The city of Berlin called on Tuesday for a five-year freeze on rents in the German capital beginning in 2020. Housing costs in the city have doubled over the past decade.
The city's proposed freeze would "protect against rent increases for 1.5 million apartments," according to city officials.
The move was announced after a city council meeting held Tuesday. Urban Development and Housing Senator Katrin Lompscher from the Left Party said, "The Senate (Berlin's executive body) has decided that there are legal grounds for capping rents." Lompscher will now have until October 15 to present a bill to be voted upon by the Senate.
Key points include:
- Rents across Berlin cannot be raised for the next five years; non-price-controlled apartments and welfare housing are exempted from the rule.
- Maximum rent levels will be fixed citywide and renters will have legal recourse if their rent exceeds that cap.
- Rent caps are to be implemented on January 1, 2020 and will apply retroactively from June 18 onward.
- The rent cap does not apply to new construction.
- Although there are exceptions in the case of renovations, landlords will be required to seek city approval for larger improvements.
- Property owners who ignore rules regarding renovation could face fines of up to €500,000 ($560,000).
Trouble for the coalition?
Berlin is governed by a three-party coalition of the Social Democratic Party (SPD), the Green Party and the Left Party. The SPD, junior coalition partner to Angela Merkel and her Christian Democratic Union (CDU) — as well as its Bavarian sister party the Christian Social Union (CSU) — has called for a similar freeze across the country.
The prospect of such a proposal could put further strain on Germany's already hobbled governing coalition, as Merkel has voiced support for investors in the past.
Proactive property owners
Haus und Grund, Germany's largest property owners' association, wasted no time in calling on its members to pre-emptively raise rents on Monday before the new bill was publicly announced.
A surge in prices has led some residents to call for property to be seized from landlords possessing 3,000 apartments or more. Those behind the initiative have already gathered more than 77,000 signatures in hopes of getting a referendum on the issue.