German court finds rent controls not in breach of constitutional property guarantee

The Federal Constitutional Court of German has upheld regulations which impose rent controls on landlords as constitutional.

The case was brought by a landlady in Berlin who was pursued by her tenant for being in breach of the Tenancy Law Amendment Act regulations and was ordered to refund the overpaid rent to her tenants. The rent cap was introduced in 2015 to prevent rents on new leases that exceed the local market rent by more than 10% in areas “with a strained housing market”.

A Berlin district court found the rent control laws to be unconstitutional, therefore referred the case to the Constitutional Court for final decision. The Constitutional Court ruled that the control of rent at the beginning of a lease does not violate a landlord’s right to “guarantee of property, freedom of contract or the general principle of equality.” The Court stated that the right to obtain the highest possible rental income for a property was not protected by the property guarantee. The Court found the rent controls to be in the public interest as they “counteract the displacement of economically less efficient population groups from highly sought-after neighbourhoods.”

Click here for the decision in German.




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