Berlin’s revolutionary rent freeze law has been declared invalid by Germany’s highest court. Reduced rents will have to be repaid. Joel, Dan and Jöran give an instant take. Who will voters blame – the CDU/FDP for killing it, or the SPD/Linke/Greens for trying it? Is a federal rent cap likely? Listen up!
This month residents of Berlin should experience the biggest collective rent reduction in history. About 340,000 residents – one in six – may be eligible for a rent cut under the Mietendeckel, Berlin’s radical new housing policy. But landlords are doing their best to stop it.
Anyone who gets a rent reduction should save the money, as they might have to pay it back. The Mietendeckel is being challenged in Germany’s constitutional court, with a ruling expected in mid-2021. Jöran Mandik explains the court process – and the judges’ red robes.
Furnished flats are not exempt from the Mietendeckel. But some companies are offering a buy-and-lease-back service model to help landlords get around the law. Tenants are told they have no choice but to rent both the flat and the furniture together. Other tricks include renting expensive basements, parking spaces and coworking desks inside their flat.
Double contracts have become standard: residents are offered two prices – a lower one that matches the rent freeze legislation, and a higher one they’ll have ot pay if the law is later ruled unconstitutional. Such double contracts are most likely legal and enforceable, says rental expert Daniel Halmer from Conny.legal (formerly Wenigermiete). But they could still be challenged using the Mietpreisbremse law, an older regulation which limits rent prices under some conditions.
What’s the effect of the rent freeze so far? If you already have an apartment, the rent freeze appears to be working as expected. If you’re looking for an apartment, things are tougher due to landlords restricting supply. A study by the ZIA found average rental prices have sunk by 5.7% in the first half of 2020. But availability has also fallen by about 50%, as property owners withhold empty flats from the market. For new flats built after 2014 – which are exempt from the Mietendeckel – prices are up 7.5%, and availability has increased by 18%, according to real estate portal ImmobilienScout24.
Swedish property management company Heimstaden Bostat isn’t deterred by the rent freeze. The company is trying to purchase about 130 buildings with almost 4000 apartments at a cost of €830 million. Heimstaden told us they had factored the rental regulations into their financial planning.
Researcher Christoph Trautwetter recently produced a report called ‘Who Owns Berlin’ for the Rosa Luxemburg Stiftung. He debunks the myth that warned the Mietendeckel would scare investors away. “There is an excess of capital looking to invest under any condition, and ready to accept the Mietendeckel as a condition to invest in Berlin,” Trautwetter said. You can read his report here: https://www.rosalux.de/publikation/id/43284
Next up on this series – who is to blame for Berlin’s lack of new properties? We’ll also hear from small-time landlords who face financial ruin under the rent freeze.
Rent Freeze is produced and presented by Joel Dullroy, Maisie Hitchcock, Jöran Mandik and Daniel Stern. Music by Tom Evans. Artwork by Jim Avignon. Produced in partnership with RadioEins, Berlin’s public broadcaster.
Berlin’s rent freeze has begun, but nobody seems to know what’s going on. Landlords and tenants alike are confused about what to do next. Rents are now capped at the rate paid in June 2019 – all increases since then are invalid. New contracts can’t exceed about €9.80 a square meter – half as much as many advertised prices. And landlords face fines of half a million euros for cheating.
On this episode we go inside Berlin’s parliament to hear the moment the rent freeze law was passed. Supporters and opponents gave fiery speeches in a rowdy session, which ended with politicians voting to suspend the free market for rental property for five years.
We hear what landlords think about the new law. Some are devising ways to cheat – by renting to ignorant foreigners: “Those who screw their landlords are old Germans.” Despite the threat of huge fines, some don’t think the city has the resources to prosecute them.
And what should tenants do if they hope for a rent decrease? Lawyer Daniel Halmer from Wenigermieter.de says they should start adding three magic words to their rent transfers: “Zahlung unter Vorbehalt.” It means paid with reservations, and gives tenants the right to to try to claim back overpayments at a later date.
Rent Freeze is produced and presented by Joel Dullroy, Maisie Hitchcock, Jöran Mandik and Daniel Stern. Artwork by Jim Avignon. Music by Tom Evans and Ducks!. Recorded by Stephan Lindner. Rent Freeze is a production of Radio Spaetkauf and RadioEins.
Radio Spaetkauf Presents: Rent Freeze #1: The Experiment
What happens when an entire city of 3.5 million residents stops paying rent increases for the next five years? Welcome to Rent Freeze, a podcast about Berlin’s rental revolution.
Berlin is about to introduce the Mietendeckel, a law that will freeze rents for five years, cap new rental contracts at a maximum price, and allow some tenants to claim a rent reduction. Supporters say it will be the best thing to happen to the city since the fall of the Wall
But investors and landlords are outraged. They say the reforms will scare off businesses, leave houses unbuilt and in disrepair, and feed a grey market for off-the-books rental as desperate Berliners try to find a flat.
On this episode we explain the basics of the law, and talk to Daniel Halmer of Wenigermiete.de about why the existing rent controls haven’t worked.
Produced and presented by Joel Dullroy, Maisie Hitchcock, Jöran Mandik and Daniel Stern. Artwork by Jim Avignon. Music by Tom Evans and Ducks!. Recorded by Stefan Lindner.
Rent Freeze is a production of Radio Spaetkauf and RadioEins.