05 Oct Living in Berlin Soaring Rents and House Prices (Mietpreisbremse) Part 2
This is the second part of my series on the Mietpreisbremse or rent control. In the first part, I explained what it is and what the rules are as well the exceptions. As I wrote in my previous post it wasn’t too long ago that Berlin was not just a poor city but also cheap and chic! It was an attractive place for musicians and artists. But where they go gentrification tends to follow. Along with other factors, such as Brexit and a booming economy Berlin has become one hot property market with not only prices but rents also soaring.
Due to this the state government introduced the so-called Mietpreisbremse or rent brake, but more commonly known as rent control. In my last blogpost, I explained how the law works. In this post, I talk about real life experiences.
Berlin was the first state to introduce the rental brake with it taking effect on 1 June 2015. Unfortunately not too many landlords are following the rules! A study conducted by the research institute Regionkontext on behalf of the Berlin tenants’ association at the end of May 2016 showed that the landlords in Berlin did not follow the rent brake guidelines for 31 percent of new leases. This meant that almost 20,000 apartments in Berlin are over the limit.
The Berliner Mieterverein (German tenants union) has also complained that many landlords are not adhering to the letter, much less the spirit, of the law. Honestly this doesn’t surprise me. According to a survey conducted by the portal Wenigermiete.de more than 70 percent of the more than 10,000 cases examined by them landlords have raised the rent are above the allowable limit. Tenants pay, on an average, 220€ more than is allowed.
Of course the other thing is that many landlords have a very expansive idea of how to interpret the legal exceptions. The sad reality is that there is little risk to increasing the rent more than is allowed because there is no threat of fines or legal action.
On May 19, 2017, the city of Berlin published the updated rent index and not surprisingly it’s shown that rents have risen an overall average of 9.4 per cent. Unfortunately the “rent brake” and limits on the maximum rents that can be charged have had only a limited effect on the market.
The figures presented by the portal wenigermiete.de at the end of April 2017 are even more frightening. About 4,000 tenants have so far checked their rents in Berlin. In over 70% of the cases they looked at, they found that the landlord had overcharged by an average of 224€ per month.
Real Life Experiences
The numbers did not surprise a New Berlin woman. She reported on her experiences with the apartment search: In mid-2016, she was offered an apartment in Kreuzberg at a price of 14.44 euros per square meter. The local comparison rent is € 8.10. The previous guest had already paid 11.20 euros, but the landlord wanted more.
There are many reasons why rents are increasing despite the rent brake. As mentioned in the first article there are many exemptions to the law. As well not all cities publish rent indices. As well even if there is a rent index it’s not being enforced.
The other issue is that many people find their places via a broker (makler) or platforms like Scout 24. The broker works for the landlord not the tenant! Platforms like Scout 24 are there only to connect sellers with buyers. Whether the rent is fair or not doesn’t concern them.
Also, as anyone who has tried to find a place in Munich or Berlin, knows, asking too many questions is a fast track to getting a rejection. Why should a landlord care when he has 3 or 4 other families that are interested and are happy to pay the rent he is asking.
But it’s not all bad news. In Hamburg, the rents for new leases fell in the first year after the introduction of the “rent brake”. This according to a survey done by the real estate portal Immowelt.de. But it’s not just rent control that’s helping. In the northern city of Hansestadt Lübeck, there has been a been a so-called “alliance for housing”. That is an agreement between the Senate and various industry Its aim is to make sure that the housing market and rents don’t spiral out of control.
Elsewhere, as I noted in German Property 2018 review cities where supply and demand are matched rents are rising slowly.
Elsewhere, as I noted in my German Property Overview 2018 review cities where supply and demand are matched rents are rising slowly.
What to do if you suspect your landlord has wrongly raised the rent.
In this situation,m it’s important that you don’t unilaterally reduce the rent. Following proper procedure here is up upmost importance. This also means, also, not sending a nasty email to the landlord telling him that you’re taking him to court. As a matter of fact you’re not even obligated to inform the landlord that the rent is too high.
Along those lines, if you’re looking at a place and you suspect that the landlord as increased the rent above the allowable limit. You are under no obligation to point this out to him. Once you’ve signed the lease, than you can begin the process of getting the rent corrected.
BTW for landlords who are reading this and thinking, OMG, this is terrible why did I invest here. In the third and final part of this series I’ll explain why this is all bad news.
My Rent is too High What to Do
First off, if you have legal insurance, then contact a lawyer who specializes in rental law and arrange a meeting with him. Secondly, if you haven’t already joined the local Meitverein. Of course, those who downloaded my free rental guide will already know that!
Mietright is an option. An interesting alternative to hiring a lawyer or joining the Meitverein are services like Mietright. They are the legal service provider operating the website Wenigermiete.de. They are the equivalent of “No Win No Fee” legal firms. That is it costs you nothing to hire them and you only pay if they succeed in reducing your rent.
The advantage to hiring a firm like Mietright is that they are specialists in this area of the law. As a tenant, you do not need to worry about anything. They will send a letter to the landlord on your behalf explaining why the rent is too high and if needed go to court. If successful, the tenant pays a third of the annual savings. If not, there is no fee to the tenant.
The portal wenigermiete.de* reported that by the end of April 2017 about 1,600 tenants in Hamburg had checked their rent and around two-thirds of the cases the rent was too high.
The only disadvantage to this type of online tool it only works in the major cities. I tried putting in some of my rental properties and the cities weren’t listed. I also tried entering in my former address in Munich and it told me it wasn’t applicable.
As always the Mietverein is often your best friend.
So in closing has anyone had any experience in taking their landlord to court to win a rent reduction?