90 ms·

Rent controls have split housing in Berlin into two distinct markets

• robertlagrant 6y ago
  > In a food shortage, for example, regulating the price of bread only trades one expression of scarcity (high prices) for another (empty shelves). This is the key statement to refute if you want to argue for rent control.
  • tom_mellior 6y ago
    "Proof by analogy is fraud." -- Bjarne Stroustrup Even if you don't fully agree with this quote, claiming that only arguments by analogy can ever be valid arguments for rent control is... surprising.
  • crote 6y ago
    If the bread price explodes, poor people will starve and the rest of the population ends up paying a boatload of money to the lucky few bakers. If the bread price remains stationary, people will starve randomly. People are going to starve either way, why not skip the whole "make the bakers filthy rich" part?
    • krcz 6y ago
      When the price explodes, bakers may hire more people and bake bread during night and day, increasing the supply.
      • sudosysgen 6y ago
        Yes, they do this even if the price only goes up 3-4x, it's not needed for the price to increase thousandfold. Also, this doesn't really apply to housing.
        • krcz 6y ago
          I fully agree, thousandfold price increases would suggest that processes that control prices in free market system had become unstable. In such cases I'd agree with state intervention. Fortunately it doesn't happen that often. > Also, this doesn't really apply to housing. Correct, it's more complex there and some of the reasons are mentioned in the article.
      • La1n 6y ago
        And Berlin needed rent control exactly because this didn't happen.
    • alacombe 6y ago
      That's petty resentment right here found in both communist ethics and catholicism... "if I can't get filthy rich, nobody shall be". If the bakers gets filthy rich, kudos on them !
  • dahart 6y ago
    Why? That argument doesn’t address the fact that many cities have an absolute limit on supply in the form of space, and no amount of construction that starts today will bring prices down today. Here are some arguments to refute if you want to oppose rent control, particularly the first one (copied and pasted directly from investopedia): “Rental prices in many U.S. cities are rising far faster than wages for moderate-income jobs. [edit: note here that most of the US has banned rent control, and this is happening regardless] “Rent control enables moderate-income families and elderly people on fixed incomes to live decently and without fear of a personally catastrophic rent hike. “Neighborhoods are safer and more stable with a base of long-term residents in rent-controlled apartments.”
    • bradleybuda 6y ago
      Berlin has 4,227 inhabitants/km², Hong Kong (widely considered to be a very livable city, and also one with hard geographic constraints on expansion) has 6,300. So we have existence proof that Berlin, if it chose to, could support an increase in housing of 50% or so, which would certainly drive rents way down. Edit: Not sure why I looked so far away, Paris is at 21,000. Like virtually every housing story, this is an example of the people who live in a place deciding they don't want anyone else to live there, and putting up economic walls that only the rich can surmount.
      • ChuckNorris89 6y ago
        >Hong Kong widely considered to be a very livable city By whom? Ricchie McRich? Every working class Hong Konger I talked to (even highly skilled ones) said living there is cramped and brutally expensive and would like to emigrate.
      • tom_mellior 6y ago
        > Berlin has 4,227 inhabitants/km² [...] Paris is at 21,000. These numbers aren't comparable: The municipality of Paris is just the small urban core of a much larger metropolitan region. Berlin has about 3.7 million inhabitants on 890 square kilometers, Paris 2.2 million on 105 square kilometers. A fairer comparison is with the Petite Couronne consisting of Paris + the innermost ring of its neighbors (https://en.wikipedia.org/wiki/%C3%8Ele-de-France#Petite_Couronne https://en.wikipedia.org/wiki/%C3%8Ele-de-France#Petite_Cour...), which has 6.7 million people on 760 square kilometers. Still denser than Berlin! But the ratio is far less extreme than you made it look. For an alternative approach, take Berlin's densest districts: Friedrichshain-Kreuzberg, Mitte, and Neukölln add up to about 100 square kilometers (like Paris) and a bit over a million people. So about 2x less dense than Paris rather than 5x.
  • lasagnaphil 6y ago
    Okay, I'll try. Given the unmeasurable social costs of people starving and dying when there isn't enough food (you can say similarily for people not having houses and freezing to death when there's a blizzard, but also read the sidenote at the end), the capitalists involved in selling and distributing food should not be compensated equally in monetary terms (by selling at higher prices) when there is a shortage of food, since they are the ones at fault of not having reserve resources and prepare their production line from various disasters such as storms and droughts. Even people from the ancient times built and used granaries to store food for years and opened it up to their fellow villagers when storms/droughts happen (even without any profit motives, there wasn't even a notion of "profit" at all!) Capitalists in the current era should prepare far better than them, as our knowledge of biology, climate, and logistics are much more sophisticated than before; a shortage of food should be outright unimaginable given the advanced technology we have. Once there are empty food shelves, the disaster's already happened (at least in the short term you can't materialize food anymore by doing smart "economics"), and really at that dire point capitalists don't deserve the right to receive profit in the same way as normal times. If the moral argument for this doesn't convince you - then there is a much more convincable political argument (of "dialectical materialism"), which basically goes as: once basic things like food and shelter aren't a given, and then capitalists gouge prices up creating an even bigger moral catastrophe among the poor, enough people would be fucking mad at them and band together wreck shit up, and some people would eventually have their heads cut off (as happened in many points in society, for example the French revolution). It's only that the current structures of power (the state & capital) are much more powerful than the past that this is more unlikely to happen, but if I were really in power I wouldn't dare try to steer closer to this event, as bloodshed doesn't really feel that good to participate. And that's the most uncontroversial center-wing take I can create. Sidenote: I think your analogy of bread isn't really comparable to the housing problem though, since housing acts less of an ideal commodity than food in economic terms. Housing is far more troublesome if you approach it in a free-market lense, since it's far easier to create a natural monopoly on land than anything else, and thus it is hard for free markets to create a "fair" price that matches with the actual use-value. That's why even some libertarians in support of free markets also think economic rent from land is unfair business practice and should be controlled by heavy taxes (such as the economic ideology of Georgism: https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism)
  • La1n 6y ago
    I think you would first need to show that bread and housing follow the same rules if you want to say that analogy applies to rent control
    • robertlagrant 6y ago
      This is an odd statement. The claim is - I think correctly - that regulating a price to combat scarcity will never help. Why should this statement apply to bread and not housing, or vice versa?
  • AlexandrB 6y ago
    This is a silly simplification that posits that sticking the word "market" on something means that it will behave the same way and is beholden to the same forces. The bread "market" and the housing "market" are not comparable in this way. I think a lot more nuance is required for convincing case against (or for) rent control.
    • robertlagrant 6y ago
      Saying "these markets cannot be compared" and "more nuance is required" without justifying either statement is pointless.
• drpgq 6y ago
  Yes why build an apartment in Berlin if they will just inevitably move the date for rent controlled buildings forward eventually.
