Ministry of National Dev How Germany implements rent control
An easy way to run a country is to leave all matters to the market.

But the market can get out of hand, just like property prices and rental.

Some people said that it is difficult to regulate rentals.

The Germans have found a solution. It is not perfect, but it is better than letting the market run out of control.

Here are the key elements of the approach taken by Germany.

a) For new rentals, they do not control the rentals.
b) For renewals they protect the existing tenant by regulating the rentals not to exceed 10% above the average rentals for the area.
c) The increase in rental should not exceed 20% over a three year period.
d) Special adjustment can be made for improvement in property, but in practice it is difficult for landlord to justify a large increase.

This approach is fair. It is market based, but does not allow the landlord to increase the rental for existing tenants to an arbitrarily high level.

It seemed to work quite well in practice.

This approach can be adopted for both residential and commercial properties. If it is implemented in Singapore, the rentals for retail space would not have gone up too high, leading to problems in the retail sector.

Tan Kin Lian

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