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Berlin rent cap overturned by Germany's top court

dw.com logo dw.com 4/15/2021 Ben Knight

Germany's constitutional court has decided that the Berlin rent cap violates Germany's constitution. The cap was one of the most-debated laws in the country.

the roof of a building: Provided by Deutsche Welle © Christoph Soeder/dpa/picture-alliance Provided by Deutsche Welle

Germany's constitutional court in Karlsruhe has ruled that the Berlin state government had no right to impose a rent cap in the German capital.

The court ruling found that since the federal government had already made a law regulating rents, a state government could not impose its own law that infringed upon that, and said the Berlin rent cap law was therefore null and void.

Berlin's rent cap meant that rents for 90% of Berlin's apartments were frozen for five years at their June 2019 level. New rents could not go above that level, and as of November 2020, any existing rents that were still above that level had to be reduced.

The Berlin rent cap has been one of the most debated laws in Germany over the past few years. Landlords claimed that it was unconstitutional because a state government did not have a mandate to interfere in housing policy, which was reserved for the federal government.

Campaigners, meanwhile, argued it was a vital way to preserve affordable housing in the German capital, where rents have been soaring for years. The German Property Foundation (ZIA) calculated last year that rents in new contracts in the city had risen 27% from 2013 to 2019 alone.

Since the law came into effect on February 23, 2020, it has caused uncertainty in the German capital's housing market, largely because landlords have taken to putting a "shadow rent" — higher rents that tenants would have to pay in case the court found the rent cap unconstitutional — in their rental contracts.

Renters associations have called these shadow rents unlawful. Thursday's decision could mean a windfall for landlords, who could now potentially demand their tenants backpay higher rents for the past year.

While you're here: Every Tuesday, DW editors round up what is happening in German politics and society, with an eye toward understanding this year’s elections and beyond. You can sign up here for the weekly email newsletter Berlin Briefing, to stay on top of developments as Germany enters the post-Merkel era.

Author: Ben Knight

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