  • yokaze 6y ago
    I don't know... maybe because you need an apartment for yourself, and you now can afford to actually buy the lot because you do not have to compete with investors expecting a dividend of 20% on their investment?
    • rsj_hn 6y ago
      Do you really think that suppressing professional home builders to make room for homesteaders building their own homes by hand is a good idea for Berlin? Why not get rid of greedy farmers so people can grow potatoes in their backyard? Why this longing to re-implement the failed policies of East Germany? Is it nostalgia for police states and shortages?
      • yokaze 6y ago
        > Do you really think that suppressing professional home builders to make room for homesteaders building their own homes by hand is a good idea for Berlin? No, and it isn't what I am suggesting. The point is that just that it becomes uninteresting for investors, it isn't for people actually living there. That doesn't exclude the professional execution of housing projects. I seriously doubt that people can build their home with their own hands and comply with German regulations. Especially in cities. Housing developers might expect a lower margin, and if the margin is too low for such a business, people can take on the risk themselves and contract professionals to execute a joined housing development. People are already doing that.
        • rsj_hn 6y ago
          Well if homes are not built by homesteaders then they will be built by for profit companies that are funded by investors. If your goal is to have more of something then you tax it less and impose fewer costs on it. If your goal is to create less of something, then you tax it more and impose more costs on it. People understand this with cigarette taxes and carbon taxes but suddenly when it comes to apartments the signs are reversed? No, getting the sign right is important. If you want more homes, then reduce the costs of building homes -- or in your parlance, make it "more interesting" for investors.
• dmfdmf 6y ago
  If only there was a science that could have predicted this.
  • cpufry 6y ago
    the dismal science
    • dmfdmf 6y ago
      It is only dismal if you think money should grow on trees which seems to be the premise behind FED policy today. Is physics "dismal" because we can't have free energy or perpetual motion machines (that can do work)?
      • deleted 6y ago
        [deleted]
    • BurningFrog 6y ago
      Trivia: The term "dismal science" was coined when economists argued for abolishing slavery: > Carlyle attacked Mill, not for supporting Malthus’s predictions about the dire consequences of population growth, but for supporting the emancipation of slaves. It was this fact–that economics assumed that people were basically all the same, and thus all entitled to liberty–that led Carlyle to label economics “the dismal science.” https://www.econlib.org/archives/2015/07/the_origins_of_1.html https://www.econlib.org/archives/2015/07/the_origins_of_1.ht...
• billpg 6y ago
  Did a landlord write this?
  • z3rgl1ng 6y ago
    Seriously, what absolute dreck. Completely bad faith.
• Darmody 6y ago
  They are pushing for something similar in Spain. And there's some disagreement in the coalition government because the far-left wants the controls to be more aggressive.
• sparsely 6y ago
  I expected to agree with that article, but honestly the tradeoff seems reasonable. Given just the data presented there, is it actually worse if rent controlled apartments are hard to get if lots of people are also paying much less rent? I'd really want to see some data about lots of people wanting to move to or within Berlin who are not able to due to lack of supply. That data may well exist but isn't presented here.
  • fallingknife 6y ago
    Is it worse if now there is a special class of people who happened to be in the right buildings at the right time when this law passed who will now forever get discounted rent, leaving everybody else to pay full price?
    • rbranson 6y ago
      This sounds a lot like land ownership.
      • DamnYuppie 6y ago
        Well in most of US you can pay off the land but you still have property taxes which can go up. Also the tax basis can be adjusted based on the market value of similar properties in your area.
        • rbranson 6y ago
          Not in California.
      • BurningFrog 6y ago
        It turns renters into a kind of owners, yes.
        • foolinaround 6y ago
          a kind, that enjoys the upsides, but can run away when there are downsides without any consequences?
• Proven 6y ago
  Government busybodies make things worse for everyone. What else is new.
• ahoy 6y ago
  This is an opinion piece in bloomberg, a pro-business, pro-wealthy publication. Is there any surprise that they dislike rent controls?
  • robertlagrant 6y ago
    This is true. Same logic goes for anti-vaxxers and doctors. Of COURSE doctors recommend going to doctors. They WOULD say that.
    • pfraze 6y ago
      Those aren’t really analogous. Doctors aren’t pro-vaccine because it’s good for their business interests. They’re pro-vaccine because their community agrees that they work and are produced safely. In the case being discussed, the argument is the anti-rent-control folks are letting business interests drive their argument.
    • ahoy 6y ago
      The difference is, of course, doctors provide healthcare services and landlords provide middleman-who-makes-housing-more-expensive services.
      • robertlagrant 6y ago
        This wasn't about landlords. It was about a business publication being pro the rules of economics.
    • deleted 6y ago
      [deleted]
    • anoncake 6y ago
      What do all businesspeople have in common? They are trying to make money – and that's all they have in common. So we can expect a pro-business publication to advocate for policies that funnel wealth to businesses, without much regard for anything else. In contrast, the one thing all doctors have in common is that they try to keep people healthy. So we can expect the medical community to advocate for policies that accomplish that. Of course there are doctors who could potentially have a conflict of interest between getting more business and doing their job correctly. But then we can still expect both factors to play a role, i.e. very few doctors would focus purely on getting business. And many doctors don't even have that conflict, e.g. employed ones whose job is secure. If vaccines harmed people's health while benefitting doctors' bottom lines, we'd see a split between employed or ethical doctors vs unethical self-employed ones. It's inconceivable that there's a consensus among doctors for a policy they believe is harmful. Anyway, I doubt vaccines even do increase demand for doctors. Administering them is cheap (~5 minutes of a nurse's time), treating the diseases they prevent is not.
• ghostwriter 6y ago
  "You know, Quasimodo predicted all this"
• fxtentacle 6y ago
  "limiting profits is bad" says the worlds biggest pro-capital megaphone while referencing a company that usually does paid pro-business questionnaires. "As expected, rents in Berlin’s regulated market plummeted in relative terms." and "Newly built apartments have therefore become even more unaffordable for most people." They are not directly lying, but I'd count this as dishonesty by omission. Newly built apartments in Berlin's city center were already impossible to finance for most people before the regulation started. So their complaint is like saying "most people cannot afford a home in Pacific Heights" which is true, but irrelevant to the regulation. "There was also an acceleration of apartments going up for sale, as landlords tried to cash out of their now less profitable investments." You know, for the families trying to live there, that is amazing news! "the landlord tends to sell the unit rather than re-let it" Wasn't that the goal of the regulation, to increase home ownership by those living there? "The biggest question is whether this episode of left-wing populism has damaged confidence in Berlin’s real-estate market permanently. If investors fear that local property rights will be put at risk in every election, they might stop building houses in the city at all." Oh wow. I'd wager that 99% of those living in Berlin won't mind if international investment corporations build their overly shiny and overpriced apartments somewhere else. And lastly, this article appears to not mention one critical thing about Berlin at all, which is "Wohnungsbaugenossenschaft". Regular families joining a non-profit to construct apartment buildings for their own use together. One of the goals of this regulation was to boost that, and scaring away for-profit investors might just be the way to make space for non-profit investments. I don't blame Bloomberg and Ifo Institute for delivering what their customer base wants to read. But it would be foolish to treat this as objective reporting.
