Top Cities and Neighbourhoods

Berlin’s Rent Cap Puts a Dent in Housing Supply

03.

December 2020

Between September 2019 and September 2020, the number of rental flats available in Berlin has decreased by 41.5 percent. This is the upshot of an analysis run by the ImmobilienScout24 real estate portal (source: www.immobilienscout24.de). The fact that so few rental flats are offered in Berlin is apparently attributable not to the coronavirus pandemic but primarily to the effects of the rent cap imposed by city hall.

As it so happens, the contraction in flat listings is limited almost entirely to existing flats built before 2014. The number of available flats that were completed since, by contrast, has increased by 6.7 percent. The rent cap context is impossible to overlook because flats completed in 2014 or thereafter are exempt from the rent cap.  

Owner/Developer Housing Companies Pulling out of Berlin

Striking to note is also that the rental housing supply in other German metropolises, rather than contracting, has actually gone up over the same period of time. In September 2020, the volume of rental flats on the market in Hamburg, Munich, Cologne, Frankfurt am Main, Stuttgart and Düsseldorf had increased by an average 35.3 percent year on year. In other words, the situation in Berlin is special.

The notion is confirmed by a report that many housing companies that develop their own buildings are increasingly shifting their projects from Berlin to neighbouring Brandenburg. According to a survey conducted by the Berlin-Brandenburg chapter of the BFW Federal Association of Independent Housing Companies, three out of four (75 percent) of the respondent companies intend to shift their activities beyond the city limits (source: www.bfwberlin.de). In answer to a similar survey done in August 2019, only 41 percent of the companies had voiced their intention to build in Brandenburg rather than in Berlin.  

Housing Shortages Could Worsen

According to the survey, a quarter of all contractors and property developers have stopped buying properties in Berlin and are planning to change their business lines. Analogously, the survey found that many investors, including insurance companies and pension funds, will stop committing themselves in housing development projects in Berlin.

The BFW state chapter therefore worries that housing construction in Berlin could slow down due to the rent cap. If it did, it would seriously exacerbate the housing shortage in Germany’s first city, as supply would continue to lag far behind demand.

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