Berlin’s rent cap ruled illegal by constitutional court

Germany’s highest court has found that a rent cap introduced by the Berlin state Government is illegal, delivering a major setback for those campaigning to keep the city affordable.

The law was overturned at a constitutional court in Karlsruhe on Thursday, as lawmakers said the state did not have the legal purview to instigate the law.

The rent cap came into force in February 2020, freezing rents for the vast majority of flats in Berlin at their June 2019 level. New rents could not exceed that level, and, as of November 2020, existing rents above this level had to be reduced.

The move was celebrated internationally by campaigners who saw it as helping to retain a social mix in Berlin, by making sure that the city’s existing residents are not priced out by soaring rent prices.

But landlords and lobbyists argued that it was inappropriate for the state to meddle in the private market.

The subsequent lawsuit claimed the rent control was unconstitutional, as the State Government had no right to interfere in housing policy, which is the responsibility of the Federal Government.

The Karlsruhe court rules that the State Government’s legislation undermined a 120-year old Federal Government law which itself regulated rent rules.

The petition to the court was filed by a total of 284 parliamentary members, including members of the centre-right Christian Democratic Union and the pro-business Free Democrats, who are both in opposition in Berlin.

The rent freeze was a flagship policy of a coalition between centre-left Social Democrats, the Greens and far-left parties, which is currently in power in Berlin.

The law would have capped rents until 2025, with exceptions for social housing and new apartments built since 2014.