BERLIN (Reuters) - Shares in German real estate company Deutsche Wohnen (DWNG.DE) surged about 10% on Friday as the Berlin city government revealed details of a planned rent cap that would still allow landlords to make moderate rent increases.
Initial details of a freeze leaked last weekend had shocked investors. Analysts and critics said the planned measures amounted to a rent cut.
The real estate industry criticised the measures as unconstitutional, and Berlin’s mayor Michael Mueller later distanced himself from the plans.
While Mueller’s ruling coalition, made up of his centre-left Social Democrats, far-left Die Linke and the Greens, is still planning a five-year rent freeze, it will be possible for landlords to increase rents if they use inflation for guidance, Berlin’s housing department said.
For new leases, the government plans to cap monthly rents at 5.95 to 9.80 euros per square metre, depending on the building’s age. Exceptions are possible for modernised apartments.
The government of the city state of 3.6 million people decided in June to freeze rents, heeding complaints from many residents that their once famously affordable city was pricing them out.
Experts have said the rent freeze could worsen Germany’s housing crisis by scaring off real estate investors eager to build in urban centres.
Berlin is a key market for Deutsche Wohnen, which has 116,000 units in the capital, including four housing estates listed as Unesco world heritage sites.
Shares in Deutsche Wohnen rose as much as 13.4% and were up 9.5% at 1202 GMT. Its bigger peer Vonovia (VNAn.DE), which is listed in the blue-chip DAX index .GDAXI and owns more than 42,000 flats in the German capital, was up 5.1%.
Reporting by Thomas Seythal; Additional reporting by Rene Wagner; Editing by Thomas Escritt and Hugh Lawson