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Berlin rent cap overturned by Germany's top court (dw.com)
162 points by tavrin 30 days ago | hide | past | favorite | 357 comments

Without judging the outcome, here are a few things HN readers might not be aware of:

- The supply of rental apartments dropped by 40-60% after the Mietendeckel came in effect. It became even harder to find an apartment in Berlin. Landlords were holding their breaths.

- The supply of housing for sale also dwindled. If I'm not mistaken, sellers were waiting for the court judgement to rent/sell.

- The Mietendeckel also concerned furnished apartments, although it was largely ignored by landlords on short term furnished flat platforms like Wunderflats. The platforms turned a blind eye.

- I know many people who got significant reductions, sometimes exceeding 20%.

- In most cases, the new rent contracts with reduced rents had a shadow rent clause in case the Mietendeckel got repealed. Many people will have to pay the difference back within 14 days.

- The Mietpreisbremse, and earlier rent control measure, is still in effect. It does not include the rent freeze, but it does include significant rent reductions. Unfortunately, it's not automatic (no threat of a fine), and often needs to be enforced in court. The court judgement is retroactive to April 2020.

This is all I know/remember.

Also, and maybe most important:

In the majority(?) of cases it did not work.

Landlords found absurd ways to work around it. Many not necessary fully legal but only in a way that if no one who is "hurt" by it sues the state can not act.

There where enough people which where open to pay the de-facto increased "not so legal" Rent, and as such would definitely not sure.

A common trick was to pair the rent contract with Renting some token furniture for completely unreasonable (and as such somewhat illegal/moon-) prices. (note: this wasn't the same as the rent prices for furnished apartments exception thingy mentioned by others)

Again if both renter and rentee are happy with it there is nothing which the state could have done.

Also more apartments where sold instead of rented out, in turn decreasing the amount of rente-able apartments while the demand did change (maybe except due to COVID, I would have to look it up). Furthermore it's not uncommon that such apartments do not enter the rent pool again even if the person in question leaves Berlin (and then illegally perma rents it over RBnB to tourists, or keeps it empty or resells it or ...)

Lastly due to majorly increased renovation costs (as far as I know) and now rent caps it was basically much less likely for any new apartments to be added to the pool. And even (potentially necessary) renovations of existing ones was much less likely done (as far as I have heard from people involved in that business, through not the very big players, but it matches the experience other cities which did impose rent caps had).

And just to be clear Rents in Berlin reaching a point where it's problematic for many people from Berlin to pay them IS a massive problem. Just that this law as far as I can tell would not have solved it and maybe even made it worse. Also yes Rents had been unusual low in the past (I'm personally profiting from this) but now they have gone beyond any reasonable price in many cases (at least in context what many people earn in Berlin).

> A common trick was to pair the rent contract with Renting some token furniture for completely unreasonable

That's a problem with the Mietpreisbremse, but not so much with the Mietendeckel, which also sets limits on furnished flats. You also can't just throw in an IKEA BILLY shelf and call it furnished (in the words of my lawyer).

This is correct, however:

> Again if both renter and rentee are happy with it there is nothing which the state could have done.

Landlords will cheat, and clients will do everything in order to get an apartment.

I've seen rental appointments with landlords, with 30/40 prospective clients, and I've always wondered if price is really the problem. I've even done a sort of test, and offered more than requested - and it didn't work.

Observing so many people competing for housing, intuitively makes me think that the housing problem is not of economic nature (but I suppose that the situation is complex).

Exactly that,

also they didn't rent out a furnished apartment, they will rent out a apartment and you will rent some overpriced furniture independent of the apartment from a 3rd party. It just "happened" that you sign both at the same time and that the same person (through proxy) profits from both.

While this still is illegal, it's to a point where even if the renting person tries to sue it likely would not be a super simple case, i.e. would take time.

And then if you agree on it why should you sue? And if you rant and then sue are you not afraid on ending up on secret illegal but unpreventable black list making it harder to find a apartment or gain a incorrect but still very troublesome Schufa (credit scoring) entry?

