Rising rents threaten to become big election issue for Angela Merkel

ROCKETING rents in Germany coupled with a decline in available housing are creating a crisis for the government and threaten to become a pivotal issue in the autumn general election when chancellor Angela Merkel will seek a third term in office.

Over half of voters in Germany rent their homes and are being squeezed out of the market as costs rise by as much as 80 per cent in some cities.

Experts say much of the fault lies with the government.

“The exploding costs and dwindling supply of urban housing are slowly pushing Germans of average means out of the cities,” said news magazine Der Spiegel as the crisis spilled into print and on to television this week at the start of a pivotal year for Mrs Merkel and her conservatives. “As September’s national election approaches, politicians are jockeying to find viable solutions to a problem they helped create.”

Berlin is a microcosm of the problem besetting all major cities in Germany. Rents in the western part of the city have risen on average by 20 per cent since 2007, some by as much as 80 per cent.

Flatseekers in Hamburg, Munich, Berlin, Frankfurt, Düsseldorf or Cologne can expect to pay at least 25 per cent more than they used to in 2007 for the same standard of accommodation, and this in increasingly hard times as the euro crisis continues to bite.

The German Renters’ Association chronicles a shortage of 250,000 apartments nationwide, and the latest government report on the housing sector warns of problems ahead.

The media is calling it “rent shock” and a frantic search for a solution is under way, with the transport minister Peter Ramsauer proposing anchoring “hotel ships” in university cities.

A number of factors have created a perfect storm for mortgage-averse Germans, most of whom go from cradle to grave in rented accommodation. One factor is a swoop on apartment houses by investors seeking a better return on money as the European Central Bank drives interest rates to historic lows. After refurbishment, the rents always go up.

Another blow for renters is home grown. Germany offers subsidies to apartment block owners to insulate and reduce heating costs – so-called energy upgrades – but the law also allows 11 per cent of these costs to be passed on to tenants.

If €20,000 is used to insulate an apartment, a tenant can find his rental soaring €183 a month overnight, and no amount of insulation, solar panels or thermal heating will save the person that kind of money.

Hard times for municipalities has seen a drastic fall-off in the building of council homes.

Critics say people, as a result, are being forced to the edges of towns – and the margins of society. Lukas Siebenkotten, director of the renters’ association, said: “Millions must brace themselves for rises this year. Many households are already paying more than a third of their spending on their flats, including running costs.

“Poorer households are spending more then 45 per cent of their money on their flats.”

The number of subsidised housing units in Germany fell from 2.6 to 1.6 million in the past few years. With speculation now a fact of life in a country that withstood crazy property prices for decades, Mrs Merkel and her advisers have their work cut out in providing solutions for a working, middle and poverty-line classes struggling to find – or keep – an affordable roof over their heads.