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HOUSING

Is there any hope for Berlin’s strained rental market?

Rents in Germany’s capital city have more than doubled in the last decade, according to a recent report from Investment Bank Berlin. What keeps pushing up prices, and is the trend set to continue?

Published: 28 March 2024 10:20 CET
Is there any hope for Berlin’s strained rental market?
Berlin's central Mitte district pictured in March 2024. Photo: picture alliance/dpa | Monika Skolimowska

According to Investment Bank Berlin’s 2023 housing market report, published earlier this month, found rent prices, excluding utilities, rose from €5.75 per square metre in 2014 to €13.99 per square metre in 2023. 

The average asking rent prices leapt to €19.85 per square metre for newly built flats. 

READ ALSO: ‘Tense housing situation’: Why a Berlin renter can’t be evicted for two years

Tale of ‘two housing markets’

Dr. Hinrich Holm, chairman of the Board of Investment Bank Berlin (IBB), said in the report the current state of Berlin’s housing market reveals a challenging situation for renters. 

“Berlin basically has two housing markets,” he said.  “One with moderate prices for existing rental agreements and one with high rents on offer. We must therefore expand the range and at the same time offer apartments subject to rent and occupancy in order to provide low-income population groups with social housing.”

The sharp rise in Berlin’s population after war-related refugee migration and the end of the pandemic isolation rules is partially to blame, he added. Nearly 80,000 people moved to Berlin after the start of Russia’s war in Ukraine in February 2022. 

Construction unlikely to solve Berlin apartment shortage

Construction for new builds is back in swing and has reached the levels seen in the mid-1990s after the wall fell. 

For the first time building completions exceeded the number of building permits issued. That amounted to the completion of 17,310 apartments which is 1,400 more than in 2021.  

Christian Gaebler, Senator for Urban Development, Building and Housing, said new construction could not immediately solve Berlin’s apartment shortage. 

Luxury flats in Berlin

Central Berlin apartments. Photo: picture alliance/dpa | Christophe Gateau

“Housing construction is not meeting demand at the moment,” he said. “The causes are complex: rising land and construction costs, delivery bottlenecks, a shortage of skilled workers and also the development of interest rates.”

With a construction backlog of more than 62,000 apartments and a realisation rate of 86.5 percent, it is predicted that the majority of apartments will become available over the next few years. But that will not help those in the market for an apartment today. 

READ ALSO: Why does Germany keep missing its house building targets?

Berlin housing crunch increases competition

Molly Harison, an American English teacher in Berlin, found her current apartment through the website wg-gesucht. She said it was tough to find reasonably priced apartments within The Ring — what Berliners dub the part of the city encircled by the S-Bahn — and avoid potentially predatory renting situations during her search. 

“With all of the expats and foreigners that are moving here, rent is really high, unless you find a questionable living situation or an honest person,” Harison told The Local. “The amount of people I know who are renting out rooms in their apartment, and the person in the apartment is paying the majority of the rent is wild.”

Harison said competition was fierce to find her current living situation.  

“There’s just not a lot of long-term rental contracts because as soon as they’re up someone snatches them and they’re gone,” Harison said. 

“There were days where I’d try to go on and find things it would be like as soon as I had messaged three people, those same ads from those three people would be gone because someone else had already put the deposit down.”

Lucy, an Italian digital marketer who moved to Berlin in March to start a new job, agreed. 

“I definitely needed to be consistent with my search, I checked the posts twice a day and sent a lot of messages,” she told The Local. “It helped me to be one of the first people to send a message to the landlord, like as soon as they posted the offer.” 

Lucy said this method paired with some knowledge of German helped her find a place within her budget in just under three weeks. 

Still, it can also be a struggle to find long term housing that offers Anmeldung, or official registration at a German residence, which is a requirement for long term visas and work permits.  

“It was quite hard to find a place that was legit for the Anmeldung, I’ve noticed that most of the time it’s not possible,” Lucy said. 

Anmeldung is required to open some bank accounts, get a tax identification number for work, and sign up for wifi in Germany. Legally residents are required to register their address within two weeks of moving.  

And housing issues in Berlin have spread outside of the city’s metro area. Nearby cities like Potsdam also recorded marked rises in asking rent prices as some commuters choose to move outside of Berlin’s city limits for housing.  

But while rents in Berlin have soared to record highs, housing prices for those looking to buy are not as bleak. The prices of condominiums and one and two family homes bucked the trend and declined slightly from previous years. 

Condominium prices stagnated for the first time since the survey began analysing Berlin housing data. 

In 2023, condominiums were advertised for an average of €5,746 per square metre. The median for new condominium buildings fell by 4.4 percent to just over €8,000 per square metre. 

The median home price also fell 9.5 percent to €639,000. 

READ ALSO: Why property prices are falling in almost all German cities

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READER INSIGHTS

How foreign residents in Germany are winning rent reductions

Rent is often the biggest expense for foreign residents in Germany. Even though there are rent controls in some cities, tenants can still be charged too much. Readers shared how they managed to get a rent reduction.

Published: 2 May 2024 14:57 CEST
How foreign residents in Germany are winning rent reductions

The Local asked readers whether they have tried to reduce their rents in Germany, and to what end. 

