German cabinet approves bill to tighten rent rise curbs

BERLIN (Reuters) – Germany’s cabinet approved a bill on Wednesday to strengthen curbs on steep rent increases in big cities that are hurting tenants and raising concerns that the property market may be overheating.

Justice Minister Katarina Barley, who introduced the legislation, said in a statement that it would allow new tenants to know how much former occupants of a property had paid in rent and whether renovation work justified any increases.

The law was already changed in 2015 to tackle soaring property prices and rents. This introduced a “rent price brake” for new tenants in densely populated areas, banning increases to more than 10 percent of local average rents.

Landlords can seek exemptions in some cases, such as for a new or recently renovated buildings.

Barley’s new bill, which now goes to parliament, obliges landlords to reveal unprompted whether they have benefited from rent price brake exemptions in the past and how much the previous rent for the property was.

An influx of people to German cities and a shortage of available housing has pushed up rents. Cities with the highest average rents include Munich, Cologne, Stuttgart, Hamburg, Frankfurt and Berlin.

The Bundesbank has warned that real estate prices in German cities may be 15 to 30 percent overvalued, hinting that a property bubble may be developing, a potential risk for financial stability.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.