Berlin "Mietendeckel" Is A Rent Freeze And A Rent Cap - What Happens When?

The now worldwide infamous "Mietendeckel" under observation by many big cities with housing issues has various aspects to it coming into effect at different times. There is also a differentiation between re-letting and existing contracts. I will give the collection of regulations some structure, later on adding a timeline to it.

	Rent Freeze	Rent Cap
Re-Renting	Rent on 18 June 2019 maximum but possibly restricted by the rent cap table	Rent Cap Table for any contract after the publication date of the law in the Journal of Laws and Ordinances for the State of Berlin Amtsblatt 1)
Existing Contracts	Rent on 18 June 2019 maximum but possibly restricted by the rent cap table. The landlord must actively inform the tenant about the “correct” rent defined by either the date above of the rent cap, whichever is lower. 2)	The rent cap requires a rent reduction by the landlord if the current rent exceeds the rent derived from the cap table by >20%. This action has to happen 9 months after the publication. 3)

1) Before the publication, there is no actual restriction except that rents exceeding the cap table by more than 20% will have to be reduced later.
2) As of 1 January 2022, the rent cap table will be subject to an annual review based on the percentage inflation determined by the Federal Statistics Office as of 31 December of the previous year but limited to 1.3%. The Senate department responsible for housing must define the relevant percentage by way of a legal order.
3) For more details about the cap table see https://germanproperties.blogspot.com/2020/01/the-berlin-rent-cap-mietendeckel-is.html

Applying the cap table and assuming the highest possible value of 9,80 €/m²/month with 0,74 € for a good location and 1,00 € bonus for top equipment and being completed between 2003 and 2013  your top rent is 11,54. Add 20% before it is deemed excessive by the "Mietendeckel" you end up at

13,85 €/m²/month. This is the Maximum!

It does not matter, whether the apartment is furnished or not, if it is older than 2014 this is the maximum rent you can possibly have. There is a time-line to be observed. I will publish a separate post on this subject. One very short time-line applies to current vacancies. For details on this matter please see https://germanproperties.blogspot.com/2020/02/action-required-you-can-optimize-your.html urgently.

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Berlin "Mietendeckel" Is A Rent Freeze And A Rent Cap - What Happens When?

Have You Recently Bought a Condominium Apartment in Berlin?

Many international investors have bought condominium apartments in Berlin during the last years. Some will have full-service packages taking care of everything, hoping that everything will be alright. Some have bought an apartment, maybe even coming personally for the handover, proudly looking at their apartment - but what now?

Photo by All Bong on Unsplash

Just a few points to be thought of, best done a few months before:

• Who makes sure that any snagging is done right and timely while you are back home?
• How serious will the developer be when his last payment depends on the tick in the box on snagging - do you trust him to be acting in your best interest without supervision?
• Who holds the keys?
• At what rent should the property be rented - or should it be rented furnished with short-term contracts?
• If you want to go down the "Furnished Apartment" road, who takes care of this and who does the marketing for it?
• Who manages your apartment and rent collection, including
  
  • Budgeting
  • rent collection incl. chasing if necessary
  • payment of contributions to the owners association
  • property tax payment (quarterly)
  • tax documentation and handover to tax consultant in Germany
  • representation at annual owners meetings

Critical Point in Your Investment

This is the point in your investment that is as important as the purchase contract. The purchase contract and all the brochures are a promise. Now it comes to the fulfilment of your expectations - don't leave it to the developer and the agent who received a healthy commission - either from you or the developer - to make sure your plans work out. Even more important if reality does not meet brochure - you want someone on your side who knows the game. It also is a critical point for reclaiming some of the money you paid for a promise that was not 100% fulfilled - the clock starts ticking on handover day.

Our recommendation

Be prepared, don't leave it until the last day. But even if your handover has already happened and you are in the midst of having to make decisions by the minute - get some professional support with local experience. Someone with broad knowledge, experience and solutions. Everybody can point out problems, the next step is much more important - what to do? You don't need a lawyer, an architect and a rental agent to identify your next steps, you need someone who "owns" and "lives" your property and then proposes other specialists when needed and with specific tasks. Otherwise, you are likely to receive long documents with lots of possible or even real issues attached to a big fee account and still no solution.

We don't offer off the shelf solutions because every investor has a personal view about the degree of their own involvement. We can go from one-stop-shop including the management of the investment to just the production of a checklist based on the contract and its documentation. We are happy to engage in a conversation to find out what you feel is best for you.

Have You Recently Bought a Condominium Apartment in Berlin?

Furnished Apartments in Berlin, the Answer to Growing Demand and Tighter Regulations

The Demand for Furnished Apartments

In the ever-changing world of work, often involving flexible locations, it is becoming more and more important that we can easily find a fully-equipped living space, ready to move into and easy to call home. Furnished living concepts are a response to this growing trend. Providers of this concept say that in 2016, every 5th space was occupied by a ‘commuter’ – someone who might only live in Berlin during the working week. In addition, fixed term contract jobs have significantly increased with this defined time span a matching comfortable living space in a given location is needed. Who wants to go find an apartment, furnish it, only to dismantle everything after 6 or 12 months? Providers of such accommodation are flexible regarding the rental period from 1 month to a year or more, and some contracts can be open ended. There is a growing preference for a furnished apartment solution over serviced apartments or hotels.

 Recent projects were developed in the light of the fact that there is an urgent need for affordable living space in Berlin. It is expected that around 250,000 people will be relocating to the city by 2030. Already, 83 percent of New Berliners live alone or in pairs. The rise in single households is twice as large as in comparable large cities.

Request more detailed information here.

The Ideal Location for Furnished Apartments

For the concept to be successful avoiding longer vacancies the location is a key factor:

• Close proximity to professional clusters with sufficient demand
• Well connected by public transport;
• Shops, restaurants at least for daily needs.

The Best Planning Concept

To achieve the best cost/benefit ratio for the users as well as for the owner these planning parameters should be adhered to:

• Compact, affordable living space with a choice of apartment size of 1.5 to 2 rooms
• Apartment sizes from 30m² to 60m²
• Fully equipped kitchen
• Modern “clean” furniture and decorations
• Smart TV, Wifi and smart metering.

Recommended Operational Concept

For an investor, it could turn into a long and in parts painful experience to try to achieve a smooth set-up and operation of a furnished apartment unless he lives “around the corner” and is flexible regarding availability. A service concept from the outset is important. It should cover these items:

• Furniture concept, delivery, and installation
• Service for rental, management during the occupation and most important handover from the tenant
• Maintenance and replacement of furniture and equipment.

In order for a service provider to be efficient and successful, they should have a number of managed apartments in the vicinity.

Example for a Suitable Location for Furnished Apartments

One such area ideally suited to furnished apartments is the vicinity of the Science and Technology Hub Berlin Aldershof, an important science, business and media centre in Berlin. It includes ten non-university research institutes, six institutes of the Humboldt University. and some 1,000 additional companies, where ca. 16,500 people are employed and more than 8,000 students are registered.

In addition, the area has attracted 146 companies in the media sector, employing another 1,763 people.

For detailed project information and price list of such a project you can sign up here:

Furnished Apartments in Berlin, the Answer to Growing Demand and Tighter Regulations