The problem is often phrased as people renting out apartments for moon prices.

But that's not the case, they rent them out for prices which are paid in many cases.(Also cost for renovating/building nearly doubled in the last ~10y for smaller property owners.).

The actual problem is that the people living in Berlin since a long time (potentially birth) don't earn enough to continue to do so. It's not that there aren't people paying and therefore there are a lot of empty properties (ok in some areas that happens too, in Berlin less so).

- the amount of apartments for sale increased but so did the prices.

- furnished aparthotels are something special and they got an exception from the state (because some providers are state owned)

I wish Berlin would just build more housing instead. For example when I cross the street there is a supermarket. It's a single story building with a huge parking lot around it. Why not make it a multistory building with apartments on top of the supermarket and skip the parking space or put it underground? Why does the city give out building permits for such buildings? There could easily be room for thirty families on that lot. A single parking spot is like 12m^2, two parking spots and three storys above them and you have an apartment for two to three people.

> Why not make it a multistory building with apartments on top of the supermarket and skip the parking space or put it underground?

That's exactly what they are doing at a few places in my city (also with a massive housing problem).

We recently found a new apartment here, the process was as follows:

(1) We found the apartment online. It was online for exactly 6 hours, listed by an estate agent.

(2) Inside the listing (hidden deep in the description) was a short sentence saying that any contact made through the listing website contact form would be ignored and that a secret mail address had to be used. You had to email an application letter (preferably with photos), copies of your latest 3 salary statements, copies of your identity card, proof of your credit-worthiness ("Schufa-Auskunft" in Germany), proof that you had liability insurance, and contact information of previous landlords. This had to be mailed until a deadline the next morning. If any of this was missing, the application would be ignored.

(3) A week later, we received an email telling us that we were eligible for an appointment to visit the apartment. But we had to confirm this until the same evening by sending an SMS to a secret number.

(4) A few days later, we indeed got a date and time for visiting the apartment (via SMS). It was a 15-minute slot, but there were at least 10 other families there, and they did visits the entire day. When the agent asked us, we indicated strong interest, told him we could rent the place beginning tomorrow and left.

(5) A week later, we got the apartment (of course we now have to pay 2 rents for 3 months). When we asked him why the process was so complicated, he told us that they were only 4 people in the agency, and they didn't have the capacity to read (not answer!) > 1000 mails of people interested in the apartment. So they gradually came up with various hoops and obstacles to get this number down to something manageable (they got it down to around 50 families who indicated final interest).

And (2) means that privacy oriented persons no longer can get an apartment in Germany.

BTW, 10% of these data collecting advertisements on the real estate websites are from identity thieves.

Actually what they are doing and asking for is illegal. Asking for credit scores, proof of employment and sensitive stuff like that is only legal when an offer to rent is actually being made to that candidate. Just having everybody send in everything is common, but should never happen. However, privacy watchdogs are somewhat toothless and future renters put up with it because they have no other choice.

This behavior is often due to the difficulty of evicting a tenant. In Berlin, the process can take 3-9 months and can be easily contested.

There's no easy solution. Everyone puts the blame on the landlord saying they should be careful who they rent to, but that's difficult to do without doing some kind of background check on tenants and can also lead to discrimination.

I cannot wait for a massive data leak containg apartment application documents, especially from high demand locations like Munich or Berlin. People simply send it all over the place and they contain everything. It would knacker out many people in various ways.

I'm always baffled by stories like this. If there's indeed so much interest in an apartment, why not increase the price to the point where 90% of contenders lose interest? The owner must have been in a huge hurry, or doesn't care about money?

In many places, a landlord can't just decide to raise the rent. When I signed the contract for my current apartment, the landlord needed me to sign an official form they had to send to the city. The form informed me of the rent the previous occupant paid and stated the applicable laws that regulated by how much the rent could be raised (based on inflation, changes in interest rates etc.). What I don't know, but assume, is that it's easy to fight for the rent to be lowered to the legal limits even after accepting signing a contract with rent above the legal limits.

