BERLIN (Reuters) - Berlin's city government on Tuesday decided to freeze rents for five years, heeding residents' complaints that their once famously affordable city was pricing them out.
For decades after German unification in 1990, the capital was a magnet for artists, musicians and students drawn by housing far cheaper than in other major European cities - partly the legacy of its decades marooned inside Communist East Germany as a mere satellite of the capitalist West's economy.
But around 40,000 people a year have moved to Berlin in the last decade, and rents have more than doubled since 2008, according to a study by the online housing portal immowelt.de. A record influx of refugees in 2015 has not helped.
Some 85 percent of Berliners rent their homes rather than owning them. Proposals to help them had ranged from expropriating large property owners to speeding up affordable housing projects.
Berlin's Senator for Urban Development and Housing, Katrin Lompscher, said the planned five-year freeze would apply retroactively from June 18 - a measure apparently designed to prevent landlords rushing to raise rents before the measure becomes law.
The Senate will prepare a bill to be sent to the city's parliament by Oct. 15. It is intended to come into effect in January.
Even though rents have risen, they are still cheap compared with London or Paris. A two-bedroom apartment in Berlin's trendy Prenzlauer Berg neighbourhood costs about 1,500 euros (£1,341) a month, about half the cost of a similar flat in London's Primrose Hill.
Shares in some property companies with large portfolios in Berlin fell after the announcement. Deutsche Wohnen stock was trading some 0.9% lower.
(Reporting by Holger Hansen und Joseph Nasr; Editing by Kevin Liffey)