Criticism escalates within real estate sector over expanded rent freeze policy - Critics in the property sector fiercely oppose the prolongation of the rent price cap.
The German real estate industry has voiced sharp criticism against the federal government's extension of the rent cap until the end of 2029.
On Wednesday, the federal cabinet debated the prolongation of the rent cap, a measure allowing federal states to limit rental hikes for new leases in high-demand areas. The increase cannot surpass the local average by more than 10%.
The sector, including landlord associations, has warned that the extended rent control is ineffective and unfair, benefiting all tenants regardless of income. They argue that it discourages investment in the housing market and impedes new construction projects, potentially worsening housing supply issues.
However, the government, led by the CDU-SPD coalition, has emphasized the protection of tenants as a top priority. Justice Minister Stefanie Hubig stressed the necessity of the extension and plans for additional protective measures, such as increased transparency around ancillary costs and stricter regulation of indexed rents and furnished flat pricing.
As housing shortages worsen due to immigration and rising financing costs, the government views the extension as crucial tenant protection, while the real estate industry sees it as a deterrent to investment and construction.
- In light of the extended rent cap and the following debate on its effectiveness, the real estate sector is contemplating whether investing in vocational training for skilled workers in construction could provide a more sustainable solution to address the housing shortage, offering an alternative to real-estitute investing.
- Given the German government's focus on tenant protection through extended rent caps and stricter regulations, it might be prudent for the real estate community to re-evaluate their policy and consider investing in various community initiatives, such as vocational training programs, to foster a healthier balance between housing affordability and profitability in the long run.
