Berlin’s government has agreed to freeze rents in the German capital for five years from 2020 in the city’s latest attempt to halt runaway gentrification.

Once described as “poor but sexy”, Berlin’s housing costs have doubled over the last decade as employees lured by the strong job market move into the city.

The sharp rent hikes have led some residents to ponder radical solutions, including pushing for the seizure of housing stock from landlords.

Berlin’s city government agreed on Tuesday on the outlines of a draft law that would include a temporary freeze on rents for five years from 2020, with a bill to be drafted.

The cap means “protection against rent increases for 1.5 million apartments”, tweeted the Berlin government’s department for urban development and housing.

Under the plan, landlords who seek to raise rates because of renovation work will also have to seek official approval for any increases above 50 cents (44p) per sq metre (11 sq ft).

The move, by Berlin’s coalition government of the centre-left Social Democratic party (SPD), the Greens and far-left Linke party, is being closely watched across Germany, where a backlash is growing over fears residents are being priced out of key cities.

The SPD, the junior coalition partner in Angela Merkel’s government, has pledged to champion such rent controls nationwide. “We need a rent price cap for all of Germany,” said Thorsten Schäfer-Gümbel, one of the three interim SPD leaders.

Merkel, the German chancellor, has voiced scepticism about such caps, warning that “we must also provide an environment for people to want to build”. While the political climate in Berlin is turning against landlords, the influential property owners association Haus und Grund has said it will not be cowed. In a call for pre-emptive action, the association had urged members to raise rents by Monday night.

Although there are still huge swathes of unbuilt land in Berlin and construction is mushrooming across the city, much of what is coming on to the market is out of reach for low-income locals despite Berlin having rents below those in major capitals around the world.