> why not increase the price to the point where 90% of contenders lose interest

Because that's illegal, even without the rent cap in Berlin.

A market response to supply and demand is illegal? What law would do that if not a rent cap?

§556d, 1 of the German civil code.


It's illegal here to demand a rent more than 10% higher than the "ortsübliche Vergleichsmiete", which is approximately the local rent averaged over the last 6 years (exactly defined in §558)

More generally, you cannot simply ask for astronomical prices for anything in Germany just because you know that people are in a position where they have to pay them, that's "Wucher" (racketeering) and against public decency, which is generally illegal according to §138.


Interesting. That sounds a lot like rent control if the wiggle room is only 10% over a 6 year moving average.

It is rent control - which basically exists throughout Germany. Even in SF rent controlled apartments can increase some % per year, it is just controlled how much. In Germany this is often done by looking at the region's average price for similar properties and then fixing some limited increase against that. This is distinct from the rent cap that was overturned, which stated no rise in rent at all for five years.

There are multiple kinds of rent caps. One is the maximum annual raise for existing tenants.

Another one is vague and based on the "Mietspiegel", which lists appropriate rents according to quality and location.

If the rent exceeds this by too much, you can sue for "Mietwucher" (rent usury).

Rent control prevents from increasing by more than a set amount every year. Theoretically you can wait for decades raising the rent every year

§ 291 StGB Wucher

Equally, why not build more housing until there is a 4% vacancy rate? This seems to have worked wonders in SF.

NIMBYism, environmental regulations, building codes and lack of money and interest by the state.

Berlin had the nice example of a few square kilometers of the Tempelhof airport field being available. Public demanded to make it a park instead of constructing housing.

Almost anything with a tree on it is impossible to build on, and even if there is a building permit for the housing, attaching it to public transports like the S-Bahn or Subway is next to impossible nowadays.

Building codes in Berlin are not much weirder than in the rest of Germany, but they also serve to make constructing housing harder. E.g. there is a strict limit to building height, which limits buildings to 5 storeys (iirc) even in high-demand high-density areas.

Money is especially tight for the state of Berlin, while they get subsidized with lots of money from the other states (Länderfinanzausgleich), they still cannot afford to construct much of the necessary housing or the associated infrastructure themselves. Private investment usually will go elsewhere because the political environment in Berlin is poor. If there is rent control in Berlin and no rent control in Hamburg, of course money will go to Hamburg first.

There is also no political will to fix the above.

No experience with the building codes in Berlin, but a least the N story limit makes sense to me. It would totally destroy the look and feel of many parts of the city of this wasn’t in place.

What I think is a bigger problem is the countless vacant lots all over the city. Even centrally there are tons of them, e.g. with only a one story supermarket or parking lots (as mentioned above) or sometimes it’s just overgrown. I wonder what the deal are with those. My guess is that the city already sold them in more dire times and now owners just sit on them until the real estate prices makes the time ripe to build something there. Can’t find another explanation for it.

Berlin has a lot of real-estate with unclear ownership, due to seizure of property during the nazi time and communism, sometimes multiple times. Add a few levels of inheritance and you get real estate that is unusable because it belongs to a lot of people at once, all in a decade long court battle with each other.

because, sadly that's illegal in all of germany.

I think I prefer the Swedish queues.

Those are great if you can wait years

Last I looked in Gothenburg those seem a joke. Only about 50 apartments in the whole city and an average queue time of 10 years or so.

Same here. The city itself should build as many cheap rental apartments as possible, also in more higher-priced areas to keep the pricing there in check. Building more housing is the only way out of this soaring pricing.

EDIT: not only rental apartments of course but more housing in general.

A second step would be, to make sure that rental housing is used for that instead of AirBNB or any other investment. It would also help to reduce land transfer tax if someone then lives in the bought flat. Speculators and builders anyway get around it in the long term by founding businesses that buy apartment blocks (pay the tax once) and then later only trade the shares of these businesses.

And last but not least, they should stop to discuss dispossessing property. It does not solve anything but wastes time and energy.

