The federal government's proposed reform package, Tenancy Law II, is a focal point for the real estate industry. Experts are warning of potential burdens for landlords, investors, project developers, and ultimately tenants, which could arise from the planned tightening of rental regulations. The proposed measures aim to curb the increase in housing costs but at the same time raise concerns about the willingness to invest in residential construction.
A core demand of the reform is the expansion of the scope of the rent brake. In the future, this is intended to include existing tenancies and not just new lettings, as is currently the case. This would signify a profound change in the calculation bases for owners and capital investors. Furthermore, a reduction in the cap limit is planned, which defines the maximum permissible rent increase within a specific period.
Potential Implications for Owners and Investments
According to leading industry associations, extending the rent brake to existing tenancies could significantly diminish the attractiveness of residential properties as capital investments. Such regulation would deeply interfere with existing contractual relationships and create uncertainty for owners. In the long term, this could lead to a decline in modernisations and maintenance, as profit expectations decrease and necessary investments become less amortised. It is also feared that confidence in the legal certainty of real estate investments in Germany could suffer.
Project developers are already indicating that such regulation would jeopardise the profitability of new residential construction projects. Given rising construction costs and increasing bureaucracy, further revenue restrictions could lead to planned projects not being realised. This, in turn, would have direct consequences for the creation of urgently needed new housing, particularly in metropolitan regions such as Munich and other Bavarian conurbations.
Background and Further Reform Approaches
The Tenancy Law II package includes not only rent-regulating measures but also other adjustments, for example, in the area of energetic refurbishment and housing promotion. However, the main focus of expert discussion is on the immediate implications for the rental market. Policy aims to keep housing affordable, but the real estate industry fears counterproductive effects that could lead to a shortage of supply and thus, in the long term, to rising prices.
- —Extension of the rent brake to existing tenancies
- —Reduction of the cap limit
- —Discussion about implications for the investment climate
- —Potential reduction of housing construction projects
