Berlin buys thousands of apartments from corporate landlords

https://thinkpol.ca/2021/09/17/berlin-buys-thousands-of-apartments-from-corporate-landlords/

by based2 • 5 years ago

297 538 5 years ago

thinkpol.ca

goldenkey2• 5 years ago

I think all countries should be eliminating real estate speculation ;-)

Xi Jinping’s famous words are “housing is for living in and not for speculation.”

When will American join these other countries?

Netherlands: https://news.ycombinator.com/item?id=28422768

China: https://www.aljazeera.com/economy/2021/7/28/in-its-latest-cr...

sokoloff• 5 years ago

Did they get ripped off by some owners that refused to sell and haggled upward?

The first sentence of the article says they bought them from two corporate landlords.

goldenkey2• 5 years ago

Missed that. Thank you good sir.

bserge3• 5 years ago

People are against the idea because in their minds they won't be able to buy 2-3 homes and rent one or two out.

No, this is about companies owning 150,000 apartments in a city that they simply charge ever-increasing rent for. It's lunacy.

andrepd5• 5 years ago

Well to be fair buying 2-3 homes to rent is also undesirable rent-seeking, albeit on a smaller scale.

danlugo92• 5 years ago

I can either own 2 apartments worth $50k each, or have $100k stock in a company that owns $15k aparments.

Can't outlaw one without outlawing the other one.

If you ban one entity from owning more than n apartments, they'll just create apartments/n shell companies.

anovikov4• 5 years ago

Extending that idea, we arrive from lunacy to a good thing: a city that is completely owned by one company. Where police is the company's private guards, the city council is its board of directors, and municipal taxes are just fees the company charges. And that is a good thing. I'd live in such a city if there was one.

For example: no homeless. This is all a private territory, and if you don't pay your rent, a guard escorts you off the premises. Very little if any crime because crime prevention is all in one hands and these hands are protecting by and large, their own private property and their profits (because if the crime rate goes up, rent goes down and rent is how they make money).

A wall keeping undesirables out.

Guards/police that can check your papers anytime just simply as they can say in a hotel - "what's your room number"? So no "undocumented" aliens.

There can't be any constitutional etc. bullshit that could prevent them from having an actual 24/7 guarded wall and checkpoints with papers check around their PRIVATE property. It can be a functional society where everyone who's there, belongs there.

luckylion10• 5 years ago

Meh. I have friends who lived in a Vonovia apartment in a prefab in East Berlin. It's not for me, but the rent was pretty cheap (~10 Euros/sqm, heating + warm water included) and didn't get raised during the years they lived there.

Berlin just came from a place of super low rent and is slowly catching up to other large German cities. Understandably, Berliners are in shock, but it's more "things are returning to normal" than "Berlin is so expensive, nobody can live there".

notanzaiiswear18• 5 years ago

You can not simply charge "ever-increasing rent". You can only charge what people are willing to pay. More people are pouring into the city every day who are prepared to pay more. Simple as that.

Those companies owning 150K apartments are also shareholder companies, so "small people" and their pension plans will still be affected.

andrepd5• 5 years ago

Houses can be homes to live in or can be an investment. They cannot be both. Since spending considerable labour and materials building concrete boxes for the ultimate purpose of speculation is silly, then it must be the former.

coralreef2• 5 years ago

What is an investment defined as? Because I'm pretty sure someone can buy a home, rent it out and make a monthly return on it, thus satisfying both a place to live and investment.

Or live it in themselves as they ride the speculative wave.

Retric• 5 years ago

As long as homes are being used there is little difference between them. The important bit to keep speculation rational is to keep occupancy rates high, a simple tax on unoccupied homes seems like the logical solution.

notanzaiiswear18• 5 years ago

Bullshit. Of course buying your own house is also an investment decision. You speculate that its future value minus your initial investment (and plus the "extra joy" you get out of being a homeowner) is worth more than what you would have paid in rent in the same time.

imtringued9• 5 years ago

Building housing for others to live in is an investment and we should encourage it. The problem is that houses don't exist in isolation, they are built on land. Most of the value is in the land.

Land is valuable because taxes pay for public services and you need to be in close proximity of public services to benefit from them. Investing into land is effectively investing in the exclusion of other people, which is why the land owner should compensate the government for the public services he is receiving.

sva_• 5 years ago

I don't know much about housing in Berlin, but I think the story is that in the time after the Berlin wall was torn down, late 80s, the city really needed money. As a result, they sold hundreds of thousands of publicly-owned apartments to these private companies in the 90s and 00s for almost nothing.[0][1] Now those apartments are worth a lot more, and people are mad because housing is not affordable to many. Hence you often hear demands for dispossession.

The whole story is probably a lot more complicated though, idk.

[0] https://www.tagesspiegel.de/berlin/nach-der-privatisierung-w...

[1] https://www.tagesspiegel.de/wirtschaft/immobilien/neubau-in-...

edit: if you read [1] for example, the private companies bought 65000 apartments for 400 million Euro. Now the city bought back 14750 apts for 2.46 billion Euro. Considering that these houses probably have barely been renovated if at all, the quality probably dropped significantly.

FredPret4• 5 years ago

Well if Xi Jinping says so…

yunohn14• 5 years ago

I wouldn’t use the Netherlands as an example, your link is only a “plan” they’re floating.

The housing situation here is horrible - skyrocketing prices and massive corporate ownership. Real estate is massive money, and the politicians are in on it - so nothing is going to actually change. Plus, they take forever for new builds, so supply doesn’t meet demand at all.

wsc981• 5 years ago

One member of the Dutch royal family even owns about 500 apartments (IIRC) in Amsterdam.

imtringued9• 5 years ago

There you have it (the solution): https://youtu.be/Li_MGFRNqOE

mjevans• 5 years ago

The only way to correct the market is for more supply to exist. Adequate supply would ensure that competition works.

bserge3• 5 years ago

More supply on limited land. Which will be bought out by the same 5 real estate companies, just like everything else.

harryh19• 5 years ago

Even if you were right (and I don't think you are) about the same 5 real estate companies buying up all added supply, it wouldn't matter. Those 5 companies would still be subject to the forces of supply and demand. Increased supply with flat demand means falling prices.

https://twitter.com/cw4emeryville/status/1438862784024891394

inglor_cz6• 5 years ago

Remarkably, Austrian capital Vienna manages to keep a good municipal stock of affordable housing. But other cities failed to imitate Viennese methods.

Also, Berlin has a lot of land that could be built upon. Land is not a scarce resource in that particular corner of Europe.

eliaspro• 5 years ago

...if you see housing as a market and not as a fundamental right in a civilized society.

harryh19• 5 years ago

If you declare housing "a fundamental right" then you still need more supply when you have a location (like Berlin) that doesn't have sufficient housing for the number of people that want to live there.

FredPret4• 5 years ago

A fundamental right it may be but it has to be built by somebody and that costs money. So it’s a market

luckylion10• 5 years ago

Regarding the "fundamental right" ... does that include "at the location one wishes", "of the size that one wishes" and "for the price that one wishes"?

Because there's no shortage of housing in Germany, it's just not hitting all three of those. People want to live in sought-after areas, have large apartments and pay very little. Understandable, but everyone should be able to see why that doesn't work.

dvh• 5 years ago

It won't. Companies will always have more money to spend than people. We should add extra tax on house/apartments and you don't need to pay it if you live there. Initially landlords will add tax to rent but as the tax will increase (let's start at 1% and increase each year) eventually the rent will be so high nobody will be able to afford it and landlord will have to sell it.

tekkk• 5 years ago

I have thought something similar but more in terms of deduction for living in your own home. But it does make more sense to increase the cost of rent-seeking as well.

