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

For which flats does the lease cap use?

Rent cap policies apply to non-public housing. Excluded from the regulations are publicly subsidised housing, social well-being flats, flats in halls of residence and newly developed flats that were very first ready for tenancy on 1 January 2014 or that have actually been brought back for property functions from uninhabitable and unoccupied previous living area that was converted at a cost commensurate with a brand-new structure.

Commercial area that has actually been transformed and rededicated as living space at considerable expense is also left out from the rent cap.
The rent cap applies to social housing which no longer falls under IBB dedication. In this case, it is not the lease on the effective date, however the last rent agreed in the commitment duration that is to be utilized as the basis.

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

According to Art. 3 (4 ), rent in accordance with the rent cap means the net base lease (not including operating costs and utility costs for heating and warm water), but including all additional charges for furnishings and furnishings.

In rental contracts in which no net base lease has actually been concurred, the property manager must, if required to do so and at the request of the skilled authorities, supply tenants with the exact net base rent amount together with the information utilized for the calculation basis.

For how long is the rent cap valid?

Can I still increase the lease now?

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

In concept, the exact same level of rent can be concurred with the next tenant. However, this is only acceptable if it does not go beyond the upper rent limits under Art. 5 MietenWoG.

If the flat was not leased on the key date of 18 June 2019 or if a tenant change has actually occurred in between the key date and the efficient date of the law, the rent consented to throughout this period will be "frozen".

How much lease can I charge as a landlord? In order to figure out the upper rent limitations, the rents noted in the 2013 Berlin Rent Index were updated to reflect genuine wage development until 2019. The upper rent limitations are obtained from the table in the lease cap law and are finished according to developing age classes and facilities. Surcharges are likewise allowed. For flats with modern-day amenities, the upper limit is increased by 1 euro. Relevant here are only those facilities supplied by the property manager. According to the law's lease table, modern amenities exists if the living space has at least three of the five following qualities:

The lease ceiling is also increased by an additional charge of 10% if the domestic area is situated in a building without any more than 2 flats. So for the computation of the acceptable lease: lease ceiling according to the lease table + additional charges listed above.

You can find comprehensive meanings of the 5 contemporary feature criteria, as stipulated by the Senate Department for Urban Development and Housing lease cap application policies, in our list for owners and property owners.

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

If the residential unit is re-let after the law comes into force, the law restricts taking a higher lease than the lease that has actually been "frozen". If the frozen lease is greater than the relevant upper lease limit (see lease table), the system might just be let at the statutory rent limitation. If required, additional charges for contemporary facilities and modernisation steps can be taken into account in the rent ceiling. When it comes to flats whose previous rent was less than EUR 5.02 per square metre, the lease may be increased by an optimum of EUR 1 approximately EUR 5.02 per square metre upon re-letting if contemporary features are readily available. Modern amenities exists if the home has at least 3 of the five following qualities:

- Passenger lift, accessible without thresholds from the flat and from the building entryway
- Fitted cooking area
- High-quality hygienic equipment
- High-quality floor covering in the majority of rooms
- Energy intake value of less than 120 kWh/( m ² a)

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

A rent is considered excessive and is therefore forbidden if it is more than 20% above the relevant upper rent limitation in the rent table, taking into account the domestic place.

Appropriate surcharges and reductions are also applicable:

- Flats in an easy house -0.28 euros
- Flats in a medium property location -0.09 euros
- Flats in a good residential location +0.74 euros

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

Certain modernisation steps and their apportionment to the lease are permitted approximately a maximum of EUR 1.00 per square metre. This limit also uses in the event of multiple modernisations during the law's credibility period. The prerequisite is that property owners inform the Investitionsbank Berlin (IBB) of increased lease based on modernisation measures. The IBB is providing an online alert treatment. You can submit a modernisation alert here.

Please note that when re-letting residential space after an apportionable modernisation, the 5 modern feature criteria mentioned above might not be additionally assigned (in order to prevent an increase of the upper lease limitation by up to 2 euros/sq. m).

Which modernisations are allowed?

Apportionable modernisation steps are those to which property managers are required by law:

- For thermal insulation of the structure envelope, basement ceiling, top flooring ceiling or roof
- For the usage of renewable resources
- For energy-efficient window replacement
- For heating system replacement with heating optimisation
- For the addition of a lift
- For the removal of barriers through limit elimination, door widening or restroom conversion

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

In exceptional cases, the IBB can approve a higher permissible lease. The prerequisite is the presence of excessive financial difficulty. This is particularly relevant if preserving the acceptable lease would result in permanent losses for the property manager or threaten the building structure over the long term.

A loss is deemed to exist if current expenditures surpass income for the relevant service entity. A threat to the building structure exists if the income from the residential or commercial property is no longer sufficient for its maintenance.

It must be kept in mind that financial hardship can only be thought about if the challenge is brought on by the lease cap law. Undue financial hardship is also just legitimate if its incident does not lie within the sphere of duty of the property owner. Simply put, expectations of appreciation in value, expected returns, rising financing costs outside regular market conditions, expected returns based upon extreme leas and losses arising from the division into service entities do not make up a case of hardship.

You can send a difficulty application to the IBB here.

What details commitments do I have as a property owner?

Landlords should offer occupants with details on the situations appropriate to the calculation of the lease ceiling within two months after the law entering into force and also before the conclusion of a new rental agreement, without being asked for to do so. Landlords need to notify renters of the quantity of the key date lease on 18 June 2019 upon request. Prior to the finalizing of a brand-new lease, property owners must inform future occupants of both without being asked.

You can discover information of the details commitments under the lease cost cap in our checklist for residential or commercial property owners and landlords.

How are infractions punished?

A fine of up to 500,000 euros may be enforced for infractions of the lease rate cap.

Where can I find additional information?

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

Do you have further questions?

We would be happy to encourage you! More than 50 realty professionals for the Berlin residential and industrial residential or commercial property market are offered to you for further information at any time personally, by telephone or by e-mail.

Ulrich Blaeser

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Everything about the Berlin lease price cap:

This means the lease price cap

Rent rate cap calculator

Obligations for landlords

Disclaimer: This article is meant exclusively as basic, non-binding information and must not replace comprehensive research study or specialist advice. Although this post has been prepared with the best possible care, there is no claim to factual precision, efficiency and/or topicality. The specific scenarios of the private case must constantly be taken into account. Making use of details contained in this post is the sole obligation of the respective reader. Any liability on the part of Engel & Völkers Gewerbe Berlin GmbH & Co. KG and/or another Engel & Völkers licensee is left out.

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