Germany’s highest court rules disputed Berlin rent ceiling unlawful

The Federal Constitutional Court has declared a policy of freezing rent in Berlin for the next five years to combat the soaring cost of living is illegal in a decision published Thursday morning.

The capital’s “Mietendeckel” law or rent ceiling “violates the basic law and is therefore declared void,” the court in the city of Karlsruhe, in the southwest, said in a blow to millions of tenants.

A total of 284 parliamentarians had filed a petition for judicial review against the rent ceiling, wondering whether such a regulation could be implemented at the state level.

In addition, several private owners have also appealed to the Constitutional Court.

The court ruled in favor of the deputies of the center-right Christian Democratic Union (CDU) and the pro-business Free Democrats, both in opposition in Berlin.

The court agreed with their argument that rent policy is a federal matter, not a state one.

The rent freeze, adopted by the Berlin legislature in January 2020, was a flagship policy of the local government coalition of center-left social-democratic parties, the Greens and the far-left Linke parties.

It is a blow for them ahead of the September elections in Berlin – its own city-state – and for a new federal parliament and successor to Chancellor Angela Merkel who is stepping down.

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READ ALSO: Rent freeze in Berlin: 340,000 tenants “pay too much” for their housing

What effect has the rent cap had?

The law capped rents until 2025, after which any increase would have been limited to 1.3% per year based on inflation.

According to the city’s planning and housing department, it affected more than 1.5 million apartments.

The exceptions included social housing and new apartments built since 2014.

Some particularly high rents have even been temporarily lowered, pending a court ruling, as landlords have broken the rules and face fines of up to € 500,000.

These tenants will now generally be required to repay the rent. Many took to social media to express their disappointment with the decision.

The rent cap met stiff opposition from the real estate industry, which argued that the freeze discouraged developers from building in Berlin and ultimately worsened the housing crisis in the capital.

According to the real estate website Immowelt, Berliners spend an average of a quarter of their income on housing costs.

Only 18.4 percent of the city’s roughly four million people own their own property, one of the lowest rates in Europe.

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