Also i pondered would adding a law that allows tenants to have an option for purchasing the house at market price for decreased taxation for the landlord help. That should make more people home-owners and thus allow them to generate more wealth in the long run.

Of course the whole topic is so complex it's impossible to invent any rule or law that fixes everything. But preventing useless speculation is what every common sense individual should wish for.

goodpoint6• 5 years ago

False. Housing is not an elastic "free" market. Houses are not fungible goods like bolts or eggs.

https://blogs.cfainstitute.org/investor/2017/03/27/where-mar...

goodpoint6• 5 years ago

Why the silent downvotes? This is the most basic economy 101.

ryan933• 5 years ago

Are you claiming that if America's housing supply literally doubled overnight prices wouldn't change?

dredmorbius10• 5 years ago

Technically, it's land that's not a fungible good.

Housing (and other construction) is. The key though is to tax the unimproved land value to make low-density, low-intensity utilisation (and unimproved holdings) economically nonviable.

grey_earthling• 5 years ago

How would you go about creating more land?

lordnacho• 5 years ago

You change the laws to incentivize building up. You add transport infrastructure, parks, schools, etc.

Valakas_2• 5 years ago

Let me give you an exercise in thought so you can see that just simplifying it into "dEmAnD vs SupPly pRobLem" is incredibly misleading.

Imagine there is one person that owns 99% of the worlds wealth. Now, is there demand for housing? You bet. That guy wants to buy all the houses he can. If they build more, he will buy them too. No matter how much supply you offer, the demand will be there. He will buy anything. Now replace wealthy guy by corporations, REITs and wealthy people (who would own not 99% but ~90% of the world's wealth) and entertain me how increasing supply fixes anything.

harryh19• 5 years ago

Your thought exercise is interesting, but not in the way you think.

Property owners do, in fact, conspire with each other to prevent the construction of new housing (via zoning laws). They do this, as you say, so that they can get richer.

Allowing them to get away with it (by denying the fact that there is a supply problem) plays right into their hands.

What we need to do is thwart their scheme and, through better government, legalize the construction of new housing so that wealthier people who own much of the existing property stop seeing artificial government created gains in the the value of their housing because they've conscripted the government into their cartel.

qeternity9• 5 years ago

As another commenter notes, housing is unaffordable because marginal demand is greater than marginal supply. We can either decrease demand, or increase supply.

Housing demand is pretty sticky, so that leaves us with one option.

djrobstep• 5 years ago

Please stop saying this - house prices in Australia have recorded record growth in the same year as record low immigration due to covid restrictions. The primary driver is low interest rates enabling cheap debt, not "supply".

rce• 5 years ago

Thanks for mentioning interest rates as well. Though I don't know that it counters the original point. Things can have multiple causes. Both limited supply and low interest rates can be major contributing factors.

Spooky23• 5 years ago

Many HN posters are California based, and apply the weird nuances of that market with everyone.

The demand side of capital is underrated because it’s hard to see. Normal folks don’t realize that managers of large funds are doing previously impractical things like buying suburban subdivision homes because they have access to unlimited capital and can offload/distribute risk.

foobar33333• 5 years ago

The prices in Australia are based on forecasted demand. Since there is almost a 100% chance that the population of tomorrow will be greater than today, that means you can buy on higher prices than current demand. Unfortunately that means houses can be considered worth almost infinite dollars since the population will keep going up.

fighterpilot8• 5 years ago

Lack of supply due to zoning restrictions is undoubtedly a huge part of it.

TeMPOraL4• 5 years ago

That may be technically true, but it misses the fact that the demand pool is larger than it should be - it consists of many other actors than just people who want to live in a given location. Those other actors tend to have more money.

notanzaiiswear18• 5 years ago

Who exactly are you talking about?

HappyTypist2• 5 years ago

Without regressing to another ad-infinitum housing discussion, real estate involves two markets: rentals/living, and ownership.

Some people want to own their own home and live in it (owner occupiers); these people however compete with investors who are seeking to rent it out. While investors don't directly affect the rentals market (as you'd expect an owner-occupier to not be a renter), they do push the price of housing, because housing becomes more of an investment (competing against everything else with zero / negative interest rates).

Progressive taxes on investors can mitigate this and make home ownership more affordable. First property, no tax. Second property, 1% of its land value charged annually. Third property: 2% of its land value, etc...

mattmanser2• 5 years ago

Then you just get thousands of holding companies.

mnd9992• 5 years ago

You’re forgetting investors who don’t want to rent property. They just by new properties, keep them empty and pristine and profit of the rising market value of the asset. Sounds crazy but it’s definitely a thing in London. It should attract very high taxes to make it unviable but of course it doesn’t.

notanzaiiswear18• 5 years ago

I don't follow your logic. In both cases, home ownership or rental, you need one house per interested party. Why should one be more expensive than the other?

And why should politics decide for people whether they should rent or buy, I mean, why push them in one direction or the other?

sagichmal10• 5 years ago

Progressive taxes on investors can mitigate this and make home ownership more affordable

In Germany home ownership is not seen as strictly positive in the same way it is in the US for example. Many, perhaps even the majority, of Germans go their whole lives as renters.

qeternity9• 5 years ago

It’s not two markets. It’s one market with two different models (like cars: buy vs lease).

There is an arb between the two markets which should hold them in tandem on a risk adjusted basis.

sudosysgen15• 5 years ago

That's just not true. Many people just want to live. They will rent or buy.

Housing supply is housing supply. There is scarce distinction in real life between rental and occupier owned housing.

parasight• 5 years ago

Buying the apartments is a short term solution to take pressure off of low income tenants. This is not about supply and demand. Increasing supply is a mid to long term solution.

By the way, land is also limited in Berlin and therefore expensive. Makes building cheap apartments difficult.

djbebs3• 5 years ago

Land is limited for political reasons.

daverol• 5 years ago

Sometimes there is no intention to build, just use the German market as a cover for a ponzi scheme, see <https://www.bbc.co.uk/news/business-55077709>

qeternity9• 5 years ago

By the way, land is also limited in Berlin and therefore expensive. Makes building cheap apartments difficult.

This is the other reality of free markets and scarce resources: if there is only so much land in Berlin, and lots of people want to live in Berlin, then it means some people won’t be able to. That’s just the reality. Unfortunately that means people who can’t afford have to move. As sad as that is, we don’t have a better system for allocating scarce resources sustainably.

mupuff12342• 5 years ago

Only if you think that the demand for real estate is mostly driven by housing needs, and not speculation & monopoly style hoarding artificially driving prices higher.

qeternity9• 5 years ago

Without a doubt, it is not mostly driven by those things. Investors have lots of choice about what to invest in. People don’t have any choice about needing shelter. They will pay whatever the price is.

I get that wealthy investors driving up housing prices gets people angry and is a good rallying cry. But it’s such a small piece of demand.

littlecranky674• 5 years ago

Housing in Berlin is not unaffordable, else the occupancy of those houses wouldnt be so high.

dathinab5• 5 years ago

It's not that simple.

Affordable housing in Berlin means:

- "Normal" people working in Berlin can afford it (e.g. prices are still below e.g. Munich but you ear much more in Munich).

- You are not forced to spent so much money on housing that you not can't really afford anything else.

- We are speaking about apartments available now, there are a lot of people with older rental contracts which as such still pay much lower rents. (I.e. the price of entering a new rent contract is basically always noticeable above the average rent price, often as much as legally possible).

