Karlsruhe - Thursday is the big day. 

Germany's top court, the Constitutional Court in Karlsruhe, on Wednesday said it would release its decision on Berlin's controversial Mietendeckel rent cap Thursday, 15 April, months earlier than expected. Some 284 members of the Bundestag, the lower house of parliament, from the conservative CDU/CSU and business-friendly FDP asked the court in May 2020 to determine whether Berlin's government had overstepped its legislative powers.

The city-state is governed by a three-way coalition of the left-wing Die Linke, environmental Die Grüne and centre-left SPD, and the suing politicians say such sweeping residential legislation is the purview of federal, not state, governments.

The first part of the rent cap came into force at the end of February 2020. Rents for just under 1.5 million apartments were frozen at the level of 18 June 2019 for the next five years. Caps were also created for new leases that were staggered according to the year of construction and how well-equipped flats are.

The controversy, explained

The second part went into effect in November 2020. Since then, rents that exceed the statutory cap by more than 20 per cent must be lowered. Construction completed after 2014 has been exempted from the cap in an attempt to encourage new construction.

The rent cap has been politically and legally controversial since it was passed. Berlin's red-red-green coalition hopes the cap, as well as other measures, will help prevent low-income residents from being forced out of the city centre. Opponents argue that retirement investments of small landlords are being jeopardised and that caps discourage landlords from making necessary repairs. Larger landlords are also less able to invest in new construction because the cap lowered their rental income.

If the court overturns the law, renters who had their rent lowered in November will be required to cough up the difference between the then-legal maximum and the amount in their leases. Many new leases were also signed with higher "shadow rents" that would come into effect if the court decides against the legislation.

The judge on the case is a former CDU politician, which would seem to be an advantage for landlords. However, according to the Taz newspaper, he was also instrumental in granting greater rights to states in setting property policy.

For the lawyers among our readers, the case is Az. 2 BvF 1/20.

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