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

#281

Post by AlexandrB » Tue, Mar 02, 2021, 9:43 PM UTC

sologoub wrote: post #60

crote wrote: post #26

"Price changes in the regulated market dropped relative to those in the 13 other cities. That’s because real estate loses value if its future cash flows to landlords are capped. There was also an acceleration of apartments going up for sale, as landlords tried to cash out of their now less profitable investments." & "And whenever somebody does move out — when moving to another city, for example — the landlord tends t…

> The caps represent a windfall to one group of tenants: those, whether rich or poor, who are already ensconced in regulated apartments. Simultaneously, they hurt all other groups — especially young people and those coming from other cities — by all but shutting them out of the market. That’s not success, that’s picking winners and losers. Same as with SF Bay Area, Santa Monica (in LA) and any other place with rent c…

> being in place early makes you a winner

Isn't this just the housing market in general? Why should renters not benefit from the same dynamics that owners do?

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

#282

Post by sudosysgen » Tue, Mar 02, 2021, 9:43 PM UTC

gruez wrote: post #92

sudosysgen wrote: post #84

Earlier quoted context omitted.

I'm not speculating at all. The article has the data to back the facts : house prices went down in Berlin. Yes, homes can go up on speculation alone, but this is a bubble that will pop. In North America, rising rents act as a backstop that prevent the bubble from popping, because of guaranteed rental incomes that protect you. It's not possible to create an insane level of supply for appartment rentals. There's two re…

> I'm not speculating at all. The article has the data to back the facts : house prices went down in Berlin. but supply has dropped as well. Freezing food prices would also drop food prices, but won't stop bread lines. >Yes, homes can go up on speculation alone, but this is a bubble that will pop. In North America, rising rents act as a backstop that prevent the bubble from popping, because of guaranteed rental incom…

Nowhere does it say that supply has dropped. If renting is less profitable, then supply of houses to be sold will actually go up.

The ability to rent is not the primary driver of speculation. But it drastically lowers downside risk, which gives less incentive for anyone to pop the bubble.

>I'm not sure how rent control fixes this. If you have 1M families but only 100,000 plots of land, they're going bid up the price until enough people can't afford it. This dynamic is in play regardless of whether there are landlords or not.

Well, empirically, it does fix it, doesn't it?

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

#283

Post by csunbird » Tue, Mar 02, 2021, 9:46 PM UTC

throwaway12903 wrote: post #258

csunbird wrote: post #227

Earlier quoted context omitted.

My first apartment was a limited lease for 6 months (like AirBnB but a private company), which I could terminate within a month if I could find another place. I could not, had to extend it to 2 years (the landlord said it will not be possible to extend beyond 2 years). After the 1.5 years of search, I was able to get not so affordable but acceptable place. 1.5 years to find an apartment, that is not cheap but borderi…

> 1.5 years to find an apartment, that is not cheap but bordering the acceptable Curious - how far outside of the center of Berlin did your search extend, and what was your parameters for an acceptable place/rent?

First question: I looked mostly in the center, nothing more than 7 kms away from my workplace. I needed somewhere that I can commute by bike, since the traffic and the fight for parking spaces are too exhausting. S-Bahn is too overcrowded.

For your second question, double of the rent cap, two rooms (or maybe 1.5), don't care if the building is old or new. Partly furnished is preferred but I do not mind unfurnished.

Please post with your main account if you are going to ask more personal questions.

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

#284

Post by AlexandrB » Tue, Mar 02, 2021, 9:47 PM UTC

WalterBright wrote: post #211

droopyEyelids wrote: post #190

Earlier quoted context omitted.

I don't quite understand how you're framing this. Oregon figured out a level of increase that would be too disruptive for its appetite, and had the legislature cap the rate to below that level. On average over the past five years, that cap would not have been reached, though it may have been reached in any one of those years. Is this a self own or mistake of some kind? Are you inferring that landlords will now raise…

If rent increases are capped at 7% per year, landlords will have an incentive to increase it at the max, because that gives them more flexibility the next year. For example, let's say the free market would raise rents 5% this year, and 8% next year. A cap of 7% means the rent will rise 7% this year, as the landlord won't want to have caps permanently reduce future rents.

