Berlin Government Reaches Deal to Freeze Rents for 5 Years

(Bloomberg) — Berlin’s government reached an agreement to freeze rent increases in the German capital for five years, dealing a blow to landlords such as Deutsche Wohnen SE and Vonovia SE whose shares slumped when the measure was first proposed in early June.The measure was approved at a Friday meeting of the parties that form the city’s governing coalition — the Left party, the Social Democrats and the Greens. That paves the way for adoption by Berlin’s legislature as early as next week, a vote viewed as a formality because the coalition has the numbers to push the bill through.“We are entering new territory,” said Berlin Mayor Michael Mueller. “Others talk about it but we’re actually doing it.’’The initiative put forward by the Left party’s Katrin Lompscher, head of urban development and housing in the city Senate, aims to ease the burden on tenants after a property boom caused rents in the city to double over the past decade. Investors have been spooked by the political outcry and a separate campaign to force Berlin’s largest residential landlords to hand over properties in return for compensation.One of the biggest losers has been Deutsche Wohnen, Berlin’s largest apartment owner and the focus of protests about rising rents and the shrinking supply of housing. The company’s shares are about 16.5% since the rent-freeze plan was announced at the beginning of June. Vonovia shares fell when the plan was set out, but have since erased losses.Berlin’s not alone in contending with skyrocketing rental prices and a shortage of affordable housing. Spain’s Socialist government pushed through a cap on rent increases earlier this year, and New Yorkers won historic rental protections from the Democrat-controlled state legislature.(Adds Berlin mayor’s quote in third paragraph.)To contact the reporter on this story: Andrew Blackman in Berlin at [email protected] contact the editors responsible for this story: Chad Thomas at [email protected], Patrick Henry, Rob UrbanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

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