(Bloomberg) -- Germany’s top court struck down Berlin’s controversial five-year rent freeze and restrictions forcing landlords to reduce prices, saying the city lacked the power to impose the rules.

Berlin isn’t free to set its own restrictions because national legislation already covers rent regulation, the Federal Constitutional Court said in a statement on Thursday. Germany’s civil code, a federal statute, has extensively regulated the relationship between landlords and tenants, so there was no room for Berlin to step in, they said.

The German capital’s aggressive efforts to clamp down on rent increases have sparked interest in cities from Amsterdam to New York. Other German cities have been holding back on similar efforts to see how the case played out and amid concerns that the action could complicate the development of new homes.

In February 2020, Berlin’s left-leaning government introduced the rent cap to keep the city from going the way of London and New York -- where the lower and middle classes are being priced out of the center.

A group of lawmakers from Chancellor Angela Merkel’s conservative bloc and from the opposition Free Democratic Party, which favors free markets, challenged the law. Two Berlin courts had also asked the top judges for a ruling. Landlords have filed individual complaints but these cases weren’t part of Thursday’s ruling.

City officials say the freeze was intended to give renters “breathing room” while Berlin seeks to increase construction to at least 20,000 new homes annually, more than four times the level in 2010.

Thursday’s cases are: BVerfG, 2 BvF 1/20, 2 BvL 4/20, 2 BvL 5/20.

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