
A Berlin Borough Buying Out Private Landlords - Geekette
https://www.citylab.com/equity/2017/08/berlin-rent-control-neighborhood-protection/536325/
======
baron816
The developed world really needs to start building new cities. People
shouldn't be deprived of the opportunity to live in an downtown area just
because the people already there feel entitled to their way of life. But,
people can lose everything if you economically force them from their homes.
That's not desirable either.

My proposal for new cities involves strictly limiting the foot print to enable
it to be completely walkable. That would mean you don't have any cars, which
is good for many reasons. A lot of what local governments do is complicated by
having to service so many different residences over a wide area (think sewage
and water, mail, policing/fire protection, road maintenance, etc). If you
mostly just build up, then that all becomes much easier, which means
government can be much smaller and cheaper. And I think the city becomes much
more livable, as a large area around the city is green space, and the streets
can be taken over by open air restaurants/cafes/bars on weekends.

~~~
dirtbox
This is an incredibly US-centric way of looking at it, the rest of the world
really doesn't have the same problems as the US in any of these areas. I lived
in Berlin for a time and many places in the UK and around Europe and really
none of this applies. People live where the work is, commutes are generally
under 30 minutes.

The US owes it's "walkability" or lack of due to Blockbusting by property
developers in the 50s that used racism to drive the middle classes out of the
cities into the newly built suburbs. No such thing happened anywhere else.

[https://en.wikipedia.org/wiki/Blockbusting](https://en.wikipedia.org/wiki/Blockbusting)

~~~
anovikov
One shouldn't forget that suburbisation was a Cold War move - a very effective
one and something Soviet Union could not even remotely afford to follow. Quite
likely that it eventually prevented nuclear war by making it clearly
unwinnable for the Soviets.

~~~
anentropic
How so?

Do you suggest that sprawling suburbanised cities were too big to bomb
effectively?

~~~
anovikov
It also prevented firestorms by making buildings less dense - there wasn't
enough density of combustible material. And made it possible for every family
(middle class family - which in 1950s timeframe, meant qualified industrial
workers, engineers, and the military - those a nation would need most in case
of major war) to have a basement to escape fallout. Downtowns have been left
to the part of population deemed useless and dispensable.

In Soviet Union, that kind of the most important members of society, lived in
apartment blocks in city centers. And because Soviet Union did not have, and
could not afford, mass automobilisation, they were stuck with that.

It made war clearly unwinnable for Commies.

------
jcfrei
It's always interesting to see which parts of our lives are incompatible with
free markets (at least for a majority of society). It's a very peculiar moral
that you mustn't evict people from their homes after they've lived in a place
for a certain amount of time. It shows that being a renter in a neighbourhood
after a while creates some sort of (legally enforceable) kinship that is
incompatible with a free market for housing. But I think it's very arbitrary
that we don't have a problem saying to outsiders "we won't allow you to live
here (even though you'd be willing to pay a lot for it)" however saying to
someone "you can't live here anymore (unless you pay more)" is a cardinal sin.

~~~
sbenitoj
It's also interesting that people genuinely believe this is going to solve the
problem rather than exacerbate it.

There is nothing any politician can do to change the laws of supply and
demand. If this district in Berlin is in high demand, they're not going to fix
the "problem" of high rents by keeping the supply fixed.

The only solution to this "problem" is to let people build additional housing
to increase supply.

Instead of keeping the same people in their current units, overtime what will
happen is people who currently rent apartments in this district will start to
sub-let their apartments to the people who are willing to pay higher prices,
acting as a wealth transfer from landlords to current tenants. And yes this
will occur even if it's made "illegal" to sublet these apartments (this exact
situation exists in NYC with people who have rent controlled apartments and
people still do it all the time).

~~~
em3rgent0rdr
Ditto.

> "The only solution..."

