Rent control ineffective?

PROGEDO relocation investigates: How have the rent control and ordering principle worked so far?

Rents continue to rise in German cities. Immowelt.de reports that in seven of the twelve cities examined in an internal study, rents are currently more expensive than before the introduction of the rent control. Nuremberg, Düsseldorf, and Ingolstadt are at the forefront.

In Berlin, rent price trends slowed after the introduction of the rent control in June and July. The market then picked up significantly in September, ending the month with a 3 percent increase compared to the end of May. These statements are consistent with the assessments of the PROGEDO capital office when looking for apartments for clients.

Blunt sword

The rent control thus threatens to become a blunt instrument, especially because it was introduced in conjunction with the "ordering principle." Landlords, who now have to pay the broker's commission for new rentals, have therefore once again quickly exploited the scope for rent increases for new rentals.

The fact that rents stagnated here and there in June and July was primarily due to the fact that many apartments weren't even available. According to research by PROGEDO, around 40 percent of the usual supply in Hamburg disappeared during the summer: landlords didn't use real estate agents and weren't quite sure how to market properties themselves. This situation met with enormous demand, as many prospective tenants had postponed their relocation plans until after June 1. The result: excess demand, driving up prices.

No uniform trend

In Düsseldorf, rents rose by 5 percent during the period observed by Immonet.de, whereas in Cologne and Bonn they actually fell. Conclusion: A consistent trend is therefore not apparent. However, it seems to be the case that the rent control is not yet delivering on its promise. It's just that the search for housing has become more difficult overall and for everyone – especially for qualified immigrants and foreign specialists.

The fact that many affected municipalities in Germany lack official, reliable rent indexes ultimately undermines the rent control. Tenants filing lawsuits are then forced to commission expensive appraisals, which enormously increases the risk of litigation and virtually nullifies the federal government's efforts to limit rent increases. Conclusion: Unfortunately, there's currently no sign of a brake.