Rent cover? Rent cap?
The rent cover is so new that we do not know exactly how to translate the term for you. With the rent cap (or rent cover), the policy of housing under red-red-green in Berlin, in particular under building senator Lompscher and Governing Mayor Müller, is now clearly geared to a planned economy. Despite harsh critique not only from private owners and the real estate industry, rents in Berlin may not be increased for five years as of 18.06.2019. The paper will now become state law. We summarise the key points of the project for you and supplement or correct them as soon as more concrete information is available.
Berlin Rent Cover: Schedule
The Senate decision on the key points of 18.06.2019 is to be completed by 31.08.2019 as a draft for the final drawing at the Senate Department for Urban Development. Thereafter, professional circles and associations are to be given the opportunity to take part in the examination by about mid-September. On 07.10.2019 the draft is to be submitted to the Senate for submission. The Senate resolution is aimed for 15.10.2019, the first reading in the Berlin House of Representatives is to take place by 31.10.2019. This will be followed by the second reading and, if there is a declaration to waive the third reading, it will be issued by 20.12.2019. Announcement in the Berlin Gazette of Laws and Decrees is to take place by 10.01.2020. The entry into force is planned for 11.01.2020. Attention: The law is retro-active. The effective date is therefore not the effective date, but the 18.06.2019.
Regulation and period of the rent cover
The rents in Berlin are to be limited by a state law. In principle, the regulations apply from the date on which the Senate adopts the key points, i.e. 18.06.2019. The rent levels are also limited to five years for increases from this date until the adoption of the state law.
Scope of application of the rent cover Berlin
The rent cap or rent cover applies to rented flats in multi-family houses throughout Berlin that are not price-fixed. Not price-fixed means: all rental houses on the free market that are not subject to subsidies. To put it more simply: for foreign investors and owners this is almost 100 percent of the cases. Subsidised social housing objects are excluded.
Rent cover Berlin: What about the existing rent relationships?
The rents in established rent relationships may not be increased for a period of five years. It is possible that tenants will be given the opportunity to check the current rent for an excess rent. Even if this point is not yet clear, this would mean that tenants could reduce the rent to the permissible level with a so-called reduction request. This is based on a generally applicable upper rent limit that is to be defined.
Rent cover and rent for new rentals
When renting out apartments, the last agreed rent from the previous tenancy may be demanded at the most, provided this does not exceed the upper rent limit. New residential construction that has not yet been let is excluded. The former would mean a caesura, because so far the landlord is entitled to demand the last received rent also with new letting. The rent cover would thus not only be a rent cover, but also a rent reducer.
Rent cover: modernization
In future, special approval and notification obligations will be created for modernisation costs. Landlords must submit advertisements and permits to the IBB (Investitionsbank Berlin). Modernisation levies which increase the gross warm rent by more than 0.50 €/m² per month are subject to reporting.
In the future, energy modernisation will be accompanied by a number of additional measures. The official approval depends on whether the rent increases are in a certain proportion to the savings achieved in operational costs. The landlords must provide written proof of the expected savings in operational costs by an authorised expert.
Further modernizations with rent increases are subject to approval. A permit must be granted, for example, if it concerns measures prescribed by law, if barriers in the flats are to be reduced or flats with so-called substandard (e.g. outside toilet) are to be equipped according to modern standards. However, the permit will only be granted if the modernisation of the housing is carried out with the aid of the housing modernisation regulations. (Attention: This point is still unclear. We will inform you)
Cases of hardship under the rent cover
The law is intended to take into account cases of economic hardship of landlords. Hardship cases must be examined by Investitionsbank Berlin (IBB) upon application and, if appropriate, approved. If there is evidence of an economic shortfall, IBB may approve rent increases and higher rental agreements. As compensation, the difference between the approved rent and the upper rent limit is financially compensated to WBS entitled tenants (WBS = entitlement certificate).
Violations of the requirements of the Berlin Rent Act are classified as infringements. They can be fined up to 500,000 euros. Tenants can report suspected violations to the district office or the IBB.
Powers of intervention of the public authorities
Entities are defined that are responsible for the rent price inspection. They will be given extensive powers to carry out this task. In particular, they may prohibit landlords in individual cases from demanding or accepting a higher rent than the legally permissible rent.