German federal rent regulation and reform

The German federal government has taken steps to regulate the housing market through the extension of the rent brake (Mietpreisbremse) regulation. Effective as of July 23, 2025, this legislation allows federal states to designate specific areas with tight housing markets for protection until December 31, 2029. In these areas, new rental agreements are generally limited to a maximum of ten percent above the local comparative rent.

Building on these measures, the government is pursuing further rent law reforms. An expert commission, which began work in September 2025, is tasked with addressing rent usury regulations and establishing penalties for non-compliance. Key objectives include introducing fines for violations of the rent brake and revising Section 5 of the Economic Offences Act. The commission is expected to present its findings by the end of 2026.

In September 2026, the government clarified that the commission’s deliberations remain confidential to encourage open exchange. Federal Justice Minister Stefanie Hubig (SPD) has since advocated for stricter sanctions, arguing that current requirements for landlords to merely refund overpaid amounts are “insufficient to deter illegal practices.”

Hubig’s proposed reforms aim to close loopholes used to bypass regulations, specifically targeting short-term rentals and the leasing of furnished apartments. While a legislative draft is under deliberation in the Bundestag, the Minister also addressed broader housing issues, including the ‘Building Type E’ model for construction and rejecting calls for the expropriation of large housing corporations, stating that “socialization is not a productive path.”