Discover what the law indicates for Berlin residential or commercial property owners and property owners in our FAQ.

For which flats does the lease cap apply?

Rent cap policies use to non-public housing. Excluded from the regulations are publicly subsidised housing, social well-being flats, flats in halls of home and newly developed flats that were very first prepared for occupancy on 1 January 2014 or that have actually been brought back for property purposes from uninhabitable and vacant former living area that was converted at an expense commensurate with a brand-new structure.

Commercial area that has been converted and rededicated as living area at considerable expense is likewise omitted from the rent cap.
The rent cap uses to social housing which no longer falls under IBB dedication. In this case, it is not the rent on the effective date, however the last lease agreed in the commitment period that is to be utilized as the basis.

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

According to Art. 3 (4 ), rent in accordance with the lease cap implies the net base rent (not consisting of operating costs and utility expenses for heating and warm water), but consisting of all surcharges for furnishings and furnishings.

In rental agreements in which no net base lease has been concurred, the property owner must, if required to do so and at the demand of the skilled authorities, offer renters with the accurate net base lease amount together with the data utilized for the computation basis.

How long is the rent cap valid?

Can I still increase the lease now?

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

In principle, the very same level of rent can be agreed with the next renter. However, this is just permissible if it does not exceed the upper rent limitations under Art. 5 MietenWoG.

If the flat was not leased on the essential date of 18 June 2019 or if an occupant modification has actually occurred between the key date and the efficient date of the law, the rent accepted throughout this duration will be "frozen".

Just how much rent can I charge as a landlord? In order to figure out the upper lease limitations, the rents listed in the 2013 Berlin Rent Index were updated to show genuine wage advancement up until 2019. The upper lease limits are originated from the table in the rent cap law and are finished according to building age classes and features. Surcharges are also allowed. For flats with contemporary facilities, the ceiling is increased by 1 euro. Relevant here are just those facilities provided by the property manager. According to the law's rent table, modern facilities exists if the living space has at least 3 of the five following qualities:

The rent ceiling is also increased by an additional charge of 10% if the residential space is located in a building without any more than 2 flats. So for the computation of the allowable rent: lease ceiling according to the lease table + surcharges noted above.

You can discover detailed meanings of the five modern-day amenity criteria, as stated by the Senate Department for Urban Development and Housing rent cap application policies, in our checklist for owners and landlords.

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

If the residential unit is re-let after the law enters force, the law prohibits taking a greater lease than the rent that has been "frozen". If the frozen lease is greater than the relevant upper lease limitation (see rent table), the unit might only be let at the statutory lease limitation. If required, surcharges for modern features and modernisation measures can be taken into consideration in the lease ceiling. When it comes to flats whose previous lease was less than EUR 5.02 per square metre, the rent might be increased by a maximum of EUR 1 as much as EUR 5.02 per square metre upon re-letting if modern-day facilities are available. Modern facilities exists if the living space has at least three of the five following qualities:

- Passenger lift, available without limits from the flat and from the structure entrance
- Fitted cooking area
- High-quality hygienic equipment
- High-quality flooring in the bulk of spaces
- Energy usage value of less than 120 kWh/( m TWO a)

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

A lease is thought about extreme and is for that reason restricted if it is more than 20% above the appropriate upper lease limit in the lease table, considering the property location.

Appropriate surcharges and reductions are likewise applicable:

- Flats in an easy suburb -0.28 euros
- Flats in a medium residential area -0.09 euros
- Flats in a great suburb +0.74 euros

Are modernisations still possible? To what extent can they be assigned to the rent?

Certain modernisation measures and their apportionment to the rent are allowed up to a maximum of EUR 1.00 per square metre. This limit also uses in the event of several modernisations during the law's credibility period. The prerequisite is that property owners notify the Investitionsbank Berlin (IBB) of increased lease based upon modernisation procedures. The IBB is providing an online alert treatment. You can submit a modernisation notification here.

Please note that when re-letting domestic space after an apportionable modernisation, the five contemporary amenity criteria pointed out above may not be in addition assigned (in order to avoid an increase of the upper lease 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 floor ceiling or roofing system
- For the use of eco-friendly energies
- For energy-efficient window replacement
- For heating unit replacement with heating optimisation
- For the addition of a lift
- For the removal of barriers through limit elimination, door widening or restroom conversion

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

In exceptional cases, the IBB can authorize a higher allowable lease. The prerequisite is the presence of undue financial challenge. This is especially appropriate if keeping the acceptable rent would lead to permanent losses for the property owner or endanger the building structure over the long term.

A loss is considered to exist if existing expenses exceed earnings for the appropriate company entity. A risk to the building structure exists if the earnings from the residential or commercial property is no longer enough for its maintenance.

It should be noted that financial challenge can only be considered if the challenge is triggered by the rent cap law. Undue financial difficulty is likewise only valid if its event does not lie within the sphere of duty of the property owner. To put it simply, expectations of appreciation in value, expected returns, increasing funding costs outside routine market conditions, expected returns based upon excessive rents and losses arising from the department into service entities do not make up a case of hardship.

You can submit a hardship application to the IBB here.

What information responsibilities do I have as a proprietor?

Landlords need to supply occupants with details on the situations relevant to the calculation of the lease ceiling within two months after the law coming into force and also before the conclusion of a new rental agreement, without being asked for to do so. Landlords should notify tenants of the amount of the key date rent on 18 June 2019 upon demand. Prior to the finalizing of a new lease, landlords should notify future tenants of both without being asked.

You can find details of the information responsibilities under the rent price cap in our list for residential or commercial property owners and property managers.

How are offenses punished?

A fine of as much as 500,000 euros might be imposed for violations of the lease rate cap.

Where can I discover more info?

At www.engelvoelkers.com/mietendeckelberlin you can find routine updates on the lease price cap.

Do you have more questions?

We would more than happy to advise you! More than 50 real estate specialists for the Berlin property and business residential or commercial property market are readily available to you for further details at any time face to face, by telephone or by email.

Ulrich Blaeser

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All about the Berlin rent rate cap:

This means the rent rate cap

Rent price cap calculator

Obligations for property managers

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