Residential tenancy law - Federal Constitutional Court (Bundesverfassungsgericht – BVerfG) overturns Berlin rent cap (Berliner Mietendeckel)

Status: 21 April 2021

On 15 April 2021, the BVerfG published its long-awaited decision on the law limiting rents in the housing sector in Berlin (Gesetz zur Mietenbegrenzung im Wohnungswesen in Berlin – MietenWoG Bln). The court finally overturned the Berlin rent cap. This means that its unconstitutionality and thus its invalidity have now been finally established.

With its decision of 25 March 2021 (2 BvF 1/20, 2 BvL 4/20, 2 BvL 5/20), the BVerfG dealt with three cases in one. Firstly, 284 members of the German Bundestag applied for a declaration that the law was incompatible with the constitution (Grundgesetz). On the other hand, two courts (Berlin Regional Court (Landgericht Berlin) and Local Court Mitte (Amtsgericht Mitte)), after suspending the civil proceedings before them, referred the question of the constitutionality of the rent cap to the BVerfG.

According to the BVerfG, the Berlin rent cap was incompatible with the constitution, primarily because the state of Berlin exceeded its legislative powers. Regulations on rent levels for unrestricted housing fell within the concurrent legislative competence under Article 74 Sec. (1) no. 1 of the constitution. According to that, the states are only entitled to legislate at all as long as and to the extent that the federal government has not made fully use of its legislative competence. However, according to the BVerfG, the federal government has already regulated the rent law in such a differentiated manner with §§ 556 to 561 of the German Civil Code (Bürgerliches Gesetzbuch – BGB) (rent control - Mietpreisbremse) that it can be assumed that the legislature intended to make a final regulation with this. However, there would no longer be any room for deviating regulations at the state level due to the blocking effect thus created.

Although the demands for state-specific rent caps would thus be off the table, the discussion about a nationwide rent cap, on the other hand, is reigniting. It will now very likely become a topic in some election programs for the upcoming federal election.

But what are the concrete consequences of the decision for berlins landlords and tenants?

Due to the invalidity of the rent cap, the regulations of the BGB and thus also the rent control (Mietpreisbremse) now apply again or still apply. Landlords can now claim any differences that may have arisen in the past due to saved rents from their tenants. Since some tenants may not have been prepared for the abolition of the rent cap, despite warnings and information from politicians, landlords would be well advised to approach their tenants and seek mutually agreeable individual solutions. It is still unclear whether, how and when a planned assistance fund of the Berlin Senate can offer support to tenants.