Rent controls have split housing in Berlin into two distinct markets • Hacker News Board

Re: Rent controls have split housing in Berlin into two distinct markets

#271

Post by sudosysgen » Tue, Mar 02, 2021, 9:36 PM UTC

awillen wrote: post #234

sudosysgen wrote: post #67

Earlier quoted context omitted.

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. I…

I've also lived in rent controlled cities (like SF), and my experience runs counter to yours. Your experience is an anecdote, not data. I get the impression you didn't actually read the article. It points out very clearly that when apartments go vacant in Berlin, they're being sold, not re-rented. If that's what happens when a renter leaves, then there's no stock for new renters to move into. And just throwing in pub…

If the apartments are being sold, then they must find buyers. If there is no way to rent them, then it's not profitable to hold on to them, and their value decreases. At that point, people can simply buy apartments, and everyone is happy.

My experience is typical and backed by data. In my city, roughly 25% of the renting population moves every year.

Re: Rent controls have split housing in Berlin into two distinct markets

#272

Post by jimnotgym » Tue, Mar 02, 2021, 9:36 PM UTC

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?

Re: Rent controls have split housing in Berlin into two distinct markets

#273

Post by germanier » Tue, Mar 02, 2021, 9:36 PM UTC

throwaway85858 wrote: post #241

germanier wrote: post #214

Earlier quoted context omitted.

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)

perhaps, but if MietenWoG is struck down that leaves only the BGB. yes you're right, two months not one.

As I said, "strike down" usually doesn't mean "transport everyone into a parallel universe where the law has never existed but all people still have acted the same and deal with the fallout no matter how unjust". Rulings are usually much more nuanced than that (and constitutionally required to be that).

Re: Rent controls have split housing in Berlin into two distinct markets

#274

Post by asdff » Tue, Mar 02, 2021, 9:37 PM UTC

el_nahual wrote: post #152

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 en…

If people could move en masse out of cramped expensive rent controlled housing in manhattan, they would. Moving requires upfront capital that a lot of people don't have. Banning rent control doesn't move these working people into more space in some suburb on the outskirts of town, it moves them into a tent under an overpass.

Re: Rent controls have split housing in Berlin into two distinct markets

#275

Post by sudosysgen » Tue, Mar 02, 2021, 9:38 PM UTC

awillen wrote: post #231

sudosysgen wrote: post #66

Earlier quoted context omitted.

This is not how it works. Without the possibility to rent out or consolidate homeownership, the inflationary pressure on home prices collapses. You create an insane level amount of supply for homeownership on this market. An absolutely insane level. Indeed, the vast majority of increase in housing prices is because rents are so high that 7% YoY returns are possible. Without these returns, then there is no way to just…

"You create an insane level amount of supply for homeownership on this market. An absolutely insane level." You're completely ignoring the fact that homeownership, even if prices aren't incredibly high, requires a large down payment that many people don't have, which is why they rent. Those people still can't afford to buy and are pushed out, and they're the ones you're supposed to be helping. "If somehow millions of…

Public housing is neither incredibly expensive nor politically difficult as long as you have a competent government and laws that don't artificially make it more expensive (see: US).

The economics are very simple. The price of housing if it's not profitable to rent and even less profitable to hold will drop until occupancy is high. Those that can't put down a down payment will rent, the others will buy. If not, the price will just continue to go down.

This argument isn't theoretical. It's an actual process that has been done and works.

Re: Rent controls have split housing in Berlin into two distinct markets

#276

Post by bluGill » Tue, Mar 02, 2021, 9:39 PM UTC

ben_w wrote: post #250

leetcrew wrote: post #226

Earlier quoted context omitted.

okay, so it can't grow out. looking at pictures of the city, it certainly looks like it has room to grow up.

Up is expensive, from what I hear.

Paris is one of the densest city in the world (overall, there are denser areas) despite having a cap at 6 floors on building height. (I might be off by a floor or so) At that height the cheapest building technologies* still apply and up is not that expensive.

Now going up to 200 floors is very expensive. However on a per unit area it is only a few times what the cheapest building style* is. So it does require more expensive rent, but not that much more expensive, and as rent gets expensive you expect apartment sizes to fall to balance some of it out.

* cheapest that can meet reasonable building codes. I'm ignoring the uninsulated, fire-prone shacks you see in poor countries which are cheaper by far.

Re: Rent controls have split housing in Berlin into two distinct markets

#277

Post by blablabla123 » Tue, Mar 02, 2021, 9:40 PM UTC

el_nahual wrote: post #152

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 en…

Either a cheap apartment is hard to find and afterwards it's even harder to move somewhere else.

The alternative - as in other cities - is that it's still hard to find an apartment that has a normal price. Of course this also attracts scammers.

The apartment situation in dense areas is bad, no matter if it's Berlin or not. At least the local government is working on a solution to not end up like Manhattan, both price- and concrete-wise. If they find a sustainable solution, then this would be a game-changer and other cities might adopt that.

Re: Rent controls have split housing in Berlin into two distinct markets

#278

Post by zamfi » Tue, Mar 02, 2021, 9:41 PM UTC

kmeisthax wrote: post #215

vkou wrote: post #186

Earlier quoted context omitted.

Kicking people out of their homes doesn't solve the supply problem, because it doesn't create new housing. It just shuffles around who lives in existing houses. If you have a housing problem, and you want to solve it, you need to do two things. 1. Not kick people out of housing that they have. (Because it is incredibly disruptive to people's lives.) 2. Build new housing, until demand is met. Rent control accomplishes…

You can't do #2 without doing #1 - most in-demand land is already occupied and unused land is typically not worth developing (or doing so would cause environmental harm). In an all-owner-occupant suburb, this isn't so much of a problem: you're literally paying people lots of money to accept the disruption of having to move. However, in almost every other kind of housing arrangement, ownership over the building is sep…

This is one of the most reasoned explanations of the key problem where development meets rent control that I've ever read. If you turned it into a longer piece that explored the monetary and non-monetary incentives on all sides I would send it to everyone thinking about this issue. If I can help please let me know.

Re: Rent controls have split housing in Berlin into two distinct markets

#279

Post by asdff » Tue, Mar 02, 2021, 9:41 PM UTC

justapassenger wrote: post #247

Fargren wrote: post #222

Earlier quoted context omitted.

"Your home" means the place where you live. It's not the same as "your house", which is a building that you own. Evicting a renter is kicking someone out of their home.

“Your” here is like with a chain - as strong as a weakest link in the chain. Creating your home in someone else’s property doesn’t really make it yours overall.

You don't really own your house either. Stop paying your mortgage, stop paying taxes, watch you eventually end up the same as someone who stops paying their rent, just through a slightly different bureaucratic process. Sometimes you might not have the liberty to freely modify your home, much like a lease.

Re: Rent controls have split housing in Berlin into two distinct markets

#280

Post by thesuitonym » Tue, Mar 02, 2021, 9:42 PM UTC

908B64B197 wrote: post #248

el_nahual wrote: post #152

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 en…

The beauty of it is it doesn't matter to the bureaucrats: since the 19 years old can't live in the city he also can't vote in the municipal elections! It also has bad impact on the type of buildings that get built. If you have to build some rent-controlled housing as part of your development project, and some jurisdictions will force developers to do that, it pushes you to build the rest of your building to be as ups…

I don't know how it is in Germany, but in the US, rent controlled buildings can only have the rent increased if the landlord upgrades the building, so it actually incentivizes them to do upgrades, as that's the only way they can increase rent.