Berlin is freezing the rent on 1.5 million homes

By Douglas Broom

February 28, 2020

Berlin apartments. Adobe

For several years, Berlin rents have soared, more than doubling between 2009 and 2019. With more than eight in ten Berliners renting, residents struggled to keep up with rent increases that often outpaced wage boosts.

After demonstrations and data showing Germans were leaving Berlin for cheaper suburbs, the city parliament approved a law freezing rents on almost 1.5 million homes for the next five years. After 2025, the law will limit increases to 1.3% per year, to stay in line with inflation.

The law, which went into effect this month, has its detractors. Opponents cite studies finding that rent controls reduce housing supplies by 15% and push up uncontrolled rents.

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Average monthly rental cost of a furnished one-bedroom apartment in select European cities as of Q4 2019 (Euros)
Image: Statista

One of Berlin’s biggest landlords — Deutsche Wohnen SE — says it saw 14% wiped off its stock market value when the Berlin rent freeze was announced last fall, prompting the company to say it would put all its Berlin developments on hold. It also described the rent freeze as unconstitutional.

Berlin’s rents have grown quickly but remain more affordable than those in cities such as London, Paris or Rome. Today, the average monthly rent for a one bedroom furnished apartment in Berlin is the equivalent of around $1,200 USD.

This article is curated from the World Economic Forum website.

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