  • fallingknife 6y ago
    "Communism is bad" says everybody I have ever met who lived in a communist country.
    • fxtentacle 6y ago
      I agree, I phrased that badly. I've now edited it to "limiting profits is bad".
    • 6y ago
• radiospiel 6y ago
  Whether or not this succeeds or is a disaster a) depends on what wants the outcome to be like, and b) when this is settled in court. As of now house owners (and remember: we talk mostly investment companies, not individual persons) are encouraged to speculate that the court overrules rent controls and (somewhat illegally) hold back appartments from the market. Once this is settled one way or the other these flats will be available on the market again, and if rent control survives, at somewhat acceptables prices. Remember that rents did increase ~300% or so over the last 15 years, but income maybe only 10 or 20%.
• beerbajay 6y ago
  > as demand from new arrivals far outstripped supply This is mischaracterizing what is going on. There is rampant speculation by multinationals buying up old housing stock and attempting to do the New York City model of hyperluxury renovations at the expense of existing residents.
• cassepipe 6y ago
  The alternative proposed by the article is basically : let it unregulated, the market will provide. Which is how it was before. Was the problem solved? No. Maybe it is not the right solution but I doubt very much the author is concerned by the problem. The article says only some places have their rent capped so the rents of the uncapped ones are skyrocketing. I am not convinced it is a solution cause I don't claim to be competent in the matter but how about all rents be capped? This is a solution the article does not even bother to discuss. So it's just yet another piece telling you that things are how they are (that is to your disadvantage) and nothing should be done about it. The article put right wing populism and left wing populism on a equal footing but as far as I can see one tries to give access to a decent life and public services, the other leaves to fend for yourself while blaming any minority group for it.
  • cousin_it 6y ago
    > The alternative proposed by the article is basically : let it unregulated, the market will provide. Which is how it was before. Was the problem solved? No. Sigh. Here's what the article actually says: > The right answer to that shortage would be to increase supply — for instance, by cutting red tape in zoning and construction. That's an alternative reform proposal, not going back to how things were before. I think it would work better than rent control, because increasing supply is better than haggling over fixed supply. Edit: another possible solution is a land value tax. It's non-distortionary (doesn't lead landlords to reduce or increase supply) and prevents a lot of rent increase.
    • cassepipe 6y ago
      So increase offer by deregulating even more? Zoning and urban policies actually have a purpose : A nice city to live in And I am ready to bet that red tape has been cut again and again everywhere without solving the problem. Sorry for misrepresenting the article reform proposal but it did not strike me as a very innovative solution. More like more of the same.
      • cousin_it 6y ago
• crote 6y ago
  "Price changes in the regulated market dropped relative to those in the 13 other cities. That’s because real estate loses value if its future cash flows to landlords are capped. There was also an acceleration of apartments going up for sale, as landlords tried to cash out of their now less profitable investments." & "And whenever somebody does move out — when moving to another city, for example — the landlord tends to sell the unit rather than re-let it." Sounds like it is a massive success? Those units don't magically disappear, they are bought - by homeowners. It seems like the landlords were artificially driving up the housing market while not adding any value. The only problem here is that they limited it to pre-2014 apartments. Maybe they should just extend it to all apartments instead.
  • wendyshu 6y ago
    Maybe read an economics textbook before opining on economics?
    • dang 6y ago
      Hey, can you please omit personal swipes from your HN comments? We're trying for something quite different here: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html. If you know more than others, that's great. If you're going to post about it, please share some of what you know so the rest of us can learn. Just putting the other person down doesn't help, and poisons the atmosphere. https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sort=byDate&type=comment&query=share%20know%20learn%20by:dang https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
  • awillen 6y ago
    So you're driving out renters, who are typically less affluent, in favor of the wealthy. Whether or not you call that success or failure depends on what you're trying to achieve, but usually these sorts of actions are trying to create housing affordability. Taking most of the supply off the market for new renters (by selling to people who can afford to buy and by incentivizing those who were already renting to stay for as long as possible) definitely does not create an affordable situation for those who need it. Without creating more supply, you end up with one of two problems for folks at the bottom. Either you don't regulate housing, and their prices go up too much for many to afford, or you do something like this and you keep the existing stock affordable but guarantee that there won't be nearly enough stock for all the people (at the bottom of the economic ladder, at least) who want it. In this case, you're not helping poorer folks as a class, you're only helping the specific set of poorer folks who were already renters (and who don't need to move into a bigger place, since they can't leave their current rentals). If you want to move to Berlin and you're not rich, you're SOL. That certainly doesn't seem to be the intended effect, so based on that I don't think it's fair to call it a massive success.
• syats 6y ago
  Let us recall that that inflation in Germany is close to 0. Thus, saying that policy X is responsible for a price hike is hilarious. There is no reason to raise the prices of unregulated apartments (second plot), except the greed of those owning the units. Another way to read this article is "this rent control is bad because we real-state speculators are now focusing our greed on a smaller number of people, instead of focusing it on everyone else". That being said, it is not clear from the plots that the overall amount of money that is being spent, city-wide, on housing has increased or decreased. I would argue this is the only valid metric to asses how effective this particular policy is.
  • AnimalMuppet 6y ago
    > Let us recall that that inflation in Germany is close to 0. OK. > Thus, saying that policy X is responsible for a price hike is hilarious. Not so fast. If inflation is close to 0, and policy X is introduced, and then price hikes show up in a category subject to policy X, why is it hilarious to say that policy X is responsible? Why is it not reasonable to at least suspect X?
  • jdminhbg 6y ago
    > Let us recall that that inflation in Germany is close to 0. Thus, saying that policy X is responsible for a price hike is hilarious. There is no reason to raise the prices of unregulated apartments (second plot), except the greed of those owning the units. This is a "not even wrong" attempt to connect inflation with supply and demand.
• raverbashing 6y ago
  Two important details about the rent control law: - it doesn't apply to newer/new buildings - it still hasn't been through the higher courts so it still can be overruled (and the tenants will owe the past rent retroactively)
• Barrin92 6y ago
  I don't actually see the disaster at all. Prices are staying low for millions of people already living in the city. Yes it's a pain for people who move but it might very well be a worthwhile trade-off. However the real long term point is made at the end of the article. >"The biggest question is whether this episode of left-wing populism has damaged confidence in Berlin’s real-estate market permanently. If investors fear that local property rights will be put at risk in every election, they might stop building houses in the city at all." This isn't a disaster, this is what needs to happen. Drive down the property market, reclaim the housing stock, turn it into mixed income public housing, which is exactly what Vienna did when the Social Democrats took control of the city in the early 20th century. Today most of Vienna's housing is public housing, and it is considered one of the most livable cities on the planet. Driving the landlords and real estate companies out of the city is only a disaster for the professional rentier class. The only problem Berlin has right now is that it hasn't gone far enough.
