Federal court rules Berlin’s rent cap unlawful

The so-called rent cap has been in force in Berlin for more than a year. Now the Federal Constitutional Court Bundesverfassungsgericht has overturned the controversial law causing apprehensions for tenants in Germany’s biggest city

The Federal Constitutional Court has declared Berlin’s rent cap null and void. According to the decision of the Karlsruhe-based highest court on constitutional matters, Berlin was not entitled to make such a law.

Since the federal government had already passed the rent cap in 2015, the legislative power lays exclusively with it, according to the ruling published on Thursday. (Ref. 2 BvF 1/20 et al.)

The case was taken to court by the 284 members of the Bundestag from the CDU/CSU and the FDP. Two civil courts in Berlin had also asked Karlsruhe for clarification on the same matter.

With the rent cap law, Berlin’s governing Red-Red-Green coalition (SPD, the Left party and Greens) had completely frozen the rents for around 1.5 million flats as of 23 February 2020. According to the Senate of Berlin, the executive body governing the city that is also a federal state, the rent freeze affects nine out of ten rental flats.

The rent cap did not apply to new flats completed since 2014 and the regulation was limited to five years, i.e. until 2025.

The Berlin Senator for Urban Development and Housing, Sebastian Scheel (a member of the Left Party), expressed regret at the ruling. He said rising rents and the displacement associated with them were endangering social peace. Scheel appealed to the federal government to either “create an effective rent law” or to “transfer the competence for this to the federal states”.

The German Tenants’ Association expressed similar sentiments. The decision is bitter, “but it is also a loud wake-up call to the federal legislature to finally act and stop the rent explosion in many German cities,” explained association president Lukas Siebenkotten.

The CDU and FDP, on the other hand, were satisfied. Federal Construction Minister Horst Seehofer (CSU) also welcomed the decision. He said that the rent cap was “completely the wrong way to go” in terms of building policy. It had put the brakes on investment and had not created a single new flat. Seehofer emphasised: “My motto is: build, build, build!”

Associations of the real estate industry also expressed positive views of the court ruling. The Federal Association of Free Real Estate and Housing Companies (BFW) stated that “legal clarity has now been created for tenants and landlords alike.” However, BFW President Andreas Ibel also emphasised the social responsibility of landlords: “With back rent payments now due, we appeal to all market participants to act in a socially responsible manner”.

After the end of the Berlin rent cap, many affected tenant households in the capital must fear that additional payments may become due. According to the decision of the Federal Constitutional Court, the regulations of the rent cap are null and void as of the date of entry into force, the building administration explained on Wednesday.

Sola Jolaoso

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