A court ruling could prevent the introduction of Germany’s much anticipated residential ‘rental freeze’.
The district court of Berlin-Charlottenburg has rejected the rental table used to calculate the mietpreisbremse in Berlin as invalid.
The court reasoned that the table was not compiled according to scientific principles.
According to German news reports, Berlin would have become the first city to implement the rental freeze agreed on by the government earlier this year. From 1 June, rents in existing buildings would have been prevented from being raised by more than 10% over the local average rent according to the rental table used.
It is anticipated that the ruling could have implications in other cities implementing the mietpreisbremse.
“The verdict is not legally binding yet, but it is sending a signal out well beyond the capital city as the court’s reasoning can be applied to many rental tables in other cities,” said Jürgen Michael Schick, vice president of the real estate association IVD.
“We are expecting a flood of legal procedures but the extent and the costs cannot be predicted.”
In the verdict it was noted that the Berlin rental table could not be presumed to represent the actual local average.
The court argued the so-called extreme value adjustment was not done according to scientifically recognised criteria and some rents were not included in the average because they were declared too high.
Schick forecasted fewer tenants and also fewer courts will accept existing rental tables.
He expects more scientific reviews of rental tables in many regions and the average rents derived from it.
Schick noted the government had also predicted “an increased number of legal procedures” in the explanatory memorandum on the rental freeze.