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

#351

Post by DetroitThrow » Tue, Mar 02, 2021, 10:51 PM UTC

Xylakant wrote: post #312

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…

A counterexample is Vienna, which utilizes a well balanced system of rent-control and social housing to have incredibly low rents and still a stable supply of flats. One tweak they apply is that rent-control does not apply to new developments, so creating new flats is more lucrative than turning old buildings into luxury developments. The city also acts as a competitor, driving prices down by offering cheap flats. Th…

Very interesting approach, it's almost as if developers get a "patent" on creating useful housing stock.

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

#352

Post by PeterisP » Tue, Mar 02, 2021, 10:51 PM UTC

crote wrote: post #39

fallingknife wrote: post #15

Earlier quoted context omitted.

Is it worse if now there is a special class of people who happened to be in the right buildings at the right time when this law passed who will now forever get discounted rent, leaving everybody else to pay full price?

Exactly, it should be extended to all rental units. An important part of the regulation is that the landlord cannot raise the rent when a new tenant moves in - the rent is locked for the unit, not the tenant. This prevents situations like New York, where you are essentially unable to move.

The consequence of that, as claimed in the article, is that when the old tenant leaves, it often ceases to be a rental property - it's not offered for rent but put on sale for someone who'll live there as an owner. Already there are half as many spaces available for rent as it was a few years ago, and the number is still shrinking. If this goes on, most of the rental stock will get converted to non-rental and you'll be able to move only if you can get sufficient credit to buy the dwelling.

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

#353

Post by Tenoke » Tue, Mar 02, 2021, 10:52 PM UTC

throwaway85858 wrote: post #175

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…

not just in 10 or 20 years, more like in 9 months! The supreme court will probably rule that the Mietendeckel is unconstitutional in November, which will lead to a nasty situation for many renters with old contracts. If the tenants are lucky the landlord will just ask for the money "saved" to be paid back, but the unlucky ones will be evicted, as being in arrears of more than one month is grounds for termination rega…

I have to say - I'm very jealous of my few friends who somehow managed to get a new place in the last few months. Their new contracts are already at the lowered prices so they don't have to fear the backrent like I do (and my reduction is quite big as I was paying way above the average for the area due to having a hard time finding anything in the first place).

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

#354

Post by AdrianB1 » Tue, Mar 02, 2021, 10:53 PM UTC

jkingsbery wrote: post #177

aphextron wrote: post #88

>In a food shortage, for example, regulating the price of bread only trades one expression of scarcity (high prices) for another (empty shelves). Well sure. But the total amount of people who have some bread is now greater, versus a select few wealthy people getting all the bread they want, as the wretched masses stare longingly. You can either increase total happiness, or concentrate it to the powerful. It's pretty…

In practice, this almost never happens. There isn't a fixed supply of bread. When the price of bread goes up, the following all happen: - Bakers will bake more bread - People from an area with cheaper bread will travel farther to sell bread where it's more expensive - Individuals will decide to bake bread for themselves - Companies that don't bake bread but that have the capability of baking bread (either directly, o…

Except when you have a bad crop season on an entire continent. No grain - no bread, so bakers will NOT bake more bread.

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

#355

Post by latchkey » Tue, Mar 02, 2021, 10:53 PM UTC

slavik81 wrote: post #333

latchkey wrote: post #316

Earlier quoted context omitted.

Around 1994/5 I wanted to move to Berkeley. I had a very hard time finding a place. I looked at so many attics turned into bedrooms and other crappy places. Eventually, I found an ideal (relatively) place and there was a good 50+ people looking at the same apartment during a showing... I walked up to the landlord (who was a lawyer in his day job) and said... "I know you can't pick favorites, but I have a good salary…

If there was no rent control, why didn't he just raise the price up to market value when your lease came up for renewal? I live in a city without rent control, and your experience is entirely foreign to me. Heck, my current landlord has offered to pay for things that I don't think are even really his responsibility. He's just happy to have good tenants paying market rate. Switching tenants will probably cost a few th…

"grandfather clause"

The removal of rent control only applied to new tenants. He was limited to a city controlled yearly mandated increase, the entire time I was there. He also couldn't kick me out unless he moved into the apartment himself for some period of time.

He also had to put my deposit into an interest bearing account and was required to pay me that interest. The rental increase and payment was a ritual I went through yearly with him and he always delayed giving me the interest as long as he could by law.

2-3x+ more rent is enough reason for a landlord to want to push someone out in a competitive market like Berkeley. There is always a stream of new tenants because it is a college town and limited rental housing is available.