You can totally have "unaffordably" priced housing and high occupancy, because housing is in general not a think people can choose to "simply not have".

Also if you decrease the supply of "affordable" housing and make the remainder more expansive you totally can have an effect where occupancy stays high and people and up on the street (decrease the supply => convert rented apartments to owned ones, which don't count into "rented apartments occupancy").

So what you see is:

- More WGs i.e. people sharing a apartment and the rent, and this is not just young people.

- A lot of "natives" moving away from Berlin.

- A lot of rented Appartments being converted to owned ones, some being actually used other not.

- A lot of people with non-high wage jobs spending so much money on rent that they have no money left to put aside for emergencies and potentially even have to cut corners in their daily live.

- Some more wealth people coming to Berlin.

One major difference to some of the more expensive cities in Germany is that people people tend to earn much less money and thinks like "moving to a cheaper metro area around Berlin" are often not really viable (as there isn't that much to move to, it might actually be more expansive then living in Berlin it also is legally seen another German state and commute times can become a problem, too. I mean they can be a problem in-side of Berlin, it's a pretty wide city.)

qeternity9• 5 years ago

Haha yes, a commenter after my own heart.

Of course, the only unaffordable price is one which the market will not bear. Any price at which a market transacts is by definition affordable.

And herein lies the issue: everyone wants to live in Berlin, but not everyone can live in Berlin. Price is the mechanism by which we determine who values living in Berlin most.

You might not think it’s fair, but this is the reality.

bjackman2• 5 years ago

Demand for _homes_ is sticky. Demand for property ownership is not at all! It is influenced by speculation and rent-seeking. We can easily cripple both those things and reduce housing cost.

(Edit: I do agree with your conclusion though. We need more homes)

Valakas_2• 5 years ago

Yes but there are 2 main types of demand in there. Demand coming from institutional and extremely wealthy investors and demand from regular folks. Who do you think is more likely to be the responsible for such an increase in price?

So i disagree with the solution you propose. The better solution is to reduce the type of demand that is responsible for this failure in housing prices.

qeternity9• 5 years ago

Who do you think is more likely to be the responsible for such an increase in price?

They of course are contributing factors and if you want to regulate that, fine, go ahead. But they absolutely are not driving prices higher. Investors have tons of alternatives to invest in if prices are too high. People don’t have alternative forms of shelter, so they will tend to pay whatever the price is. And society facilitates and exacerbates this through well meaning efforts like “affordable housing” policies that artificially reduce interest rates and drive demand higher.

The bigger issue is that housing and property should never have become a de facto investment class. You should not earn inflation adjusted returns for owning a house. But of course, most wealth in the world is due to housing. And the next generations just increasingly get screwed over.

thazework• 5 years ago

Berlin's population hasn't increased significantly since the end of WW2. There may be desirable areas that are experiencing demand spikes but the price increase seems city wide. Why is supply more of an issue right now? It is a question of (money) supply.

KoenDG• 5 years ago

Commercially backed mortgages. The reason it doesn't work the way you're describing.

Supply and demand do not exist in a vacuum.

There's no _immediate_ response to people not being willing to pay a certain amount.

Owners, and especially individuals or companies that own large amounts of housing, will refuse to lower prices, regardless of demand dropping. Be it actual demand, or people staying away because the price is too high.

Because they have the power to do that.

I invite you to watch these little documentaries on new york city: https://www.youtube.com/watch?v=Zjd1WNhGliY&list=PLkVbIsAWN2...

Where store spaces have not been rented out for sometimes a decade, because owners consistently refuse to lower prices. Just refusing to lower rent, for years on end, and being empty that entire time.

And if you ask why, the answer is: commercially backed mortgages.

It's simply: you take a loan with a bank for, say, 10 million USD. You're required to pay this loan back over a period of 10+ years. The bank, meanwhile, sells this as an investment product. The bank uses their own funds to guarantee the profit this loan is going to generate, and attracts investors to take a part of it. Thus gaining them a % increase after X years.

However, this means that you can't ever lower the amount you have to pay back, if the value of the physical good your property is based on, drops.

Price isn't dynamic in a pure sense. There's a person on the controls and if they refuse to move them, even if you think it's illogical to do so, they're not going to budge.

Because they have a loan to pay back. Over a finite amount of years. And lowering rent means longer time to pay back the loan, meaning breach of contract.

There are far more systems in place than many are even willing to consider. For it assaults their idealized worldview.

Be it shop or regular housing, this is a system that artificially stops prices from dropping.

qeternity9• 5 years ago

Yes and no. Yes, property investment and speculation and inflate prices beyond their consumptive utility.

But no in the sense that commercial real estate investors are a small chunk of the global RE market. The vast majority of residential property are owned by the tenants. We have turned housing into the largest retirement fund and don't have a way of undoing that. And we have exacerbated this by deciding to push interests rates artificially low so that all sorts of people who otherwise would be priced out of home ownership, are now part of the demand curve competing against the same supply curve.

dorgo• 5 years ago

Because they have a loan to pay back. Over a finite amount of years. And lowering rent means longer time to pay back the loan, meaning breach of contract.

I don't get it. Refusing to rent out the property means even longer time to pay back the loan, doesn't it? It can't be the reason.

linuxftw• 5 years ago

Socialized housing only creates slums. Tenants have no incentive to keep the place nice, government rationing of maintenance ensures they degrade faster than the government is willing to spend to keep them functioning. Anyone that can afford better moves out. Eventually (not that long), only destitute remain.

FredPret4• 5 years ago

This, 100%. Then a new generation grows up in said slum with its attendant effects on their development and the cycle worsens

kebos• 5 years ago

I'll take social housing over the homeless problem you get in countries without large social housing stock 100x.

Maybe some % of people just aren't going to break the cycle. I'd still rather they aren't homeless and causing decay on the streets.

nicoffeine2• 5 years ago

That's why Vienna mixes subsidized housing and regular housing, often in the same building. They also allow families to stay in their housing or purchase it as long as they pay the higher rate related to their rising income.[1]

The problem in the US is that there is no gray area for subsidized housing. As soon as you hit some magic number, you lose all of your benefits. The people who game the system to stay under this number are not stupid, but acting rationally because they know their new job may not stick around. They would rather have housing security than take a chance at losing everything and living in the street until their tax return shows that they are poor again.

[1] https://www.newstatesman.com/spotlight/2019/09/housing-basic...

nicbou7• 5 years ago

Berlin has a few city-owned housing companies [1] that provide above average service. You'd be much happier with DeGeWo than with Akelius.

[1] https://allaboutberlin.com/guides/find-a-flat-in-berlin#hous...

mnd9992• 5 years ago

Sometimes that happens, but not always. Take the Barbican centre in London as a very well known counter example.

odiroot• 5 years ago

It's a part of the City though. Not sure it's comparable.

ZeroGravitas• 5 years ago

https://en.wikipedia.org/wiki/Public_housing_in_Singapore

Relevant quote "In 2008, Singapore was lauded by the United Nations Habitat's State of the World's Cities report as the only slum-free city in the world"

postingawayonhn5• 5 years ago

I think that very much depends on whether government owner housing is a last resort for the poor or open to wider sections of the population.

imtringued9• 5 years ago

This is an unhealthy opinion because it goes too far into either extreme.

beckman4662• 5 years ago

Socialized housing only creates slums. Tenants have no incentive to keep the place nice
destitute

It sounds like you're one of those people who looks down on marginalized groups for no reason. Stop poor-hating.

aomobile• 5 years ago

Didn’t they sell government housing before? Anyway this is probably a bad idea as governments are bad landlords and taxpayers will get the bill eventually

oreilles• 5 years ago

Except contrary to any other landlord, the government doesn't expect to earn money but to have a balanced budget. This is why medical expanses are much higher in the US than in any European country. This is why all basic necessities should be controlled by the government. Water, roads, internet, housing.

mgbmtl• 5 years ago

Not all governments are inefficient, and not all types of public housing are cheap. See Vienna. It can work.

