How do German politicians want to tackle the rental crisis?

After years of consistently sharp rent increases in Germany, the latest report from the Institute for Economic Research in Cologne (IW) has confirmed that little changed in 2024. Less than a month out from a snap federal election, which promises are political parties making to mitigate the German rental crisis?

Rents continue to spiral in Germany

Over the past 10 years, rents in Germany have become significantly more expensive and have risen even more sharply since the coronavirus outbreak. Rents are being raised nationwide, but the most significant increases are in German cities.

According to figures from Eurostat, the average monthly rent for a one-bedroom flat of 60-80 square meters (m2) in Berlin was 890 euros in 2015, and 730 euros for the same accommodation in Bonn or Karlsruhe. In the final quarter of 2024, the average, monthly rent for an 80m2 one-bedroom flat in Berlin was 1.002 euros, 909 euros in Bonn and 956 euros in Karlsruhe.

Prices are even higher in more expensive cities, like Frankfurt and Munich, where landlords were respectively charging an average of 14,17 euros and 19,3 euros per m2 during the final quarter of 2024.

Germany is the EU country with the highest percentage of renters, 52,4 percent of the population. But in the past decade, sharp rent increases have not been offset by wage increases and of tenants across the EU, those in Germany spend the third-largest proportion of their income on rent, an average of 24,5 percent according to Eurostat’s 2022 figures.

Another study, published by the IW in October 2024, revealed that many tenants in Germany could not find a home where rents cost a third of their monthly income or less, an internationally recognised guideline for affordable housing.

In 1991, just 5 percent of households in Germany were spending 40 percent or more of their income on rent, this figure has now risen to 14 percent. Tenants in Germany who pay more than 30 percent of their income on rent are considered “overburdened”.

Current German rent brake is not sufficient, critics argue

In 2015, the CDU-led grand coalition introduced a rent brake law (Mietpreisbremse) to prevent rents in popular residential areas from going through the roof. In 2024, Olaf Scholz’s traffic light coalition extended the law until 2029. So have rents continued to rise so sharply over the past decade?

Under the Mietpreisbremse, in areas “with a strained housing market” - as defined by local authorities - it is illegal to charge rents over the standard comparable rent for new contracts by 10 percent or more. 

The “standard comparable rent” is determined using the annually adjusted rent index (Mietspiegel), which applies in towns and cities with 50.000 inhabitants or more.

If a landlord charges rent which is 10 percent more expensive (or more) than the legal limit determined by the Mietspiegel, tenants are entitled to a rent reduction and refund of any overcharged rent they have paid.

But the existing Mietpreisbremse has further limits. At the moment, tenants who live in newly-built properties rented for the first time after 2014, modernised properties, properties rented for less than a year, properties where the rental contract was signed before the law took effect and those previously rented at an illegally high price, are not protected.

For the German Tenants Association (DMB) these gaps render the current law insubstantial. Speaking to Berliner Zeitung when Scholz extended the Mietpreisbremse in 2024, President of the DMB Lukas Sibenkotten said, “Loopholes [...] urgently need to be closed up.” 

What housing policies are German parties promising in 2025?

So, with a large population of renters, the worst housing shortage in 20 years, increasingly unaffordable rents and appeals for a sturdier Mietpreisbremse, as election day looms which policies are politicians proposing to ease the rental crisis?

The Christian Democratic Union (CDU) is currently polling at 30 percent and its leader, Friedrich Merz is widely expected to become the next German chancellor. To reckon with the nationwide housing crisis, the CDU is pushing to remove bureaucratic hurdles for housing construction and tax breaks for landlords who charge below the average regional rent. 

The party hasn’t called for a rent cap but “efficient and appropriate tenant protections, which includes regulation on increasing rents”. Going against the grain of his party, Berlin’s CDU mayor Kai Wegner has called on the conservative party to regulate rents at the federal level.

The Social Democratic Party (SPD) is currently polling at 15 percent and is widely expected to form the next coalition with the CDU. The SPD would also like to remove bureaucratic hurdles to accelerate housing construction and increase funding for social and student housing construction. The party also wants to extend the Mietpreisbremse indefinitely and expand it to include properties rented since 2019.

The Greens are currently polling at 15 percent. The party also wants to extend and expand the Mietpreisbremse, to convert unused office buildings into housing and build upwards on existing housing units.

The Alternative for Germany (AfD) is currently polling at 20 percent but is not expected to enter government because of the Brandmauer (firewall). The party would like to increase the number of property owners in Germany, introduce a law whereby “native Germans” are given priority for housing, increase housing benefit (Wohngeld) payments and rule out any kind of rent regulation.

The Left Party (die Linke) is currently polling at 5 percent, the minimum vote share required to enter the German parliament. The party believes that rent regulation should come before expanding housing construction and is pushing for a nationwide rent cap for the coming six years, only non-profit landlords who have previously charged very low rents would be allowed to issue annual increases.

Both the Federal Democratic Party (FDP) and Alliance Sahra Wagenknecht (BSW) are currently polling below the 5 percent margin required to enter parliament. The FDP is opposed to a rent cap, wants to accelerate housing construction and encourage private investment. BSW would like to increase funds for social housing and freeze rents until 2030.

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