Berlin agrees drastic measures to curtail housing costs

The city of Berlin has agreed drastic measures to curb the surging cost of housing in the German capital, including a five-year freeze on rents and the right for tenants to have them lowered if they exceed a government-imposed figure.

The new curbs — presented by Social Democrat mayor Michael Müller and members of his leftwing government on Tuesday — will apply to an estimated 1.5m apartments.

Supporters say the measures are needed to preserve affordable housing for low-income households, and to halt the spiralling rents of the past decade. But critics warn that the Berlin plan will drive away investment and exacerbate the severe housing shortage in the fast-growing city. 

“The issue of housing and rents is a central issue not just in Berlin. We know this is a matter for large cities around the world,” said Mr Müller, who presides over a coalition with the Greens and the far-left Die Linke party. “Large parts of the population are reaching the limits of their financial possibilities. Many cannot find flats in the centre of the city that are affordable. We have to react to this.” 

Mr Müller added: “This is a big step forward for Berlin tenants who will now have some breathing space.” 

Ramona Pop, a Green politician who heads the city’s economic department, said: “We now have the unique opportunity here in Berlin to avoid the kind of development that you see in London or Paris, where hardly any people live in the city centre. They have been pushed out to the margins.” 

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BERLIN, GERMANY - JULY 17: Michael Mueller, who is both mayor of Berlin and the vice-president of the Bundesrat, speaks at the appointment ceremony of new Defense Minister Annegret Kramp-Karrenbauer at Schloss Bellevue on July 17, 2019 in Berlin, Germany. Von der Leyen is relinquishing her post following her election yesterday by the European Parliament by a slim margin as new president of the European Commission (Photo by Cuneyt Karadag/Anadolu Agency/Getty Images)
Berlin mayor Michael Müller: ‘Tenants will now have some breathing space’ © Getty

Soaring rents in Berlin and other large German cities have become politically controversial in recent years, and a favourite campaign theme for left-wing parties.

According to a study by Immowelt, a property website, rents in Berlin have jumped 104 per cent since 2009. The average rent per square metre in the city stands at €11.60, a notable jump from €5.70 in 2009 but still lower than the 2019 prices in cities such as Munich (€18.60) and Frankfurt (€14.20). 

Under the new plan, landlords will be banned from raising rents for the next five years. The city will also give tenants the right to demand lower rents if they exceed official rent caps by 20 per cent. According to the new rental table presented on Tuesday, the maximum rent landlords can demand for recently-built apartments is €9.80 per square metre, with minor top-ups allowed only for properties with high-quality fittings or located in an especially desirable neighbourhood. 

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Property investors and construction groups voiced sharp criticism of the measures, warning they would deliver a heavy blow to the Berlin economy. “The Berlin senate [city government] has today agreed on a Berlin rental cap that will throw the capital into a property-political chaos. This decision will have negative consequences for Berlin that will last many years,” said Jürgen Michael Schick, president of Germany’s IVD property association. He described the draft law as an “attack on our constitution” and urged opposition leaders to challenge the plan in Germany’s constitutional court. 

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Mr Müller said he expected the rental cap to face legal scrutiny but was confident that it would be upheld. The law was expected to enter into force in early 2020, he added. 

The rental cap is expected to hit Deutsche Wohnen, the listed property company that owns about 100,000 rental apartments in Berlin, particularly hard. Deutsche Wohnen’s share price has lost more than 13 per cent since the Berlin plans were first floated in June. The company declined to comment. 

Berlin has gained almost 400,000 new residents over the past decade, taking the city’s population to 3.75m. The recent growth reflects at least in part Berlin’s new-found economic dynamism: long derided as a business backwater, devoid of important corporate headquarters, the city has emerged as a location for the technology and start-up scene.


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