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Berlin: Senate to Approve New ‘Rent Cap’ on Tuesday

Berlin’s three-way left-wing coalition intends to approve its new ‘rent cap’ on Tuesday. That way, the city state wants to fight its affordable housing crisis. It is safe to say that the conservatives do not like the ‘rent cap’.

Note: The latest on the ‘rent cap’ can be found here: Berlin: Senate Approves ‘Rent Cap’

For months, Governing Mayor Michael Müller, a Social Democrat (SPD), and his coalition partners in Berlin had a big argument about the right way to make living more affordable in Berlin. Everyone had their own ideas regarding the details. Within ‘The Left’, one of Müller’s coalition partners, even expropriations of large real estate companies were on the agenda.

Shaky Measure

What the partners, which also include the Greens, came up with is a compromise. It is a shaky one, especially from a legal perspective. It will be the first time any ‘rent cap’ is being imposed on landlords in Germany. The caucus of the conservative CDU at the Berlin Bundestag said it wanted to fight the measure at the Federal Constitutional Court.

The ‘rent cap’ includes the following points:

  • The rents will be based on the rent index of 2013 and frozen for five years, while the average salary increase since will be taken into account.
  • The ‘cap’ even applies when new tenants takes sign new leases. There will supposedly be a ‘rent cap’ table which will show general limits based on certain characteristics of apartments.
  • Rents can be raised by up to 1.3 percent per year under certain conditions, starting in 2022. This is the inflationary adjustment the coalition partners included in what they call a ‘breathing rent cap’.
  • Landlords who charged very low rents in the past may increase them by up to one Euro per square meter. The maximum rent they can ask for is 5 Euro per square meter.
  • Tenants can be charged for modernization costs under certain conditions. The maximum is 1 Euro per square meter and month.
  • Tenants can apply for a decrease of their rent if it exceeds 5 to 9,80 Euro per square meter (depending on the kind of apartment they are renting) by more than 20 percent. So-called profiteering rents can be decreased against the will of the landlord.
  • The ‘rent cap’ will be valid for 1.5 million apartments in Berlin. It does not apply to an additional 400,000 of them, because there are exceptions. For instance public housing projects are exempt. So are newly built apartments and apartments in residential homes.
  • Berlin’s Senate Administration will employ up to 250 people in total whose task will be to review and verify rents.
  • Once the ‘cap’ is officially in place, it will apply retroactively from June 18th, 2019.

Rents Already Regulated

The conservative opponents of the ‘rent cap’ are arguing the legislator, on the federal level, had already regulated rents for the entire country. Berlin did not have the right to come up with its own ‘rent cap’. They also say the measure contradicted the property rights in Germany.

In case Berlin’s ‘rent cap’ is thrown overboard by the Federal Constitutional Court, tenants might have to expect demands for subsequent payments. This means, at this point the ‘rent cap’ is a risk for those it is supposed to protect.

The latest on the ‘rent cap’: Berlin: Senate Approves ‘Rent Cap’