Moneybox

Berlin’s City Government Agrees to Freeze Rents for Five Years

The facades of residential buildings in Berlin.
Residential buildings in Berlin’s Friedrichshain district.
Tobias Schwarz/Getty Images

As in many other major cities around the world, rapid gentrification driven by a burgeoning tech scene and a shortage of housing has sent rents in Berlin skyrocketing in recent years. They’ve more than doubled since 2008, and rose 7 percent in the first three months of 2019—which, you know, is a lot for a town once renowned as a cheap, artist-friendly place where comp lit grads could bum around for years after college.

Unlike other major cities, however, it appears Berlin’s lawmakers are willing to take some truly radical steps to address their affordability issues. On Tuesday, local officials agreed to the outline of a plan that would freeze rents for five years in Germany’s capital. Technically, the pause would go into effect in 2020 but would apply retroactively to this week in order to keep landlords from raising rents at the last minute. The move would apply to 1.4 million properties, according to the BBC, but would exclude new constructions.

The freeze is just one of a few drastic ideas that have been proposed to deal with housing costs in Berlin , where about 85 percent of residents rent their home. Activists have been pushing for a referendum on whether to expropriate apartments from large landlords with more than 3,000 units, buying apartments back in order to turn them into public housing. The city has already purchased a few buildings, and Berlin’s mayor promised in January to nationalize 50,000 units belonging to Deutsche Wohnen, a mega-property owner known for sharp rent hikes.

The five-year pause could face a challenge in court. But the Social Democratic Party, which helps run Berlin, is already advocating for a nationwide freeze. The party is a junior partner in the country’s governing coalition, led by Angela Merkel’s conservatives, which could give it some sway. But the chancellor herself seems a bit cool on the idea, having said that “we must also provide an environment for people to want to build.”

The slightly funny and mystifying thing about all this, at least from a New Yorker’s perspective, is that housing in Berlin is still relatively cheap compared with what you might find in a high-priced American city. As Reuters notes, “A two-bedroom apartment in Berlin’s trendy Prenzlauer Berg neighbourhood costs about 1,500 euros ($1,700) a month.” That’s about $1,200 less than the median one-bedroom apartment in New York City, according to Zumper. The median one-bedroom in San Francisco costs $3,700 these days. Of course, incomes in Germany, and Berlin in particular, tend to be lower than they are stateside, so the rent burden could work out to be similar.

In any event, what might sound like a bargain to jaded, rent-burdened New Yorkers apparently qualifies as a crisis in Germany, where, just to reiterate, a major city has just put a half-decade moratorium on rent hikes while the residents and their political leaders seriously contemplate the idea of seizing property from landlords. This all may or may not be a good idea—it definitely seems like the sort of thing that would dissuade real estate companies from fixing up the apartments they own. Even if new buildings are exempt from the hard rent cap, it also sure seems like the sort of thing that might lead to a cutback in construction unless the government picks up the slack. There’s also the matter of what happens after five years are up—what limits will there be on what landlords can do once the freeze hits its expiration date? If you’re a democratic socialist in say, Brooklyn, though, I have a hunch that the only question you’re asking is how you can make Berlin’s plan happen.