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

#356

Post by vkou » Tue, Mar 02, 2021, 10:54 PM UTC

edbob wrote: post #326

dragonwriter wrote: post #270

Earlier quoted context omitted.

> Rent controls are a textbook example of a well-intentioned policy that does not work. They deter the supply of good-quality rental housing. With rents capped, building new homes becomes less profitable. Rent control tends to be adopted with the fairly explicit goal of prioritizing affordability for existing tenants in their current residences over either encouraging maintenance/updates or improving housing supply f…

Your technical analysis is correct as usual, but I agree with sologoub's comment[0], "That’s not success, that’s picking winners and losers." [0] https://news.ycombinator.com/item?id=26316547

Markets pick winners and losers all the time. It's just that winners in market housing situations are always the people with the most money.

It's difficult to make an argument that it's a more virtuous way to select winners, compared to 'the winners are the people who were here first'. Both are fundamentally unfair. Life, in general, isn't fair.

Rent control doesn't exist to maximize overall virtue. It exists to minimize disruption and upheaval in people's lives. You're explicitly excluding that from your criteria for success.

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

#357

Post by chipsa » Tue, Mar 02, 2021, 10:54 PM UTC

slavik81 wrote: post #333

latchkey wrote: post #316

Earlier quoted context omitted.

Around 1994/5 I wanted to move to Berkeley. I had a very hard time finding a place. I looked at so many attics turned into bedrooms and other crappy places. Eventually, I found an ideal (relatively) place and there was a good 50+ people looking at the same apartment during a showing... I walked up to the landlord (who was a lawyer in his day job) and said... "I know you can't pick favorites, but I have a good salary…

If there was no rent control, why didn't he just raise the price up to market value when your lease came up for renewal? I live in a city without rent control, and your experience is entirely foreign to me. Heck, my current landlord has offered to pay for things that I don't think are even really his responsibility. He's just happy to have good tenants paying market rate. Switching tenants will probably cost a few th…

Frequently, even on places that don't have "rent control", there's still limits on how fast landlords can jack up the price on a tenant in the place, but that doesn't apply to new tenants. So if you can only raise the rent by $100/mo once a year, but the market rent for the place is $1000/mo higher than current, you've got 10 years before you actually reach market rate.

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

#358

Post by Tenoke » Tue, Mar 02, 2021, 10:59 PM UTC

cbmuser wrote: post #325

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 problem is that's virtually impossible to find new in apartments these days. This law only benefits tenants who already have an apartment in Berlin, anyone else is completely out of luck. Source: I live in Berlin.

Of everyone I know, the very few who looked for and somehow got a new flat right now benefit even more as they don't need to fear any backrent - their rent is lower from the start.

In my case, yes I benefit from the lowered rent but it's even harder to move if I want to (which I would if it was easier), I might owe a pretty big amount if the law is overturned, my flat is now getting sold and the other tenants are writing on the walls and threatening 'war' over the sale (even though realistically nobody here can be kicked out for 10-11 years after the sale).

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

#359

Post by DetroitThrow » Tue, Mar 02, 2021, 11:01 PM UTC

nullserver wrote: post #332

JPKab wrote: post #322

Earlier quoted context omitted.

There is plenty of scientific denialism on the right. Along with anti nuclear, the belief that rent control is a remotely good idea is an example of scientific denialism on the left. There are some decent arguments to be made against nuclear but rent control has always always caused more harm than good everywhere it's been tried.

Parents city decided to rent control all the mobile home parks. They changed there mind after thousands of people received eviction notices. Owners would rather let the land sit empty then deal with the nightmare it would create.

Wow crazy outcome, wonder if a land tax system would have helped that.

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

#360

Post by Tenoke » Tue, Mar 02, 2021, 11:08 PM UTC

csomar wrote: post #339

> If the judges nix the legislation, lots of tenants in the formerly regulated sector could get hit by huge and even retroactive increases in their rents. Am I reading this correctly? So, these tenants might find themselves in thousands (maybe dozen of thousands) of euros of debt to their landlord. And I assume they'll be required to pay it up overnight? In this case, the politicians really screwed these "poor" peopl…

Yes. It even said so in the letter you get when the price was lowered. My rent was fairly 'overpriced' for the area so if it gets overturned I'll owe around 500e per month for every month that the law was in effect. Needless to say, most who lost their jobs and even many who didn't won't have the 5k or whatever it is in their case to give up suddenly.

I guess if many of us find ourselves in debt here and can't rent because the debt means we cant ever pass the Schufa which every place checks then possibly that'll ironically help solve the housing crisis..