As a teenager, I was a Maoist. One of our favourite aphorisms from the “Great Leader Mao Zedong” was as follows: “Imperialism and all reactionaries are paper tigers.” The aphorism was actually not quite complete. In full, Chairman Mao actually said: “Hence, imperialism and all reactionaries, looked at in essence, from a long-term point of view, from a strategic point of view, must be seen for what they are — paper tigers. On this we should build our strategic thinking. On the other hand, they are also living tigers, iron tigers, real tigers which can devour people. On this we should build our tactical thinking.”
I contend that in the case of the Mietpreisbremse, exactly the opposite is the case. In the short-term, it certainly has the appearance of a harmless paper tiger. Many private landlords are simply ignoring it, and most tenants are turning a blind eye to rents that breach the regulations because they are simply happy to have found somewhere decent to live. In the long run, though, it would be quite dangerous to view the Mietpreisbremse as nothing more than a paper tiger.
On the 1st of July, as the anniversary of the Mietpreisbremse’s enactment in many German cities arrived, there was widespread stock taking. Tenants associations published numerous reports to show that a majority of private landlords were simply ignoring statutory requirements when reletting their apartments. Independent analyses drew the conclusion that rent control in this form had failed to have an impact.
How will politicians react? Will they shrug their shoulders and admit: “Yes, it was a stupid idea from the very start, we’re better off getting rid of it.” I think that is totally unrealistic. Or will we have to get used to the fact – like in Greece or Italy – that there are certain laws that, in practice, nobody follows? That is just as unrealistic.
It is much more likely that legislators will tighten up the existing regulations. We’re already hearing growing calls to do just that from the SPD, Green and Left parties. The CDU is holding itself back somewhat, but experience tells us that they will also bow to such demands sooner or later. For example, one of the changes that has already been proposed would allow tenants to claim back any excess rent they have paid over the years.
There have also been calls to introduce substantial penalties for landlords who ignore the maximum rental price limits. And finally, a draft law has been prepared to change the way in which rent indexes are compiled – amendments that will have a massively negative impact on landlords. I am sure that these ideas and demands will be followed by concrete deeds and actions.
On top of all this, tenants associations’ information campaigns will at some point start to bear fruit. Tenants who have accepted a monthly rent that is higher than legally permitted will take action against their landlords in increasing numbers and claim their rights under the Mietpreisbremse. Which is why, if I were to buy an apartment building today, I would very carefully analyse the lease agreements signed since the Mietpreisbremse was introduced to make sure that they comply fully with current legislation.