BERLIN — Germany’s highest court ruled Thursday that a cap on rent prices implemented last year by Berlin’s left-wing state government is unconstitutional and void.
The cap was introduced last February by Berlin’s governing coalition with the goal of preserving affordable housing in the capital. The Social Democratic, Greens and Left parties make up the coalition.
The regulation meant that rents for some 90% of Berlin apartments were frozen at June 2019 rates for five years, and that new rents could not be above that level, while existing rents needed to be reduced to conform.
The policy has caused havoc in Berlin’s housing market. Many landlords have included so-called “shadow-rent” clauses in new contracts – higher monthly rents that would go into effect retroactively if the cap were overturned.
In its ruling on an appeal brought by Berlin’s opposition Free Democrats and Christian Democrats, the Federal Constitutional Court in Karlsruhe said the rental cap was unconstitutional because housing policy is a federal issue and states only may intervene if the federal government does not exercise that power.
“Since the federal legislature has laws… regulating rental prices, there is no room for the the states to legislate,” the court said in its ruling.
