Berlin's Mietendeckel (2020–2021) — A Municipal Rent Freeze Annulled by the Constitutional Court, With Documented Supply Losses

The Berlin Mietendeckel (rent cap) entered into force in February 2020. It froze rents in most pre-2014 housing and capped rents by building age, and it was Germany's first state-level rent freeze of this kind. In April 2021 the Federal Constitutional Court annulled it, holding that the Land lacked legislative competence over rent regulation, which is a federal matter. The legal reason for its end was therefore constitutional competence, not a finding about policy performance.
A peer-reviewed analysis (Hahn, Kholodilin, Waltl and Fongoni, Management Science, 2024) compared rent advertisements for dwellings inside and outside the scope of the policy. Advertised rents dropped significantly when the policy was enacted, but the number of available rental properties also dropped significantly, and a share of those properties appears to have been lost permanently to the rental sector. A substantial rent gap opened along Berlin's administrative border, and rents in adjacent unregulated municipalities grew rapidly. Landlords adopted hedging strategies against long-term low fixed rents, with the risk falling on tenants. The authors conclude that negative consequences for renters appear to outweigh positive ones.
A 2021 PwC study based on ImmoScout24 data reported an average rent reduction of about 8% while the cap applied, with the largest declines in wealthier districts and smaller benefits in lower-income districts such as Neukölln. This is a consultancy estimate and is weaker evidence than the peer-reviewed paper.
The case is valuable mainly as a cautionary example: it shows how a city-level rent freeze can deliver short-term relief while shrinking supply, creating border spillovers and carrying legal risk when competence sits at a higher level of government.

Read the full analysis: https://www.diw.de/de/diw_01.c.873005.de/publikationen/externe_referierte_aufsaetze/2024_0003/forward_to_the_past__short-term_effects_of_the_rent_freeze_in_berlin.html