Berlin - The capital city on Tuesday agreed a €10 million rescue fund that will provide interest-free loans to needy renters who were put into debt by the lifting of the city-state's controversial Mietendeckel rent control law.

Renters can apply for a loan no higher than their monthly after-tax income and those in especially precarious conditions can ask to have the debt then forgiven, erasing any need to pay back the loan. To qualify, single applicants must have after-tax annual income no higher than €33.600. 

"The unbureaucratic bridge loan is to ensure that in cases where renters didn't save any money, no one has to worry about losing their apartment," urban development minister Sebastian Scheel (Die Linke) said in a statement. 

Berlin's ambitious Mietendeckel rent cap was overturned on 15 April by Germany's Constitutional Court, creating a headache for renters who had enjoyed a lowered rent since November. Politicians had cautioned renters to set aside the difference between the lowered rent and their previous rent in case the law was overturned but many didn't heed the advice and politicians say as many as 40,000 renters could now be in trouble.

Immediate repayment

It's not immediately clear where or how struggling renters can apply for the aid.

The conservative CDU had suggested a similar €10 million bailout fund in January, but that was voted down by the city's left-leaning coalition government.

While announcing the fund, the Berlin government said renters must immediately repay the difference and said anyone who signed a new lease while the Mietendeckel was in force should seek advice if the lease included two separate amounts - one in case the rent cap remained in place and one if the cap was overturned.

The so-called "shadow rents" may be unenforceable, officials said. Renters can get advice at the Berlin tenant's association or at district tenant advice offices.