German constitutional court strikes down Berlin rent cap

BERLIN — Germany’s Constitutional Court on Thursday ruled a rent cap in Berlin to be null and void, leaving many renters in the country’s capital with the prospect of paying back thousands of euros in discounts to landlords.

The decision reverses a policy implemented by the city’s left-leaning coalition government in February 2020 which froze rents for 90 percent of apartments — or around 1.5 million properties — at June 2019 prices for five years and then later forced landlords to cut prices for those paying above a certain average.

The policy was aimed at making housing more affordable in Berlin, where around 85 percent of people rent rather than own their own property and rates have surged over recent years amid an influx of private investment.

Critics argued that the law benefited wealthier tenants while throttling the local housing market and making it more difficult for newcomers to find accommodation.

The rent cap was introduced pending a decision from the Constitutional Court after federal lawmakers from the center-right Christian Democrats and the liberal Free Democrats complained that national legislation dating back to 2015 should take precedent.

In a long-awaited judgment on Thursday, the court ruled that the Berlin state government had no right to implement their own rules given the existence of a federal law regulating rents. (The Berlin rent cap went further than the federal “rent brake,” which allows landlords to increase rents by a maximum of 10 percent more than comparable local rent prices.)

The decision means many landlords can now demand back payment on discounts handed out over the last year, although one major real estate company, Vonovia, said it would not ask renters to repay rates retroactively.

Berlin’s Senator for Urban Development and Housing Sebastian Scheel, speaking of a “difficult day for tenants in Berlin,” told Tagesspiegel that authorities would support those in need of help.

“The rent cap is history,” Germany’s Interior Minister Horst Seehofer, also responsible for building policy, said in a statement on social media. “That is a good thing because it was also the completely wrong path in terms of building policy.”

Berliners go to the polls for regional elections in September, when federal elections will also take place. Locally, the Greens and Christian Democrats are almost neck-and-neck, according to recent polls.

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