Once the capital of artistry and the party scene, Berlin finds itself battling a trend targeting older and lower-income residents. Gentrification, or the process of renovating a district to conform to middle-class tastes, has driven rental prices in the German capital too high for homeownership; in a city of three million people, only 18 percent of residents own their homes. In a new law, however, Berliners will see most rents in the city capped at 2019 levels for the next five years with limits on the amount that they can be charged based on condition and amenities, according to the New York Times.
“We have created an instrument that will stop the partially absurd price developments for the next five years,” Katrin Lompscher, Berlin’s senator for city development and living, said at a news conference on Friday. “It is up to politicians to create the basic conditions for lower and middle-class earners to be able to afford to live in Berlin.”
Critics call Berlin’s leftist government efforts to save the reputation of a real estate-bogged former-creative scene a hampering move, stating that growth in the property market is necessary and that the law will frighten off those willing to build affordable housing units. Real estate developers and members of the conservative party threatened to challenge the law on the grounds that it was unconstitutional, which stipulates federal government-set rents.
Jürgen Michael Schick, president of Germany’s Real Estate Association, warned about the negative effects the measure could have on the overall economy. “Limiting and reducing the income from rents will create uncertainty for investors and will ward off real estate developers from investing,” said Schick.
But lawmakers disagreed. Iris Spranger, the housing affairs spokeswoman for the city’s Social Democrats, said, “Three million tenants will benefit in the city.” She added, “After a long phase of galloping prices, rents will now be stopped, and that is sorely needed.”
First published in print by The Stillman Exchange on February 14, 2020.
