German government extends rent control until 2029

The German federal government has approved a draft law extending the rent control measure until 31 December 2029, in a move aimed at maintaining affordable housing.

German Bundestag - source Pixabay

This extension allows continued regulation of initial rent prices in designated high-demand areas, capping them at 10% above local market rates. 
This measure, initially introduced in 2015, aims to protect vulnerable groups like families, pensioners, and young people while encouraging new housing construction by exempting units built after October 1, 2014. 
In a speech earlier this month, German Chancellor Friedrich Merz emphasized the critical importance of housing affordability, highlighting this policy as a key component of the government’s strategy.
The government argues that the rent control extension is necessary due to the housing shortage, exacerbated by immigration and a construction slowdown caused by rising interest rates. 
Justice Minister Stefanie Hubig emphasized the urgency and importance of this extension for protecting tenants and ensuring fair access to housing.
While this extension is welcomed by tenant advocacy groups, landlord associations argue it is ineffective and unfairly benefits all renters regardless of income. Furthermore, the industry has warned that extending rent control discourages investment and further hinders new construction.
Further measures are planned to address transparency in additional costs and regulate indexed rent increases and furnished apartment pricing.