  • compiler-guy 6y ago
    If there are 100 houses in Berlin, and 101 households want to live there, no amount of reclaiming the housing stock is going to create space for that additional household. Berlin's population has been growing by leaps and bounds. The only way for everyone to have enough housing is to create enough housing for everyone to live there, or to make it sufficiently unattractive to live in that people leave.
• kamyarg 6y ago
  I have mixed feelings about this policy as a berliner. But the article is definitely skewed towards the landowners and huge renting companies. Some facts for you: Rate of home ownership among Berliners, Londoners, Parisans: - Berlin: 17.5% - London: 52% - Paris: ~60% The main problems is huge home-renting corporations. The article refers to a separate discussion about breaking up huge companies that own more than 3,000 apartments. As far as I know this criteria meets only a couple of huge companies such as Deutsche Wohnen that over the past couple of years have artificially created a sense of scarcity and caused the rent to increase without a proportionally increase to wages(Not only blue collar but also High Tech wages) It is very ironic that companies such as Deutsche Wohnen were able to grab so many apartments when Berlin wall fell with dirt cheap prices. You can argue rushed privatisation caused this problem and something needs to be done if Berlin wants to avoid becoming SF. - https://guthmann.estate/en/market-report/berlin/ https://guthmann.estate/en/market-report/berlin/ - https://www.trustforlondon.org.uk/data/housing-tenure-over-time/#:~:text=Tenure%20types%20of%20London%20households%20over%20time%20(1961%2D2018),-Data%20source&text=The%20proportion%20of%20London%20households,52%25%20in%20the%20last%20decade https://www.trustforlondon.org.uk/data/housing-tenure-over-t.... - https://tradingeconomics.com/france/home-ownership-rate#:~:text=Home%20Ownership%20Rate%20in%20France%20averaged%2063.32%20percent%20from%202005,of%2060.50%20percent%20in%202007 https://tradingeconomics.com/france/home-ownership-rate#:~:t.... - https://www.dw.com/en/berlin-social-democrats-reject-expropriation-of-homes/a-51004409 https://www.dw.com/en/berlin-social-democrats-reject-expropr...
  • bogomipz 6y ago
    Regarding the rate of home ownership among Berliners. I remember reading that Germans in general are more likely to to rent than own their housing. Is that not true? >"It is very ironic that companies such as Deutsche Wohnen were able to grab so many apartments when Berlin wall fell with dirt cheap prices. You can argue rushed privatisation caused this problem and something needs to be done if Berlin wants to avoid becoming SF." Interesting. Is Deutsche Wohnen origins the old East Berlin then?
    • detaro 6y ago
      > Interesting. Is Deutsche Wohnen origins the old East Berlin then? Not really, no. It was founded in 1998 and initially had no Berlin holdings at all. It then bought various entities with housing stock in Berlin, which also have complex histories - e.g. one example was founded as a city-owned company in the 1920s, lost its East German properties obviously but continued to operate in West Berlin, after reunification got the eastern bits back, and then was privatized in the 90s. But of course East German state ownership plays a role in how the situation overall came together.
• sudosysgen 6y ago
  Seems to me it is working as intended. Now the only thing remaining is to build a lot of public housing to increase supply at affordable prices.
  • orloffm 6y ago
    Which means a comeback of Soviet-style blocks. Given that red-green-red coalition is basically a comeback of DDR socialist party, this feels like DDR strikes back in Berlin.
    • sudosysgen 6y ago
      Why would it have to be Soviet blocks? There were actually two types of Soviet blocks in general terms. The first type was based on community and had a lot of greenery, a lot of community shops in walking distance, and those are actually worth quite a lot of money nowadays. The rest were those that were built in order to rapidly provide housing to workers as industrial capacity was being massively built up. In any case, in my city, the most iconic and beautiful housing structure was public housing, so if done right it can be beautiful and amazing to live in. Otherwise, the private housing market is always there as competition. If there's anyone I'd trust to get it right, it would be the Berlin lefties. Hopefully they are successful and set a good example for others to follow.
    • La1n 6y ago
      Better soviet-style blocks than no housing.
      • inglor_cz 6y ago
        I grew up in a city with a lot of Soviet-style blocks (Ostrava). Construction quality of said block living was notoriously shoddy. State of the buildings only improved when most of the units were sold into private hands (usually that of the tenants, no megacorps). After that, the tenants-turned-owners started investing into repairs and reconstructions.
    • llampx 6y ago
• yorwba 6y ago
  I think this article is getting the interpretation of the facts all wrong. They point to the predictable drop in supply in the regulated market as if it was a bad thing, but they ignore where that supply is coming from. Those are not newly-built apartments, because the price controls don't apply for new construction. When an old apartment becomes available, it's because the previous occupant moved out, e.g. because they could no longer make rent. So making rents more affordable leads to fewer people having to move for financial reasons, which I think is a good thing. Disclaimer: I live in a regulated apartment and don't intend to move, so it's probably not surprising that I like this policy.
  • awillen 6y ago
    It also leads to fewer people being able to move. Have a kid and your one bedroom apartment is too small, but don't have enough cash to buy a bigger place? Unfortunately, you're going to have to move out of Berlin, because two- and three-bedrooms are being sold when their tenants move out, so there's no supply available for you to move into. You're definitely one of the people this type of policy helps, but you're benefitting at the direct expense of less affluent people who want to move into bigger apartments and who want to move into your city from outside of it. That's fine if it's what they intend with these policies, but they're almost always championed as helping poorer people, when that's too overbroad to be accurate, because they actually only help poorer people who are currently renters and don't need to move (and bear in mind they also help rich people who are currently renters and don't seem to move, which hardly seems to be the goal).
    • sudosysgen 6y ago
      The proposed rent control in Berlin is sticky, in that the rentier cannot increase rent between renters beyond a certain amount. The most likely scenario is that they will find a place to move into in a year or so, which will fit their family planning. Otherwise, if they have enough for a modest downpayment as the collapse of the renting market leads to increased supply in bought housing, they can also buy a condo. If even that doesn't happen, they can also go into public housing. I live in a rent controlled city. The scenario you are describing doesn't happen. When I was a kid, we moved 7 times. All we had to do was look for housing a few months in advance, and move as our lease was up.
• zapnuk 6y ago
  The graphs seem misleading or at least raises additional questions. Yes, compared to the next 13 largest cities there seems to be a difference. However, the difference in graphs existed even before the policy proposal+enactment. The margin is also relatively small and only for a small timespan. There should also be comparison to more comparable big cities like Munich, Cologne, Hamburg, or Frankfurt. Other cities are substantially smaller or have no (or even negative) population growth. Of cause the rent in those cities grows differently compared to Berlin. Thereby shifting the average.
