The German capital, Berlin, a city once known for its low rent, now faces a housing crisis, driven by a sharp increase in rent prices and unsuccessful policies.
By Ananya Devraj
Berlin’s soaring rents, increasing 85% between 2007 and 2019, are tremendously impacting the population, of which 80% rent their homes. Unemployment rose by 10.6% in Berlin in 2020, which resulted in a worsening financial situation for its citizens and increased their need for affordable housing. In response to soaring rents, high unemployment and financial instability playing roles in the housing crisis, the Berlin parliament voted on a rent cap, known as the Mietendeckel, on Jan. 30, 2020. This policy regulated the Berlin housing market by prohibiting any rent hikes for properties built prior to 2014 for five years while mandating rent reductions for certain high-rent properties. This policy was met with widespread opposition from landlords, with many insisting that their incomes are being compromised in a time of financial uncertainty. On the other hand, the Berlin Tenants’ Association strongly supported the Mietendeckel, with member Rainer Wild citing it as “the biggest and most important reform in the city since the fall of the Berlin Wall,” as reported in The ExBerliner.
However, the policy was short-lived. Germany’s Federal Constitutional Court abolished the Mietendeckel on April 15, 2021, ruling it unconstitutional as only the federal government had the authority to regulate rent prices. What was, to an extent, keeping Berlin’s housing prices stable, was now abolished. Without the Mietendeckel, according to The International Rent Index’s quarterly research, reported in “I Am Expat,” there was subsequently an immensely sharp increase in Berlin’s rents of up to 40%, rendering the capital the sixth most expensive city to live in across Europe.
Frustrated with the abolition of the rent cap, Berliners voted for an initiative titled “Expropriate Deutsche Wohnen and Co.” to encourage the city government to nationalize private real estate companies. The expropriation initiative called for the local government to buy up to 240,000 privately owned properties, according to The Business Insider, targeting companies like DW, which own more than 3,000 rental units in Berlin. Essentially, this would result in cheaper housing as prices for these units would be under the control of the public sector rather than landlords. Facing post-rent cap prices, on Sept. 27, 2021, roughly 59% of Berlin voters backed the initiative.
The citizens of Berlin believe that housing is a human right, and expect that public ownership of apartments would increase the accessibility of affordable housing. The referendum, conversely, has also been met with skepticism. In a statement to Reuters, Rolf Buch, CEO of a major real estate company Vonovia, said that these measures “do not solve the manifold challenges on the Berlin housing market.” This claim was further backed up by the capital’s newly elected leading party — the Social Democrats – adding that even though it will lead to an increase in public housing, the referendum failed to address the shortage in housing supply. Ultimately, Berlin faces a structural shortage when it comes to housing — not only are there not enough properties, but the existing ones are also unaffordable —, in which a sustainable solution would require both reduced rent prices and an increased quantity of housing.
One year later, in 2022, Berliners are still desperately waiting for the referendum to be acted upon, creating further frustration from the failure of previous attempts at stabilizing the housing market. In the meantime, according to EuroNews, only 90,000 of Berlin’s 1.9 million apartments are public, while the city is far behind on its plan to build 200,000 new units in the next 10 years. Perhaps, the Social Democrats Party is concerned that allocating money towards expropriation and buying back private housing will take away from the plans to build new housing, which is a more direct solution to the shortage. Nevertheless, Berliners need a solution now, one that will take up to 10 years to take effect.
The city now faces another issue; this shortage has snowballed into a growing refugee housing problem in Berlin. The Russo-Ukrainian War has pushed refugees and asylum seekers toward Western Europe, including Germany. The German capital was generous in its promises to provide shelter to incoming refugees, welcoming over 100,000 Ukrainians so far, as reported in InfoMigrants News. However, Berlin’s existing housing shortage amongst its citizens has led to an even more significant accommodation shortage for refugees. Additionally, the rising prices of gas and electricity, paired with the rising rents, have reduced the number of private offers by Berliners to take refugees into their homes. The government could no longer rely on its citizens to accommodate refugees, as rising expenses have caused the population to be apprehensive about privately welcoming refugees. The consequences of the housing shortage have now spread from Berlin’s citizens to both incoming and existing refugees and asylum seekers.
Unfortunately, according to another news organization Foreign Policy, Germany has been displacing hundreds of Afghani refugees that originally fled from the Taliban in order to make space for Ukrainian refugees. Berlin’s Senate Department for Integration, Labor and Social Services defended the move by claiming that it was “based on operationally necessary and difficult considerations” and that there was “no alternative.” In other words, the housing crisis has compounded to the point where it became structurally impossible to house all refugees. This has resulted in places such as the old airport and gymnasiums being prepared as temporary housing, but it is unclear what the long-term solution to this problem will be. Afghani refugees are suffering — many are uncertain of their futures, as they “don’t know where they’re sent to next,” according to Amiri, who is from an Afghan family of refugees. The well-being, safety, and living standards of Afghan refugees are being compromised.
In the post-pandemic era, there remains a lack of improvement in the housing market. Instead, the policies failed to address the scarce housing issue, a problem that now threatens the lives of both Berliners, new and existing refugees. This highlights the importance of accessible, affordable housing, especially in times of economic and sociopolitical instability. Not only has Berlin’s housing crisis worsened the standards of living for its citizens, but also for refugees and asylum seekers who are in need of safety. The current state of the market remains unsustainable and leaves a potential for it to worsen as the number of refugees continues to increase; Berlin needs a solution, soon, to prevent further damage. □