When rents are not allowed to rise anymore

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Frankfurt, Berlin, ErfurtKatrin Lompscher has become the specter of most real estate companies – and the hope for many tenants. For the 57-year-old Berlin Senator for the Communist Party with a party book of the left has worked out the controversial key issues paper, on the basis of which the state government was the first federal state last week to introduce a rent cap.

Berlin wants to freeze rents for up to 1.6 million apartments in the future and is thus forcing ahead in the fight against high housing costs. The example could soon be making school in other parts of the republic as well. The SPD in Bremen is already thinking about a similar step. For many homeowners and apartment seekers, this is a major change. The Handelsblatt answers the most urgent questions.

What is Berlin planning?
The government wants to freeze rents for an initial five years. The so-called Mietendeckel should apply to all "non-price-linked apartment buildings".

When will the lid be introduced in Berlin, and how long can the rent be increased?
The law for the measure is expected to enter into force in early 2020, but will be effective retroactively from 18 June this year. In an interview with the RBB radio, Lompscher even stated that it also depends on the tenant's approval so that a rent increase announced before June 18 is still valid.

"Thus, in the view of the Senate almost all short-term rent increases are likely to be obsolete, because hardly a tenant should have agreed so quickly. According to the law, tenants have two months to do so, "says Gerold Happ, the federal managing director and tenant law expert for the house and land owners' association.

Is the rental cover compliant at all?
Constitutional lawyers from the Judiciary and Interior Administration of Berlin report concerns that the Mietendeckel could violate the Basic Law. The lawyers of the law firm Greenberg Sad look the same. The state of Berlin lacks the necessary legislative competence, which lies with the federal government, according to a statement. Also Mietrechtler Nils Huber considers the Mietendeckel unconstitutional, because he violates federal law. Tenancy law is federal matter. In the end, the courts will probably decide. The FDP faction in Berlin is already considering a lawsuit.

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Will there be an upper limit?
The new law will introduce a rent ceiling. Accordingly, even vacant apartments may not be allocated at previous rents if these exceed the upper limit. It will probably be about differentiated upper rent limits, which will be based, for example, on construction age, equipment and size, said Building Senator Katrin Lompscher the Handelsblatt.

What if my rent is already over the limit today?
Tenants should receive a legal right to have rent increases officially reviewed. If the rent is too high, it would have to be lowered to the permissible value. That would also apply to new leases. If landlords violate these regulations, this should be punished for the first time. Namely as an administrative offense, which can go hand in hand with a fine of up to 500,000 euros.

What about new buildings?
New residential construction is completely excluded from the law in Berlin. For the new apartments, which are being moved into for the first time, rents may continue to be demanded by the market. So the city hopes to continue to receive investment in new construction. Even rent-based apartments, ie social housing, should not be affected by the law.

However, tenants who have moved into a new building before the cut-off date could benefit the most. This would also mean that those who rented a new building at a comparatively high rent at the beginning of 2019 must expect the rent to be reduced. Not excluded from the rent cover are graduated rents, in which regular rent increases are specified. "In the case of staggered rental agreements, the rent scale applicable at the time of the Berlin Rent Act is relevant and may not be increased during the term of the Rental Act," says Lompscher.

May the landlord no longer apply modernization costs to the rent?
Yes, he is allowed to. The Berlin state government wants to prevent the new law from slowing down important investments in its portfolio. The Senate, however, only wants to allow levies that ultimately drive rents up by no more than 50 cents per square meter.

Under the heading "Economic hardship cases", the Senate also states in its rental cover concept that landlords are still allowed to apply for rent increases under particularly difficult financial conditions. These applications are to be reviewed by the Investitionsbank Berlin (IBB) and the Senate and must be approved separately.

What do the tenants associations say?
The Berlin tenants' association is in favor of a Mietenteckel. However, he favors his own concept, which provides fixed rental rates, depending on the age and size of an apartment. The basis for this is a rental rate from a time when "the housing market was a bit more even".

On the other hand, activists of an initiative "expropriate German housing and co-ownership" are going much further. A few weeks ago, they handed over a list with the signatures of citizens demanding a "socialization" of all private owners, who own at least 3000 apartments.

What do the homeowners criticize?
The housing industry is running against the Senate resolution storm. "The rental cover will mean that less is built and less renovated," complains about Deutsche Wohnen CEO Michael Zahn. He also doubts that the state of Berlin has the right to such a decision at all.

With more than 110,000 apartments in Berlin is German living the largest private landlord in the capital. The owners' association Haus & Grund considers the rental cover to be in violation of the constitution and human rights. Association President Kai Warnecke announced that he would go to court against the law. Warnecke described the decision as a mistake that could "by no means find more imitators".

Is living cheaper now?
For some tenants, it was even more expensive. Because shortly before the deadline of the law, hundreds of Berlin have still got a rent increase. In the days before the Senate meeting yesterday, the Berlin tenants' association registered a rent increase wave. Tenants who have received an increase in recent days advised the German Tenants 'Association to have them checked by the Berlin tenants' association.

In any case, it remains unclear whether tenants must have agreed to 18 June, so that the rent increase is claimed. Since the rental price brake applies in Berlin, landlords are in any case only allowed to rent their apartments at a maximum of ten percent above the level of the local comparative rent.

Do the scheme benefit non-wealthy households that could afford high rents?
This appearance is obvious. Building Senator Lompscher contradicts: Although one or the other, who can afford higher rents, could benefit. This effect is to be contained by including the income levels of the tenants concerned in the calculation of the reduction. How this is supposed to work is still unclear. The measure helps but especially those who have less, says Lompscher.

Kai Wegner, building policy spokesman for the CDU / CSU parliamentary group feared: "Red-Red-Green breeds a bureaucracy monster." Implementation and control of Mietendeckels swallow up administrative capacity, which are urgently needed for the actual solution of the housing issue, such as fast development plan and building permits.

Are there any experiences abroad?
New York had introduced a Mietenteckel 1962. Although the example proves that such a radical step will cause rents to rise much more slowly over the long term. In return, however, there was a progressive deterioration of the building fabric. Property experts also refer to Lisbon: In 1947, a rental cover was introduced there, which remained for decades. Here, too, investment remained, buildings fell into disrepair. Berlin is now becoming a new field of experiment for tenant protection.

More: If the housing industry wants to keep its fate in its own hands, it finally has to show more initiative – a comment.

. (tagsToTranslate) Rent (t) Berlin (t) Rent cover (t) Real estate market (t) Regulation (t) Expropriation (t) Deutsche Wohnen (t) Rent ceiling (t) Living space (t) Tenancy law (t) Real estate mirror (t) SPD (t) FDP (t) The Left (t) Greenberg Sad (t) Investment Bank Berlin (t) CDU (t) CSU (t) Broadcasting Berlin-Brandenburg RBB (t) Katrin Lompscher (t) Kai Warnecke (t) Kai H Warnecke (t) Homeowners (t) Construction (t) Building Construction & Civil Engineering

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