Irishman William Campbell lives in Berlin and says despite how we hold up the German housing market as one of the best, it has developed some serious flaws.
FOR AN IRISH person moving to Berlin, a startling contrast with home is the Anmeldung requirement for all of Germany’s 83m residents to register their address, sex-offender style, with the police.
Queuing to complete this task will give ample time to contemplate whether Berlin-style rent-controls might solve our housing problems back home.
Some things in Berlin are grimly familiar – an acute housing shortage and a political system failing to resolve it. Berlin, like Dublin and the rest of Ireland, also has a strikingly low population density.
A lot of Berlin’s extra space is put to great use. Children enjoy more playgrounds than could be imagined in Ireland; parks and lakes are never more than a short cycle away; but take a trip on the Dart-style S-Bahn and you’ll see vast tracts of vacant land, dotted only with derelict communist-era factories.
Of course, the fact that you can see all this land from the S-Bahn means that it is within sight of Berlin’s world-leading transport system, so it’s all the more shocking just how acute the housing shortage is.
Berlin needs about 100,000 new dwellings per year; pre-Covid only about 16,000 were being built.
Berlin is covered by German-wide anti-eviction laws, and the Mietspiegel, which limits rent increases based on other rents in the area; the 86 per cent of Berliners who rent pay either the Mietspiegel or the rent set in a sometimes decades-old contract, whichever is lower.
These contracts are sometimes sold on illegally; the tell-tale word bei (care of) in an address marks an apartment where the resident cannot change the name on the letterbox or doorbell because they are not the tenant named in the contract.
The rents might make the arriving Irish weep – modest apartments in fashionable areas like Friedrichshain are advertised for as little €300 per month, but you might end up living beside someone whose rent of €100 per month has barely changed in years.
You might, if you could actually get a place, but demand vastly outstrips supply. A Google image search for “Berlin Wohnungsbesichtigung” (apartment viewings) returns a page with crowd scenes that you might expect at a rock concert.
In a free market that would be sure to send prices skyrocketing, motivate new construction, and bring supply and demand into equilibrium. But Berlin is not a free market – the powerful state government, controlled by the Red-Red-Green alliance of SDP, Left and Green parties, has been introducing law after law in the past decade to keep rents down.
If the measure of these laws is the availability of affordable housing, they have been a catastrophe, but the hurt is not spread evenly.
The Milieuschutz (character protection) laws have been deployed to control renovation of apartments. ‘Luxury’ fittings, such as of a separate bath and shower, air conditioning, fancy tiles and built-in ovens, dishwashers or fridges are all now verboten in about one-third of Berlin’s apartments.
The thinking was that since unrenovated flats are cheaper, preventing renovation would reduce prices.
In a move that seems difficult to reconcile with EU law, owners in some districts are prohibited from selling their properties, except under the strictest conditions, to anyone other than the city, or a resident of surrounding streets.
Proposed developments on all that vacant land attract well-organised protests, which politicians are not motivated to defy.
Predictably, sales prices continued to climb steeply, because none of these policies addresses the housing shortage; but this policy failure does not carry the political cost that it might.
Searching for a home is ever more nightmarish for people who need it, but most current residents already have somewhere to live, so the problem only affects those – Berliners and new arrivals – trying to establish themselves.
Many voters cheer these laws because it means they enjoy German salaries, combined with very low housing costs. If you have an apartment, the lack of housing is somebody else’s problem.
A cap on rents?
The latest whack-a-mole attempt to control the market is the Berlin government’s Mietendeckel rent cap. This threatens landlords (and tenants who sublet a room) with fines up to €500,000 if they don’t reduce rents, depending on the area, to as low as €200 per month for a two-bedroom apartment.
The real kicker is that this applies even to existing contracts, regardless of how long they have been in place; landlords had a deadline of last April to write to tenants to advise them of the rent reduction.
No news is bad news
Support The Journal
Your contributions will help us continue
to deliver the stories that are important to you
Support us now
Predictably, tearing up existing contracts has attracted a slew of complaints to the German Supreme Court in Karlsruhe, but there is no certainty about the outcome, which will not be known until next year at the earliest.
In the meantime, Berlin’s property market has been thrown into chaos. Apartment viewings, always crowded, are now chaotic – Berlin’s evening news recently carried a report that 1,749 people showed up for a single small apartment to rent.
Despite this demand, anecdotal evidence suggests that construction, paused by Covid, is likely to grind to a complete halt.
In theory, the Mietendeckel law does not apply to homes built since 2014, but a new law is already in the works to change this and developers fear they would be unlikely to recover their costs before getting caught up in the new round of rent controls.
Another new regulation bans the subdivision of apartment blocks, so only the entire block – not individual apartments – can be sold, effectively ending the chance of expanding homeownership.
All this is bad news for a Berlin economy that relies heavily on attracting the skills of people from around the world, particularly to its growing IT start-up economy; but there’s no indication that Berlin will change tack soon, quite the reverse.
This is a war between settled Berliners and the young people from near and far who want to establish themselves.
Since the former by definition outnumber the latter at the ballot box, there is no motivation for politicians to reverse course. So, the more this damages Berlin’s economy, the more entrenched it becomes.
William Campbell lives and works in Berlin and produces the Irish current affairs podcast Here’s How (www.HeresHow.ie) in his spare time.