Germany protects its tenants against the coronavirus by preventing the end of the contract

Germany protects its tenants against the coronavirus by preventing the end of the contract

© Gtres
German Finance Minister Olaf Scholz in the Bundestag

That no tenant be left homeless by the coronavirus. This is the spirit of a bill that the German Government has just approved to try to protect the almost 45 million citizens (54% of the population) who live on rent and who, with the economic crisis that has unleashed the covid -19, may have difficulties paying their leases due to the fall in their income.

The text, prepared by the Ministries of Justice, Interior and Economy, foresees that exceptionally between April 1 and September 30 of this year, non-payment of the rent is not a reason for the termination of the contract. “No one should lose their home because as a result of the coronavirus crisis they fall into default problems”, assured when presenting the measure the Minister of Justice, the Social Democrat Christine Lambrecht. The obligation to pay the monthly rent, however, remains.

The measure has been drafted with the forecast that the hardest phase of the economic crisis will end by autumn. However, the bill contemplates the possibility of extending protection for tenants for several more months, with July 31, 2021 as the maximum limit.

The bill, which must now go through the Bundestag (lower house), puts on hold the German owners’ legal possibility of terminating a contract after two consecutive monthly defaults. The text also includes exceptions for late payment of electricity and running water. Also, contemplate a deferment of mortgage payments for struggling homeowners to satisfy monthly payments due to the slowdown in economic activity.

The conservative bloc of Chancellor Angela Merkel and the Social Democratic Party, the two members of the grand coalition, considered that it is, in the worst case, a deferment of payments for tenants with liquidity problems because of the coronavirus crisis.

But the owners don’t see it that way. The Casa y Terreno collective, an owners association, fears a wave of insolvent owners due to defaults. “For the plans known so far, the state wants to ignore in an unprecedented way the almost four million private people who rent homes,” said the president of the association, Kai Warnecke. In his opinion, the postponement should be possible only if the tenant tries to ask for housing help. In addition, the State would have to set up a special fund for tenants.

The real estate sector, meanwhile, applauded the government’s plans and urged it to take further steps in this direction. Andreas Mattner, president of the Central Real Estate Industry Association (ZIA), assured that it is “a good and important first step, which surely will not be enough to mitigate the consequences of the coronavirus crisis.” In his opinion, more measures will be required and with greater depth in the coming weeks. Among others, he proposed more aid, also for housing, and to increase from two to three the number of monthly defaults necessary for the termination of the contract. If not, he warned, the entire system of the real estate system may suffer.

Germany is for historical, cultural and economic reasons, a country of tenants. According to the Property Index 2019 of the consultancy Deloitte, Germany is the country of the European Union (EU) with a lower rate of own housing. Only 45.7% of Germans reside in an acquired home, almost 20 percentage points less than the next country in this ranking. In cities like Berlin this rate reaches 85%.

The measure to protect tenants was included in a comprehensive package by the German government to combat the economic consequences of the new coronavirus pandemic. With more than 28,000 cases and a hundred deaths, Germany is currently one of the countries most affected by covid-19.


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