Reversal of the Berlin rent cap – questions and answers
1. The Federal German Constitutional Court has declared the rent cap law as “null and void”. Which effects does that have on the amounts saved due to the rent cap?
First of all, this means that all legal consequences derived from this law are ineffective. From now on, the rent is due which was agreed prior to the coming into force of the Berlin rent cap (on 23 February 2020). The tenants who pay by standing order or individual bank transfer must consider this and pay the higher rent again starting in May 2021. In case of re-letting or rent lowering you can check the criteria of the national rent stop (seek legal advice please). This may take a while. Therefore the future rent should be paid under reserve in these cases.
Note: Rent amounts retained or reduced due to the law must be paid back.
The question if it must be repaid in one sum or immediately or if you can wait with repayment, is answered below. In addition there are exceptions to the repayment obligation. In case of doubt, please ask for our legal advice before you make repayments!
First of all, we will find out in which specific situations/cases the lessor is entitled to demand repayment of the partial rent amounts (starting with question no. 2). Then we will tell you when these repayments are to be made (starting with question no. 10). Rent cap cases which were or will be negotiated in court, are discussed starting with question no. 18.
Note: Rent amounts retained or reduced due to the law must be paid back.
The question if it must be repaid in one sum or immediately or if you can wait with repayment, is answered below. In addition there are exceptions to the repayment obligation. In case of doubt, please ask for our legal advice before you make repayments!
First of all, we will find out in which specific situations/cases the lessor is entitled to demand repayment of the partial rent amounts (starting with question no. 2). Then we will tell you when these repayments are to be made (starting with question no. 10). Rent cap cases which were or will be negotiated in court, are discussed starting with question no. 18.
2. Can I wait with the repayment until my landlord’s/lessor’s request to do so?
In many cases there is no need for the lessor to demand repayment – the tenant must do so on his/her own initiative. For more details see 5. You can, however, wait for a repayment request in the following situation: The lessor/landlord has reduced the rent pursuant to the rent cap on his/her own initiative and has written a rent reduction letter with the following wording (e.g.): „Starting 1 December 2020, the rent will be reduced to EUR xxx. This does not constitute a waiver of the agreed rent, but the higher amount is just not requested by me/us. The overall rent is calculated starting 1 December 2020 as follows. Please only transfer EUR xxx. The lessor explicitly reserves the right to claim subsequent payment of the reduced amounts in case of the law’s invalidity.“
3. Can I wait for the lessor’s request even if a higher rent was agreed in my rental contract concluded after 23 February 2020 than the rent I have paid due to the rent cap until now (shadow rent)?
If the rental contract specifies that in case of the rent cap law‘s invalidity the “initiative” will be taken by the lessor, the tenant is in no default of payment because he/she can wait for the according request of the lessor.
4. How much time do I have for repayment after the lessor has sent a payment request?
Upon receipt of the request you have thirty (30) days pursuant to the German Civil Code (BGB) until the payment is due and paid to the lessor’s account. Only after expiry of this period, default interest is due. Not paying within this period is a reason for termination of the rental agreement.
5. How long can I wait if I am obliged to make a repayment but the lessor is not obliged to send a prior request?
If the lessor must not ask you to pay before payment is due – according to the above –, he/she is obliged to do so if he/she has announced this during the rent cap’s period. You do not have 30 days but probably only 14 days from 16 April 2021 on to make the repayment / bank transfer to avoid default. According to the Berliner Mieterverein the lessor is obliged also in these cases due to the principle of good faith to grant the tenant a repayment period of 30 days but this is not yet legally clear. It is therefore much safer to ask the lessor for a longer repayment period than those 14 days (see below, instalment agreement).
6. Can I ask the lessor for an instalment agreement and if yes, must he/she accept it?
This makes sense if you cannot repay the amount(s) as quickly as requested or in one entire sum. Often it is a matter of gaining time until the job centre or the Senate’s planned support fund (see below) grants aid.