• caseyross 6y ago
  I get that it's Bloomberg's duty to root for the landlords, but to me the data in the article shows a very clear win for renters. If I'm reading the graphs right, price controls in Berlin have slashed rent price growth by nearly 60% for almost all of the city's apartment stock. Meanwhile, rent for the remainder, those apartments built since 2014, is only growing 10% faster than the baseline. So if we're gonna do the math: [lots of apartments * -60% inflation], against [fewer apartments * +10% inflation], equals a presumed windfall for renters, versus the alternative history where this rent control policy doesn't get enacted.
  • el_nahual 6y ago
    The issue is that supply fell, so while there was a windfall for existing renters, anyone trying to join the renter class (by moving into the city, growing up and moving out of their parent's place, etc) is unable to find an apartment. If you project this trend forward 10 or 20 years, you end up with a situation where most affordable rentals are being used by an aging population and the young have nowhere to live. This also explains why these policies become entrenched: before, the world was divided into rich vs poor; now it's divided into (rich + old and poor) vs young and poor.
• fabiofzero 6y ago
  It's Bloomberg so of course anything helping the poor is a "disaster".
• febeling 6y ago
  The situation in Berlin before the policy change was that the city government had made it very hard to build apartments at all. Each time a project it developed, the developer is blackmailed into supporting various unrelated policies, being it parking space related, maximum stories, etc., and sometimes capriciously denied permission to build. This is how my green-leaning, government-trusting architect friends describe the situation. This happened all the while time Berlin changed from being viewed as a forgotten backyard in Germany with few companies and high unemployment to the capital city of the dominant and richest country in Europe. Especially the great financial crisis accelerated this change of perception. Consequently, many people moved to Berlin. For many years 100k people per year moved into a city of 4m. Stated in terms of economics, supply of apartments was very steady, and demand jumped up. The sound response of a market is to signal that through price hikes. That should encourage investment in residential building. When this is being suppressed nothing can even get better. Only longtime renters are favored. People with already cheap and large apartments benefit. Losers are those young couples expecting a baby. A solution that could potentially work would be to accept temporary pains from high prices, remove regulatory obstacles from new construction and let the industry find a new balance. Maybe accelerate the process by governmental subsidies, if you like that sort of policy. But the current policy can't work in theory, it doesn't work in practice. And it only benefits old established interests who are privileged already.
  • csunbird 6y ago
    I moved to Berlin two years ago and the finding a house was incredibly exhausting. As the article mentions, there are two categories, rent capped apartments and non rent capped apartments. For the first category, there are 2000+ applicants per day per apartment, making it impossible to actually have a chance to get the apartment. The odds getting that apartment as a foreigner that do not speak German is non existent, you actually have better odds on playing lottery and winning it, then buying a new apartment. The second category is the overpriced apartments, the "landlords" (mostly the same three evil companies) are asking stupid amounts of rent for small apartments (1100 - 1200 cold rent for 50sqm ??). Those apartments are not accessible to 90% of the population. They are very happy to rent to the foreigners, since they can extract money from them, plus they do not know the local laws, so they can push newbies around. Currently there are two categories of people living in the Berlin as well: The new comers, who are screwed and the old renters who rented for cheap, who landlords can not get rid of. The first category are mostly expats, who are being screwed by landlords who do not want to rent to foreigners (especially if you are not from Europa), so they are pushed to new, non-rent capped apartments, making their lives even harder. The second category is people rented huge apartments for 300 Euro per month 10 years ago, with 2% increases per year, who are not going to move soon. Berlin wants to be the startup capital and an expat center, but it is not going to happen if they allow systematic exclusion* and abuse of expats that are trying to settle in the city. I can go and rant for days but I think this post is already long enough. * I did not want to use "racism" word here but it really feels like it is.
• neonate 6y ago
  https://archive.is/l3i2w https://archive.is/l3i2w
• aphextron 6y ago
  >In a food shortage, for example, regulating the price of bread only trades one expression of scarcity (high prices) for another (empty shelves). Well sure. But the total amount of people who have some bread is now greater, versus a select few wealthy people getting all the bread they want, as the wretched masses stare longingly. You can either increase total happiness, or concentrate it to the powerful. It's pretty clear by the tone of this article which side the writer lands on.
  • 0x1DEADCA0 6y ago
    Once the evil rich pigs have lots of bread, more than even they can eat, do they then not start using it to purchase labor from the starving poor?
    • tyree731 6y ago
      Not necessarily and, historically, not true at sufficient scale.
      • 0x1DEADCA0 6y ago
        So all of the software engineers out there being paid for their labor by companies flush with cash are... not, being paid? in your mind?
        • weakfish 6y ago
          And what of the Amazon warehouse workers?
        • tyree731 6y ago
          Software Engineers are being paid for labor, as are the "starving poor" from the original analogy. However, the wealthiest citizens of the world have been amassing wealth at a comical rate for the past few decades, while the poorest citizens have not, suggesting that "Once the evil rich pigs have lots of bread, more than even they can eat", they in the aggregate do not start using it to purchase labor from the starving poor, they tend to hoard it.
• standardUser 6y ago
  The goal of rent control - or more accurately rent stabilization - should be to smooth out fluctuations in rent over time, not to create a class of housing stuck below market in perpetuity. Most of what people object to about rent control isn't the attempt to stop families form suffering wild rent increases that can destabilize entire neighborhoods/workforces, but rather to smooth out those increases to give families a proper chance to adapt or move.
  • kall 6y ago
    A different policy (Mietpreisbremse -> rent price brake) with this explicit goal is in place in "high-pressure" rental markets all over Germany. It means price cannot be more than 10% over the local average. Berlin specifically wanted something more.
• deleted 6y ago
  [deleted]
• ridaj 6y ago
  > The right answer to that shortage would be to increase supply — for instance, by cutting red tape in zoning and construction Hmm but didn't they indeed provide incentives for increasing supply, by exempting new construction from rent regulation? In fact the later argument saying that prices started going up in the unregulated market would support the notion that the policy is indeed providing a powerful incentive to new buildings. Sure, the article also laments that there still isn't enough supply, but can one argue that giving more rent money to owners of old properties would help fix this? How did new construction change in Berlin? What about homelessness? I don't know but find it shady that the numbers aren't shown.
• fallingfrog 6y ago
  If you’re going to argue that supply will only go up if you allow price to rise infinitely, you’re getting it backwards- the increase in supply is supposed to make the price go back down, that’s the whole idea. There is supposed to be a balance that develops that holds the price down to an affordable level. Why does this never happen? Well, there are many areas of the United States where real estate prices are skyrocketing even though all the houses are vacant- because real estate is being used as a vehicle for speculation. And the same thing is happening in almost every city in the western world. It’s likely the same thing is happening in Berlin. The demand is not coming from renters so allowing the price to go up does not help renters, it’s all just a tidal wave of free money from central banks looking for somewhere to go. Also the author of the article is an Ayn Rand free-market-as-magic-bullet ideologue with an axe to grind. He makes no pretense of trying to write a balanced analysis. He even appears to be framing things like rents and real estate prices falling as pure negatives when both those things are purely positive from the point of view of anyone but a real estate owner.
