Should we be looking towards Berlin to solve the potential UK rental crisis?
It has recently emerged that UK residents pay the highest level of rent in Europe; parting with 40% of their monthly wages to their landlords. This is a sharp contrast to Germany where renters spend only 25% of their wages to have a roof over their heads.
The figures should not be a surprise as the Germans seem to have something of a reputation for innovation. The Capital Pioneers Law, which was recently implemented in Berlin, prohibits landlords from charging new tenants more than 10% above the local average rental price. The law was already in place to protect existing tenants but now takes into account new tenants as well.
Berlin is the first city in Germany to enforce the policy in an attempt to put the brakes on the ever increasing cost of renting in the capital, which previously had some of the fastest rising rents in Europe.
Reiner Wild, managing director of the Berlin Tenants’ Association, commented: “The rent ceiling is very important for Berlin because the difference between the rent paid in existing contracts is so high. The other problem is that we have 40,000 more inhabitants per year. Because of this problem the housing market is very strong.”
Berlin has opted for the rent cap after the national parliament approved the law, which focuses on areas where there are noticeable housing shortages. The reasons for this were due to the fact that Berlin has become increasingly competitive for those who are flat-hunting.
Despite the fact that rent levels are fairly low in comparison to London, there is the intention to ensure that levels of rent are kept as low as possible: “We don’t want a situation like Paris or London. The reality in Paris or London is that people with low income have to live in the further-out districts of the city.”
The average levels of rent in the German capital have risen from just over 5.50Euros (£3.60) a square meter in 2005 to close to 9Euros last year, according to a report conducted by property services company Jones Lang LaSalle.
This is a stark contrast to UK where we are now paying the highest levels of rent in Europe and it appears that there is little hope of this changing in the near future. If there is going to be a genuine attempt to curb the ever-increasing cost of renting in the UK then it is imperative that efforts are made to introduce a similar type of rental cap across the country.
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