Berlin rent cap unconstitutional

The Federal Constitutional Court has declared the Berlin rent cap unconstitutional. The state law is void because the federal government has regulated rental law. Now many tenants are threatened with additional payments.

The Berlin rent cap is invalid after a decision by the Federal Constitutional Court. The law was void, it said in the decision of the judges. The rent cap, which came into force more than a year ago, violates the Basic Law. Since the federal government had already decided on the rent brake in 2015, the legislative power lies exclusively with it, it said in the decision. There is therefore no room for the countries’ own laws. So the lawsuit by 284 members of the Bundestag of the Union and the FDP in Karlsruhe was successful. Two Berlin civil courts had also asked Karlsruhe for clarification.

1.5 million apartment rents frozen

The Berlin rent cap was unique in Germany; the law passed by the red-red-green coalition was initially limited to 2025. On February 23, 2020, the existing rents for 1.5 million apartments in the capital were frozen – at the level of June 2019. This affects nine out of ten rental apartments. The Berlin Senate Department for Urban Development and Housing had assumed before the decision that tenants would have to pay the actual, higher rent again if the rent cap was tipped. In the event that this applies retrospectively, she had already recommended tenants to put the money saved for the time being. Under certain circumstances, the difference has to be paid for the entire contract period.

Seehofer: Rent cover was the wrong way to go

Federal Building Minister Horst Seehofer welcomed the judgment of the Federal Constitutional Court. “The rent cap is now history. That is good, because it was also the wrong way to go in terms of building policy,” said the CSU politician. “It created uncertainty in the housing markets, slowed down investments and not created a single new apartment.” To counter the housing shortage, there is only one motto: “build, build, build!” Last year, 300,000 new apartments were built, “more than in 20 years”. Building “is and will remain the best protection for tenants,” says Seehofer. This means that the past year is above the longer-term trend. However, the federal government will fail to achieve its goal of creating 1.5 million new apartments by the federal election. About 1.2 million apartments are expected to be finished.

Real estate industry welcomes decision

The FDP, which had gone to the Federal Constitutional Court against the rent cap, was pleased with the judges’ decision. “The fact that the rent cap is void is good news. Because such interventions in the market are merely combating symptoms,” said FDP parliamentary group vice Michael Theurer after the decision. The building and housing policy spokesman for the FDP parliamentary group, Daniel Föst, added: “The Berlin Senate, against their better judgment, abused the tenants for an ideological experiment, and that was completely unsuccessful.” The real estate industry also welcomed the Karlsruhe decision. “Finally there is legal certainty,” said the chairman of the Eastern Region of the Central Real Estate Committee (ZIA), Stefanie Frensch, of the dpa news agency. What many appraisers, associations and legal experts have repeatedly warned has now been confirmed by the highest court: “The state of Berlin has no legislative competence for a rent cap.” The supply of rental apartments has plummeted and it has rarely been so difficult to find an apartment in Berlin.

Tenants’ Association: “A wake-up call to the federal legislature”

It is particularly bad that the lid did not ensure cheap rents for low-income tenants, said Frensch. Wealthy tenants in good Berlin locations in particular would have had to pay less. “For the other cases, a hardship case is now required,” she said. In the long term, there must now be impulses to accelerate planning and construction so that the rental markets in the metropolises and university towns can relax over the long term. Following the decision of the constitutional judges, the German Tenants’ Association calls on the federal government to finally act. The decision is bitter, “but it is also a loud wake-up call to the federal legislature to finally act and stop the rent explosion in many German cities,” said the President of the German Tenants’ Association, Lukas Siebenkotten.

Vonovia waives back payments

The real estate company Vonovia has now announced that it will forego additional rent payments in the capital. “The decision of the Federal Constitutional Court is logical, and the rent cap was not suitable to solve the problems on the Berlin housing market,” said Vonovia boss Rolf Buch. “We have decided not to ask for any rents that we would now be legally entitled to based on the decision,” he said. The tenants should “not suffer any financial disadvantages as a result of political decisions made”. Vonovia is therefore foregoing additional rent claims amounting to around ten million euros.

Fine of up to 500,000 euros

In order to curb the price increase on the Berlin housing market, the Senate had decided on the rent cap. From November 2020, rents that are more than 20 percent above the upper limit for the apartment had to be reduced by law. Violations could result in a fine of up to 500,000 euros. The rent cap did not apply to new apartments that were finished since 2014. The review by the Federal Constitutional Court was initiated by more than 280 members of the Bundestag from the FDP and the Union, with a joint legal review application. The Berlin regional court and a district court, where landlords have sued, also considered the regulations to be unconstitutional and switched Karlsruhe on.

Demonstration in Berlin-Neukölln

After the end of the Berlin rent cap, several thousand people demonstrated in the federal capital for a nationwide rent freeze. They criticized the decision of the highest German court and demanded more political action against the “rent madness”. The demonstrators first gathered at Hermannplatz in Neukölln and then started an elevator that should lead to Kottbusser Tor in Kreuzberg. The Berlin tenants’ association had called for the protest. The police spoke of a number of participants “in the mid four-digit range”, the organizers of thousands of demonstrators. File number: 2 BvF 1/20 and others