The incoming German government has announced details of its coalition agreement. How will the planned policy changes impact renters in Germany?

German government announces coalition agreement

Germany is the EU state in which the highest proportion of residents are renters, rather than homeowners. According to 2023 figures from the Federal Statistical Office (Destatis), 52,3 percent of residents are renters. As such, any German government’s policies on renting are of great interest to many residents, both tenants and landlords. 

Last week, Germany’s incoming CDU / CSU-SPD government announced details of its coalition agreement. The agreement includes several policies which will impact renters in the coming years:

Changes to the rent index law

Germany already has a rental index (Mietspiegel), which is updated every two years. The Mietspiegel determines if, and by how much, landlords can legally increase basic rents (Kaltmieten) and is based on the consumer price index set by Destatis.

The country’s tenants’ associations regularly criticise the existing rent index for being too flimsy; only in areas with a “strained housing market” can rents be controlled, and then only in certain properties.

The coalition says it will expand what is defined as a “strained housing market”, will regulate rents more strictly and that furnished properties will be subject to rent controls for the first time.

Nebenkostenabrechnungen will change

Annual utility bill charges (Nebenkostenabrechnungen), which landlords sometimes use to obscure rent increases, will be simplified and easier to read. 

More local authorities can use Vorkaufsrecht

Finally, more local authorities will be given greater powers to use “right of first refusal” (Vorkaufsrecht). Vorkausrecht allows local authorities to give one party (e.g. tenants) priority to obtain or buy a property before it can be offered to another party (e.g. an investor or letting agency).

Economic Offences Act will be reviewed

The coalition has said that by the end of 2026, an expert panel will review the rent exploitation provision included in the existing Economic Offences Act.

Landlords in Germany who are charging exploitative rents 20 percent over the Mietspiegel limit can face fines of up to 50.000 euros, while those charging over 50 percent may be committing a criminal offence and can face prison time.

In early 2025, a rent calculator run by The Left (die Linke) allowed tenants in eight German cities to easily calculate whether their landlord was charging them exploitative rents. Of the 32.000 people who used the calculator, 22.000 found they were paying too much. Of these 22.000 users, 13.000 found that they were being charged rent 50 percent over the Mietspiegel limit.

New laws for a “Wohnungsbau Turbo”

According to a recent study by the Building Research Institute ARGE in Kiel, Germany is short of 550.000 homes and must build at least 100.000 social housing units per year to keep up with demand.

In response, the incoming coalition has promised to deliver a “Wohnungsbau Turbo” (housing construction turbo) draft law within the first 100 days of taking office to “accelerate construction”. 

As part of the Wohnungsbau Turbo, the government will consolidate two central subsidy programmes, for building and modernisation, run by the state-owned investment bank Kreditanstalt für Wiederaufbau (KfW or Credit Institute for Reconstruction).

Construction laws will be “simplified”

The German building code will also be “simplified” and the rules around what qualifies as an energy-efficient “Building type E” will be loosened. For example, fire protection materials will not have to be compliant with “type E” requirements for a building to be considered "type E".

After the Central Association of the German Construction Industry criticised that planning approval often takes longer than actual construction, the government will make it easier for municipalities to approve construction plans.

WG advice centre will be established

The Union and SPD coalition has also promised to improve tenancy laws in favour of young people and others who live in shared accommodation, such as Wohngemeinschaften (WGs).

The incoming government will set up a nationwide advice centre for those renting WG rooms in shared accommodation. 

When will the changes be adopted?

According to the current timeline, Chancellor-elect Friedrich Merz (CDU) will officially become German Chancellor on May 6, 2025, before the coalition government begins work on May 7. Only then can the new government begin further shaping its new housing policies and putting them to a vote on the Bundestag floor.

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