FAQ Berlin rent price cap – An overview of the most frequently asked questions and answers

UPDATE: The Berlin rent cap was declared invalid by a decision of the Federal Constitutional Court in Karlsruhe on April 15, 2021.

13.05.2020 | On 30 January 2020, Berlin’s coalition government passed the “Act on the New Regulation of Statutory Provisions on Rent Limitation” (MietenWoG). The rent price cap came into force on 23 February 2020. Find out what the law means for Berlin property owners and landlords in our FAQ.

For which flats does the rent cap apply?

Rent cap regulations apply to non-public housing. Excluded from the regulations are publicly subsidised housing, social welfare flats, flats in halls of residence and newly built flats that were first ready for occupancy on 1 January 2014 or that have been restored for residential purposes from uninhabitable and unoccupied former living space that was converted at a cost commensurate with a new building.

Commercial space that has been converted and rededicated as living space at considerable expense is also excluded from the rent cap.
The rent cap applies to social housing which no longer falls under IBB commitment. In this case, it is not the rent on the effective date, but the last rent agreed in the commitment period that is to be used as the basis.

The law says “rent in accordance with the rent cap” – what does that mean?

According to Art. 3 (4), rent in accordance with the rent cap means the net base rent (not including operating costs and utility costs for heating and hot water), but including all surcharges for furniture and furnishings.

In rental agreements in which no net base rent has been agreed, the landlord must, if required to do so and at the request of the competent authorities, provide tenants with the precise net base rent amount along with the data used for the calculation basis.

How long is the rent cap valid? 

Can I still increase the rent now?

The key date for the “freezing” of the rent is the date of the Senate resolution on 18 June 2019, i.e. after the law comes into force, the baseline for a re-letting is the rent that was effective on the key date.

In principle, the same level of rent can be agreed with the next tenant. However, this is only permissible if it does not exceed the upper rent limits under Art. 5 MietenWoG.

If the flat was not leased on the key date of 18 June 2019 or if a tenant change has taken place between the key date and the effective date of the law, the rent agreed to during this period will be “frozen”.

How much rent can I charge as a landlord?

In order to determine the upper rent limits, the rents listed in the 2013 Berlin Rent Index were updated to reflect real wage development until 2019. The upper rent limits are derived from the table in the rent cap law and are graduated according to building age classes and amenities. Surcharges are also permitted. For flats with modern amenities, the upper limit is increased by 1 euro. Relevant here are only those amenities provided by the landlord. According to the law’s rent table, modern amenities exists if the living space has at least three of the five following characteristics:

• Passenger lift, accessible without thresholds from the flat and from the building entrance
• Fitted kitchen
• High-quality sanitary equipment
• High-quality flooring in the majority of rooms
• Energy consumption value of less than 120 kWh/(m²a)

The rent ceiling is also increased by a surcharge of 10% if the residential space is located in a building with no more than two flats. So for the calculation of the permissible rent: rent ceiling according to the rent table + surcharges listed above.

You can find detailed definitions of the five modern amenity criteria, as stipulated by the Senate Department for Urban Development and Housing rent cap implementation regulations, in our checklist for owners and landlords.

How much rent can I charge if I re-let the unit?

If the residential unit is re-let after the law comes into force, the law prohibits taking a higher rent than the rent that has been “frozen”. If the frozen rent is higher than the applicable upper rent limit (see rent table), the unit may only be let at the statutory rent limit. If required, surcharges for modern amenities and modernisation measures can be taken into account in the rent ceiling. In the case of flats whose previous rent was less than EUR 5.02 per square metre, the rent may be increased by a maximum of EUR 1 up to EUR 5.02 per square metre upon re-letting if modern amenities are available. Modern amenities exists if the living space has at least three of the five following characteristics:

• Passenger lift, accessible without thresholds from the flat and from the building entrance
• Fitted kitchen
• High-quality sanitary equipment
• High-quality flooring in the majority of rooms
• Energy consumption value of less than 120 kWh/(m²a)

When is a rent considered excessive and when can it be reduced?

A rent is considered excessive and is therefore prohibited if it is more than 20% above the relevant upper rent limit in the rent table, taking into account the residential location.

Appropriate surcharges and deductions are also applicable:

• Flats in a simple residential area -0.28 euros
• Flats in a medium residential area -0.09 euros
• Flats in a good residential area +0.74 euros

Are modernisations still possible? To what extent can they be apportioned to the rent?

Certain modernisation measures and their apportionment to the rent are permitted up to a maximum of € 1.00 per square metre. This limit also applies in the event of multiple modernisations during the law’s validity period. The prerequisite is that landlords notify the Investitionsbank Berlin (IBB) of increased rent based on modernisation measures. The IBB is offering an online notification procedure. You can submit a modernisation notification here.

Please note that when re-letting residential space after an apportionable modernisation, the five modern amenity criteria mentioned above may not be additionally apportioned (in order to avoid an increase of the upper rent limit by up to 2 euros/sq. m).

Which modernisations are permitted?

Apportionable modernisation measures are those to which landlords are obliged by law:

• For thermal insulation of the building envelope, basement ceiling, top floor ceiling or roof
• For the use of renewable energies
• ​For energy-efficient window replacement
• For heating system replacement with heating optimisation
• For the addition of a lift 
• For the removal of barriers through threshold removal, door widening or bathroom conversion

What options do I have as a property owner if the permissible rent leads to losses or to a threat to the building structure in the long term?

In exceptional cases, the IBB can approve a higher permissible rent. The prerequisite is the existence of undue economic hardship. This is particularly relevant if maintaining the permissible rent would lead to permanent losses for the landlord or endanger the building structure over the long term.

A loss is deemed to exist if current expenses exceed income for the relevant business entity. A threat to the building structure exists if the income from the property is no longer sufficient for its maintenance.

It should be noted that economic hardship can only be considered if the hardship is caused by the rent cap law. Undue economic hardship is also only valid if its occurrence does not lie within the sphere of responsibility of the landlord. In other words, expectations of appreciation in value, expected returns, rising financing costs outside regular market conditions, expected returns based on excessive rents and losses resulting from the division into business entities do not constitute a case of hardship.

You can submit a hardship application to the IBB here.

What information obligations do I have as a landlord?

Landlords must provide tenants with information on the circumstances relevant to the calculation of the rent ceiling within two months after the law coming into force and also before the conclusion of a new rental agreement, without being requested to do so. Landlords must inform tenants of the amount of the key date rent on 18 June 2019 upon request. Prior to the signing of a new lease, landlords must inform future tenants of both without being asked.

You can find details of the information obligations under the rent price cap in our checklist for property owners and landlords.

How are violations punished?

A fine of up to 500,000 euros may be imposed for violations of the rent price cap.

Where can I find further information?

At www.engelvoelkers.com/mietendeckelberlin you can find regular updates on the rent price cap.

Disclaimer: This article is intended solely as general, non-binding information and should not replace detailed research or specialist advice. Although this article has been prepared with the greatest possible care, there is no claim to factual accuracy, completeness and/or topicality. The particular circumstances of the individual case must always be taken into consideration. The use of information contained in this article is the sole responsibility of the respective reader. Any liability on the part of Engel & Völkers Gewerbe Berlin GmbH & Co. KG and/or another Engel & Völkers licensee is excluded.