How is the rental price brake implemented?

Since 1.6.2015 there is the so-called Mietpreisbremse in Germany. But what exactly slows down the rental rates? And has it worked for the first few months since its introduction? On the one hand, it has not yet been implemented nationwide, on the other hand, it still has to be decided whether its application will actually be fully effective in practice.

The idea of ​​a rental price brake

As rents in urban areas have risen in some cases explosively in recent years, according to the policy, a rental price brake must be used. This prevents that, for example, when a new tenant moves in, the rent can be set completely freely. An increase may now only be made up to a limit that does not exceed 110 percent of the local rents. Higher rents are not allowed.

The exceptions to the rule

A whole series of exceptions ensures that the planned effects of the rental price brake are reduced. Whether or not you are affected by the new regulation is shown at a glance by Lexware. There you will also get a free e-book with further details.
The regulation initially only applies to housing. It does not apply to the rental or leasing of commercial premises. Leases that were settled before the brake was introduced are not affected. Existing rental prices do not have to be changed. Even if the last rent was already above the permissible 10 percent, new leases can be concluded for the same price and do not have to be adjusted downwards.

The rental price brake also does not apply to renovated and new buildings. New buildings include all buildings that were inhabited for the first time after 1.10.2014. In the case of renovations, these works must be so comprehensive that they cost at least a third of what a comparable new building would have cost. The rent brake applies only in cities with housing shortages, which were determined by the competent federal states and not nationwide.

Implementation so far

First of all, the rental price brake had exactly the opposite of its actual goal. In the months leading up to the introduction, about half of all German private landlords increased their rents - especially in Munich and Dusseldorf. Up to now, the geographical distribution in Bavaria, for example, is similar to a patchwork quilt. In one community it is, in the next not. This creates unfair inequalities.

Initial experience shows that many landlords do not adhere to the rental price brake and that it is not so easy for tenants to get this on the loose. Moreover, especially in the affected cities, the lack of housing is so high that one is glad to have even found a flat. Therefore, many are afraid to nail down the landlord on the amount of rent.

Future developments

Forecasts indicate that real estate owners will refrain from minor refurbishment work in the future, only to do it all at once later and then increase rents without restriction. The determination of the local rent index is problematic and will probably still provide for litigation. With similar arrangements in the past in Spain and the US, there is also concern that existing housing will become increasingly unequal, that more people will be homeless and families with children will have to live in a smaller area. An elimination of the housing shortage in some cities is not in the rental price brake in sight.

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