Q·REAL ESTATE: FEDERAL CONSTITUTIONAL COURT OVERTURNS BERLIN’S RENT CAP ON THE HOUSING MARKET

The Berlin rent cap is invalid according to a decision of the Federal Constitutional Court. The law is null and void, the judges said in their decision. The rent cap, which came into force more than a year ago, violates the Basic Law. Since the federal government had already passed the rent cap in 2015, it had exclusive legislative power, the decision said. There was therefore no room for the Länder to pass their own laws. The complaint of 285 members of the Bundestag from the CDU/CSU and the FDP was thus successful in Karlsruhe.

Since 23 February 2020, rents for about 1.5 million flats in Berlin have been frozen at the level of June 2019. From 2022 onwards, they may increase by no more than 1.3 per cent per year. If a flat is re-rented, the landlord must adhere to new caps set by the state and the last rent charged.

The second stage came on 23 November 2020: rents that are more than 20 per cent above the upper limits are now prohibited by law and must be reduced by the landlord. The law is limited to five years. Among others, new flats that were ready for occupancy after 1 January 2014 are exempt.

Stock prices of real estate companies rise sharply. On the stock exchange, the share prices of real estate groups rose significantly on Thursday morning. Within minutes of the verdict being announced, the share price of Deutsche Wohnen rose by 6.8 per cent to a five-month high of 46.46 euros, Vonovia by 2.9 per cent and Adler Group by 7.6 per cent.

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