Where I live (Montreal), a very common model is housing cooperatives. Funds help build or buy property, then gets converted to housing rental coop. It's not perfect since not everyone wants to manage a building, but it works fairly well overall.

Leparamour4• 5 years ago

Not all governments are inefficient

Unfortunately Berlin administration is infamous for this, across all parties.

jdiez17• 5 years ago

I know some people living in apartments owned by the Berlin. Their experience with state-owned rental agencies is much better than most private landlords. FWIW.

fallingfrog4• 5 years ago

A lot of people are saying that housing supply needs to go up to resolve the problem. This is essentially correct! But the market is not doing it, so government intervention is reasonable. The government should buy land, construct a whole bunch of high quality housing on it, then rent it at below market rates. Rents in the rest of the city will collapse downward to compete.

Problem solved. This is the same tactic that the us government used to make electricity cheap in the 1930’s with the construction of the grand coulee dam.

Edit: Look: governments all over the world are willing to plow unlimited amounts of money into the stock market when rich people are in trouble. But when young people just starting out can’t get an affordable apartment, somehow nothing can be done.

Let’s get real. This is a matter of priorities.

luckylion10• 5 years ago

The government should buy land, construct a whole bunch of high quality housing on it, then rent it at below market rates.

They can't, because they'd need to zone that land for housing use (a different part of the government is responsible and won't do it) and they'd have to relax the regulations for building houses to make it cheaper (another different part of the government is responsible and won't do it). You can't spend your budget on subsidized housing if you also want schools, infrastructure and low tax rates.

fallingfrog4• 5 years ago

Low tax rates for existing landowners are not the goal here; low rents for young people are what you want. One makes the city grow and thrive, the other just allows old or rich people to have big piles of money.

I said high quality housing, not crappy housing. No need to relax regulations or fiddle with zoning.

enaaem• 5 years ago

In many Asian countries you can just buy a townhouse, break it down and built a flat. Something like that would be unthinkable in the West.

baybal22• 5 years ago

Indeed, quite a number of countries don't have a concept of zoning at all, or nowhere near what it is in US.

Most of South Asia lives with nearly completely unregulated construction. Somebody just building a very narrow highrise on their townhouse plot is nothing unheard of, if not quite popular. Google Dhaka, or Karachi.

Most of China's villages near big cities in the south are chock full of self-constructed 5-10 storey apartments.

Wealthier South East Asian countries are starting to flex bureaucratic muscles on that, but I believe rather cautiously. A highrise flat, even completely illegally constructed, is way better than a slum, by any measure.

nkmnz5• 5 years ago

The construction market is heavily regulated in Germany. The government is actively suppressing the creation of supply by issuing permits very slowly (or not at all) due to zoning laws and similar bureaucracy, or due to financial reasons: in a lot of places, the city itself is already the biggest owner of housing. They would reduce the value of their own assets.

chii• 5 years ago

rent it at below market rates

if the gov't rents it out at "below market rates", a black market would form to take the arbitrage profits (legal or illegal).

fallingfrog4• 5 years ago

By that logic, the construction of housing by the private sector would never make rents drop either. There’s no difference whether the government or the private sector does it.

postingawayonhn5• 5 years ago

In popular cities around the world zoning is the main factor limiting housing supply. Governments are actively intervening to constrict supply.

djbebs3• 5 years ago

Government intervention is literally the reason the market is "not doing it"

sagichmal10• 5 years ago

This is... obviously not true?

Demand exists at a lower end of the market, where there is less incentive for suppliers. There is no affordable housing stock being created. Government exists for things precisely like this situation.

yunohn14• 5 years ago

Not sure how much of a real change this will make, but man, what a bad deal for taxpayers. They shouldn’t have allowed rampant corporate ownership in the first place, but now they’re going and spending public money on overpriced real estate.

secondcoming• 5 years ago

This is happening now in the UK. Lloyds bank [0] and John Lewis [1], a retailer, are both planning to tap into this revenue stream.

[0] https://www.theguardian.com/business/2021/aug/19/lloyds-plan...

[1] https://www.theguardian.com/business/2021/jul/04/john-lewis-...

dazc• 5 years ago

I am all for big businesses moving into buy to rent. There are far too many amatuer landlords in the UK making a living by renting out poor quality housing.

My office landlord also has two small flats above (think glorified bedsits) and his partner also rents out a tiny cottage. This is their living (aprox. £3k a month), neither works or has any other business, all from a 'portfolio' of properties that maybe cost £150k twelve to fifteen years ago.

As an example of market inefficiency, multiply this across the country and it's not hard to argue that the housing market is severely broken.

kiba4• 5 years ago

This is exactly the kind of solution I favor in the states. Buy up properties, build or expanding housing supply, and then either continue to subsidize it or sell it back to the market while imposing land value tax.

Why? Because the problem is lack of political will. You can't expand housing supply if nobody wants to.

It's a piecemeal solution until we figure out something better or that society is willing to support public housing initiative. Otherwise, we would be waiting forever for entrenched political opposition to die or the situation to worsen over time.

notanzaiiswear18• 5 years ago

Or, you could simply allow private entities to build housing.

I am sure especially in those "hot" areas where prices are spiralling out of control, there is no shortage of entities with the "will" to build.

That is usually the point behind markets, rising prices give an incentive to increase supply.

fighterpilot8• 5 years ago

Why not just let private developers build apartments. They have the capital, know-how and will to do it. All that needs to happen is government and councils getting out of their way with zoning restrictions and the problem will fix itself as if by magic.

I agree on the land value tax part of what you said, though.

asdfasgasdgasdg10• 5 years ago

Maybe this is just me being a filthy capitalist, but it also seems somewhat fair? If cities are instituting rent controls on properties that were previously market rate, that is a targeted form of wealth expropriation. To be clear, I'm not one of these "taxes are theft" people -- we do have to pay shared costs. But there's a continuum of acceptability: it would clearly be wrong to pass a law that raises taxes on one person by name. And it's clearly ok to raise taxes on everyone.

For me, instituting rent controls is towards the less acceptable end of this spectrum. If the city believes it ought to be able to set prices on an apartment, it should own that apartment first. Just my unenlightened gut feeling on this issue.

notatoad• 5 years ago

You can't expand housing supply if nobody wants to.

it's wrong to say "nobody" wants to. the problem is that the homeowner class holds all the political power, and so there is no greater political sin than decreasing the cost of housing (or "lowering property values" in homeowner terminology). if anybody cared what non-homeowners thought, there'd be plenty of will to build more housing. as long as so many people's net worth is tied to their housing, there will be no appetite for lowering the cost of housing.

est313• 5 years ago

The worst is: just a couple of years ago, in 2013, the (mostly) publicly owned BayernLB has sold 32 000 condos/rentals to a private owner for extremely cheap prices: around 77 thousand euro per rental.

https://de.wikipedia.org/wiki/Bayerische_Landesbank#GBW-Verk... (German)

foepys3• 5 years ago

In 2008 the state of North Rhine-Westphalia sold ~93,000 apartments for about 8,500€ each to Goldman Sachs. The reasoning was that the apartments were in bad shape and renovations would be expensive.

