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Germany’s centre-left SPD plans Rent Freeze

As the old saying goes, “Desperate times call for desperate measures”. All that’s missing is “…and desperate politicians to propose them.” In this case, the desperate times refer to the housing shortage gripping Germany’s major cities / the centre-left Social Democrat Party’s steep decline in recent elections*. Now, in an attempt to solve the housing crisis / reverse their descent into irrelevance*, the SPD’s leadership are hatching plans to freeze rents in areas where housing markets are most strained. The SPD’s Mietenstopp (rent freeze) would restrict landlords from raising rents by more than the rate of inflation for a period of five years / help lift the SPD above 17.1% in opinion polls*.

 

12-point plan

And that’s not all: The SPD has floated a 12-point plan to curb rent increases in overheated markets / districts where the SPD is haemorrhaging support*. According to the leaked proposals, the SPD’s rent freeze would apply to both in-place tenants and new leases for a period of five years. Just to put this into some perspective: a) inflation in Germany is currently running at around 2.0% and b) landlords in districts with overheated housing markets can currently increase rents by up to 15% in a three-year period (as long as they don’t violate the Mietpreisbremse (rent brake).

 

No more share deals?

The aim of the SPD’s proposed rent freeze is to win extra time / votes* until existing measures, such as the programme to boost the construction of affordable housing, bear fruit. The 12-point plan will apparently include a number of new measures to protect tenants from being forced out of their apartments by landlords who claim they need the apartment for their own use. In addition, the stop-gap plan also proposes a complete ban on share deals, stricter restrictions on converting rental apartments into condominiums and extending the length of rent guarantees for state-subsidised housing. Other components of the SPD’s plan include a register of landownership (which would also identify land that is ripe for development), a legal obligation to build on undeveloped land and higher property taxes on undeveloped land—a combination of measures the SPD hopes will put an end to speculation with land. 

 

Elections loom

Despite what might well be a noble long-term aim, namely to ensure that no one in Germany has to spend more than 30% of their income on housing, the SPD’s timing is certainly suspect. After all, the coalition government, of which the SPD is a junior partner, has just announced a raft of new measures that are scheduled to take effect from 01.01.2019. Could the upcoming state elections in Bavaria and Hesse have anything to do with the SPD’s announcements? And how will voters, including many tenants, react? Fortunately, we won’t have to wait long to find out.

 

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