Real Estate

Federal Constitutional Court overturns controversial Berlin rent cap

According to the Federal Constitutional Court, the Berlin rent cap is invalid. The law is void, it says in a decision. Tenants now have to be prepared for additional payments.

The Berlin rent cap is no longer valid with immediate effect. The Federal Constitutional Court declared the state law, which came into force in two stages in 2020, to be null and void. The federal legislature has finally regulated the rental price law, announced the highest German court in Karlsruhe on Thursday. There is therefore no room for the countries’ own laws. (Az. 2 BvF 1/20 etc.)

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 in this case. 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 term of the contract.

The Berlin rent cap was unique in Germany. The law passed by the red-red-green coalition was initially limited to 2025. The red-red-green state government had frozen the rents for around 1.5 million apartments on February 23, 2020, retroactively to the status of June 2019. This affects nine out of ten rental apartments. From 2022, landlords should at least be able to offset inflation.

There was a risk of fines of up to 500,000 euros

In the event that tenants change, the Rent Cover Act stipulates that the old rent should remain or upper limits apply. Rents that are more than 20 percent above the upper limit for the apartment were considered too high. Since November 23, affected landlords have been legally obliged to lower them.

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 regulation was limited to five years, i.e. until 2025.

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 regulatory review application. The Berlin regional court and a district court, which landlords had sued, also considered the regulations to be unconstitutional and switched Karlsruhe on.

Vonovia wants to forego any additional payment requests

Tens of thousands of Berliners must now expect that they will have to make additional payments to their landlord. The tenants at the Vonovia real estate group will not be affected by this.

After the decision in Karlsruhe, the company announced on Thursday that the tenants should “not suffer any financial disadvantages as a result of the political decisions taken”. Vonovia is thus foregoing additional rent claims amounting to around ten million euros.

Defeat for the Berlin Senate

Berlin’s Senator for Construction Sebastian Scheel (Linke) said on Thursday after the constitutional court’s decision that he had expected a different decision by the court. “Since the federal reform of 2006, the competence for housing has been the sole responsibility of the federal states,” explained Scheel. “Social peace is in danger due to rising rents and the associated displacement. It is the central task of politics not to stand idly by.”

Now it is the task of the federal government either to create an effective rental price law that ensures the social mix in the cities, or to transfer the competence to the states.

“In the Senate we will discuss the consequences of the judgment on Tuesday,” Scheel continued. “The Senate also sees it as its duty to develop socially acceptable solutions for tenants.”

Berlin opposition criticizes the Senate

The Berlin opposition parties were happy about the decision from Karlsruhe and immediately shot at the Berlin Senate. “This is not the first time that the left-wing coalition has a questionable understanding of the law – this time the effects of the amateurish behavior are particularly damaging for the people in our city,” said the FDP parliamentary group leader in the Berlin House of Representatives, Sebastian Czaja.

The Berlin CDU chairman Kai Wegner also described the decision from Karlsruhe as a “sensitive defeat for the Senate”. The Berlin government had deceived tenants with a “false rent cap promise,” he said. At the same time, he called for a fund for cases of social hardship and the implementation of existing federal tenant protection measures such as the rent brake.

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