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Berlin approves 5-year rent freeze
- NikolaeVarius 7y agoWell, at the very least, will be an interesting economic experiment.
- motivated_gear 7y agoThis has been tried before in a number of different flavors. Most leave people worse off. https://www.bloomberg.com/opinion/articles/2018-01-18/yup-rent-control-does-more-harm-than-good https://www.bloomberg.com/opinion/articles/2018-01-18/yup-re...
- Vinnl 7y agoThanks, I hadn't realised that obviously existing landlords might stop renting out a place, which would reduce supply of housing - that could be problematic. It also mentions that apartments got transformed into condos. This might be a problem with my not being a native speaker, but: if one apartment is turned into multiple condos, isn't it able to house more people? (Though being "new" housing, I suppose they'd then be able to ask higher rents again?)
- kaybe 7y agoYes, it can house more people, but you can also demand a lot more for the same area in smaller units, so rent per square metre goes up.
- esarbe 7y agoSince there's already some effort to confiscate property that's been empty for too long, I doubt too many landladies in Berlin will dare to go that route. I could be wrong. Relevant article: https://www.reuters.com/article/us-germany-housing/berlin-activists-march-to-demand-city-seize-housing-from-landlords-idUSKCN1RI0EG https://www.reuters.com/article/us-germany-housing/berlin-ac...
- cccccccccccm 7y agoI'm a bit confused, this article seems to only look in depth at rent control in San Francisco? San Francisco and any city in California is a major anomaly compared to other cities in the world. For example, rent control in Montreal works fairly well for renters and has kept the city affordable for the middle class while residential construction still booms.
- refurb 7y agoHousing in Montreal is cheap compared to the rest of Canada. Rent control "worked" because there was little upward pressure on rents there.
- withdavidli 7y agoIsn't this similar to rent control in the states already, or other incentives that disincentive moving (ex, locking in property tax amount at time of buying)?
- deleted 7y ago[deleted]
- vtail 7y agoAs a person born and raised in Soviet Union, I strongly believe that whoever thinks that a proper economic response to raising prices is literally to order them to stop raising, is a lunatic.
- tmalsburg2 7y agoGenuinely curious: what do you think would be a better response?
- vtail 7y agoRaising prices = Demand > Supply. You can either try to curb the demand (by e.g. creating incentives for companies to build offices elsewhere, move government bureaucracy somewhere else, etc.) or improve the supply by facilitating new construction, which in most places on earth is limited by, again, local government restrictions. edits: grammar
- sdegutis 7y agoWhat's wrong with legally limiting artificial price hikes to prevent people from abusing Demand > Supply for the sake of their greed? [Edit] To clarify, they seem to be "artificial" price hikes because they don't in any way necessary to cover costs. People realize they can charge more and get more money, so they simply do. That's inherently avaricious and unethical. Sure, maybe prices work themselves out, so that price goes down when supply goes up, but this seems to only be because suppliers can no longer get away with a higher price, because their competition is now selling it at a lower price. So I think it's far more ethical for a government to limit those kind of price hikes, which mainly just hurt the consumer, than to allow these abuses to continue in the name of "freedom".
- usefulcat 7y agoSymptom: rents are too high Cause: insufficient housing supply Solution: disincentivize new construction?
- tmalsburg2 7y agoNope. New buildings are exempt.
- andy_ppp 7y agoSo living in new buildings becomes undesirable even further because they are more expensive to live in than the rest of the city!
- iagooar 7y agoNo, new buildings are desirable because they're new and will always find buyers, especially if built in a nice neighborhood.
- andy_ppp 7y agoLet's just thing this through: I have the option to buy a rental property in Berlin, I can either buy an old rental property and not be allowed to increase rents for 5 years. Or I can buy a new build rental property (which already sell for above market value in most places), and can charge more rent but I will be less able to find renters as they are looking to lock in 5 years worth of zero rent increase. I really don't get how either situation encourages me to become a landlord.
- iagooar 7y agoBerlin doesn't need landlords. It needs homes for people.
