Newly-elected Berlin mayor targets city rental crisis

Berlin's new mayor Franziska Giffey greeted by chimney sweeps for luck at the town house.
Berlin's new mayor Franziska Giffey greeted by chimney sweeps for luck at the town house. Photo: picture alliance/dpa | Carsten Koall
Former German family minister Franziska Giffey was elected mayor of Berlin on Tuesday with a plan to boost house building amid soaring rental costs in the capital.

Social Democrat Giffey, who served in Angela Merkel’s coalition government between 2018 and 2021, is the first woman to lead Berlin, in SPD control for the last two decades.

Deputies in Berlin’s legislature cast ballots for mayor and Giffey won 84 votes, with 52 against her and two abstentions.

Her party had finished first in local elections on September 26th on a good night for the Social Democrats, who also topped the polls in the general election, setting Olaf Scholz up to become the new chancellor.

READ ALSO: What does the Berlin election mean for the city’s housing shortage

Giffey, 43, cobbled together a coalition with the Greens and far-left Linke party, who together have set themselves the task of building 200,000 homes by 2030 in a city that attracts more and more residents each year.

The roadmap for policy the parties signed Tuesday calls for a public-private “partnership for new construction and affordable housing”.

The new government has also decided to establish a commission to assess the possibility of “expropriating” corporate landlords, a proposition which gained a majority in a non-binding referendum on the same day as the election.

Around 56 percent voted in favour of the move against real estate companies with more than 3,000 properties after a successful petition to hold a ballot.

The commission, to be established within 100 days, will have a year to “review the possibilities, means and conditions for implementing the referendum”, the coalition pact said.

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The new mayor has said seizing property is “not the right way”, particularly because of the high cost of indemnities that would have to be paid.

Supporters of the proposal say they would be more able to control rental prices if the properties were transferred to public ownership.

While Berlin remains cheaper than Paris or London, rents in the hip capital have increased 85 percent between 2007 and 2019.

Rising costs for housing have weighed heavily on inhabitants, 80 percent of whom are renters.

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Member comments

  1. In increase of 85% sounds terrible but it is in fact only an increase of approximately 5% per year over the 12 year period. Yes it’s a couple of % above inflation and way above any normal employees annual salary increase but it’s not ridiculously extreme and is more, I would suggest, the result of Berlin becoming a more desirable place to live. It’s not actually crisis, it’s just the basic rule of supply and demand playing out.

    1. But the supply does not meet the demand, there is a shortage of 200,000 flats. If the supply doesn’t meet the demand, the supplier will price gouge — hence the 80% increase.

      1. Yes I agree that supply has not kept up with demand but that, in economic terms, is because the supply of property is inelastic in the short term ie it cannot be quickly produced to meet demand and therefore prices will rise. Again, in purely economic terms, once companies ramp-up production, demand will be met and prices will level out. Will purchase or rental prices drop? Highly unlikely. Would the City nationalising and taking control actually work? Maybe it would appear so in the the short term but the cost would be born by Berlin’s tax payers and is not sustainable. Same applies to rent caps as these are disincentives to both the building of new flats and the maintenance of the existing stock. The bottom line is that every time Governments interfere with the market that market ends up becoming dysfunctional. Don’t forget consumers have a choice. No one is forcing anyone to live in Berlin!

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