The once divided city is once again deeply divided in the discussion about housing and rents. The decision of the Federal Constitutional Court on the rent cap does not change this for the time being. Around half of Berliners even consider expropriation of flats to be a suitable political means to make housing cheaper.

On 15 April 2021, the Federal Constitutional Court (BVG) declared Berlin's rent cap incompatible with the Basic Law and thus null and void. The rent cap consisted of three pillars: a rent freeze, a rent cap for re-letting and a legal ban on excessive rents. About 1.5 million flats in Berlin were affected. The whole republic was watching this experiment. What would happen if the model were to be adopted nationwide? These fears are now off the table. 

The court examined the question of legislative competence. Was the state of Berlin allowed to introduce such a rent cap at all? The BVG came to the conclusion that such regulations on tenancy law belong in the Civil Code. There, however, the federal government has already made comprehensive and conclusive use of its competence with the Mietpreisbremse (§§ 556 ff. BGB). The Mietpreisbremse was introduced in 2015 and has been further developed with several amendments to the law. 

For tenants in Berlin who have reduced their rent, this means: The difference to the originally agreed rent must be paid back retroactively. Whether there is an immediate termination option is doubtful.

Interventions like the rent cap have had serious consequences not only in Berlin, but also in New York, San Francisco, Barcelona, London and Stockholm: landlords are investing less in their existing properties. Energy-efficient modernisation is hardly worthwhile any more. The quality of the housing market is declining. In Berlin, moreover, the supply of rental flats fell by 28 percent.

(Photo: © Bill Kasman, Pixabay)

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