Protests after Germany's top court nixes Berlin rent cap

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FILE - In this Thursday, April 4, 2019, file photo, apartment buildings in the district Mitte photographed from the television tower in Berlin, Germany. Germanys highest court has ruled that a cap on rent prices implemented last year by Berlins left-wing state government is unconstitutional and void. (AP Photo/Markus Schreiber, file)

BERLIN – Thousands of Berliners took to the streets, many banging pots and pans, to protest a ruling Thursday by Germany's highest court that a cap on rent prices implemented last year by Berlin's state government is unconstitutional and void.

The cap was introduced in February 2020 by the state's left-leaning government with the goal of preserving affordable housing in Berlin, where tenants had for years enjoyed low rents compared to many other capital cities.

The Social Democratic, Green and Left parties that make up the city's governing coalition introduced a rule that froze rents for some 90% of Berlin apartments at June 2019 rates for five years. In many cases, existing rents needed to be reduced to conform to the new threshold.

The policy caused havoc in Berlin's housing market, with some landlords setting “shadow-rent” clauses in new contracts — higher monthly rents that would take effect retroactively if the cap were overturned. Some tenants now face considerable back payments.

“(It's a) deeply concerning judgement,” said Balakrishnan Rajagopal, an independent expert on the right to affordable housing appointed by the United Nations Human Rights Council. “The pandemic is not a good time for the court to strike down this Berlin effort.”

The pro-business Free Democratic Party and Chancellor Angela Merkel's Christian Democratic Union, which are not part of the Berlin state government, had appealed to challenge the rent cap. In its ruling, the Federal Constitutional Court in Karlsruhe said the regulation was unconstitutional because housing policy is a federal issue and states only may intervene if the federal government does not exercise that power.

Germany's federal government introduced a limit on rental price increases in 2015 which applied nationwide.

“Since the federal legislature has laws... regulating rental prices, there is no room for the the states to legislate,” the court said in its ruling.