Rents in Berlin’s most fashionable districts could be slashed by more than half under controversial new controls.

The Berlin regional government is considering plans to impose a maximum monthly rent cap on homes across the city of just under €8 per square metre (68p per square foot).

The proposals would have a dramatic effect on prices in the German capital’s most fashionable neighbourhoods, which currently command monthly rents of more than €17 per square metre (£1.43 per square foot).

The plans, drawn up by a regional minister from the socialist Left Party, have been condemned by opponents as “unconstitutional” and “an economic catastrophe”.

Rents in Berlin have risen sharply in recent years and the city is finding it hard to live up to its unofficial motto of “poor but sexy”.

The rises have been largely driven by Berlin’s lure for young people as one of Europe’s most fashionable cities, as the past decade has seen an estimated 40,000 new residents flock to the German capital.

But in a city where home ownership is rare and 85 per cent of people rent, the increases are a divisive political issue and this year has seen widespread public protests.