- username444 7y agoThis. Cities don't want or need more landlords. It needs more landOWNER residents.
- Roritharr 7y agoI'm so ashamed of german politics of late. We're becoming the country where Homeopathy is GAINING popularity, where policy is increasingly symbolic in the good case, outright ideological in the worst case. It's really at the point where I don't want my kids growing up here anymore, problem is, where else?
- llao 7y ago> Homeopathy is GAINING popularity Citation please.
- Roritharr 7y ago[1] https://www.spiegel.de/gesundheit/diagnose/homoeopathie-in-deutschland-absatz-steigt-auf-670-millionen-euro-im-jahr-2018-a-1256101.html https://www.spiegel.de/gesundheit/diagnose/homoeopathie-in-d... [2] https://www.bah-bonn.de/bah/?type=565&file=redakteur_filesystem/public/Ergebnisse_Allensbach_deSombre.pdf https://www.bah-bonn.de/bah/?type=565&file=redakteur_filesys... Sorry for the german sources.
- llao 7y agoThanks and yikes! I am positive that the growing critique will lead to an improvement on that front though.
- Bayart 7y ago> We're becoming the country where Homeopathy is GAINING popularity In France there's homeopathy propaganda in pharmacies, it's big business here... And we have anti-vaxers gaining popularity, of all things. There's been a big wave of obscurantism regarding vaccines, nuclear, OGM, radio waves...
- jotm 7y agoDon't go to Eastern Europe, absolutely nothing but wastelands there, no houses, no land, no services. Just don't go. Hehehe
- Y_Y 7y agoAt best you'll produce consumer surplus for lucky renters, and you'll produce sad outsiders who'd be willing to to pay even more but can't get in. Everyone knows this is an issue with insufficient supply (of housing or of nice alternative places to live) but it is popular to put a ban on symptoms.
- WhompingWindows 7y agoRather than think of it as insufficient supply, why not think of it as excessive demand? If there is a trend across the developed world of moving into city cores and working high-paying jobs, then it seems that demand is more at fault. These are very old cities with entrenched interests, do they have the political quickness to respond to these demand trends?
- blub 7y agoYeah, not everyone has to live in Berlin. Better that the current citizens have reasonable living conditions than everyone paying through their nose. Everyone knows about supply and demand, few know what the situation's like in Berlin or even care to find out before supplying us with economic platitudes for which there is little if any demand at all.
- cperciva 7y agoBetter that the current citizens have reasonable living conditions... What makes current citizens more deserving than the people who want to live in Berlin but won't be able to due to policies which reduce the supply of housing?
- blub 7y agoAssuming they have a home in Berlin, the fact that they already live there makes them deserving. A home is unlike any other material good and the basis of securing a livelihood, it should not be allowed to exploit tenants for profit. AirBnB'ers and other speculators are of course not deserving at all.
- 2T1Qka0rEiPr 7y agoAs much as I can sympathise with the predicament, this decision, and the Berlin housing market in general, absolutely baffles me. When I moved here I was warned of 100 people turning up to a flat viewing, and laughed it off as some hyperbole. Only later did I find out that it actually happens, albeit the maximum viewing I went to was around a meagre 50. Having come from the UK, I found the situation in Berlin to be absolutely ridiculous. There are already strict rental price limitations in place (based on location, size of the property etc.), and although these can be skirted, in general they're clearly very effective. Again, I sympathise with city housing being very expensive, and don't believe that purely gentrified city centres are likely to be a good thing. Still, economics 101 seems to suggest that merely putting rental freezes in doesn't fix the problem. It just (as is already the case in Berlin), leads to excess demand. The solution is to build houses, but what kind of investor is going to throw their money at Berlin, where their opportunity to make a return on their investment is severely hampered? I just don't understand this stance at all.
