UPDATE: The Berlin rent cap was declared invalid by a decision of the Federal Constitutional Court in Karlsruhe on April 15, 2021.
04.05.2020 | The rent price cap has been in force since 23 February 2020. We have summarised which obligations are legally applicable and which will take effect in the coming weeks and months for you as a landlord.
Regular information obligations according to the rent price cap
Effective immediately: Information regarding the calculation of the rent ceiling – to new tenants and upon request
1. Before conclusion of a new rental agreement, without being asked
2. At the request of the Senate Administration
Provide evidence of the circumstances that are relevant to the calculation of the rent ceiling. You are not required to provide information on the permissible rent.
Details to include in your information:
- Key date rent
- Date of initial occupancy of the flat
- Whether the flat is equipped with central heating and a bathroom
- Whether the dwelling is a detached or a semi-detached house
- Which modernisation measures have been implemented
- Whether an exemption exists so that the law does not apply
- Whether there is an exemption due to a case of hardship
- Which of the five criteria for modern amenities exist
> Regarding the five criteria for modern amenities: List all criteria and whether they exist in the flat or not:
- Passenger lift, accessible without thresholds from the flat and from the building entrance
- Fitted kitchen
- High-quality sanitary equipment
- High-quality flooring in the majority of rooms
- Energy consumption value of less than 120 kWh/(m²a)
Definition of “accessible without thresholds”: According to the Senate Department for Urban Development and Housing,
the rent cap implementation regulations stipulate that thresholds with a maximum height of 2 cm are permissible. There may also be more than one barrier, each of which may only have a maximum height of 2 cm and the barriers may not be directly behind one another. The criterion stipulates that there are no insurmountable barriers for a wheelchair or wheeled walker.
Definition of “fitted kitchen”: The Senate Department for Urban Development and Housing implementation regulations stipulate that a fitted kitchen includes upper and lower cabinets, stove or hob and oven, extractor hood and sink.
Definition of “high-quality sanitary equipment”: The sanitary equipment in the bathroom and lavatory (bathtub, shower and washbasin, including fittings and toilet) must be of high quality. High-quality refers to the material quality and elaborate craftmanship as well as the price. Special designs (e.g. round or corner bathtub, whirlpool) also indicate high quality.
Definition of “high-quality flooring”: This refers to the superior quality of the products used (for example, high abrasion resistance and/or impact resistance, structure or thickness in the case of parquet) and price. The corresponding flooring – high-quality parquet, natural stone, artificial stone, tiles or equivalent flooring or floor covering – must be clearly distinguishable from a standard floor covering in this respect and must be present in more than 50% of the living spaces (not including kitchen and bathroom/lavatory).
Definition of “energy consumption value of less than 120 kWh/(m²a)”: You are not required to provide the exact energy consumption value in your declaration. Simply indicate whether the value is below or above the criterion of 120 kWh/(m²a).
- To determine the value: The value refers to energy for heating and hot water. In the case of decentralised hot water supply, 20 kWh/(m²a) must be added to the energy characteristic value shown.
- The use of energy demand values is not stipulated in the Berlin rent price cap. However, specifications can be found in the implementation regulations. In providing the final energy demand value, the energy consumption value limit is to be increased by 20%. In this case a limit value of 144 kWh/(m²a) applies, which may not be exceeded.
The rent cap does not apply to:
- Newly constructed flats that were ready for occupancy on or after 1 January 2014
- Publicly subsidised housing
- Flats that were restored for residential purposes from uninhabitable and unoccupied former living space that was converted at a cost commensurate with a new building
- Halls of residence and social welfare flats
- Living space for people with urgent housing, care or participation needs
Please note: the rent cap applies to social housing which no longer falls under IBB commitment. In this case, it is not the rent on the effective date, but the last rent agreed in the commitment period that is to be used as the basis.
If information is not provided in full, e.g. if you do not inform the tenants in a building with 20 parties that it is a building with more than two flats. If incorrect information is provided, e.g. if you specify an existing modern amenity criterion that does not exist in the flat.
Effective immediately: Information regarding the rent on the key date – to new tenants and upon request
Since the law came into force on 23 February 2020, you are obliged to provide information regarding the rent on the 18 June 2019 key date in writing:
1. Before signing a new rental agreement, without being requested to do so
Add the following sentence to the lease under “Other”: “The net base rent on 18.06.2019 was ... euros”.
> Definition of “net base rent”: According to the Senate Department for Urban Development and Housing, the net base rent includes all surcharges agreed in the rental contract: for furniture or furnishings, partial commercial use, subletting surcharges, as well as garages and parking spaces if they do not have a separate rental contract. Operating costs, utilities (such as electricity) and the rent deposit are not included.
2. At the request of the tenant
Inform your tenants in writing with an original signature.
- According to the Senate Department for Urban Development and Housing, if you are repeatedly asked for information, you can refer to the information already provided as long as it is still up to date.
- If the flat was not rented out on the key date, inform the tenant that there was no rental on the key date.
- If no net base rent was agreed on the key date: If a gross base rent or inclusive rent was agreed, inform the tenant that no net base rent with or without surcharges was agreed on the key date. According to the Senate Department for Urban Development and Housing, in the case of gross base rent, the concrete operating costs must be taken into consideration. The recalculation can be carried out in the same way as Rent Index calculations.
