18 ms·

As 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 warne

As 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 ago
It’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 ago
  If 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.
  - luckylion 7y ago
    > just with more focus on social factors than on high profits Which is basically a political issue, because they will say "some people are more equal than others". Personally, I prefer naked capitalism over this "you need to know somebody in the party to get a good flat"-stuff.
    - jordanbeiber 7y ago
      Isn't the black market that occurs a form of naked capitalism? Here in Stockholm a lot of the public good properties have been sold out which have left precious little for too many to contend. Prices of labour and land are so expensive that, allegedly, profit margins are not good enough. The "know somebody" bit goes for plain hard capitalism as well, but is less in effect in a society that actually focus on the social side of things. IMO.
      - luckylion 7y ago
        I don't know, I've always liked the "if you have money, you can buy it" part of capitalism. You can make money, but you can't change the fundamentals. In a racist white society, having money will not help you if you're black. In a politicized society, having money will not help you if you don't have the right worldview, or were born into the wrong family. In my home town, having money will not help you get into a (private) housing cooperative if you don't match the social criteria. What you describe in Stockholm has happened around here too. Still, I prefer it: this way I do have a chance to get a (nice) apartment, even though I was born to a family where nobody was a member of the local ruling party. Sure, I may not get the great flat at the greatest location for a third the market price, but at least I can get one, even if it's more expensive. I'm happy to pay a higher price to be able to actually buy something.
        jordanbeiber 7y ago
        I’m just saying that with capitalism comes politics. Always have, always will. To believe otherwise is a bit naive. Politics can be used to even things out as was done over here from the turn of the century up until, I’d say, 70-80s. The last few decades have been way to market/neoliberal policy wise, and in many ways we’re seeing the effect today. I just think you’re a bit binary here. I come from a struggling family but have managed to buy a place for my own family in a really attractive location. The problem is that thanks to virtually no regulations on the banks for lending the whole market is inflated, both for property and land. It’s simply not a question about supply and demand - it’s “how much money can I borrow”. A study showed that roughly 25% of people owning housing i Stockholm cannot manage a lowish “normal” interest rate. Banks love printing money for free! Capitalism only works when properly regulated by sane policy.
- zanny 7y ago
  The solution is pretty basic and was proven to work for centuries before extreme zoning intervention by governments happened at the behest of property owners wanting their gentrification. To fund the program you institute luxury property taxes on units larger than what you want your average citizen to afford and actually property tax businesses (which many cities do not do, because they bribed companies to locate there with agreement they would have substantially reduced taxes). Both should be at progressive rates, the larger companies and homeowners paying more. In any city that has the modern housing price crisis in effect there is plenty of money floating around to pay this and would not "kill" the city to institute because demand is so high already. Then, with the revenue, you A) invest in public and modernized infrastructure and B) rezone for mixed use or simply dezone your city (the only real valid arguments for zoning nowadays are to avoid overburdening infrastructure and to maintain specific skylines, but policies that prevent vertically entirely are wholly draconian and cannot stand - there needs to be an avenue for vertical growth no matter what). The infrastructure is ridiculously expensive. Decomissioning streets to build functional bike and walkable space infrastructure, building a comprehensive subway / light rail / tram / trolly network, supporting comprehensive bus service are all major projects. Every city, though, needs to be doing all of these. Private car ownership has to trend towards 0 for anyone living in the city proper, and proper zoning and tax code should incentivize almost anyone within a substantial difference to move towards the city because its cheaper. Its cheaper to live in a 50 story condo building when you factor in all externalized costs - the lifetime of the building, the heating / cooling efficiency, the infrastructure requirements, the construction efficiency, the materials efficiency, the cost of public services to support the building, the access to productive labor and jobs local to the residence, the climate damaged caused by long commutes from suburbs, the environmental impact of sprawl, the maintenance on infrastructure to support it. People look at how 2500 condos might cost 100 million for the building alone and think that means its inefficient and too expensive... but in practice A) the costs are inflated due to regulatory impedance B) there isn't enough high density demand in most western countries to get economies of scale reducing prices of construction the way they are in Asia and C) even when the building is more expensive everything else is cheaper. Which probably comes back to the fundamental reason we are in this state in the first place. Externalities are not factored in. Environmental harm, infrastructure & services upkeep, human potential lost, etc all factor in to cost the modern sprawl low density lifestyle and our societies dearly. Cities are actively hurting their responsibility to grow to mitigate this damage, but its also on nations as a whole to stop subsidizing lifestyles that hurt the plant, nations, and people themselves. Cities don't have money to build because money is siphoned to maintain the status quo and that keeps this unnatural unsustainable relationship in place.
- jotm 7y ago
  Encourage people to buy land and build their own houses?
max_hoffmann 7y ago
