Berlin Voters Asked The City To Tackle Rising Rents. The Plan Is A Long Shot

[M II A II R II K]

Berlin Voters Asked The City To Tackle Rising Rents. The Plan Is A Long Shot, But The Message Is Powerful.


September 29, 2021

By Adam Taylor

Read More: https://www.washingtonpost.com/world...nt-referendum/

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On Sunday, voters in the German capital backed a nonbinding referendum that called on the local government to buy hundreds of thousands of housing units from large property companies in the latest bid to control Berlin’s spiraling rent. An estimated 240,000 apartments, about 10 percent of the city’s housing stock, would end up in public hands if the radical proposal is carried out.

- The referendum has no legal power. Previous attempts to counter rising rent in Berlin have struggled, with a cap on housing prices overturned by Germany’s top court in April. And just how will expropriating hundreds of thousands of apartments work anyway? — Still, the message to authorities was powerful: It received more than 56 percent of the vote. On Monday, Berlin’s new mayor said she would “respect” the results of the referendum and go about drafting a new bill. Even if not, the referendum’s organizers have said they could bring together a new, binding referendum if the law is delayed. — If it works, this unorthodox approach to municipal housing could reverberate far outside the German capital. “It can be a catalyst for municipal housing movements across Europe,” Alexander Vasudevan, an associate professor in human geography at the University of Oxford, wrote for the Guardian this week.

- Rent in the German capital remains lower than in many other major world cities. Renting a two-bedroom apartment in Berlin cost less than a third of what a similar apartment in Hong Kong or San Francisco would cost, Deutsche Bank has estimated, and half of a similar apartment in Paris or London. — But the city’s rental market has been changing, and that has become a vexing issue for Berliners. The city, divided for 30 years during the Cold War, had once stood out as a place where the low cost of living could enable people to not worry so much about salaries. — But its ever-increasing appeal has pushed rents higher and higher, challenging that very feature. According to international property firm Knight Frank, between 2010 and 2018, the city’s population increased by about 360,000. During that same eight-year period, only 86,370 new homes were built.

- In a city where roughly 85 percent of residents rent rather than own, the rental market has been squeezed the hardest, with rents increasing by 42 percent over the past five years, the most of any German city, Berliner Zeitung reported this year. With housing supply so low, the issue isn’t just rental prices. Apartments are often snapped up within hours of being listed or even less. In November 2019, an apartment viewing in the popular neighborhood of Schöneberg drew headlines for attracting 1,800 potential renters. — Much of the anger has been directed at large property companies and international investment groups that have bought up rental units across Berlin, partly by buying apartments once owned by the city but sold off during a period of financial distress in the 2000s. The largest of these corporate landlords, Deutsche Wohnen SE, owns more than 113,000 apartments.

- The ambition of the Berlin referendum has led to hope overseas. For some, it has changed a conversation that has focused on relatively small reforms and older tactics, such as rent control. Writing for the Conversation before the referendum, the University of Cambridge’s Joanna Kusiak said that the “the move could provide a legal precedent for other cities to call for nationalization as a modern and legitimate solution to their housing crises” and perhaps even prompt changes in international law that could empower housing as a human right. As Vasudevan put it in the Guardian, the result shows that “What is needed are creative, large-scale solutions that tackle housing insecurity and empower residents to challenge their increasing marginalization and vulnerability.” Given rising home prices in much of the world, such solutions are needed a long way from the German capital, too.

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[C.]

Does Germany have a similar concept of providing just compensation when private property is taking? If so, where will Berlin get the the billions of euros necessary to purchase these market rate apartments and operate them at below market rate.

I'm going to lowball here and say the average apartment in Berlin $300,000... That's 240,000 x $300,000 = $72 billion.

Or is this just a feel good symbolic effort to protest high housing costs and nothing will be done.

Who would have thought that keeping interest rates at 0% would have consequences.

[Yuri]

I tend to believe this won't work. They don't have the money to do it, and even if they did, this money could be put in use in much more helpful projects, for instance, to build new houses.

The answer here, it's the same: build more. Period. Berlin went through a mini-population in the past ten years and as the article mentions, didn't build enough. Same story in London, San Francisco, Stockholm.

[biguc]

Originally Posted by C.

Does Germany have a similar concept of providing just compensation when private property is taking? If so, where will Berlin get the the billions of euros necessary to purchase these market rate apartments and operate them at below market rate.

I'm going to lowball here and say the average apartment in Berlin $300,000... That's 240,000 x $300,000 = $72 billion.

