The Berlin rent cap is unconstitutional, the extreme regulatory intervention by the left-wing capital city government is a waste of time. Three reasons why the judgment is good.
From the dream of socialism! As expected, the Berlin rent cap is crashed before the Federal Constitutional Courtwho have favourited embarrassment for the red-red-green Senate perfect. And that’s a good thing – for three reasons.
First: The free market economy in Germany will be strengthened. Despite all trends towards more regulation, the judgment of the constitutional judges means that the state is not allowed to do everything. At least not as the local government of the SPD, Left Party and Greens did in Berlin.
It is true that Germany’s highest court has declared the rent cap unconstitutional simply because Berlin is not responsible for tenancy law. But this does not change the result: the retroactive lowering of rents, the quasi-expropriation of thousands of landlords, has been stopped. In this way – for the time being – you can still rely on privately concluded contracts that do not concern the state.
Secondly: Moving to and within Berlin is now easier again. Recently, it was particularly difficult for those who came from outside and were looking for an apartment in the capital.
Fewer rental apartments on offer
As much as the rent cap relieved the wallet of the locals, it also ensured that hardly any property owner even offered apartments for rent. If he did, some brokers would ask desperate people looking for a place to stay in bribes in four figures.
A study by the German Institute for Economic Research (DIW) recently confirmed that the rent cap is lowering the supply of rental apartments – also because more rental apartments have been converted into owner-occupied apartments. Those who couldn’t afford the latter were locked in or out of Berlin by the rent cover in their apartment. That is now the end of it: the supply of apartments is expected to grow again and the market will relax.
Third: The rental market is becoming fairer again. Does that sound ironic? But it is not, because: The rent cap not only ensured that poorer people no longer had to fear rent increases – it also ensured that richer tenants could lower their monthly payments to the landlord. Although they could easily afford the high rents.
The judgment now resolves this design flaw, which, of all people, a left-wing government built into the lid from the start. Those who have more can and must now pay more so that they can live in the chicest areas of the city.
More housing really solves the problem
It is to be hoped that these views will prevail. However, skepticism is appropriate here. In addition to the Left Party, the Greens and the SPD are also pulling into the approaching federal election campaign with the idea of a rent cap.
The decision by the Karlsruhe judges should encourage many on the left in the spectrum of parties to solve the rent problem in the metropolitan areas with a lid by federal law instead of the only instrument that really helps: building more apartments.