So here in the UK, our councils used to build social housing. 300,000 per year. And then Thatcher made it illegal and said privately owned housing associations would fill the gap.

In the 30 years since then, the most they've ever managed is 30,000.

It's not in private landowner's interest to build cheap social housing. It reduces rents, it suppresses property values. So they don't get built.

If they do build anything, it's in their interests to build luxury apartments. They make the most money out of those. I know little about Berlin's housing, but by any chance would there be a lot of expensive apartments being built?

Did something similar happen in German history? You'll probably find all the big landowners in Berlin and Germany lobbying very hard to make sure nothing like this ever happens.

Berlin and other cities sold off their public housing to pay for their budget deficits. Generally, there are housing cooperatives in Germany, and they have significant amounts of apartments. Not close to being as big as the largest private companies, but 3000-5000 apartments aren't rare. You become a member and buy shares, and their purpose is to provide housing to their members, they're very affordable and all around pretty great (not as profit-oriented as the private companies, not as bureaucratic as the public stuff).

I'd prefer those over public housing very much because only with them, the interests between the renter and the landlord are aligned, and they're not part of the state and can therefore not be used (or sold) by political decisions.

I know of some related things going on here:

* Typically in Germany, social housing is built with a time-limit built in: after X years, the house falls out of the social housing program and can be rented and sold freely. At the moment, a lot more houses leave the system then are added.

* Many cities sold their real estate after the financial crisis to give the money to the failing banks. I.e. Berlin is super-broke, in parts because of a big banking scandal of the previous government.

* In Munich they have a pretty decent system: anyone who develops land had to keep to a certain split of social housing, middle income housing and free market housing. They use the land they own and their powers over zoning to enforce that.

At least in Warsaw, there are various kinds of developers. Some specialize in luxury housing, while others cater to the mass market, with tall building of small-ish flats, hundreds of units per flat, built on cheaper land further away from the city center. There were entire districts built by such developers in the past 20+ years. Perhaps the key to this is relatively low regulation in Poland, which sadly results in somewhat chaotic urbanism and a lot of missed opportunities for building a city that's nice to live in, but also allows for shit to get done.

I'd take them building more expensive housing (as long as it's not used purely as an empty investment vehicle as in London) over barely building anything at all. I know people who would've paid a bit more for a nicer place but their options were too limited, so I'd expect some trickle-up/down effect at least.

There is a point when you run out of people who are willing to spend millions on the empty investment vehicles so I'm hoping even those properties will help with supply when the tide eventually do go out. Unfortunately it could take a very long time before this happens.

Isn't it widely used for money laundering and wealth sheltering? Don't think there's an end to that money.

An endless supply of money sounds like a great source of tax revenue. It's rather difficult to evade a property tax.

There are millions of chinese and other people who want safe investment vehicles. If the government does nothing, land and housing in a big capital can easily be usurped by investors who then take massive tax breaks.

Investors will profit most by renting out their property. Allowing the profit motive to work to increase supply is an effective way to reduce the price consumers pay in every industry, including the rental market.

Profit is just an emergent form of social compensation for addressing a shortage. That society enacts laws to prevent the profit motive from working, and incentivizing socially beneficial behavior, is a tragedy.

This "trickle-up/down effect" is the exact excuse they've been using to justify it.

As far as I know, it's a widely discredited theory, never based on any actual studies.

Thatcher has been out of office since decades. If this was important to the people they would vote for people who promise to bring it back.

Or politicians are corrupt and Thatcher is a good excuse. Take your pick.

That's not how politics works in the UK. We have first past-the-post, so individual policies mean very little.

On top of that, the Conservatives made an election pledge to build 200,000 starter homes in 2015 election and apparently failed to build a single one. It's easy to claim you'll build houses and then do nothing, like it's easy to claim you'll reduce immigration but it just keeps going up.

The last election in 2019 was mainly about Brexit and the general public's perception that Corbyn was unsuited to being the Prime Minister.

