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WHY THE EXPERIMENT WITH FREEZING OF RENTALS IN BERLIN FAILED.

WHY THE EXPERIMENT WITH FREEZING OF RENTALS IN BERLIN FAILED.

The Constitutional Court of Germany has repealed the law of the left parties on the ban on raising the rent for housing in Berlin for five years. Now state regulation will become a pre-election topic.

  • JUNE 14, 2021

How to stop rising prices for rental housing? In Germany, this is one of the most acute social problems - after all, almost half of the country's population lives in rented apartments and houses, and they have risen sharply over the past decade. Rents have risen particularly rapidly in recent years in Berlin, where the income of a significant part of the population is significantly lower than in West German millionaire cities with more developed economic structures: Munich, Hamburg and Cologne.

The Berlin city authorities have exceeded their constitutional authority

Therefore, the Berlin Senate - the government of the city, which has the status of federal state - decided to resort to measures of administrative regulation of the local housing market. The center-left coalition of the Social Democratic Party of Germany (SPD), the Left Party and the Soyuz-90 ″ / Green Party is in power in Berlin. According to the decision of this coalition in the capital of Germany on February 23, 2020 in the rental market, which is about 1.5 million apartments, the rent was frozen for five years as of June 2019.

Three months later, in May last year, the Constitutional Court of Germany in Karlsruhe filed a lawsuit against this decision. It was submitted by 284 members of the Bundestag from the center-right parties, the conservative CDU / CSU bloc and the Liberal Free Democratic Party (FDP). These deputies do not deny the problem of the shortage of affordable housing, but advocate its solution not by administrative but by market methods. However, in this case, they focused exclusively on the legal side of the case, arguing that the authorities of the federal state of Berlin had no right to make such a decision, as housing legislation is within the competence of the federal authorities. 

On April 15, 2021, the Constitutional Court of Germany confirmed that the Berlin authorities had exceeded their powers enshrined in the German Basic Law, and declared the freezing of rents in the city "completely invalid."

Many Berlin tenants will be charged extra

For many Berlin tenants, this verdict means that they may have to pay landlords certain sums, which they are now entitled to claim under existing rental agreements.

However, Vonovia has already stated that it will not demand to compensate it retrospectively for the difference between the originally agreed and frozen rent. At the same time, another large housing concern, Deutsche Wohnen, intends to collect an average of 430 euros from its tenants, but assured that as a result of the court's decision, no one will lose the leased housing.

For all German citizens, the decision in Karlsruhe means that state regulation of the housing market will now become one of the most important topics of the election campaign ahead of the September 26 elections to the Bundestag. After all, the Constitutional Court has given only a legal, but not a political and economic assessment of the Berlin model of rent freezing, and now its initiators and supporters will demand the adoption of a similar or similar law at the federal level.

State regulation of the housing market is becoming a pre-election topic

They left no doubt about that. For example, the ruling mayor of Berlin, the Social Democrat Michael Müller, said that "the federal authorities must finally begin to fight vigorously against the already widespread housing disaster across the country."

And the Berlin senator (minister) of urban development from the Left Party, Sebastian Scheel, demanded that the federal authorities "either create effective legal norms for the establishment of rents to guarantee the combination of different social strata in cities, or transfer it to the competence of the federal states."

In turn, the Minister of Internal Affairs of the Federal Republic of Germany Horst Seehofer, responsible for housing construction in the country, assured that the rent freeze is now in the past. "And that's good, because in terms of housing, it was a completely wrong path. This measure created a feeling of uncertainty in the housing market, slowed down investment and did not create a single new apartment, "- said the politician from the conservative party CSU.

According to him, he follows the motto "Build, build, build!", As increasing the supply in the housing market "was and remains the best form of protection of the interests of tenants." So the representatives of the two options for solving the problem of shortage of affordable housing, in fact, have already begun to fight for the votes of German voters.

Source: Deutsche Welle

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