Clemens Fuest, president of the Ifo Institute, argues that further tightening of Germany’s rent‑control system would actually increase the country’s housing shortage. He contended that such interventions do not relieve the market; instead, they exacerbate scarcity and restrict labor mobility. When fewer apartments are built and rental markets are locked into fixed price levels, young people and job seekers-who need to relocate for employment-suffer the most.
According to the Ifo’s analysis, rent regulation pushes investment in new construction downward and makes the use of existing housing less flexible. One visible consequence is the sharp gap between rents for new builds and rents for older dwellings: nationwide rents for new apartments are roughly 30 % higher, and in attractive metropolitan areas the premium can approach 50 %. These price differences make moving financially unattractive for many, leading to a decline in mobility. As older residents tend to stay in larger homes, younger individuals struggle to find suitable accommodation, further tightening the rental market.
Fuest therefore opposes any additional restrictions on the rent‑control policy. He stresses that the priority should be to foster new housing development and to improve the utilization of the current housing stock. Only by increasing supply and enhancing flexibility can Germany sustainably align housing demand with availability in the long term.
