Mietendeckel: Five Years’ Rent Freeze – What Just Happened?
By Andrew Cottrill . November 19, 2019
As the peasants rejoice and the fatcats ball their fists, we ask: is the Mietendeckel real? What does it mean for us?
Whilst the idea of reduced rents and five years without rent increases sounds a dream – too good, right? – we ask lawyer, Berlin rent expert and founder of wenigermiete.de, Daniel Halmer, what’s really happening and whether we should be excited.
BLY: So, it’s decided: rent reductions and five years without rent increases, right?
Daniel: Well, on paper yes. The Berlin Senate and Parliament have improved the bill, and the law came into effect on the 23rd February 2020. This means that rents have now been frozen back to the level that they were on in July 2019.
But there have been many laws on paper trying to curtail rent hikes, and there’s still a long way to go before the more essential parts of it come into action.
For instance, actually being able to lower your rent if it costs more than 30% of your household income isn’t going to become a possibility until at least the end of 2020.
As for the rent freeze, our guess is that landlords will continue to send rent-increase letters – just as landlords have ignored existing laws in the past.
But there is another really big problem with this law: some high-ranking lawyers argue that it is unconstitutional, that the Berlin Senate isn’t capable of passing such a law – only the Bundestag federal parliament could.
BLY: What is the goal of the Mietendeckel?
Daniel: The Mietendeckel is the current Berlin Rot-Rot-Grün government’s plan to end the Berlin housing crisis.
The rent freeze itself is a temporary solution – hence the five-year limit. The theory behind it is to keep the pressure of high rents off those who already rent here until enough new houses are built and made available to level out the demand – solving the supply/demand crisis which led to the huge inflation of rent prices we’ve seen over the past years.
Along with this, there are also plans for future rent control measures to limit how high rents can go.
BLY: Will a rent freeze help the housing crisis, or just make Berlin seem more attractive?
Daniel: Have the past rent control laws made Berlin more attractive or affordable?
So the same logic applies for this new law: it will make Berlin more affordable and hence (even more?) sexy. It’ll also only work if tenants actually make use of the law, and if it withstands legal challenges by landlords.
This remains to be seen. In any case, Berlin tenants can currently make use of the existing Mietpreisbremse rent control laws which have already been proven as legally enforceable by the courts. We’ll have to wait and see how the new Mietendeckel will be legally enforced. Why wait any longer?
BLY: How likely is it that this law will soon be overturned?
Daniel: Opposition to the Mietendeckel is fierce. Landlord unions have unequivocally stated that they will challenge it to the end.
It’s also a fight between left- and right-wing economics, and an argument about the need for Mietendeckel when Mietpreisbremse rent control laws are already in place.
It will most likely very quickly move to the constitutional court and end up in a similar situation as the Mietpreisbremse rent control law.
Landlords will claim the law is unconstitutional. In the case of the rent freeze (Mietendeckel), they will argue that federal civil law is the binding legislation and that the city of Berlin has no legal authority to issue and implement such a law.
The court process will most likely take years. In the meantime, it might as well be that some court districts in Berlin will work with that law and others will put all court cases regarding this new law on hold.
Despite all of this, we recommend that every household tries to make use of any law that can lower their rent.
BLY: How will the Mietendeckel be enforced?
Daniel: That’s a good question, with a complicated answer.
To apply for a rent-reduction claim using the Mietendeckel, you’ll have to go to your local Bezirksamt and file a complaint. After receiving a document confirming how much rent you’re overpaying, you’ll then have to approach your landlord to request a rent reduction. If the landlord refuses to reduce the rent, you yourself will have to sue for a rent reduction.
The thing is: the Bezirksamt is a famously sluggish institution. It’s predicted that to enforce the Mietendeckel, the Amt will have to hire 250 more employees – experts – something which will take a long time, if ever, to achieve.
The Mietpreisebremse, on the other hand, already has a system in place that works. It has been ratified for another five years on a federal level by the current federal coalition government. It’s currently the safer option of the two.
BLY: Mietendeckel vs. Mietpreisbremse: which will save renters more money?
Daniel: Under the new law, the cap for lowering your rent (if you have a low household income) is designed as follows:
Rent levels as assigned in the 2013 Mietspiegel, plus Reallohnentwicklung (average wages increases), plus 20%.
Mietpreisbremse’s upper cap limits are: your maximum rent as assigned in the current Mietspiegel, plus 10%.
You can’t make generalisations about whether tenants will be able to save more by using the Mietendeckel or the Mietpreisbremse. It differs in all cases.
BLY: So what do you suggest tenants do?
Daniel: We suggest that tenants find out which of the two laws could be used to lower their rents the most.
It’s worth noting that we have already used the Mietpreisbremse to successfully lower the monthly rent of thousands of households in Berlin.
BLY: Since the Mietendeckel law was passed, have new rent increases appeared? What can people do about this?
Daniel: Indeed. Every day we now receive hundreds of rent increase notifications from our clients. That’s 10x more than usual, and the traffic to our page is still increasing.
Based on that, we estimate that more than 10,000 Berlin households have received last-minute rent increases.
The good news is, those rent increases came mostly from private landlords – and they were done with the hot needle. A lot of them are very easy to reject because they do not meet the formal standards at all.
One landlord even argued the rent increase was their last chance – that they were on the verge of being dispossessed. So if you have received a rent increase or know someone who has, put them forward to us and we will check and reject them for you.
BLY: Will this law put some investors in financial difficulty?
Daniel: In theory, it would curtail investors’ and developers’ profits. However, as discussed before, we presume landlords won’t stick to the law, because they will try to secure their profits… Could some investors struggle if the law is fully enforced or compiled with? Maybe. Have Berlin tenants struggled in the past because some investors ruthlessly maximized their profits? Sure thing.
Within the Mietendeckel paperwork, there’s also a maximum fine of 500,000 EUR for landlords who breach the rental cap. But for any prosecutions to happen, the case would have to go to the high court and they likely have better things to deal with.
BLY: What happens after this five year period? Will landlords find a way to recoup their losses?
Daniel: That’s a really good question. If this law runs out five years after its introduction, then the legislation will just go back to the old established standards i.e. with the current cap for rent increases.
Under those regulations, landlords will be able to make some rent increases – and it is pretty self-evident that after having been curtailed for five years, landlords will use every measure possible to increase their profitability.
Since the passing of this law, something has already changed. The current discussion around it has helped tenants to become aware of their rights. The demand for rent reduction services has exploded in recent months.
Thanks a lot for the chat, Daniel. We hope that’s cleared some things up for our readers.
Check out Daniel’s rent lowering portal, wenigermiete.de to see if you’re still overpaying rent and, if so, get it lowered. This new law may seem like a victory, but let’s keep up the pressure on the landlords.
Also, if you’ve received a rent hike in retaliation to this law, find out if it’s legal. There’s a good chance it’s not.
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