Why Berlin is paradise for renters: a 1,100 sq ft flat could be capped at US$886 a month under new rules

Even though it was long considered a paradise for renters with prices so cheap that hardly anyone wanted to buy their own flat, steep increases in recent years have rattled Berlin to the point that the city government is working on plans to impose a five-year freeze on rents – and possibly even to force some landlords to cut their prices.

The draconian measures being drafted by the city housing department comes amid rising pressure for action from the public, where about 85 per cent of the residents are renters with only about 15 per cent owning their flat.

A doubling in rents over the last decade, albeit from strikingly low levels, has also revived nostalgic memories of the Communist past in the eastern half of the city, where the clamouring for dirt-cheap rents after a half-century of socialism is especially loud and home ownership rates are even lower.

“We want to put up a ‘stop sign’ against speculation and fight for affordable rents in a social city,” said the Berlin city government minister in charge of housing, Katrin Lompscher, a local leader in the Left party that traces its origins to the Communist SED party.

She is also looking into public demands to expropriate property from some of the private companies that, critics say, have raised rents excessively since acquiring formerly public housing at rock bottom prices more than a decade ago.

It is, however, uncertain if the other two parties in the Berlin city coalition government, the Social Democrats and Greens, will agree to such extreme measures.

“We do want to make Berlin unattractive for international capital investors who are hunting for large profits with these steps like the cap on rents,” Caren Lay, a member of the federal parliament for the Left party, told South China Morning Post.