Freezing rents is not meant to be a solution for a lack of housing. It’s a solution to the explosive increase of rents of existing ones. There are lots of people where the rents of their current apartment have increased so much, that they had to move out. This solution is trying to fix that. Also freezing rents doesn’t mean Berlin will stop building new houses. If there is big demand for housing in a city one needs both: 1. make sure people currently living in the city are able to do so in the future 2. make sure new people coming to the city have available space Freezing rents is aimed at problem one. These solutions are not exclusive.
- zanny 7y ago
  Pretty much every western nation has systemically failed to recognize or support the insanely high demand for high density living in the 21st century. That is where the future of economics is, where the future of humanity in general pretty much is, and every democracy is consistently demonstrating the total inability for legislatures to sacrifice the advantage of those lucky enough to inhabit cities as they exist now for the benefit of all those who would grow the economy and future in the cities tomorrow. Largely because those in the cities have the money and influence to buy the politicians.
  - jimmaswell 7y ago
    I don't buy any of this. Growing up everyone around me saw the city as somewhere you begrudgingly went out of necessity and only lived there if you had no choice, and I'm inclined to agree. In virtually every aspect I find more countryside-ish living much more pleasant. Consider virtual reality and remote work. I imagine much of the workforce will move to virtual offices in the near to medium-far future when corporations finally come around to realizing they don't have to waste so much money on rent. There's no need for programmers, graphic designers, reporters, and employees of lots of other professions to work in a physical office. So really, as cities become less of a necessity to certain jobs, I expect a moderate exodus to nicer areas, halting growth or even decreasing population in urban centers.
    - 7y ago
WalterBright 7y ago
Rent control never works, but that never dissuades governments from trying it again and again. https://en.wikipedia.org/wiki/Rent_regulation https://en.wikipedia.org/wiki/Rent_regulation
- odiroot 7y ago
  Because it's a very effective populist policy to get support from the electorate.
- pgeorgi 7y ago
  It works reasonably well in the rest of Germany. As for it not working in Berlin, I have a hard time to come up with _anything_ that works there, so my hunch would be that the housing market in Berlin is broken not because of rent control, but because it's Berlin.
  - luckylion 7y ago
    > It works reasonably well in the rest of Germany. How? Pretty much all large cities are much more expensive than Berlin, rent-wise (and in most other things).
  - tomatocracy 7y ago
    It "works" (in that it doesn't cause problems like rationing by other means like queueing, under the table payments, subletting, or any one of the myriad other problems rent control produces) because it actually does nothing - it results in rents which are equal to what the open market price would have been. Ultimately, if you want to reduce rents AND have a functioning market, you have two options (or a combination of them): (1) reduce demand, (2) increase supply.
    - acchow 7y ago
      > it actually does nothing - it results in rents which are equal to what the open market price would have been. Lots of people living in rent-controlled apartments around the world would disagree.
odiroot 7y ago
> I found the situation in Berlin to be absolutely ridiculous. I totally agree with this assessment. I've never seen a city where you struggle to get a flat even if you have the money or can pay more. The market is absolutely broken with literally everyone competing for the same pool of flats.
- meesles 7y ago
  I don't know, there's something utopian about what you describe. If the city doesn't have housing for everyone, why should the rich get it first? Leave capitalism at the door, we're talking about a roof over your head for janitors vs. business executives. If an 'ideal' free market means the rich get the houses and the poor are on the street, because developers don't have motivation to build, then I'm happy to see everyone compete for the same housing and seeing both the rich and the poor on the street while we figure out a real solution.
  - hikarudo 7y ago
    The opposite of: "only the rich can get a house" is not "everyone gets a fair chance of getting a house", but "not even the rich can get a house". Think of two families that want to get the same house, both having about the same wealth, but one is desperate to get the house and therefore willing to pay more, say because of health problems, while the second family can wait for another property. You lose a lot when you "leave capitalism at the door".
    - xg15 7y ago
      By that logic, there would be no way at all for the poor to get a house.
      - nemothekid 7y ago
        Yes there is. You _build_ more so that prices go down. It’s baffling how much “adding more housing” is always a non starter solution. Everyone seems to understand that if flood the market with something like diamonds then the prices of diamonds will go down, but when it comes to housing then basic economics go out the window. Rent control is an incredibly pro-landlord policy. In high growth cities, land owners can simply sit on property, never invest in that property (they don’t have to compete) and simply watch their value skyrocket as they never have to worry about new supply driving the market down.
srrr 7y ago
The rental freeze does not apply for new housing. (Wohnungsneubau wird vom Gesetz gänzlich ausgenommen.) https://www.berlin.de/rbmskzl/aktuelles/pressemitteilungen/2019/pressemitteilung.820537.php https://www.berlin.de/rbmskzl/aktuelles/pressemitteilungen/2...
- stickfigure 7y ago
  This time. When the next freeze takes place, your residential construction won't be "new" anymore.
  - anoncake 7y ago
    Freezes have always been possible. Nationalization below market rates have always been possible. Neither discourages construction. That's just FUD.
bpfrh 7y ago
