Berlin is undoubtedly one of Europe’s most extravagant realities. In fact, it is not immune to novelties, especially in the real estate sector, which have provoked discussion. In the last year, due to the critical situation caused by the Covid emergency, the local government has taken a number of steps to try and make things easier for potential buyers and tenants alike.
However, a measure that came into force last year (February 2020) has been highly criticised . So, Berlin is considered as an unconstitutional real estate. Let us therefore see what makes this initiative so controversial. So, if you are curious, you are in the right place. We at Realigro are going to describe the whole issue to you without leaving out even the most insignificant detail. So, if you’re ready, we can start our new guide!
Before trying to understand Berlin has an unconstitutional real estate, it is necessary to understand what are the peculiarities of the new law. The reform is based on the principle that it is possible to freeze rental prices for 5 years. To ensure that tenants can pay their rent for a much longer period of time without seeing interest rates rise. At the same time, the owners of the property have a great protection. Within five years, they will see the entire rent paid into their account. However, according to the Constitutional Court, this reform is highly unconstitutional.
This is because the regions can adopt new regulations, but only in matters where there is no regulation at federal level. To put it simply, it is necessary to ensure the hierarchy of sources. So that a lower-ranking regulation does not conflict with a higher-ranking pre-existing regulation.
This is precisely what has happened with this reform. Furthermore, it should be remembered that there is already a national law on rental prices and that the entire housing policy, being federal, is regulated by the German Civil Code. This is why the Constitutional Court states that the länders (federal states) have not the legislative powers in the field of rent price regulation.
What we have described is the view of the German Constitutional Court on this issue. It is not surprising, however,that the population does not support this decision. We have to remember that Germany, especially the city of Berlin, does not have a housing tradition based on buying property, but on signing rental contracts.
This means that most Germans do not own their own home but live on a monthly rent. This is why the decision to block this reform has generated deep discontent. Moreover, the measure concerned about 1.5 million houses in the German capital alone, which represents 85% of the rented population (in Berlin alone). What will the future hold? If you want to find out, stay tuned to our blog Realigro!
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