Learn what the law implies for Berlin residential or commercial property owners and property owners in our FAQ.

For which flats does the rent cap use?

Rent cap regulations use to non-public housing. Excluded from the policies are publicly subsidised housing, social well-being flats, flats in halls of home and freshly developed flats that were very first prepared for occupancy on 1 January 2014 or that have actually been brought back for property functions from uninhabitable and vacant previous home that was transformed at a cost commensurate with a brand-new building.

Commercial space that has been converted and rededicated as living space at substantial expenditure is also left out from the lease cap.
The lease cap applies to social housing which no longer falls under IBB dedication. In this case, it is not the lease on the effective date, but the last lease concurred in the commitment duration that is to be used as the basis.

The law says "rent in accordance with the lease cap" - what does that indicate?

According to Art. 3 (4 ), lease in accordance with the lease cap implies the net base lease (not consisting of running costs and energy expenses for heating and hot water), however including all surcharges for furnishings and furnishings.

In rental arrangements in which no net base lease has been agreed, the proprietor must, if required to do so and at the request of the skilled authorities, provide occupants with the precise net base rent quantity together with the data utilized for the calculation basis.

For how long is the rent cap valid?

Can I still increase the rent now?

The essential date for the "freezing" of the lease is the date of the Senate resolution on 18 June 2019, i.e. after the law comes into force, the standard for a re-letting is the rent that worked on the crucial date.

In principle, the exact same level of lease can be agreed with the next occupant. However, this is just allowable if it does not go beyond the upper rent limits under Art. 5 MietenWoG.

If the flat was not rented on the key date of 18 June 2019 or if a tenant change has actually taken location in between the crucial date and the efficient date of the law, the lease accepted during this duration will be "frozen".

Just how much rent can I charge as a property owner? In order to figure out the upper rent limits, the leas listed in the 2013 Berlin Rent Index were upgraded to reflect real wage advancement until 2019. The upper rent limitations are stemmed from the table in the rent cap law and are finished according to building age classes and amenities. Surcharges are also allowed. For flats with modern-day facilities, the upper limitation is increased by 1 euro. Relevant here are just those amenities supplied by the landlord. According to the law's lease table, modern features exists if the living area has at least three of the five following attributes:

The rent ceiling is likewise increased by an additional charge of 10% if the property space lies in a building with no more than two flats. So for the estimation of the allowable lease: rent ceiling according to the rent table + surcharges noted above.

You can discover detailed definitions of the five modern-day amenity requirements, as stated by the Senate Department for Urban Development and Housing rent cap execution regulations, in our checklist for owners and landlords.

How much lease can I charge if I re-let the unit?

If the domestic system is re-let after the law enters into force, the law restricts taking a higher rent than the lease that has been "frozen". If the frozen lease is higher than the appropriate upper rent limitation (see lease table), the unit may just be let at the statutory lease limitation. If needed, additional charges for contemporary amenities and modernisation steps can be considered in the lease ceiling. When it comes to flats whose previous rent was less than EUR 5.02 per square metre, the rent may be increased by an optimum of EUR 1 up to EUR 5.02 per square metre upon re-letting if modern features are available. Modern features exists if the home has at least 3 of the 5 following characteristics:

- Passenger lift, accessible without thresholds from the flat and from the structure entrance
- Fitted kitchen
- High-quality sanitary equipment
- High-quality flooring in the bulk of rooms
- Energy consumption worth of less than 120 kWh/( m TWO a)

When is a rent considered excessive and when can it be reduced?

A lease is considered excessive and is therefore restricted if it is more than 20% above the appropriate upper rent limitation in the rent table, taking into consideration the domestic place.

Appropriate surcharges and reductions are also applicable:

- Flats in a basic house -0.28 euros
- Flats in a medium suburb -0.09 euros
- Flats in a great suburb +0.74 euros

Are modernisations still possible? To what extent can they be apportioned to the lease?

Certain modernisation procedures and their apportionment to the rent are permitted as much as an optimum of EUR 1.00 per square metre. This limitation also applies in case of multiple modernisations throughout the law's credibility duration. The requirement is that proprietors notify the Investitionsbank Berlin (IBB) of increased lease based on modernisation measures. The IBB is providing an online notification treatment. You can submit a modernisation alert here.

Please note that when re-letting residential space after an apportionable modernisation, the five contemporary feature requirements pointed out above may not be in addition assigned (in order to prevent an increase of the upper rent limitation by approximately 2 euros/sq. m).

Which modernisations are permitted?

Apportionable modernisation steps are those to which property owners are obliged by law:

- For thermal insulation of the building envelope, basement ceiling, leading flooring ceiling or roofing system
- For using renewable resources
- For energy-efficient window replacement
- For heater replacement with heating optimisation
- For the addition of a lift
- For the elimination of barriers through threshold elimination, door widening or bathroom conversion

What options do I have as a residential or commercial property owner if the allowable rent leads to losses or to a hazard to the building structure in the long term?

In remarkable cases, the IBB can approve a higher permissible rent. The prerequisite is the presence of undue economic hardship. This is especially appropriate if keeping the acceptable lease would lead to long-term losses for the property owner or threaten the building structure over the long term.

A loss is considered to exist if present costs surpass earnings for the pertinent business entity. A hazard to the building structure exists if the earnings from the residential or commercial property is no longer enough for its upkeep.

It must be noted that economic challenge can only be thought about if the challenge is triggered by the lease cap law. Undue financial challenge is likewise just legitimate if its event does not lie within the sphere of obligation of the property owner. In other words, expectations of appreciation in value, expected returns, increasing financing costs outside regular market conditions, anticipated returns based upon excessive rents and losses resulting from the division into organization entities do not constitute a case of hardship.

You can submit a challenge application to the IBB here.

What information commitments do I have as a proprietor?

Landlords must supply tenants with details on the circumstances pertinent to the calculation of the lease ceiling within 2 months after the law entering force and likewise before the conclusion of a brand-new rental contract, without being requested to do so. Landlords should inform tenants of the amount of the key date lease on 18 June 2019 upon request. Prior to the signing of a brand-new lease, property owners should notify future occupants of both without being asked.

You can find details of the details commitments under the lease price cap in our list for residential or commercial property owners and landlords.

How are offenses penalized?

A fine of as much as 500,000 euros might be enforced for violations of the rent cost cap.

Where can I find more information?

At www.engelvoelkers.com/mietendeckelberlin you can discover regular updates on the rent rate cap.

Do you have more concerns?

We would enjoy to advise you! More than 50 real estate experts for the Berlin property and industrial residential or commercial property market are available to you for additional information at any time personally, by telephone or by email.

Ulrich Blaeser

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Everything about the Berlin rent rate cap:

This implies the lease rate cap

Rent cost cap calculator

Obligations for property owners

Disclaimer: This post is meant solely as basic, non-binding details and ought to not change in-depth research study or professional advice. Although this article has been prepared with the best possible care, there is no claim to accurate precision, completeness and/or topicality. The specific situations of the individual case must always be thought about. Using info included in this post is the sole responsibility of the particular reader. Any liability on the part of Engel & Völkers Gewerbe Berlin GmbH & Co. KG and/or another Engel & Völkers licensee is omitted.

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