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Berlin agrees five-year rents freeze to tackle house price boom

The local government in Berlin has agreed to freeze rents in the German capital for five years as the city is battling high housing prices. The Berlin Senate’s majority, which is composed by the Social Democrats, Greens and the Left party, approved the decision after months of discussions.  

The plans will be sent to parliament, where they are expected to be approved and to take effect in January 2020. They also include measures to cap subletting contracts.

“We’re entering new territory,” said Berlin Mayor Michael Mueller. “Others talk about it, but we’re actually doing it.”

The clamp down on rental increases, one of the most extreme decisions taken by a Western capital in recent times, is being followed with close interest by other world cities. In Germany, the shares of local housebuilders and property companies fell after the announcement.

Pressure had been rising for the local government to act as, for the second year in a row, the German capital had recorded the strongest price growth rate globally, with a 12% increase year-on-year – according to data from Knight Frank. 

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