The German Civil Code (BGB) governs limitations for rent increases in Germany.
The so called “Mietpreisbremse” in English rent act cap came into effect in 2015. Each federal state in Germany had to comply with the new law. Based on a catalogue of indicators such as occupancy, rents, population growth etc. each municipalicty classified areas where residential space is insufficient. In these classified areas rents must not be more than 10% above the local comparative rent.
In addition to the local comparative rent there is a rental cap. The rental cap is defined in § 558 BGB III. The rental cap states that the rent may not increase by more than 20 percent within three years from the start of the rental period.
To find out what the local comparative rent is you can send a request to the responsible office in each city. e.g Housing Office, Office for Urban Development or at the social welfare office.
The Parliament of the Federal State of Berlin took the “Mietpreisbremse” a notch further. On January 30, 2020, the Parliament executed a law to freeze rents in Berlin which came into effect on February 23 rd 2020.
The monthly maximum rent a landlord can charge is fixed between EUR 3.92 and EUR 9.80 per square meter per month, depending on the year of completion and furnishing of the apartment. Rents for residential space completed before January 1, 2014, are frozen on the level of June 18, 2019. Property developments that are completed after January 1, 2014 are not affected by the law.
After reading a couple of legal opinions it can be expected that the law to freeze rents in Berlin violates against constitutional rights and can be challenged.
The length and outcome of a legal case of such complexity is uncertain. So for that particular reason I can only urge you to factor in the constraints and limitations in Berlin and if you are in doubt don’t invest.