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Berlin rent cap null and void

In a decision published today, the Second Senate of the Federal Constitutional Court declared the Act on Rent Restrictions in the Housing Sector in Berlin (MietenWoG Bln) to be incompatible with the Basic Law and therefore null and void.Regulations on rent levels for freely financed housing that can be offered on the open housing market (unrestricted housing) fall within the concurrent legislative competence. The Länder are only authorized to legislate as long as and to the extent that the Federal Government has not made final use of its legislative competence (Article 70, Article 72(1) of the Basic Law). Since the federal legislature has conclusively regulated rent law in Sections 556 to 561 of the German Civil Code (BGB), there is no room for the legislative power of the Länder due to the blocking effect of federal law. Since the core of the MietenWoG Bln also regulates the rent level for unrestricted housing, it is void as a whole.

Facts: The MietenWoG Bln came into force - with the exception of Section 5 MietenWoG Bln - on February 23, 2020. For the apartments covered by its scope, the "Berlin rent cap" essentially consists of three sets of regulations: a rent freeze, which prohibits a rent that exceeds the rent effectively agreed on June 18, 2019 (effective date) (cf. §§ 1, 3 MietenWoG Bln), a location-independent rent cap for re-rentals (cf. §§ 1, 4 MietenWoG Bln), whereby building and equipment-related surcharges as well as certain modernization apportionments are permitted (compare §§ 1, 4 in conjunction with §§ 6, 7 MietenWoG), as well as a statutory ban on excessive rents (compare §§ 1, 5 MietenWoG Bln). In contrast, the provisions of the MietenWoG Bln do not apply to new buildings that were ready for occupancy for the first time on or after January 1, 2014.

The applicants in the abstract review proceedings (2 BvF 1/20) - 284 members of the German Bundestag from the CDU/CSU and FDP parliamentary groups - consider the MietenWoG Bln to be incompatible with the constitutional distribution of legislative powers (Art. 70 et seq. GG). The two judges' submissions (2 BvL 4/20 and 2 BvL 5/20) concern the compatibility of § 3 MietenWoG Bln with the Basic Law.

Main considerations of the Senate:

The MietenWoG Bln is incompatible with Article 74 (1) No. 1 in conjunction with Article 72 (1) of the Basic Law and is null and void.

(1) The Basic Law assumes a generally conclusive distribution of legislative competences between the Federation and the Länder. The delimitation and content of the legislative powers of the Federation and the Länder are governed exclusively by Article 70 et seq. of the Basic Law. GG. The legislative competences are consistently delimited alternatively from each other, in particular by means of the catalogues of Art. 73 and Art. 74 GG. As a rule, double competences are alien to the Basic Law. Accordingly, the Federation has the right to legislate insofar as the Basic Law expressly assigns this to it. The scope of competence of the Länder is therefore fundamentally determined by the scope of federal competences, not vice versa. The Basic Law does not provide for a presumption of competence in favour of the Länder. Opening clauses in federal laws are permissible, but do not grant the Länder any leeway beyond the opening.

(2) The Basic Law regulates concurrent legislation conclusively in Art. 72 and Art. 74 as well as Art. 105 GG. If the Federation makes use of concurrent legislation, the Länder lose the right to legislate pursuant to Article 72 (1) GG at the time ("as long as") and to the extent ("to the extent") that the Federation permissibly makes use of the legislative competence (so-called blocking effect). As far as the blocking effect extends, the legislative competence of the Länder ceases to exist. It prevents the enactment of new Land laws in the future and removes the basis of competence for Land laws enacted in the past, so that they are or become null and void. The blocking effect presupposes that the federal and Land legislation concern the same subject matter. In terms of subject matter and content, it extends as far as the federal legislature has made or intended to make an exhaustive, i.e. complete and conclusive regulation.

(3) Regulations on the amount of rent for unattached housing, as part of social tenancy law, fall within the concurrent legislative competence for civil law within the meaning of Article 74(1)(1) of the Basic Law.

According to the understanding of law that has been shaped by state practice and regulatory tradition for 150 years now, civil law comprises the totality of all norms that are conventionally attributed to civil law. The decisive factor is whether a provision regulates private law relationships, i.e. the legal relationships between private individuals and the rights and obligations arising from them. The law of tenancies has been regulated in §§ 535 ff. of the German Civil Code since it came into force on 1 January 1900. BGB and - despite numerous amendments - is an essential part of civil law. This also applies to tenancies of flats (§ 549 BGB). The tenancy agreement is the result of private autonomous decisions of the contracting parties. This is true even if the rights and obligations based on private autonomy are further defined or limited by the legislator.

(4) With §§ 556 to 561 BGB, the federal legislature has finally made use of its concurrent competence for rent law as part of civil law.

