GERMANY: Significant changes for real estate investors in Berlin Berlin’s draft law on a rent price cap – uncertainty for tenants and landlords

December 2019 – Putzier – Attorneys-at-law Partnerschaftsgesellschaft mbB

In October 2019 Berlin has passed a draft law for a Berlin rent price cap. It is assumed, that this draft law will come into force in January or February 2020. When the law is in force, landlords in Berlin are facing some severe information obligations in regard to their tenant and are restrict-ed in the amount of rent they can demand. Furthermore the tenants have a right to apply for a reduction on their rent.

For a period of five years the landlord cannot ask for a rent higher than the one that was agreed upon on June 18th 2019. The landlord has the obligation to inform his tenant, two months after the law has come into force, and before the conclusion of a new lease, of the circumstances rele-vant for the determination of their rent limit. Additionally, the landlord also shall provide infor-mation on the amount of the rent as of June 18th 2019 upon request of the tenant.

The draft law includes a scale where one can determine what rent the landlord is allowed to ask for, whereas the rents range between € 3,92/m² and € 9,80/m². There are also some factors that can increase or lower the applicable rent.

If the rent that was agreed upon by June 18th 2019 was 20 % higher than the rent that the draft law applies the tenant has the opportunity to submit an application for capping of his rent to the responsible Senate Administration. In case this application gets granted the landlord himself can file a hardship application with the Investitionsbank Berlin and apply for an increase in the per-missible rent. If this is approved, in turn, the tenant can apply to the Investitionsbank Berlin for a corresponding rent subsidy as compensation.

Multiple legal opinions have considered the draft law to be unconstitutional. Since the unconsti-tutionality has not been decided upon there is a great uncertainty for tenants and landlords when the law comes into force in January/February 2020.

For more information on the above or in other matters, please contact Dr. Eckart Putzier or Katharina Götting (