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The German coalition government’s decision to extend the Mietpreisbremse (rent control law) until the end of 2029, and expand its scope, has unleashed a wave of criticism from landlords, developers, and industry representatives. While touted by Housing Minister Klara Geywitz as a vital step to protect tenants, the measure’s detractors argue it is a political placebo that worsens the housing crisis.
The Mietpreisbremse, introduced in 2015, was intended to curb runaway rents while spurring new construction. Almost a decade later, the market remains deeply strained, with affordable housing in urban centres increasingly scarce. “The new construction turbo has not ignited,” said Rolf Buch, CEO of Vonovia, in a guest column for the Frankfurter Allgemeine Zeitung. “The market is more tense than ever, and affordable living space is in short supply in the metropolitan regions.”
The expanded law now includes rental properties built between 2014 and 2019, previously exempt, and extends protection to 410 municipalities, encompassing 9.5 million apartments. For Buch and other critics, this broadening merely entrenches existing problems. “The across-the-board rent cap has failed in its purpose. The promise of building more apartments and improving the situation has not been kept,” he wrote.
The ZIA, the central real estate industry association, has echoed these concerns. President Iris Schöberl described the extension as “a placebo, dosed even higher,” warning that such measures fail to address the root causes of the crisis. Instead, she urged for a “courageous reform” of building regulations to reduce costs and accelerate construction. She also highlighted the need to amend the Federal Building Code, suggesting that opening up Section 246 for residential construction could “quickly boost supply” if implemented without unnecessary restrictions.
The GdW, representing housing and real estate companies, pointed to the burden on both tenants and landlords. “This law does nothing to reduce the immense pressure on the rental market,” stated Axel Gedaschko, President of the GdW. He called for comprehensive measures to ease the approval process for new construction, warning that overregulation continues to stifle innovation and investment.
Tenant groups, however, view the extension as a necessary, albeit incomplete, measure. Lukas Siebenkotten, President of the German Tenants' Association (DMB), emphasised the importance of protecting tenants against steep rent hikes in an overheated market. “Loopholes, such as exemptions for newly constructed or furnished apartments, must be closed,” he argued, adding that stronger penalties for landlords who bypass regulations would enhance tenant protections. Tenant advocates have also stressed the need for more affordable housing options, particularly for lower-income households, who bear the brunt of housing shortages.
Investors on the sidelines
For institutional investors, the Mietpreisbremse represents a significant deterrent. By capping rental income while construction costs soar, the regulation stifles the financial viability of new projects. Dirk Salewski, President of the BFW Association of Independent Real Estate Companies, called the decision “a pure election manoeuvre” that undermines planning security. “Every businessman knows that lower sales at higher costs do not work in the long term,” Buch added.
Developers and landlords argue that the law creates a two-tier system: existing tenants benefit from capped rents, while those seeking housing face fierce competition and higher prices for an ever-shrinking supply of new properties. “Those who have a long-term rental agreement are hanging on to it, even if it no longer meets their personal needs,” Buch noted. “This is happening because there are simply no suitable apartments available.”
Tenant groups contest such critiques, arguing that without controls, many would face unaffordable rents or displacement. Siebenkotten countered that “without the Mietpreisbremse, the already severe disparities in the rental market would worsen dramatically, leaving countless families without viable housing options.”
A way forward?
Buch and others advocate targeted solutions over blanket controls. He suggests allowing landlords to rent out most of their properties at market rates, while committing a proportion to tenants in genuine need. “The additional income could be used to invest in new construction, renovation, and modernisation,” he argued, describing such an approach as fostering a “new social balance” in the housing market.
Industry leaders are unanimous on one point: increasing supply is the only sustainable solution. Schöberl has called for reforms to the German Federal Building Code, specifically the removal of restrictive regulations that drive up construction costs. Gedaschko and Salewski both emphasised the urgent need to eliminate state-imposed costs, such as land transfer taxes, as barriers to affordability.
Meanwhile, tenant groups and government officials remain committed to rent controls as a lifeline for millions. Geywitz defended the extension as protecting “over nine million households in 400 municipalities,” framing it as essential amidst a broader housing affordability crisis.
As the debate intensifies, Germany’s housing market continues to grapple with spiralling construction costs, regulatory hurdles, and political deadlock. For landlords and investors, the Mietpreisbremse remains a symbol of policy failure—a brake that has stalled the market instead of steering it towards balance.
