Berlin approves 5-year rent freeze • Hacker News Board

Re: Berlin approves 5-year rent freeze

#61

Post by cco » Tue, Jun 18, 2019, 5:07 PM UTC

supercall wrote: post #36

vtail wrote: post #10

Earlier quoted context omitted.

Raising prices = Demand > Supply. You can either try to curb the demand (by e.g. creating incentives for companies to build offices elsewhere, move government bureaucracy somewhere else, etc.) or improve the supply by facilitating new construction, which in most places on earth is limited by, again, local government restrictions. edits: grammar

You're assuming the high prices are a result of high demand. Speculators and other bad actors are also driving up prices.

I would imagine, but obviously can't speak for the parent poster, that if you suggested limiting speculation they could agree on a sensible implementation of that policy.

I have not met anybody so far who thinks wealthy foreigners should be able to use real estate to launder money, store value, hide wealth, or otherwise not use real estate for what it is meant for, that is to say as places for people to live, play, or work.

Re: Berlin approves 5-year rent freeze

#62

Post by tmalsburg2 » Tue, Jun 18, 2019, 5:08 PM UTC

andy_ppp wrote: post #33

tmalsburg2 wrote: post #6

Earlier quoted context omitted.

Nope. New buildings are exempt.

So living in new buildings becomes undesirable even further because they are more expensive to live in than the rest of the city!

If there is more demand than supply, no.

Re: Berlin approves 5-year rent freeze

#63

Post by vtail » Tue, Jun 18, 2019, 5:08 PM UTC

tmalsburg2 wrote: post #42

vtail wrote: post #10

Earlier quoted context omitted.

Raising prices = Demand > Supply. You can either try to curb the demand (by e.g. creating incentives for companies to build offices elsewhere, move government bureaucracy somewhere else, etc.) or improve the supply by facilitating new construction, which in most places on earth is limited by, again, local government restrictions. edits: grammar

But how well has this worked in comparable cities like London or Paris where only wealthy people can afford to live?

And only really wealthy people can afford to stay in a 5-star luxury hotel. The underlying mechanisms are the same: when demand for a resource is greater than supply, you can either artificially limited the demand by some controlling body, or let the market bring them into equilibrium through pricing signals.

Re: Berlin approves 5-year rent freeze

#64

Post by andy_ppp » Tue, Jun 18, 2019, 5:09 PM UTC

iagooar wrote: post #46

andy_ppp wrote: post #33

Earlier quoted context omitted.

So living in new buildings becomes undesirable even further because they are more expensive to live in than the rest of the city!

No, new buildings are desirable because they're new and will always find buyers, especially if built in a nice neighborhood.

Let's just thing this through:

I have the option to buy a rental property in Berlin, I can either buy an old rental property and not be allowed to increase rents for 5 years. Or I can buy a new build rental property (which already sell for above market value in most places), and can charge more rent but I will be less able to find renters as they are looking to lock in 5 years worth of zero rent increase.

I really don't get how either situation encourages me to become a landlord.

Re: Berlin approves 5-year rent freeze

#65

Post by rchaud » Tue, Jun 18, 2019, 5:09 PM UTC

vtail wrote: post #3

As a person born and raised in Soviet Union, I strongly believe that whoever thinks that a proper economic response to raising prices is literally to order them to stop raising , is a lunatic.

I wasn't aware the Soviet Union allowed rich investors to buy up chunks of the housing supply and rent them out as hotels without a business license, while also bypassing the numerous regulations that hotels have to abide by.

Re: Berlin approves 5-year rent freeze

#66

Post by jseliger » Tue, Jun 18, 2019, 5:10 PM UTC

vtail wrote: post #3

As a person born and raised in Soviet Union, I strongly believe that whoever thinks that a proper economic response to raising prices is literally to order them to stop raising , is a lunatic.

It's like we never learn https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent...

https://www.theguardian.com/world/2015/aug/19/why-stockholm-...

Re: Berlin approves 5-year rent freeze

#67

Post by andy_ppp » Tue, Jun 18, 2019, 5:11 PM UTC

tmalsburg2 wrote: post #62

andy_ppp wrote: post #33

Earlier quoted context omitted.

So living in new buildings becomes undesirable even further because they are more expensive to live in than the rest of the city!

If there is more demand than supply, no.

No because the developer will just charge more for the new properties and old property prices will be worth less.

Re: Berlin approves 5-year rent freeze

#68

Post by _0w8t » Tue, Jun 18, 2019, 5:11 PM UTC

vtail wrote: post #10

tmalsburg2 wrote: post #5

Earlier quoted context omitted.

Genuinely curious: what do you think would be a better response?

Raising prices = Demand > Supply. You can either try to curb the demand (by e.g. creating incentives for companies to build offices elsewhere, move government bureaucracy somewhere else, etc.) or improve the supply by facilitating new construction, which in most places on earth is limited by, again, local government restrictions. edits: grammar

The problem is that market reaction can be too slow. In such case introducing new rules can be good as they destabilize the slow status quo and makes things to move in the desired direction quicker. Berlin government hopes that by restricting rent in older buildings it will push the market to build quicker.

Re: Berlin approves 5-year rent freeze

#69

Post by iagooar » Tue, Jun 18, 2019, 5:11 PM UTC

andy_ppp wrote: post #64

iagooar wrote: post #46

Earlier quoted context omitted.

No, new buildings are desirable because they're new and will always find buyers, especially if built in a nice neighborhood.

Let's just thing this through: I have the option to buy a rental property in Berlin, I can either buy an old rental property and not be allowed to increase rents for 5 years. Or I can buy a new build rental property (which already sell for above market value in most places), and can charge more rent but I will be less able to find renters as they are looking to lock in 5 years worth of zero rent increase. I really do…

Berlin doesn't need landlords. It needs homes for people.

Re: Berlin approves 5-year rent freeze

#70

Post by partiallypro » Tue, Jun 18, 2019, 5:11 PM UTC

bobthepanda wrote: post #56

CPLX wrote: post #43

Earlier quoted context omitted.

As a person living in New York who thinks rent stabilization has been largely more successful than not at achieving its goals, I disagree.

People who disagree with rent control largely disagree with the goals, which is to keep existing residents where they are. It’s effective at that until landlords abuse the loopholes, which you have to keep closing through legislative whack-a-mole.

> People who disagree with rent control largely disagree with the goals

This is absolutely false. They just understand, by economics, and history, that it has failed. The best way to decrease rents is to make housing more affordable through supply. Unfortunately it sometimes takes time for supply to catch-up and you get price surges...but you also have special interests, especially in the US (aka real estate firms) that lobby zoning boards to limit development and drive up prices for their own benefit.

This is not even a partisan issue, economists on both ends of the spectrum are in near complete agreement that rent controls are damaging.