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Germany Eyes Ways to Control Rents as Giant Landlord Emerges

Germany Eyes Ways to Control Rents as Giant Landlord Emerges

(Bloomberg) -- Germany will consider new ways to control rent increases as Vonovia SE seeks to upend the country’s already-tight housing market with a 19 billion-euro ($23 billion) bid for rival Deutsche Wohnen SE.

The goal is to allow half the population in large cities to have the right to subsidized apartments, Olaf Scholz -- the Social Democrats’ candidate for chancellor -- said in a Bloomberg webinar on Tuesday. Scholz, who currently serves as finance minister, called for the government to do more to ease the housing squeeze, including backing construction by cooperatives and public-sector companies.

“We are far away from what we need” in terms of new apartments, and “we need fair regulation” to help tenants, he said.

The comments reflect how political housing has become in Germany, which has some of the lowest home-ownership rates in the developed world. In recent years, landlords have faced intense public pressure over rising prices, particularly in the nation’s capital. The issue is set to remain on the agenda ahead of national elections in September.

The year’s biggest takeover in Europe and the biggest-ever in the region’s real estate sector would combine the country’s two largest residential landlords into an entity that controls more than 500,000 apartments. The transaction would further consolidate the power of large property owners, an issue that has inflamed activists especially in Berlin.

The deal includes plans to offer to sell about 20,000 apartments to the Berlin government, build some 13,000 new units and limit rent increases. But activists seeking a referendum to force the city to buy out large landlords weren’t impressed by the concessions.

“Berliners will expose this deal as a sham,” said Rouzbeh Taheri, a spokesman for the initiative. “We are optimistic that our referendum will be successful.”

Finding a home in Germany’s trendy capital has gotten steadily more difficult over the past two decades as new residents, investors and companies have moved in. Rental prices in many neighborhoods have more than doubled since 2009 as construction has lagged demand.

Berlin was unimaginably cheap until about 15 years ago. Although vibrant and beloved by artists and students, it had little industry, few jobs and a glut of derelict apartments. That all began to change as Berlin became the premier startup hub in continental Europe and big companies, such as Amazon.com Inc., Daimler AG and Sanofi, opened facilities.

While Berlin is the epicenter of the issue, rising rents have plagued cities across Germany, and affordable housing has become a feature on campaign platforms.

“We are the ones who aren’t just moaning about the situation,” said Scholz, who pointed to his record as Hamburg mayor. “We are the ones that are able to fight the real fight for more cheap and affordable houses.”

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