Same thing happens here in Austin, if you don't force them to also build affordable housing as part of their deal with the city virtually 0 will be build because the profit margins are so much more with luxury apartments that are 500 sq ft and you can fit a ton of them in a high rise.

The dichotomy between "cheap housing" and luxury housing needs to end.

(I might be wrong but) if I had to bet why councils could build more places it's that they would have a streamlined approval process with councils (denying a social housing project would look bad) while the private developers have to follow the mood of the deparments and several "appeals" and "NIMBYs" (same as in the US today)

But a new "luxury apt" opens a place in a slightly cheaper property.

> A second step would be, to make sure that rental housing is used for that instead of AirBNB or any other investment.

This is already in place. Berlin is very strict about apartment usage. Once a unit is designated as a living space, it's very difficult to get a permit to use it as an AirB&B. Also if you own an apartment, it's illegal to leave it without a tenant for an extended period - I think 90 days is the maximum.

I think that 90 day limit is great, it would help my city a lot because of all the speculative market buyers who buy and hold just as a store of wealth hoping to flip it for a profit after a few years

High mandated standards on Fire/Noise Protection, Insulation, accessibility on new buildings make it really hard to build "cheap" rental apartments. With the mandated standards in place there is little to no cost difference between high cost and low cost residential buildings.

Those standards obviously have their benefits or are unavoidable (fire protection) and result in new housing being high quality. But they make it hard to address housing shortages in a non long term way.

That's already happening with two Edeka markets in my neighbourhood, they teared down the old markets, and replace(d) them with new buildings with the market on the bottom floor, and flats on top. Drop in the bucket though I think.

I don't think the city is giving out new building permits for this type of stuff, and many of those markets have either been there "forever", or have been built after the reunification (and in the 90's city planners were expecting that the city would shrink further, not grow).

You hit on the major problem. That it's hard to build in the city. So many ugly buildings under Denkmalschutz, so many empty concrete spaces and people still want to live where the facilities are, not in the outskirts if they have the choice.

I imagine this might be implicit in your comment, but it's politically much easier to bring in a rent cap ("protecting the hard-working families of Berlin") than hand out building permits ("overdevelopment!") Issuing more building permits also takes a long time to have any effect on rents, so by the time it takes effect the politician who brought it in is likely to be long gone. More permits will only happen if politicians can stop bickering amongst themselves and agree that more housing is the way forward (which it clearly is, compared to rent controls).

I'm not convinced that it is politically easier, the rent cap is a very controversial topic (for good reasons, it's really an extreme measure). A fringe may like that talking point, but that's not how you do effective policies.

In Berlin it is a good talking point. I am not commenting on whether it is effective or good policy, just that you can score politically with it (well, until the court now killed it, I suppose).

Concerns about being able to afford rent not just now but in the future is a major concern for a huge chunk of the population. They look at what happens in other large cities with rent prices (be it Munich, be it Paris, be it SF) in fear.

Berlin itself uses an unofficial slogan of "Arm aber Sexy" ("poor but sexy/attractive"), coined by a former Berlin major referring to the budget of the city but adopted by the population to mean the people living there as well. They fear that driving out poor people - including themselves - and turn it into yet another place for the rich, and/or fear "over-development" will destroy the character of the city (and the ecological consequences of such developments; the Green party is big in certain parts of Berlin).

I can see that with my sisters, who have been living in downtown-ish Berlin for a long time while "poor" (think student, almost-unpaid intern, unemployed), and who constantly complained about the rents (that my parents and later welfare paid) and scarcity of available apartments, but at the same time were e.g. very much against any plans to develop the large area of the old closed Tempelhof airport, where all plans to develop that area were abandoned after multiple public referendums decided that the area has to remain a "park". That alone is 12km² of now entirely unused space close to the heart of the city, space for about at least 50000 people considering Berlins current population density of 4118 people per km². Or develop only half of it, and leave 6km² and that's still a ton of new apartments. But nope.