I wonder as a thought experiment, if the city keeps buying more houses to fix
the "problem", it might eventually become the dominant landlord, and then in
order to raise revenue, it might find that it has to increase rents on its
rent-controlled housing...

~~~
mseebach
Rent control is an instance of "chang[ing] the laws of supply and demand". If
you need it, you didn't provide a solution. The "build, baby, build" solution
would keep supply in line with demand, and prices would be stable on their
own. Having rent control even if you don't need it (out of concern for long
term tenancy security), you will just create a constituency with a vested
interest in you not building any more.

Also, strictly speaking, building is not the only solution. Curbing demand by
making the city less attractive would also be a solution.

~~~
sbenitoj
Ha, you're right that making the city less appealing would also fix the
"problem" (lower prices), and I almost included that in my post because
strictly speaking it's true...but honestly I didn't want to give politicians
any ideas!!

~~~
danohu
I've occasionally suggested* a dirty bomb as the only way to make London
livable again. Just enough radiation to scare away the rich, not enough to
actually harm anyone ;)

And in Berlin, I've sometimes seen graffiti along the lines of "cleaner walls
== higher rents". So making the city less appealing is already part of the
anti-gentrification arsenal.

* for the record, I'm not actually planning to nuke London.

------
evv
What a small world. Until tonight I had never been to Kreuzberg, let alone
Berlin. My friend recommended this as one of the more hipster neighborhoods.
After realizing that this building is only a 25 minute walk away, I decided to
go around and take a few photos of it and the surrounding neighborhood:

[https://imgur.com/gallery/cSpgv](https://imgur.com/gallery/cSpgv)

This area has a fun vibe and it's easy to see why it's rising in popularity..
my Airbnb host grew up here and told me that it used to be very poor. This
particular building is well painted, but doesn't really stand out.

As someone who grew up in Palo Alto, gentrification just feels so.. normal.
Although it's priced out most of my friends and family, I've always seen it as
something inevitable.

This is such a strange precedent to set.. how many of these dwellings is the
city prepared to buy? How can they possibly stop the free market?

------
danielfoster
I am curious how this decision will impact the neighborhood and city in the
long-term. Unless the city spends more to educate existing residents or finds
a way to bring in a more qualified workforce, higher-paying jobs won't come to
the city and tax revenue will stay flat. I'm afraid this will hurt the city
more in the long-run than any gentrification would.

This is probably also infuriating to other parts of Germany, which pay
substantial subsidies to Berlin and a few other poorer states.

~~~
JBlue42
>This is probably also infuriating to other parts of Germany, which pay
substantial subsidies to Berlin and a few other poorer states.

It can be annoying but that's what being a unified country is about. Can't say
those of us here in California or in NY are too happy about our massive
subsidies that go to the red states that accuse us of being full of "welfare
queens" but that's the cost of being a country.

------
ikeboy
As long as they're paying more than the investors offered, it seems fine.
Article makes it unclear how the price they paid compares to what the sell
price would have been.

~~~
matt4077
They get right-of-last-refusal on any offer. Meaning they pay whatever the
investor was offering.

~~~
ikeboy
Does the investor have a right to bid higher in that case?

~~~
detaro
If I understand it correctly, the district takes over at the price the
investor signed a contract for. So no, they can't outbid the district
afterwards, they only can put a higher bid initially, which they'll have to
pay if the district doesn't make use of their interception right.

------
mbag
I'm interested to see how this plays out. Some cities have opposite approach.
These are older articles, but it might be a reason why Berlin decided to try
new approach: [https://www.theguardian.com/society/2014/jan/31/inside-
londo...](https://www.theguardian.com/society/2014/jan/31/inside-london-
billionaires-row-derelict-mansions-hampstead) [https://www.theguardian.com/uk-
news/2015/jan/25/its-like-a-g...](https://www.theguardian.com/uk-
news/2015/jan/25/its-like-a-ghost-town-lights-go-out-as-foreign-owners-desert-
london-homes)

------
rocqua
I wonder what the zoning laws are like in Berlin. Specifically, I wonder if
zoning laws prohibit small homes that allow for pretty good high-density
housing. Such zoning laws could contribute to the high rents in the center of
town.

In any case, this method is much better than rent-control. There is still then
monetary incentive to skip on maintenance, but the institution should insulate
from that. The biggest potential downside I see is a slowing of development in
general. That might obstruct development of cheap rents more than it saves.

In general I wonder what prevents building higher, cause you can build high
and cheap and if there is demand, why not?

