Germany: Federal Constitutional Court declares Berlin rent cap unconstitutional

Apr 28, 2021 Benn-Ibler Rechtsanwälte

The Berlin rent cap violates the German Constitution (Grundgesetz). The state of Berlin has no legislative competence to regulate rent levels.

At the beginning of 2020, the Berlin State Law on the Reorganization of Legal Regulations to Limit Rents was passed (Landesgesetz zur Neuregelung gesetzlicher Vorschriften zur Mietenbegrenzung or "Berliner Mietendeckel”). The occasion for the law was the increasing demand for living space, which could not be met by a corresponding increase in housing supply so far. This led to rents increasing at a higher rate than incomes, which could not be prevented by the "rent cap" ("Mietpreisbremse") regulated in the German Civil Code (Bürgerliches Gesetzbuch, BGB). It had therefore been deemed necessary to exert influence on the market development itself and to take additional measures under public law at the state level to limit rent prices.

This law has now been declared unconstitutional by the Federal Constitutional Court (Bundesverfassungsgericht) as it is not compatible with the German Constitution.

As a rule, the German Constitution assumes a final distribution of legislative competences between the federal government and the states. The states have the right to legislate if the Constitution does not allocate legislative powers to the federal government. Double competences are incompatible with the norms of competence and with their function of delimitation. Since regulations on rent levels for privately financed housing - as part of social tenancy law - fall within the federal government's legislative competence, the "Berlin rent cap" is not compatible with the Constitution and is therefore null and void. The federal legislature had already made final use of its competence for rent law as part of civil law.

Bundesverfassungsgericht 2 BvF 1/20, 2 BvL 4/20, 2 BvL 5/20 (25.03.2021)