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With effect from 2015, the German Federal Government plans to regulate new lettings more strictly. The proposal is for rents to be kept no higher than 10% above the so-called ‘local reference rent’. How this significant intervention will work still remains unclear. In our study, we have therefore analysed almost 80,000 new tenancies provided by an online market platform in the year 2014 to see which would have been affected if the rent controls had already been in place. We compare rental accommodation advertised in Berlin and Cologne. Using a geographical information system (GIS), and with the help of statistical evaluations, the quality of the location can be established and applied to the analysis. The analyses show that the planned rent controls will not only affect a few rental offerings with asking prices wildly in excess of the rest of the market, but they will impact over a broad area. Overall, the observable effects differ between Berlin and Cologne.
Deschermeier et al. (Mon,) studied this question.