Redistribution Is Da Solution (Again)

The next step backwards: Berlin has a new law prohibiting landlords from demanding rents that are more than 10 percent higher than the area average, in an attempt to keep housing affordable in a city that’s attracting 50,000 new residents a year. The rule relies on a disputed index — known as the Mietspiegel — that critics say is a statistical crapshoot.

Rents

“The rent brake is essentially a transfer of wealth from landlords to tenants. Berlin will become less of a destination for international investors because capital doesn’t like to be constrained.”

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6 responses

  1. The same problem is visible in our area here in Washington State. There are no rent controls whatsoever in Seattle, for instance. Many tenants are being forced out of apartments they already live in because rents are being raised SO high; it some cases they are more than DOUBLE with a 30 to 60 day notice.

    Since it is NOT costing the freaking landlords double to have the same buildings, I’d say they ARE just trying to make a fortune in a city where lots of folks are moving IN and they don’t give a damn about people who’ve rented from them for a long time. And of course, even the presumed new tenants can’t really afford that high rent.

    (I rented in Berlin as a newlywed in 1977. Our rent for a 3 room apartment with kitchen and small bath making a slim 5 was one thousand marks a month, plus more for heat.)

  2. That’s an awful situation if landlords are in a position to demand and get rent increases like that. But why is that? Supply and demand. I don’t know anything about renting in Seattle but what you write tells me everything I do need to know: There aren’t enough units. So what will happen now? Investors will build more units because that would be profitable for them and this will make the rents more competitive, affordable. That can’t happen in Berlin if the investment isn’t interesting enough for investors and this new law ensures that.

    By the way, what you paid back then was relatively high. Up until very recently, as you probably know, rents in Berlin were amazingly low. Now they are just low – compared to other German cities.

    • Yes, we did think our rent high. But Army members were discouraged from certain areas, renters on the “officially approved” list could demand a premium.

      Seattle is a bitch; once rent rise, it is s new benchmark and even new units start there and go up. All the arguments about being attractive to builders and investments keep rent control off the table; even joints where moisture barriers suck and possessions MOLD are over $1200 a month for a small place!

    • Correct – it is all about supply and demand. If they frustrate someone developing and building more housing (with a overly long permit process, making it hard to get dumpster permits, allowing all of the neighbors have a say as to what you can do with your property), the spigot is closed down, and this sends a price signal that makes rents soot up far more than the actual supply shrinking.

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