Landlords rejoice after Berlin rent cap is found unconstitutional

Major residential landlords including the city’s largest landlords Vonovia and Deutsche Wohnen welcomed Thursday’s ruling by the German Federal Court on the unconstitutionality of the so-called Berlin rent cap (Mietendeckel) a year after its introduction in the German capital city.

In overturning the law, Germany’s Constitutional Court said that the city government lacked the authority to enact such rules. Rents were initially frozen for five years in February 2020, affecting about 1.5 million apartments. A second stage came into effect in November 2020 when landlords were forced to cut rent for more than 300,000 tenants.

German property group Vonovia said it would waive its right to claim rent arrears, while rival group Deutsche Wohnen announced that it would seek reimbursement for the difference between the original and capped rent.

‘No tenant of Deutsche Wohnen will lose their own apartment as a result of the decision,’ the company said, adding that it would offer ‘various options’ for settling the remaining amount of the rent due, from one-off and installment payments to deferrals.
Phoenix Spree Deutschland, another landlord, said that all of its rental agreements have been structured to revert back to pre-Mietendeckel rent levels and to allow for the back-payment of higher rents now legally due for the period during which the Mietendeckel was in place.

The company has now the right to claim about €1.8 mln of rents.

Einar Skjerven, CEO of Berlin-based property group Skjerven, said that the Court’s verdict not only overturns the rental cap decision of the Berlin Senate but also sends ‘a clear message to Berlin's politicians not to unduly interfere in the residential real estate market’.

‘The ruling is excellent news for investors in Berlin. At last there is legal certainty and landlords can rent out their apartments at market rates. We now expect demand for Berlin residential real estate to be very high again,’ the firm said.

The Mietendeckel law had been hotly disputed by experts since the beginning, with real estate groups and landlord associations doubting its legality and sense.

In May 2020, members of the Bundestag from the FDP and CDU/CSU submitted a petition to the Federal Constitutional Court in Karlsruhe to review the law.


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