Berlin properties and Corona

The corona crisis will lead to liquidity bottlenecks for tenants in Berlin. The Federal Government and the Berlin Senate are countering this with protective umbrellas and programs. Which tenants are particularly at risk? 

by Peter Guthmann Published on:

Is the Corona crisis bringing tenants into trouble?

The uncertainty surrounding the SARS-CoV-2 virus is very high and there are enormous human and economic implications. Whether landlord or tenant, commercial or residential property: the crisis will not pass without leaving clear traces. It is to be expected that the markets and segments will react with varying degrees of severity and with a time lag in the course of the year. 

Tenants and landlords in the Corona crisis

The corona crisis does not selectively affect individual population groups, but via cascade effects sooner or later almost all market participants. With the law to mitigate the consequences of the Covid 19 pandemic, the German government has put up a protective umbrella that is intended to reduce the effects of the crisis, especially for tenants, in civil, insolvency and criminal procedural law. 

Much tenant protection - no landlord protection

With this act, the federal government wants to prevent indebtedness, housing shortages and the loss of employment bases. Tenants' obligations to pay can only be claimed by landlords at a later date. The law thus limits the landlord's right to give notice without releasing the tenants. The legislator hopes for a dampening effect in view of the loss of income and liquidity bottlenecks among tenants. Specifically, the law suspends the landlord's right of termination for tenancies due to rent debts that initially arise between April 1, 2020 and September 30, 2020. An aid fund, as demanded by many parties, is currently only available for commercial tenants. Housing tenants can apply for housing allowance in case of loss of income. 

Are also landlords protected?

A large fraction of private landlords in Germany and in Berlin are smallscale entrepreneurs, freelancers, family businesses or families who depend on the rental income from their properties for management, financing and their own livelihood. For this group of landlords, loss of rent is a serious matter. They bear the risk of vacancies in the commercial sector and must ensure management. Against this background, owners' associations criticise the protective shield as one-sided in favour of tenants. The Tenants' Association and the Federal Association of German Housing and Real Estate Companies, GdW, had argued in favour of a state housing fund in the event of rent losses for residential property, which, like the proposal for a subject subsidy in the form of a special housing allowance for residential and small commercial tenants, went unheeded.

Where do the Berliners live?

About a quarter of the approximately 1.45 million rental apartments in Berlin are let by private individuals. In total, the housing stock amounts to about 1.95 million units, mainly in multi-storey residential buildings with 3 or more units. Around 337,000 units are occupied by the owners themselves. The approx. 1.45 million rented apartments are spread over four pillars:

Type of landlord Percent
Private sector companies 37 %
Housing companies and cooperatives 28 %
Private persons 26 %
Public institutions 9 %

Tenants in Berlin by type of employment

The tenant ratio in Berlin is about 83 percent of the total population of about 3.77 million. The number of people in employment is approximately 2.065 million, including approximately 1.53 million employees subject to social insurance contributions. 

Employees in Berlin

Employed people Number Percentage
Total 2.065.000  
Employees subject to social insurance contributions 1.530.000 74 %
Civil servants and employees in the public sector 234.000 11 %
Employees not subject to social security contributions 301.000 15 %

Tenants subject to social security contributions

For employees covered by social insurance, the rules for continuation of salary payments apply in the event of incapacity to work or quarantine in accordance with the Infection Protection Act. In the event of quarantine, employees covered by social insurance receive continued wage payments for six weeks. From the seventh week, employees receive sick pay from the state. In the case of short-time work, the unemployment insurance covers approximately 60 percent of net wages with the short-time work allowance, and 67 percent for employees with children. 

Civil servants and employees in the public sector

In Berlin there are about 234,000 employees in the public sector. Civil servants receive their full salary even during long periods of absence, e.g. due to illness or quarantine. Salaried employees receive sick pay amounting to 70 percent of their gross income after six weeks of illness, or for 78 weeks from the 43rd day of illness. 

