Rent control and the "buyer pays" principle are now set to come into effect

As early as summer 2013, the German states had called for improved protection against excessive rents and for real estate agent commissions to be paid according to the "whoever orders, pays" principle. In its plenary session on March 27 of this year, the Bundesrat (Federal Council) approved the law. It is expected to come into force in June .

Previously, the rent for many properties could be increased by agreeing to higher rents when re-letting existing apartments. These higher rents often exceeded the local comparative rent. With the introduction of the rent control law, which aims to curb rent increases in tight housing markets, this practice will be virtually impossible. In the future, the permissible rent for a new tenancy may not exceed ten percent above the local comparative rent.

The rent control measure is initially intended to apply until December 31, 2020,

There are exceptions: The new regulation does not apply to newly constructed apartments that were first rented out after October 1, 2014. The initial rental of an apartment after extensive modernization is also exempt from the restriction.

For owners, this means:

When renting out a property, check whether it is located in an area with a tight housing market. Is the upper limit, i.e., the local comparative rent plus a maximum of ten percent, generally observed there?

After extensive modernization, check whether the rent control law applies to your apartment.

If you have already agreed on a rent that is above the rent control limit, you do not have to lower it either during the current tenancy or when renting out the property again.

With the aim of creating a fair balance between the interests of landlords and tenants, the new law also strengthens the so-called "whoever orders, pays" principle regarding real estate agent commissions. In the future, both tenants and landlords will still be able to engage real estate agents. However, the market-based rule "whoever orders, pays" will now apply.

For owners who want to rent out an apartment, this changes the previous commission practice. While it will still generally be the landlord who commissions the real estate agent, whereas previously the future tenant paid the agent's fees, the apartment owner, as the client, must now pay the commission themselves.

Only if the tenant has explicitly commissioned a real estate agent to find a new apartment, must he pay the commission himself, which is usually two months' rent plus VAT.

Furthermore, the legislator has ruled out the possibility of the landlord passing the costs on to the tenant or adding them to the rent.

Source: www.bundesrat.de