Forward to the past: The Short-Term Effects of the Rent Freeze (“Mietendeckel”) in Berlin

Anja M. Hahn
Vienna University of Economics and Business

Konstantin A. Kholodilin
DIW Berlin & NRU HSE St. Petersburg

Sofie R. Waltl
Luxembourg Institute of Socio-Economic Research & Vienna University of Economics and Business

Abstract

Already in 2015, a new type of rent control – the so-called “Mietpreisbremse” (rent brake) – was first  introduced in Berlin and subsequently was adopted by several other German federalstates. In 2020, an even more rigorous policy was added to the former: the “Mietendeckel”, i.e., a rent freeze aiming to stop run-away rental prices. We evaluate this new addition to policy makers’ toolkit by analysing immediate supply-sideeffects using a rich pool of rent advertisements reporting asking rents and comprehensivedwelling characteristics. We distinguish three periods: pre-announcement, transition and post-enforcement, and perform hedonic-style Difference-in-Difference analyses comparing price and quantity effects of dwellings inside and outside the policy’s scope. We find no effect upon announcement of the policy, yet advertised asking rents drop significantly upon the policy’s enforcement. This hints towards general compliance of landlords. Yet, the stark reduction of advertised rental units hampers a successful housing search for newcomers or tenants aimingfor a different housing opportunity.

Keywords: first-generation rent control; rent freeze; urban policy; rental price; trade volume; Berlin.

JEL classification: C14; C43; O18.