Germany’s Rental Regulation Reforms to Come into Effect by May

All Major cities in Germany are gearing up to take advantage of the new rental rules that were finalized in December 2012. It was then decided that the new rules would be applicable by April 2013. However, the regulations will only come into effect by May now, reports Businessweek.

Two major coalition parties passed a rental reform bill on December 13, 2012. Some of the key changes that were highlighted and approved by the government were:

- Landlords will be given the freedom to take up any renovation and energy efficiency investment projects even against the will of the tenant. Any disturbance arising from the construction work should be accepted only up to three months. Rent will not be decreased during the period. The tenant, in turn will get a special lease termination right.

- If energy efficiency adaptation measures cost more than the operating costs of the previous remodeling session, the cost can be distributed to the tenant as well.

- The maximum permissible rental increase for a three year period has been capped at 15 percent. Landlords cannot charge or increase rents more than that for a minimum of three years. 

- Landlords will also be able to eject tenants off the property, more easily.

The new regulations had been heavily criticized then by the public stating that the laws were all pro-landlord and were not in the best interests of the tenants.

"The new rules will result in a drastic deterioration of tenants' rights. Rent rises for new rentals were likely to go through the roof as a result," Lukas Siebenkotten, head of the German Tenants' Association, said to The Local.

However, local governments are now planning to use the reforms to curb the property boom in Germany. Rents have been riding high in the country. Over the past five years, rents have spiked 15 percent on an average, throughout the nation.

"Rents in Hamburg are quite high and we're discussing different options to regulate them. We expect to apply the new law in some form," Kerstin Graupner, a spokeswoman for Hamburg's urban development agency said to Bloomberg.

The Bavarian government has already decided to adopt the laws and they will be applicable in the region by May 15. In Berlin, Hamburg and the state of Rhineland-Palatinate, the laws will take up to one year to be incorporated, reports Bloomberg.