Berlin (en),  Legal,  Rental,  Sales

The Berlin rent cover (Berliner Mietendeckel) and its consequences

The supply quantity of rental apartments in Berlin will decline.

Vacant apartments will get sold to owner-occupiers.

Rents between 3.92 Euro / sqm and 9.80 Euro / sqm will not be profitable for many owners. The supply of rental apartments will drop drastically. With sinking supply and rising demand not to the needy gets the apartment, but the solvent tenant gets an apartment at capped price.

Because of the scarce rental offer but also more people would rather buy. Of course, with rising demand, the prices for free and vacant flats will not fall.

The cheap rental costs in Berlin will get around in Germany and abroad, so that more people want to move to Berlin. This demand will further aggravate the housing shortage in Berlin.

The decline in investments in Berlin and the growing shortage of housing will lead to increased migration to the Brandenburg region, which will lead to even faster price increases there.

Maintenance measures gets reduced, modernizations stopped.

Dramatic effects on the housing quality and craft industry.

Maintenance is non-recoverable additional costs. These must therefore be paid from the rents. With stagnating or even falling rents, living space will increasingly decay. Often, only the bare essentials are done and thus damage the building fabric in the long term. No energy or handicapped modernization can be carried out for the planned surcharge of a maximum of one euro per square meter. Even cooperatives are dependent on rent increases in order to be able to finance modernizations and new buildings.

Landlords stop their investment, this leads to declines in the craft trade, and thus layoffs.

Commercial rents will rise.

Heavily regulated markets are unattractive to investors. The commercial real estate market is less regulated. Here landlords, as far as possible get their return balance. Rents and purchase prices will increase in this segment.

Private landlords worry about your retirement.

Although large housing stocks are owned by housing companies, many owners are private individuals who have invested in a residential property as a pension because of low interest rates.

They have relied on rental income and many are now faced with the situation that they can no longer pay their debts and lose their old-age provision.

Banks will also revalue real estate holdings for institutional investors. Investors will have to raise capital, which will lead to significant additional burdens and, in some cases, bankruptcies.

Uncertainty.

What’s next? The rental cover leads to great uncertainty in the market. Will the regulatory comforts of the Berlin comrades soon cap the new building, or commercial real estate? The damage of great investment and legal uncertainty has long been present.

Bureaucracy.

The rental cover affects over 1.5 million households.

Citizen’s offices must check compliance with the upper rent limits, reduction of excessive rents, rent subsidies, modernization applications, hardship cases, violations, etc. And the whole thing will then also occupy the courts.

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