As rents heat up, Germany wants a freeze

As renters around the world echo the concerns of Jimmy McMillan (read: the rent is too damn high), some countries are taking drastic measures to cool off hot rental prices. 

Driving the news: Germany has proposed a plan to cap rent increases at 6% in cities with high demand and freeze rent hikes entirely in the rest of the country for three years, as it looks to curb record-high rental prices amid a housing shortage, per the Financial Times

Why it matters: Germany is far from the only country contending with skyrocketing rents. Other crafty nations across the globe are devising ways to ease renters’ pain.  

  • Vienna has been dubbed a “renter’s utopia” for its robust public housing program where 80% of the city qualifies, and once you’re in, qualification never expires.

  • The Netherlands is expanding rent control to over 300,000 more homes, pegging rent to inflation, cutting rents by an average of €190, and fining overcharging landlords.

  • Spain is going one step further, replacing a system that pegs rent increases to inflation with an index that will always keep rent hikes capped below inflation levels. 

In Canada: Speaking of countries where rents have gone through the roof, the average asking rental price in Canada hit new highs in July, with rental demand only set to go up.

  • Across Canada, landlords can only increase rent once a year. Still, only Ontario, BC, Manitoba, Québec, PEI, and the Yukon have caps on the percentages of hikes.

  • Of these, Ontario and PEI, have both recently dabbled in rent freezes. That said, Ontario followed up its 2021 freeze by raising its annual rent hike cap this year. 

Yes, but: Some economists have called the effectiveness of rent control into question, arguing that it only really helps existing tenants—as landlords aren’t stopped from hiking up rent for new renters—and that it discourages the construction of new rental units.—QH