Consumers are set to receive enhanced protection against excessive surcharges for furnished housing and expensive short-term rental contracts under new regulations. The Federal Cabinet approved draft legislation on Wednesday that will require furniture surcharges to be separately itemized going forward.
Additionally, a maximum limit will be established for short-term rental contracts, and index-based rent increases will be restricted. "Targeted gaps in social rental law" are being closed, Federal Justice Minister Stefanie Hubig (SPD) explained.
In the future, it will be "clear and comprehensible" what is permitted regarding furnished apartments and short-term rentals, Hubig continued. This will set "effective limits against circumventing the rent brake."
According to the proposal, short-term rental contracts will have a statutory maximum limit of six months. Under certain conditions, landlords may extend these contracts to eight months. Furthermore, short-term rental contracts will only be permitted when there is a special reason for the short-term rental on the tenant's part, as stated in the draft.
These should be distinguished from fixed-term rental contracts based on expressly regulated landlord concerns: such contracts are subject to the rent brake, and there will be no statutory changes in this area.
For furnished apartments, landlords in tight housing markets will be required to separately itemize the surcharge in the future. If they fail to do so, the apartment will be considered unfurnished. Landlords can provide proof retroactively, but the apartment will still be considered unfurnished for two years from that point.
The furniture surcharge should be based on the current value of the furniture, with the draft legislation including a proposed calculation method. For fully furnished apartments, landlords may also apply a flat rate of ten percent of the net base rent. In individual cases, a higher surcharge will be possible if the value of the furnishings is higher.
The German Tenants' Association (DMB) explicitly welcomed this development. "Furnished living is being deliberately used to achieve particularly high returns and to circumvent protective regulations," explained DMB President Melanie Weber-Moritz. However, there is a need for "clear legal guidelines on the current value of furniture as well as transparency regarding acquisition costs and dates." The Tenants' Association demanded that the reform must be "consistently implemented and improved."
According to the draft, rent increases for index-linked leases in tight housing markets will be limited in the future. Index-linked rents are tied to the inflation rate: above a threshold of three percent annually, increases may only be applied at half the rate as rent increases.
If the Consumer Price Index rises particularly rapidly, as it did following Russia's attack on Ukraine, tenants should not face increasingly higher burdens. "Especially in times of rising inflation, renting should not become a cost trap," Hubig stated.
There will also be greater protection for tenants who face termination due to unpaid rent. In cases of payment arrears, tenants will be able to prevent an ordinary termination once, provided the outstanding rent is paid in full.
Hubig had presented an initial draft of the legislation in early February. The Union faction announced "need for corrections" at that time. Several regulations were softened. "Agreement within the Federal Government was not easy," Hubig acknowledged on Wednesday, but compromise "belongs to democracy." She saw the draft legislation as a "fair balance between tenant protection and the legitimate interests of the landlord side."
The Green Party's housing policy expert, Hanna Steinmüller, stated that the package is a "necessary first step, but many more must follow to ensure affordable rents." The limitation on index rent increases is "extremely complicated," requiring "simple, transparent rules and legal certainty," she criticized.
The Left Party criticized the "watering down of the rental law reform under pressure from the real estate lobby." This is "more than regrettable," explained the Left Party faction's housing policy spokesperson, Caren Lay. The draft legislation is "not suitable for stopping the rent price explosion. What is finally needed is a nationwide rent freeze, including for existing rentals."
The Association of Private House, Apartment, and Property Owners (Haus & Grund), on the other hand, condemned what it called an "expropriating intervention in private retirement provision in Germany." Association President Kai Warnecke stated that the Federal Government "stigmatizes private landlords" and thereby makes renting "less attractive."
Particularly problematic, according to Warnecke, is the planned additional protective regulation for tenants who face ordinary termination due to unpaid rent. It cannot "be the responsibility of private landlords to permanently finance payment defaults, legal costs, and repeat risks," Warnecke explained. The Tenants' Association, however, rated the expansion of the so-called grace period payment as a "particularly important advancement" to "prevent housing loss." The association viewed the restriction to one-time application critically.
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