Social housing Berlin 2015: rents higher than on the open market

In March 2015, housing senator Andreas Geisel drew attention to a contradiction that turned the logic of social housing on its head: rents in Berlin's social housing stock averaged 20 cents per square metre more than rents for unsubsidised apartments in Berlin.

"It cannot be the purpose of social housing subsidies that welfare recipients pay more than people who earn good money," Geisel told broadcaster RBB.

How it happened

The cause lay in the financing structure. Since the follow-on subsidies expired in 2003, Berlin had received no additional federal funding for subsidised housing. Existing social housing units were subject to fixed rent ceilings based on historical cost rents rather than the current rent index.

While rents on the open market were governed by supply and demand and had even stagnated in some locations, social housing rents followed entirely different rules. The result was absurd: the very apartments intended for low-income households cost more than comparable unsubsidised ones.

Geisel's reform plan

The senator announced a regulation to tie social housing rents more closely to Berlin's current rent index (Mietspiegel). The aim was to reduce the rent burden on low-income households and to align the subsidy structure with actual market developments. Linking rents to the index was meant to both prevent excessive costs for tenants and allow for market-appropriate adjustments.

What the situation revealed about Berlin's market

The 2015 case showed how quickly subsidy structures can become outdated. The loss of federal funding had left a gap that Berlin could only partially close. For investors and property owners, the debate was an early sign that Berlin intended to restructure its social housing provision. In the years that followed, the state significantly expanded its programmes for affordable housing.