German Cities Plan Tighter Rent Controls to Curb Housing Boom

Germany’s largest cities are preparing to tighten rent regulations as they take advantage of a new federal law aimed at curbing the housing boom.

State governments that oversee housing rules in Hamburg, Berlin, Munich and other cities plan to make it illegal to raise rents in those locations by more than 15 percent in 3 years, according to government officials.

“Rents in Hamburg are quite high and we’re discussing different options to regulate them,” said Kerstin Graupner, a spokeswoman for Hamburg’s urban development agency. “We expect to apply the new law in some form.”

Rents in Germany’s largest cities have soared as home construction has failed to keep pace with an influx of people. On average, German rents rose 15 percent in the past five years, according to data compiled by online broker Immobilien Scout.

In December, the German parliament passed a law that allows state governments to cap rent increases in certain areas at 15 percent every three years, compared with 20 percent previously. The law comes into effect next month.

On Wednesday, the Bavarian government became the first state to adopt the law, a decision that will come into effect on May 15. In the states of Hamburg, Berlin and North Rhine- Westphalia -- home to Cologne and Dusseldorf -- legislators are preparing to vote on whether to follow suit.

“We have commissioned an evaluation to find out which cities have a home shortage,” said Maik Grimmeck, a spokesman for North Rhine-Westphalia’s Ministry for Construction, Housing and Urban Development. “Once we have that, we can put together a regulation.” The law will probably take effect in 2014, he said.

In Hamburg, Berlin and the state of Rhineland-Palatinate, the law is likely to take effect this year, according to officials in those states.

All four states are ruled by the opposition Social Democratic Party. Bavaria is ruled by the Christian Social Union, the sister party of Angela Merkel’s Christian Democratic Union. Germany has 16 states.

To contact the reporter on this story: Dalia Fahmy in Berlin at dfahmy1@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net

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