Of the readers who responded, nearly half said they had never tried to reduce their rent. Among the other half of respondents, many said they either wanted to reduce their rent or were currently in the process of trying to have it reduced. 

About 18 percent of respondents to our survey said they had successfully reduced their rents in Germany before.

Why do residents want rent reductions?

Germany notoriously has the lowest rate of home ownership in Europe, which has long been attributed to being a country with high real estate prices and relatively low rents.

But this means that a large number of German residents are directly affected by rising rents. Low-income individuals living in urban hubs where rents have been rising rapidly in recent years are particularly vulnerable.

According to Germany’s statistical office (Destatis), 11.8 percent of the population was overburdened by housing costs as of 2022 – meaning these households spent more than 40 percent of their income on housing.

Unsurprisingly, a number of readers cited inflation and cost-of-living increases as the primary reason they wanted to try for a rent reduction.

READ ALSO: How to grow your savings in Germany during high inflation

A couple of readers noted that their current rent prices are making their living costs too high.

Rothe, 29, who lives in Aachen, says she can’t bear her current rent but is stuck in a contract.

Similarly, Lucas, 35, who lives in Horb am Neckar said he wants to reduce his rent to balance his expenses following the recent cost-of-living hikes. He says he’s tried to negotiate with his landlord, who doesn’t care to do so.

While landlords are unlikely to grant a rent reduction based on inflation or cost-of-living increases, there are a few reasons you can legitimately demand a rent reduction in Germany.

Make sure your rent isn’t exceeding the price brake limit

The rent price brake (Mietpreisbremse) isn’t perfect, but it’s arguably Germany’s strongest protection for tenants against rising rents. 

It’s designed to prevent landlords from raising rents to ‘unreasonable’ levels, but with no central agency for enforcement, the burden falls on tenants to demand legal rents.

READ ALSO: German rent brake to be extended until 2029: What you need to know

Andrew, 62, successfully reduced the rent he pays for his flat in Berlin’s Gesundbrunnen area with the rent brake rule. After he realised the “rent was high for the location”,  he contacted his tenant’s association.

He thought that his landlord responded in a reasonable manner: “They thought the condition of the flat justified the higher rent and paid a friendly visit to point out the features,” Andrew said.

“We countered that the features were all quite old and that the previous tenants had been on a lower rate.”

Mieten runter "rents down"

The words “Rents down” are graffitied on the wall of a rental building. About 75% of Berlin rents are set illegally high, a legal expert told The Local. Photo: picture alliance/dpa | Monika Skolimowska

The rent brake prohibits landlords from setting rents more than 10 percent above a local average value, which is recorded in a local rent price index. You can find your local rent price index by searching for the German term “Mietspiegel”, along with the name of your city or region.

Here is one for Berlin, which allows you to calculate your rent index based on your current address and a few factors such as the area of your flat and how old the building is etc.

Andrew recommends joining a tenants’ union and using an online calculator to check if your rent is reasonable. He also says you should be prepared to negotiate and to compromise where necessary.

Gerson, 50, who lives in North Rhine-Westphalia, also found that his current rent was too high for his location. He says he is currently looking for a company that can assist him with the process to demand a rent reduction.

David, 57, in Berlin said he believes his rent is “illegally high” compared to other and he has hired a lawyer to go through the process of trying to get a rent reduction. 

There are also legal service providers that can help with renters’ issues in Germany, and some that even specialise in winning rent reductions with the rent price brake. You can find some of them through an online search. You may want to look for one that will initiate the process at no cost to you. Some will even complete the service with no cost to tenants, applying their fees instead to the landlords at fault in the event that they win a rent reduction.

READ ALSO: Why are Berlin rents soaring by 20 percent when there’s a rent brake?

It’s also worth noting that the rent price brake only applies to rental markets that are considered highly competitive. So it applies to most of Germany’s big cities, but may not apply in suburban or rural regions.

Overcharged by faulty measurements

Rents prices in Germany are usually calculated according to a price per metre of living space. Therefore, in some cases, it may be worth double checking that your living space has been calculated accurately.

One reader, who didn’t wish to be named, told The Local that he had previously reduced his rent for an apartment in Düsseldorf in this way.

“We had a small attic apartment with slanted walls,” the reader said. “The total square metres of the apartment were based on measurement from wall to wall. However, walls had to be straight to a height of at least 1.2 metres before the slanted side can begin [or else] the total square metres start from the point where the vertical height of 1.2 metres is available.”

After he learned about this requirement he measured the apartment, and found that his own rent had been based on a measurement of the floor plan, not the legally defined living space. Then he contacted his tenants’ association, which sent an architect to confirm the measurements.

Initially sceptical, his landlord sent another architect to check the measurements. But when it was confirmed, his rent was lowered accordingly. “Turned out that we had to pay for about 10 square metres less all in all,” the reader said.

This incident was 15 years ago, and these types of regulations can vary from region to region.

His advice to readers is to check up on the local regulations that may apply to your situation. 

In other cases, some renters have been able to negotiate rent reductions for other inconveniences – such as excessive noise, for example.

READ ALSO: How to get a rent reduction for problems in your German flat

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