- jordanbeiber 7y agoIt’s an interesting catch 22. The housing you make margins off are expensive housing in expensive locations. The reason to keep rents affordable is that it’s generally a good thing in terms of keeping gentrificarion and segregation in check. Cap on rent can’t be the only policy though. I see the exact same situation in Stockholm, and there’s a concensus that profit margins are not good enough. How to solve it? Either sprinkle lots of tax money in some shape or form or do a quatar fotball world cup kind of setup? I’m curious, as I see this situation all over, and frankly no one seems to offer a complete solution.
- wongarsu 7y agoIf the city wants something the market can't provide the solution is to do it yourself. Berlin is partially doing that. The "Wohnungsbaugesellschaft Berlin-Mitte" is a housing association owned by the City of Berlin that builds and rents out apartments. They more or less act like other investors, just with more focus on social factors than on high profits.
- TomK32 7y agoAt the same time german tax office will give you trouble if you don't make enough profit as a landlord.
- looperhacks 7y agoSource? Btw, landlords will be able to apply for excemptions, if it is necessary.
- welterde 7y agoHere is an article about such a case from Munich (in German): https://www.deutschlandfunk.de/zu-nett-fuer-muenchen-der-vermieter-rebell-und-das-finanzamt.862.de.html?dram:article_id=422777 https://www.deutschlandfunk.de/zu-nett-fuer-muenchen-der-ver...
- chvid 7y agoGood luck finding a flat if you are moving to Berlin ...
- lkqJHA 7y agoNo problem: Many people sublet their rent-controlled or outright government subsidized apartments for three times the official rent. Finding a real apartment where you cannot be kicked out any moment is hard though. The best way in Berlin to find a decent place is to be low-income for several years, get on a waiting list and then finally get one of the luxurious subsidized places. No chance otherwise.
- hashberry 7y agoIf affordable housing is an issue, then perhaps the government should provide it for its citizens, like building huge high-rises in Berlin. I used to rent in an expensive city but bought a cheap house in the suburbs (thankfully I work remotely). Everything is cheaper out here, from gas to utilities to food. But I did experience classism from my friends and family: there is status living in a world-class city. And having wealth or a high-paying job in the city is part of this status. But many people want the status without having to pay the $$$.
- tempsolution 7y agoLast thing I heard, high buildings are mostly infeasible in Berlin due to the unstable underground. You can't build New York everywhere...
- Bombthecat 7y agoI doubt that high buildings help, no matter how many people you square per cubic meter, in big cities it will never be enough to allow affordable living...
- odiroot 7y agoYes but we can at least grow the city up to the 6th floor. There's so many building that barely reach the 4th.
- zanny 7y agoJapan and Korea have managed to build some of the densest cities in the world on active fault lines. For a first world world power economy like Germany reinforcing prime real estate in their capital in the 21st century is not an infeasible economic obstacle.
- wander_homer 7y ago> But many people want the status without having to pay the $$$ It's not just about the status. Every city needs people who do lower paying jobs. Someone has to clean those office buildings, someone has to take care of sick people at hospitals, someone has to drive taxis, buses, ... By not supplying those people with affordable housing within the city they're lives only become worse (more money and time spent commuting, less time spent with family and friends).
- dopamean 7y agoDoes this mean that five years of natural price increases will just happen all at once when five years have passed?
- rchaud 7y agoIf supply stayed exactly the same as it is today, sure. I would imagine 5 years gives them some room to allow for more construction to increase supply by the time the ban expires.
- Vinnl 7y agoI'd imagine that they hope the five years is enough time to sufficiently increase the supply such that prices can't rise that much.
- akerro 7y agoAnd unnatural homelessness surge will just happen over night in 5 years.
- pgeorgi 7y agoPrice increases in housing are limited in Germany and have been for a _long_ time (and tightened up in the last couple years). This specific Berlin regulation is on top of that.
- bubblewrap 7y agoI received a rent increase today, with an apologetic letter that the government is forcing their hands. I suppose I could technically turn it down, but since I have always been on good terms with the landlord, I a not yet sure that I will. I sympathize with his cause. Other than that, there are also restrictions in place for how much rent may be increased, so I doubt they would be able to make up for the 5 years.