The regulatory intensity and density of the federal provisions alone suggest that §§ 556 ff. BGB is a comprehensive and conclusive regulation. Sections 556 et seq. BGB do not contain any regulatory reservations, opening clauses or enabling provisions that would allow the Länder to enact their own or deviating rent regulations. Rather, the differentiated regulatory system and the connection with the law on protection against dismissal make it clear that the federal legislature intended to make a final regulation. This is not called into question by the authorisation to issue ordinances in § 556d (2) BGB. In this respect, the Länder are merely implementing a regulation which the Federation has largely determined in terms of content, purpose and extent, as evidenced by Article 80(1) sentence 2 of the Basic Law; an independent regulatory power is not associated with this.

Since the Tenancy Law Reform Act of 9 June 2001, the federal legislature has based regulations on rent levels solely on Article 74 (1) no. 1 of the Basic Law - unchallenged by the Federal Constitutional Court. In addition, the Rent Law Amendment Act of 21 April 2015 introduced the rent brake regulated in Sections 556d et seq. of the German Civil Code (BGB) into the Civil Code for the first time. The explanatory memorandum of the draft law states a comprehensive weighing of all interests affected, and thus the goal of a final reconciliation of interests between the parties to the tenancy agreement, which was subsequently readjusted several times: The Rent Law Adjustment Act of 18 December 2018 was intended to prevent tenants from having to leave their flats due to modernisation. The Act on the Extension of the Consideration Period for the Local Comparative Rent of 21 December 2019 intended a moderate modification of the "local comparative rent" of Section 558 (2) sentence 1 of the German Civil Code, namely the extension of the consideration period from four to six years. Finally, on 19 March 2020, the Bundestag passed the Act on the Extension and Improvement of the Regulations on the Permissible Rental Amount at the Start of the Rental Period, which gave the Länder the option of continuing to apply the Mietpreisbremse for a clearly defined period of time.

With the Rent Law Amendment Act at the latest, the federal government has finally regulated the assessment of the maximum permissible rent for unrestricted housing. In the past six years, it has reacted to the worsening housing situation in conurbations with the four aforementioned laws, some of which are extensive, and has attempted to ensure a balance between the interests of landlords and tenants, which are protected by fundamental rights, by means of detailed regulations and thereby to curb the development of rents in strained housing markets.

Since the federal legislature has conclusively made use of its concurrent competence, at least with regard to the determination of the maximum permissible rent for unrestricted housing, the Länder are excluded from regulating the amount of rent in this area (Article 72 (1) of the Basic Law).

(5) The "Berlin rent cap" and the federal rent brake essentially regulate the same subject matter, namely the protection of tenants from excessive rents for unrestricted housing. However, the MietenWoG Bln narrows the leeway left to the parties to the rental agreement by the federal regulations and introduces a parallel rent law at the state level with static and market-independent stipulations; it establishes legal prohibitions in the sense of § 134 BGB (German Civil Code), which limit private autonomy in concluding rental agreements for residential space beyond that permitted under §§ 556 ff. BGB. The MietenWoG Bln thus modifies the legal consequences ordered by federal law and shifts the balancing of the interests involved undertaken by the latter.

Section 3 (1) sentence 1 and (2) sentence 2 of the MietenWoG Bln prohibit the rent increase permitted under Section 557 (1) of the German Civil Code (BGB) in current tenancies or for new tenancies. Section 3(1) sentence 2 MietenWoG Bln freezes the graduated or index-linked rents permitted under sections 557a and 557b BGB at the rent due on the reference date. § Section 7 MietenWoG Bln reduces the modernisation measures relevant for rent increases to a catalogue that is narrower than the measures according to Section 555b No. 1, No. 3 to 6 BGB, and limits the permissible rent increase after modernisation measures more than Section 559 (1) BGB. The scope of application of rent regulation is extended by the MietenWoG Bln; rent increases permissible under federal law are prohibited, as are agreements on the amount of rent at the beginning of the lease permissible thereunder. Thus, the rent ceilings of Section 6 (1) to (3) MietenWoG Bln exclude the agreement of a rent amounting to 110% of the local comparable rent - even in the cases of Section 4 MietenWoG Bln - contrary to Section 556d (1) BGB.

These restrictions of the MietenWoG Bln are in addition to the regulatory regime of the Mietpreisbremse according to §§ 556d ff. BGB. Since §§ 556 ff. BGB conclusively regulate the rent level for unrestricted housing, the Land of Berlin lacks the legislative competence in this respect.

Other titles of competence, namely Article 74 (1) No. 11 GG ("Law of the Economy") or Article 70 (1) GG, cannot be used as a basis for enacting the MietenWoG Bln. In particular, the regulation of the maximum permissible rent for unattached housing was not (or no longer) covered by the competence title "housing" within the meaning of Article 74 (1) no. 18 GG (old version) and could therefore not be transferred to the legislative competence of the Länder within the framework of the Federalism Reform I in 2006.


Federal Constitutional Court

Press release
No. 28/2021 from 15 April 2021

Resolution from 25 März 2021

2 BvF 1/20, 2 BvL 5/20, 2 BvL 4/20

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