CURRENT JURISDICTION – RENT CAp („Mietendeckel“) Berlin
On 23.2.2020 the law on rent caps in the housing sector – the so-called rent cap (“Mietendeckel) – came into force in Berlin. The Berlin rent cap (“Mietendeckel” also BlnMietenWoG) i.e. stipulates that rents for housing will be frozen for 5 years from 18.6.2019. This regulation also applies to single and multi-family houses and, in addition to the regular rental contracts, also affects graduated and index rents.
The rent in the sense of the Berlin rent cap (“Mietendeckel”) is the net cold rent including all surcharges, but excluding operating costs and the costs for heating and hot water. The above provisions do not apply to social, carrier, and dormitory apartments, newly built apartments that are ready for occupancy since 1.1.2014, and apartments with funds from public budgets.
The Berlin rent cap (“Mietendeckel”) has already led to many uncertainties and disputes and has meanwhile been submitted to the Federal Constitutional Court. A final decision is expected in the second quarter of 2021. Here you will find an overview of the most important, current decisions and rulings by the Berlin Regional Court, the Federal Supreme Court, and the Federal Constitutional Court on the Berlin rent cap (“Mietendeckel”):
Federal Constitutional Court, DECISION of 10.3.2020 – 1 BVQ 15/20
On 10.3.2020, the Federal Constitutional Court (BVerfG) rejected an urgent petition received regarding the suspension of the Berlin rent cap (“Mietendeckel”). It argues that the reasons for a temporary regulation according to § 32 BVerfGG that speak for a temporary regulation must be of particular importance for a desired suspension of law. They must weigh more heavily than any reasons that usually make the issuing of a temporary injunction indispensable. In this respect, it is of decisive importance whether the disadvantages are irreversible or only very difficult to revise in order to allow the interest in suspension to prevail. The BVerfG is of the opinion that the disadvantages resulting from a provisional application of the penalty provisions of the Berlin rent cap (“Mietendeckel”) of 11 February 2020, which came into force on 23 February 2020, do not clearly outweigh the disadvantages of a provisional suspension of the penalty provisions in terms of their extent and severity and thus do not meet the strict requirements for a provisional suspension of law.
Berlin regional Court, SUSPENSION AND REFERRAL ORDER of 12.3.2020 – 67 S 274/19
The Berlin Regional Court (LG Berlin) decided on 12.3.2020 that it had to suspend the present legal dispute because it had combined Art. 1 § 3 BlnMietenWoG with Art. 72 I, 74 I No. 1 GG in conjunction with §§ Sections 557 I, 558 I, II BGB are incompatible and thus unconstitutional. Thus the facts of the case were handed over to the Federal Constitutional Court for decision.
The LG Berlin justifies its suspension decision by stating that the rent claimed in the lawsuit exceeds the rent as of June 18, 2019, which is the reference date specified in Art. 1 § 3 BlnMietenWoG. According to the express wording of the regulation and the equally express justification of the state legislator, an agreement on the amount of rent reached after the cut-off date is no longer taken into account for the provisions of the rent permitted under the BlnMietenWoG. A landlord can therefore only successfully invoke a rent that is favorable to him on the reporting date if he has either concluded a uniform contractual agreement by 18 June 2019 in the amount of the rent required after the BlnMietenWoG came into force, the tenant has voluntarily agreed to a request for an increase by the landlord by 18 June 2019 or a judgment that has become final and absolute by 18 June 2019 replaces the tenant’s consent in accordance with section 894 sentence 1 of the German Code of Civil Procedure.
Federal supreme court, JUDGEMENT DATED 29.4.2020 – VIII ZR 355/18
In a ruling dated 29 April 2020, the Federal Court of Justice (BGH) stated that Section 3 I 1 BlnMietenWoG is to be interpreted in accordance with its meaning and purpose as meaning that, as a prohibition on rent increases, it does not cover court proceedings to increase rents in which the landlord pursues a claim to an increase in rent that arose at a point in time before the reference date specified in this provision – 18 June 2019. In addition, the BGH ruled that the question of whether the Berlin rent cap (“Mietendeckel”) stands up to a constitutional review can be left open in any case in rent increase proceedings in which a claim for consent of the landlord subject to a time limit falls in a period prior to the “rent stop” cut-off date. This applies because the claim triggers a retroactive amendment of the contract at the time of the conviction. The Berlin “rent stop”, which is based on a cut-off date, is intended solely to prevent “deadweight effects” until the law comes into force – on 23.2.2020 – but is not intended to change the substantive legal situation in rental increase proceedings already underway to the detriment of the landlord.
Berlin Regional Court, JUDGEMENT OF 15.7.2020 – 65 S 76/20
In a ruling of 15 July 2020, the Regional Court of Berlin stated that the prohibition regulated in § 3 I 1 BlnMietenWoG does not cover the landlord’s civil law claim in the concrete individual contractual relationship to the tenant’s consent to an increase in rent up to the locally customary comparative rent from § 558 I BGB if the regulation is applied in conformity with the constitution.
