Proposed reforms to the Mietpreisbremse aim at strengthening and solidifying restrictions on steep rent increases in German urban areas.

By Christian Thiele and Eun-Kyung Lee

After intense discussions within the ruling coalition, the German government this week adopted a draft bill regarding the reform of German tenancy law.

What is the Mietpreisbremse?

The Mietpreisbremse (literally “rental price brake”) introduces a considerable element of rent control into the German legal system and is one of the largest political projects in the German rental market in recent years. Adopted in 2015, the measure allows the governments of the 16 German federal states to cap landlords’ rental price raises for new rentals by way of regulation. The main purpose is to prevent landlords of apartments in urban areas from significantly increasing rents following a change of tenant. According to Section 556d of the German Civil Code, the rental price in a new residential lease contract must not exceed the local comparable rent by more than 10% if the regulations have declared the relevant region as part of an area with a strained residential market. Of the 16 federal states, 11 states, including Berlin, Hamburg, and metropolitan areas in North Rhine-Westphalia and Bavaria, have so far passed such a regulation.