The Senate Department for Urban Development and Housing rent cap implementation regulations stipulate the following: In the case of rental agreements in which no net cold rent has been agreed, the landlord must, if necessary and at the request of the competent authorities, inform tenants of the net base rent amount and provide data on the calculation basis.
Until 23 April 2020: Information to all tenants on the calculation of the rent ceiling
Within two months of the law coming into force, i.e. by the end of 23 April 2020, you are obliged to inform existing tenants of how the rent ceiling has been calculated.
- Provide all the details listed under point 2 in your information
- Also provide the indication of the residential area (simple, medium, good)
Until a map with official classification of Berlin’s residential areas is issued, the residential area can be determined on the basis of the address list for the 2019 Berlin Rent Index (in accordance with the Senate Department for Urban Development and Housing rent cap implementation regulations as of 17.04.2020).
Within three months: Notification of rent increases following modernisation to IBB
For modernisations carried out between the key date of 18.06.2019 and the entry into force of the law on 23.02.2020, the permissible rent can be increased by up to 1 euro/sq. m. Within three months of the law coming into force, the rent increase base on modernisation measures must be reported to the Investitionsbank Berlin (IBB).
The IBB is offering an online notification procedure. You can
submit a modernisation notification here
.
Modernisations which are eligible for raising the permissible rent:
- Legally required modernisations
- Thermal insulation of the building, basement ceiling, top floor ceiling or roof -Use of renewable energies
- Energy-efficient window replacement
- Heating system replacement with heating optimisation
- Addition of a lift
- Removal of barriers through threshold removal, door widening or bathroom conversion
Please note when re-letting residential space after modernisation: In order to avoid an increase of the upper rent limit by up to 2 euros/sq. m, the five modern amenity criteria mentioned above under point 1.2. may not be additionally apportioned.
In nine months: Reduce rents for existing properties
Nine months after the rent price cap comes into force, excessive rents based on existing leases must be reduced.
According to the law, a rent is excessive if it is more than 20% above the permissible rent ceiling after taking the residential area into account.
Sequence for calculation:
1. Rent cap according to table
2. +10% for a dwelling in a detached or semi-detached house
3. +1 euro/sq. m for three of five existing criteria for modern amenities
- Passenger lift, accessible without thresholds from the flat and from the building entrance
- Fitted kitchen
- High-quality sanitary equipment
- High-quality flooring in the majority of rooms
- Energy consumption value of less than 120 kWh/(m²a)
4. +/- Surcharges and deductions according to residential area
- 28 cents/sq. m for simple location
- -9 cents/sq. m for medium location
- +74 cents/sq. m for good location
Until a map with official classification of Berlin’s residential areas is issued, the residential area can be determined on the basis of the address list for the 2019 Berlin Rent Index (in accordance with the Senate Department for Urban Development and Housing rent cap implementation regulations as of 17.04.2020).
= Permissible rent ceiling
5. +20% tolerance
Eligible to be fined: Those demanding a rent that is higher than the permissible rent without authorisation, in the form of a reminder or payment claim, risk a fine of up to 500,000 euros. Should the Federal Constitutional Court repeal the law, accumulated rent arrears can be demanded without risking a fine.
New rentals after the law comes into force
Rentals after the effective date of the rent price cap are based on the lower value:
Either the rent on the key date
If the key date rent is less than 5.02 euros and 3 of 5 modern amenity criteria are met, the new rent can be increased up to 1 euro/sq. m, to a maximum of 5.02 euros.
Or according to the rent table
In addition, rent may be increased after modernisation measures (see point 4) up to 1 euro/sq. m.
The abovementioned calculation sequence applies, with one difference:
For rentals after 23 February 2020 there is no 20% tolerance above the rent ceiling (see point 5).
Additional income:
Or according to the rent table
In addition, rent may be increased after modernisation measures (see point 4) up to 1 euro/sq. m.
The abovementioned calculation sequence applies, with one difference:
For rentals after 23 February 2020 there is no 20% tolerance above the rent ceiling (see point 5).
Additional income:
- No increase in the rent ceiling due to the flat being furnished or partial commercial use.
- Cellar and parking spaces can be rented separately.
Rent price cap in Berlin - Strategic consulting
We will be happy to provide you with further information at any time in person, by telephone or by e-mail. Our more than 50 real estate experts for the Berlin residential and commercial property market look forward to hearing from you.
For further legal information we recommend the blog of attorney Tobias Scheidacker at https://ikb-law.blog
Ulrich Blaeser
Team Leader Investment Residential and Commercial Properties | Member of the Executive Board
Phone +49 30 203460
More information about the rent price cap:
Disclaimer:
This article is intended solely as general, non-binding information and should not replace detailed research or specialist advice. Although this article has been prepared with the greatest possible care, there is no claim to factual accuracy, completeness and/or topicality. The particular circumstances of the individual case must always be taken into consideration. The use of information contained in this article is the sole responsibility of the respective reader. Any liability on the part of Engel & Völkers Gewerbe Berlin GmbH & Co. KG and/or another Engel & Völkers licensee is excluded.
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