Welcome Guest [Log In] [Register]


Reply
German rent-control law violates constitution, court rules; Justice is served, the law is incompatible with the country’s constitution because it discriminates against some landlords
Topic Started: 21 Sep 2017, 10:10 AM (368 Views)
Bardon
Default APF Avatar


Justice is served.

German rent-control law violates constitution, court rules
Ruling throws key project of Merkel’s coalition into doubt days before elections

One of the prestige projects of Angela Merkel’s outgoing coalition government has been thrown into doubt after a Berlin court ruled that a recently introduced rent-control law violates Germany’s constitution.

The so-called Mietpreisbremse or “rental price brake” was introduced two years ago with the aim of barring landlords in property hotspots from increasing rents by more than 10% above a local benchmark. In June 2015 Berlin became the first German state to implement the new regulation.

But just five days before Sunday’s federal elections the capital’s district court has ruled that the law is incompatible with the country’s constitution because it discriminates against some landlords.

In a press statement, the court said the law gave landlords in some cities an advantage over those in others. The benchmark for rent increases is calculated on local averages, and varies by up to 70% between cities such as Munich and Berlin.

The court in the German capital also bemoaned the fact that the mechanism had no effect on lettings that were already overpriced when the new policy came into effect. Far from offering an advantage to “restrained” landlords, the government’s rent-control initiative rewarded those who had from the start “tapped rental income to its maximum potential”, the court said.

The case was brought by a tenant who tried to claim back rental payments for a one-bedroom apartment in Berlin’s Wedding district, whose landlord had asked her for a monthly fee of €351 even though the previous tenant had paid only €215.

While the district court’s ruling will not immediately disable the brake on rising rents, it increases the likelihood that the law will soon end up in front of Germany’s constitutional court.

The policy had already been criticised from various sides. With the onus on tenants to check the rental increase against the local benchmarks, rents in Germany’s large cities have continued to rise.

According to a report published this week by Berlin’s tenant association, three in four landlords continue to raise rents at a higher rate than the brake allows.

The tenant association’s director, Reiner Wild, who praised the rental price brake when it came into effect in Berlin two years ago, described the latest developments on the housing market as dramatic.

Clemens Fuest, a leading German economist who heads the Ifo Institute for Economic Research, called the rental brake law “one of the biggest economic mistakes” of Merkel’s grand coalition.

Fuest said the law had achieved the opposite of what it set out to do by favouring higher earners over lower ones. “It leads to those on good wages being able to assert themselves far better in the rental market, because if a landlord is restricted by the amount of rent he can demand, he is almost always going to opt for the person who earns more money because it gives him more security.”

As the country prepares to head to the polls, Merkel remains at odds with her junior coalition partners over the future of rent-control measures. The centre-left Social Democrats (SPD), who first conceived the mechanism, have promised to tighten the Mietpreisbremse further if they govern in the next term, while the chancellor wants to focus instead on making it easier to build new housing.

“The SPD’s view is that if the rental price brake doesn’t work, then we need a second rental price brake. We say: if there’s a lack of housing, we should improve the conditions for building new housing,” she said.

https://www.theguardian.com/world/2017/sep/20/german-rent-control-law-violates-constitution-court-rules
Edited by Bardon, 21 Sep 2017, 11:11 AM.
Profile "REPLY WITH QUOTE" Go to top
 
1 user reading this topic (1 Guest and 0 Anonymous)
ZetaBoards - Free Forum Hosting
Free Forums. Reliable service with over 8 years of experience.
« Previous Topic · Australian Property Forum · Next Topic »
Reply



Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.

Forum Rules: The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.

Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.

Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.

This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.

For more information go to Limitations on Exclusive Rights: Fair Use

Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ

Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy