Covid-19 in Berlin: what landlords need to know about rental defaults and eviction protection

The spread of SARS-CoV-2 and the government countermeasures plunged Berlin's housing sector into a state of emergency in spring 2020. Shortly after the rent cap took effect, the Covid-19 crisis confronted owners and investors with new challenges. The federal government and Berlin's Senate responded with relief programmes, though questions about how the burden is shared remain.

Eviction protection for tenants

The federal government passed a law to mitigate the consequences of the Covid-19 pandemic. A key point for property owners: the right to terminate tenancies for non-payment of rent is restricted. Specifically, this applies to rent arrears arising between 1 April 2020 and 30 September 2020 that are demonstrably caused by the crisis. The obligation to pay rent remains in place. The debts are deferred, not forgiven.

Which tenants are most affected?

The economic fallout hits Berlin's tenants very unevenly. Civil servants and public-sector employees face little income loss. For other groups, the picture is different:

• Self-employed, freelancers and small business owners: This group of roughly 300,000 workers in Berlin is most at risk. Orders dry up, income often falls away entirely, while private and sometimes commercial rent payments continue.
• Employees on short-time work: Their net income drops by up to 40 per cent. Depending on rent levels, this can quickly create liquidity problems.

Impact on Berlin's housing market

The crisis hits a city whose economy depends heavily on tourism, culture and the startup scene. Boroughs with a high proportion of creative professionals and self-employed residents, such as Neukoelln or Kreuzberg, are likely to see rising payment difficulties. In Mitte, where many workers depend on the paralysed hospitality and retail sectors, uncertainty is growing too. For owners of apartments in Berlin, the default risk varies considerably by location and tenant mix.

What can owners do now?

Despite the one-sided nature of the tenant protection measures, landlords are not powerless.

1. Seek dialogue: Reach out to tenants who signal payment difficulties. Open conversations can help find joint solutions such as deferral agreements.
2. Review your liquidity: Analyse your own financial position. Can you bridge temporary rental losses and continue servicing your loans?
3. Know the support options: Point your tenants to government assistance such as housing benefit, basic income support or the Senate's emergency aid programmes. These can often prevent a rental default.

How market trends develop in the long run depends on the duration of the crisis and the effectiveness of the countermeasures.