Why a Berlin court deemed the new rent freeze law ‘unconstitutional’

Why a Berlin court deemed the new rent freeze law 'unconstitutional'
Source: dpa
According to one of Berlin’s district courts, the rental cap law (Mietentdeckel) violates Germany’s constitution and should therefore be examined in the country’s supreme court. Three urgent requests were unsuccessful.

Berlin’s district court considers the Berlin Rent Cap Law (Mietendeckel) to be unconstitutional. As part of an appeal procedure on Thursday, the 67th Civil Chamber, one of Berlin’s three district courts, ruled for it to be examined by the constitutional court in Karlsruhe.

The rent cap  – decided by Berlin’s House of Representatives – entered into force in mid-February and is the only one of its kind in Germany.

READ ALSO: Berlin to freeze rent for five years: What you need to know

According to the new law, rents will initially be frozen at the June 2019 level and may not increase by more than 1.3 percent annually from 2022. This does not include new apartments that were ready for occupancy from January 1st, 2014.

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The Chamber considers the rental cap law to be unconstitutional because it is of the opinion that the State of Berlin did not have the legal authority to pass such a law.

How did the dispute start?

The district court of Spandau in the north of the city had ordered the tenants in a rental increase dispute to consent to an increase from €895 to €964.61 in rent from June 1st, 2019. 

The tenants appealed and referred to the Rent Cap Law, which introduced a freeze on rental prices in Berlin for a period of five years and could be applied retroactively. 

However, in its decision, the 67th Civil Chamber of the regional court took the view that the legal provisions of the rent cap are unconstitutional.

READ ALSO: Berlin rent freeze: 340,000 tenants paying too much for housing

Old or new – the rental cap act freezes all rents in Berlin. Source: DPA

In the meantime, Berlin landlords have been unsuccessful in bringing their case to Karlsruhe, where the Federal Constitutional Court rejected an urgent application for a provisional suspension of the fine regulations in the Rental Cap Law. 

The applicants wanted to ensure that charging high rents would not be considered administrative offenses and thus punishable with high fines. 

In its decision, which was published on Thursday, the court stated that the disadvantages arising from fines imposed by the Rental Cap Law will be of particular importance, should the law prove to be unconstitutional.

“However, they do not clearly outweigh the disadvantages that would arise if the regulations on fines expired, should the law later prove to be constitutional.”

The Federal Constitutional Court also rejected another application for an interim order and did not accept an appeal for a re-decision. The court in Karlsruhe already rejected an initial urgent request from landlords against the rental cap in February, for formal reasons. 

The constitutional court in Karlsruhe will rule on the rental cap act. Source: dpa

The question of whether the State of Berlin had the legislative competence to regulate the rent cap is still up in the air, according to the Karlsruhe judges.

“The Federal Constitutional Court should only exercise its power to suspend the enforcement of a law that has entered into force with great caution,” they wrote.

The decision was made by the 3rd chamber of the First Senate; the constitutional court is made of up two senates and the first deals with constitutional complaints. In its decision, the court stated that landlords had sufficient time to familiarize themselves with the new requirements – and thus avoid fines.

Berlin's Senator for Urban Development and Housing, Katrin Lompscher, said that the court's decision to refuse or not to approve the applications came as no surprise to her.

“We continue to assume that the law drawn up by the Senate and the Berlin House of Representatives will also withstand future reviews.”

Translated by Sarah Magill

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