Uncertainty among landlords and tenants
Landlords and tenants in Berlin are facing a challenge. The insecurity is high on both sides. On the one hand, lawyers consider it unlikely that the rent cap will be accepted in court. The Christian Democrats and the Liberal Democrats have already announced a complaint against the rent cap at the Federal Constitutional Court and a wave of lawsuits is also expected from private landlords, who own around 500,000 of the approximately 1.5 million apartments concerned. On the other hand, the project is officially underway and the new rent ceilings are in sight. These are set in such a way that most tenants in Berlin will feel motivated to apply for a rent reduction. This also applies to those tenants who have always been happy with their rent and who found it fair and appropriate. They now get the feeling that the rent is too high. The basis for the new upper limits is not the 2019 rent index acknowledged by the Senate and the housing industry, but the 2013 rent index.
Rent cap. The key points of the project:
- Rent freeze for 5 years: Rents in Berlin are to be frozen for a period of 5 years, retroactively to 18 June 2019.
- Staggered and index-linked rents will be suspended and also frozen to the level of the rent owed as of 18 June 2019.
- Rents exceeding 120 percent of the upper limits may be reduced to the 120 value upon application.
- In the case of new rentals, the rents fall back to the upper rent limit, i.e. to a maximum of 100 percent.
- From 2022, landlords should be able to increase rent by 1.3 percent annually
Properties affected
About 1.5 million apartments are impacted in Berlin. Excluded are apartments that were ready for occupancy after 1 January 2014, social housing (apartments from public funded housing construction), dormitories, new buildings, and housing units with public sponsorship.
What about furnished apartments?
Furnished flats and student flats are subject to the new regulations.
Rent limits (Rent table)
The Senate has defined political rent limits and brought them into a new rent table. The most recent rent mirror from 2019 is being discontinued. The new regulated rents base on the rent index of 2013, in which rents in Berlin for "normally equipped apartments" ranged between 5.95 and 9.80 euros per square metre of living space. Existing rents may exceed the fixed basic values (see table below) by 20 percent. Rents that exceed 120 percent of the basic values (basic value plus 20 percent) may be reduced by tenants.
Inflation compensation up to rental cap only
From 2022, the rent may increase annually by an inflation compensation of 1.3 percent, provided that it is still below the permitted upper rent limit.
Rent table (Source: Senate Department for Urban Development and Housing)
| First time occupancy of the apartment und Ausstattung | Rent per sqm |
|---|---|
| until 1918 with collective heating and with bathroom | 6,45 Euro |
| up to 1918 with collective heating or with bathroom | 5,00 Euro |
| until 1918 without collective heating and without bathroom | 3,92 Euro |
| 1919 to 1949 with collective heating and bathroom | 6,27 Euro |
| 1919 bis 1949 mit Sammelheizung oder mit Bad | 5,22 Euro |
| 1919 to 1949 without collective heating and without bathroom | 4,59 Euro |
| 1950 to 1964 with collective heating and bathroom | 6,08 Euro |
| 1950 to 1964 with collective heating or with bathroom | 5,62 Euro |
| 1965 to 1972 with collective heating and bathroom | 5,95 Euro |
| 1973 to 1990 with collective heating and bathroom | 6,04 Euro |
| 1991 to 2002 with collective heating and bathroom | 8,13 Euro |
| 2003 to 2013 with collective heating and bathroom | 9,80 Euro |
| newer than 2014 | no restrictions so far |
What are the effects of equipment features?
For apartments with modern equipment, the value increases by 1.00 euros. A modern equipment is present, if at least three of the following characteristics are present:
- Elevator accessible without steps
- Fitted kitchen
- High-quality sanitary equipment
- High-quality floor surface in the majority of living area
- Energy consumption indicator of less than 120 kWh/(m² a)
Family houses
According to the Senate Department for Urban Development and Housing, the law also applies to detached and semi-detached houses. According to the Senate's website: "If the apartments are located in buildings with no more than two apartments, the upper rent limit will be increased by ten percent".
Rent reductions
If a rent is more than 20 percent above the upper rent limit, it can be reduced to 120 percent of the upper rent limit for existing leases. According to red-red-green, this regulation will come into force probably nine months after the law has come into force. There will be no link between the rent reduction and household income (30 percent rule).
How are modernizations and renovations handled
Rent increases due to modernization are limited. Increases of up to 1 Euro/m² must be notified to the local authorities, but do not need approval. For modernizations, which result in rent increases above 1 EUR/m², subsidy programs from the IBB must be used. The maximum permissible rent increase in that case amounts again to 1 euro. Only measures that serve the creation of barrier-free accessibility or a necessary energetic renovation are considered eligible.
Differentiation according to year of construction and location
The rent table is differentiated by year of construction and location.
- Simple locations: reduction of 0.28 EUR/m²
- Mediocre locations: reduction of 0,09 EUR/m²
- Good locations: additional charge of 0,74 EUR/m²
New Leasing (re-rentals)
When re-renting an apartment in Berlin, the “new” rent may not exceed the value of the previous rent if this was below the upper rent limit. If the rent owed by the previous tenant was above the upper rent limit, the rent must be reduced to the new upper rent limit. Rents which were less than 5 Euro/m² in the previous rental period can be raised by up to 1 Euro to a maximum of 5 Euro/square metre in the case of new rentals.
Legal remedies
Owners / landlords are not entitled to out-of-court remedy proceedings. This means that no objection is possible. Owners/landlords must therefore sue. The filing of an action will not have a suspensive effect.