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Could Berlin cap rents at €8 per square meter?

August 26, 2019

Berlin could cap residential rents at €7.97 per square meter, German media report, citing a draft law. The measure is still subject to discussions and could change, according to newspapers.

Protesters carry a banner saying 'Expropriate Deutsche Wohnen & Co'
Image: Getty Images/S. Loos

Berlin's urban development minister wants to cap monthly rents at €7.97 per square meter ($0.82 per square foot). Katrin Lompscher, of the Left Party, said the cap would apply to flats built through to 2013.

"Tenants could lower their rent by lodging an application with the district office," Lompscher's proposal reads, according to two newspapers that reported the plan on Sunday.
Read more: Protesters rally against 'rental insanity' in large German cities

The proposal would cap base rents at €3.42 per square meter for many units. Rents in GDR-era prefab buildings would stop at €5.64; coveted pre-1918 structures could cost €6.03. Apartments built in the German Reunification period from 1991 to 2013 could cost the maximum of €7.97 per square meter.

Berlin tenants seek landlord

The total would "cover charges for furniture and equipment," adding a layer of protection for residents currently forced to pay fees on top of the advertised rental sums. The proposal would exempt flats built beginning in 2014, and landlords who have renovated units within the past eight years could charge an additional 20%.

Read more: Offshore investment funds exploit Berlin's housing shortage

Opposition from business

In June, Berlin's governing coalition — the Greens, the Social Democrats (SPD) and the Left Party — froze rents for five years. City officials have tried to facilitate new construction and considered buying units from landlords.

Read more: Germany's soaring housing prices spark calls for reform

Lawmakers will vote by October 15. The measure could take effect in January.

The plan could hit large property concerns the hardest. With more than 115,000 flats in the German capital, Deutsche Wohnen has become Berlin's biggest landlord. Vonovia owns more than 42,000.

In his capacity as the SPD's national representative for small and medium-size businesses, banker Harald Christ called for Lompscher's resignation, telling Der Tagesspiegel that she had "failed miserably" and that, "miscast" in her role, she would "damage Berlin as a location for businesses." He called on Mayor Michael Müller to "stop this madness."

Read more: Germany's biggest landlord threatens Berlin rent cap backlash

The average basic rent in Berlin is €6.72, cheaper than in Hamburg or Munich, but some landlords charge €16-18 per square meter. At the national level, the Left and Greens — opposition parties to the government led by Chancellor Angela Merkel's Christian Democrats and facilitated by the SPD — have recommended expropriating rental flats from companies that lease out more than 3,000 units. That has also proved popular with renters, who have also called for companies to be stripped of rental flats.

Berlin's allotment gardens

mkg/aw (Reuters, AFP, dpa)

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