While it is true, that there are simply not enough apartments the rest of your argument is wrong. In berlin, the rent limits don't work, because of various reasons, one for example is that companies simply rise the costs that are not rent for appartment, force the people living there out and then raise the rent. The rent limit is not the only thing that has to be done but it is a step in the right direction. I always hear the argument about investors and the rent limit, but there are multiple reason why that is a bad argument. The investors had about 20 years time to fix this issues and make a good living out of it. Instead they raised the rents to exorbitant values and didn't built new appartments. Investors can still make good money of appartments if they just rent them for a fair amount. Of course that means they don't get a 200% percent profit, but I don't think that should be the case anyway. Homes are not up for speculation and profit and they should never have been. A good chunk of the houses in berlin where owned by the city and state and sold for far too little.
- llampx 7y ago
  > In berlin, the rent limits don't work, because of various reasons, one for example is that companies simply rise the costs that are not rent for appartment, force the people living there out and then raise the rent. Do you have examples of this happening? Nebenkosten are controlled by the government or the responsible agencies as well, and you get a detailed invoice of any costs so the landlord can't just bill whatever they want.
  - bpfrh 7y ago
    Afaik there was a winter service which was billed and nobody ever saw that winterservice happening. Or there were addons built to the house that where not necessary and would force the people out.
- PavlovsCat 7y ago
  > Homes are not up for speculation and profit and they should never have been. Amen. Here's a bit by Stewart Lee that I consider more insightful than funny: > Basically, what's happened is, somewhere along the line, as a society, we confused the notion of home with the possibility of an investment opportunity. What kind of creature wants to live in an investment opportunity? Only man. The fox has his den, the bee has his hive, the stoat has a a stoat hole. But only man, ladies and gentlemen, the worst animal of all, chooses to make his nest in an investment opportunity. Mmm, snuggle down in the lovely credit. All warm in the mortgage payment. > Mmm! But home is not the same thing as an investment opportunity. Home is a basic requirement of life, like food. > When a hamster hides hamster food in his hamster cheeks, he doesn't keep it there in the hope that it will rise in value. And when a squirrel hides a nut, he's not trying to play the acorn market. And having eaten the nut, he doesn't keep the shell in the hope of setting up a lucrative sideline making tiny hats for elves. And when a dog buries a bone, he doesn't keep that bone buried until the point where it's reached its maximum market value. He digs it up when he's hungry. > And if estate agents were dogs burying bones, not only would they leave those bones buried until they'd reached their maximum market value, but they'd run around starting rumours about imminent increases in the price of bones in the hope of driving up the market, and they'd invite loads of boneless dogs to all view the bone at the same time in the hope of giving the impression there was a massive demand for bones. And they would photograph the bone in such a way as to make it look much more juicy than it really was, airbrushing out the maggots and cropping the rotten meat.
deanCommie 7y ago
> 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. This is a deeply American hyper-capitalist stance. I understand you're not American, but it's an insidious American mindset that permeates the world, and must be resisted. A successful society is not just a rampant pursuit of economics and profits at the expense of everything else. There are investors who will make their choices about more than just "which decision gives me the most profit at any point in time?" There are many policies that are pro-business and pro economic stimulation that actually have huge negative externalities on the quality of life of individual people. And, not to go all granola on you, but PEOPLE is what it's all about. All - society, culture, our reason for existence. Anytime government regulations are introduced that favour people at the expense of corporations there is screaming of the sky falling and that the economy is going to collapse, etc. I suspect it's frequently not in good faith, and doesn't consider a holistic approach to maximizing human happiness.
- 6cd6beb 7y ago
  >A successful society is not just a rampant pursuit of economics and profits at the expense of everything else. Right, but people are incentivized by the profit motive and generally do what they can to meet it. To just say "think of the people" is swimming upstream; you're more likely to succeed by finding a way to modify the system to drive people towards actions that benefit each other. Unfortunately it is not very human to forgo money, power, fame in exchange for what they think is the right thing to do. That's why we've had to create economic or political systems that saddle the drive for those things and steer it towards things that benefit society.
- icebraining 7y ago
  While I don't necessarily disagree with rent controls, portraying this measure as people vs corps is simplistic. As long as the city relies on private investors to build new residences, lower investment also means the PEOPLE who could have lived in Berlin are left out. (The measure is also typically bourgeois; it throws some crumbs to fix the outcry so the capitalist system can remain in place)
- 7y ago
walshemj 7y ago
There isn't massive sub letting going on then?
- llampx 7y ago
  I'm not aware of massive subletting going on but in general if you sublet without letting your landlord know about it you risk losing the apartment entirely, and most landlords won't let you sublet for longer than six months. Of course sometimes it does happen. A couple of friends of mine have been in the same sublet for the better part of a year but they're also looking to move to a more stable place. The renter has basically moved out but is keeping the flat around "just in case"
baxtr 7y ago
I am not sure if building houses is the solution. Wealthy people from around the globe will still buy them to rent them out for a profit or let them just sit there empty to visit for 2 weeks a year. There is even a name for that effect, it is called "induced demand". See: https://en.wikipedia.org/wiki/Induced_demand https://en.wikipedia.org/wiki/Induced_demand
- seunosewa 7y ago
  I feel that the problem is that too many people want to live in Berlin, the solution is for a large fraction of those people to choose to live elsewhere, and the rising rents would have been a good way to achieve that outcome.
  - xg15 7y ago
    Well, in that case, either the rent lock will actually work - or it will increase the difficulty for everyone to get a flat, which essentially would have the same effect of driving people to the outskirts.