  • mtoner23 6y ago
    The demand is coming from renters though. People are moving to Berlin. They need to build more houses or prices will go. Markets dont solve everything but they do here. Just ask tokyo how they got out of their housing crisis. Build More.
    • fallingfrog 6y ago
      The population of Germany is declining, (Berlin population has been stagnant since 1950), wages aren’t rising but housing prices are going up everywhere. And the same story is repeating in multiple countries all over the world. So clearly, must be supply and demand and not just a speculative bubble, right? Berlin population 1950: 3,338,000 Berlin population 2021: 3,567,000 Germany birth rate: 9.5 Germany death rate: 11.5
      • bhelkey 6y ago
        > The population of Germany is declining, Germany's population is increasing over time. In fact, 2020 was an all time high [1]. > Berlin population has been stagnant since 1950 Between 1980 and 2020, Berlin's population increased by half a million people [2]. In addition, it's population has increased every year since 2004 with an average of ~0.3% yearly increase. [1] https://www.worldometers.info/world-population/germany-population/ https://www.worldometers.info/world-population/germany-popul... [2] https://www.macrotrends.net/cities/204296/berlin/population https://www.macrotrends.net/cities/204296/berlin/population edit: formatting
• el_nahual 6y ago
  An issue that many commenters here are missing is that the problem with rent control will manifest more sharply in the future. Sure, the impact today seems relatively equitable: a windfall for people that rent today coupled with a small drop in supply. But fast forward 10 or 20 years and the situation looks far worse: everyone who got a windfall today is still living in the same apartment, whereas anyone trying to enter the rental market is utterly SOL. The people that are really getting screwed are 10 years old today: when they try to move out of Mom and Dad's they will enter a market with vastly reduced supply since nobody has any incentive to move. This is why if you're 19 you can't afford to live in Manhattan: you're either old (and lucky) or rich.
  • throwaway85858 6y ago
    not just in 10 or 20 years, more like in 9 months! The supreme court will probably rule that the Mietendeckel is unconstitutional in November, which will lead to a nasty situation for many renters with old contracts. If the tenants are lucky the landlord will just ask for the money "saved" to be paid back, but the unlucky ones will be evicted, as being in arrears of more than one month is grounds for termination regardless if you pay it back the the debt or not.
    • germanier 6y ago
      It's extremely unlikely that the court will strike down the law in a way that this situation arises. It's not like everybody starts to pretend that a law has never existed if it's ruled unconstitutional. Usually arrangements will be made for those that relied on it. Especially in a case like this, where another basic right is affected. (It's two months btw)
      • throwaway85858 6y ago
        perhaps, but if MietenWoG is struck down that leaves only the BGB. yes you're right, two months not one.
        • 6y ago
• fallingfrog 6y ago
  Let me get this straight: the population of Berlin has been stagnant since 1950, wages aren’t rising, but the reason real estate prices are rising is because of demand from renters? Sorry folks, the correct answer is: it’s a real estate bubble. And deregulation is not going to help with that. We all lived through 2008, didn’t we? We’ve seen this before. It shouldn’t be a big mystery. Speculation drives real estate prices, real estate prices drive rents. Government intervention is necessary to break the cycle.
• briffle 6y ago
  In Oregon, they passed a statewide rent control. They pointed out repeatedly at how rent had gone up 30% over five years. The solution, is that now landlords can only increase rent 7% (plus inflation) per year. This year, its something like 9%. Apparently, someone forgot to figure out what >7% per year for 5 years is..... Its 40%, before the inflation numbers are added in.
  • droopyEyelids 6y ago
    I don't quite understand how you're framing this. Oregon figured out a level of increase that would be too disruptive for its appetite, and had the legislature cap the rate to below that level. On average over the past five years, that cap would not have been reached, though it may have been reached in any one of those years. Is this a self own or mistake of some kind? Are you inferring that landlords will now raise rents more than they would have in the uncapped situation?
    • WalterBright 6y ago
      If rent increases are capped at 7% per year, landlords will have an incentive to increase it at the max, because that gives them more flexibility the next year. For example, let's say the free market would raise rents 5% this year, and 8% next year. A cap of 7% means the rent will rise 7% this year, as the landlord won't want to have caps permanently reduce future rents.
      • AlexandrB 6y ago
        This is a weird argument. Would this still happen if rent increases were capped at 10%/year, what about 50%/year? At some point no one is going to rent at the rates you're asking and you're going to have to stop.
        • WalterBright 6y ago
          It all comes down to business risk. For example, with all the trillions being printed and stuffed into the economy, I'd be afraid of a return to 20% inflation like in the 70's. If my rates were capped at 7%/year, you can bet I'd raise it now by 7% just so I don't get caught next year with 20% inflation and only a 7% rate increase. Yes, right now, I'd risk fewer tenants with 7%, but balance that against what might happen next year when I'd be full and still lose money because of the cap that year.
• kingkawn 6y ago
  Bloomberg op-eds on economic redistribution issues are like asking oil companies to comment on environmental protections
  • chx 6y ago
    Thanks, I was searching comments whether anyone had klaxons going off in their head reading this drivel: > If populism on the political right corrupts democracies, populism on the left ruins economies. Might as well stamp "this article is written by a conservative fanatic, proceed with caution". Looking at the author his short bio says worked for Handelsblatt -- I peeked at wikipedia, why am I not at all surprised to find they printed a fake vaccine story recently?
• throwaway12903 6y ago
  I moved to Berlin with partner in late 2019. We were looking for 3 rooms for < 1800 in East (Pberg/Xberg/Friedrichshain). After long, tiring search of 20+ places with 100+ people at each, through a friend of friend we got a place for 1400 because we were the only ones that looked at it. Then rent control happens and now we pay 1000. And we would have paid 2000+... --- If you find something you like, it doesn't matter because there would be 20 other people applying. Landlords want to rent for a long time, so they prefer Germans over foreigners/expats, and people with long-term stable jobs (government, teachers, etc.) instead of startup people, so we were at the back of the queue. When we found a place we liked, we would have been prepared to pay way more than the asking rent, and put down multiple years of rent in advance just to get it - like happens in NYC for example. But no landlord/agent is interested in this in Berlin. I guess this is an example how well-paid tech ppl are driving rents up. Even though "well-paid tech" in Berlin is not that much. Only at rent levels of 2200+ do you start to find places you really like in good areas, but there are lots of places advertised at ~1500 that were even more ideal but unattainable due to demand, which is frustrating. I really don't know how anyone can get an apartment in Berlin now after rent-control. When we move out, we will most certainly find a friend to hand over to. --- Re: Rent control Before it was impossible to find a place, now it must be insane. For existing tenants though, it's like an unexpected yearly bonus - but for us, completely unnecessary. It's like a middle-class handout.
