Berlin - An estimated 40,000 Berlin residents will face financial hardship if they're forced to immediately pay back the difference between their temporarily lowered rent thanks to the city's now-defunct rent control law and their actual rent, the department of urban development said.

Sebastian Scheel (Die Linke), Berlin's urban development minister, estimates that 340,000 Berliners were able to lower their rent because of the Mietendeckel rent control law that was struck down Thursday by Germany's Constitional Court. And one-in-ten, or 34,000 households, would get into dire financial straits if they had to pay back the reduced amount at once.

And about 10 per cent of the perhaps 57,000 tenants who signed contracts while the Mietendeckel was in place that included "shadow rents" will also have trouble covering the increased rent bill. "Shadow rents" are higher rents that were part of many leases signed last year that would only come into effect if the Mietendeckel was struck down. However, the estimate includes many unknowns and is little more than a guess.

Politicians are creating a relief fund to help the 40,000 renters but they disagree on how much money should be poured into the aid package. Berlin's CDU submitted a motion to launch a €10m fund in January but a majority voted against it. Iris Spranger, the urban development expert for the centre-left SPD, which is part of Berlin's ruling three-way coalition, said Sunday that €10m would "not be enough."

Coalition had to know it was risky

Spranger said she wants to make the process of accessing the funds simple but applicants will still have to prove they are in financial trouble.

"Berliners should know that we will not abandon them," she said.

She said it was obvious the politicians knew how precarious the law was because Karin Lompscher (Die Linke), who was urban development minister when the law was passed, advised tenants to save and not spend the difference between the lowered and actual rent just in case.

But the conservative CDU is considering even graver consequences for Berlin's governing coalition of the leftwing Die Linke, the centre-left SPD and the environmental Die Grüne. The party's urban development expert, Christian Gräff, said they were looking at whether or not all affected renters should be compensated - regardless of need. Since the coalition knew the law was risky, the question is now whether it is also liable for the legal failure, Gräff said.