    - seunosewa 7y ago
      The people who can afford to pay higher rents are generally the most productive. They have important skills that employers are willing to pay high salaries for. They also pay more taxes and spend more money. If I ran a city, I would want more of those highly skilled workers in my city.
      - nerfhammer 7y ago
        So, you're actually in favor of higher rents. Why not mandate rent increases?
        llampx 7y ago
        This is silly. Your counter-argument is basically also meddling in the market.
ivan_gammel 7y ago
This measure discourages investors to purchase already existing property, for sure. But this also leaves the opportunity to put the money in construction. The market in Berlin is still very attractive due to very high demand, so lets see how quickly can the local councils allocate land for new housing. Some time ago I’ve also heard the complaints that city has no enough capacity to give building permits quickly. Those could be the real bottlenecks in the city which grows by 200 000 every year. It’s also interesting to compare it with Moscow - nearly the same area, but 4 times smaller population and plenty of badly used space (like Tegel airport). Will it be able to keep growing while maintaining high living standards?
ernst_klim 7y ago
>in general they're clearly very effective. Oh yeah. Like, it's nearly impossible to find a place to live. Economics 101, true, artificially lowered price is leading to deficit.
air7 7y ago
My take is that from an "economics 101" perspective, a rental isn't a normal commodity. When a vacant rental is first advertised, it is essentially "put on the market" and it's price could be determined by supply and demand in a more or less fair way (assuming "gentrification" is just demand). But signing a lease and renewing it are very different. For the renter, leaving a rental incurs a very real cost (searching for another place, packing, moving, stress, change of habits etc). It's true that there's also a cost to the owner but it's much smaller (adverting, viewings, risk of unknown tenants etc). So the "rational" thing for the owner to do is to try and take advantage of this by hiking up the price to include the leaving cost of the tenant. If the market is left to it's own accord, it will cause this. Of course freezing hampers with the fluidity of the market price. A good middle ground is a predetermined max price increase agreed upon in the lease.
- evancharles 7y ago
  I think you underestimate owner costs of turnover. Risking an empty apartment for even a few weeks can erase your yield for the whole year. Landlords, then, are only likely to hike rent aggressively if it's worth that risk, in other words, when the market price is dramatically higher than the current rent rate.
MickerNews 7y ago
>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? Uh, the state. It's strange to me that someone can honestly ask this question. The free market has failed as is its wont in these matters, this failure always needs to be addressed by the state. Where were you for the last global economic collapse?
- ericd 7y ago
  What does the last global debt crisis (which was caused by central banks around the world keeping interest rates incredibly low for a long time, which allowed housing debt/speculation to balloon massively, and then tightening suddenly) have to do with the failures of the free market to develop sufficient housing? And in many major cities, things like zoning are preventing developers from building nearly as much housing as they’d like. I guess I’m just kind of baffled as to how you’ve reached the conclusions you have. I’d love some clarification.
- CryptoPunk 7y ago
  The last global financial crisis was created by the world's largest Central Bank. It had absolutely nothing to do with the free market when the largest banks were dealing with government-guaranteed securities and were speculating on a government created bubble. In a free market, all those who poured billions into the bubble would have gone bankrupt and all of their real assets would have been sold off in bankruptcy proceedings to responsible players who are less likely to over leverage themselves and exacerbate the speculatory frenzy in the next bubble. The only reason the market hasn't solved the housing problem is government interventions like rent control. In places without these interventions and with strong enforcement of private property and contract rights, the market does an absolutely excellent job of providing housing. The effects of rent control have been observed for a hundred years. In city after city rent control has been observed to cause more harm than good for the population at large.
  - someguydave 7y ago
    https://www.idiosyncraticwhisk.com/2016/10/housing-part-183-measure-of-shortage.html https://www.idiosyncraticwhisk.com/2016/10/housing-part-183-... Kevin Erdmann agrees with you. Here is his blog post about the housing shortage associated with the 2008 bust
SomeOldThrow 7y ago
I have a hard time being sympathetic to people wishing to displace.
drugme 7y ago
The solution is to build houses, It's one option among many. And by itself -- most likely not a sufficient solution (or any kind of a game changer). I just don't understand this stance at all. Basically the main reason this "stance" is that the locals know better: that simply allowing newer (unregulated) construction isn't going to bring their rents down -- or that is to say: do something about availability in their income brackets, and not just yours and mine -- anytime soon.
pmiller2 7y ago
> 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. The Bay Area has a rather efficient solution to this problem: limit the open house to 15 minutes. I wish I was kidding, but I saw multiple open houses that were literally 15 minutes long, and if you arrived 16 minutes after it started, too bad. And, unless you show up with a pre-filled application, credit report, blood sample, and your checkbook, there's no guarantee you'll even have a shot at the place. Ok, the blood sample is a bit of an exaggeration, but not much. Apartment hunting in the Bay Area is not something I'd wish on anyone. I'm pretty sure Dante wrote about it in the Inferno somewhere.
- ben_w 7y ago
  The problem isn’t the number of people showing up, it’s the number of people who want any given apartment. Limiting viewings to 15 minutes may solve disruption to neighbours, but it doesn’t help with the demand-supply ratio.

