Berlin - rent cap: landlords lose 21 million euros - per month

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Apartment buildings near Kollwitzplatz in the Prenzlauer Berg district

Photo: Lothar Ferstl / DPA

This Monday, the most radical stage of a law comes into force that has never existed on the German housing market: For many apartments in Berlin, housing costs have to be reduced if they have been too high up to now.

This is what the rent cap provides, probably the most important socio-political project of the red-red-green state coalition.

Rents have only been frozen since February 23, but now phase two begins, which provides for large-scale rent cuts.

The Berlin Senate Department for Urban Development and Housing has so far assumed that around 340,000 apartments will be affected by this second stage of the rent cap.

But a new study by the research company F + B shows that the law should apply to significantly more apartments.

According to the analysis house's current residential index, which is available to SPIEGEL, the regulations on rent deduction should apply to 512,000 apartments.

"That corresponds to around 37 percent of Berlin's total stock of relevant apartments in buildings with three or more apartments," says the analysis.

Rent index level from 2013

So soon more tenants are likely to receive a letter informing them of the rent reduction.

A flat rent is considered to be too high if it is more than 20 percent above the upper limit defined in the law.

This upper limit depends on the year of construction of the house as well as on the equipment and the time of the last modernization.

For this purpose, the red-red-green Senate has presented a price table in which the apartments are staggered according to year of construction and equipment and are provided with a maximum rent.

These prices roughly correspond to the rent index level from 2013. For example, Wilhelminian-style buildings from the years before 1918, which are often in sought-after locations, are allowed € 6.45 net rent per square meter.

For apartments that were built between 1973 and 1990, only 6.04 euros.

If the current rent is more than 20 percent higher, landlords can only ask for the tabular value.

According to the analysts from F + B, landlords will earn almost 21 million euros less rent per month with these rules.

That would be an average of 40 euros per apartment.

Calculated over a year, landlords lose 250 million euros.

Tenants of refurbished apartments in old buildings should benefit in particular

Most of the potential for rent reductions can therefore be seen in the around 165,000 well-equipped old apartments built up until 1918. In this segment alone, rents could be a total of 6.8 million euros cheaper.

In contrast, apartments in East and West Berlin from 1965 to 1990, which include many prefabricated and large housing estates, only have a depreciation potential of 5.7 million euros.

"We assume that the tenants in particular will benefit from high-quality refurbished old apartments in good locations," says Bernd Leutner, Managing Director of F + B.

Whether the Berlin rent cap is necessary and sensible - this has long been a political issue.

One thing is clear: nationwide, the trend towards rising rents has recently weakened significantly even without such an intervention.

According to the F + B index, new lease rents fell by 0.9 percent in the third quarter of 2020 compared to the previous quarter.

Compared to the same quarter of the previous year, they increased slightly by 0.1 percent.

"On the national average, exorbitant rent increases are finally a thing of the past," says Leutner.

If the state support measures had not been in place in the spring in the wake of the corona pandemic, this would probably have led to even greater declines in rents.

In contrast to rents, the purchase prices for houses are continuing to rise, albeit not as much as in previous years.

These increased in price by 0.5 percent compared to the previous quarter and by as much as 8.6 percent year-on-year.

The plus is significantly higher than the prices for condominiums, which have almost always increased significantly more over the past ten years.

Now it is more the single-family houses with gardens that are becoming more expensive.

"We are of the opinion that the corona pandemic has generated an additional and apparently sustainable surge in demand here," says Leutner.

The F + B-Wohn-Index measures rent and price developments on the German real estate market.

According to the company's own information, the basis for the index is the supply data from more than 30 million properties throughout Germany.

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