Berlin's Rent Cap Makes a Comeback
Berlin's Left Party Pushes Radical Rent Cap for 400,000 Public Homes
At least, that is, if Berlin's Left Party has its way. Unlike the short-lived original introduced in 2020, the new proposal would not apply to all apartments in the city but only to the roughly 400,000 units managed by the city's six municipal housing associations (Landeseigene Wohnungsbaugesellschaften, or LWU). Our website has obtained exclusive access to the party's draft plan, which it intends to implement if it takes power after September's state elections. The proposal describes the measure as a "central response to the rental housing crisis."
Under the Left Party's plan, rent increases for tenants of Degewo, Howoge, and other municipal providers would first be frozen entirely for one year. The measure would be enacted within the first 100 days of a new government via a Senate resolution. After that, the housing associations would be required to limit annual rent hikes for existing tenants to a maximum of 1 percent, with a one-time increase of up to 2 percent permitted over two years. The regulations would initially apply for five years before being reviewed.
But the plan goes beyond a simple rent freeze. Much like the 2020 rent cap—struck down by Germany's Constitutional Court in 2021—it includes additional measures. Rents for new and relet apartments would be capped at the level of the previous rent, or at most at 10 percent below the local reference rent (ortsübliche Vergleichsmiete). Currently overpriced rents exceeding the reference rate by more than 20 percent would be reduced to the legally permitted threshold of 10 percent above it.
The proposal also seeks to restrict how much of the cost of modernization can be passed on to tenants—capping it at a maximum of €1.50 per square meter. Here, too, rents would not be allowed to exceed 10 percent above the reference rate. Existing affordability guarantees, which limit rent burdens to no more than 27 percent of household income, would remain in place.
Impact on the Rental Market
Elif Eralp, the Left Party's candidate for governing mayor in this autumn's election, describes the plan as a way to keep rents "below market levels." Overall, the measures are intended to ensure "stable and affordable housing" for around one million Berliners. At the same time, the party expects the policy to have citywide effects. "The new rent cap will lower the overall rent index and thus also help dampen rents in the private market," Eralp told our website. By contrast, the next official rent index, due later this year, is expected to show significant increases.
These measures are not entirely new. Active regulation of municipal housing providers' rent policies has been a recurring issue in Berlin since 2017, marked by repeated advances and setbacks. Back then, under Left Party urban development senator Katrin Lompscher, the first cooperation agreement was signed with the housing associations to limit annual rent increases to a maximum of 2 percent. Even after the original rent cap failed, the red-green-red coalition continued to stabilize rents in its own stock, keeping existing rents steady and curbing price hikes for new and relet apartments.
But these regulations came to an end under the center-right and Social Democrat coalition that took office in late April 2023. Since 2024, annual rent increases of up to 2.9 percent—and in some cases up to 11 percent over three years—have been permitted. The cap on rents for relet apartments was abolished entirely, leaving the housing associations bound only by the legal limits of the national rent brake (Mietpreisbremse).
The result? Rents for both existing and newly advertised apartments under public providers have risen faster than in the private sector—though they remain significantly lower overall. By the end of 2025, for example, the average rent for a newly let apartment with Berlin-Mitte's municipal housing association (WBM) had reached €10.10 per square meter—a 35 percent increase compared to just two years earlier.
A New Approach to Financing Social Housing
The Left Party's policy paper states: "The LWU [state-owned housing companies] are losing their rent-stabilizing function. Kai Wegner's Senate is not only hitting LWU tenants hard in the wallet but is also putting the entire model of public housing provision at risk." Elif Eralp adds: "Berlin is becoming increasingly expensive due to regular rent hikes by property giants like Vonovia—but unfortunately, the Wegner Senate is also contributing to the problem."
A parliamentary inquiry by Left Party housing policy spokesperson Niklas Schenker in 2024 revealed that housing associations expected annual windfall profits of €34 million from permitted rent increases. The Left's proposal now estimates that a one-year rent freeze would cost between €35 and €55 million, with subsequent caps reducing revenues by €20 to €40 million. To offset the shortfall in the first year, the plan calls for a "one-time injection of equity capital into the LWU." Overall, the goal is to ensure "cost-neutral management of existing housing stock" for these companies.
The proposal further recommends separating the financing of new construction and renovations from the management of existing properties. This would relieve pressure to fund investments through rent revenue from current tenants. To achieve the party's targets—a municipal housing program delivering 7,500 new homes annually and a renovation initiative—up to €2 billion per year would be allocated. Funding would come from transaction-based loans and a reallocation of the €1.5 billion currently spent on subsidies for social housing, largely financed through credit as well.
With this rent cap proposal, the Left Party completes its housing policy platform ahead of the election. It also plans a "Secure Housing Act" to impose requirements on private landlords. The law's centerpiece would mandate that landlords with at least 50 units allocate 30 to 50 percent of their annually vacated apartments—depending on portfolio size—to low- and middle-income households. The SPD and Greens have put forward similar concepts. As a long-term goal and a clear condition for any coalition, the Left Party seeks the socialization of housing stock owned by major private property corporations.
