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

#421

Post by imtringued » Wed, Mar 03, 2021, 12:47 AM UTC

brmgb wrote: post #129

gruez wrote: post #99

Earlier quoted context omitted.

>Not if it's so cheap to keep empty apartments around that you would rather not make money now, in the hope that you will be able to make more money in the future. Ironically rent control laws that cause this. Accepting a lower rent now would mean locking in a lower monthly rate for the future, whereas if you left it empty you can hope that the rental market will recover and charge high rents in the future.

If only the state could heavily tax empty apartments and cap resell price to counter that. But wait, it actually can. Pushing renters and speculators out of the housing markets in favor of people who actually want to settle in the city is probably the best you can do as a municipality.

I must absolutely thank you. I derive personal enjoyment from broken systems and the mass suffering that they produce. Everyone is happy. Isn't that nice?

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

#422

Post by mandelbrotwurst » Wed, Mar 03, 2021, 12:48 AM UTC

foota wrote: post #403

imtringued wrote: post #383

Earlier quoted context omitted.

Rent control only exists for one reason: to keep tenants in their apartments. It's not a tool that is solving a shortage of housing but lots of politicians will insist that new housing isn't needed. You just need to manipulate the useful fiction that is the market and fake everything. At least that's what the politicians think. Even if it means that the market is no longer useful.

Rent control, when coupled with other means of ensuring housing is built for those that can afford it, is a reasonable way of ensuring housing for those that can't afford it at the market price. That is, globally applying a cap on rents would be a bad idea, since there would be no incentive to build new housing. However, when coupled with restrictions such as requiring only some fraction of new housing construction t…

This may depend on where you are, but around here I’d have very low confidence that the government would be capable of efficiently delivering quality housing at a low price.

Edit: Ah, I’m realizing now that you may have meant delivering it to the occupants at a low price out of their pocket, and not necessarily at a low cost overall.

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

#423

Post by freyir » Wed, Mar 03, 2021, 12:59 AM 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…

San Francisco also applies rent control only to older buildings. The effect is that developers only build top-of-market “luxury” housing (often cheaply constructed it rented at luxury rates). This helps them recover their development costs, which they couldn’t recoup on affordable housing.

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

#424

Post by jtbayly » Wed, Mar 03, 2021, 12:59 AM UTC

latchkey wrote: post #355

slavik81 wrote: post #333

Earlier quoted context omitted.

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 we…

In other words, it was still rent controlled.

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

#425

Post by elihu » Wed, Mar 03, 2021, 1:01 AM 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…

Are new buildings exempted from rent control permanently, or just for a limited time?

The latter seems like it would be a workable system: incentivize new buildings by allowing the owners to charge whatever rents the market will bear for the first 10 or 20 years or so, then eventually they revert to rent control (presumably after the original construction costs have been repaid and then some).

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

#426

Post by filoleg » Wed, Mar 03, 2021, 1:03 AM UTC

jtbayly wrote: post #424

latchkey wrote: post #355

Earlier quoted context omitted.

"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 we…

In other words, it was still rent controlled.

Yes, but only until the current tenant leaves. Which gave that landlord all the incentives to make the current tenant leave, as evident by the half-assed repairs and other slumlord-like behaviors that the parent comment mentioned.

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

#427

Post by sokoloff » Wed, Mar 03, 2021, 1:05 AM UTC

WalterBright wrote: post #314

bluGill wrote: post #262

Earlier quoted context omitted.

> Rationing does nothing to increase the supply, Maybe, maybe not. Depends on how you handle prices (or subsidies) along with the rationing. >distributes the existing supply to people who don't need it. A bit, but in the case of housing and food you can safely assume people all need it in about the same amounts. You will be wrong, but close enough. The black market might even by your friend in correcting some of your…

> WWII rationing in the US mostly worked from what I understand It suffered from all the faults I mentioned. The black market in gas was extensive, and even included drive by shootings. In public, people proudly supported rationing, in private, they sold their extra gas to people who needed it at black market prices. Yes, the government did try in their blundering manner to give different rations based on need, but i…

Not to mention the 1942 Labor Stabilization Act[0] that led us the modern employer-provider health insurance situation (which isn't strictly rationing but is an example of well-intended market intervention/price controls being outsmarted by the market participants and casting an enormously long shadow over the country).

