Alliance for affordable rents: what the 2012 Senate decision covers

On 4 September 2012, the Berlin Senate adopted an Alliance for Social Housing Policy and Affordable Rents (Buendnis fuer soziale Wohnungspolitik und bezahlbare Mieten). According to the Senate press release, the alliance aims to ensure that tenants of the six municipal housing companies can live well, securely and at affordable prices.

Public stock: from 277,000 to 300,000 apartments

The publicly owned housing stock is to grow from around 277,000 to 300,000 units, through both acquisition and new construction. Municipal housing companies will have access to state-owned land, allocated at market value or as a capital contribution. Allocation is based on housing development concepts. As a pilot project, 14 plots of land are being made available.

New rent limits for public housing

Stricter rules will apply to apartments in the public stock:

• Rent increases capped at 15% over four years, based on the Berlin rent index (Mietspiegel). Previously, 20% over three years was permitted.
• During rent increase procedures, a ceiling of 30% of household net income for net cold rent (Nettokaltmiete) applies.
• Modernisation costs may be passed on at a maximum of 9%.
• An arbitration body (Schiedsstelle) will mediate disputes between tenants and landlords.

Simplified apartment swaps

The municipal companies are setting up a joint pool for apartment swaps. This is intended to make it easier for older tenants to move to smaller units.

Implications for the broader market

These rules initially apply only to the state-owned companies. Their signal effect on private owners and investors is nonetheless relevant. The municipal companies will be more active as buyers, which can affect the market for apartment buildings. The preferential allocation of state-owned land also reduces the amount of building land available to private developers.

Source: Press release of the Senate Chancellery, 04.09.2012