Germany Agrees New Home Rent Controls as Housing Remains Tight

Germany’s governing parties agreed to terms for new rent control laws aimed at keeping housing in large cities affordable, addressing a dispute that started after the 2013 national election.

The proposed law caps rents for existing apartments at 10 percent above the local average in areas where the housing market is deemed to be tight. It doesn’t apply to newly built homes. Angela Merkel’s Christian Democratic Union and its Social Democrats coalition partner will send the measure to parliament next week, Volker Kauder, CDU’s parliamentary chief, told reporters Wednesday.

“We’re creating a fair balance between the interests of landlords and tenants,” German Justice Minister Heiko Maas said in a statement. “We want to foster and maintain the high appetite for investment on the residential market.”

Rents in Germany’s largest cities are rising as developers try to reduce a housing shortage caused by migration into cities and a long slump in construction. In Berlin, rents have gained more than 30 percent in the past three years, according to data compiled by Jones Lang LaSalle Inc.

The proposed law will also make it mandatory for real estate brokers to be paid by the person who hired them. Currently, brokers can decide who to charge, which means that tenants usually foot the bill even when the broker is hired by the landlord.

Developers and landlords had lobbied to exclude newly built homes from the law, arguing that rent caps would stifle construction.

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