Berlin Builders Hit the Streets in Backlash Over Rent Freeze

(Bloomberg) --

Berlin’s effort to protect tenants from steep rent increases has antagonized other participants in the property industry.

Three convoys of construction lorries, along with landlord representatives, converged on Berlin’s Brandenburg Gate on Monday to protest against a plan to freeze rents in the city for five years. Around 1,500 people registered to take part in the event involving an estimated 240 vehicles, according to regional broadcaster RBB.

The German capital’s government is trying to ease the burden on tenants after a property boom caused rents to double over the past decade. However, critics of the plan -- including economists and large landlords -- have said the only way to address growing demand for housing is to build more homes.

The rent-freeze legislation will start its passage through Berlin’s parliament this week and is expected to come into force in the first quarter of next year.

“Mueller, we need to talk,” organizers of the protest tweeted on Sunday, referring to Berlin Mayor Michael Mueller. The group, called “New Ways for Berlin,” said that the measures to rein in landlords will destroy jobs by halting renovation and construction work.

Heiko Kretschmer, head of the group, told protesters gathered at Berlin’s best-known landmark that the city’s plans will be “a barrier to investment.”

“The number of homes being built and getting planning permission is already falling, and investors are already going elsewhere,” he said.

The government intends to introduce a range of measures that will include an upper limit on rents. Deutsche Wohnen SE, Berlin’s biggest landlord and the target of tenant protests, has said the plans have started to crimp investment.

The city’s plans “threaten to cause considerable damage to both the housing market and Berlin as a whole,” IW institute economists wrote in a recent report for the Christian Democratic Union party, which is in opposition in Berlin and opposes the measures. Scrapping the plan is “urgently needed from an economic perspective to prevent wider damage to the Berlin economy,” they added.

To contact the reporter on this story: Andrew Blackman in Berlin at ablackman@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Chris Reiter, Iain Rogers

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