Rent Control Regulation

Rent Brake (Mietpreisbremse) and Berlin Rent Cap (Mietendeckel) explained

Depending on the city and the time of first occupancy, apartment rents can be subject to regulation in Germany. The following shall give you an idea, whether your apartment falls under this regulation, looking at the so-called Rent Brake (“Mietpreisbremse”) of the German Civil Code and the Berlin Rent Cap (Mietendeckel), see also Berlin Rent Cap Q&A.

Note, however, that the Berlin Rent Cap is NOT FINAL YET and has not yet come into force. Moreover, the Berlin Rent Cap faces serious constitutional challenges, which will be subject to court procedures, once the law is in force.

For the Rent Brake of the German Civil Code, the constitutionality was approved by the German constitutional court on July 18, 2019. So this law is here to stay.

Does my Apartment fall under Rent Regulation?

The Rent Brake is federal law and applies in areas of tense housing markets that the state legislators may specify. The state of Berlin has done so for whole Berlin, just as other state legislators have done for several cities in Germany, see here.

The Berlin Rent Cap will apply to Berlin apartments only, as it is Berlin state law.

Rent Brake – NOT, if built or extensively modernized after October 1, 2014:
For the Rent Brake, apartments are excluded that were first used after construction or an extensive modernization after October 1, 2014. We talk of an extensive modernization, if the apartment condition after modernization is roughly comparable to a new apartment AND if modernization costs were approximately 1/3 of the costs of a new apartment, minimum.

Moreover, apartments are exempted from the Rent Brake Regulation regardless of the time of first use, if

  • the lease is for temporary use only, or
  • the leased residential space is part of an apartment, which is used and furnished by the landlord. For the Berlin Rent Cap such exceptions shall not apply.

Since January 1, 2019, landlords may only invoke the cut-off-date of the Rent Brake, if the landlord informs the tenant prior to the conclusion of the rental agreement that the apartment was first used after October 1, 2014, after construction or extensive modernization.

Berlin Rent Cap – NOT, if built after 2013: The Rent Cap shall apply only to apartments that were first time ready for occupancy before January 1, 2014.

For an overview, when the law is applicable and when not, please see Table 1.

What are the Maximum Rents under the Rent Regulation?

Maximum Rents under the Rent Brake (“Mietpreisbremse”, §§ 556d-g BGB)
Under the Rent Brake, the rents for re-letting and initial rental must not be

  • 10 % higher than the comparative average rent (in Berlin calculated according to the Berlin Rent Index OR
  • higher than the previous rent if the previous rent was valid. Based on this, the maximum rent can exceed the comparative average rent. However, note, since January 1, 2019, the landlord may only invoke the higher rent if the he or she has informed the tenant about the previous rent before conclusion of the lease.

Maximum Rents under the Berlin Rent Cap (Mietendeckel) – First Rentals or Re-Rented Apartments –
When re-letting an apartment or in a case of a first rental after the Berlin Rent Cap has entered into force, landlords must not exceed the maximum rent, which is specified in Table 2. The maximum rent varies and depends on the following criteria:

  • Year of Construction
  • Does the apartment have central heating and / or a bath room?
  • Does the apartment have 3 of the following amenities: (1) elevator accessible from the apartment entrance without step, (2) built-in kitchen, (3) high quality sanitary equipment, (4) mostly high-quality flooring, (5) energy consumption value less than 120 kWh / (m² a) (so-called modern equipment)

As also indicated in Table 2, if a building does not have more than two apartments, the landlord can add another 10 % to the maximum rent.

Maximum Rents under the Berlin Rent Cap – already Existing Rentals –
For already existing rental contracts, landlords must take in account two caps:

  • 1. June-18-2019-Cap: The landlord must not ask for a rent that exceeds the rent that applied on June 18, 2019.
  • 2. Capping Application: Moreover, the tenant can apply for a cap or rather cut off rent, if the June-18-2019-rent exceeds a maximum rent. For such an application, the maximum rent is 20% higher than the maximum rent for new rentals (see above). Moreover, the residential area (Wohnlage) determining: in simple and medium residential areas, a deduction of 0.28 € or 0.09 € / sqm respectively applies; in good residential areas, we can add an extra of 0.74 €. Following this, you find the maximum rents specified in Table 3. For buildings with up to 2 apartments, the maximum rent is again 10% higher (not included in Table 2).

Defining the residential area: another city ordinance shall specify whether your apartment is in a simple, medium or good residential area. We may expect that this ordinance will be based on the definitions in the Berlin Rent Index (Wohnlagen Berliner Mietspiegel).

Capping applications will be possible only several months after the law is in force. The capped rent then applies from the month following the capping request.

When can the landlord ask more than the maximum rent?
An increase of the maximum rent is possible:

  • up to 1 € / sqm after modernization, if increase takes place after the law enters into force AND if the requirements of § 559 i. V. m. § 555b No. 1, 3-6 BGB are fulfilled, in particular, the increase per annum must not amount to more than 8% of the modernization costs; OR
  • in case of hardship, esp. if the housing costs, including substance-sustaining refurbishment costs, are higher than the rental income.

Landlords must notify Investitionsbank Berlin (ibb) about the modernization increase of up to 1 €/sqm. Landlords must apply at Investitionsbank Berlin for increase based on a hardship.

What do I have to do as landlord? When do I face a fine?

Obligation to notify: The landlord must notify the tenant before conclusion of the rental contract of the:

  • amount of the rent on June 18, 2019 and
  • the circumstances for the calculation of the maximum rent, i. e. the years of first occupancy, central heating, bath, the modern equipment (see specified above)

A landlord can be fined if the landlord

  • violates the obligation to notify the tenant as specified above,
  • demands more than the applicable maximum rent,
  • does not provide information or provide documentation despite the authority’s request.

Here you will find an overview of all tables:
Table 1
Table 2
Table 3

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