  • colinmhayes 6y ago
    Do you not think this was the entire point of the policy? Rent control doesn't exist to lower rent for everyone, it exists to reward the long term residents who voted for it at the expense of newcomers. Berliners essentially voted themselves a handout.
    • throwaway12903 6y ago
      Gentrification is real though. And a lot of Berlin's culture is built by people who don't earn that much. I'd be interested to know for how many people it actually helps at the margins and how many its just a handout for. But yeh - I can imagine a lot of middle-class folks saw its as virtue signalling and free money at the same time.
• plumeria 6y ago
  Would be interesting to see a longer term analysis for Copenhagen where rent-controlled buildings exist since longer ago.
• jimnotgym 6y ago
  I found this article to be rather unbalanced, like the free market always knows best. For example, cutting red tape may increase housing supply, but red tape is not the only thing holding back building. I used to commute through miles of ex industrial wasteland, zoned for housing that was not being built on, because it was being landbanked because tax rules in the UK help large land owners store weath that way. So it seems to me that a right wing policy is damaging the market, the community and the economy. Perhaps the article would be more balanced if it acknowledged that better policy from both wings is needed?
• mrcartmenez 6y ago
  I’m amazed that the writer can spin this as bad. Low housing-costs are both fantastic for residents and fantastic for the economy due to increased disposable income. Only a Rentier Capitalist would want the opposite.
• naebother 6y ago
  Agreed, rent control newer buildings too.
• jariel 6y ago
  In Ontario and Quebec the entire economies are rent controlled to some extent - rents can only rise by a certain amount. It seems to work. Also, with Berlin, perhaps it's an issue of splitting the areas that's bad, and also perhaps the excessive nature of the controls. Finally, this may be related to an issue of low interest rates. Low interest rates give much leverage to landed/owners so rents to up even if all other economic issues don't change. Meaning that there is a kind of 'hidden inflation' which simply favours one class (owners) over the other. Here are the Ontario regs [1] [1] https://www.ontario.ca/page/residential-rent-increases https://www.ontario.ca/page/residential-rent-increases
• timdaub 6y ago
  I live in Berlin. I've found a regulated appartment for rent last year. The author clearly exposes his sentiment in their choice of words. There's lots of buzzwords thrown around and not much reporting from here. Was the author even in Berlin before writing? Anyways, in Berlin it will now get even "worse" as an initiative is now starting to collect signatures to disown "Deutsche Wohnen" of hundrets of thousands of flats they own. I can see that the market is "bad" from that article. My experience with renting a flat was different: The law allowed me to reduce my rent to a price I indeed find reasonable. It's roughly 100€ less. I'm happy with that. And in case our supreme court overthrows the Berlin ruling, I've gotten read and saved the "shadow rent".
• ipnon 6y ago
  American and European urbanites need to become comfortable with Chinese and Japanese style mega cities or their urban areas will always be unaffordable. Chinese and Japanese cities are affordable for everyone because they build! They build as much as they need to in order to fit everyone into the city. We don't do that here so cities are for rich people.
  • u678u 6y ago
    > Chinese and Japanese cities are affordable uh Chinese apartments are super expensive and you dont even get to own the land. Japan was super expensive but is now affordable since the bubble popped and the population started shrinking. Berlin's population is growing quickly so doesn't have much to do with Japan.
• csomar 6y ago
  > If the judges nix the legislation, lots of tenants in the formerly regulated sector could get hit by huge and even retroactive increases in their rents. Am I reading this correctly? So, these tenants might find themselves in thousands (maybe dozen of thousands) of euros of debt to their landlord. And I assume they'll be required to pay it up overnight? In this case, the politicians really screwed these "poor" people in the most unimaginable way.
  • Tenoke 6y ago
    Yes. It even said so in the letter you get when the price was lowered. My rent was fairly 'overpriced' for the area so if it gets overturned I'll owe around 500e per month for every month that the law was in effect. Needless to say, most who lost their jobs and even many who didn't won't have the 5k or whatever it is in their case to give up suddenly. I guess if many of us find ourselves in debt here and can't rent because the debt means we cant ever pass the Schufa which every place checks then possibly that'll ironically help solve the housing crisis..
    • csomar 6y ago
      Is it me, or it is just irresponsible to push this through before it gets legally cleared. You basically endangered the finances of most renters in the city.
      • Tenoke 6y ago
        It was extremely misguided and the local government campaign was so focused on how much 'for the people of the city' it is that it never even mentioned things like the very significant chance it can't get cleared or that it will slow down building even more or that many of our flats will be put immediately on sale (which mine now is, along with graffiti by other tenants against it and declarations of 'war').
  • mxfh 6y ago
    This applies to both sides, the so called shadow contracts might also be not enforcable in a lot of cases, be it for legal reason or private persons declaring bankruptcy. This uncertainty is the way bigger driver for the current situation, coming to conclussions from this about the effects of rent control is premature at best. This current situation of legal limbo is a phenomenon on it's own. Not even mentioning COVID.
• deleted 6y ago
  [deleted]
• nickpp 6y ago
  Rent control, minimum wage, compulsory employee classification, "free" healthcare, "free" education. All sounding good on paper, but every time the unforeseen side effects rear their ugly heads. Every time we try to "improve" on the market "failures", we screw up. Because there is an universal law it seems: you f.ck with the free market, the free market f.cks with you.
• anigbrowl 6y ago
  Land Value Tax. That's the whole comment.
• throwawaymanbot 6y ago
  Am I supposed to feel sorry for the American vulture and REIT funds who are bumping the property (rental and sale) prices sky high in European cities and American ones???? The Humanityyyyyy
• mastazi 6y ago
  This reminds me of that time the Italian Government decided to regulate the price of face masks (about a year ago, in response to the COVID pandemic). The result was that (my relatives in Italy told me) it suddenly became impossible to find masks anywhere. Most producers decided to keep stock unsold hoping that the regulations would change in the future, and some smaller producer actually stopped production altogether or went out of business because it was no longer viable (source, in Italian) https://www.ilsole24ore.com/art/mascherine-primi-espulsi-mercato-il-tetto-05-euro-ADdvG2M https://www.ilsole24ore.com/art/mascherine-primi-espulsi-mer...
• islandlordingok 6y ago
  One thing I've always wondered is why we as a society even let real estate be a thing that people can buy a lot of. Why does an individual get to buy, say, 10 buildings and rent them? The title "land lord" even seems like a holdover from some feudal time. Not that I think you completely outlaw the practice, but why not start taxing after, I don't know, you own 20 units or something. Just figure out some sort of scheme that disincentivizes people from hoarding a resource required for life. I'd much rather rent from someone that lived in the building and actually cared for the place than some random LLC in Florida I mail checks to that can't be bothered with anything.
  • openfuture 6y ago
    Read up on Georgism, this is not a new idea. Rent seeking is hard to eliminate, there has to be some way for lazy aristocrats to feel safe in their complacency. Try to remove it and the sleeping dragon gets very angry.
