Germany passes rules to put brakes on rent increases

German lawmakers passed a bill on Thursday to cap rent hikes as from summer this year, in a bid to control sharp increases in tenants' living arrangements.

Under current laws, rent rises in Germany cannot exceed 15 percent within three years with the same tenants. As a response, some landlords raise the rents sharply when there is a changeover in tenants.

This practice is especially common in big cities such as Berlin, Hamburg, and Munich where the housing demands are extremely high. In Berlin, rents increased by 35 percent from 2007 to 2013 while the national average growth was only 15 percent.

According to the bill passed Thursday in the Bundestag, the lower house of German parliament, local governments will be able to impose a "rent brake" of up to 5 years in places where the market is particularly tight. During the brake period, rent rises would be limited to 10 percent above the local average level.

Exceptions would be granted to new houses or renovated ones coming onto the market after October 2014.

It also ruled that fees to brokers must be paid by those who hired them; in most cases, the landlords.

The majority of Germans live in rented houses. Data from the German national statistical office showed that home ownership in Germany was only 43 percent in 2013.

"Today is a good day for tenants," said German federal justice minister Heiko Maas in a statement.

"Rents must be affordable for normal income people," he said, "Thirty or 40 percent increase in rents in some metropolitan areas are simply unacceptable."

According to Maas' ministry, the bill still needs to be passed in the Bundesrat, the upper house of German parliament, which represents interests of German federal states, before it can become law in April and come into force in June. Endit