increase linked to inflation
Greens call for regulation of index rents
2/5/2023 11:42 am
In the wake of inflation, index rents are becoming an “unacceptable cost trap,” warns the German Tenants’ Association. The Greens want to counteract the rent increases with state intervention, and Minister of Construction Geywitz from the SPD is also open to a cap. But the FDP sees no need for action.
The Greens are in favor of regulating index rents linked to inflation. “Index rents are a problem that we have to tackle,” Katharina Dröge, co-chair of the Greens parliamentary group in the Bundestag, told the newspapers of the Funke media group. “Inflation has risen so much that it will be a shock for many tenants when the increase comes.”
It goes beyond what was stipulated in the coalition agreement, “but we have to discuss with the coalition partners how we can regulate index rents,” said Dröge. That could mean, for example, that existing index leases are capped and new ones are more tightly regulated. “We need a solution at this point.”
Federal Building Minister Klara Geywitz had previously shown herself open to capping index rents. The SPD politician told the “Frankfurter Allgemeine Sonntagszeitung” that she could imagine linking index rents to the general development of rents or setting a cap. But that is not in the coalition agreement, and the FDP sees no need for action, said Geywitz.
Justice Minister Marco Buschmann had already rejected demands from the SPD for a reform of index rents in December. In recent years, tenants with such contracts have been in a better position than tenants with other contracts, the FDP politician told the “Rheinische Post”. Because the cost of living has risen more slowly in the past than the comparative rents, on which rent increases are usually based.
Cold rent increases by up to 15 percent
According to the German Tenants’ Association, more and more newly concluded leases are linked to inflation. In larger metropolises, so-called index rents were agreed for an average of 30 percent of new contracts last year, the tenants’ association said in mid-January. For Berlin, the tenants’ association assumes that even up to 70 percent of the new leases provide for indexation.
“Many landlords are making full use of the options for inflation adjustments in existing rental contracts and have increased their tenants’ rent by up to 15 percent in the crisis year 2022 alone,” said Siebenkotten, according to the announcement. “The enormously increased costs for heating and electricity are added to this. With high inflation and rising energy prices, index rents have become an unacceptable cost trap and must also be limited more in the portfolio.”
Inflation, which is relevant for index rents, reached its highest level since the founding of the Federal Republic last year. Consumer prices rose by 7.9 percent on average over the year.