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How does the rent cap work? Who does it concern? What are the exceptions?

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What is the rent cap?

The rent cap describes a law which stipulates that the net cold rents of 1.5 million existing apartments in Berlin may not increase for 5 years. The net cold rent also includes all surcharges such as equipment or furniture. The law will come into force in 2020 with retroactive effect from 18 June 2019. This means that the rent to be paid may not be higher than that which applied on 18 June 2019. This also applies to graduated and indexed rents.

Information on exceptional cases can be found under “Who does the rent cap apply to?”.

When can the rent be capped?

The rent cap law also provides for capping of rents that are above 120% of the rent table if the tenant files a suit. The capping then amounts to exactly 120% percent of the specified values. In contrast to the rent cap alone, this regulation is only effective nine months after the law comes into force.

Information on the rent table can be found under “What is the rent table?”

Who does the rent cover concern?

The law affects existing apartments built before 2014. That’s about 1.5 million apartments in Berlin. Exceptions are flats of publicly subsidized housing construction, so-called “social housing”. Other exceptions are owner-occupied flats, such as flats in halls of residence, and new buildings which were ready for occupancy for the first time since 01.01.2014.

First letting

In the case of a first-time rental of the apartments affected by the rent cap, the specified rent cap applies (see rent table). This may not be exceeded.

Re-letting

In case of re-letting, the net cold rent of the previous tenant applies, up to a maximum rent of the value of the rent table. An apartment is considered to have modern facilities if it has at least three of the following characteristics:

-Fitted kitchen

-high quality sanitary equipment

-high-quality floor covering in the majority of living spaces

-sleeperless accessible elevator

-Energy consumption characteristic value of less than 120 kWh/(m2a)

Modern equipment

If the previous rent of an apartment with modern equipment is less than 5 euros per square meter, the rent may be increased by a maximum of 1 euro to a maximum of 5.02 euros per square meter in the event of re-letting.

How does the rent cover behave during modernizations?

The apportionment of certain modernisations is still permitted, provided that the rent does not increase by more than 1 euro per square metre.

Overview of the permitted modernisations:

-Modernisations that landlords are legally obliged to carry out

-modernisations for thermal insulation of the building envelope, the basement ceiling, the top floor ceiling or the roof

-modernisations for the use of renewable energies

-modernizations for energetic window renewal

-modernisations for heating system replacement

-modernizations for elevator attachment or for the removal of barriers by removing thresholds, widening doors or rebuilding bathrooms

Who decided on the rent cap?

The Federal Government is not responsible for the rent cap, but the State of Berlin. The rent cap law was passed by the red-red-green government.

Until when does the rent cap apply?

The rent cap will apply from 2020 for 5 years retroactively to the cut-off date of 18 June 2019.

What is the rent table?

The rent table determines the upper limit of the net cold rent. Influencing factors are the age and equipment of the apartment.

Supplements

From 2022, the rent may increase by 1.3% per year to compensate for inflation. However, this only applies if the rent remains below the upper limit of the rent table. The values in the table also change depending on the location of the apartment. For flats in a simple location, the rents in the table are reduced by 28 cents per square meter and for flats in a medium location by 9 cents per square meter. The rents in the table increase by 74 cents per square meter for apartments in good locations. If the living space is in a building with a maximum of 2 apartments, the rent ceiling increases by 10%.

Rent table

First-time occupancy of the apartment and equipmentRenting price per square meter
until 1918 with collective heating and with bath6,45 Euro
until 1918 with collective heating or with bath5,00 Euro
until 1918 without collective heating and without bath3,92 Euro
1919 to 1949 with collective heating and with bath6,27 Euro
1919 to 1949 with collective heating or with bath5,22 Euro
1919 to 1949 without collective heating and without bath4,59 Euro
1950 to 1964 with collective heating and with bath6,08 Euro
1950 to 1964 with collective heating or with bath 5,62 Euro
1965 to 1972 with collective heating and with bath 5,95 Euro
1973 to 1990 with collective heating and with bath 6,04 Euro
1991 to 2002 with collective heating and with bath 8,13 Euro
2003 to 2013 with collective heating and with bath9,80 Euro

Source: Stadtentwicklung Berlin

Where do the tenants get the information from?

Landlords are obliged to provide their tenants with information on all facts relevant to the rental cover within 2 months after the law comes into force. The same applies before the conclusion of a new rental agreement.

Penalties

Failure to comply with the rent cap may result in a fine of up to 500,000 euros. The respective districts, the Senate Department for Urban Development and the Investitionsbank Berlin are responsible for the review.

Hardship cases

If the permissible rent leads to losses or to a substance endangerment for the landlords or the property in the long run, they can apply to the Investitionsbank Berlin. The Investitionsbank can approve an appropriate increase in the rent. In case of a WBS authorisation, the tenants can have the difference between the value of the rent table and the then approved rent for the appropriate part of the living space compensated.

Will the rents be increased before the law comes into force?

An increase in rents can be expected, but the increase is unlikely to succeed due to the retroactive application of the rent cap. As things stand at present, the basis is the rent that was agreed on the cut-off date of 18 June 2019, as long as it does not exceed 120% of the rent table.

Reactions and policy intentions

The rent cap law of the red-red-green Berlin government is still being examined for its constitutional legality. The CDU and FDP, for example, have announced that they will take legal action against the law. The parties are in agreement that new construction in Berlin must be pushed ahead in order to meet the great demand in Berlin.

Do you have any more questions?

We are happy to be at your disposal as contact persons, but we are no substitute for legal advice. Here we will gladly refer you to an expert. We would be happy to share our knowledge of the Berlin market with you and inform you about price developments. Please call us at 030 – 40 633 050 or write to us at [email protected] You can also simply drop by our office at Lychener Straße 2 – we look forward to seeing you!

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