Employees without social security contributions 

2.06 million employees minus 1.52 million employees subject to social insurance contributions and 234,000 employees in the public sector corresponds to approximately 306,000 people. For the time being, this group is the most affected group, since income losses are not absorbed or mitigated by the social security system. Small and individual entrepreneurs in particular can be hit twice, as commercial and residential rents must often be made to pay.

The Berlin Senate has decided on emergency aid measures for this occupational group. The so-called Emergency Aid II provides for a state programme of 100 million euros for the current year. The emergency aid program is intended to support small and micro-enterprises in the private cultural sector, freelance and solo independent artists and cultural workers, as well as honorary staff, small art associations and independent event companies with up to 5,000 euros each.

Liquidity bottlenecks, especially for the self-employed

It can be assumed that the liquidity problem will have a muted impact on the housing market. Bottlenecks are initially to be expected for the approx. 306,000 employees who are not covered by social security. Given an average household size of approx. 1.7 persons, this corresponds mathematically to about 180,000 rental contracts that could run into difficulties. 

Liquidity bottlenecks among employees covered by social insurance will only arise after some time, if at all. For a period of 6 weeks, wages will continue to be paid in full if quarantine is imposed. If companies go on short-time work, depending on the extent of the shortfall, there may be a shortfall of up to 40 percent of net wages (childless) and up to 33 percent (with children). The average value of 40 and 33 percent corresponds to a salary loss of about 36.5 percent in the case of short-time work. According to our assumptions, this percentage liquidity loss would apply to approximately 1.53 million Berliners. Assuming a household size of 1.7 persons, this would affect about 890,000 households. But here, too, apartment tenants can take advantage of government assistance before they defer rent. In case of a complete loss of wages or if the wages are no longer sufficient, there is the possibility to apply for short-time work or unemployment benefits.

Calculated in Euro

In Berlin there is about 142,700,000 m² of living space. Calculated on 1.95 million apartments, this results in an average living space of approx. 73 m². An average apartment thus costs around EUR 512 net cold per month, based on the average rent of around EUR 7/m² recorded in the 2019 rent index. Calculated on the basis of square metres or living space, this results in a Berlin monthly net rent of almost one billion euros (998,400,000). 

A hypothetical scenario calculated according to employment group results in the following default risk for 100 percent rent loss:

1 billion euros monthly net rent x 15 percent = maximum risk of approx. 150 million euros. Distributed over the type of landlord, this means

Landlord Percentage of housing stock Percent Risk of default (in millions of euros)
Private companies 37 % 55,5
Housing companies and cooperatives 28 % 42
Private persons 26 % 39
State institutions 9 % 13,5

What if the shutdown takes longer?

In the event of a prolonged shutdown, rent losses are likely to occur also for employees covered by social insurance, unless they are absorbed by an emergency fund. The planned postponement with protection against dismissal must be replaced by a subject subsidy or by legal claims of the landlords in the amount of the losses against the emergency fund. In order to avoid deadweight effects, the tenant and not the landlord must be able to prove the reason for the shortage. Furthermore, a state fund is the only way in which tenants can be relieved of accumulated rent debts at a later date. Housing tenants can apply for housing benefit in the event of loss of income. Those who no longer receive a wage or receive too little can also apply for short-time work or unemployment benefits.


With the "Act to Mitigate the Consequences of the Covid 19 Pandemic in Civil, Insolvency and Criminal Proceedings", the German Parliament has put up a protective umbrella to safeguard tenants who are unable to pay their rent or cannot pay it in full due to the corona virus in the period from April to June 2020, against termination of their tenancy agreements due to late payment. Even though the corona crisis will lead to liquidity bottlenecks for many tenants in Berlin, a differentiated view is important. In the case of employees covered by social insurance in the event of quarantine, it can be assumed that liquidity bottlenecks will not occur until the seventh week of quarantine. In the case of short-time work, bottlenecks can occur earlier. 

Liquidity bottlenecks are not expected to occur for civil servants and public employees.

The situation is most critical for about 306,000 persons not subject to social security contributions. Many small and self-employed entrepreneurs may be hit twice, as commercial rents have to be paid in addition to residential rents. For this occupational group, aid to the tune of 100 million euros will be provided.