Around the world, countries and cities from New York to Dublin use rent controls to keep homes affordable. In 2015, Berlin joined the ranks of those cities that regulate their rents, with the introduction of the Mietpreisbremse – literally, a brake on rent prices.
The German capital’s rules prevent landlords from increasing rents by more than 10 per cent of the local average. These controls were introduced specifically to avoid the development of a London-style housing crisis in Berlin.
Avoid a London-style housing crisis
While the design of Berlin’s controls link price increases to the market – if all landlords in an area hike rents by the maximum allowed, then the average on which the ceiling is based increases – the evidence suggests that regulation has slowed the pace of rent increases.
Over the first year of the Mietpreisbremse, Berlin’s rent increases have slowed – in fact – in the first month, rents fell by just over three per cent. Since then, year-on-year rent rises have fallen to five per cent, down from 6.5 per cent the previous year.
In the first month, rents fell by just over three per cent
Although the policy’s focus help low- and middle-income households, research has shown that the greatest impact has been among properties with high rental values. This may be due to the structure of this form of regulation, which still relies on the market to set an ‘average rent’. Instead, rent controls should define affordability based on affordability for tenants and should be set in consultation with a tenants’ union.
Nonetheless, Berlin has shown that regulating rent rises can help slowdown increases and prevent families from being priced out of their homes and neighbourhoods.
The London Housing Campaign is calling for the Mayor of London to have the powers to control rent increases within and between tenancies – and once the Mayor has these powers for rents to be frozen for five years to return rents to affordable levels.
London Housing Campaign 