Berlin continues to push more progressive solutions to rent control, with the German city recently passing a new measure that links tenant income to how much they pay in rent. According to a CityLab, the decision will affect roughly a quarter of a million people living in 125,000 government-controlled apartments in housing projects across Berlin, as well as 280,000 additional apartments run by a group of four state-controlled companies. Starting January 1, tenants in these buildings will pay no more than a third of their income in rent (and in some units with particularly steep energy costs, that will drop to a quarter of their income). As the article points out, Berlin is in effect passing a law governing how much it charges for apartments it controls, and it reflects plenty of quirks in the German system. But the precedent it sets becomes even more important considering how this may affect the wider market. Berlin has been a fast-growing real estate market for the last few years; a BBC story notes the population is growing at 50,000 people a year, and rents are growing at 10 percent annually. A cap introduced earlier in the year limiting how much a landlord could raise rents appears to be working, based on early results.
The new law also stipulates that Berlin increase its total number of affordable apartments from 280,000 to 400,000, and set aside 55 percent of these units for low-income tenants. That's a big government commitment to affordable housing, in large part because so much of the city's population rents instead of owns (the only parties that voted against the measure were far-left ones that wanted even more progressive measures). These measures are easier in Berlin since rental costs are lower than many other big cities. But as many cities in the U.S. and Western Europe struggle with affordability issues, Berlin, despite a hot real estate market, may be setting a template for stabilizing rent.
Wibke Werner, a leader of Berlin's tenant association, told the BBC the law has gained support because Germans fear seeing their city go the way of others such as London, where rent has skyrocketed. These legal rent caps, he says, may offer a real chance to "save the social mix."
· A Month In, Berlin Rent Control Already Lowering Prices [Curbed]
· What We Can Learn From Berlin's New Rent Control Law [Curbed NY]