Federal court overturns Berlin’s housing rent cap

More than 1.5 million Berlin households have been dealt a blow by the Federal Constitutional Court. At the request of 284 Christian Democratic Union of Germany (CDU) and Free Democratic Party (FDP) members of the Bundestag (the German parliament), this Federal court, based in Karlsruhe, declared Berlin’s rent cap unconstitutional and retrospectively null and void.

Around 420,000 people now face being forced to pay rent arrears for newly allowed increases in the middle of a pandemic and having to cope with higher rents from now on. This ruling is scandalous and makes resistance to its effects necessary. But, above all, it is a big lesson for many people – namely that in this state it is the capitalists’ ‘right’ to profit that counts, and there is no affordable housing for most of society.

The Federal Constitutional Court (BVerfG) published its decision on April 15th. The court ruled in favour of a judicial review, claiming that the Berlin law inadmissibly encroached on the federal government’s legislative competence. This may be based on the fear that the Berlin rent cap could set a precedent and that the fight against rising rents would be encouraged in other cities and federal states.

The court’s ruling had been made more than three weeks before its public announcement. But there was to be no respite for half a city for which the rent cap itself had become a breathing space in the fight against rents that had been rising for years. Under the cap, rent increases were banned, with some exceptions, for nine out of ten rental flats until 2025. One in five Berliners could reduce the rent they had to pay. Even though the introduction of the rent cap was an attempt by the city’s ‘red-red-green’ (SPD-LEFT party-Green) rulers to pacify the growing tenants’ movement it was, despite being rather watered down in the legislative process, a social improvement for many and an achievement of pressure from below.

In the middle of the crisis, rents go up again

But, even in a pandemic, there is no guarantee in capitalism that improvements of any size will not be rescinded. The BVerfG’s decision plunges thousands of tenants into an existential crisis – especially because it declares the law null and void and thus payments of back rent are now due. Almost half of those who were able to reduce their rent have not built up savings for this possibility. Those who have lost their jobs in the last few months are on short-time work or simply do not earn enough. They can be summarily evicted and thrown out the door if they can’t meet their landlord’s demand for additional payments. But even for those who have put the money aside or somehow managed to scrape it together to cover these ‘new’ arrears, the total rent to be paid is now rising. How many (especially young) people will now have to look for a new flat or even a new city or town to live in?

Berlin Senate

Tenants and would-be tenants can, and will, ‘thank’ the CDU and FDP for this. Unsurprisingly, the CDU and FDP are jubilant about this decision. This proves, once again, that they are in the pockets of the real estate companies and are willing to jump into the breach for them.

However, the general reaction of people means that the CDU and FDP may suffer electorally for their legal victory. This is the reason why the CDU are now suddenly opportunistically saying that they are thinking of financially compensating all renters affected by this court decision!

But the reaction of the city’s government, the Berlin Senate, is also unsurprising and does not paint a hopeful picture for renters. More or less in unison, the SPD, the Greens, and DIE LINKE (the Left Party) regret the decision, point to the fact that they have entered “new legal territory” and now point the finger at the federal government. A LINKE senator, Scheel, promises to set up a hardship fund, but who will get how much money and when is still unclear. So far, he has not even given assurances that the state-owned housing companies will leave the rent cap regulations intact.

This does not answer the immediate concerns of Berliners. Apart from the recommendation that each individual should put aside the money saved until the legal clarification, there was apparently no concrete preparation of what to do to protect tenants in a case like the one that exists now – not to mention a perspective of struggle. As a party with socialist pretensions, this is an indictment of the Berlin LINKE, which makes no effort to put pressure on the SPD and the Greens in this direction.

What is needed?

The first step would be for the affected tenants to organise themselves. The first landlords have already demanded back payments. The Berlin renters’ movement, together with trade unions and the Left, should invite people to a joint conference, as soon as possible, to discuss the effects of the Karlsruhe ruling and the next steps. Such a conference could discuss what to do in order not to have to accept the court decision, with all its consequences, including possible evictions, without a fight. It could also be the starting point for the next demonstrations and an intensified spreading of the campaign to expropriate Deutsche Wohnen and other large property companies in Berlin. Deutsche Wohnen is the second-largest private owner of properties in Germany, including over 120,000 units in Berlin,.