In Berlin, rent control isn't a fringe topic. Half of Berlin was formerly communist (the east) with the non-conformists being sent out to the sticks. And the other half has a higher proportion of (partly radical) leftists due to the federal draft not applying in Berlin (so young, mostly left-leaning, males moved to west Berlin to avoid serving in the military). So the general population in Berlin is rather more friendly to ideas such as communal property, rent control and generally sticking it to the evil capitalist man.

How things have changed. I remember going to Berlin around 15 years ago and was surprised how cheap the property was there. At the time it was a city where the population wasn't growing for a very long time, but had good infrastructure and more supply and demand especially to the East. Large apartments in established neighbourhoods were the norm. There was also not much in the way of jobs going for working in tech, or else I would probably have moved there as soon as I landed an opportunity to do so. The tech jobs and the young talent found each other there and the rest is history and this spike in demand keeps luring in more property speculators. It's a difficult situation to fix, the real fix here is a policy to increase housing supply dramatically. Unfortunately the financial incentives against this is very strong, because a critical mass of people have an interest in even higher prices. Putting controls on the trade of existing properties (e.g. making mortgages less accessible) or taxing landlords higher results in a shortage of rental properties and makes the prices rise even further. Rent control to try curb this leads to further shortages.

My impression of Berlin (living there for the last 2 years) is that there's plenty of space, plenty of new housing already built and plenty of new construction still going. SF, NY, Paris and London are way more crowded and under-housed in comparison. Shitty one-story supermarkets are really just a sign of abundance of space and not enough demand (yet). Among big European cities the rent seems low. You can buy an super-duper-lux apartment for ~$1M in the very center of the city that in the next 10 years can easily go for $5M if Berlin is to continue to grow the way it does.

Surely a rent cap is a clear sign that there is demand though?

I think the discussion of the rent cap is more complex. In every city there's some distribution of wealth and there are plenty of people who are sensitive to rent. Then, gov orders businesses to shut down, a lot of people lose money, then gov starts playing games with various ways to buy love of voters, rent cap is one of those things.

Similarly, minimum wage is typically bumped after inflation already made its way, so most of the people are over the threshold anyway and won't be thrown out of their jobs. And those who will — are valuable voters who can be made highly dependent on state unemployment programs.

A rent cap is a clear sign that the capitalist system is broken and we need a better system to match the housing needs and supply without feeding into heartless vampires who'd rather have empty apartments than rent them at a reasonable price.

Quite the opposite actually.Increase capitalism and reduce government control and you get more housing.

Yes, as we can see from the very great examples of where this approach worked perfectly. Now every one is perfectly housed in decent conditions and for cheap in United States or South Korea. We all know the dozens of thousands of homeless folks in San Francisco and around really want to live in slums or on the streets, and their situation has nothing to do with speculation, gentrification and AirBNB. /s

Are you South Korean? What do you know about South Korea's real estate?

Either way I would say housing in Japan (considering all the constraints) seems to work great.

> Are you South Korean? What do you know about South Korea's real estate?

No. Very little. Just read articles over the years saying they are facing similar issues of real-estate bubble and speculation and that prices in Seoul are getting close to those of New York.

And what does that have to do with the price of tea in China?

That's not how it turned out in the UK. As this graph illustrates, when the local government authorities were prohibited from building more housing, from the 1980s onwards, the private sector didn't pick up any of the slack: https://i.stack.imgur.com/MmJ5N.png

The capitalists instead decided to optimize for steadily increasing the price of housing by restricting supply, so these are now primarily seen as an investment with nearly-guaranteed returns, rather than places for people to live.

Another piece of data, from the Netherlands, where office space vacancy has significantly increased since making squatting illegal back in 2010: https://en.squat.net/2016/05/27/netherlands-housing-crisis/

> an investment with nearly-guaranteed returns, rather than places for people to live.

Or "magic coin-shitting machines", as Charlie Brooker so pithily put it.

Berlin needs much more new housing. I keep an eye on the market both for buying and for renting , and the prices for buying have exploded upwards at the same time as the number of flats for rent has steeply declined.

Empty ugly spaces (not Parks or Public squares) are a symptom of a lethargic bureaucracy, not a healthy thing.

