A German court struck down a transformative Berlin rent law that not only capped rents citywide, but in some cases lowered them.
The court voided the law Thursday, saying the federal government had already passed rent legislation within the jurisdiction, according to the Wall Street Journal.
Berlin passed its law in February 2020, and shortly after it was challenged in court by around 284 legislators, including members of Chancellor Angela Merkel’s Christian Democratic Union.
The law included a five-year rent freeze for all units built as recently as 2013, and a rent hike cap based on the property’s age plus 1.3 percent inflation.
Landlords were required to reduce rents within nine months to be 20 percent above the cap or lower. Tenants who managed to lower their rents since the law took effect may have to pay back the difference, according to the Journal.
Berlin has some of the lowest rents among Europe’s capitals and premier cities, but rents doubled over the last decade or so. Around 80 percent of Berliners are renters.
A 2019 estimate figured the law would apply to about 1.5 million units across the German capital. Investors and landlords staunchly opposed the legislation.
BBU, a landlord association, said its members would lose 1.1 billion euros — $1.3 billion — over five years under the law and that investment would fall by 5.5 billion euros — $6.5 billion — during that period.
[WSJ] — Dennis Lynch