Berlin mayor defends rent cap as study blames it for squeezed market

Berlin’s controversial rent cap, introduced a year ago to control the soaring cost of living in the city, was a necessary “breather” for tenants in the German capital, Mayor Michael Mueller said on Tuesday.

“This is of course a disputed course,” Mueller conceded, while arguing that rent prices were out of step with people’s salaries.

The anti-gentrification law came into force on February 23, 2020. Since then, the rents of around 1.5 million flats in Berlin have been frozen at June 2019 rates.

Between 2022 and 2025, they are permitted to rise annually by a maximum of 1.3 per cent.

If a flat is vacated and put back on the rental market, landlords must adhere to the cap based on the previous rates rather than bumping up the costs.

According to the ifo institute, the measure has not only lowered rents, as intended, but also reduced the supply of rental housing available to apartment seekers.

“Purchase price growth rates in Berlin have been five to nine percentage points below the control group since the third quarter of 2020,” said ifo President Clemens Fuest, who co-authored the Munich-based institute’s study.

“This slowdown in real estate price growth illustrates the shortfalls that the rent cap has caused apartment owners,” said Mathias Dolls, another co-author.

He noted that the squeezed rental market was probably down to falling rents encouraging tenants to stay longer in apartments, while flats that become vacant are sold or used by the owners themselves.

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