Red-red-green compromise: rents in Berlin should be capped - even retroactively

In Berlin, the recent sharp increase in rents should be frozen for five years. That's what the coalition committee agreed at its six-hour Friday night meeting, participants said. "Habemus Mietendeckel", tweeted Berlin's Greens parliamentary leader Antje Kapek.

Habemus #Cover cover pic.twitter.com/JmiQMC0Waz

The law is intended to cover rents for around 1.5 million apartments built before 2014. It is due to enter into force retroactively to June 18, 2019 at the beginning of 2020 - on which day the Senate had decided on the first cornerstones. In addition to the actual rent-stop, various flanking measures are planned.

First, the red-red-green Senate but the bill must still decide and vote on the House of Representatives. For other major cities in Germany, the model with which Berlin entered new territory could be interesting.

The initially envisaged possibility to allow tenants a lump sum in addition to the cover, if they spend more than 30 percent of their net income on housing costs, is reportedly off the table. It would have meant intervening on a broad front in existing leases.

The background for the Mietendeckel plans is the tense housing market in the capital. In some parts of the city, ordinary earners hardly have a chance to find an affordable place to stay. According to the Federal Ministry of Agriculture, rents for free apartments have doubled to an average of € 11.09 per square meter net in 2018 in 2018.

An analysis of the Mietendeckel plans in Berlin can be found here: Entry drug into the planned economy

The rise in rents in Berlin is thus stronger than elsewhere in Germany. This causes heated discussions in the city, an initiative has even strained a referendum on the expropriation of large housing companies.

But the rents cause great stress throughout the country. According to a survey from September, every second tenant in Germany transfers more than 30 percent of his household net income to the landlord. For every fifth tenant household, the burden is therefore even more than 40 percent.