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Berlin landlords seek to overturn rent-freeze law in court

Berlin

LANDLORDS in Berlin are challenging a raft of measures to rein in the city's rental market, claiming they are unconstitutional.

Property owners have asked Germany's highest court to overturn the Berlin government's move to freeze rents for five years.

Additionally, some of them are seeking to also suspend the legislation while the judges review their constitutional complaint, said a court spokesman.

The legislation, which came into force on Feb 23, is intended to ease the burden on tenants after a property boom caused rents to double over the past decade.

Major landlords such as Deutsche Wohnen have criticised the effort, warning that it risks undermining investment in much-needed new housing projects.

The rent restrictions will encourage landlords to withdraw properties from the rental market when they become vacant and sell them as condominiums, the Ifo institute, one of Germany's largest think-tanks, said in a Feb 19 report.

"Landlords are not the only people who stand to lose from the rent cap," Ifo president Clemens Fuest said. "People looking for accommodation in Berlin will be affected too."

Katrin Lompscher, Berlin's head of urban development and housing, wants to the city to increase the number of apartments that are built each year to around 20,000 to address the lack of affordable accommodation.

She dismissed the concerns and described the city as an "El Dorado" for investors. The Berlin government has said it expects the law to withstand legal challenges. BLOOMBERG