Germany’s highest court overturns Berlin rent freeze

The German Constitutional Court has overturned the city of Berlin’s controversial rent ceiling, after a year of legal battles between supporters of landlords and real estate companies, and grassroots activists fighting against rising rents in the capital.

In its ruling on Thursday, the country’s highest court declared rent control in Berlin null and void, saying the federal government had already passed laws to regulate the rental market and no further action was needed from regional authorities.

“There is no room for state legislative power, due to the blocking effect of federal law,” the court said in its ruling.

The nationwide rent freeze in 2015 in Germany was aimed at controlling prices in desirable residential areas. But last year, the Berlin Senate imposed its own rental caps in response to popular campaigns claiming national law did not go far enough to tackle gentrification and skyrocketing prices in Berlin. Before the pandemic, the city had become a haven for Brexit refugees, artists and aspiring tech entrepreneurs, with its population growing by 40,000 per year.

Real estate companies, the construction industry and conservative politicians have reacted with outrage, arguing that the move could devastate Berlin’s investment climate, already plagued by excessive bureaucracy and planning delays.

The Constitutional Court effectively upheld a complaint against the rent cap brought by 280 members of the Bundestag of the center-right CDU / CSU bloc and the pro-business Free Democratic Party who gathered to claim that the Berlin government had exceeded its limits. powers by promulgating the law, getting lost in an area which was the sole responsibility of the federal authorities.

Shares rose in German real estate companies invested in Berlin, including Vonovia and Deutsche Wohnen (DW), Berlin’s largest lessor and one of the main targets of those battling rising rents in the capital.

When Berlin’s regulations came into effect, many landlords notified tenants that they might be required to repay rent reduced by the cap, if the court ruled in their favor. But owner Vonovia announced after the decision that he would not be asking for a rent refund.

Speaking to German newspaper Der Spiegel, Vonovia boss Rolf Boch said the verdict would not resolve growing tensions in the city, nor its housing crisis.

“It would be an illusion to believe that the decision will simply be accepted by politicians and initiatives and that everything will be brought back to the time before the introduction of the rent cap,” he said.

The cap received popular support in Berlin, particularly due to anger towards private developers such as DW, who gained a reputation for renovating buildings and then increasing rents. The company claims that its prices have always been in compliance with the regulations.

Berlin tenant groups routinely accuse large real estate companies of not performing maintenance or fixing the heating, leading to multiple complaints during sub-zero temperatures this winter.

Opponents of Berlin’s rental cap, however, argued that the regulations would never have solved tenant problems and could instead worsen the supply of rental housing by discouraging investment and construction.

“Instead of token populist politics, effective realpolitik measures are needed to ease the pressure on housing markets,” said Wolfgang Steiger, secretary general of the CDU’s Economic Council. “What we need above all are faster construction or type approval procedures. . . The influx into metropolitan areas can only be absorbed by the construction of new apartments. “

But the fight seems far from over in Berlin.

A movement of activists and residents is already pursuing a more radical move – a campaign called “Expropriate Deutsche Wohnen & Co”, which demands that Berlin “socialize” around 200,000 apartments, most of which belong to DW.

Rent-cap supporters Thursday saw a silver lining in the court’s decision to block state legislation, saying they could still fight gentrification and skyrocketing rents by fighting nationally.

“If the federal states cannot regulate it, we will turn to the federal government with all our might and in a national way #Mietenstopp [rent cap]The Berlin Tenants Association wrote on Twitter. “Fight for millions of tenant households in Germany who need security!”

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