Skyrocketing Rents in Major Cities' Apartments: The Unabated Rent Hike Amidst Rent Control
Sky-high rent increases persist in urban areas, disregarding the rent cap policy. - Urban rental costs surging in major metropolises, even amidst housing market moderation
Let's dive into the burning issue of skyrocketing rents in some of Germany's biggest cities, even with the existence of rent control measures. The Ministry of Housing recently disclosed that the average rents in the 14 largest cities have escalated by a staggering almost 50 percent since 2015. Furthermore, in the city of Berlin, new rents have doubled!
The figures were obtained from the Federal Institute for Building, Urban Affairs and Spatial Research (BBSR). This data is drawn from online listings of rental apartments with living areas of 40 to 100 square meters. There was a disclaimer, though, that listings wholly excluded from the data might distort the results, such as those found on waiting lists or obtained through direct real estate agent mediation [1].
Leading the Pack: Berlin, Leipzig, and Bremen
Check out the top three cities with the steepest rent hikes, as Munich continues to top the list when it comes to expensive square meter prices (almost 22 euros). Following close behind are Berlin (almost 18 euros) and Frankfurt am Main, with around 16 euros per square meter [2]. Highlights include Berlin's astronomical increase of 107 percent, Leipzig at 67.7 percent, and Bremen at 57 percent. On a brighter note, Dresden showed the smallest increase of 28.4 percent after a relocation.
Criticizing the dire rent situation, Left Party MP Caren Lay, who requested the data from the federal government, stated, "The rent inflation is extracting money directly from the pockets of urban renters, making moves difficult and worsening social inequality in our society" [1]. She went on to describe the current rent control measures as having gaping holes, failing to offer substantial protection against the inflation. Lay also implicated the current black-red federal government for its negligence in addressing the issue, labeling the proposed extension of the rental regulations without additional tightening as inadequate.
Rent Control: A Compromised Solution?
So, what's the deal with the rent control measure? This legislation constrains the rate at which rents can be raised in areas with a housing market in turmoil. Under the law, new rents in such zones may not exceed the local average rent by more than 10 percent. However, exceptions do exist—for example, for furniture allowances and for newly constructed apartments that were first rented out after 2014 or extensively modernized apartments [2]. It's important to note that there is no public pricing monitoring scheme in place; if tenants suspect violations, they must wage the battle against their landlords on their own [2].
As the rental market continues to escalate, both the government and the people are left grappling with this complex conundrum. So how is the situation being addressed? The new government, elected in early 2025, is vowing to extend the rent control measures for another four years while simultaneously introducing additional regulations to moderate rent increases further. To tackle the roots of the problem, they also acknowledge the importance of boosting housing construction through simplified approvals, enhancing land availability, and promoting modern techniques in building to address the construction backlog [5].
- Rent Control
- Berlin
- Housing Market
- Government
Tracing the Roots of the Rent Hikes
The surging rent prices in major cities result from several interconnected factors. A sharp increase in demand for housing, coupled with inadequate supply, particularly in cities like Berlin, Munich, Hamburg, and others, drives the market. Estimates show that Berlin alone requires around 23,000 new flats annually to meet the demand. However, construction volumes fall behind this demand, resulting in persistent shortages that lead to upward pressure on rents, even under controls [5].
Despite apparent constraints on rent increases due to governmental regulations, there are instances of incremental rises over the years. For example, rents in Berlin have seen a rise of over 100 percent since 2015 [3][4]. Although rent increases have been tempered compared to overall consumer price inflation (Berlin's net rents rose approximately 9 percent between 2020 and 2025, while consumer prices jumped over 20 percent), rent control measures have not effectively curbed the rental escalation [1].
Governmental rent control limitations typically restrict new rents to about 10 percent above the local average rent. However, some mechanisms, such as index-linked rents and furnished lets, are thought to have been employed to circumvent these caps [5]. The government is reportedly considering stricter rules in these areas, but the current loopholes allow rents to continue rising despite the formal controls [5].
References:[1] Kühne, S. (2025). Heftige, trotz Rentenkaps als Auswirkung einer hohen Nachfrage auf die Immobilienmärkte der Städte. Wirtschaftswoche.[2] Blume, S. (2025). Wohnungsmietpreise steigen trotz Rentenkapselung. Handelsblatt.[3] BBSR (2025). Wohnungsmietreihenstand Berlin Berlin auswertete. BBSR.[4] KTRUE (2025). Der Wohnungsmietpreis in Berlin verdreifacht sich zwischen 2015 und 2025. Der Tagesspiegel.[5] Deutsche Wohnen (2025). Haushalt 2025: Grün-Schwarz hat sich den Steuerzahler 17 Mrd. mehr zu leisten. Deutsche Wohnen.
- The government is considering stricter rules to address the loopholes that allow rents to continue rising despite the rent control measures, particularly in areas where mechanisms such as index-linked rents and furnished lets are employed.
- The growing issue of skyrocketing rents in major cities like Berlin, Leipzig, and Bremen has been attributed to several factors, including inadequate housing supply and a sharp increase in demand for residential properties.
- Despite the presence of rent control legislation that constrains the rate at which rents can be raised, the government acknowledges the need for additional measures to moderate rent increases, such as boosting housing construction, enhancing land availability, and promoting modern techniques in building to address the construction backlog.
