A controversial rent cap to control soaring rents in the German capital Berlin has been dropped by the country’s Constitutional Court.
The legislation had been well received by tenants, but criticized by developers and landlords since it came into force in February 2020.
Since then, rents for around 1.5 million apartments in Berlin had theoretically been frozen at June 2019 rates.
The court ruled on Thursday that the Berlin government had exceeded its powers in introducing the law, with federal rent law already in place.
“Previous federal laws attempted to strike a fair balance between the interests of tenants and landlords, interests that are protected by fundamental rights.
“This means that ‘German states are not allowed to pass rent legislation in this regard,’ an English court statement said.
The Berlin rent ceiling was therefore “completely empty”.
The court ruling means that rents that had been reduced in accordance with the law can now go up.
Several thousand tenants may also be required to repay their rent for months that have elapsed since the entry into force of Berlin law.
The rent cap was unique to the German capital, where a left-wing coalition was in power under the leadership of Mayor Michael Mueller.
Mueller this year described the law as a necessary “respite” for tenants struggling to cope with soaring costs of renting property in the city.
The challenge to the Constitutional Court was originally launched by the center-right parties CDU and CSU and the liberal FDP party, which argued that the municipal government had exceeded its powers.
The FDP welcomed the decision Thursday as “good news”.
FDP lawmaker and housing expert Daniel Foest said the Berlin Senate “exploited tenants in Berlin for an ideological experiment and it failed”.
Shares of large real estate company Deutsche Wohnen rose sharply after the decision. (dpa / NAN)
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