It's ridiculous how concerned politicians, especially conservatives, act now.

https://rp-online.de/nrw/panorama/leg-mieter-in-sorge_aid-11... (German)

amelius• 5 years ago

Yeah, it's completely bad timing, like the situation took them by surprise. Doesn't the state employ economists and planners to handle these situations properly and timely?

If so, what were these economists thinking? What is the profession even worth if it brings a false sense of knowledge and security?

awild5• 5 years ago

Privatisation was seen as a cool thing 10-20 years ago.

hk-im-ad3• 5 years ago

Real estate rarely decreased in price, especially in Berlin. It may turn out to be a good investment.

yunohn14• 5 years ago

That’s exactly… the problem? Housing shouldn’t be an investment, for corporates nor the government.

lumost• 5 years ago

The only way for housing to keep rising at its current speeds is for buyers to spend a greater share of income on housing and for interest rates to fall.

Interest rates are near zero and individuals are spending very large portions of their income on housing. Continued expectations for high returns on housing will lead to hard landings/defaults or pathological cases where renters don’t pay rent and can’t be evicted.

rastafang3• 5 years ago

Im glad I bought in 2009 because it decreased A LOT

notanzaiiswear18• 5 years ago

"rampant corporate ownership" - what exactly makes it "rampant"? It is just ownership.

I live in Berlin and for the most part, the houses really just sit there. They are not on a rampage or anything.

yunohn14• 5 years ago

Rampant:

(of something bad) getting worse quickly and in an uncontrolled way

<https://dictionary.cambridge.org/dictionary/english/rampant>

abliefern2• 5 years ago

spending public money on overpriced real estate

What gave you that idea? The transaction is explicitly budget neutral, this is entirely financed by loans that will be covered by rental income.

axiosgunnar5• 5 years ago

Who carries the risk if rental income dries up? Exactly, the tax payer.

cnorthwood• 5 years ago

is this necessarily a bad deal? Governments can normally raise capital at significantly lower interest rates than the private sector, so if the private sector was making a profit on this, then the public should be able to do too, and then re-invest that into public services

imtringued9• 5 years ago

The government sold public housing and then bought (other) units that have appreciated in value.

ivan_gammel4• 5 years ago

At average price of approx.160 000€ per apartment it can be a good deal if financed with debt. Market value for those apartments is likely much higher and city-owned property firms can borrow very cheap. The only question is, whether this debt should be used to fix a short term problem with increasing rents or to invest in building more city-owned apartments. Besides, this deal may discourage investors, which may see property market in Berlin as low margin due to artificially limited returns.

WinstonSmith842• 5 years ago

"overpriced" is accurate. People complaints of rising rental prices, but property prices have skyrocketed to a much faster pace.

A realignment is going to be due at some point in the future: either rental price will have to catch up faster, which would fuel more discontent, or the real estate will have to "collapse" ...

HPsquared• 5 years ago

What will happen, I think, is a large amount of inflation. Prices of everything else (including wages and rent) will increase substantially, but house prices will stay (nominally) about the same.

That way, they cease to be overpriced but the owners avoid negative equity.

harryh19• 5 years ago

Corporate ownership of housing is good. Every time I’ve rented from a corporate landlord, it’s been great. They’re organized, have staff, fix problems promptly. Every time I’ve rented from an individual owner, it’s sucked. They are undercapitalized, don’t know what they are doing, and hem and haw over every tiny repair expense.

Economies of scale are real.

GoodJokes• 5 years ago

You live in bubble and are failing to look at all aspects of your situation including your own wealth.

pgeorgi• 5 years ago

Ownership moves from corporate to communal, which also manages several thousand units already. There's no individual owner involved in this scheme.

yunohn14• 5 years ago

Believe me, I’ve lived in both individual and corporate owned rentals. I fully agree that the latter are better organized, and economies of scale are real.

But I’d much rather nobody invest in housing, and governments handle scaled affordable housing - so that there’s accountability and no profit motive.

P.S. Please no replies claiming anything run by the gov will fail; those are boring and called whataboutism.

vanilla_nut3• 5 years ago

Meanwhile, every time I’ve rented from a corporation the property management has been evasive and incompetent, punting issues down the road and fixing issues with as little effort as possible (often leading to lasting damage and more expensive repairs down the road). All of the private owners I’ve rented from have been incredibly helpful, quick to deal with issues, and willing to flex on move-in/out dates, month-to-month terms, etc.

Sometimes it’s about the personal touch, not “economies of scale.”

humaniania6• 5 years ago

It's not good. It's better than awful. What a horrible way to decide how to structure society. Landlords are parasites that expect their tenants to pay >100% of their mortgage costs every month or they'll be heartlessly ejected into the street.

klyrs2• 5 years ago

I've never had a prompt and responsive landlord. But at least with an individual, you get the responsible party on the phone. With property management companies, you need to navigate the corporation in order to get work done, and some are quite skilled at putting stupid barely-legal obstacles in your way.

Economies of scale are real.

Agreed. Try getting google on the phone for support.

MichaelMoser123• 5 years ago

In 2004 the state of Berlin sold 65000 flats for 405 million euro. Now they are buying 14700 flats for 2.46 billion euro. https://de.wikipedia.org/wiki/GSW_Immobilien . Back then they had the same coalition in power as today, the taxpayers money at work.

hristov• 5 years ago

What you are missing is that corporate ownership makes it much easier to raise rent. It is very hard for 100 000 individual small time landlords to collectively raise rent in normal conditions (i.e., with no housing shortage). Many will lower rent to get their properties rented faster. But if you have a dozen or so large corporate owners it happens almost automatically.

This is very simple and well understood economics. If you lower the number of providers of a good or service they gain bargaining power.

Large corporations work very hard to make sure there is as large as possible number of providers of every item they buy and every service they use. But somehow when it comes to ordinary people, we are supposed to pretend it is a good thing. No, it is not a good thing.

bildung2• 5 years ago

You get the best of both worlds with housing cooperatives, where the tenants are also collective owners of the units. Those are pretty common in Berlin and the rest of Germany (at least Eastern Germany).

You have a large enterprise giving tenants the advantages you described, while also removing the incentive to rise rents on every possible occasion.

tmpz22• 5 years ago

I had my deposit stolen recently by a large corporate landlord in SF when COVID lockdowns started.

Large corporate landlords are the ones who calculate the legal costs of massive abuses and do it anyways.

41209• 5 years ago

It’s also much easier to avoid scams.

Plenty of individual owners will rent out units they don’t actually own , rent it out while in foreclosure, etc.

That said, always see the unit first. Avoid luxury apartments! Get the cheapest place in the best neighborhood

dgellow• 5 years ago

When I was in Berlin I got the exact opposite experience. Same in Hamburg. Are you actually talking about Germany?

wonnage• 5 years ago

The worst is renting a condo and then something affects your unit that requires the HOA's involvement... might be faster just to move out.

endymi0n• 5 years ago

Here in Berlin, the measure has large support and I don‘t know why. It‘s mostly because the measure is called „disowning“ corporate landlords, which seems to resonate with everyone being angry at the rents.

Had they called it „paying out the last decade of profits to corporate landlords to keep the rent of 5% of Berliners instead of building new housing to lower the rents of 95% of Berliners“ (which is what‘s planned), I guess it would have way less support. It‘s a populist market rigging measure just as futile as the failed rent control and I‘m not looking forward to the impact on the city.

blablabla1232• 5 years ago

But it's also a symbolic value, that something is fundamentally changing. 15000 apartments isn't that much for Berlin but a billion is.

