Learn what the law implies for Berlin residential or commercial property owners and property managers in our FAQ.

For which flats does the lease cap use?

Rent cap policies apply to non-public housing. Excluded from the policies are publicly subsidised housing, social welfare flats, flats in halls of residence and recently constructed flats that were very first prepared for tenancy on 1 January 2014 or that have actually been brought back for property functions from uninhabitable and unoccupied previous home that was converted at an expense commensurate with a new structure.

Commercial area that has actually been transformed and rededicated as living area at substantial expenditure is also excluded from the lease cap.
The lease cap uses to social housing which no longer falls under IBB dedication. In this case, it is not the lease on the efficient date, but the last lease agreed in the dedication period that is to be used as the basis.

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

According to Art. 3 (4 ), rent in accordance with the rent cap indicates the net base rent (not consisting of operating expenses and energy expenses for heating and hot water), however including all surcharges for furniture and furnishings.

In rental contracts in which no net base lease has been concurred, the property owner must, if required to do so and at the demand of the qualified authorities, provide renters with the accurate net base lease amount in addition to the data used for the estimation basis.

The length of time is the rent cap valid?

Can I still increase the rent 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 comes into force, the standard for a re-letting is the lease that worked on the key date.

In principle, the exact same level of rent can be agreed with the next tenant. However, this is just acceptable if it does not go beyond the upper lease limitations under Art. 5 MietenWoG.

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

Just how much rent can I charge as a landlord? In order to determine the upper lease limits, the leas listed in the 2013 Berlin Rent Index were upgraded to reflect real wage advancement until 2019. The upper lease limitations are stemmed from the table in the rent cap law and are graduated according to building age classes and facilities. Surcharges are also permitted. For flats with modern-day amenities, the ceiling is increased by 1 euro. Relevant here are just those features offered by the proprietor. According to the law's rent table, modern facilities exists if the living area has at least three of the 5 following characteristics:

The lease ceiling is likewise increased by an additional charge of 10% if the residential area is situated in a structure with no more than two flats. So for the computation of the allowable rent: rent ceiling according to the lease table + additional charges noted above.

You can discover comprehensive meanings of the 5 contemporary feature criteria, as stipulated by the Senate Department for Urban Development and Housing lease cap application regulations, 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 enters force, the law restricts taking a higher rent than the lease that has actually been "frozen". If the frozen lease is greater than the applicable upper rent limitation (see rent table), the unit may just be let at the statutory rent limit. If needed, surcharges for modern-day facilities and modernisation procedures can be taken into consideration in the lease ceiling. In the case of flats whose previous rent was less than EUR 5.02 per square metre, the rent may be increased by an optimum of EUR 1 approximately EUR 5.02 per square metre upon re-letting if contemporary amenities are readily available. Modern amenities exists if the home has at least 3 of the 5 following characteristics:

- Passenger lift, available without thresholds from the flat and from the building entrance
- Fitted cooking area
- High-quality sanitary devices
- High-quality flooring in the majority of rooms
- Energy usage worth of less than 120 kWh/( m TWO a)

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

A lease is thought about extreme and is for that reason restricted if it is more than 20% above the relevant upper rent limit in the rent table, taking into consideration the residential area.

Appropriate additional charges and reductions are likewise appropriate:

- Flats in a basic residential location -0.28 euros
- Flats in a medium domestic area -0.09 euros
- Flats in an excellent house +0.74 euros

Are modernisations still possible? To what level can they be allocated to the lease?

Certain modernisation steps and their apportionment to the lease are permitted approximately a maximum of EUR 1.00 per square metre. This limit likewise applies in the occasion of several modernisations during the law's validity period. The requirement is that property managers notify the Investitionsbank Berlin (IBB) of increased lease based upon modernisation steps. The IBB is using an online alert treatment. You can submit a modernisation notification here.

Please note that when re-letting domestic space after an apportionable modernisation, the 5 modern amenity requirements pointed out above may not be in addition assigned (in order to prevent an increase of the upper rent limitation by up to 2 euros/sq. m).

Which modernisations are permitted?

Apportionable modernisation steps are those to which proprietors are obliged by law:

- For thermal insulation of the building envelope, basement ceiling, top floor ceiling or roofing
- For using renewable resources
- 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 bathroom conversion

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

In exceptional cases, the IBB can authorize a higher acceptable lease. The requirement is the existence of unnecessary financial difficulty. This is particularly relevant if keeping the permissible lease would lead to irreversible losses for the property owner or threaten the building structure over the long term.

A loss is considered to exist if current expenditures surpass income for the appropriate organization entity. A risk to the building structure exists if the income from the residential or commercial property is no longer enough for its upkeep.

It needs to be noted that financial hardship can only be thought about if the challenge is triggered by the rent cap law. Undue economic difficulty is likewise only legitimate if its event does not lie within the sphere of responsibility of the property owner. Simply put, expectations of gratitude in worth, expected returns, increasing funding expenses outside routine market conditions, expected returns based upon excessive rents and losses arising from the division into business entities do not make up a case of hardship.

You can submit a challenge application to the IBB here.

What info obligations do I have as a property owner?

Landlords should supply renters with details on the situations appropriate to the estimation of the lease ceiling within 2 months after the law coming into force and also before the conclusion of a brand-new rental contract, without being requested to do so. Landlords should inform tenants of the quantity of the key date rent on 18 June 2019 upon request. Prior to the signing of a new lease, property managers must inform future tenants of both without being asked.

You can find details of the info obligations under the lease rate cap in our list for residential or commercial property owners and property owners.

How are offenses penalized?

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

Where can I discover additional information?

At www.engelvoelkers.com/mietendeckelberlin you can find regular updates on the lease rate cap.

Do you have additional concerns?

We would more than happy to encourage you! More than 50 real estate experts for the Berlin residential and industrial residential or commercial property market are readily available to you for additional info at any time personally, by telephone or by email.

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All about the Berlin rent rate cap:

This implies the lease rate cap

Rent cost cap calculator

Obligations for property managers

Disclaimer: This post is planned solely as basic, non-binding info and must not change comprehensive research study or expert suggestions. Although this article has actually been prepared with the biggest possible care, there is no claim to factual precision, efficiency and/or topicality. The particular circumstances of the individual case need to constantly be taken into account. Making use of info contained in this short article is the sole duty of the particular reader. Any liability on the part of Engel & Völkers Gewerbe Berlin GmbH & Co. KG and/or another Engel & Völkers licensee is omitted.

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