jordanbeiber 7y ago

It’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 ago
If 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.
- luckylion 7y ago
  > just with more focus on social factors than on high profits Which is basically a political issue, because they will say "some people are more equal than others". Personally, I prefer naked capitalism over this "you need to know somebody in the party to get a good flat"-stuff.
  - jordanbeiber 7y ago
    Isn't the black market that occurs a form of naked capitalism? Here in Stockholm a lot of the public good properties have been sold out which have left precious little for too many to contend. Prices of labour and land are so expensive that, allegedly, profit margins are not good enough. The "know somebody" bit goes for plain hard capitalism as well, but is less in effect in a society that actually focus on the social side of things. IMO.
    - luckylion 7y ago
      I don't know, I've always liked the "if you have money, you can buy it" part of capitalism. You can make money, but you can't change the fundamentals. In a racist white society, having money will not help you if you're black. In a politicized society, having money will not help you if you don't have the right worldview, or were born into the wrong family. In my home town, having money will not help you get into a (private) housing cooperative if you don't match the social criteria. What you describe in Stockholm has happened around here too. Still, I prefer it: this way I do have a chance to get a (nice) apartment, even though I was born to a family where nobody was a member of the local ruling party. Sure, I may not get the great flat at the greatest location for a third the market price, but at least I can get one, even if it's more expensive. I'm happy to pay a higher price to be able to actually buy something.
      - jordanbeiber 7y ago
        I’m just saying that with capitalism comes politics. Always have, always will. To believe otherwise is a bit naive. Politics can be used to even things out as was done over here from the turn of the century up until, I’d say, 70-80s. The last few decades have been way to market/neoliberal policy wise, and in many ways we’re seeing the effect today. I just think you’re a bit binary here. I come from a struggling family but have managed to buy a place for my own family in a really attractive location. The problem is that thanks to virtually no regulations on the banks for lending the whole market is inflated, both for property and land. It’s simply not a question about supply and demand - it’s “how much money can I borrow”. A study showed that roughly 25% of people owning housing i Stockholm cannot manage a lowish “normal” interest rate. Banks love printing money for free! Capitalism only works when properly regulated by sane policy.
zanny 7y ago
The solution is pretty basic and was proven to work for centuries before extreme zoning intervention by governments happened at the behest of property owners wanting their gentrification. To fund the program you institute luxury property taxes on units larger than what you want your average citizen to afford and actually property tax businesses (which many cities do not do, because they bribed companies to locate there with agreement they would have substantially reduced taxes). Both should be at progressive rates, the larger companies and homeowners paying more. In any city that has the modern housing price crisis in effect there is plenty of money floating around to pay this and would not "kill" the city to institute because demand is so high already. Then, with the revenue, you A) invest in public and modernized infrastructure and B) rezone for mixed use or simply dezone your city (the only real valid arguments for zoning nowadays are to avoid overburdening infrastructure and to maintain specific skylines, but policies that prevent vertically entirely are wholly draconian and cannot stand - there needs to be an avenue for vertical growth no matter what). The infrastructure is ridiculously expensive. Decomissioning streets to build functional bike and walkable space infrastructure, building a comprehensive subway / light rail / tram / trolly network, supporting comprehensive bus service are all major projects. Every city, though, needs to be doing all of these. Private car ownership has to trend towards 0 for anyone living in the city proper, and proper zoning and tax code should incentivize almost anyone within a substantial difference to move towards the city because its cheaper. Its cheaper to live in a 50 story condo building when you factor in all externalized costs - the lifetime of the building, the heating / cooling efficiency, the infrastructure requirements, the construction efficiency, the materials efficiency, the cost of public services to support the building, the access to productive labor and jobs local to the residence, the climate damaged caused by long commutes from suburbs, the environmental impact of sprawl, the maintenance on infrastructure to support it. People look at how 2500 condos might cost 100 million for the building alone and think that means its inefficient and too expensive... but in practice A) the costs are inflated due to regulatory impedance B) there isn't enough high density demand in most western countries to get economies of scale reducing prices of construction the way they are in Asia and C) even when the building is more expensive everything else is cheaper. Which probably comes back to the fundamental reason we are in this state in the first place. Externalities are not factored in. Environmental harm, infrastructure & services upkeep, human potential lost, etc all factor in to cost the modern sprawl low density lifestyle and our societies dearly. Cities are actively hurting their responsibility to grow to mitigate this damage, but its also on nations as a whole to stop subsidizing lifestyles that hurt the plant, nations, and people themselves. Cities don't have money to build because money is siphoned to maintain the status quo and that keeps this unnatural unsustainable relationship in place.
jotm 7y ago
Encourage people to buy land and build their own houses?

max_hoffmann 7y ago

Freezing rents is not meant to be a solution for a lack of housing. It’s a solution to the explosive increase of rents of existing ones. There are lots of people where the rents of their current apartment have increased so much, that they had to move out. This solution is trying to fix that. Also freezing rents doesn’t mean Berlin will stop building new houses. If there is big demand for housing in a city one needs both: 1. make sure people currently living in the city are able to do so in the future 2. make sure new people coming to the city have available space Freezing rents is aimed at problem one. These solutions are not exclusive.