~~~
matt4077
I'm not sure what you mean by "small homes". Here, take a look at the house I
live in, which is very typical of the buildings in central Berlin:
[https://www.google.de/maps/@52.4952517,13.4168985,3a,75y,199...](https://www.google.de/maps/@52.4952517,13.4168985,3a,75y,199.05h,101.08t/data=!3m7!1e1!3m5!1sSlbQbKKWe2BjeVennexFpw!2e0!6s%2F%2Fgeo3.ggpht.com%2Fcbk%3Fpanoid%3DSlbQbKKWe2BjeVennexFpw%26output%3Dthumbnail%26cb_client%3Dmaps_sv.tactile.gps%26thumb%3D2%26w%3D203%26h%3D100%26yaw%3D55.752544%26pitch%3D0%26thumbfov%3D100!7i13312!8i6656)

Generally, Berlin has mixed zoning with retail on the street level, apartments
above, and offices and small manufacturing in the back. You can't build higher
than what you see in the photo (the old limit for fire ladders), unless it's
in an area with other higher buildings already.

Rents are rising as a return to normal. Most people pay around $1.2/ft^2
(sorry, I have no idea what unit the US uses for rent)

~~~
rocqua
For small homes I'd say < 40m^2 spaces, getting as small as 25m^2. Those allow
young single people to live where they want at prices they can afford. A
related factor is required parking space. Such space, when there is no demand,
makes high-density housing take up much more land.

------
config_yml
Other cities do this as well, like Vienna, or Zurich.

------
Boothroid
I've thought in the past about the possibility of a network of enterprises
that would seek to eliminate or at least minimise profits and to exclude
profit making companies from participation in the network. For example, the
Goldman Sachss of this world would find the doors firmly shut via some kind of
legal structuring. The eventual goal would be to drive profit out of the
system completely, which surely would convert all profit into pure
inefficiency, and thus slowly destroy the profit making enterprise as a viable
model. Intrigued therefore to see this and also a report on TV about how
Hamburg voted (narrowly) to take back control of their electricity network,
and how this has the big power companies seriously concerned, no doubt because
their parasitic extraction of profit is threatened.

As may be obvious I am not an economist, so anticipate and welcome the flaws
in my idea being pointed out!

~~~
rocqua
Forcing out profit means there is less money for reinvesting. This would mean
your network would fall behind in the quality it provides, until the profit
enterprises are a better deal, even after their profit is extracted.

You could go against that by having the intention of turning a profit but
committing to reinvesting, but that is still extracting that profit. Moreover,
it encourages the same exploitative behavior.

In general, profit isn't bad. Trades are only made when both parties are
better of afterwards, so in principle, more trade means everyone is better
off. The devil lies in the balance between how much better off both parties
are.

~~~
Boothroid
OK, so then include a percentage of price for reinvestment and eliminate all
other profit? Or put all of this profit into a socialised pool? Also for-
profit competitors would be effectively shut out of the network by agreement.
The vision would be vertical integration with minimal profit at each step,
thus opportunities for concentration of wealth are minimised. Interestingly
this seems to be happening to a degree with Amazon, where profits are
arbitraged out of the system (though to varying degrees between participants).

------
holydude
Some people prefer this some people dont. I honestly detest interfering like
this.

~~~
imtringued
Why? It gives the government financial incentives to build more housing or
deregulate zoning laws.

------
odiroot
That's too bad, the Kreuzberg part of this dual district really needs a lot of
improvement. One may risk saying needs a bit more gentrification.

~~~
Geekette
This move of certain municipalities buying housing appears to be one of many
tactics being used to address housing shortage. I recall recently reading
elsewhere that Berlin govt is also planning for building additional housing
and conversion of large unused industrial spaces into housing. I wouldn't be
surprised if improvement of certain areas is also part of the
renovation/conversion tactics used in their housing strategy.

------
neokya
I am quite not sure how it would be expensive for existing residents even
after sale to so called foreign investor. As far as I understand, in Germany,
rents are fixed for existing residents and landlord can not evict them (few
exception exists, probably won't work for investors).

That 10% increase rule is only for new tenants.