- tschellenbach 7y agoWhy does the national government allow the city of Berlin to implement such short sighted and destructive policies? There should be some guidelines set by the national government about what you can and can't do in terms of housing supply.
- pgeorgi 7y agoBecause Germany is a federal republic. There's stuff the federal government just has nothing to say about. I mean, in case of Berlin, they could help by moving back to Bonn. Lots of real estate, both office and residential, would free up immediately.
- iso-8859-1 7y agoThere is fresh federal legislation on this subject: Mietrechtsanpassungsgesetz (MietAnpG). Here is an overview: https://www.etl-rechtsanwaelte.de/aktuelles/mietrechtsanpassungsgesetz-2019-ein-kurzer-ueberblick-fuer-eigentuemer-vermieter-und-potentielle-immobilieninvestoren https://www.etl-rechtsanwaelte.de/aktuelles/mietrechtsanpass...
- pgeorgi 7y agoContract law (as changed by MietAnpG) is part of the BGB ("civil code"), which is federal law, while the rent cap is built on top of housing law ("Wohnungsrecht"), which is - mostly - state law (e.g. https://www.morgenpost.de/berlin/article226212113/Mietendeckel-in-Berlin-Mieten-duerfen-fuenf-Jahre-nicht-steigen.html https://www.morgenpost.de/berlin/article226212113/Mietendeck...). The states are rather peculiar about the federal government trying to infringe on their right to set laws, so even if most other states agree that the rent cap is a bad idea (not a given), it's uncertain that they would support anything that uses federal powers (in the Bundesrat, which would be hard to avoid) to stop it in Berlin.
- xxxpupugo 7y agoSeems like only going to create a black market, or funnel the rent in other ways.
- hobofan 7y agoProbably not worse than the one that already exists. There are a lot of people illegally subletting their apartments for 2-3x their original rent.
- objektif 7y agoI think the only solution to high rents and home prices is to build more and more supply. But strangely there is opposition to this from both sides of the political spectrum. Left opposes it in the name of “preserving neighborhoods”, conservative wealthy home owners dont want new inventory to reduce their real estate valuations, and developers oppose it because it will eat into their profits.
- mixmastamyk 7y agoAgreed except for last part. Devs want to build homes, as that's what they do.
- mantas 7y agoNah. Build too much and your margin gets slimmer and slimmer. Build less and get same profit with less work while keeping the market hungry for the future.
- mixmastamyk 7y ago> Build too much… Thankfully, that's not a problem anywhere in places with skyrocketing rents.
- objektif 7y agoIt actually is, otherwise you would have seen Manhattan skyline reach the end of earth but it does not. Premium condos demand such high prices that developers dont have incentive to over supply the market.
- mixmastamyk 7y agoThe housing shortage is real, discussion of niche exceptions is not a great use of time.
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- LifeLiverTransp 7y agoThere is only got to be one socialism movement in town, to drive the shares of landlhorders down..
- balozi 7y agoWhy stop at price controls on housing? Why not just go bravely into the full-blown confiscation and redistribution of private property.
- option 7y agoI’m afraid not everyone understands your sarcasm here :)
- 2ion 7y agoIt's a running joke that the country and Berlin in particular is turning into GDR2.0. Which is why there's lots of dissent especially among the former East-Germans who feel reminded of something.
- bubblewrap 7y agoYou have to start somewhere.
- Roritharr 7y agoI think the main reason why this makes me so angry is because it's Berlin, again, doing something fiscally irresponsible that the rest of the country is going to have to finance in the long run. How I imagine it to go down would be like this: Today the politicians pat themselves on the back for their progressive stance on this topic. In year 2 of the rent freeze most of the property investment will have seized, new construction is going to be mainly be occuring by entities that are forced to construct in this market, which are mostly government backed. In year 3 the pressure on the city council will be so high that some emergency funding will be requested by the city to support the government backed property developers (degewo, GESOBAU, GEWOBAG, HOWOGE, WOGEHE, WBM) in their quest to buy expensive property from "evil" speculators to build more housing, as obviously the private markets have failed to do so. In year 5 after two years of campaigning the funding is granted by a then black/green coalition in the Bundestag.
