Wednesday 9/22/21
HOUSING

German Constitutional Court scraps controversial Berlin rent cap

Rents that had been reduced can now go back up and many thousands of tenants may also be required to backpay their rent from the months since the legislation came into force.

15 April 2021, Berlin: Police officers clash with demonstrators during a demonstration of the alliance "Together against displacement and #Mietenwahnsinn" against the ruling of the Federal Court of Justice on the rent cap in Berlin. Photo: Christoph Soeder/dpa
Police officers clash with demonstrators of the alliance "Together against displacement and #Mietenwahnsinn" against the ruling on the rent cap in Berlin. Photo: Christoph Soeder/dpa.
A controversial rent cap to control soaring rents in the German capital Berlin has been scrapped by the country's Constitutional Court.

The legislation had been welcomed by tenants, but panned by developers and landlords since it came into force in February 2020.

Since then, the rents of around 1.5 million flats in Berlin had theoretically been frozen at June 2019 rates.

The court ruled on Thursday that the Berlin government had overstepped its powers in introducing the law, as federal law governing rents was already in place.

Previous federal laws had "attempted to ensure a fair balance between the interests of tenants and lessors, interests that are protected by fundamental rights" meaning that "the [German states] are precluded from passing rent legislation in this regard," an English statement from the court said.

The Berlin rent cap was therefore "void in its entirety."

The court decision means that rents that had been reduced in line with the law can now go back up.

Many thousands of tenants may also be required to backpay their rent from the months since the Berlin legislation came into force.

Introduced by a left-wing coalition

The rent cap was unique to the German capital, where a left-wing coalition has been in power under Mayor Michael Mueller.

Mueller had this year described the law as a necessary "breather" for tenants struggling to deal with the soaring cost of renting property in the city.

The challenge in the Constitutional Court was originally brought by centre-right CDU and CSU parties and the liberal FDP party, who argued that the city government had exceeded its powers.

The FDP welcomed the ruling on Thursday as "good news."

FDP lawmaker and housing expert Daniel Foest said the Berlin Senate had "exploited renters in Berlin for an ideological experiment, and it had failed."

Shares in major property firm Deutsche Wohnen rose sharply after the decision.

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