Or is this just a feel good symbolic effort to protest high housing costs and nothing will be done.

Who would have thought that keeping interest rates at 0% would have consequences.

The answers to all of your questions are here:

https://www.darumenteignen.de/en/

[chicago river]

Allowing one person to own another person's home is a terrible idea and has zero positive effects on society as a whole. Landlords are leeches. Even the godfather of capitalism, Adam Smith, agrees.

[10023]

Originally Posted by chicago river

Allowing one person to own another person's home is a terrible idea and has zero positive effects on society as a whole. Landlords are leeches. Even the godfather of capitalism, Adam Smith, agrees.

Except that real estate is a valuable asset and landowners are probably the second oldest profession after prostitutes.

If you don’t have a concept of renting or otherwise paying to occupy a dwelling owned by another person, then what do people with no assets do? Build a lean-to?

The real problem is anything that keeps supply from matching demand. Otherwise buildings have a replacement cost, based on materials and labor, which should increase over time but in line with general inflation, rather than vastly outpacing it.

Some of these things are worthwhile, like historic preservation to retain cultural patrimony and aesthetics. But there’s a lot of stuff - ranging from regulations to graft - that impede supply. Think about those things.

[chicago river]

Originally Posted by 10023

Landowners are probably the second oldest profession after prostitutes.

We criminalize one group, why not the other?

[jbermingham123]

Originally Posted by chicago river

We criminalize one group, why not the other?

Because landlords are a specific example of a much broader problem in economics known as rent-seeking, where you have people getting something, rent, for doing nothing. This problem is not solved by doing away with landlords.. because taking the properties away from the landlords without compensation and giving them to some other group leads to, well, the same thing; people getting something for nothing.

The solution, in my view, is to enforce a maximum profit margin, something like 5%. If a landlord makes more than that, they have to either give it back directly or invest it in improving the living space for their tenant(s). The other option obviously would be to lower their rent so that profits stay at 5%.

This way, it still makes economic sense for property owners to provide living space for renters (because theyre still making a profit), but it ensures that most rent money goes to either improving the living space or back into the tenants' pockets.

This would also solve the problem of property owners sitting with vacant housing waiting for more profitable tenants.

To prevent such a system from deterring new development, you could make it so that the profit control doesnt kick in until a building is 20 years old.

[jd3189]

Yeah, housing for profit, like healthcare and other baseline things in our society for profit, is a shitty game to play for everyone involved.

I understand landlords need to pay their bills and make some living, but gradually increasing the rent for tenants who often have incomes that are continuing to be stretched thin just sounds awful.

And, no, telling the tenants ( if they are reliable and pay on time) that they just have to accept the rising rent or get the fuck out, is not the most realistic thing to do. Not every neighborhood is going to attract high paying individuals.


I like that profit cap idea. It may actually help foster a better relationship between tenants and landlords.

[jmecklenborg]

Originally Posted by jbermingham123

The solution, in my view, is to enforce a maximum profit margin, something like 5%.

Please. Most landlords in the United States break even or lose money. The only ones who are wildly profitable are those who acquire their property for free or at an extreme bargain and who lobby for special property tax breaks.

A mere 12 years ago, tens of thousands of landlords lost their properties because there weren't enough tenants.

[10023]

Originally Posted by jbermingham123

Because landlords are a specific example of a much broader problem in economics known as rent-seeking, where you have people getting something, rent, for doing nothing. This problem is not solved by doing away with landlords.. because taking the properties away from the landlords without compensation and giving them to some other group leads to, well, the same thing; people getting something for nothing.

The solution, in my view, is to enforce a maximum profit margin, something like 5%. If a landlord makes more than that, they have to either give it back directly or invest it in improving the living space for their tenant(s). The other option obviously would be to lower their rent so that profits stay at 5%.

This way, it still makes economic sense for property owners to provide living space for renters (because theyre still making a profit), but it ensures that most rent money goes to either improving the living space or back into the tenants' pockets.

This would also solve the problem of property owners sitting with vacant housing waiting for more profitable tenants.

To prevent such a system from deterring new development, you could make it so that the profit control doesnt kick in until a building is 20 years old.

How will you measure this profit margin?

And if you think that’s a simple question to answer then you’re already out of your depth.

[jtown,man]

Delete

[Pedestrian]

Originally Posted by chicago river

Allowing one person to own another person's home is a terrible idea and has zero positive effects on society as a whole. Landlords are leeches. Even the godfather of capitalism, Adam Smith, agrees.

Lots of people have become "leeches" by investing in a few rental units with the idea that the cash flow from the same will fund their retirement.

