Lessons from Germany: Tenant power in the rental market

Abstract

The second of our series of reports comparing the English and German housing markets explores the lessons that policymakers in England can learn from Germany – where renting, the dominant tenure, appears to offer both stability and security to its 40-million-plus tenants. The private rented sector (PRS) in England is growing rapidly, in part in response to the increasing unaffordability of home ownership and the declining supply of social housing. There is mounting concern that across a range of indicators it is a poor substitute for both of these main alternatives. Tenants enjoy limited rights, their tenancies are short, and rents – while in the short-term more affordable than buying – are rising faster than incomes, preventing tenants from saving for mortgage deposits or even meeting the everyday costs of living. The PRS does not need to be a poor relation to home ownership or social renting, however, and we can turn our attention to other countries in which the challenges presented by the PRS are managed with more success. This paper, the second of our series comparing the English and German housing markets, explores the lessons policymakers can learn from Germany – a country in which renting is the dominant tenure and which appears able to offer both stability and security to its 40-million-plus tenants. England can learn from Germany in areas of tenancy security, controls on cost, and tenant representation. We recommend greater balance between the rights of a tenant and the rights of a landlord in England through longer tenancies, help with the costs associated with renting (such as deposits and letting fees), and stronger, more formalised representation.