Tenants in big cities like Berlin are being exploited through legal loopholes that allow them to circumvent rent control laws. The government now plans to introduce new rules for furnished and short-term rentals.
Anyone who has ever tried to find an apartment to rent for a long period of time in one of Germany’s big cities knows that it is not easy — even with an above-average income and an impeccable track record. When browsing online property portals, it is likely that hundreds of apartments will be found for sale in the most sought-after neighborhoods in cities such as Berlin, Munich and Hamburg.
But, looking more closely, most of these properties are short-term furnished rentalswith prices well above what owners can charge for long-term contracts in unfurnished apartments. That’s because a growing number of landlords are using short-term, mobile contracts — no matter how basic — to justify higher rents and circumvent rent control laws.
Furnished apartments cost, on average, twice as much as regular apartments in the German capital, according to a study by Investitionsbank Berlin (IBB). A 20 square meter fully furnished apartment in the newly built residential complex Haven’s Living in Berlin’s Charlottenburg district is currently advertised by 1349 euros per month — more than 67 euros per square meter.
New plans for the rental market
Now, Justice Minister Stephanie Hubig, from the center-left Social Democratic Party (SPD), wants to protect tenants from this type of exploitation. The first version of the proposals, seen by public broadcaster ARD, includes the following points:
- Owners must disclose how much was added to income for furniture. The addition for furniture must be “appropriate” to the purchase price and the current condition of the property.
- There will be a flat rate of 5% of net income (excluding utility costs) for fully furnished properties.
- Short-term leases will only be exempt from rent control if they are leased by a maximum period of six months. Tenants must also declare the reason why they wish to rent for short periods.
- Annual rent increases, also called “indexed rents”, which are linked to the inflation rate, will be limited to a maximum of 3.5%.
Increase in the supply of furnished properties for rent
“As often happens in politics, this is an intermediate solution“, said Armin Hentschel, sociologist and director of the Institute for Urban Social Development (IFSS) in Potsdam.
Hentschel is one of the authors of an IFSS study on the Berlin rental market, commissioned by the Berlin Tenants Association (BMV), scheduled for completion in 2025. The study revealed that furnished apartments already accounted for more than 40% of all ads of rental on the Berlin S-Bahn ring road in 2018. This figure rose to 52% in 2022.
Although the rent control law also applies to furnished apartments, in most contracts the additional fee for furnishings is not separately itemized and is often abused — simply providing a bed, table and chairs can raise rents to exorbitant levels.
Increase in short-term rentals and Airbnb
Another big problem in Berlin is the abuse of the temporary use clausewhich exempts short-term rentals from tenant protection and rent control laws. Only 7% of rental contracts analyzed in the IFSS study had a fixed duration of six months or less.
These types of rentals have quickly become a business model: the vast majority of those renting short-term furnished apartments are professional agencies with several apartments who advertise them repeatedly on the relevant platforms. Only around 25% are natural persons who, for example, rent their homes for limited periods due to travel or work abroad, according to the IFSS study.
The rapid growth of rental platforms like Airbnb has put pressure on tenants in Berlin, as landlords opt to rent properties on a daily or weekly basis, a much more profitable amount comparable to hotel prices. “We’re also talking about tourists, who are now being served by part of the traditional rental sector. People are competing with long-term residents, which doesn’t make sense“, disse Hentschel to DW.
A historical analysis of ambitious policies to address the housing crisis
Alexander Reisenbichler, a political scientist at the University of Toronto and author of the book “Through the Roof: Housing, Capitalism, and the State in America and Germany”, agrees that the Ministry of Justice’s proposals are a “step in the right direction”but they would not solve the housing crisis in Germany. “Politicians are not willing to invest enough resources to solve the problem,” he told DW.
Germany had been through this before, when it faced a huge housing and affordability crisis in the post-World War II periodexplained Reisenbichler — a crisis he resolved with ambitious policies and large-scale investment in social housing.
In 1975, there were around 6 million social housing units in West Germany alone. This number dropped to just 1 million throughout reunified Germany.
“It seems that today we are not able to muster the political will and adopt smart policies, as we have done in the past,” Reisenbichler said. “I know this has a political and financial cost, but makes a real difference to peopleand I think it’s also a way for mainstream parties to take people’s problems seriously and neutralize the growing popularity of the AfD [Alternativa para a Alemanha].”
Tenant and landlord groups are skeptical
The German Tenants Association (DMB) said it “wholeheartedly welcomes” the preliminary proposals, which it considers “an absolutely crucial and long-awaited proposal for better tenant protection.” The association stated that the proposed six-month limit for short-term rentals is “a step in the right direction“, but advocates stricter regulation on the number of short-term rentals each owner can offer.
However, the proposals were criticized by the German Property Owners Association (Haus & Grund), which classified them as “another attack on the functioning of the property rental market” and “a vote of no confidence” in private landlords. The association predicts that the new rules on surcharges on furnished apartments will entail a massive increase in bureaucracy and “reduce the availability of flexible housing options”.
Meanwhile, tenants in Germany will have to wait a while for the latest proposals to become law: they will first need to go through consultations with various associations, then be approved by the cabinet before heading to the Bundestag (German Parliament).
The Ministry of Justice did not commit to a specific deadline.
