Widespread criticism over Berlin Senate's plans to set rent price cap for apartments

Source: Xinhua| 2019-08-26 22:45:12|Editor: ZX
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BERLIN, Aug. 26 (Xinhua) -- Apartments in Berlin should have an upper rent price limit of just under eight euros per square meter for most leases regardless of location, according to a draft plan by the Berlin Senate reported on by German media on Monday.

Depending on the first occupancy and the furnishings of an apartment, the basic rent would be limited between 3.42 and 7.97 euros in the plans drawn up by Berlin urban development senator Katrin Lompscher from the Left Party.

"We want to set a stop sign against speculation, for affordable rents and a social city," said Lompscher.

The goal was to secure "a socially mixed city for the future," emphasized Lompscher, adding that it was "necessary to intervene in existing rents" to achieve this goal.

German media reported that the proposal envisaged capping all rents at the level as of June 18, 2019, even for new rentals.

The only exceptions would be new buildings ready for occupancy as of Jan. 1, 2014 and publicly subsidized residential constructions, according to German media reports.

The basic rule for setting the prices was that the older the apartment building, the lower the rent, regardless of an apartment's location in the German capital.

The German real estate industry reacted with shock and criticism to the bill. Andreas Mattner, President of the German Property Federation (ZIA), criticized the plans as "an attack on the industry and all owners".

Germany's largest residential property company Vonovia feared that the plans for an upper rent limit in Berlin would have major impact on business.

Should the plans become reality, they would burden rental income in 2020 with 20 to 25 million euros, the German housing company warned on Monday.

German politicians also voiced criticism of the plans, including from the Social Democrats, which together with the Green Party and the Left Party, lead the Berlin Senate.

"We do not need quick shots, but a legally reviewed draft law that must also stand up in court," said Iris Spranger, SPD parliamentary group spokesperson for housing policy, told the German Press Agency.

Kai Wegner, chairman of the Berlin conservative CDU, went further, telling the Berliner Morgenpost that "this rent cap, as it is apparently planned, will not be able to stand up in court".

"Of course we have to look at the law as soon as it is available," said Wegner, but stressed that he had no doubt that the law would be unconstitutional and he would "therefore file a complaint to review the norms".

Director of the German Free Democrats' (FDP) parliamentary group, Marco Buschmann, said that deficiencies could not be managed "with any rent caps".

"No one will build, renovate or maintain anymore," argued Buschmann and stressed that the designation of new building land and the lowering of building and bureaucracy costs would be more helpful in tackling the housing crisis.

Back in July, the Berlin Senate had agreed to freeze rents for 1.6 million apartments for five years from 2020.

The regulation was the first of its kind in Germany and was intended to provide tenants in Germany's capital with a "breathing space," argued the Senate.

Since the end of 2015, prices for residential real estate have risen by 22 percent across Germany, according to the Federal Statistical Office (Destatis).

During the last four years, above-average price dynamics were seen in condominiums in Germany's major cities, where prices rose by almost 41 percent, the statistical office found.

The German central bank, the Bundesbank, has repeatedly warned that apartments and houses in cities are overpriced by up to 30 percent.