- JanSt 7y agoThey already receive $4.4bn/year through the Länderfinanzausgleich (mostly from bavaria) to finance their irresponsible policies. I guess it will just be increased, no need for black/green coalition to add anything.
- southerndrift 7y agoThat's a bargain when you remember that Siemens moved its headquarter from Berlin to Bavaria after the war [1]. [1] https://en.wikipedia.org/wiki/Siemens https://en.wikipedia.org/wiki/Siemens
- odiroot 7y ago> I think the main reason why this makes me so angry is because it's Berlin, again, doing something fiscally irresponsible that the rest of the country is going to have to finance in the long run. This is perfectly stated. Not looking forward to possible SPD+Grüne+Linke coalition in Bundestag.
- blub 7y agoWhat do you call the chicanery that companies like Vonovia are doing except evil speculation? Yes, heavy demand with slower increasing supply will result in higher prices, but we're talking about homes here, not iPhones. People can't afford a home any more, it's inhuman to just let them be bled dry or get kicked out in the name of real-estate profit. Your critique's puzzling especially because this law only applies to existing buildings
- option 7y agothe West is being murdered by populists
- dang 7y agoMaybe so, but please don't post unsubstantive comments to Hacker News.
- vchernobyl 7y agoVery curious about this scenario - what about people who have a rent contract with "Staffelmiete" (meaning rent goes up by a "small" amount each year)? Does it mean this annual increase is now seen as invalid?
- nickpp 7y agoAnd in other news: “That can’t be graphite on the ground”
- nielsole 7y agoThis will prevent the referendum to expropriate major german housing companies to gain traction. So in this way this could actually be considered as a pro-market law when considering the political alternatives.
- pure_ambition 7y agoI think most people with an understanding of economics would agree that more supply is needed. The problem is, zoning laws are made by the cities themselves, which means they are ultimately made by the people who already live there. People who already live there don't want their neighborhoods bulldozed for luxury high rises, which is what happens when zoning is abolished. Then, there is the problem of the suburbs. A lot of people suggest moving to the suburbs and embracing a longer commute as the solution. The problem is, suburbs also control their own zoning laws, just like cities, and surprise - they also don't want their neighborhoods bulldozed for luxury apartments. So the problem is essentially a power issue - who holds the power? Without the political power to make zoning changes, little new housing will be built. I don't see a solution here. So it seems that the local people embrace rent control as the best possible solution among alternatives. Viewed from that perspective, it's not so bad after all. The city's residents will feel the impacts, and if it's not working out, they will eventually repeal the law. Big deal.
- jlawson 7y agoI wish someone with a deeper understanding would go to Japan and study how they got this so right. Their zoning laws don't separate uses, only nuisance levels, so you often see residential in commercial areas and small shops in residential neighborhoods. It's amazingly effective at reducing how far you need to go to get places, and gives the whole city a much more organic feel. Plus, there is actually housing if there's demand for it. Is it just Japanese cultural collectivism that made this work? How did they make this happen when we failed so badly? I have no idea.
- claudeganon 7y agoIt’s actually pretty simple: housing isn’t an investment vehicle like it is in many parts of the West. The social and historical reasons why this is so in Japan are complicated, but the overall circumstances are not. You can either have affordable housing that’s not an appreciating asset or let finance/real estate Capital run roughshod over everything in speculative flurries, leading to the insane state of affairs in many western cities today. You can’t have both.
- jk27277 7y agoBerlin will be the Lisbon of the 90ies. Well deserved
- pierrebeaucamp 7y agoWhat happened to Lisbon in the 90s?