zanny 7y ago
Pretty much every western nation has systemically failed to recognize or support the insanely high demand for high density living in the 21st century. That is where the future of economics is, where the future of humanity in general pretty much is, and every democracy is consistently demonstrating the total inability for legislatures to sacrifice the advantage of those lucky enough to inhabit cities as they exist now for the benefit of all those who would grow the economy and future in the cities tomorrow. Largely because those in the cities have the money and influence to buy the politicians.
- jimmaswell 7y ago
  I don't buy any of this. Growing up everyone around me saw the city as somewhere you begrudgingly went out of necessity and only lived there if you had no choice, and I'm inclined to agree. In virtually every aspect I find more countryside-ish living much more pleasant. Consider virtual reality and remote work. I imagine much of the workforce will move to virtual offices in the near to medium-far future when corporations finally come around to realizing they don't have to waste so much money on rent. There's no need for programmers, graphic designers, reporters, and employees of lots of other professions to work in a physical office. So really, as cities become less of a necessity to certain jobs, I expect a moderate exodus to nicer areas, halting growth or even decreasing population in urban centers.
  - 7y ago

WalterBright 7y ago

Rent control never works, but that never dissuades governments from trying it again and again. https://en.wikipedia.org/wiki/Rent_regulation https://en.wikipedia.org/wiki/Rent_regulation

odiroot 7y ago
Because it's a very effective populist policy to get support from the electorate.
pgeorgi 7y ago
It works reasonably well in the rest of Germany. As for it not working in Berlin, I have a hard time to come up with _anything_ that works there, so my hunch would be that the housing market in Berlin is broken not because of rent control, but because it's Berlin.
- luckylion 7y ago
  > It works reasonably well in the rest of Germany. How? Pretty much all large cities are much more expensive than Berlin, rent-wise (and in most other things).
- tomatocracy 7y ago
  It "works" (in that it doesn't cause problems like rationing by other means like queueing, under the table payments, subletting, or any one of the myriad other problems rent control produces) because it actually does nothing - it results in rents which are equal to what the open market price would have been. Ultimately, if you want to reduce rents AND have a functioning market, you have two options (or a combination of them): (1) reduce demand, (2) increase supply.
  - acchow 7y ago
    > it actually does nothing - it results in rents which are equal to what the open market price would have been. Lots of people living in rent-controlled apartments around the world would disagree.

odiroot 7y ago

> I found the situation in Berlin to be absolutely ridiculous. I totally agree with this assessment. I've never seen a city where you struggle to get a flat even if you have the money or can pay more. The market is absolutely broken with literally everyone competing for the same pool of flats.

meesles 7y ago
I don't know, there's something utopian about what you describe. If the city doesn't have housing for everyone, why should the rich get it first? Leave capitalism at the door, we're talking about a roof over your head for janitors vs. business executives. If an 'ideal' free market means the rich get the houses and the poor are on the street, because developers don't have motivation to build, then I'm happy to see everyone compete for the same housing and seeing both the rich and the poor on the street while we figure out a real solution.
- hikarudo 7y ago
  The opposite of: "only the rich can get a house" is not "everyone gets a fair chance of getting a house", but "not even the rich can get a house". Think of two families that want to get the same house, both having about the same wealth, but one is desperate to get the house and therefore willing to pay more, say because of health problems, while the second family can wait for another property. You lose a lot when you "leave capitalism at the door".
  - xg15 7y ago
    By that logic, there would be no way at all for the poor to get a house.
    - nemothekid 7y ago
      Yes there is. You _build_ more so that prices go down. It’s baffling how much “adding more housing” is always a non starter solution. Everyone seems to understand that if flood the market with something like diamonds then the prices of diamonds will go down, but when it comes to housing then basic economics go out the window. Rent control is an incredibly pro-landlord policy. In high growth cities, land owners can simply sit on property, never invest in that property (they don’t have to compete) and simply watch their value skyrocket as they never have to worry about new supply driving the market down.

srrr 7y ago

The rental freeze does not apply for new housing. (Wohnungsneubau wird vom Gesetz gänzlich ausgenommen.) https://www.berlin.de/rbmskzl/aktuelles/pressemitteilungen/2019/pressemitteilung.820537.php https://www.berlin.de/rbmskzl/aktuelles/pressemitteilungen/2...

stickfigure 7y ago
This time. When the next freeze takes place, your residential construction won't be "new" anymore.
- anoncake 7y ago
  Freezes have always been possible. Nationalization below market rates have always been possible. Neither discourages construction. That's just FUD.

bpfrh 7y ago

While it is true, that there are simply not enough apartments the rest of your argument is wrong. In berlin, the rent limits don't work, because of various reasons, one for example is that companies simply rise the costs that are not rent for appartment, force the people living there out and then raise the rent. The rent limit is not the only thing that has to be done but it is a step in the right direction. I always hear the argument about investors and the rent limit, but there are multiple reason why that is a bad argument. The investors had about 20 years time to fix this issues and make a good living out of it. Instead they raised the rents to exorbitant values and didn't built new appartments. Investors can still make good money of appartments if they just rent them for a fair amount. Of course that means they don't get a 200% percent profit, but I don't think that should be the case anyway. Homes are not up for speculation and profit and they should never have been. A good chunk of the houses in berlin where owned by the city and state and sold for far too little.

