Overview

• The German government has approved a proposal to extend the rent cap law, originally set to expire in 2025, until the end of 2029.
• The measure aims to limit rent increases in areas with housing shortages, capping new rental contracts at 10% above local average rents.
• The new proposal expands the rent cap's scope, exempting only properties first rented after October 2019, instead of the previous October 2014 cutoff.
• The extension faces significant hurdles in Parliament, with the FDP and CDU/CSU opposing the plan, leaving its passage uncertain before the February elections.
• Critics, including housing industry groups, argue the extended cap could deter new construction, while tenant advocates call it essential to prevent steep rent hikes.