Freeze to battle gentrification
Rental prices on more than 1.5 million Berlin apartments will be frozen or lowered for five years as a result of new legislation aimed at halting a recent spike in rents that is driving out older and lowerincome residents.
The measure, which takes effect this month, is an attempt by Berlin’s leftist government to slow the gentrification of a city that built a reputation on a creative scene but is being squeezed by real estate investors and infrastructure projects.
“We have created an instrument that will stop the partially absurd price developments for the next five years,” said Katrin Lompscher, Berlin’s senator for city development and living. “It is up to politicians to create the basic conditions for lower- and middleclass earners to be able to afford to live in Berlin.” Renting is more common in Germany than homeownership, with more than half of the country’s residents renting their homes. In Berlin, a city of three million people, only18 per cent of residents own their homes.
The new law caps most rents in the city at 2019 levels and limits the amount that can be charged based on the apartment’s condition and amenities.
Critics say the move will hamper desperately needed growth in the property market and frighten off those willing to build affordable housing in a city, once known for its “poor but sexy” party scene of the 1990s, that has become a rapidly changing European capital.
Real estate developers and members of Chancellor Angela Merkel’s conservative party have threatened to challenge the law.
They argue that it violates the country’s constitution, which stipulates that rents are set by the federal government.
“The rent cap is equivalent to an expropriation and is a catastrophe for Berlin’s real estate market,” said Juergen Michael Schick, president of Germany’s Real Estate Association.
The group has warned about the negative effects the measure could have since the city government proposed it last year.
“Limiting and reducing the income from rents will create uncertainty for investors and will ward off real estate developers from investing,” Schick said.
Lompscher said the aim was not to halt growth in the city’s housing stock, but to ease the strain on renters while private developers and city officials facilitate the construction of more housing. The city, Germany’s capital, plans to construct more than 60,000 apartments in the coming years, many of them lower-priced properties, she said.
A combination of factors led to a spike in rental prices, especially in the most desirable areas of the city.
In 2017, Berlin ranked internationally as the only major city where property values had increased more than 20 per cent from a year earlier, with rents keeping pace. > BERLIN