It was the first time that a new law which came into force on May 1st, banning property owners and tenants from renting out whole apartments or houses for short-term holiday lets through online portals such as Airbnb, had been challenged in court.
“This is a dark day for Berlin. We are unsettled by this decision and can't understand it in any way. We will continue to fight for private holiday lets,” a spokesperson for Wimdu, a rival homesharing site to Airbnb, said in a statement.
Berlin authorities feared that the phenomenon of private holiday lets were fuelling rising property prices as investors were snapping up apartments for the lucrative market.
But the plaintiffs, who had put up their apartments for temporary holiday lets, argued that such state interference ran counter to property ownership rights enshrined in the constitution.
The cases are among dozens filed since the law came into force, according to a spokesman for the administrative court.
The popularity of homesharing sites like Airbnb and Wimdu has fuelled the private holiday let market and Berlin's authorities had estimated that around 12,000 apartments were being used for such purposes.
The new law was passed in 2014 but provided for a two-year transition period that ended on April 30, after which owners are only allowed to rent out rooms via such portals, not entire flats or houses.
Offenders can face fines of up to €100,000 ($113,000) and neighbours are encouraged to report any suspected misuse online.
Rents in Berlin shot up 56 percent between 2009 and 2014, although at around €10 per square metre this year, they are still relatively low compared to other major European cities.