An instalment agreement is a good and recommendable solution – e.g. as regards the payment starting date and the amount of monthly instalments. Such an agreement should be made in writing to have a better proof. An e-mail request and a confirmation by the lessor of such an arrangement suffice for this purpose. But: The lessor must not offer or accept an instalment agreement. In this exceptional case of an invalid federal law the Berliner Mieterverein however believes that the lessor – due to the principle of good faith – may be obliged to accept an appropriate offer. In this case it is however assumed that you will inform the lessor of your payment difficulties (possibly due to the Corona situation).
An instalment agreement is a good and recommendable solution – e.g. as regards the payment starting date and the amount of monthly instalments. Such an agreement should be made in writing to have a better proof. An e-mail request and a confirmation by the lessor of such an arrangement suffice for this purpose. But: The lessor must not offer or accept an instalment agreement. In this exceptional case of an invalid federal law the Berliner Mieterverein however believes that the lessor – due to the principle of good faith – may be obliged to accept an appropriate offer. In this case it is however assumed that you will inform the lessor of your payment difficulties (possibly due to the Corona situation).
7. Am I definitely obliged to make repayments?
No. Some lessors as e.g. the companies Vonovia and Heimstaden and the six municipal housing companies (Gesobau, Gewobag, Howoge, Degewo, Stadt & Land and WBM) announced that they will waive repayments. Tenants of flats of these lessors muss not make any repayments but should ask the lessor for a written confirmation of their repayment waiver as soon as possible.
8. If rents were not paid or paid late: From when on can lessors terminate the contract?
There is no immediate termination option for the landlord although rent is owed because the tenants complied with applicable law when paying the capped rent. It is however mandatory to pay the differential amounts very soon. If they are not paid, a termination may be effective under the two following conditions:
Firstly, a termination-relevant situation of default must have arisen. If there is a backlog of payments of two full monthly rents (incl. ancillary costs), the tenant in fact risks an immediate termination. In case of a backlog of payments of one full monthly rent plus one cent (incl. ancillary costs), the tenant risks an ordinary termination. The latter presumes the tenant’s fault. This can certainly be excluded since tenants relied on the validity of the rent cap law.
Secondly, tenants would have to be in default. This is the case if the landlord requested or demanded the tenant to pay the difference. Principally, a prior request/dunning letter is not obligatory to terminate the agreement due to owed rent. In this specific case the landlord probably has a special care duty and – according to BMV’s opinion – should ask the tenant for repayment and setting a payment date before terminating the contract. To be on the safe side: Pay the outstanding rent within 14 to 30 days without waiting for a demand of the landlord. Possible exemptions from repayment (see questions 7./14. and 15.) By the way: The lessor associations BBU and BfW declared that their members who manage approx. 1 million flats will not send out termination letters based on additional rent claims.
Firstly, a termination-relevant situation of default must have arisen. If there is a backlog of payments of two full monthly rents (incl. ancillary costs), the tenant in fact risks an immediate termination. In case of a backlog of payments of one full monthly rent plus one cent (incl. ancillary costs), the tenant risks an ordinary termination. The latter presumes the tenant’s fault. This can certainly be excluded since tenants relied on the validity of the rent cap law.
Secondly, tenants would have to be in default. This is the case if the landlord requested or demanded the tenant to pay the difference. Principally, a prior request/dunning letter is not obligatory to terminate the agreement due to owed rent. In this specific case the landlord probably has a special care duty and – according to BMV’s opinion – should ask the tenant for repayment and setting a payment date before terminating the contract. To be on the safe side: Pay the outstanding rent within 14 to 30 days without waiting for a demand of the landlord. Possible exemptions from repayment (see questions 7./14. and 15.) By the way: The lessor associations BBU and BfW declared that their members who manage approx. 1 million flats will not send out termination letters based on additional rent claims.
9. I agreed to a rent increase after 18 June 2019 based on the Berlin rent index. Payment was suspended due to the rent cap. Do I now have to repay the higher amounts? From which date on does the “new” rent apply?
The higher rents suspended due to the rent cap must be repaid from 23 February 2020 on. In addition, the higher rent is to be paid continuously starting in May 2021.
10. My rental contract stipulates a stepped rent. Since 18 June 2019 a new scale would have applied. Do I have to repay the difference?
Unfortunately yes. But not every stepped rental contract must be effective! If in doubt, please check this before you transfer the amounts which have accumulated every month.
