Berlin rent index 2021: Senate opts for index based update instead of new data collection

The Berlin Senate has published the 2021 rent index. Instead of a new market data survey, which normally takes place every two years, the 2019 qualified rent index has been updated using the consumer price index for the first time. The average rent now stands at 6.97 euros per square meter, an increase of just 1.1 percent. Landlord associations have refused to endorse the result.

Why only 1.1 percent?

The Senate's housing department used the nationwide German consumer price index as its basis. Had it applied the specific price index for apartment rents in Berlin, the increase would have been 2.1 percent. Using a national average for a market as diverse as Berlin pushes the benchmark rent artificially low. Critics view this as a politically motivated decision.

What this means for landlords

Rent increases on existing leases must follow the new rent table. The cap of 15 percent within three years remains in place, but the benchmark rent barely rises. This limits the scope for yield adjustments, whether for apartments in Berlin in Mitte or in up and coming areas.

For new leases, rents may not exceed the rent table value by more than ten percent. The low baseline limits income potential here as well.

Rent cap by other means?

Many market participants see this approach as a continuation of rent cap politics through different channels. After the rent cap was struck down by the Federal Constitutional Court, the Senate uses the remaining legal room to limit rent increases. Rather than allowing the market to normalize after the rent cap period, the regulatory approach continues.

The underlying problem, a shortage of available housing, remains unaddressed. The responsibility for stable rents continues to rest disproportionately with private landlords. Whether the 2021 rent table will withstand legal challenges remains to be seen.