Whether and under which conditions § 3 I 1 BlnMietenWoG hinders the enforceability of the payment claim resulting from the effected contract amendment is not decided thereby. The landlord can carry out the contract change during the period of validity of the BlnMietenWoG and let the payment of the increase amount promise itself if necessary for the time thereafter already now, without thereby the national legislative goal would miss. After exclusion of the competence title “housing” from the catalog of the competing legislative competence of the federation in accordance with art. 74 I No. 18 GG (old version), a state competence for public-legal fine regulations can result according to art. 70 I GG also for the penetration in the residential tenancy law of the elements of §§ 556g I, 558 VI, 559 VI BGB regulated in the BGB for the delimitation of the rent increase. The question of the scope of the prohibited offense in § 3 I 1 BlnMietenWoG is of fundamental importance to the LG Berlin because it arises in an undefined number of cases – in Berlin in potentially just under 1.5 million tenancies.
bavarian Constitutional Court, DECISION OF 16.7.2020 – VF. 32-IX-20 (WITH DECISION OF 16.6.2020 IN THIS MATTER)
The Bavarian Constitutional Court (BayVfGH) decided on 16.7.2020 that the draft law on rent regulation on which the Bavarian petition for a referendum is based is obviously incompatible with federal law, as the state legislator lacks legislative competence under Article 72 I GG. Thus already existing federal legal norms block the possibility of state legal regulations. By the regulation contained in §§ 556d ff. of the German Civil Code (BGB) on the rent amount, both at the beginning of the lease – so-called rent brake – and during an ongoing lease – so-called cap limit – the federal legislator has made exhaustive use of the competing legislative competence for civil law to which it is entitled under Article 74 I No. 1 of the German constitution (GG). According to the BayVfGH, the state legislator is not able to deviate from the authorizations of the state governments to enact statutory ordinances as provided for in §§ 556 d II, 558 III BGB with regard to the determination of the permissible rent level. The draft bill of the petition for a referendum cannot be based on the responsibility of the Länder for areas of housing as provided for in Article 70 of the Basic Law because there is no overall concept under public law. The rent regulations of the draft represent in the result nothing else than a tightening of the valid regulations to the rent brake and to the cap.
In a special vote, three constitutional judges of the BayVfGH – bearing in mind that under the Bavarian Constitution, popular and parliamentary legislation are of equal value and equal rank and that Bavaria, in accordance with its self-image, wants to be a pioneer and model for other federal states in matters of direct democracy – warned that the constitutional preventive control of popular legislation in general and thus also in the present case should not be overstretched, but that popular legislation should be allowed in case of doubt and thus also here. Furthermore, the Bavarian judges warn that the lack of legislative competence on the part of the state, as assumed by the majority in the present case, is not obvious, even in view of the vividly discussed diverging views and the legal aspects that support them, which are in themselves considerable.
Berlin Regional Court, JUDGEMENT OF 31.7.2020- 66 S 95/20
The Berlin Regional Court ruled on 31.7.2020 that it is not the purpose of the “key date regulation” in § 3 BLnMietenWoG – contrary to some assumptions – to link the beginning of the general political discussion with a legal consequence. The legal consequence is that landlords who are willing to increase their rent are prohibited from pursuing a claim resulting from the applicable provisions of the social rental law of the German Civil Code (BGB).
In addition, the Berlin District Court excludes another function of the “key date regulation” from the point of view of the rule of law and with a view to the BGH decision of 29.4.2020: there is no empirical evidence that a tenant who is only sentenced to consent in the court proceedings provided for by the legislator in accordance with § 558b BGB will not pay the increase amounts.
Berlin Regional Court, SUSPENSION AND SUBMISSION ORDER OF 6.8.2020 – 67 S 109/20
The Berlin Regional Court decided on 6.8.2020 that the rent cap ordered in § 3 I of the Berlin rent cap (“Mietendeckel”) is unconstitutional. The chamber of the Berlin Regional Court thus follows in the same direction as the decision of the BayVerfGH. It claims that § 3 I BlnMietenWoG, if it should be constitutional after all, would have to be observed in civil proceedings. A request for a rent increase received after 18.6.2020 would then fall entirely under the “rent stop” ordered in § 3 I BlnMietenWoG even if the landlord demanded approval for the rent increase from a point in time that was even before the law came into force on 23.2.2020.
Federal Constitutional Court, RESOLUTION OF 29.10.2020, AZ. 1 BVR 972/20
In its decision of October 2020, the Federal Constitutional Court again confirmed that the Berlin rent cap (“Mietendeckel”) should not be suspended temporarily, at least in part, before the second stage of the rent cap comes into force. From 23.11.2020, rent caps will apply. If a landlord demands a higher rent than the permissible rent or accepts it without immediately remitting it, he risks considerable fines of up to 500,000.00 Euros in the most severe cases. However, the federal judges did not recognize a sufficiently serious disadvantage for the landlords and rejected the application of a Berlin landlord.
CONCLUSION
A Federal Constitutional Court decision is still pending. A fundamental decision on the constitutionality of the law by the Federal Constitutional Court is expected by the end of the second quarter of 2021.
The Federal Court of Justice does not make a ruling on whether the BlnMietenWoG is in conformity with the constitution. It does, however, state that rent increase claims of the landlord that arose before June 18, 2019 can still be enforced in court proceedings.
The 67th Chamber of the Berlin Regional Court under its Chairman Michael Reinke has already determined that it considers the law to be unconstitutional. The chamber goes along with the majority opinion of the Bavarian Constitutional Court, which holds that the state government has no legislative competence for a law on rent cap. In the 65th and 66th, the Berlin judges do not follow this view sp.
For the time being in Berlin, one must live with the uncertainty, which the Berlin rent cap brings with itself. Here landlords should not let themselves be disconcerted already by the rejected rush applications. These might have no indication effect in view of the final decision. Nevertheless, the requests were rejected for the reason that the landlords could be expected to wait until the final decision.
NOTE TO TENANTS:
Build up reserves! There are quite substantial, constitutional doubts about the constitutionality of the rent cover law. Should the law be declared unconstitutional, you will find yourself in a situation of considerable rent arrears. In this case, the landlord may be entitled to immediate extraordinary termination. You could, if necessary, invalidate this termination by immediate payment of arrears according to § 569 BGB.
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