11. My rental contract stipulates an index-linked rent. Do I have to make repayments?
Only if the landlord has sent a notification of increase. In contrast to stepped rents index-linked rents can only be increased based on a unilateral notification of the landlord. Also in this case check if the contract stipulating an index-linked rent is in fact effective. If in doubt, please check this before you transfer any amounts.
12. I voluntarily agreed – orally or in writing – to an increase of my rent from 18 June 2019 on – what happens now?
Even in case of a voluntary agreement, i.e. without a prior rent increase, you have to repay the higher amounts agreed upon. The agreement must however be effective. This is e.g. not the case if you were taken by surprise (doorstep selling). If in doubt, please check!
13. My landlord modernised the flat. He asked for a rent increase only after the cost capping prescribed by the Berlin rent cap (1.00 €/sqm). Do I now risk a higher rent?
This depends on the specific circumstances:
No if the demanded rent increase corresponds to annually 8% of the modernisation costs. Yes if the rent increase corresponding to 8% of the modernisation costs is above 1.00 €/sqm monthly and was reduced due to the cap. In case of measures, however, announced after 1 January 2019, a cap of 2 or 3 €/sqm per month is planned depending on the amount of the initial rent. According to the wording in the rent increase notification this applies retroactively or only with effect for the future.
No if the demanded rent increase corresponds to annually 8% of the modernisation costs. Yes if the rent increase corresponding to 8% of the modernisation costs is above 1.00 €/sqm monthly and was reduced due to the cap. In case of measures, however, announced after 1 January 2019, a cap of 2 or 3 €/sqm per month is planned depending on the amount of the initial rent. According to the wording in the rent increase notification this applies retroactively or only with effect for the future.
14. I concluded a rental contract after 23 February 2020. I only paid the capped rent based on the rent cap table. Pursuant to the contract I however owe a „shadow rent” in case the rent cap is ineffective or the law expires. Do I have to repay the difference between the paid rent and the shadow rent or do I owe this rent in the future?
Not necessarily! First of all please check if the shadow rent agreement is effective at all. Unfortunately, relevant case law has not yet been available but the Berliner Mieterverein regards such agreements for various reasons as legally problematic. Please seek legal advice. Until legal clarification by the courts the Berliner Mieterverein recommends to make subsequent payments of the difference between rent cap rents and shadow rents only “under reserve” (unter Vorbehalt). Please also read the explanations below (next question & answer)!
15. Does the rent stop help avoid a full or partial subsequent payment based on the shadow rent agreement – for rental contracts concluded after 23 February 2020 – or based on the rent reduction as of November 2020?
Yes. Before making a payment you should check the rights you have pursuant to the rent stop. The prerequisite is the conclusion of a rental contract after 1 June 2015. If the allowable rent pursuant to the rent stop is lower than the contractually agreed (shadow) rent, you must only repay the difference between the capped rent pursuant to the Berlin rent cap law and the maximally allowable rent based on the rent stop law. In case of rental contracts concluded until 31 March 2020 no complaint is required. But note: A full repayment of all amounts saved due to the rent cap made under reserve is not doable. This would undo the release from the „duty to complain“. In case of new rental contracts concluded on or after 1 April 2020 you can wait for clarification of the question as to whether the rent cap leads to a reduced repayment but you must then make a full repayment. In a next step you should check if the capped rent is lower than the “shadow rent”. If this is the case, you must complain within 30 months and the paid excessive rents can then be reclaimed. Got to our website and check
the rent level based on the rent stop
the rent level based on the rent stop
16. Are there cases in which the lower capped rent still applies despite voidness of the Berlin rent cap, i.e. no repayment(s) become(s) due?
Yes! Despite voidness of the rent cap this is indeed possible. It applies if the landlord has not put the lower or reduced rent under reserve of an increase but an agreement was reached on the lowered rent (e.g. the rent based on the rent cap table was not explained in detail or put under reserve in rental contracts concluded on or after 23 February 2020). To check this, please seek advice in one of our advice centres.
17. Do I have to pay interest on repayable amounts or subsequent payments?
No. Due to the legal situation until the decision of the Federal German Constitutional Court was made on 15 April 2021 there was no default. Interest is only owed in case of culpable default in payment, i.e. starting on the date on which the deadline for repayment has expired (see above).