We have one or two such landlords among us. I have argued with them that I'd rather put the portion of my assets I want to have in real estate in professionally managed REITs just because I don't want to have to deal with this attitude along with the other unpleasant aspects of being a landlord. REIT managements have the money and connections to fight "city hall" when necessary where individuals don't, and if it comes to it, they are more likely to get fair compensation for property taken from them by government.

[JManc]

Landlords should absolutely be able to turn a profit...within reason of course...but they are the ones who purchase the property, pay any and all fees and maintenance, taxes, insurance and then incur any risks/ liabilities. This sense of entitlement escapes me and I rented for most of my adult life...often from shitty landlords or leasing companies.

[jbermingham123]

Originally Posted by JManc

Landlords should absolutely be able to turn a profit...within reason of course...but they are the ones who purchase the property, pay any and all fees and maintenance, taxes, insurance and then incur any risks/ liabilities. This sense of entitlement escapes me and I rented for most of my adult life...often from shitty landlords or leasing companies.

Exactly.

And the costs associated with being a landlord arent just financial either; it is extremely time consuming and tedious. This is why most properties are owned or managed by companies, rather than individuals. Idk if Ue has ever had to deal with a cable company like Comcast or AT&T, but being a landlord is like that, 24/7.

So for a landlord to profit, the opportunity cost needs to be included as well. Otherwise, why devote any time to your tenant's needs? When opportunity costs arent included in rent, thats when you end up with people living in squalid conditions. If you own a building and your cable/internet gets screwed up, why would you spend an hour on hold with Comcast, followed by a conversation with some dude in Bangladesh, followed by an entire day stuck waiting for the damn truck to show up, if you'd be better off just ignoring the problem and working somewhere for $15 an hour during all that time? The cable example is just to illustrate the point, but if you want to see how serious this problem is, just think about plumbing, or mold.

[jbermingham123]

To Ue's point, collective ownership is great, but only when it is organized organically and people are free to participate or choose not to. This is left-libertarianism, and it can work! Co-ops are becoming more common by the day, and I invite Ue to find one and join.

The problem is when people want to use the legal system to enforce this model on the whole of society, because there are plenty of situations for which the model is ill-suited. That is the authoritarian-left model. Funny enough, these days it is often those same authoritarian-left people who want to reduce the state's power to enforce laws

[chicago river]

Prove it

[biguc]

Lots of cringey ideological back-and-forth here. None of it's relevant to the DW&Co Einteingnen plan.

Cities are not society at large. They have different limitations and, therefore, benefit from different rules. Space is limited in cities. Vienna and Singapore have already solved this problem by socializing a large portion of their housing--this is housing for middle class people too. Private builders can still build luxury housing (which is mostly what they build anyway) and get stinking rich anyway. Germany has some really big housing companies--these are the only companies affected by this move. They will not suffer. A lot of what they own in Berlin is socialist-built housing in the East, anyway.

This isn't murdering kulaks or paying nurses peanuts. Pull it together, people.

[10023]

Originally Posted by biguc

Lots of cringey ideological back-and-forth here. None of it's relevant to the DW&Co Einteingnen plan.

Cities are not society at large. They have different limitations and, therefore, benefit from different rules. Space is limited in cities. Vienna and Singapore have already solved this problem by socializing a large portion of their housing--this is housing for middle class people too. Private builders can still build luxury housing (which is mostly what they build anyway) and get stinking rich anyway. Germany has some really big housing companies--these are the only companies affected by this move. They will not suffer. A lot of what they own in Berlin is socialist-built housing in the East, anyway.

This isn't murdering kulaks or paying nurses peanuts. Pull it together, people.

Has Vienna or Singapore “solved” this problem? How difficult (or expensive) is it to secure housing in these cities now if you don’t qualify for government housing? Is there incentive to create new housing supply? Are these government buildings being maintained and updated in the way they would be if a private landlord was competing for tenants/customers (and will they be for the next 10, 20 or 30 years)?

[biguc]

Originally Posted by 10023

Has Vienna or Singapore “solved” this problem? How difficult (or expensive) is it to secure housing in these cities now if you don’t qualify for government housing? Is there incentive to create new housing supply? Are these government buildings being maintained and updated in the way they would be if a private landlord was competing for tenants/customers (and will they be for the next 10, 20 or 30 years)?

It's pretty easy to find this stuff out. We are, after all, on the internet.

https://www.wienerwohnen.at/wiener-g...in-vienna.html

https://en.wikipedia.org/wiki/Public...g_in_Singapore