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 five years without a rent hike sounds a dream – too good, right? – we ask lawyer, Berlin rent expert and founder of wenigermiete.de, Daniel Halmer, what’s really going on.
Q. So this is it – it’s decided: five years without rent increases, right?
A. Well, on paper yes. But there have been many laws on paper trying to curtail rent hikes.
This is just another law and it remains to be seen whether landlords will respect it. Our guess is, they will continue to send rent increase letters – just as landlords have ignored existing laws in the past. Particularly as this piece of legislation is subject to a legal controversy: some argue that the Berlin Senate isn’t capable of passing such a law – only the Bundestag federal parliament could.
For the time being, this is just a term sheet. The wording of the act will need to be written, then it is scheduled to be discussed again in view of being passed by the Senate in early 2020. It is likely to pass, but there’s still quite some time ahead of us until it does take effect.
Q. How likely is it that this law will soon be overturned?
A. 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.
We recommend, however, that if the law gets passed by the Senate in early 2020, then, of course, every household should try to make use of it. We at wenigermiete.de are currently working to develop a product specifically to enforce this law.
Q. There are exceptions to this law. What are they?
A. New buildings/developments are exempted from the law – the same as they were exempted from the Mietpreisbremse rent control law.
Also, if the landlord finds themselves in financial trouble, they can apply for an individual exception to allow them to increase the rent – however, they must also prove that the flat is producing losses under the current rent.
Q. Will a rent freeze help the housing crisis, or just make Berlin seem more attractive?
A. 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, but the most effective way to stop the rent hike is to make use of the existing rent control laws for new tenancies and for rent increases now. Why wait more than another half year?
Q. New rent increases have been coming in response to this law. What can people do about this?
A. 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.
Q. What does this mean for the Mietpreisbremse?
A. The rent control law remains untouched. Theoretically, tenants can base their claim on the law that’s more favourable for them. But then again, it will take at least another half year until the new law is in place. Until then, check and use your rights under the current regulation: most rent increases can already be defeated and three out of four tenancy agreements closed after summer 2015 can legally get their rent lowered.
Q. Will this law put some investors in financial difficulty?
A. 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.
Q. What happens after this five year period? Will landlords find a way recoup their losses?
A. 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.
Thanks a lot for the chat, Daniel. We hope that’s cleared some things up.
Check out Daniel’s rent lowering portal, wenigermiete.de to see if you’re still overpaying rent – this law may seem 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.
This article contains affiliate links.