CMS: Berlin tops list of European cities for best residential rent control policies

Berlin tops the list of major cities across European as the residential market which has the most positive control on rental caps, according to a survey by CMS.

Rent caps remain a controversial issue for the real estate industry. Consumers, however, are overwhelmingly positive about them across all six cities, with 71% in favour overall.

Almost eight of 10 CMS survey respondents rated Berlin’s governmental rent controls as either very positive (45%) or slightly positive (33%), followed by Amsterdam at 36% and 40%, for very positive and slightly positive, respectively.

This is one of the themes which will be discussed at Thursday’s ‘Cradle to Grave’ Investment Briefing in Paris. To reserve your place, please click here. We are also running another session in Berlin on September 18, please reverse your place here.

In Berlin, 1.6 million of the 1.9 million homes there are rented. The city has been experiencing population growth of around 50,000 per year, with rents doubling over the past decade. This sparked high-profile mass protests in the city in Spring 2019.

In response to public pressure, a five-year rent freeze is due to come into force in 2020, which sets caps for each neighbourhood, so anyone paying more can demand a reduction.

In Paris, new rent control measures were introduced in April 2019 under the Elan France 21 Law. Limits will only apply to new leases (first-time rentals or new tenants), while the price of rent will be calculated in euros per square metre, based on a property’s location.

A studio in the affluent 6th arrondissement, for example, will cost more per square metre than an apartment of the same size in the less well-off 20th arrondissement. In Amsterdam, rental homes that cost EUR 720 or less in base rent per month (2019 threshold) are regulated. These are considered social housing rentals. Above this rent rate the landlord is free to set their own rental price and determine annual rent increases.

Despite rent controls, the PRS market is generally strong in Paris, Berlin and Amsterdam. They are mature markets and benefit from a culture of renting property, unlike the UK cities CMS polled.

‘Cradle to grave’ real assets lifecycle is picking up momentum as a cohesive investment strategy.  Join Investment Briefings this Thursday in Paris, for a seminar focused on this emerging strategy. To reserve your place, please click here.

james.wallace@realassetmedia.com