Experiencing Daily Life - Berlin welcomes back the qualified rent index.
Berlin's latest rental index reveals a mild growth in apartment prices, with the standard comparison rent sitting at €7.21 per square meter net cold for the reference date of 1st September 2023 - a 0.7% increase from the previous index in 2023. However, this new index can't be compared to the past one, according to Building Senator Christian Gaebler (SPD).
Law Requirements for Increased Rental Index Accuracy
A significant reason for this change is the federal rental index law, which has been in effect since 2022. This new law sets stricter criteria to create a more reliable rental index, demanding tenants and landlords to provide information about their living conditions and rental situations. Moreover, the index has a new table structure that includes a different classification of building years.
The purpose of the rental index is to provide tenants and landlords an idea of the standard comparison rent. The index states, "Counterparties learn from the rental index what height a requested rent is above and up to what point they can accept it. The landladies and landlords are provided with an overview of how high a rent they can increase or agree on."
While the previous rental index in 2023 was just a continuation without any survey, the current index is based on a comprehensive collection of rental and equipment data from over 16,000 apartments of varying ages and locations during multiple months. The index considers living conditions, building years, and equipment to determine a specific rental range for each apartment type. Depending on how well equipped the apartment is, the rent may reach the top of the range or vice versa. For instance, for a pre-war apartment measuring 90 square meters in a medium area, the rent amount lies between €5.74 and €11.05 per square meter.
The importance of the standard comparison rent is that it serves as a limitation to rent increases and offers a chance for landlords to increase rents during ongoing rental agreements by offering a cap. In Berlin, landlords can only increase the rent by a maximum of 15% within three years as long as they remain below the current rental index rate - thus setting the upper limit for rent increase.
The Berlin Tenants' Association is seeing both sides of the coin concerning this new index, praising the absence of widely expected significant increases in the standard comparison rent, but expressing concern over potential big rental hikes in apartments with strong upper limits in the 1919-1949 building year category in simple living conditions compared to the previous index in 2023, mentioning increases up to 18% in some cases.
On the other hand, the housing organization Haus & Grund points out that rents for newer apartments in equivalent locations have actually dropped vis-a-vis size. Refuting activists' demands that aim to change rental laws to favor tenants at the expense of landlords, Haus & Grund claims, "The often-publicized trend that rents always rise does not't exist."
However, the Tenants' Association recently sounded an alarm about the Berlin housing market challenge, publishing a study that shows smaller households often pay around 40% of their income on average as rent.
Gaebler - the Building Senator (SPD) - attributes the challenging situation mainly to the federal government, urging them to implement the promised extension of the so-called rent brake and look into proposed exceptions to help stabilize the rental market. The rent brake ensures the rent at the start of a new agreement is at most 10% higher than the local comparable rent.
Read also:
- Amidst the changes in Berlin's real estate market, rent prices for pre-war apartments in medium areas have seen a potential increase of up to 18% within the 1919-1949 building year category, according to the Berlin Tenants' Association.
- The federal rental index law, implemented in 2022, has significantly impacted the rental index process in Berlin, requiring tenants and landlords to provide information about their living conditions and rental situations for a more accurate index.
- In response to the new rental index, the SPD's Building Senator Christian Gaebler emphasized the importance of implementing the promised extension of the rent brake to help stabilize Berlin's challenging housing market and address the issue of smaller households paying around 40% of their income on average as rent.
