Germany’s Top Court Rules Against Berlin Rent Cap

15 April 2021 | General

In a ruling that came as little surprise to anyone within Berlin, Germany’s top court ruled that the Mietendeckel—a measure put in place by the city to curb skyrocketing rents—was unconstitutional.

In a ruling from the Constitutional Court in the city of Karlsruhe, it was determined that the city-state could not make such legislation by itself. The conservative-leaning CDU and CSU parties, along with the FDP, had asked the court to review the law.

The measure had come into force last November, following its passage in February. Under its auspices, rents for apartments built before 2014 were frozen to whatever they were on 18 June 2019. The Mietendeckel also allowed for tenants to have ‘excessive’ rents lowered. It was reported to have affected 1.5m apartments, 90% of the current housing stock, within the city.

Support for the Mietendeckel had largely been positive within Berlin. Over the last decade, rents within the German capital have risen sharply, displacing many who saw themselves as native to the area even if they were not German nationals. Between 2013 and 2019, according to the German Property Foundation, rents in new contracts had risen 27%. The city had, some felt, became a victim of its own marketing success—Klaus Wowereit , when mayor, had declared it “Poor, but sexy.”

The city has long had tensions with its attractive image and relatively-low property prices compared to other European capitals. In 2016, it attempted to take the wind out of Airbnb’s sails with a law designed to prevent people from buying property cheaply, then renting it out on the site. As The Washington Post reported, “With few exceptions, the city made short-term rentals on platforms such as Airbnb and Wimdu illegal, with fines of up to 100,000 euros (about $123,000) for hosts who violate the law.” Despite returning 4,000 homes to the long-term rental market by 2017, the city’s efforts were gradually chipped away over the following years.

The new ruling is more than likely to cause great consternation within the city. As Berliner Zeitung reported on Thursday, “The ruling will likely create a windfall for landlords in Germany’s capital and a stiff bill for back rent for those who had their rents lowered in November by the now-defunct law.”

The implications of the rent cap being struck down are likely to be severe for those resident in Berlin, and are already being felt. Many rental contracts in the last year have explicitly stated that the rent will remain at a lower level until the cap was lifted after which a higher rate would apply—and be backdated. At least one Berlin resident, taking to Twitter, said that her landlord had called her within fifteen minutes of the ruling being published at 09.30 to chase back payment. At least one major landlord, Vonovia, has said that it will not chase the back payments. Others have said that no one will be made homeless.

The ruling was met with immediate controversy within the German capital, with hundreds attending a protest in the city’s Hermannplatz area. This came despite increasingly-severe lockdown rules put in place to curb an increasingly-dire Covid-19 situation.

This post has originally been featured in Property Wire.