Renewed demands for commercial ‘rent brake’ in Germany

We have reported about moves by the Green Party in the Bundestag to accelerate change in the area of Share Deals and the avoidance of the Grunderwerbsteuer, or land transfer tax, by corporations when acquiring German property assets. The party is also actively trying to push through a draft bill to extend the so-called Mietpreisbremse, or rental brake, from the residential sector to include commercial properties.

The Greens are being joined by demands from the far-left Die Linke party for the right of tenant companies to far-reaching rent reductions in commercial premises as a result of the coronavirus pandemic. Die Linke is looking for a 30% legal reduction in rent for companies getting into trouble because of coronavirus. This should be increased to 50% if the company is forced to close completely or partially as a result of lockdown, while there must be a moratorium on evictions triggered by missed or late payment of rent due.

The Greens have ambitious plans for their initiative. They are demanding the introduction of a rent brake for commercial tenants, particularly small businesses, and greater protection for these businesses against eviction. The rent brake would apply to property markets deemed by their respective Länder state governments to be ‘tight’. For the Greens, these are markets where companies with up to nine employees and annual turnover of up to €2m would have problems renting premises on “reasonable terms”. Such companies need firmer protection against eviction, and the right to extend their existing lease contracts on unchanged terms, claim the Greens.

This is at least the third attempt by the Greens to have their motion enacted into law, after at least triggered discussion in the Bundestag in 2018 and 2019. Simultaneously, the state of Berlin had introduced measures to prevent owner-managed small businesses from being crowded out of their affordable premises, and while the Länderkammer, or Chamber of States, tried to motivate the federal government to consider the bill, nothing came of it. The government’s response then was that “no reliable and robust data were available that would indicate a structural and considerable imbalance between landlords and tenants over commercial space." In other words, not interested.