(de-news.net) – The proposal by Federal Justice Minister Stefanie Hubig (SPD) to reform German tenancy law has triggered criticism from a broad range of political actors and interest groups, highlighting pronounced fault lines both within the governing coalition and across the wider housing policy landscape. While the CDU/CSU parliamentary party and the property owners’ association Haus & Grund have demanded substantive revisions to the draft, the Greens, the Left Party, and tenant organizations have approached the proposal from the opposite direction, arguing that it remains insufficient in scope and ambition. Taken together, these reactions underscore the contested nature of tenancy regulation and the difficulty of reconciling tenant protection with investment incentives.
According to both Haus & Grund and representatives of the CDU/CSU, the draft bill risks imposing excessive regulatory constraints on the rental market without delivering meaningful relief in high-pressure urban areas. From their perspective, an accumulation of detailed rules could reduce flexibility while failing to address underlying shortages. Union lawmakers have therefore warned that adjustments are needed in several key areas, particularly with regard to index-linked rents and short-term leases, in order to prevent instruments originally intended to benefit tenants from becoming unattractive or counterproductive in practice. Although there is broad agreement on the value of increased transparency in the market for furnished apartments, critics have argued that the proposed flat-rate cap on furniture surcharges could itself become a source of legal uncertainty and conflict rather than simplification.
CDU/CSU stresses safeguards and construction incentives
The CDU/CSU has further emphasized the need to maintain protections for small-scale landlords, especially against tenants who fail to meet their payment obligations. In this context, Union representatives have insisted that any grace-period rules for rent arrears should be narrowly confined to situations in which the risk of homelessness is concrete and immediate. At the same time, there has been broad approval of the plan to raise the threshold for minor modernizations to €20,000, a measure widely seen as a pragmatic response to sharply rising labor and construction costs. More fundamentally, Union members of parliament have argued that reforms to tenancy law alone cannot resolve Germany’s housing shortage. In their view, sustainable rent stabilization depends on accelerating construction, reducing bureaucratic hurdles, and lowering building costs, so that investment is encouraged rather than deterred.
By contrast, the Greens, the Left Party, and tenant associations have framed the reform plans as a necessary but incomplete step. While they have generally welcomed stricter rules for furnished apartments and short-term rentals, as well as limits on increases in index-linked rents, they have maintained that the measures do not go far enough to rebalance power in favor of tenants. Accordingly, they have called for more robust enforcement mechanisms and broader interventions. Within this camp, the Left Party continues to advocate a nationwide rent cap as a central policy goal, whereas the Greens have focused on the introduction of penalties for landlords who provide misleading or false information.
Haus & Grund warns of shrinking housing supply
Haus & Grund, for its part, has warned that the reform package could weaken the housing market by discouraging private landlords from investing or modernizing their properties. Its leadership has argued that only a relatively small share of tenants would benefit directly from the proposed changes, while the overall effect would be a further reduction in incentives to expand or upgrade housing stock, thereby constraining the future supply of affordable housing. Specific criticism has been directed at the design of the grace-period rules for rent arrears, which the association considers insufficiently clear and predictable for private landlords, as well as at the proposed method for calculating furniture surcharges, which it has described as impractical and likely to generate disputes. In addition, Haus & Grund has cautioned that excluding energy-efficient modernization from index-rent calculations would undermine financial planning, particularly given that renovation costs have risen far more steeply than general inflation, and has characterized the cap on index-linked rents as largely symbolic in effect.
Under the draft legislation, the existing system—under which index-linked rents directly track inflation and have allowed significantly higher increases in recent years—would be replaced by a cap limiting annual increases to 3.5 percent. Furniture surcharges for fully furnished apartments would be restricted to a maximum of five percent of net cold rent, and short-term rental contracts would generally be limited to a duration of six months. The bill now enters the coordination phase within the federal government. At the same time, an expert commission on tenancy law, established in September, is working in parallel and has been tasked with, among other responsibilities, developing a framework of sanctions for violations of existing rent-control provisions.
