Dear reader, dear customer.
The rent cap was stopped by the Federal Constitutional Court on 15.4.2021 as not being in conformity with the constitution. The information you read here is now only for your information. Please also read our market reports, from which you can deduce the further development of the Berlin property market.
- Understanding the rent cap
What exactly is the new law doing? - Advice for owners and landlords
Hold, sell or buy: We give you advice - Up to date
Information is everything
The constitutional judges have put the ideologically driven housing policy in Berlin in its place. The Berlin real estate market will return to normality. With us at your side, you have what you need: Transparency, expertise and experience. We look forward to hearing from you.
In need of a strategy
The Berlin Senate has approved the rent cap. It is still unclear whether the law is in accordance with the constitution. Nevertheless, you should now work with us to develop a strategy for your real estate in Berlin.
Will prices drop now?
It is expected that rented apartments will give way in price. If your apartment becomes vacant, it could be a good moment to sell.
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Detailed knowledge is the top priority. This applies to the way owners deal with tenants, to the sale and equally to your holding strategy. You decide which way you want to go. We flank your decision with know-how.
FAQ Rent Cap
The rent law was passed by the Berlin Senate on 30.01.2020. It intends to interrupt the market mechanisms in Berlin by freezing and lowering rents. By law, rents are to be frozen for a period of five years as of June 18, 2019. "Excessively high" rents for new rentals and existing leases are to be reduced to an "appropriate" level. The new rent ceilings are based on the values of 2013.
Let's assume the following case: You are the owner of a rented classic old Berlin apartment in a location classified as "medium". This applies to more than half of the residential locations in Berlin. Let's assume that the property was divided according to the German Property Act (WEG) in 2011 and completely modernised in the course of the division. You acquired it in the course of the division. The apartment was completely renovated, with high-quality sanitary equipment, new electrics, new windows and a complete overhaul of the floor boards. You are leasing the apartment today at a net cold rent of EUR 11.50 m².
In contrast to previous practice, the maximum rent you can require is no longer defined by the rent index and the rent brake, but by a new rent table. In addition to the rent table, there are value-increasing and value-decreasing features. The rent table is based on the construction year of the building, and the surcharges and discounts are based on five fixtures and fittings characteristics. In the case described above, the new rent allowed according to the rent cover would be calculated as follows:
| Feature | EUR/m² (+/-) |
|---|---|
| Current rent, net cold | 11,50 |
| Year of construction: 1905 | 6,45 |
| Medium residential area (classification) | 0,09 (-) |
| Features increasing living quality (3 of 5) | 1,00 (+) |
| Total basic rent allowed | 7,36 |
| Exceeding 20 % | 1,47 |
| Maximum allowable rent (120%) | 8,83 |
| Difference to current rent | 2,67 |
According to the current status of the planned law, your tenant could apply for a rent reduction from EUR/m² 11.50 to EUR/m² 8.83 in autumn 2020.
In the case of new rentals, the table values plus and minus the values for location, modernisation and equipment may not be exceeded.
| Feature | EUR/m² (+/-) |
|---|---|
| Current rent, net cold | 11,50 |
| Year of construction: 1905 | 6,45 |
| Medium residential area (classification) | 0,09 (-) |
| Features increasing the living quality (3) | 1,00 (+) |
| Total basic rent allowed | 7,36 |
| Difference to current rent | 4,14 |
In the case of a re-letting you may demand a net cold rent of EUR /m² 7,36.
Rent table (Source: Senate for Urban Development and Housing)
| First time occupancy of the apartment und Ausstattung | Rent per sqm |
|---|---|
| until 1918 with collective heating and with bathroom | 6,45 Euro |
| up to 1918 with collective heating or with bathroom | 5,00 Euro |
| until 1918 without collective heating and without bathroom | 3,92 Euro |
| 1919 to 1949 with collective heating and bathroom | 6,27 Euro |
| 1919 bis 1949 mit Sammelheizung oder mit Bad | 5,22 Euro |
| 1919 to 1949 without collective heating and without bathroom | 4,59 Euro |
| 1950 to 1964 with collective heating and bathroom | 6,08 Euro |
| 1950 to 1964 with collective heating or with bathroom | 5,62 Euro |
| 1965 to 1972 with collective heating and bathroom | 5,95 Euro |
| 1973 to 1990 with collective heating and bathroom | 6,04 Euro |
| 1991 to 2002 with collective heating and bathroom | 8,13 Euro |
| 2003 to 2013 with collective heating and bathroom | 9,80 Euro |
| newer than 2014 | no restrictions so far |
At the moment, the real estate market in Berlin is segmenting more strongly than before into rented and vacant apartments. As our weekly market analyses show, rented apartments are falling slightly, while vacant apartments are rising in price. The Senate did not succeed in triggering the desired panic in the market and causing a price collapse. Nevertheless, the rent cap is already visibly slowing down the sale of rented units. How the market reacts to the current developments can be seen at first glance in our market reports.
It is planned to introduce it by state law in 2020. The Senate's view is that the regulations will take effect retroactively to the cut-off date of 18 June 2019. Various lawyers, on the other hand, are of the opinion that the law has not been passed and that the German Civil Code (BGB) applies. It will be passed in spring 2020 at the earliest. It is already becoming apparent that complaints will be lodged against the law immediately after it enters into force. The situation in the coming years will be marked by a number of uncertainties.
The degree of the planned rent cap does not only concern owners of apartment buildings in Berlin, which have already been considerably restricted by previous regulatory measures. Small landlords, cooperatives and municipal housing associations are also sceptical about the Senate. Losses due to capped or reduced rents, losses in the value of the properties and the lack of legal certainty influence the way owners and the buyer's market behave. Owners who are considering selling their properties for the short or medium term should consider selling any apartments that become vacant. Time-limited leases must be well-founded. To avoid formal mistakes, we recommend legal advice. Even if no sale is desired, an expert or a lawyer should be consulted for the organization of the lease.
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