With the rent cap gone, what's next?

Hope placed in federal politicians, government asked to help on back rent.


Berlin-After thousands of protesters took to the streets in Berlin Thursday, the leading German tenants' association, the DMB, is now looking to the federal government to take swift action after Germany's Constitutional Court struck down Berlin's aggressive Mietendeckel rent cap legislation.

"Rent freeze for existing leases, sharp cap on new rentals," Lukas Siebenkotten, head of the DMB, told news agency dpa. "As the corona measures show, quick action by the federal government is possible if the political will is there."

He said politicians for years have proposed fair and equitable rental legislation, which could still be passed ahead of September's elections.

The Constitutional Court Thursday inadvertently made real estate policy an issue in September's federal election by saying Berlin couldn't institute a rent cap because the federal government had already claimed that issue as its own through previous laws. A national rent cap was a popular component of a protest late Thursday in Berlin that began at Hermannplatz and eventually led to the arrest of 48 protestors. 

Nationwide rent freeze

Others at the protest pushed for a proposed referendum in September that would make it illegal for any company to own more than 3,000 apartments and essentially force Berlin to buy back apartments it sold over a decade ago.

Raed Saleh, head of the centre-left SPD in Berlin, called for a national rent freeze and said one possibility would be for the federal government to hand rental policy to the states, circumventing Thursday's Constitional Court decision. The court has previously allowed rent caps.

But Berlin's Mietendeckel in November also automatically lowered existing rents on as many as 500,000 apartments. Tenants now owe the difference between their agreed rent and the lowered rent. Many ignored calls to set aside the amount and are facing financial hardship - though public landlords as well as a handful of private landlords said they would not demand back payment.

Berlin wants to help those affected, Saleh said. A hardship fund should prevent tenants who cannot make additional payments from losing their apartments. He said the fund will comprise an amount in the double-digit millions.

Rent growth could pick up again in some cities and regions.

Deutsche Bank

Even if illegal, the Berlin law affected rental policy throughout Europe's biggest economy. Researchers at Deutsche Bank, Germany's biggest listed bank, said the debate over the Berlin rent cap already resulted in a slowdown in the rise of rents in all German cities.

"Rent growth could pick up again in some cities and regions, as many initiatives that copied the Berlin cap will lose momentum," they wrote.

The court decision is a sharp reprimand for the Berlin government, which is led by a coalition of the leftwing Die Linke, the centre-left SPD and the environment Die Grüne. In addition to criticism for passing an ultimately illegal law, the politicians also must explain why they allowed renters to go down a financial dead-end by lowering rents in November before the law had been tested.

Andrew Bulkeley adapted this article from the original German.