- iso-8859-1 7y agoTranslated from the German Wikipedia article: In 1947, António de Oliveira Salazar initiated a rent freeze for Lisbon and Porto, which remained in force for over 40 years and ensured that for some old-style apartments in the late 1980s, <5 euros/month had to be paid. After the freeze, rent increases remained limited to inflation until 2006, so that rents remained very low. Many homeowners let their old apartments become derelict because the money was missing for renovations. Sanitary facilities with shower and toilet were missing in many buildings. In the center of Lisbon, about 20 houses per year collapsed at the end of the 1990s due to poor condition.
- xmly 7y agoThis is totally wrong! The government should never intervene market!
- max_hoffmann 7y agoNope, because the market doesn’t care about you. It doesn’t care if you have a place to live, if you are healthy, if you are safe… Not restricting "the market" at all leads to a worse life for humans.
- oezi 7y agoThere are a lot of factors at play here: 1.) Supply is inelastic because construction work and building approvals are limited by current capacity. It is not feasible to expect the market to react as quickly as 600,000 new inhabitants over 10 years required. 2.) A lot of policy is still considering this to be a fad before cities become less popular again. Berlin's plans had for instance foreseen falling demand for schools due to demographic change and now rising birthrates (good economic situation) and influx of young people into cities are causing a trend change (for how long?). 3.) Current ECB rates are causing a housing bubble in Germany where many people are buying property for the first time. Because these properties are mostly rented when purchased but renters can't be terminated in Germany, the only way to evict is by raising rent until renters give up. Putting a rent freeze into place makes sense to prevent this and the rampant luxury renovations which don't create more supply. 4.) Berlin at its peak (1944) had still more than half a million more people and is surrounded by mostly empty countryside. It could easily grow to 10m as Paris or London.
- zanny 7y ago> a fad before cities become less popular again The only way this happens is if cities like Berlin putting rent freezes prevent construction that would increase capacity and lower prices to allow people to live in cities. There will be no new economic growth where people are spread thin - all future productivity will only emerge where people are. Any country trying to do anything but centralize their human capital in cities will find themselves at economic disadvantage going forward.
- oezi 7y agoOr technology (self driving cars, remote work) and social change (universal basic income) would not require you to live in a city to work there or work at all that productively.
- zanny 7y agoThe point is more than density is an optimization of the marginal cost of maintaining a person. Manufacturing all the autos, maintaining all the roads for them to travel on, and providing supply lines across vast areas of low density are immense ongoing expenses that are hugely reduced when people are centralized in urban areas. As we move towards remote work it should lead to density increases, not the other way around - living denser means more access to more recreation and services, should mean cheaper goods and infrastructure, and can stymie the isolation problem brewing with remote workers across the industrialized world.
- durdleturtle 7y agoThis seems like it could be dangerous as it creates incentives for slumlords. If the landlords need to raise rent but they can't, then the only way for them to turn a profit is to cut their expenses.
- MickerNews 7y agoOr just sell up and find a more respectable way of making money, increasing supply in the buyer occupier market, lowering prices.
- rorykoehler 7y agoWhich is illegal in Germany.
- iso-8859-1 7y agoMore details on the German Wikipedia article (it can be translated): https://de.wikipedia.org/wiki/Mietpreisbindung#Mietpreisbremse_(2019) https://de.wikipedia.org/wiki/Mietpreisbindung#Mietpreisbrem... Interestingly, legislation like this was in effect from 1945-1988 in West-Berlin.
- amai 7y agoInteresting, this legislation actually was invented by the Nazis: "On October 17, 1936, the National Socialists imposed a rent freeze and further rent authorities were established. After the end of National Socialist rule, this regulation initially continued to apply in both parts of Germany, which is why home ownership was often considered "unprofitable" as early as the 1950s, as the costs for maintenance, repairs and administration continued to rise every year. Translated with www.DeepL.com/Translator"
- azhenley 7y agoI just listened to a very relevant Freakonomics podcast, "Why Rent Control Doesn’t Work (Ep. 373)". http://freakonomics.com/podcast/rent-control/ http://freakonomics.com/podcast/rent-control/
- cwperkins 7y agoI will eagerly wait to see how this unfolds. Count me in the skeptical camp though. From an outside perspective it looks like the Overton window in Berlin is skewed heavily because of the runaway prices. I remember just last month the huge protests against Deutsche Wohnen and people demanding the nationalization of apartments. It’s no stranger in New York City that the most inattentive landlord that had the hardest time getting things done is NYCHA, the city agency. I’m skeptical of this solution, but the alternative was scarier.