• ryan_j_naughton 6y ago
  There is no reason why housing cannot be much much cheaper than it is now -- so cheap that it is nearly free. Larry Page, in an interview in 2014 discussed how. "Rather than exceeding $1m, there’s no reason why the median home in Palo Alto, in the heart of Silicon Valley, shouldn’t cost $50,000" [1] and attributed this entirely to a policy problem. The answer is continuously increasing supply in a manner that outpaces population growth dramatically. If we reorganized the market such that there were incentives to massively build new housing, this would be a solved problem. The price of housing could effectively be the marginal cost of construction as opposed to the market power driven pricing derived from scarcity. Couple that with remote work and efficient high speed transit both within cities, to the suburbs, and to other cities, and we should be able to enable the demand to spread out (enabling more diverse supply to compete) and to add significantly more supply everywhere. It is infuriating that a simple problem of supply and demand has not been able to be solved by developed governments. I recognize that it isn't as simple of a market problem as say a true commodity because location matters -- causing heterogeneity in the goods. But that location difference is alleviated by the increasing supply in high demand areas and by empowering more competition across areas through transit and remote work. This honestly doesn't have to be that hard. [1] https://www.ft.com/content/3173f19e-5fbc-11e4-8c27-00144feabdc0 https://www.ft.com/content/3173f19e-5fbc-11e4-8c27-00144feab...
  • konjin 6y ago
    Housing can at most grow as l^3, population can grow as e^n. If you want to be withing t hours of place x then you need transport systems that travel at l/t km/h. Until people have two children or less population will always outpace housing. Anything else is wishful thinking.
    • chii 6y ago
      that's funny because many cities have a replacement rate less than 2, not counting immigration. And even with population growth at e^n, the constants matter in the analysis. l^3 growth may be enough until humans reach space faring.
      • 6y ago
• thrower123 6y ago
  Huh, funny how this always happens... Something about those who refuse to study history are doomed to repeat it.
• u678u 6y ago
  Surely this is good. The long term inhabitants get to stay at a cheap rate, the newcomers have to pay a premium. NYC works in a similar way. The only difference is new construction, are new buildings controlled as well or free to charge whatever?
• mxfh 6y ago
  As a tenant living in Berlin, the lede is buried in the last paragraph. To complicate Berlin’s situation further, Germany’s constitutional court is expected in the coming months to decide whether these rent controls are even legal. If the judges nix the legislation, lots of tenants in the formerly regulated sector could get hit by huge and even retroactive increases in their rents. That would create yet more chaos. The current Berlin housing market Situation has little definite insights on the effects of rent control, but all about risk aversion and maximization of profits. The current shortage of supply is all about landlords withholding their vacant listings until that final court order. Or they are cashing out by selling them after fantastic interest rates averging above 10% year over the last decades. If you feel you have like a 60% chance of getting double the rent, you avoid it at literally at all costs, below that threshold, to rent out on unlimited terms, if you can affor it in any way possible. Where you're stuck on the long established mandated single digit rent increments, if the current pratice of shadow contracts should prove to be not enforcable. There simply is just so much more uncertainty than actual rent control happening for the time being.
  • shuckles 6y ago
    Can you point me to some evidence that vacancies are a problem in the rental market?
    • mxfh 6y ago
      My immediate neigborhood, with quite a few empty appartments?! Even the service workers asked to install the mandated smoke detectors were commenting about this, since they can't access quite a few of appartments even during COVID's stay at home policies. There is no offical data on this, since it's illegal to keep them vacant for more than 3 months. So they are under "maintenance" or the like. https://web.de/magazine/politik/schattenmieten-leerstand-berliner-mietendeckel-35336938 https://web.de/magazine/politik/schattenmieten-leerstand-ber... https://www.zeit.de/2020/37/mietendeckel-berlin-immobilienmarkt-leere-wohnungen https://www.zeit.de/2020/37/mietendeckel-berlin-immobilienma...
      • shuckles 6y ago
• busterarm 6y ago
  Ahh, once again the single most divisive topic on Hacker News. Where contempt for the rich and contempt for the poor battle with the same points of view. You think we'd learn.
• cycomanic 6y ago
  It's somewhat interesting that in the "most damning" two graphs related to the listing of apartments nothing actually happened. The listing of old apartments were on a downward trend well before the policy was a enacted (and considering the noise on the limited data, I'm doubtful that there is a significant increase in slope) and the article even admits that there is not much effect that can be made for new developments.
• alg0s 6y ago
  At least they have tried something. In some other areas, like Sydney or Melbourne (Australia), everyone who matters (landlords + politicians) owns homes. So nobody is doing anything about it. Economic benefits are probably the biggest reason for being stuck in those unlivable cities. However the downside might outweigh the upside: higher cost, long commute and lots of worries.
• yc-kraln 6y ago
  Lots of points missing in this article, clearly written by someone looking from the outside and not someone actually familiar with the rental market in Berlin. Even without these specific rent controls, most rental contracts have either "staffelmiete" or "indexmiete", that is, fixed points at which the rent will increase or an index against which rent is pegged. There are very strong laws supporting renters. I live in a somewhat newer apartment, so it's not subject to the discussed changes. My rent increases were agreed with the landlord when we moved in, they are fixed in my contract, and after the built in increases are done, the rent won't go up anymore. The issue with housing and prices is Berlin is not the same as other places in the world. For years Berlin was an economic wasteland. Just now it's become desirable to live here, and there are jobs and an economy to support it. The rent in Berlin is, despite increasing 5-10% per year every year for the past decade, still less than that in Munich or Hamburg. This isn't a case of a speculative bubble or outlier system, just a historically depressed economy returning to the mean, and fast. Yes, it's unfortunate, that people cannot afford to live in Berlin as they did in 1996. But Berlin is not the city it was in 1996. To alleviate this price pressure, more housing needs to be built than demanded, and that has not been the case for a long time now; place is limited.
• dfgdghdf 6y ago
  Rent controls provide a strong disincentive for people to move, which prevents people taking jobs they might otherwise have taken. It's hard to estimate the overall economic cost of this, since the effect is diffuse, but it is likely significant.
• draklor40 6y ago
  Indian living in Berlin. Can confirm. Finding a new apartment is almost impossible and the rents on unregulated apartments is now through the roof. An apartment that would cost ~800 EUR for rent is now atleast 1100-1200 (even for a good developer salary, this is insane). Berlin is the SF of Europe at the moment. Unless you want to spend 6 months at a minimum hunting apartments I would avoid this city. Once I get comfortable with German, I am thinking of moving to cheaper, smaller cities , probably in the south and working full time remote.
• iamsaitam 6y ago
  This article is a joke, starting with "If populism on the political right corrupts democracies, populism on the left ruins economies.". It really sets the tone and bias.. Maybe someone should introduce to Bloomberg the concept of gentrification.. The only difference between the rent cap and no rent cap is that now there are affordable places.. the prices were already ridiculous pre-rent cap.
• chris123 6y ago
  Socialism destroys everything it touches, eventually.