Berlin Rent Cap – Q&A

Updated October 25th, 2019

The Berlin Government has announced in June 2019 – before their summer break – that they are planning a new law to limit - for a period of 5 years - the rents of “pre-existing” apartments in Berlin. After 4 months of speculations, the governing coalition has agreed on a draft of the law which shall be discussed in the Berlin regional representations and the Berlin Parliament over the next weeks. It contains a number of rather negative news for owners of apartments that were completed before 2014. The good news in the draft is that new apartments are fully exempted and that the definition of “new apartment” is fairly wide (any apartment completed 2014 or later).

It is quite unlikely that there will be substantial changes to the current draft as it was agreed upon by the governing parties of Berlin. However it is certain that there will be a number of lawsuits to contest the law. The opposition and also many owners have already announced that they will bring this law to court right after it has been passed. There are a number of serious arguments against the validity of the law, such as

  • The Berlin government exceeding their competences (with rental laws being the competence of the German federal legislation)
  • It being unconstitutional because of the property guarantee in the German constitution

At this point it is therefor impossible to say definitely whether and which parts will actually be valid in the long run. However, we have put together the most frequent Q&A below, based on the current draft:

The 9 most frequent questions and answers about the Berlin rent-cap

Is the “Rent-Cap” already in force?

No, until now there is only an announcement that the governing parties in Berlin want to pass such a law and a draft of the law. However this current draft is very likely to be passed within the next 2 months.

What is the “Rent-cap”?

The Rent-Cap first of all forbids to ask for a higher rent than what was agreed on June 18th, 2019.

Further, for all apartment rental contracts that are closed after the law is in force, it becomes also illegal to ask for a rent higher than the maximums stated in the list below. The list specifies a specific maximum rent, depending on age of the apartment and whether it has a bathroom or central heating. The rent can be 1 €/sqm/month higher if it is considered an apartment with “modern equipment” (i.e. if 3 out of 5 specific elements are fulfilled. These elements are a barrier-free elevator, built in kitchen, high end sanitary objects, high end flooring in most of the rooms, low energy consumption).

Furniture and location play no role in this. Certain types of renovations can increase the rent by up to 1 EUR/sqm.

Finally, tenants who pay more than 120% of the maximum amount described above, will be able from September 2020 on to apply to the Berlin city administration to reduce the rent for them. Here location, equipment shall have a small impact on the maximum rent (the wiggle room here is + 0,74 EUR/sqm and – 0,28 EUR/sqm).

The list is as follows (listed for apartments with bathroom and central heating only):

  • First completion until 1918 – € 6,45 per sqm per month
  • First completion 1919-1949 – € 6,27 per sqm per month
  • First completion 1950-1964 – € 6,08 per sqm per month
  • First completion 1965-1972 – € 5,95 per sqm per month
  • First completion 1973-1990 – € 6,04 per sqm per month
  • First completion 1991 - 2002 – € 8,13 per sqm per month
  • First completion 2003-2013 – € 9,80 per sqm per month

Please note: The” Rent-Cap” is not the same as the “Rental Break” which was a federal law passed in 2014 to slow down rent increases in the rental markets all over Germany. Unfortunately the terms are not always used properly, so it is easy to be misled. Especially articles that predate June 2019 are very likely to treat the “Rental Break” rather than the new “Rent-Cap-Law”.

Are also new buildings and apartments affected?

The draft stipulates that buildings that were ready for occupancy 2014 or after shall be fully exempted of the Rent-Cap. There is no exception for fully renovated buildings (unlike the ones in the regulations of the “Rental Break”).

Is there a time limit for the Rent-cap? Where is the rent-cap valid?

The Rent-Cap shall have a duration of 5 years, so until the end of 2024. It is a Berlin law that shall be valid in the entire area of Berlin, but not outside of Berlin.

As owner of an apartment – will I need to take action?

According to §5 (4) of the law, you will have to inform the tenant about the data necessary to calculate the maximum rent. This has to be done within 2 months after the Law has been put in force or before a new contract is being closed. You are not obliged to calculate the maximum rent for the tenant.

What do I need to do if my tenant applies for the Rent-cap?

This will be an administrative procedure, about which you will be informed and in which you can participate. Also the decision of the administration will allow to contest it.

Could I avoid the cap by renting out furnished?

The Rent-Cap contains a clause stating that even with furniture the rents may not be higher, but the same Rent-Caps apply. So furnishing will rather make the apartment less efficient.

Is the Rent-cap lawful and in line with the constitution and what happens if not?

There are serious doubts whether the law – once passed – will be lawful. Many legal experts question that Berlin has the right to pass its own rental law, as the civil law legislation is usually a competence of the federal government. Further the law could be in breach with the right to ownership which will be in accordance with other laws and the constitution. It is expected that there will be a number of different law suits right after the law is coming in force.

Does the Rent-cap change the side costs?

The law does not contain any changes (like a cap) regarding the side costs. The tenants have to bear the transferrable side costs in addition to the maximum rents stated above.

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