Cap of rents unconstitutional? Ministry says yes!

Die Kritik am Berliner Mietendeckel reißt nicht ab. Einer der häufigsten Kritikpunkte: Das Gesetz, das der Berliner Senat verabschiedet hat, ist verfassungswidrig. Das Bundesinnenministerium hat sich den Kritikern nun angeschlossen.

According to the Federal Ministry of the Interior, the rent cover planned by the coalition in Berlin is unconstitutional. This emerges from a 13-page internal “constitutional assessment” of the Interior Ministry. As a result, the draft approved by the Senate, which has yet to be confirmed by the Parliament, violates the German constitution in several respects.

Criticism of the Berlin cap of rents is legitimate

Among others, the newspaper “Berliner Morgenpost” and the “Frankfurter Allgemeine Zeitung” reported on the possible unconstitutionality of the draft law. The Federal Constitutional Court has already ruled that a cap of rents can counteract possible gentrification and, as a result, the less privileged population may not be displaced so easily. The law could remedy this and protect the rights of tenants, but it disadvantages landlords. According to the Federal Ministry of the Interior, the draft law interferes with the property owners’ freedom of property, which is protected by the constitution, and their freedom of contract.

Ministry and economic researchers criticise Berlin Senate

The officials from the Federal Ministry of the Interior see a further problem in the fact that the planned cap of rents would affect all landlords. The law does not provide for a distinction between landlords who have actually asked for a rent that is too high and landlords who asked for rents within the legal requirements. In addition, according to the federal government, the rental cover interferes with the property owners’ freedom of ownership and does not take into account the landlord’s costs. Also the Cologne Institute of German Economy does not assume in a report that the cap of rents will relieve the housing market in Berlin. It says: “Ultimately, the attractiveness of the market for tenants will increase due to the expected low rents. As the number of apartments does not increase, people will still have to move to surrounding areas of Berlin.” The researchers assume that new buildings and modernisations in particular will be more difficult or hampered and that the local economy will be adversely affected.

Cap of rents ignores rising costs

Further the ministry criticises the model for calculating the rent limit. For this purpose, the permissible rent is set to the level of the rent index from 2013, which is based on the rents for the years of 2008 to 2012. The fact that prices have increased since then – in the construction industry for maintenance and other costs related to real estate – have not been taken into account in the law, according to the ministry. Landlords who have achieved an increase in the value of their property through investments such as energy-efficient renovation would be disadvantaged. In addition, the draft law does not ensure “that renting can also generate income that contributes to the financial basis for one’s own way of life”. Landlords who make a living from their property are withdrawn from their fundamental earnings.

Berlin is not authorised to make laws

In principle, the Federal Ministry of the Interior also adjudged that the State of Berlin was not authorised to enact the planned law on the cap of rents. The Federal German Government has already created a legal basis for the regulation of rental prices on the free housing market – for example with the rental price brake in regions with particularly tight housing markets. According to this regulation, the rent in these areas may exceed the standard local rent by a maximum of 10 percent at the beginning of the rental contract. “The rental price limit has thus been comprehensively and finally regulated by the federal government,” says the report. There is Therefore there is no legislative competence given for the federal states.

The Federal Ministry of the Interior under Horst Seehofer (CSU), as the so-called constitutional department, is responsible for compliance with the legal system and is examining planned laws in legislative procedures.

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