18. I receive social benefits – does the authority have to pay the higher contractual rent and make subsequent payments to the landlord?
This case has not been specified in the implementation regulation “AV-Wohnen” as of 27 September 2019 (German Official Gazette of 2019, page 6019). In section 3.2.2. a similar case is described according to which a cost reduction process can be initiated in these cases if upon new rental it is already obvious that the rent will increase excessively. According to the Senate’s statements made on 20 April 2021 the benefit-paying authorities will pay the higher rents and subsequent payments.
19. I won a court case against my landlord in a rent cap dispute – is this decision now null and void too?
No, court proceedings legally resolved prior to the announcement of the Federal German Constitutional Court’s decision (e.g. pertaining to a rejected rent increase due to the rent cap, a lowering of the rent or the excessive increase of the re-letting rent (“shadow rent”)) remain legally effective. The tenant may however no longer execute under the judgment if the landlord does not comply with it.
20. I am still defending my case in court regarding a rent increase – what will happen now?
The circumstances are decisive: If you objected to the rent increase based on the rent cap alone, you should end the proceedings in a cost-efficient way. If you do not have a legal expenses insurance, you would have to bear the costs of the proceedings yourself. In case you are insured, the insurance will pay the costs which would be the most cost-efficient solution. If you are not represented by a lawyer, seek legal advice from us.
A different situation exists if you also defend your case against a rent increase based on the assignment of residential amenity features, i.e. objecting to content-related factors. In this case proceedings on the rent increase can be continued basing them on the Berlin rent index.
A different situation exists if you also defend your case against a rent increase based on the assignment of residential amenity features, i.e. objecting to content-related factors. In this case proceedings on the rent increase can be continued basing them on the Berlin rent index.
21. My landlord sues me for grant of approval of a rent increase (“Zustimmungsklage”) in connection with the rent cap. I received the letter after 15 April 2021, i.e. before announcement of the Constitutional Court’s decision. What will happen now?
In case you agreed to the rent increase only based on the rent cap, proceedings should be terminated as cost-efficiently as possible. The costs of the proceedings must be borne by you. If you do have a legal expenses insurance, the insurance is no longer obliged to cover the costs of the proceedings. The Berliner Mieterverein will however try to support the members insured with it so that at least the basic costs are paid. Hiring a lawyer to defend the case is probably no longer appropriate. Affected members should seek our legal advice as soon as possible to discuss the best strategy.
22. A court decided that the re-letting rent was ineffective – can I rely on this?
Yes if the decision is final. It remains valid despite the voidness of the rent cap and confirms the validity of the rent being lowered to the rent level at the reference date or the upper rent limit.
23. Based on which regulations can landlords now demand rent increases?
Rent increases can still be justified based on the 2019 rent index or by indicating rents paid for comparable flats in the area. In May 2021 a new rent index will come into force showing updated data compared to the former index data. Landlords must always observe a statutory waiting period of twelve months between two rent increases. Tenants who were asked to pay a higher rent in the past months due to which the rent increased (possibly retroactively), will “have some peace” for now.
24. At present, I cannot repay the rental amounts saved in the past. Who can help me, what can I do?
First of all, please contact your landlord to see if he demands repayment or not. If yes, then you can ask him for instalment payment (see 6.).
If this is not offered, you can apply for financial aid („Sicher-Wohnen-Hilfe”) granted by the Berlin Senate. The Senate grants a bridging allowance which constitutes a loan and is paid out unbureaucratically. This means: The allowance must be paid back but no interest is due. If tenants are not able – through no fault of their own – to fully or partially repay the allowance, the loan can be converted into a subsidy and repayment can (partially) be waived.
Eligible for this allowance are all households whose income amounts to maximally 280 percent of the federal German income limit. Tenants are eligible who live in a single-person household earning maximally 33,600 EUR annually and those who live in a two-person household earning maximally 50,400 EUR annually. If eligible, submit the application to the Berlin Senate Administration for Urban Development and Housing (Senatsverwaltung für Stadtentwicklung und Wohnen). For more details go to:
https://mietendeckel.berlin.de/
19.06.2023
