On 30th January the Berlin Abgeordnetenhaus passed the so-called rent cap. The law is not yet in force, but is expected to come into force by March 2020 at the latest. This law is also of great importance for foreigners interested in acquiring a property in Berlin.

Main features of the rent cap

The law introduces a statutory maximum limit on the rent allowed, not only for new leases to be contracted, but also for existing leases that may have been running for years. The current yields from a condominium in the area of the city of Berlin will be thus strongly regulated by this. The free rental housing market will be virtually eliminated.

Important exception: new construction

the rent cap does not apply to rental agreements in newly constructed apartments to be concluded for the first time or to rental agreements for newly constructed apartments that have been ready for occupancy for the first time since 1 January 2014.

Calculation of the rent cap

Unless an exception is made, future residential rents may only correspond to the local comparative rent according to the rent index (Mietenspiegel) for 2013. The comparative rent will be continuously adjusted in accordance with the development of real wages and future inflation.

Modifications

slight upward deviations are permitted for apartments with modern equipment and for apartments in buildings with no more than two apartments. The final details have not yet been determined.

Important: Tenant must demand reduction of rent

The current rent in existing tenancies is not automatically reduced by virtue of the entry into force of the Act. Rather, the tenant must submit a corresponding application.

Hardness regulation (Härtefallregelung)

in individual cases, private landlords can claim exemption from the rent cap, especially if the purchase of the condominium is financed by a loan and the owner is practically entirely dependent on the originally calculated current rent to properly service the loan.

Legal advice on the purchase of property in Germany

I offer you affordable legal advice in English language in connection with the purchase of a property in Germany. I check the notarial draft of the purchase contract for you. You will find further details and useful links on the page Advice on German Real Estate Law