Reactions to the Karlsruhe judgment: Seehofer: rent cover “completely wrong way”

Reactions to the Karlsruhe judgment
Seehofer: rent cover “completely wrong way”

The Federal Constitutional Court declares the Berlin rent cap null and void. The legislative authority in this area would not lie with the federal states. The decision is met with a divided echo: while the opponents are jubilant, the supporters now see the federal government as an obligation.

With immediate effect, the Berlin rent cap no longer applies. After a decision by the Federal Constitutional Court in Karlsruhe, the state was not entitled to take a separate route. Since the federal government had already decided on the rent brake in 2015, the legislative power lies exclusively with it, it says in the decision.

So the lawsuit by 284 members of the Bundestag of the Union and the FDP in Karlsruhe was successful. Two Berlin civil courts had also asked Karlsruhe for clarification. The Berlin rent cap was unique in Germany; the law passed by the red-red-green coalition was initially limited to 2025. On February 23, 2020, the existing rents for 1.5 million apartments in the capital were frozen – at the level of June 2019.

Federal Minister of Construction Horst Seehofer welcomed the decision in Karlsruhe against the Berlin rent cap. “The rent cap is now history,” said Seehofer in Berlin. “That is good, because it was completely wrong in terms of building policy. It created uncertainty in the housing markets, slowed down investments and not created a single new apartment.”

“Build, build, build!”

Seehofer emphasized: “My motto is: build, build, build! In 2020 alone, 300,000 new apartments were built, more than in 20 years. That is and remains the best protection for tenants.” The past year would thus be above the longer-term trend. However, the federal government will fail to achieve its goal of creating 1.5 million new apartments by the Bundestag election – only 1.2 million should be finished.

The German Tenants’ Association wants to continue fighting for a nationwide regulation to limit housing costs after the ruling. “The decision from Karlsruhe is bitter, as it hits the residents of 1.5 million Berlin rental apartments hard,” said Association President Lukas Siebenkotten. “But it is also a loud wake-up call to the federal legislature to finally act and stop the rent explosion in many German cities.”

An effective rent limit at federal level is now necessary. To this end, more than 56 initiatives, associations and organizations are already supporting a corresponding “rent stop campaign”. “After the Berliner Weg was stopped today in Karlsruhe, we will fight for a nationwide rent freeze with even more incentive,” said Siebenkotten.

Also the Berlin Senate now sees the bundle on the train after the rent cover is off. “It is now the task of the federal government either to create an effective rental law that ensures the social mix in the cities, or to transfer the competence for this to the federal states,” said Urban Development Senator Sebastian Scheel.

For tenants in Berlin, the ruling means that they may also have to pay the difference between the rent cap rent and the contractual rent. “The Senate also sees it as its duty to develop socially acceptable solutions for tenants.” The Senate will discuss the consequences of the judgment on Tuesday. He also sees it as his duty to develop socially acceptable solutions for tenants.

Red-red-green was “completely washed off”

The real estate industry reacted with relief to the verdict, shares in the Vonovia and Deutsche Wohnen groups, which are heavily involved in Berlin, rose. Vonovia announced, however, that after the ruling, he wants to forego additional rent payments in Berlin. The group put the corresponding claims at ten million euros.

Associations of Homeowners and Real Estate applaud the verdict. “That is the maximum defeat that can be suffered before the Federal Constitutional Court,” said Haus & Grund President Kai Warnecke in a digital press conference. The court had “completely wiped out” the Berlin state government made up of the SPD, the Left and the Greens. The tenants would now have to pay back payments, but no one would have to fear dismissal or sleep restlessly today.

“Rents aren’t going to explode now.” Housing construction should be accelerated and not slowed down. The acting politicians must now draw the conclusions. Warnecke called for the resignation of the Governing Mayor Michael Müller, the Senator for Economic Affairs Ramona Pop and the Senator for Urban Development Scheel.

“Legal clarity for tenants and landlords”

Other representatives of the housing and real estate industry also commented positively on the court’s judgment. “Now legal clarity has been created for tenants and landlords alike,” said the President of the Federal Association of Independent Real Estate and Housing Companies (BFW), Andreas Ibel. At the same time, however, he also emphasized the landlords’ social responsibility: “If additional rent payments are due now, we appeal to all market participants to act in a socially responsible manner.”

The Federal Association of German Housing and Real Estate Companies (GdW) announced that the decision made it unmistakably clear “that the Senate and the majority of the Berlin Parliament have disregarded the competences of our constitutional law”. GdW President Axel Gedaschko added that Germany now needs a “real consensus for the joint creation of more affordable housing”.