This is a weird argument. Would this still happen if rent increases were capped at 10%/year, what about 50%/year? At some point no one is going to rent at the rates you're asking and you're going to have to stop.

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

#285

Post by distances » Tue, Mar 02, 2021, 9:50 PM UTC

throwaway85858 wrote: post #245

distances wrote: post #229

Earlier quoted context omitted.

The tenants are not in arrears. In the common case rents were lowered officially by landlords, with a footnote that the difference is due in full if the law is striked down.

Nope! The rental amount agreed in the contract is to be owed by the tenant, this is not changed by the MietenWoG. https://ikb-law.blog/2020/11/19/resume-zum-mietendeckel/

And as stated in the third paragraph of your link, it's not grounds for termination if the landlord has agreed that part of the rent is suspended until the matter has gone through courts.

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

#286

Post by germanier » Tue, Mar 02, 2021, 9:52 PM UTC

ben_w wrote: post #246

germanier wrote: post #220

Earlier quoted context omitted.

It's not like this is a hard border. It's completely feasible to live outside its limits. Sure, that's not technically Berlin but for all purposes regarding the housing market it is.

Not quite . If I understand right (as a recent-ish migrant to Germany, I expect to have half an understanding at best), different states have laws and slightly different taxes. Not as much so as American states, but perhaps more like Newark vs. NYC than Cupertino vs. Sunnyvale.

The difference in taxes is zero or negligible for almost all persons (income tax, VAT, etc. is exactly the same – dog tax probably is the highest difference). Corporations pay less taxes outside city limits.

The most relevant law I can think of is that if you live outside the city limits you might not be able to send your kids to a school in Berlin.

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

#287

Post by krcz » Tue, Mar 02, 2021, 9:52 PM UTC

sudosysgen wrote: post #71

krcz wrote: post #68

Earlier quoted context omitted.

When the price explodes, bakers may hire more people and bake bread during night and day, increasing the supply.

Yes, they do this even if the price only goes up 3-4x, it's not needed for the price to increase thousandfold. Also, this doesn't really apply to housing.

I fully agree, thousandfold price increases would suggest that processes that control prices in free market system had become unstable. In such cases I'd agree with state intervention. Fortunately it doesn't happen that often.

> Also, this doesn't really apply to housing. Correct, it's more complex there and some of the reasons are mentioned in the article.

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

#288

Post by omginternets » Tue, Mar 02, 2021, 9:52 PM UTC

justapassenger wrote: post #208

anoncake wrote: post #188

Earlier quoted context omitted.

Giving people "incentive to move" – aka forcing them out of their homes – doesn't increase supply. Unless they're "moving" onto the streets in which case you did free up a flat.

> aka forcing them out of their homes They aren't theirs. They're renters.

It might not be their apartment (or house or whatever), but it damn-sure is their home.

First-world jurisdictions (including all 50 US states) universally recognize that eviction is a big deal, and that it is not equivalent to forfeiting any old rented property. Accordingly, landlords cannot do whatever they please just because they own four walls, a floor and a roof.

Of all the things you could nit-pick, I can't even begin to understand why you would choose this. Your point is not only pedantic and cringe-inducing, it also betrays callousness beyond that of even American courts. This is truly an accomplishment. Bravo.

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

#289

Post by e40 » Tue, Mar 02, 2021, 9:52 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…

I experienced exactly this in the early 1980's. In Berkeley, CA. Apartments were scarce because of rent control. I had a coworker that lived in his apartment from late 70's until late 90's. He paid less than $300/mo. It was great for him. He saved a ton of money and bought a house in Berkeley in the late 90's. But, as a student I had to live in Oakland and was never able to find an apartment. Every time I went to look at one there were another 99 people there. It was so frustrating.

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

#290

Post by Krasnol » Tue, Mar 02, 2021, 9:52 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…

The only difference to the situation right now that people are able to stay where they are. They wouldn't otherwise.