~~~
detaro
Rent can be adjusted up to match prices in the area (with a limit of 15%
increase per 3 years), and modernizations are a valid reason to increase
prices above that. Which is the typical gentrification scenario Berlin is
worried about: old buildings are bought, improved to a more luxurious standard
and then rented at accordingly higher prices.

------
JanSt
Berlin is lead by a left-far left-green coalition and gets billions of € every
year from the Länderfinanzausgleich. Basically, other germans pay for their
citys reckless spending on questionable projects. High rents need more living
space, not payed-by-other one

~~~
tannhaeuser
It's been said the majority, or a large part, of the electorate of Berlin
consists of people receiving welfare or other community/state benefits in some
form or another, including the large number of state employees living in
Berlin. It's a very unhealthy situation going forward, since the government of
Berlin must appease that part of the electorate, rather than attracting eg.
investors or people who can sustain themselves.

That the state or municipality is an actor on the housing market really is a
perversion and outright declaration of defeat on behalf of politicians. With
the negative interest rate set by the European Central Bank and thus lack of
investment opportunities, and given the growth of population in the
metropolitan areas of Germany, you'd think this market should be able to see
after itself, like it is in other areas of Germany.

Even more so since housing has traditionally been an investment for people
seeking to build up a rent for when they're old, a problem that will come big
time to Germany in the years to come, the demographics being what they are.

But social-democratic politicians in Berlin are generally incompetent or
corrupt in the extreme; at the expense of other German's money, they rather
want to be perceived as acting in the interest of their electorate.

~~~
Xylakant
How are employees of the federal government "receivers of state benefits"?
It's a job like any other job - they work for money.

~~~
JanSt
They are - in a sense - by taking 40 paid days off/year on average for being
'sick'. [1] That's two month out of every year in addition to ~10 holidays and
30 days vacation.

[1] [http://www.tagesspiegel.de/berlin/gesundheitspolitik-in-
berl...](http://www.tagesspiegel.de/berlin/gesundheitspolitik-in-berlin-
beamte-sind-im-schnitt-40-tage-krank/11971286.html)

~~~
Xylakant
These are not employees (Beamte are not employed) and they're not federal
government. So the article kind of does not apply twice. These statistics also
counts weekends and holidays as sick leave, so - as the article mentions - the
data cannot be compared with the usual averages which do only count work days.
On top, the groups with the highest sick leave are people in high risk jobs -
policemen and firefighters. These are definitely not rent-seekers from the
government.

~~~
tannhaeuser
My post wasn't an insult on state employees of any kind, or some such. The
point was that the electorate consists to a very large extent of receivers of
tax payer's money, and that the Berlin Senate buys their electorate with money
they receive via cross-financing from other German countries
("Länderfinanzausgleich"), which I do not approve of.

Edit: cf. rsync's quote

~~~
Xylakant
This is not a case of the senate buying anything. The district of Kreuzberg
uses it's right to preempt the sale and direct it to a public housing
association. The voters in that building a most certainly not government
employees, but low-income residents. You're mixing up things in a disingenuous
way.

~~~
tannhaeuser
In other words, they're pulling a publicity stunt here, with the elections
conveniently coming up in two weeks. Interfering with the market is uncalled
for here, even though it might make good appearance in local media, and
resonates with the intellectually challenged.

The government's job sure is to provide economic conditions such that a market
for housing and other basic needs can sustain itself. But what they are rather
doing is publicly blaming investors as "evil insects" ("Heuschrecken") in the
worst socialist or even Nazi tradition, and making construction expensive by
laws such as EnEV (law putting absurd energy efficiency burdens on new
buildings) and asymmetric, unreasonable rights in favor of tenants.

Really, if there's a housing crisis, it's entirely the fault of the
government, by definition.

