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Berlin approves 5-year rent freeze

reuters.com

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Re: Berlin approves 5-year rent freeze

#111

Post by CPLX »

partiallypro wrote: post #53
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.

The data disagrees with you, it has caused shortages. Especially pre-90s. Since I was downvoted for stating things that are factually observed: https://web.stanford.edu/~diamondr/DMQ.pdf https://www.bloomberg.com/opinion/articles/2018-01-18/yup-re... https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent... https://www.economist.com/the-economist-explains/2015/08/30/... http://iea.org.uk/sites/default/files/pub…

The goal of rent stabilization is to make neighborhoods more stable. The concept is right there in the name, and that's exactly what it does. It's not built to stop shortages, or to increase the availability of apartments for people moving to the city.

Re: Berlin approves 5-year rent freeze

#112

Post by southerndrift »

JanSt wrote: post #97
Roritharr wrote: post #90

I think the main reason why this makes me so angry is because it's Berlin, again, doing something fiscally irresponsible that the rest of the country is going to have to finance in the long run. How I imagine it to go down would be like this: Today the politicians pat themselves on the back for their progressive stance on this topic. In year 2 of the rent freeze most of the property investment will have seized, new c…

They already receive $4.4bn/year through the Länderfinanzausgleich (mostly from bavaria) to finance their irresponsible policies. I guess it will just be increased, no need for black/green coalition to add anything.

That's a bargain when you remember that Siemens moved its headquarter from Berlin to Bavaria after the war [1].

[1] https://en.wikipedia.org/wiki/Siemens

Re: Berlin approves 5-year rent freeze

#113

Post by CPLX »

partiallypro wrote: post #70
bobthepanda wrote: post #56

Earlier quoted context omitted.

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) t…

> rent controls are damaging

To whom?

Rent controls redistribute the value capture from gentrifying neighborhoods away from landlords and towards longtime residents. That's what they're intended to do, and they do that.

Re: Berlin approves 5-year rent freeze

#114

Post by dgellow »

rchaud wrote: post #65
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.

If you’re talking about Airbnb, as far as I know what you’re describing is not allowed in Berlin.

Re: Berlin approves 5-year rent freeze

#115

Post by peterwwillis »

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

So we just need to magically create more housing and make it cheaper, or magically prevent people from wanting to live there.

I'm not aware of either of these things happening in any modern city. (well, the latter happens whenever the local economy tanks)

Re: Berlin approves 5-year rent freeze

#116

Post by wander_homer »

hashberry wrote: post #31

If affordable housing is an issue, then perhaps the government should provide it for its citizens, like building huge high-rises in Berlin. I used to rent in an expensive city but bought a cheap house in the suburbs (thankfully I work remotely). Everything is cheaper out here, from gas to utilities to food. But I did experience classism from my friends and family: there is status living in a world-class city. And hav…

> But many people want the status without having to pay the $$$

It's not just about the status. Every city needs people who do lower paying jobs. Someone has to clean those office buildings, someone has to take care of sick people at hospitals, someone has to drive taxis, buses, ... By not supplying those people with affordable housing within the city they're lives only become worse (more money and time spent commuting, less time spent with family and friends).

Re: Berlin approves 5-year rent freeze

#117

Post by IAmEveryone »

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.

That's true for, say, bread. Or really any fungible good where labor makes up most of the price of the product. If you artificially suppress those prices, there isn't enough money to pay the farmers and bakers, and no bread will be made.

This freeze actually exempts new construction, so the whole problem is mood. But it's still interesting to think it through, and the result is different than simple economics may make you think:

Housing is different than bread, or cars, or mobile phones. It doesn't actually cost meaningfully more to build a new house in the middle of Berlin than to do so in some empty village in the countryside: the costs of material are the same, and for the most part so is labor.

The only difference is the cost of land.

The effect, according to the basic supply/demand scheme of economics you are invoking should be to depress land value, with no effect on the amount of housing units being built. That's true as long as the rent it is possible to charge is high enough to cover the costs of construction. One can take a guess at the actual value by looking for the cheapest rents in newly constructed housing, which for Germany is about half of Berlin's average. In the limit, land value would tend toward zero, although that's rather theoretical because at some point owners just wouldn't care about selling.

This hints at some additional factors that may have minor impact: maybe there is an expectation that land value will rise again after those five years, and the actual discount in the market is therefore smaller, etc. But even then, it's only land value that would be affected.

Re: Berlin approves 5-year rent freeze

#119

Post by Vinnl »

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…

Can't you (as a hypothetical landlord) simply ask the same rent for the new housing as you'd ask without this measure? Then it should be about as easy as it is now to find renters (as this measure does not affect supply), and just as attractive to become a landlord as it is now.

(Granted, demand for existing housing should increase if they are cheaper, but presumably supply will decrease as well as fewer people living there will move out - so I guess it shouldn't affect the pricing of new housing much?)

Re: Berlin approves 5-year rent freeze

#120

Post by chimeracoder »

CPLX wrote: post #111
partiallypro wrote: post #53

Earlier quoted context omitted.

The data disagrees with you, it has caused shortages. Especially pre-90s. Since I was downvoted for stating things that are factually observed: https://web.stanford.edu/~diamondr/DMQ.pdf https://www.bloomberg.com/opinion/articles/2018-01-18/yup-re... https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent... https://www.economist.com/the-economist-explains/2015/08/30/... http://iea.org.uk/sites/default/files/pub…

The goal of rent stabilization is to make neighborhoods more stable. The concept is right there in the name, and that's exactly what it does. It's not built to stop shortages, or to increase the availability of apartments for people moving to the city.

> The goal of rent stabilization is to make neighborhoods more stable. The concept is right there in the name, and that's exactly what it does.

No, it's not. Rent stabilization is, purportedly, about ensuring that poor or low-income residents specifically aren't pushed out of neighborhoods or New York City entirely due to gentrification and rising rents.

In terms of making housing affordable for those people, rent stabilization is incredibly ineffective.

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