Berlin mayor proposes income-based rent limit

Berlin’s governing mayor, Franziska Giffey, has proposed limiting rents to 30 per cent of total household income in a fresh attempt to halt the spiralling cost of housing in the German capital.

The Social Democratic (SPD) politician was elected last September on a promise to tackle Berlin’s housing crisis by building 20,000 new homes annually – one-fifth as social housing.

She also set up a new housing alliance to bring housing interest groups – builders, landlords, politicians and tenant representatives – around the table, where she has attracted applause and sneers for her proposal.

“Imagine that no one in Berlin had to pay more than 30 per cent of the household’s net income for the rent, that would be a fair and comprehensible solution for all,” she said. “An affordable rent is different whether you are talking about a supermarket worker, a doctor or a governing mayor renting the apartment.”

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As part of her proposal, the mayor has suggested establishing a public authority where tenants could have their rent assessed and allow them approach their landlord for an adjustment if the monthly cost is higher than 30 per cent of their income.

This is the Berlin SPD’s second attempt in as many years to cut rental costs; last year, Germany’s highest court dismissed as unconstitutional a previous statutory rental cap.

Doom predictions

Many predict Ms Giffey’s 30 per cent proposal is as doomed as the rent cap, and for the same reason: it failed because Germany’s political system makes major housing questions solely a federal – not state – competence.

In an interview with the Tagesspiegel daily, Ms Giffey admitted her government would break its promise to build 20,000 housing units this year, something she blamed on Russia’s war with Ukraine and the exploding cost of building materials.

Her political rivals have seized on the missed housing target and flagged the 30 per cent proposal as a “political smoke bomb”.

The full proposals for reforming Berlin’s rental market will be presented on June 20th but the expectations – and challenges – are growing, not least among Ms Giffey’s own two coalition partners.

The Left Party wants a mandatory 60 per cent social housing quota in all new developments while the Greens want the commission to impose a five-year halt on rent increases – neither of which is considered practicable by Ms Giffey and her SPD.

Both Left and Green politicians have reacted with surprise to what one called Ms Giffey’s “jack-in-the-box” suggestion; others warned it could hurt the people it is supposed to help if landlords decide to rent only to the highest earners.

With 98.9 per cent of Berlin housing occupied, the opposition Free Democratic Party (FDP) and Christian Democratic Union (CDU) insist the problem is a lack of housing supply, not greedy landlords.

“Every time you get a pay rise, the rent rises too? Will the rental test centre be in touch if you get a better job?” asked Daniel Föst, an FDP Bundestag MP. “The proposal is neither thought-through nor will it solve Berlin’s problem with housing prices.”

But Ms Giffey and her allies believe the proposal deserves a fair hearing, and could even come into effect.

Berlin’s public housing associations already have such rental agreements with their tenants; it remains to be seen if private landlords come on board.

Meanwhile, a second housing time bomb continues to tick in Berlin. Last autumn, a majority of Berlin voters backed a proposal for the forced buyback of housing from Deutsche Wohnen, a corporate landlord with 240,000 apartments.

In March, Ms Giffey, an opponent of the initiative, set up another commission to examine the issue and report back within a year.