Tenants will pay the price. Berlin rent cap overturned by Germany’s top court

Tenants worldwide have suffered during the Pandemic.

Berlin has some of the steepest rents in the World. The Berlin government has attempted to bring some equity to this situation.  Now, Germany’s constitutional Court has ruled the rental caps put in place by the Berlin government are illegal.

Tenants will suffer. Landlords stand to make a windfall profit.  This ruling has ramifications throughout Europe. It is an issue which Americans need to pay close attention as Federal moratoriums on evictions during the Pandemic are due to expire later this year.

Fortunately there are some cities in America with decent rent control measures and the occasional State law which provide tenants with a measure of protection.

It is obvious that legislators and the Courts are all too accommodating to property owners.  Landlords have the money. Tenants pay the price.

Excerpted from Deutsche Welle 4.15.2021

Germany’s constitutional court has decided that the Berlin rent cap violates Germany’s constitution. The cap was one of the most-debated laws in the country.

Germany’s constitutional court in Karlsruhe has ruled that the Berlin state government had no right to impose a rent cap in the German capital.

Berlin’s rent cap meant that rents for 90% of Berlin’s apartments were frozen for five years at their June 2019 level. New rents could not go above that level, and as of November 2020, any existing rents that were still above that level had to be reduced.

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International campaigners saw the Berlin rent cap as one of the most radical rent control measures worldwide, because though other European countries and cities have introduced rent freezes, the Berlin law allowed tenants to actually sue their landlords to reduce their rents. 

Barbara Steenbergen, EU liaison head of the International Union of Tenants (IUT), said she was shocked by the German court decision, not least because other state-level in Berlin laws did in fact regulate regulate private property rights: There is a law that bans landlords from keeping property empty as a speculation, for instance.

Steenbergen said that the Berlin state government had been forced to act because the federal government’s rent control measures, the rent brake, had not slowed the capital’s spiraling rents.

The court ruling found that since the federal government had already made a law regulating rents, a state government could not impose its own law that infringed upon that, and said the Berlin rent cap law was therefore null and void.

Today was a “heavy day for renters in Berlin,” said Sebastian Scheel, Berlin’s minister for urban development and housing, of the socialist Left party. “We took this path for good reasons,” he told the taz newspaper. “We knew that we were treading new ground, and wanted to sound out this issue of jurisdiction.”

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He also promised that the government would step in to help tenants who would now potentially be hit by sudden rent hikes. A demonstration calling for major property-owning companies to be expropriated was called on Thursday evening.

The Berlin Tenants’ Association called Thursday’s ruling a “slap in the face” for all tenants. “To declare the law unconstitutional from the beginning is irresponsible social policy,” the association’s director Reiner Wild said in a statement, before noting that it contradicted several other court rulings.

The constitutional complaint had been brought in May 2020 by Bundestag parliamentarians from the conservative Christian Democratic Union (CDU) and the pro-business Free Democratic Party (FDP), who both welcomed the decision on Thursday.

Kai Wegner, a spokesman for the CDU federal parliamentary group, called the decision a “sensitive defeat” for the Berlin government, who he blamed for making “a false rent cap promise” to the city’s renters.

“The damage is great,” he said in a statement. “Ideology solves no problems, not in the housing market either. In the long-term, only a sufficient supply of housing can secure affordable rents.”

But the Berlin government had called the rent cap a “breathing space” for tenants while new housing could be built.