- bronzeage 7y agothe only scalable solution is to reduce demand, not increase supply. cities are already getting pretty saturated, and building more houses isn't going to solve a thing. what is really needed is very fast public transportation from outside cities to the cities themselves, and incentives for workplaces to split into sub-branches in other nearby locations instead of endlessly expanding within the same city. most people would prefer living outside the city for cheaper and higher quality of housing, the force pulling them back towards the city is the transportation distance to work. the force pulling workplaces into the cities is that they want to minimize transportation time for potential employees (unless the workplace has a location tied to the city), while they still need to cluster employees who have to work together. so everything is clustered, and there's nothing to do about it. only way that this can end, is if you reduce the force pulling everything together - by reducing transportation distance - while in the same time, you need to introduce some incentives for workplaces to split to sub branches.
- toper-centage 7y agoAs someone who rides the S-Bahn for 30 minutes, having an express S-Bahn that takes me straight to the center would be really nice. But there are only 2 S-Bahn tracks most of the time :/
- hokus 7y agoIts really simple. We should tax property AND rent to the point where it becomes unprofitable to hoard it for purposes of unproductive wealth extraction. Then change all rent contracts into lease-buy contracts. You would accumulate a good percentage of madly overpriced rentals that no one wants then they go bankrupt one by one. You get those delicious market dynamics we [apparently] crave more than any social convention. Buildings should be hot potatoes that you don't want to hold for to long. With this much demand it wont even affect housing prices but even if it did, who cares? Gradually, (in stead of rent) people pay tax at market rates. We can keep the large scale wealth extraction and continue to force people into productivity only it would be the government doing it. The same logic applies as with the teachers, taxi drivers, cleaners, garbage men, restaurant employees etc: If you don't like it you can just leave the city. Get some of that delicious mobility going and gtfo. They can just leave for the sake of efficiency and availability. Its that simple: Just go away. If you have to chose between [say] 1) a corner store OR 2) a land lord it should be obvious which one to get rid of. If they are contributing to quality of life by selling food and employing people we should consider giving the store a tax cut. One could also extend the tax cut to the people working there and have cheap stores. Its hilariously unproductive to have a usury scheme of greedy unproductive rent seekers extracting wealth from every transaction that is some how remotely related to real estate. I just want to pay for the ice cream, pay the people involved in making the ice cream happen. Why would I pay 80% to someone who doesn't do anything I need?
- esoterica 7y agoIf you tax rent, landlords will pass the tax on to renters. All you are doing is making renting more unaffordable.
- whymsicalburito 7y agoBut buying will be cheaper than renting, so it seems just fine that rents would go up.
- esoterica 7y agoA lot of people cannot afford to buy at any price point.
- cyrksoft 7y agoCan they use Airbnb and the likes to bypass this?
- caseysoftware 7y agoWhile rent may freeze, what are the unintended consequences? - Will enough of the "right people" be able to move in to fulfill the right jobs? Keeping a barber seems great until you realize that there aren't enough doctors. - Will "rent" be shifted to other, less trackable metrics? Will there be large application fees to apply? Does Berlin have something similar to condo associations or HOAs that will increase? There are consequences to every action.. are the first order ones acceptable here?
- nullwasamistake 7y agoRent control is almost always a disaster. It benefits current residents at the detriment to everyone else. Look no farther than SF or NYC. I have a friend in NYC paying 2000 a month to be a roommate to a guy paying 1500 for the whole place. Yeah he's paying more than this guy's whole rent, because the apartment is rent controlled.
- gwright 7y agoAgree with you about rent control, but I'm assuming that the "guy" must be breaking the law. If people in rent controlled apartments are free to sublet at market rates, that seems like a huge loop hole easily exploited. Regulations like this tend to create incentives for corrupt practices of all kind.
