Berlin-Moabit (Stephanstraße) – Rent Reduced from €1,190 to €661.97 and €5,700 Repayment

In proceedings conducted by our firm before the Berlin-Mitte Local Court, a substantial excessive rent was successfully corrected. In a court-approved settlement, the monthly net cold rent for a period apartment in Berlin-Moabit was reduced from €1,190 to €661.97. This corresponds to a monthly saving of around €528, or more than €6,300 per year.

The apartment on Stephanstraße (approx. 95 m²) had a local comparative rent of on average €6.33/m² according to the Berlin rent index. The rent actually charged was therefore significantly higher. The tenancy agreement merely stated that the rent level was justified on the basis of a "Kernsanierung" (core renovation).

The landlord relied on the exception to the rent cap for the first letting after extensive modernisation (section 556f of the German Civil Code). That exception only applies, however, if the tenant is properly informed thereof before the contract is concluded. A general reference to a "core renovation" is not sufficient for this purpose. It does not make clear whether a modernisation in the legal sense has actually taken place, nor whether this is the first letting following the completion of such measures.

The Berlin-Mitte Local Court followed this legal assessment. What is decisive is that only those measures qualify as modernisation that sustainably increase the usable value of the property or permanently improve general living conditions. Pure maintenance work or merely cosmetic improvements are insufficient. In addition, the measure must meet the requirements both quantitatively (a significant proportion of investment) and qualitatively (achieving a condition comparable to a new build). A transparent, trade-by-trade breakdown of the measures carried out, with deduction of maintenance costs, is therefore required. This was lacking in the present case.

A further factor was that the apartment is located in a social preservation area (Milieuschutzgebiet). In such areas, structural alterations that enhance the property's value are generally subject to planning permission and may in some cases be impermissible. The proceedings therefore also raised the hitherto rarely clarified question of whether features created in breach of building regulations may at all be taken into account as value-enhancing under the rent index. To allow such features to be considered would effectively provide an economic privilege for an unlawful situation.

As no out-of-court settlement could be reached, proceedings were brought seeking repayment of overpaid rent and a declaration as to the permissible rent level. In the court proceedings, in addition to the rent reduction, repayment of the amounts overpaid since the formal objection was raised – totalling around €5,700 – was also achieved.