After months of discussion, the German parliament has agreed measures to control sharp rent rises in areas under housing pressure. Nearly 60 percent of people in Germany rent their homes.
The law will restrict new rental contracts in areas of high demand to within 10 percent of the average local rent. In areas of high demand such as the major cities and towns with universities, rents are currently rising by 20 percent to 30 percent.
Under the new law, responsibility for paying agency fees will be transferred from tenants to the owners or landlords who commission the agents. Until now costs of around two months rent, in advance and in addition to deposits, have been charged to incoming tenants to cover real estate agent fees.
Federal Minister of Justice and Consumer Protection Heiko Maas said after the vote on Thursday: "This is a really good day for tenants in Germany."
Maas said the cap was "important for average earners, for people on limited incomes and for people with children looking for a larger apartment, without being driven out of their areas."
Maas said he expects the measures will benefit about 400,000 tenants every year. "We do not want people on average incomes be pushed to the outskirts," he said. Apartments are not a commodity and people's homes and should not be traded like shares on the stock exchange, he added.
The Bundesrat, the upper house of German parliament, still has to approve the law. The new measures are due to come into force on June 1 and will have to be adopted state-by-state, with each one deciding in which regions the measures will be applied.
The German Tenants' Association called on the authorities in the regions under housing pressure - such as the capital Berlin, Hamburg, Bavaria and North Rhine-Westphalia - to implement the new measures as soon as possible.
The caps do not apply to newly built housing or homes that have been extensively renovated. The coalition government wants to encourage new building projects to alleviate current housing shortages.
Green party politician and chair of the Committee on Legal Affairs, Renate Künast, accused lawmakers in both the grand coalition government of the Christian Democratic Union and the Social Democratic Party of taking far too long to come to an agreement over the rent rise cap. Rents had risen still further in the intervening months the coalition had taken to agree on the measures, she said.
The Bundesrat is expected to debate the new law on March 27.
jm/sms (epd, dpa)