Of course more apartments are needed and Berlin needs to grow in height and diameter. But also there is no point in landlords hardly putting any efforts in to keep apartments in good shape. Needed repairs and modern upgrades are labeled as luxury renovations which is just a total distortion of reality. At the same time there are small, non-corporate landlords which put in more effort, are more approachable but who in reality invested in a casino-like asset. IMHO real-estate makes only sense for institutional investors, private or governmental because any single error can be financially disastrous and needs to be averaged out.

That's why I backed the bill but I hope everyone is working towards something better...

mqus• 5 years ago

The "disowning" part is somewhat different from the current transaction though. It will be decided by referendum if the "disowning" actually happens and at least the proponents say that Berlin should not be paying market rates for the apartments.

The article mentions a different deal that was struck separately without a referendum. I think there is not much support for buying back apartments for such prices.

andi9992• 5 years ago

I totally don't get it. Why not use that money to build more apartments instead. Why take on the liability with these apartments beiing asbestos contaminated and needing more money to get rid of this. Too me there is the stench of corruption but I don't have evidence. My Hanlons razor is not sharp enough to cut this here though.

rad_gruchalski2• 5 years ago

Here in Berlin, the measure has large support and I don‘t know why.

This fits perfectly into the recent “eco, socially responsible, ev, wind and solar power, fridays for future, throw the baby out with the water green party support, take from the rich-give to the poor, 100kph Autobahn speed limit, we need to be the best example in the world at whatever cost” mental state of Germany. It doesn’t have to make sense. It is what it is.

ibotty• 5 years ago

It depends on how much they will pay. There are studies showing that it does not have to be that much. The Grundgesetz (German constitution) allows not paying market value in certain cases.

https://gentrificationblog.files.wordpress.com/2021/08/ag-so...

refurb3• 5 years ago

The market for housing sets the price. Whether it is owned by a family, a landlord with one property or a corporation doesn’t change the price.

rastafang3• 5 years ago

Around here, corporations buy a lot of homes and rent them so that probably affect prices.

ivan_gammel4• 5 years ago

In Berlin property market is heavily regulated. Same property under different legal conditions may have 50% spread in price for which it can be sold. City is currently buying at a price not available to ordinary investors in order to offer rents significantly below the market. And it is still an ok deal for sellers, which purchased it much cheaper.

asoliveira• 5 years ago

Exactly.

After the leftists start to fuck up the real estate market with rental cap, statization, and other threats. The real estate investment fled the city.

Now it's almost impossible to find an apartment in Berlin anymore.

This populism is ruin the city, which needs to build new residents for the incoming influx of migrants.

sudosysgen15• 5 years ago

Go to London. Then you'll see if the free market can provide what you want. It doesn't.

jounker3• 5 years ago

Yeah, the shouldn’t have allowed rampant corporate ownership. Now is a great time to remedy that. Given the city’s continued growth, in ten years that real estate will look like a great investment.

jounker3• 5 years ago

Yeah, the shouldn’t have allowed rampant corporate ownership. Now is a great time to remedy that. Given the city’s continued growth, those purchases are a solid investment.

llampx2• 5 years ago

I don't think so. In investment terms, i believe the taxpayer is being forced to buy back these apartments closer to a top than a bottom.

jeppesen-io• 5 years ago

Makes me think of Singapore - a very different model where the state owns a large part of housing

nkmnz5• 5 years ago

For everyone not familiar with German rental markets: Berlin is quite cheap compared to other big and small cities. From cities as big as Munich to smaller ones like Mainz, most cities are more expensive (except for those in the former GDR). Cheap(er) rents are part of the reason why people move to Berlin - the more the Senate does to control rent, the more people will want to move to Berlin. The only way is to increase supply - or rebuild the wall ;-)

Tenoke• 5 years ago

It's gotten way closer than even 5 years ago. I 'overpay' as an ex-pat in Berlin but my rent is within 10% of the average Munich rent (unless it's risen there recently as well) for a comparable place.

nkmnz5• 5 years ago

Interesting. I guess it’s a more high end rental? I don’t know the High end markets in both places that well, but I know it’s much more expensive for students and others with low income to live in Munich (which has risen recently, indeed) than it is in Berlin. But the gap might be closing nevertheless.

notanzaiiswear18• 5 years ago

Or run the city into the ground, make it unattractive enough to repel the people who want to move there. That approach may even work out - Socialism succeeded doing that before already.

e12e2• 5 years ago

most cities are more expensive (except for those in the former GDR).

So, Berlin is much more expensive than other cities in former GDR?

luckylion10• 5 years ago

Yes, but it's much cheaper than West-German cities.

ArmandGrillet2• 5 years ago

Instead of buying what they sold two decades ago for practically nothing, they should have built more supply.

Open Google Maps and check Kreuzberg, a district of Berlin. South of it is Tempelhofer Feld, 355 hectares (a third of Kreuzberg), a discontinued airport next to the city only used for people to bike and do barbecues. It's an old airport so it looks bland and there are smaller parks right next to it offering the space to do barbecues and play with your dog. It's been a decade that this airport is not being used yet it's still in that state.

Paris' housing crisis is mostly due to the road surrounding it (le Périph') but Berlin doest not have that yet housing is getting more expensive extremely fast, faster than in Paris actually.

nicbou7• 5 years ago

Tempelhofer Feld is a green space where people can meet, exercise, and enjoy their free time without being expected to spend money. Berlin's green spaces is one of its strongest assets. Don't let that city turn into a concrete hell.

I'd much rather see Kleingarten disappear than public spaces.

notanzaiiswear18• 5 years ago

They wanted to build just on a small stripe on the side of it, it is not as if they would have to fill the whole place with houses. But even that was shot down via "Volksentscheid".

ChuckNorris89• 5 years ago

How is that anything other than NIMBYISM?

mmarq2• 5 years ago

Tempelhofer Feld is for the most part an abandoned field, if half of it were used to build housing a problem would be solved and no damage would be done.

The issue there is the usual weird coalition between landlords that don’t want more residents (if they live there) or more competition (if they rent their flat) and the fringe of the green/left that is worried about urbanisation, gentrification economic activity.

littlecranky674• 5 years ago

You could just as well argue NYC should start to use Central Park for new housing...

ArmandGrillet2• 5 years ago

Manhattan's population density is already 17 times higher than the one in Berlin so no, I wouldn't suggest that.

black_13• 5 years ago

You could

abliefern2• 5 years ago

Instead of buying what they sold two decades ago for practically nothing, they should have built more supply.

"Instead"? It's not an either-or choice.

mejutoco3• 5 years ago

Berlin is not a very dense city, maybe because of the backyards (almost every block has a backyard for trash containers and bikes, maybe an elevator) in most blocks and the green spaces.

In the last years I have seen also a lot of floors being added (to the last floor) of buildings that allow it, to gain one more floor.

Your comment about periphery made me think of something. Berlin is surrounded by Brandenburg, which is even less dense. So Berlin has space to expand, unlike other cities (like Barcelona, much denser).

In my mind the solution would be to build affordable housing in Brandenburg (there is space there) and on the edge of Berlin.

nicbou7• 5 years ago

Berlin does not have space to expand, precisely because it's surrounded by Brandenburg. It has been a problem for years.

ben_w• 5 years ago

While I’m sure there’s something better that can be done with the Tempelhofer Feld site than currently (even trees in the grass between the runways would make it better, IMO), the large number of green spaces — including Tempelhofer Feld itself — is one of the things I like about Berlin.

