German constitutional court strikes down Berlin rent cap

In this aerial view from a drone, people chat at Admiral Bridge (Admiralbruecke) at Landwehr canal in Kreuzberg district during the second wave of the coronavirus pandemic on February 28, 2021 in Berlin, Germany. Christian Ender | Getty Images News | Getty Images

Germany’s Constitutional Court ruled on Thursday that a law putting a rent cap on apartments in Berlin is invalid.

The state of Berlin does not have the authority to enact the law, as the federal government is responsible for such decisions, the court said in its ruling.

“There is no room for the legislative power of the federal states due to the power of federal law to block it,” said the court.

The rent cap came into force on Nov. 23, 2020, forcing landlords to cut rents for more than 300,000 tenants and freezing them at that level for five years.

The real estate industry had criticized the measures as unconstitutional, while some experts have said the rent freeze could worsen Germany’s housing crisis by scaring off real estate investors eager to build in urban centres.

Shares in property companies with assets in Berlin, including Deutsche Wohnen and Vonovia , rose on the ruling.


Source: CNBC


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