[0] Formal title is "An Act to Amend the Emergency Price Control Act of 1942, to Aid in Preventing Inflation, and for Other Purposes"

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

#428

Post by zamfi » Wed, Mar 03, 2021, 1:08 AM UTC

heterodoxxed wrote: post #406

zamfi wrote: post #398

Earlier quoted context omitted.

> For that purpose, it has done very well as a policy. Well...for those who are not actually displaced, yes. But the ones that are displaced are often essentially banished by a dysfunctional housing market. Rent control is not targeted towards the poor and elderly, and there are many others who benefit in the short-term (but then, again, are unable to move because the market rate has skyrocketed, though of course not…

| for those who are not actually displaced, yes. Yes, exactly. | But the ones that are displaced are often essentially banished Without it they would have been displaced even earlier. Speculative bubbles exist outside of rent control, especially in the US where rent control is never all that strong or comprehensive.

I take a very SFBA perspective here, but...

> Without it they would have been displaced even earlier

This is mostly hypothetical. In functioning housing markets that don't manipulate prices or limit new construction through policy, speculative bubbles make little sense -- why would housing become more expensive if it's easy to build lots of it?

The argument that removing just rent control would make folks worse off -- that I'm sympathetic to, of course. Obviously you also need to build. But rent control as practiced in most of the Bay Area causes lots of grief despite only helping a relative few of the desired beneficiaries.

That is, unless you define beneficiaries much more widely than you do -- to basically make it a benefit to seniority. Rent control, like Prop 13 and construction restrictions, work to allocate scarce resources based on seniority rather than wealth or ability/willingness to pay. The argument that it allocates based on need (i.e., poverty, inability to move house) is weak; that's a mild side effect, and policies that just straight up subsidize housing (i.e., vouchers, etc.) for those in need could be much better targeted, and could be funded in a way that doesn't also incentivize poor maintenance, harassment, and eviction.

Is allocating based on seniority better than wealth? For current residents--at least, until they're Ellis'd--sure. For their kids, who lack seniority? Almost never. Everyone needs a place to live. Right now, more people want to live here than we're allowing to (through construction limitations). So, sure, we could argue about how to allocate -- or we could just end the damn scarcity!

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

#429

Post by dheera » Wed, Mar 03, 2021, 1:09 AM UTC

foota wrote: post #403

imtringued wrote: post #383

Earlier quoted context omitted.

Rent control only exists for one reason: to keep tenants in their apartments. It's not a tool that is solving a shortage of housing but lots of politicians will insist that new housing isn't needed. You just need to manipulate the useful fiction that is the market and fake everything. At least that's what the politicians think. Even if it means that the market is no longer useful.

Rent control, when coupled with other means of ensuring housing is built for those that can afford it, is a reasonable way of ensuring housing for those that can't afford it at the market price. That is, globally applying a cap on rents would be a bad idea, since there would be no incentive to build new housing. However, when coupled with restrictions such as requiring only some fraction of new housing construction t…

> supplying government housing to anyone at a low price

Singapore does exactly this with the HDB flats.

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

#430

Post by konjin » Wed, Mar 03, 2021, 1:11 AM UTC

ryan_j_naughton wrote: post #417

There is no reason why housing cannot be much much cheaper than it is now -- so cheap that it is nearly free. Larry Page, in an interview in 2014 discussed how. "Rather than exceeding $1m, there’s no reason why the median home in Palo Alto, in the heart of Silicon Valley, shouldn’t cost $50,000" [1] and attributed this entirely to a policy problem. The answer is continuously increasing supply in a manner that outpace…

Housing can at most grow as l^3, population can grow as e^n. If you want to be withing t hours of place x then you need transport systems that travel at l/t km/h.

Until people have two children or less population will always outpace housing. Anything else is wishful thinking.