Monthly review: What has been going on in Berlin this February

The state of Berlin and the federal government are exploring various measures in an effort to counteract rising rents. These include a stricter control of rents, which has been in place since 1 January; this measure, for example, makes rent increases conditional on other factors, while also making it easier for tenants to contest excessive rents.

Since new construction  – in the opinion of many experts, the only solution against permanently attractive rents – has been decreasing thanks to government overregulation and the number of building permits being issued in Berlin is in decline, the federal representative Eva Högl and the vice-president of the SPD, Julian Zado, have now introduced a new idea into the discussion: rent control. According to SPD politicians, rents are to be capped in particularly tense housing markets as an additional regulation measure. This would mean that initially no rental increases are permitted for five years. The fact that this proposal is based on pure populism has now been revealed in an expert opinion released by the research service of the German Bundestag, which disputes that the federal states have the regulatory authority to make such interventions. Whether this fundamental encroachment on the property rights of respectable citizens – irrespective of who should issue this regulation – would have constitutional validity  seems more than questionable in view of the numerous undeveloped open spaces in Berlin, from the Elisabethaue to Tempelhof Airport.

But even the instrument of rent control, which already exists, has already been repeatedly declared invalid by the courts in its original form, as it deals equally with high and low rents. In reality, this rent control means that both high rents of 18 or 20 euros and low rents of 3 or 4 euros per square meter are treated equally.

Over the course of the year, the Federal Constitutional Court will negotiate submissions made by the district court of Berlin regarding to constitutionality of rent control. In addition, a constitutional complaint has already been filed by a landlady.

Incidentally, this policy punishes those landlords who have thus far called for few or no rental increases. On the other hand, it seems certain that the battle about rental prices will continue and become more and more populist; this is because, as long as Berlin experiences its strong economic development and population growth, real estate in the capital will remain highly attractive.

What strategies should property owners derive from the situation? To invest in the long term and not be unsettled by the activism of politicians.

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David Borck Immobiliengesellschaft
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