Rent cap. What next? 

What the Rent Cap is supposed to do, how it affects your properties in Berlin and what you can do.

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  • Understanding the rent cap
    What exactly is the new law doing?
  • Advice for owners and landlords
    Hold, sell or buy: We give you advice
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Peter Guthmann

Even under the rent cap: You alone decide on your property. What you need is detailed knowledge and a concept. We point out options and develop sustainable strategies for your Berlin properties. Contact us for a non-binding, individual and free consultation.

Peter Guthmann, Director

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.

Trust the best professionals in Berlin

We are your alert service on the real estate market in Berlin. Contact us for advice.

 

Getting information

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.

Rent Cap. What's next?

Rents for around 1.4 million apartments will be frozen for an initial five-year period at the level of 18 June 2019. Within two months, as of 23.04.2020, i.e. by 23 April 2020 at the latest, landlords must inform their tenants, without being requested to do so, about the criteria used to calculate the rent cap. If the rent does not exceed the tolerance value of 20 % of the rent limit, the rent is permissible. If the rent exceeds the tolerance value, it shall be deemed to be illegal nine months after the entry into force of the Act, i.e. from the end of November 2020. The Act also regulates new leases, staggered contracts, furnished apartments and rent increases that took effect after 18 June 2020.

Our blog posts about the rent cap:

Rent cap roadmap

Basics about the rent cap in Berlin

Rent cap Berlin: legal aspects 

 

 

FAQ Rent Cap

What is the 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.

What exactly will change for me as an apartment landlord?

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.

What happens in case of re-letting?

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
How does the rent cap affect the value of my property?

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.

Is the rent cover already effective?

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.

Shall I hold or sell?

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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