Separately, given the large mostly empty expanse of Brandenburg surrounding Berlin (and the really low house prices I see there on immobilienscout24), I think improved transport connections are more critical: improving connections to the surrounding area makes the surrounding area more available for commuting. For example, there are routes from Eberswalde or Frankfurt an der Oder to parts of Berlin which are faster than reaching those parts of Berlin from elsewhere in Berlin, so improving existing routes would enable lots of the existing room outside the current city to become more city.

I have no idea what the political issues with this might be, not just with “would people like this?” (I can’t even determine that effectively in my original country) but also with “can this even be done, given Berlin is a different state?” (I have yet to learn anything beyond the most superficial about German politics).

nicoffeine2• 5 years ago

Posted in another thread, but there is a very interesting theory about why Germany has stable housing prices compared to other nations. This funding model may also explain why local municipalities are against multi-family housing, which is driving sprawl and unwalkable zoning policy in the US.

'Local German officials, like local leaders everywhere, seek bigger budgets to provide more and better services to their constituents. What’s different about Germany is that the way to get bigger budgets is to increase local populations. And, as Professor Buettner says, “Ultimately, to get people, municipalities will need to support housing.”

The result is a system of incentives that is the opposite of “fiscal zoning”—the US practice of zoning land in ways that maximize local governments’ income and minimize their costs. In places with high sales taxes, such as Washington State, leaders zone more land for shopping centers. In places where residential property taxes are capped, such as California, they zone less land for homes and more for offices. In affluent suburbs, they often zone land for houses on large lots, excluding low-income people.

Maximizing property values is such a central concern of local government in the United States that Dartmouth economist William Fischel developed the notion into an entire political theory. His “homevoter hypothesis” holds that local governments are almost single-mindedly focused on maximizing real estate values, because homeowners typically vote their home values in local elections. German jurisdictions gain financially by maximizing population, not house values, and because renters outnumber homeowners in the country, homevoters are not the dominant electoral force in local German elections. Renters are.'

https://www.sightline.org/2021/05/27/yes-other-countries-do-...

sagarm• 5 years ago

I'm very confused: if you want to have more residents in your city with a fixed amount of land, then you need multifamily housing. Walkability is also associated with density and benefits from multi-family and mixed use zoning.

fnord775• 5 years ago

SF is looking into buying unsold luxury condos from developers.

no_butterscotch• 5 years ago

To put homeless in?

fnord775• 5 years ago

yes

refurb3• 5 years ago

I recall on rule of fixing a market problem is to apply the most direct fix possible.

The government would be better off just giving money directly to renters to pay their rent.

This has the added benefit that the cost of subsidy of very transparent and it provides a nice incentive to increase housing supply.

axiosgunnar5• 5 years ago

I, as a taxpayer, refuse to finance a few lucky grandfathered-in people that want to live in a highly sought-after district but cannot afford the rent.

There is no human right to an apartment in the city center of a megapolis.

refurb3• 5 years ago

But it’s no different than your tax dollars buying housing from private entities or building public housing and charging lower than market rent.

It’s all dollars out of your pocket.

dredmorbius10• 5 years ago

Land is an inelastic good.

"Buy land. They ain't makin' any more of the stuff." -- Will Rogers

In economics, rents are goods or services whose supply is inelastic (doesn't increase when demand increases), so that any increase in demand simply results in a rise in price.

Another way of looking at this is that all surplus value of that service is appropriated by the seller. This contrasts to normal commodity goods in which price tends to fall to the cost of provisioning. Note that wages generally behave this way as well, with the result that unskilled workers (lacking any wage premium) in a rents-based world are squeezed between wages which deny them all surplus value of labour and rents which appropriate all surplus value of housing. Any increase in wages is immediately met by a corresponding increase in rents.

Your proposal of a direct rent subsidy is the equivalent of a wage increase. You'll pay it to the workers, who'll in turn pass it on directly to the landlords.

Counterintuitively: if you want to lower the cost of housing, tax the unimproved value of land.

Where regulation allows for increased utilisation density, the result is that the tax (as with the wage increase) is passed on to landlords. It effectively takes up the surplus value of housing, and appropriates it for public expenditure. Landlord profits are reduced. Landlords can increase profits by increasing the real estate units available --- by building more units on the same land. This means one or more of less unbuilt land per property (setbacks and easements), smaller units (more people in a given space), or more floors.

Building two storeys rather than one doubles the available real estate. Building up 5 or 10 storeys increases land by a factor of 5 or 10. (It's not necessary to build cloud-scraping towers, even modest increases in height limits will greatly increase housing densities.)

Housing is a good for which increasing taxes, if done correctly, INCREASES supply. Highly counterintuitive, but true.

https://en.wikipedia.org/wiki/Land_value_tax

lifeisstillgood• 5 years ago

The housing market is complex, but one point I would like to make, is that if there is now a (global?) opportunity to borrow capital, buy houses on a mass scale and rent them out, that implies to me that there is a failure in mortgage market - families want housing in a location, it is possible to borrow money and buy them, but those families don't have access to that monet.

This implies

a) inequality in wealth and incomes b) failure to change mortgage market to account for higher risk in harder to reach areas (this is what savings and loans were literally made for) c) errr d) that's it.

IkmoIkmo• 5 years ago

The housing market is complex, but one point I would like to make, is that if there is now a (global?) opportunity to borrow capital, buy houses on a mass scale and rent them out, that implies to me that there is a failure in mortgage market - families want housing in a location, it is possible to borrow money and buy them, but those families don't have access to that monet.

Not sure I see the issue. Renting and owning has very different risk profiles, which is why you'll find people can rent a place they're unable to buy.

The risks are with loss of income, e.g. due to job loss, sickness etc. Such things are somewhat inevitable in the span of a 30y mortgage. In such a situation the tenant can move to more appropriate alternative housing, e.g. moving to a smaller home, a home that's not as well located, sharing a home with others, friends, family etc.

In the case of an owner it gets trickier, typically the person would eventually be forced to sell the house to be released from the contractual obligations to pay the mortgage. The risk events' probabilities correlate, i.e. you're more likely to lose your job in an economic downturn, as does everyone else, which means home prices are more likely to be low during an economic downturn, meaning a forced-sale during such times can mean you're selling your home for less than the value of the loan, leaving you not only out of income, out of a home, but also with a sizeable debt.

In other words, there can be reasonable explanations for why a government could buy homes and rent them out to tenants who can afford the rent, while those same tenants could not afford an equivalent mortgage.

Second, I think it'd be very sensible to assume that the government is not going to be renting out these units at market rate. In other words, they're subsidising the tenants, with taxpayer money. That's why the rent would be affordable, but the purchase would not, for the tenants. If anything that implies this decision is lowering the effects of inequalities, due to in-effect a redistribution of wealth from rich to poor.

kartoshechka• 5 years ago

SyntaxError: JSON.parse: unexpected character at line 1 column 1 of the JSON data

ayyy spa for a static content site

b0ner_t0ner• 5 years ago

Source is HTML, but came back as JSON MIME type. Something in their memcached borked.

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dathinab5• 5 years ago

A lot of people say that "more houses need to be build" to fix it.

The problem is less "not having apartments" but "not having affordable apartments".

A a lot of "housing" had been build in the recent years but hardly any of it increased the "supply of affordable housing".

Most had been very expensive "luxurious"(1) living spaces, from small one family houses to large "luxus" apartments.

