Berlin’s rent freeze plan hits shares

Germany’s biggest residential landlords have declined on concern that the city of Berlin will freeze rents in the capital for five years in response to a surge in housing costs.

Shares in Deutsche Wohnen fell almost 9% in Frankfurt, while Vonovia shed 5.5%. As a result, the Stoxx Europe Real-Estate Index was the region’s worst-performing sector in the latest session, declining about 2.4%.

Berlin’s Social Democratic-led government plans to float a proposal for a five-year freeze on rents this month, with a draft law on the measure expected in October, the state ministry for urban development said.

The measure was agreed on in principle earlier this year by the SPD and its state coalition partners, the Greens and the Left party.

Berlin’s residents, as in other European cities, have been buffeted by a sudden surge in costs in recent years, fuelling public demonstrations and calls for a referendum to push the city to expropriate apartments from landlords owning more than 3,000 units.

Deutsche Wohnen, one of the main winners of Berlin’s housing boom and owner of about 112,000 properties in the city, has rejected demands to turn over its property.

“A potential long-term rent freeze is arguably a more significant concern,” said Morgan Stanley analysts including Bart Gysens.

“Not only does the likelihood of this seem higher, it could also reduce capital values as much or even more than other measures,” said the analysts.

Nina Henckel, a spokeswoman for Vonovia, said we need to take concerns about rising rents seriously and construct more affordable homes.

Bloomberg