State-owned housing companies allowed to raise rents from 2024 onwards

Tenants of the state-owned housing companies are likely to face higher rents.

According to a new cooperation agreement between the housing companies and the Senate, an annual increase of 2.9 percent will be possible in the future, as Senator for Urban Development Christian Gaebler (SPD) explained on Monday when presenting the agreement. It is to apply from 2024 and initially until the end of 2027, i.e. beyond the next parliamentary elections. On the other hand, tenants will get the opportunity to lower their rent if it reaches 27 percent of their net income. Previously, a limit of 30 percent applied.

State-owned companies own around 358,000 apartments

Gaebler acknowledged that the agreement was not an ideal solution and referred to a conflict of interest. On the one hand, there is a need for economically successful housing associations that are expected to handle new construction, energy-efficient refurbishment and higher costs for paying employees. On the other hand, tenants have a right to good and affordable housing. The new cooperation agreement with the six state-owned companies - Degewo, Gesobau, Gewobag, Howoge, Stadt und Land and WBM - is a good solution. Together, they own around 358,000 apartments. The figure of 2.9 percent annual rent increase is 40 percent below the legal upper limit and 20 percent below the limits agreed in the Alliance for Housing and Affordable Rents, Gaebler said.

Housing companies welcome planning certainty

Gaebler pointed out that there had been demands from the housing associations for larger rent increases. Senator for Finance Stefan Evers (CDU) called the agreement a promise of affordability. Gesobau board member and spokesman for the state-owned housing companies Jörg Franzen said that an agreement had been reached rather quickly after only two meetings. Acccording to him, the agreement is a compromise that gives the housing companies breathing room, he said. In his view, rent increases are unavoidable.

Housing stock to be climate-neutral by 2045

More than 50,000 new apartments are planned for the next few years. In addition, the housing stock is to be climate-neutral by 2045. It was clear that this could not be achieved with the rules of the previous cooperation agreement. Construction costs have risen by 20 percent in the past year and a half, he said, and so have interest rates on loans. The new agreement now offers the state-owned companies the necessary planning security. The previous cooperation agreement dates back to 2017, and last year it was also decided to freeze rents at the state-owned companies until the end of 2023. The new agreement replaces all previous arrangements.