(Bloomberg) --
Berlin landlords are challenging a raft of measures to reign in the city's rental market, claiming they're unconstitutional.
Property owners have asked Germany's highest court to overturn the Berlin government's move to freeze rents for five years. Additionally, some of them are seeking to also suspend the legislation while the judges review their constitutional complaint, according to a court spokesman.
The legislation, which came into force on Feb. 23, is intended to ease the burden on tenants after a property boom caused rents to double over the past decade. Landlords including Deutsche Wohnen SE have criticized the effort, warning that it risks undermining investment in much-needed new housing projects.
The rent restrictions will encourage landlords to withdraw properties from the rental market when they become vacant and sell them as condominiums, the Ifo institute said in a Feb. 19 report.
“Landlords aren't the only people who stand to lose from the rent cap,” Ifo President Clemens Fuest said. “People looking for accommodation in Berlin will be affected too.”
Katrin Lompscher, Berlin's head of urban development and housing, wants to the city to increase the amount of apartments that are built each year to around 20,000 to address the lack of affordable accommodation. She dismissed the concerns, described the city as an “El Dorado” for investors.
The Berlin government has said it expects the law to withstand legal challenges.
To contact the reporters on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net;Andrew Blackman in Berlin at ablackman@bloomberg.net
To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Chris Reiter
©2020 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
