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Insights

Regulation In The German Housing Market

Update for Investors: What legal changes will the new federal government bring?

The first quarter of 2025 confirms the high attractiveness of the German residential property market for national and international capital and shows that the market is stabilising. However, as the largest rental market in the EU, it is subject to strict regulation, which is also linked to political objectives. Certain changes had already become apparent before the early federal elections in February 2025 – for example, tighter regulations were expected with regard to the so-called rent cap and the temporary letting of residential space.

This report, produced in collaboration with CMS, provides an overview of market developments in the first quarter of 2025 and guides players in the German residential investment market in detail through the most important legal changes from the coalition agreement between the CDU/CSU and SPD for the 21st legislative period: 

  • Tenancy law – changes to the rent cap, index-linked rent and furnished and temporary lettings
  • Extension and amendments to the so-called conversion ban 
  • Changes to the municipal right of first refusal 
  • Plans for subsidisation measures 
  • Reform of the German Buildings Energy Act
Living room with sofa, mirror, wooden chair and plant Living room with sofa, mirror, wooden chair and plant
'The German residential market is particularly strong across Europe and the transactions in the first quarter of 2025 confirm its attractiveness for domestic and foreign capital. It is therefore particularly worthwhile for investors to familiarise themselves with the applicable laws in order to make optimal investment decisions.'

Jan-Bastian Knod | Head of Residential Investment Germany & Head of Healthcare Advisory at Cushman & Wakefield
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REPORT 2024: what investors need to know

The German residential property market is popular among investors – partly due to the high proportion of renters. Numerous laws exist to protect tenants, covering rental prices, construction measures, and energy standards. Germany's federal structure adds further complexity and leads to regional variations.

 Anyone active in the German housing market and looking to make investment decisions needs a clear overview of the applicable laws and the differences between the individual regions and cities.

In collaboration with Hogan Lovells, a report has been produced that combines market and investor expertise with legal knowledge, offering a comprehensive view of the subject and answering the following questions:

  • What types of residential tenancy agreements exist?
  • How are rents determined, and what does the rent control mean?
  • In which areas do special regulations apply?
  • And what do the recent changes in the Building Energy Act entail?
Vier Menschen besichtigen ein modernes Haus, Blick von oben Four people in a modern house, viewed from above
'Regulation requires careful attention from all players in the housing market. A thorough review of the legal framework, combined with the needs of the demand side and market developments, also presents interesting opportunities.'

Jan-Bastian Knod | Head of Residential Investment Germany & Head of Healthcare Advisory at Cushman & Wakefield
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CONTACT

Jan-Bastian Knod
Jan-Bastian Knod

International Business Partner • 60311 Frankfurt am Main

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