llampx 7y ago
> In berlin, the rent limits don't work, because of various reasons, one for example is that companies simply rise the costs that are not rent for appartment, force the people living there out and then raise the rent. Do you have examples of this happening? Nebenkosten are controlled by the government or the responsible agencies as well, and you get a detailed invoice of any costs so the landlord can't just bill whatever they want.
- bpfrh 7y ago
  Afaik there was a winter service which was billed and nobody ever saw that winterservice happening. Or there were addons built to the house that where not necessary and would force the people out.
PavlovsCat 7y ago
> Homes are not up for speculation and profit and they should never have been. Amen. Here's a bit by Stewart Lee that I consider more insightful than funny: > Basically, what's happened is, somewhere along the line, as a society, we confused the notion of home with the possibility of an investment opportunity. What kind of creature wants to live in an investment opportunity? Only man. The fox has his den, the bee has his hive, the stoat has a a stoat hole. But only man, ladies and gentlemen, the worst animal of all, chooses to make his nest in an investment opportunity. Mmm, snuggle down in the lovely credit. All warm in the mortgage payment. > Mmm! But home is not the same thing as an investment opportunity. Home is a basic requirement of life, like food. > When a hamster hides hamster food in his hamster cheeks, he doesn't keep it there in the hope that it will rise in value. And when a squirrel hides a nut, he's not trying to play the acorn market. And having eaten the nut, he doesn't keep the shell in the hope of setting up a lucrative sideline making tiny hats for elves. And when a dog buries a bone, he doesn't keep that bone buried until the point where it's reached its maximum market value. He digs it up when he's hungry. > And if estate agents were dogs burying bones, not only would they leave those bones buried until they'd reached their maximum market value, but they'd run around starting rumours about imminent increases in the price of bones in the hope of driving up the market, and they'd invite loads of boneless dogs to all view the bone at the same time in the hope of giving the impression there was a massive demand for bones. And they would photograph the bone in such a way as to make it look much more juicy than it really was, airbrushing out the maggots and cropping the rotten meat.

deanCommie 7y ago

> 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. This is a deeply American hyper-capitalist stance. I understand you're not American, but it's an insidious American mindset that permeates the world, and must be resisted. A successful society is not just a rampant pursuit of economics and profits at the expense of everything else. There are investors who will make their choices about more than just "which decision gives me the most profit at any point in time?" There are many policies that are pro-business and pro economic stimulation that actually have huge negative externalities on the quality of life of individual people. And, not to go all granola on you, but PEOPLE is what it's all about. All - society, culture, our reason for existence. Anytime government regulations are introduced that favour people at the expense of corporations there is screaming of the sky falling and that the economy is going to collapse, etc. I suspect it's frequently not in good faith, and doesn't consider a holistic approach to maximizing human happiness.

6cd6beb 7y ago
>A successful society is not just a rampant pursuit of economics and profits at the expense of everything else. Right, but people are incentivized by the profit motive and generally do what they can to meet it. To just say "think of the people" is swimming upstream; you're more likely to succeed by finding a way to modify the system to drive people towards actions that benefit each other. Unfortunately it is not very human to forgo money, power, fame in exchange for what they think is the right thing to do. That's why we've had to create economic or political systems that saddle the drive for those things and steer it towards things that benefit society.
icebraining 7y ago
While I don't necessarily disagree with rent controls, portraying this measure as people vs corps is simplistic. As long as the city relies on private investors to build new residences, lower investment also means the PEOPLE who could have lived in Berlin are left out. (The measure is also typically bourgeois; it throws some crumbs to fix the outcry so the capitalist system can remain in place)
7y ago

walshemj 7y ago

There isn't massive sub letting going on then?

llampx 7y ago
I'm not aware of massive subletting going on but in general if you sublet without letting your landlord know about it you risk losing the apartment entirely, and most landlords won't let you sublet for longer than six months. Of course sometimes it does happen. A couple of friends of mine have been in the same sublet for the better part of a year but they're also looking to move to a more stable place. The renter has basically moved out but is keeping the flat around "just in case"

baxtr 7y ago

I am not sure if building houses is the solution. Wealthy people from around the globe will still buy them to rent them out for a profit or let them just sit there empty to visit for 2 weeks a year. There is even a name for that effect, it is called "induced demand". See: https://en.wikipedia.org/wiki/Induced_demand https://en.wikipedia.org/wiki/Induced_demand

seunosewa 7y ago
I feel that the problem is that too many people want to live in Berlin, the solution is for a large fraction of those people to choose to live elsewhere, and the rising rents would have been a good way to achieve that outcome.
- xg15 7y ago
  Well, in that case, either the rent lock will actually work - or it will increase the difficulty for everyone to get a flat, which essentially would have the same effect of driving people to the outskirts.
  - seunosewa 7y ago
    The people who can afford to pay higher rents are generally the most productive. They have important skills that employers are willing to pay high salaries for. They also pay more taxes and spend more money. If I ran a city, I would want more of those highly skilled workers in my city.
    - nerfhammer 7y ago
      So, you're actually in favor of higher rents. Why not mandate rent increases?
      - llampx 7y ago
        This is silly. Your counter-argument is basically also meddling in the market.

