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Berlin rent cap is unconstitutional

The Federal Constitutional Court has overturned the rent cap.

Find out here on what basis and what this means for tenants and landlords.

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What is the rent cap?

The rent cap describes a law that 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 fixtures and furnishings. The law will come into force from 2020, retroactively to the cut-off date of June 18, 2019. This means that the rent to be paid may not be higher than that which applied on June 18, 2019. This also affects graduated and index-linked rents. The rent cap law also provides for the capping of rents that are above 120% of the rent table if tenants file a lawsuit. The cap then amounts to exactly 120% percent of the specified values. Unlike the pure rent cap, this regulation is only effective nine months after the law comes into force.

Why was the rent cap overturned?

15.04.2021: The Federal Constitutional Court has ruled that the rent cap introduced by the red-red-green government in Berlin is unconstitutional. The federal government had regulated the rent law, the states had no legislative power. In 2015, the federal government had already introduced the rent brake, and according to the judges the Berlin rent cap violates the Basic Law. The lawsuit was filed by 284 members of the CDU/CSU and FDP, the judges ruled unanimously. “The judges ruled unanimously that Berlin’s unilateral action endangered the “unity of the legal order”. Thus the requirement of the freedom of contradiction of the legal order is in danger” (Der Tagesspiegel).

What does this mean for tenants and landlords?

The tipping of the rent cap means that landlords are allowed to charge the previously agreed, higher rent. Rent increases are also possible again for the 1.5 million existing apartments. Provided that these are in line with the rent brake adopted by the federal government. When the rent cap came into force, tenants were already advised to save the difference between the previous rent and the capped rent. Now many landlords could reclaim this amount. However, the Berlin government holds out the prospect of state aid for tenants in cases of hardship, and other parties are also calling for safe-housing funds. It is possible, however, that some landlords will waive the differential amounts of the last months.

What happens next?

On the day of the announcement, thousands of people in Berlin demonstrated against both the ruling and the housing policy. The fact is, however, that Berlin’s rent cap is unconstitutional. However, it could now be discussed at the federal level. In addition, the existing federal measures to protect tenants should be more consistently enforced and monitored. That action must be taken with regard to a housing policy for all is also a consensus among the plaintiff parties – the CDU and FDP.

Do you still have questions?

We are at your disposal as a contact person, but we do not replace legal advice. In this case, 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. Call us at 030 – 40 633 051 or write to us at contact@invest-ab.com. You can also just drop by our office at Lychener Straße 2 – we’ll be happy to help!

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If you have any questions regarding the rent cap in Berlin, we will be happy to assist you as a professional partner. Our international team of real estate experts is looking forward to hearing from you.

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