Rent Cap canceled by Federal Constitutional Court

The Federal Constitutional Court has declared the red-red-green state law null and void. This is the biggest conceivable defeat for the Berlin Senate. With announcement.

by Peter Guthmann Published on:

End with notice

The Berlin rent cap is history. The Federal Constitutional Court overturned the law, which was introduced in stages in 2020, on 15 April 2021. Germany's highest court announced that the federal legislature had conclusively regulated the rent law. There is therefore no room for the federal states to legislate on their own. (Case no. 2 BvF 1/20 et al.)

Two years of uncertainty on the Berlin real estate market

The decision had been expected by most experts and by many politicians, not only from the liberal and conservative camps. For the Berlin Senate, the short stage is a disaster. In particular, the Senate Department for Urban Development and Housing, which had been instrumental in pushing the project, is now left with more than just empty hands vis-à-vis millions of Berlin tenants. The rent cap, which was always a political instrument and never a regulatory one, will now lead to many tenants being in debt to their landlords through no fault of their own. Because with the overturning of the law, they will have to pay the agreed rent from the tenancy agreement again. Even the former senator and initiator of the rent cap had strongly recommended that tenants put the money they had saved aside, just in case - something that senator Lompscher herself had obviously always counted on. In the worst case, tenants will now have to pay the accumulated difference for the entire term of the contract. Affected are around 1.5 million residential rental contracts that have been frozen at the status of June 2019 and among which a large part of the tenants have reduced the rent on the basis of the law.

The rent cap is history. Do tenants have to pay back withheld rents?

Here the answer is quite clearly: Yes. The rent cap was a violation of the Basic Law. Tenants were laid a rotten egg in the nest. The situation was exacerbated by the fact that the BVG did not agree to an urgent application by landlords to suspend the law. The aim of the application was to suspend the law until a decision was reached.

If leases with two rents were concluded during the period of the rent cap, does the tenant now have to pay the higher rent?

Yes, and also rents that have been withheld. This is because the decision of the Federal Constitutional Court also states that rents that were contractually agreed according to the German Civil Code but have not yet been paid now apply. The landlord is thus entitled to a subsequent claim.

Until when do the rents have to be paid in arrears?

Following the court's decision, millions of households now have rent debts. In principle, rent debts must be paid immediately if there is to be no threat of termination. But: Landlords in Berlin are, contrary to the legend of the Red-Red-Green Senate, not bad landlords. It is to be expected that in many cases an amicable agreement will be reached between landlords and tenants.

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