Will the rent-cap end the years of real estate boom in Germany? As is well known, the city of Berlin recently decided on a rent-cap – a violent intervention in a free market by freezing rental prices for five years.
What consequences will such an intervention have for the real estate market? In recent years, real estate prices have risen massively, even faster than rents. For many people in major German cities, the situation is thus threatening – can they stay where they want to live, or will they have to move to less pleasant residential areas?
The Berlin rent-cap has it all: there are phrases like “there is no right to a return on investment”. In fact, this overrides the free market economy! Lars Erichsen analyses the statements in the justification for the rent cap – and is almost speechless: “I wouldn’t have thought that something like this would be possible in Germany in 2019”!