A proposed 5-year freeze on rentals to take effect from 18 June has the city on edge as the local authority braces for a court challenge and a plunge in investments from locals and foreigners.

Apreviously divided Berlin is now united against further rental increases after rents almost doubled over the past 10 years. About 80% of Berlin’s population are tenants with two major landlords. The city has the highest percentage of renters among all major cities in Germany. The country meanwhile has the highest proportion of renters among all European nations.

Due to its reputation as a bohemian and groovy city, Berlin attracts both businesses and artists, causing a massive influx of migrants from other parts of the country and EU. In the last 10 years, an annual average of 40,000 people make Berlin their home. This is much more than what the city can cope with in terms of accommodation. As a result, landlords have raised rentals commensurate with the unrelenting demand.

The subsequent backlash has been severe. In April this year, a group of 50,000 people from all over Germany protested over the rental increases and called for expropriation or nationalisation of real estate from big landlords (companies that own more than 3,000 units).

The local authority came to a compromise solution – a 5-year freeze on rental and caps set for each neighbourhood instead of expropriation. Property owners who flout therules face a fine of up to 500,000 euros.

The two largest landlords, Deutsche Wohnen SE and Vonovia SE breathed a sigh of relief and said this was better than descending into London’s situation where ‘only the super rich can afford to live in downtown neighbourhoods’.

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