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Berlin’s state senate passed a new law that will put a cap on rent in the city.
The new law was the result of talks between Berlin’s major political parties. It will affect around 1.5 million apartments in the city built before 2014. However, the law still needs approval from the state parliament. Once it secures approval, it will take effect at the start of 2020 and will be effective for five years.
Under the new law, rent will be capped with the upper limit of €9.80 (around $11) per square meter, which is a substantial decrease from the current average rent of €11.60 (around $13) per square meter. The law will also allow tenants to sue landlords who raise their rent above the limit.
Rent in the city was cheap in the late 1980s when the wall that once separated West Germany and East Germany was demolished. However, since the 1990s, many people have moved into the city, causing rent to go up. Eventually, the soaring rent drove many residents away and forced them to move to the suburbs.
Reactions to the law have been mixed. One real estate analyst said that the public will support drastic measures that will make housing affordable. Some residents in Munich are even pushing for a similar law in their own city.
In contrast, the law was criticized by the real estate industry and some politicians. According to experts, the new law might result in landlords neglecting their properties. The mayor of Hamburg also said that this law could even discourage investors from buying new homes.