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The Berlin Rent Cap is expected to become law in January next year and will apply to 1.5 million privately rented properties, but not to social housing or new builds. The rent cap is likely to be backdated to the date of the announcement, 18 June, to prevent landlords from pre-emptive rent rises between now and January.
It is being introduced by the left wing Social Democrats (SPD) who control Berlin and would also like to see it rolled out nationally.
German finance minister, Olaf Scholz, indicated his support for the plan saying he wanted to prevent Berlin rental market replicating London and said: “If we don’t want to end up like London, where even lawyers and doctors have to live with flatmates, because they can’t afford their own apartment, then we have to do something about it.”
The average monthly rent for a furnished Berlin flat is approximately €1,100, or roughly £979, with rents rising by 7% in the first quarter of this year, and doubling over the last 10 years.
Under the cap, landlords who want to carry out renovation work on a property will also have to seek official approval for any rent increases above 50 cents per sq metre. However, exemptions for new builds means that their costs to rent could increase sharply.
German Chancellor, Angela Merkel, is critical of the plans and warned: “We must also provide an environment for people to want to build”.
However, Katrin Lompscher, Berlin’s senator in charge of housing, said: “Housing is a basic need. With this new law we want to put a halt to the severe increase in rents in recent years and to calm the overheated rental market in Berlin.”
Surveys indicate 85% of Berliners rent their homes rather than owning them.
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