CDU/CSU and FDP groups to file complaint against Berlin's rent price cap

Germany's CDU/CSU and FDP groups in the Federal Parliament have confirmed that they have sufficient signatures from MPs to file a constitutional complaint with the Federal Supreme Court against Berlin's rent price cap law.

The complaint, which will be led by constitutional law expert Professor Shirvani from the University of Bonn, is expected to be filed prior to Easter this year.

The Berlin State Parliament passed the state law introducing the so-called Berlin rent price cap (Berliner Mietendeckel) on January 30. The law, which effectively freezes or lowers rents on more than 1.5 million Berlin apartments, is expected to come into effect from this month for relettings and in November for current leases.

While Berlin's landlords begin to assess the impact of the new regulation on their portfolios (France's Covivio for instance announced last week that it expects to lose some €8 mln in rental income), law experts warn that the brand-new law remains unconstitutional largely due to the lack of legislative competence of the State of Berlin.

'The existing provisions of the social rent price law under the BGB-provisions regarding rent control, particularly with reference to the local comparative rent (ortsübliche Vergleichsmiete) and governing stepped and indexed rents as well as the rent price brake for re-lettings (Mietpreisbremse), are meant to be suspended by the Berlin rent price cap in Berlin and replaced by a stricter rent control regime,' Christian Schede, managing partner of law firm Greenberg Traurig writes in a report.

The law firm also sees strong arguments that the Berlin rent price cap violates other fundamental rights and principles of the German constitution. 'In particular, the concept of citywide, automatic, and mandatory rent reductions sanctioned with penalty fines is likely to be in breach of the constitutional property guarantee and the freedom of contract. Also, the new law still does not provide for certain required differentiations. Most importantly, it does not provide for an appropriate treatment of substantially refurbished apartments. Similarly, it does not appropriately consider the location of the leased space when it comes to determining permitted rent levels,' Greenberg Traurig said.

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