Rent crisis | Lawyers' conference discusses the end of the rent cap

The rental market is tense and the gap between existing and asking rents is widening. Should the former rise or the latter fall? Photo: dpa/Fabian Sommer A report is causing a stir at the German Lawyers' Conference in Erfurt. The lawyers Markus Artz and Arnold Lehmann-Richter propose an end to rental law restrictions on existing rents such as the rent cap. This is intended to close the gap between existing and offered rents and thus reduce the housing problem. Artz is part of Justice Minister Stefanie Hubig's (SPD) Tenancy Law Commission.

The basic idea: The German housing market suffers from the so-called lock-in effect. This means that pensioners cannot move out of apartments that are too large, and families cannot move out of apartments that are too small. There is simultaneous undercrowding and overcrowding. The theory goes that if the existing rents for people who live in apartments that are too large were to increase, they would be more likely to move. This will make tenancy law more accurate and fairer.

The protection of existing properties has been part of the so-called social tenancy law since 1971. The real estate industry has been calling for its dismantling for years. The law reduces the willingness to invest. Before the Lawyers' Day, more than 100 scientists from interdisciplinary urban and housing research came forward with a counter-evaluation. Your criticism: Increasing existing rents would not solve the housing crisis, but on the contrary would worsen it.

“The report by the two lawyers contradicts in many aspects the social scientific analyzes of housing policy and housing supply,” criticizes signatory Lisa Vollmer, research associate at the Leibniz Institute for Spatial Social Research Erkner.

Those with very good salaries in particular lived in large apartments, she explains in an interview with “nd”. "If you increase their rent, they'll pay more." Poor households, on the other hand, would certainly not be able to move. This does not ensure more fairness in the housing market, but rather higher rents for everyone. “The solution is not to increase existing rents, but rather to limit asking rents – and finally consistently enforce the existing laws,” says Vollmer.

Asking rents are calculated from the average rents offered on major real estate portals. The level reflects the private rental market. There is a capping limit for current contracts in the portfolio. In tight markets, it allows a maximum of 15 percent increase within three years. The rent cap does not apply to new contracts everywhere. In this case, the rents can be up to ten percent above the local comparative rent.

“Reforms of tenancy law are certainly not the sole answer” to the “social question of our time,” write Artz and Lehmann-Richter. But they could help solve the problem. "The creation of new living space has so far not led to any noticeable improvement in the situation on the rental market in the affected areas."

For both of them, this means, among other things, abolishing the rent cap and no longer relying on comparative rents. As Artz explains in an interview with "Legal Tribune Online", one of the main problems is that tenants have to proactively implement the law and are often unable to do so. Another difficulty is that the brake also regulates rents for high-income households.

At the Lawyers' Day, the different theses of the report will be voted on individually. Instead of rent controls, Artz and Lehmann-Richter suggest introducing a “social rental obligation”. This is intended to encourage landlords to give some of their apartments to people who do not rent at reasonable prices in relation to their income.

The “social rental obligation” should be based on the concept of the equalization levy. Corporations pay this if they do not employ the specified number of people with disabilities. The rent that fulfills the “social rental obligation” should either be set by law based on the income of those entitled or left to the market.

"The second alternative is based on the thesis that landlords have an interest in fulfilling their social rental obligation and will therefore offer tenants entitled to rent a rent that they can also pay," write the two lawyers. The compensation tax on the labor market has been criticized for years. Far fewer than half of companies still fill the required positions with people with disabilities, partly because the law has some loopholes.

»The gap between quoted and existing rents arises primarily from landlords systematically breaking the law and not adhering to existing regulations.«

“The comparative rent system is established, and at least in the portfolio it has led to a reasonably moderate rent development,” emphasizes Vollmer. "The gap between offered and existing rents arises primarily because landlords systematically break the law and do not adhere to existing guidelines." According to the critics and their counter-report, increasing existing rents would lead to "an increase in rents overall, an intensification of social polarization in the housing market, an increase in housing-related poverty, higher public spending and more social segregation in urban areas."

2,000 professionals have registered for the Lawyers’ Day. The recommendations of the Lawyers' Day are to be passed on to the legislature as reform proposals at the end of the three-day conference this Friday. Past resolutions of the Lawyers' Day were implemented by the respective federal government, for example in the reform of family law in 2023.

Note: On Friday, according to a broadcast, the German Lawyers' Association committed itself to social tenancy law. In his resolutions, he advocated, among other things, tightening the rent cap.

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