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Berlin enters new legal territory with the planned rent cap.
Around 3.7 Million people live in Berlin right now, each year the number rises by 40.000.
According to the rent index of the Berlin Senate Derpartment for Urban Development there are 1.906.400 properties. The majority of those are rented estates, around 1.6 million, this leads to a share of 85 %.
With retroactive effect from the effective date of 18 June 2019, the rents of almost 1.5 million existing apartments in Berlin will be frozen for five years. The law was passed by the Berlin House of Representatives on 30 January and came into force on 23 February 2020. A reduction of rents that were already excessive on the effective date of 18 June 2019 is only possible nine months after the law comes into force, i.e. from 23 November 2020.
When the term rent is used in the following text, it refers to the net cold rent, i.e. without the operating costs and without heating and hot water costs.
Compared to Hamburg and Munich, Berlin’s rents are still lower on average. In the other cities, rents have traditionally been at a high level for some time.
Nationwide, rents, but also property prices, have risen sharply. According to the Berlin Senate Department for Urban Development, rents have risen by 18.1 % over the past five years, or an average of 3.3 % per year. Supply rents have even increased by 30.5 % or 5.5 % annually over the last five years. The main problem for Berliners is new rentals, where the average net cold rent is €10 /m². While rents have risen sharply, the income of Berliners has hardly increased at all. The Senate Department for Urban Development has calculated that 44 % of the net household income must now be spent when moving into a new apartment. To counteract all too rapid changes in urban society and prevent social inequality, the current government in Berlin wants to introduce the rent cap.
In order to counteract the trend of rapid rent increases, landlords will not be allowed to charge more than before when re-letting a property once the law comes into force. The upper limit depends on the year of construction, the location of the apartment and its size (see table)
The rent cap applies to 1.5 million apartments (of the total of 1.9 million in Berlin). This applies to all rental agreements that already existed on the effective date 18 July 2019 and still exist. This does not apply to publicly subsidised housing, owner-occupied housing, dormitory apartments and new buildings that were ready for occupancy for the first time since January 2014. This also includes attic flats that were subsequently added to the house. In the case of apartments where the previous rent was less than €5 /m², the rent may be increased by a maximum of €1 to up to €5.02 /m² on re-letting, provided that modern equipment is available.
A modern furnishing is present if at least three of the following features are present:
In cases of economic hardship of landlords, rent increases may be approved if this is absolutely necessary to avoid endangering the substance and permanent losses. Approved rent increases above the upper rent limits are cushioned by a rent subsidy. The rent subsidy may not exceed the amount exceeding the rent ceiling.
Tenants do not normally need to take action to have their rights become effective.
Landlords must provide tenants with information on the circumstances relevant to the calculation of the rent cap, without being asked, within two months of this Act coming into force and before a new rental agreement is concluded. Once the rent cap comes into force, it is generally prohibited to demand a higher rent than the rent on the effective date (19.06.2019).
The law stipulates that excessive rent is prohibited. However, this prohibition only applies nine months after the promulgation of the Act, i.e. from 23 November 2020. Excessive rents are rents that are more than 20 % higher than the rent ceiling permitted taking into account the residential situation.
Landlords must lower the rent to the rent caps on their own initiative, otherwise they are threatened with a fine.
If landlords do not act and do not reduce the rent, tenants should take action. No notice from the Senate Department for Urban Development and Housing is required for the reduction, but it can be helpful. Since the responsible Senate Administration can take all measures necessary to enforce the reduction claim, it should be involved if the landlord rejects the reduction request.
Also graduated rent is not being allowed anymore if the law is coming into effect.
If the landlord tries to increase your rent after the 18th of June 2019, the claim is illicit.
Landlords ignoring the law can be fined up to €500.000.
At the moment, it is still disputed whether the state of Berlin is allowed to intervene so strongly in the tenancy law. Berlin is the first federal state to decide on a rent cap and is thus breaking new ground.
A number of expert opinions come to different conclusions. One of the main criticisms is that the State of Berlin does not have the authority to pass such legislation. There was also criticism that the subsequent lowering of rents was a violation of the constitution.
The rent cap is considered an encroachment on property, which is strongly protected by a German Basic Law. Some legal experts, therefore, think that the Berlin law violates the constitution. Opposition parties (CDU, FDP, AfD) have already announced that they will file a complaint with the Federal Constitutional Court, and industry associations also want to join.
The Berlin tenants' association [Berliner Mieterverin] therefore advises to retain rents that have not been paid in relation to the new law.
Comparable rents customary in the location (effective date 01.09.2018) net cold rent in Euro per square meter monthly