Ten years ago, Berlin’s housing was dirt cheap. So cheap that you could rent an entire, huge apartment just for yourself. Then word got out, the city got cool, and the influx of hipster migrants drove rents up, pushing locals and regular immigrants to the outskirts.
It’s a clichéd story, one which has been told from New York to San Francisco, from London to Barcelona. But unlike those cities, Berlin is doing something about it. A new law goes into effect on January 1, 2016, capping rents for the quarter of a million people who live in the city’s public housing. In Berlin, rents for public housing are often higher than in the private market (more on that in a second), and the new law will reverse this.
The city’s poorest residents will pay no more than one third of their income on rent. Apartments must be under 540 square feet, and the maximum subsidy will be $2.68 per 11 square feet, and if the heating costs are unusually high, the cap is lowered to 25% of income. Other than that, the rents will be linked to the wages of the people who live in them, which seems very sensible.
The law has come about, says local newspaper the Berliner Zeitung, because the companies that administer public housing are often charging more than the regular private market. This happened because, in order to incentivize private companies to build more public housing, Berlin offered a big subsidy on rents, enabling the companies to effectively overcharge. When the subsidy was cut, the companies were allowed to charge the tenants instead.
This change won’t have a direct effect on city-wide rent rises, but it does apply to tenants of privately-owned “public” apartments, so they won’t get priced out of the market. This offers the kind of rent security that people on low income seldom enjoy. It also proves that Berlin is serious about reforming the rental market.
This year, several new laws have been passed to address the problem, and hopefully to head off unsustainable rent hikes before Berlin turns into another Manhattan or Central London, where only the rich can afford to live. At the beginning of the year, the courts ruled that landlords could evict tenants for subletting their apartments on Airbnb, although in terms of curbing rent rises, it might be better to stop landlords renting their own apartments via the service.
And at the beginning of this month, November, a new law came was passed regulating the Anmeldung, Germany’s residence registration, making it harder for tenants to do off-the-books subletting.
Taken together, these changes make it trickier for people to drop in and out of the city, pushing rents up as they do so, while making little difference to long-term residents. Like most German bureaucracy, it is slow, methodical, and relentless, and will probably end up working.