Rent cap for all of Berlin: what changes for landlords from June 2015

Berlin's government has approved the rent cap for the entire city. The regulation takes effect on 1 June 2015. Earlier discussions about limiting it to selected boroughs with particularly tight housing markets were abandoned in favour of a city-wide approach.

The core rule

When re-letting a resale apartment, the rent may not exceed the local reference rent by more than ten per cent. The Berlin rent index serves as the benchmark. The rule covers all new tenancy agreements signed from 1 June 2015 onwards. Existing leases are unaffected.

Three exceptions

The regulation includes special cases that landlords should be aware of.

First: if the previous tenant already paid a rent above the new ceiling, the landlord may charge the same amount to the new tenant. Proper documentation of the previous rent is required.

Second: new developments first let after 1 October 2014 are exempt. The legislator aims to preserve incentives for residential construction.

Third: apartments that have undergone comprehensive modernisation also fall outside the cap. A modernisation is considered comprehensive when costs reach at least one third of a comparable new build.

What changes

In boroughs such as Friedrichshain-Kreuzberg or Neukölln, where rents have risen sharply in recent years, the regulation will slow the pace of rent increases on re-lettings. For investors, calculating yields on existing properties becomes more complex. Reviewing the rent index and documenting previous rents and modernisation works are now standard parts of the letting process.