At the same time a lot of affordable living space has been converted into non affordable ones or removed from the rental marked.

Reasons for this are many fold and include:

- Prices in Berlin had been unrealistic low, so once they started rising/people realized it they rose fast attracting a lot of speculative investments, speeding up the price rise and level above what it should have been.

- Stupid formulated laws around "energy" renovations turned out to be a perfect backdoor to circumvent existing limitations about how much rent can rise, especially if combined with little continues wide spread Illegal acting allowed massively bumping prices in short time.

- Certain tax changes done ~7 or so years ago increased renovation cost massively, and the price boom and building (of non affordable housing) boom made it hard to build/renovate affordable housing for people just owning a small number of apartments).

- Also maybe thinks like Aribnb had a bad effect, but I can't judge this.

So what should be changed IMHO:

1. Change the energy renovation law to not be trivially abusable.

2. Make regulations which favor affordable rentable living space over all other versions (also favor it over office space).

3. Change certain laws about tax handling of losses from "rent", i.e. there are people which but absurd prices on apartments with the intent of them to not ever be rented because they bought them for speculative investments and selling a unrelated one is easier/better. If a apartment is in a area with a deficit of (affordable) living space you should not be able to tax-deduct losses because you werent able to rent out an apartment. (Similar the kind of "buy to sell at a higher price later" behaviour should be illegal.).

4. Add a legal method the state can use to punish organizations which en-mass do a lot of systematic small illegal things which each on themself are not worth opening up a law suite and affect a different person, like systematically trying to increase rents slightly more then average every time.

5. Maybe (idk, only if it matter) auto-sync databases of platforms like Airbnb with residential databases to auto detect abuse.

6. Undo mistakes of the past where Berlin reduced affordable housing programs.

(1): Price wise, not necessarily quality wise.

game_the0ry• 5 years ago

Former real estate investment professional here.

This is likely a bad deal for the German taxpayer and a great deal for the corporate landlords.

Essentially, the Berlin gov has given the corporate landlords a profitable exit for their investments. The corp landlords, seeing the writing on the wall and fearing lower rents, unrest among tenants, and diminishing exit opportunities via selling to the market (which wont want to deal with the risks) can now exit by selling to the government. The German / Berlin gov gets an investment that is all but guaranteed to be a loss assuming they drop the rents for the tenants. Thus, tax payer eats the loss.

I see something similar playing out in the US, and not just for corp landlords - it could happen to baby boomers looking to sell their homes upon retirement. During the last housing crisis in '08, Alan Greenspan and Warren Buffet suggested buying homes and destroying them, effectively lowering the housing supply in order keep prices at the same level in a market with lower demand [1].

Key takeaway from all this - governments and the folks that influence them (who also own and get their primary income from assets) wont let asset prices go down. They would rather destroy assets and lower supply to protect price levels. This dynamic teed-up a political war between those who own assets vs those who do not, young vs old, establishment vs anti-establishment, etc.

I feel for tenants - I am one myself. However, better to let the market to clear market inefficiencies.

[1] https://www.fool.com/investing/general/2011/10/06/creative-d...

markenqualitaet3• 5 years ago

Maybe more complex.

Legally, you cannot increase rents above 10% of the respective average here. If Berlin-owned rents aren't increasing, this will slow down the whole market.

Now, this depends a lot on how the law will be enforced in the future.

richwater• 5 years ago

Anyone who thinks you can take this model and apply it to America, with all the evidence we have of horrific public projects, is quite literally insane.

Leparamour4• 5 years ago

I'm a bit surprised. I thought the referendum over this wasn't due for another week, since there will be general and state elections next sunday.

This looks like a hail mary move before elections could have switched up majorities and brought a change in administration. As a born-Berliner I'm highly critical of this populist move, that was mainly organized by transplants who demand stuff for free all the time: UBI AND open borders. Unfazed by the fact that somebody will have to foot the bill for socialist cloud castles eventually. These people will move back to their hometowns when they have made the living situation in Berlin become untenable, for me it's my home and where all of my family lives.

markenqualitaet3• 5 years ago

The above comment is propaganda. I doubt the person is from Berlin or lives there still.

The Deutsche Wohnen Enteignung campaign has broad and diverse support across the population. This was actually proven in an investigation for possible "radical left" influences, suggested by the conservative opposition.

Leparamour4• 5 years ago

The above comment is propaganda. I doubt the person is from Berlin or lives there still.

Haha, what? I should probably be grateful you didn't outright call me a Nazi or something. If you're in fact involved with the campaign feel free to ask around where your fellow people are from originally.

How about you? Real Berliner? Or do you move back if Berlin doesn't pan out for you?

For instance, I haven't met a single signature collector that was native to Berlin and boy have I been engaging them in discussion when I ran into them every day while commuting between Neukölln and Friedrichshain.

The Deutsche Wohnen Enteignung campaign has broad and diverse support across the population.

This is actual propaganda.

This was actually proven in an investigation for possible "radical left" influences

Explain this then:

https://interventionistische-linke.org/beitrag/unterstutzt-m...

acd• 5 years ago

Corporate landlords are speculating on housing with central bank artificial lowered interest rates.

Its also maybe not in accordance with UN human rights article 17.

"Everyone has the right to own property alone as well as in association with others."

If a corporation owns the property and you have to rent then it may not be in compliance with article 17.

https://www.un.org/en/about-us/universal-declaration-of-huma...

dragonwriter2• 5 years ago

If a corporation owns the property and you have to rent then it may not be in compliance with article 17.

A corporation is a vehicle for owning property in association, so denying it the right to use itd assets to acquire property would arguably violate Article 17, as would not permitting such associative ownership vehicles.

The right to own property doesn't imply the means to individually afford the particular quantity, class, or specific item of property you desire, only the freedom to use the resources you have to acquire property.

EDIT: OTOH, if the market conditions the government allows to persist make adequate housing (not necessarily ownership) unaffordable, after whatever social support is provided and considering the cost of other necessities, it is a violation of Section 1 of Article 25. “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.”

Bombthecat• 5 years ago

And in ten years, Berlin will sell them back for cheap to another firm...

madballster• 5 years ago

Every taxpayer in Berlin is basically subsidizing these state owned apartments which are rented out at below market rates.

nkmnz5• 5 years ago

treasure trove of data about the berlin housing market: https://guthmann.estate/de/marktreport/berlin/

einpoklum• 5 years ago

Why buy rather than expropriate? Berlin has lots of people with no apartments, and the commercial corporations have apartments without permanent residents. Instead, Berlin is funneling ~200K EUR of public funds x 14,750 to partially rectify an allocation anomaly of Capitalism.

(If you're against expropriation - it could just be a massively high tax on apartments owned besides the one you physically live in; or a strong de-criminalization of squatting of such apartments, including allowing for registering as the resident based on actual residence etc.)

dredmorbius10• 5 years ago

For those wondering what drives real estate prices, there's a look at the most expensive ZIP code in the US, 95027, a/k/a Atherton, CA:

The town’s ascendance stems largely from its single-family zoning, 1-acre-minimum lot sizes, flat land, streamlined permits and changing buyer demographics — which have translated into soaring house sizes and skyrocketing prices.

https://www.sfchronicle.com/business/networth/article/Here-s...

If you want abundant, affordable housing, invert at least those first two conditions:

- Multi-family zoning

- Small lot sizes

Flat land and streamlined permits for denser housing will also help.

Mostly, though, you've got to build. And tax land values to keep that from appreciating with no end.

Berlin buys thousands of apartments from corporate landlords

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