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17 09 2015
Rent Row in Berlin Settled

The book has apparently been closed on Berlin's rent referendum. City hall and the action group advocating the rent referendum agreed on a compromise. Although the resulting draft bill takes some of the demands of the activists into account, it ignores costly or impractical proposals. For instance, the initiators backed off from their demand to pool Berlin's six state-owned housing associations and convert them into a statutory corporation. According to the Senate of Berlin, the new law is to be enacted by mid-November – and not until then will the action group cancel the referendum for good.

Rents Capped at 30 Percent of the Net Income

Around 300,000 tenants of the municipal housing associations are to benefit from the new law. According to the draft bill, rents paid to housing associations owned by the State of Berlin will be capped at 30 percent of a given tenant's net income. The remaining amount will be covered by the State of Berlin. In cases of unusually high operating costs, the subsidised rent share may actually be topped up. Moreover, the draft bill will ban the sale of state-owned apartments in the future.

Once the law enters into force, the housing associations will also be obliged to earmark 55 percent of new lettings for households in possession of an eligibility certificate for subsidised rent-restricted apartments (WBS). One in every five of these units is to be let to homeless people, refugees or other individuals in need. The law moreover stipulates the creation of a modernisation fund that assists owners with energy refurbishments of rental buildings. At the same time, the Senate will expand its construction subsidies. A total of up to 3,000 new flats is supposed to be put on the market per year.

Costs Adding up to 1.4 Billion Euros

According to calculations done by the Senate, the new law is expected to generate costs to the tune of 1.4 billion euros. The rent cap will require an estimated 200 million euros, while the increase in the housing association's shareholders’ equity will weigh in at approximately 300 million euros. Another 900 million euros are to be set aside for housing construction, and approximately 40 million euros will go toward the modernisation fund.