ivan_gammel 7y ago

This measure discourages investors to purchase already existing property, for sure. But this also leaves the opportunity to put the money in construction. The market in Berlin is still very attractive due to very high demand, so lets see how quickly can the local councils allocate land for new housing. Some time ago I’ve also heard the complaints that city has no enough capacity to give building permits quickly. Those could be the real bottlenecks in the city which grows by 200 000 every year. It’s also interesting to compare it with Moscow - nearly the same area, but 4 times smaller population and plenty of badly used space (like Tegel airport). Will it be able to keep growing while maintaining high living standards?

ernst_klim 7y ago

>in general they're clearly very effective. Oh yeah. Like, it's nearly impossible to find a place to live. Economics 101, true, artificially lowered price is leading to deficit.

air7 7y ago

My take is that from an "economics 101" perspective, a rental isn't a normal commodity. When a vacant rental is first advertised, it is essentially "put on the market" and it's price could be determined by supply and demand in a more or less fair way (assuming "gentrification" is just demand). But signing a lease and renewing it are very different. For the renter, leaving a rental incurs a very real cost (searching for another place, packing, moving, stress, change of habits etc). It's true that there's also a cost to the owner but it's much smaller (adverting, viewings, risk of unknown tenants etc). So the "rational" thing for the owner to do is to try and take advantage of this by hiking up the price to include the leaving cost of the tenant. If the market is left to it's own accord, it will cause this. Of course freezing hampers with the fluidity of the market price. A good middle ground is a predetermined max price increase agreed upon in the lease.

evancharles 7y ago
I think you underestimate owner costs of turnover. Risking an empty apartment for even a few weeks can erase your yield for the whole year. Landlords, then, are only likely to hike rent aggressively if it's worth that risk, in other words, when the market price is dramatically higher than the current rent rate.

MickerNews 7y ago

>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? Uh, the state. It's strange to me that someone can honestly ask this question. The free market has failed as is its wont in these matters, this failure always needs to be addressed by the state. Where were you for the last global economic collapse?

ericd 7y ago
What does the last global debt crisis (which was caused by central banks around the world keeping interest rates incredibly low for a long time, which allowed housing debt/speculation to balloon massively, and then tightening suddenly) have to do with the failures of the free market to develop sufficient housing? And in many major cities, things like zoning are preventing developers from building nearly as much housing as they’d like. I guess I’m just kind of baffled as to how you’ve reached the conclusions you have. I’d love some clarification.
CryptoPunk 7y ago
The last global financial crisis was created by the world's largest Central Bank. It had absolutely nothing to do with the free market when the largest banks were dealing with government-guaranteed securities and were speculating on a government created bubble. In a free market, all those who poured billions into the bubble would have gone bankrupt and all of their real assets would have been sold off in bankruptcy proceedings to responsible players who are less likely to over leverage themselves and exacerbate the speculatory frenzy in the next bubble. The only reason the market hasn't solved the housing problem is government interventions like rent control. In places without these interventions and with strong enforcement of private property and contract rights, the market does an absolutely excellent job of providing housing. The effects of rent control have been observed for a hundred years. In city after city rent control has been observed to cause more harm than good for the population at large.
- someguydave 7y ago
  https://www.idiosyncraticwhisk.com/2016/10/housing-part-183-measure-of-shortage.html https://www.idiosyncraticwhisk.com/2016/10/housing-part-183-... Kevin Erdmann agrees with you. Here is his blog post about the housing shortage associated with the 2008 bust

SomeOldThrow 7y ago

I have a hard time being sympathetic to people wishing to displace.

drugme 7y ago

The solution is to build houses, It's one option among many. And by itself -- most likely not a sufficient solution (or any kind of a game changer). I just don't understand this stance at all. Basically the main reason this "stance" is that the locals know better: that simply allowing newer (unregulated) construction isn't going to bring their rents down -- or that is to say: do something about availability in their income brackets, and not just yours and mine -- anytime soon.

pmiller2 7y ago

> 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. The Bay Area has a rather efficient solution to this problem: limit the open house to 15 minutes. I wish I was kidding, but I saw multiple open houses that were literally 15 minutes long, and if you arrived 16 minutes after it started, too bad. And, unless you show up with a pre-filled application, credit report, blood sample, and your checkbook, there's no guarantee you'll even have a shot at the place. Ok, the blood sample is a bit of an exaggeration, but not much. Apartment hunting in the Bay Area is not something I'd wish on anyone. I'm pretty sure Dante wrote about it in the Inferno somewhere.

ben_w 7y ago
The problem isn’t the number of people showing up, it’s the number of people who want any given apartment. Limiting viewings to 15 minutes may solve disruption to neighbours, but it doesn’t help with the demand-supply ratio.