- nullwasamistake 7y agoThey're not allowed but it's so hard to evict people from rent controlled units in NYC, and so lucrative to rent out your place, that it's extremely common. Maybe more than 50% of units. A lot of times you rent to a friend or relative so they don't rat you out. It effectively turns rent control into a $1000+ a month untaxed subsidy. I'm sure there's plenty of people that rent out more desirable rent controlled units and don't have to work a day in their lives.
- justnotworthit 7y agoPaul Krugman, 2000: https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-affair.html https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent... "The analysis of rent control is among the best-understood issues in all of economics, and -- among economists, anyway -- one of the least controversial." "So now you know why economists are useless: when they actually do understand something, people don't want to hear about it."
- 08-15 7y agoIsn't it amazing how short politicians' memories are? It's been only 30 years since the GDR (German "Democratic" Republic, aka East Germany) collapsed. In the GDR, all rent was regulated to a "fair" level. The result was a universal scarcity of housing, and existing houses were decaying, because nobody would invest any amount of money into maintenance. The best housing available in the 1980s were those ugly and uncomfortable apartment buildings made from mass produced concrete slabs, which everyone just remembers as socialist architecture. And "available" meant you had to wait for many years. Still, the alternative was to live in a house built in 1910-1930 and not maintained since 1950. There is no place in the world that could document this failed policy better than Berlin: the contrast between East Berlin (ugly ruins) and West Berlin (nice houses) is striking, even today. But the Berlin senate decides to go with socialist thinking again. However, that was to be expected after the Berliners voted the old Socialist Unified Party (renamed twice, but otherwise unchanged) into the senate.
- nickik 7y agoThe only way to actually solve living prices is increase in living space. Its as simply as that. Literally nothing else has worked, and the cheapest cities to live in are those that build a lot of new apparment buildings. Everything else is political snake oil that usually makes the problem worse not better. This is the most basic economics that has been shown over and over again for 100+ years. If you want to do something useful. Do infrastructure building and make more of the surounding area accessable for large scale building programs. Make regulations for building easier to handle when building new houses. Meaning allow to build higher and so on. I bet there are 100s of unnessary regulations that have accumelated over the last 50 years.
- oytis 7y agoPeople are bringing in the supply-demand curve from their school economy classes. The problem is it doesn't work that way with housing. There is zero incentive to build affordable housing when you can build a luxury house. On the contrary, landlords in Berlin "renovate" all the time, to make normal apartments into luxury ones. So without regulation, the supply for affordable housing is diminishing. To increase the supply and reduce the prices, one needs regulation. Without all efforts to reduce prices by giving landlords the opportunity to build more affordable houses will be wasted. They don't want this opportunity, they need as much money from each square meter as they can get. I am all for building more where there is space, it just needs to come with some regulation. That is, a certain quota of social housing in each building, prohibit meaningless renovations, make it less attractive to use property as an investment. Rent freeze does some of this. It lets people stay in their house, preventing further gentrifying districts (which would lead to further rise in prices in a kind of a positive feedback loop). And what is important, it makes property in Berlin much less attractive of an investment, because nobody knows what else to expect from the senate (even expropriations are discussed). I don't expect it to solve the problem completely, but it will definitely slow down its progression.
- fredm-de 7y agoLuxury housing, too, does create supply. Prohibiting the construction of luxury apartments will just end with rich people paying luxury money for standard apartments thus raising prices and people with less financial means will be priced out.
- oytis 7y agoOr will just move to a city that is willing to provide them living conditions they want (Munich, Hamburg, whatever). Also when we consider new houses, luxury house creates less supply than a normal one by having fewer apartments.
- chappagetti 7y agoThis means that who gets a place to live and who doesn't will be decided by factors other than willingness or ability to pay. I imagine renter selection will come down to criteria that are no better and possibly borderline discriminatory -- how do you choose which renter to go with when you have 100 to choose from all paying the same? Should we make regulation for renter selection also?