Since 2015, Berlin’s rent-control laws have been reported to bring down the cost of living, which was at astronomical rates until the city installed its “rental price brake.”
Figures collected by German real estate agency ImmobilienScout24 show that the average cost of new rental contracts dropped by 3 percent within a month of the legislation’s introduction. Most people in Germany rent properties instead of owning them. Because Berlin’s combination of “rent brakes,” large apartment building projects and tenants’ rights is working, the city could provide solutions to the full country’s housing affordability crisis.
In a report released by Germany’s real estate industry trade association Zentraler Immobilien Ausschuss (ZIA), the agency predicted that the country’s property rental rate, which has been high for quite some time, will soon cease and may even begin to reverse. ZIA predicts that the cost of new rental contracts and legally allowed rent increases will both begin to drop sharply. This is guaranteed in Berlin, likely in Munich and expected in Frankfurt and Hamburg, according to the report.
Rental prices should be further stabilized by new housing projects happening within the next few years. Germany has around 300,000 new homes waiting for approval or completion and most of them will be built in Berlin, Munich, Frankfurt, Hamburg, Dusseldorf, Stuttgart and Cologne. ZIA reports that these homes will be up for rent right as property prices are set to fall. The hope is that more realistic prices will entice people to move to the Big Seven German cities.
Could the idea work in Philadelphia?
Read the full story here (via CityLab)
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