Mietendeckel, and the saga continues.

Watching the opinions about the #Mietendeckel in Berlin unfold has been like watching a good crime thriller and I am not quite sure that I know who the murderer is yet.

I have talked about the details of the #Mietendeckel at length in my previous Blog post. Lots of companies, housing associations, landlords, tenants and politicians have widely ranging opinions on whether the #Mietendeckel will have a positive or negative effect on the Berliner real estate market. Here are some of the much talked about consequences:

Less investment into new buildings

Some say that fewer properties will be build as investors don’t see a high enough return of income with the cap on renting prices. Indeed a few companies have already said that due to the fact that they are predicted to earn less, they will not be able to invest in new buildings.

Possible loss of jobs

Just today a protest by the Berliner building trade against the introduction of the #mietendeckel took place. The building industry is worried that whilst new builds are exempt from the #mietendeckel, a lot of investors will decide against building new housing as well as undertaking renovations on existing properties as they simply do not see a return on their investment. This in turn will lead to a decrease in tradespeople being required and ultimately lead to a loss of jobs. 

The big question, is the proposed law actually consistent with german constitutional rights? 

The former president of the federal constitutional court (Bundesverfassungsgericht) Hans-Jürgen Papier seems to think not. In a 21 page long report, he explains that the proposed law is not compatible with the rule of equality (Gleichheitssatz) in article 3 of the constitution. In other words, people will not get treated equally, for the law doesn’t differentiate between landlords who have been moderate with their rent demands and those who have asked for substantially higher rents. The proposed #mietendeckel will not differentiate between those two groups and ‘penalise’ both equally. Furthermore, Papier lists the fact (amongst others) that tenants would be allowed to lower their rent (if they apply for it in writing) as a partial disappropriation and therefore also not compatible with the constitution. 

However, even here opinions diverse. CEO of the German Tenant Association (Deutscher Mieterbund) Ulrich Ropertz believes that as long as there are no country-wide laws regulating the increasing pricing structure on the rental market the #mietendeckel is absolutely necessary and welcome.

So what can property investors do? Well for one, there are plenty of other cities in Germany to invest in. Indeed the newest City-ranking report by Berenberg und HWWI has found that Dresden and Leipzig are the clear winners and show good prospects for the future. On the other hand, you can sit tight and with the current heated debate, wait and see whether the #mietendeckel will actually come into force next year.

However you decide, if you need a mortgage for your german property purchase, check out our mortgage calculator to find out just how much you can afford.