Berlin rent cap ruled unconstitutional by German federal government

Daniel Wighton
Berlin’s governing parties struck a deal to freeze rents for five years, marking one of the most radical plans to tackle spiraling housing costs - Bloomberg

A plan recently passed by the Berlin senate to freeze rent prices across the city for the next five years has been deemed unconstitutional by the German Government.

In a letter sent to Kai Wegner (CDU), a member of the Bundestag representing Berlin, the German Ministry of the Interior, Building and Community has said the rent cap is a matter for federal rather than state regulation.

According to the letter, rent limits are already “comprehensively and conclusively regulated” by the Federal Government, preventing Berlin or any other state parliament from introducing similar protections.

The Ministry for the Interior said rules put in place by Berlin had the effect of undermining the rules handed down by the Federal Government. When it came to federally regulated matters, the “legislative competence of the German states” was “blocked”, the statement said.  

The ministry also expressed concern about the impact of the law on investment and new construction. Since the law was first proposed, building permits have fallen significantly – with a 40 percent decrease in September 2019 compared to the same month last year.

After being debated for months, the rental laws were passed by the Berlin senate in October. The law is expected to be finalised by the House of Representatives in early 2020, before being applied retroactively to June 2019.

The rules say rents cannot be raised for the next five years, while landlords will be stopped from charging higher rents than that paid by previous tenants.

The laws will also establish a ‘rent table’, which will list the upper limits for rents in different suburbs across Berlin. If a tenant is currently being charged an amount higher than the limit, the tenant will be able to sue to have their rent lowered.

Apartments built after 2014 are exempt in order to encourage construction in the overcrowded German capital. More than 1.5 million homes in the German capital will be affected by the law.

Katja Kipping, the Berlin boss of Die Linke, has hit back at the Ministry, telling the Berliner Morgenpost that Federal Minister of the Interior Horst Seehofer is ‘incapable’ of stopping the proposed law.

“The most incompetent Minister of Housing of all time is failing the state (of Berlin), (a state) which is currently pursuing consistent tenant protection.”