Some left groups have called for a rent boycott or strike to come into play in this context. This idea has also been discussed in the tenants’ movement for some time now and it is encouraging that it is met with a lot of sympathy. But it should be clear that a back-rent and rent increase strike would be a confrontation that would be fought hard by the real estate companies and would need a strong organisation and solidarity campaign from trade unions and social movements. The right response would be for Berliners to collectively refuse to pay arrears and to insist on the old rent. A genuine left government would support such a strike movement and guarantee to take the risk of penalties or back rent. Together with mass mobilisations, such a dispute could be won politically. If billions in state money can be spent on Lufthansa in this crisis, why not on Berlin tenants?

Is a ‘red-red-green’ national government the solution?

The Berlin Senate (unsurprisingly) does not seem to be thinking of taking such a stance – let alone calling on the renters’ movement to fight together. Its flagship project “rent cap”, on the other hand, is obsolete.

This should be food for thought for the Berlin LINKE, which had chosen this law as a ‘killer argument’ in favour of government participation with the SPD and the Greens. The city government’s balance sheet has been dealt a serious blow. Unfortunately, it would be the completely wrong lesson from the current debacle to simply hope for rescue by a Green-Red-Red federal government after the elections in September. The SPD and the Greens are pro-capitalist parties. It is not new that they turn left before elections, only to turn right after the coalition agreement, at the latest. They will not pursue policies in the interest of tenants and working people. But struggle and pressure from below can win demands. The Berlin rent cap was the result of pressure from a housing movement that has been growing in the city for years.

Therefore, the conclusion must be to build a nationwide movement for a rent freeze, affordable housing, and the expropriation of the real estate corporations. Through the pressure of such movements, improvements can be fought for. At the same time, socialist measures, such as the nationalisation of large real estate corporations, under democratic control and management, the willingness to break with capitalism, and the mobilisation of working people, are necessary to make such reforms last in the long run.

Now more than ever: expropriate Deutsche Wohnen and Co.

It is to be hoped that with their decision, the judges in Karlsruhe have at least done some good publicity for the campaign to ‘Expropriate Deutsche Wohnen and Co’. This campaign to use Article 15 of Germany’s Basic Law to expropriate the holdings of landlords owning and managing more than 3,000 apartments in Berlin city, in return for still to be agreed compensation, is now aiming to secure enough signatures for an official referendum on this policy. The aim is for this referendum to be held on September 26th, the day of elections to both the national and Berlin city parliaments. Last year, they gathered 77,000 signatures for the first stage of this campaign, now they need 175,000 legally accepted signatures by June 25th. A successful referendum would be a fitting response to this class justice. Deutsche Wohnen also declared that they will claim every cent of back rent.

One more argument for the initiative: profit logic knows no mercy. That is why the petition for a referendum, despite the possibility of excessive compensation to the former owners, must now be supported all the more clearly, and the campaign intensified. If the big real estate companies were expropriated, rents below the rent cap would still be possible. Such a step would resonate not just through Germany but internationally, as tens of millions suffer through housing crises. There is a lot of anger in the city that can be built on by campaigners. Up to 20,000 people demonstrated through Berlin’s Kreuzberg and Neukölln districts on the day the court ruling was officially announced. This shows that demonstrations can be carried out while keeping distance and following hygiene rules due to covid. Further mass mobilisations should follow.

An important lesson must be not to trust in the rules of the capitalist system and political establishment and to build a broad mass movement. “Democracy” has extremely narrow limits under capitalism. It ends either at the factory gate or in Karlsruhe, where the BVerfG’s “judges” cannot be elected or voted out of office, at any time, and receive a minimum salary of 14,537 euros a month. Arguments against expropriation under Article 15 will also be found in the chambers of the Federal Constitutional Court. This does not speak at all against the struggle for concrete improvements in the here and now. But such struggles must be linked to the need for fundamental social change and for socialist democracy.


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