Berlin is also full of empty spaces for historical reasons. Previous rulers intentionally built some things big and far apart for their capital, WW2 left even more unused spaces after the rubble was cleared and during the cold war only some parts got rebuilt. So even compared to most smaller German cities, Berlin has a low density overall.

Not enough demand for high priced apartments != not enough demand for affordable accommodation. In fact, they're literally in opposition.

They're building housing all the time. There are 3-4 housing blocks being build near me. One office building being built. Everyone keeps acting like they can just build new housing over night.

To be fair, construction work in Berlin is super slow.

Well in recent months the Tesla Giga Berlin factory has shown just how fast construction can take place if the people in power actually want it to happen. Building new housing units in the city slows the increase in value of existing real estate, which is why property owners are not rushing to allow the construction of new structures. Lobbyism is a powerful force in real estate.

The factory is located somewhere in Brandenburg. There is a difference in building a factory on farmland vs. a house block in a large city.

This is not the greatest example. There is still no final permit for the whole thing, only temporary ones. It is embarrassing and a textbook case of pointless German bureaucracy, misguided environmentalism and NIMBYism.

The Gigafactory near Berlin is still on a temporary permit, meaning that they might have to tear it down again (at least in large parts) if the bureaucracy finds a nit to pick. There is still the possibility of more problems due to environmental protection regulations for the surrounding forest and the water supply.

All in all, while some politicians may have suggested that the Gigafactory is an example of a fast project they made possible, they no longer do so. Because actually it is a perfect example of everything being regulated to death, dog-slow bureaucracy and crazy risks you have to take as a business if you want things done fast. Where "fast" is still slow compared to the rest of the world.

No housing construction will ever go to the lengths Tesla did in terms of risk for a fast construction. Housing investment is notoriously risk-averse in any case.

To be fair, it's not he people in power it's the construction companies. The amount of workers on a building site in Germany is way lower than in other places. And then you get the ones where they put 2-3 people for 2-3 weeks every 6 months.

Depends. Public construction is very different from private and industrial construction. As the industry pays well, on time and demands results, their construction sites are staffed to the fullest amount possible and complete astonishingly fast.

Public construction on the other hand goes with the cheapest bidder, so doesn't pay that well. Also, the state will only pay after a lengthy process of inspections and trying to find something wrong with the finished building. So lots of companies just avoid public bids, because they cannot afford to finance all the materials and work pay for the duration of the build. Those that can afford it are companies that specialize in public construction sites, usually designed to be able to go bankrupt at the first sign of trouble.

Generally, in a public construction site, all contractors are lowest bidders. Some do intentionally bid lower than cost to get the contract. What they then try to do to recoup their cost is to try to find some problem that wasn't spelled out in the bidding, or to wait for some change of plans or regulations. Because they then can bill a lot more for the additional work and material necessary to fix the problem, or hold up the construction site in lengthy court proceedings. Because everyone knows that something like that will happen at some point, they intentionally go as slow as possible, waiting for the order to drop everything and wait for the courts. Because if they are quick and invest a lot of work and material, they might not survive the delay.

> As the industry pays well, on time and demands results, their construction sites are staffed to the fullest amount possible and complete astonishingly fast.

In my opinion, compared to other countries things that would be built within 8-12 months take 2 years.

Yes, that might be the case. I'm just comparing to the average German construction site.

It seems like covid will solve the Berlin housing problem. My building in Schillerkiez is slowly emptying out.

How does that work, I don't suppose residents are dying away? Does unemployment force them to move out?

Move to the countryside probably. Others move back home. The one person I spoke to was moving his family to a house for more green space

Any specific reason why is emptying out?

Can’t enjoy the cultural offerings of the city if everything is closed and banned.

They are building a massive amount of houses, but they are too expensive for the average Berlin citizen.

I don't know the details of the Berlin situation, but as long as someone lives in those new apartments (who would have lived in Berlin anyway), it helps with the housing shortage and prices. Someone moves to the new, most expensive apartment in the city, someone else moves to their now vacant slightly less expensive apartment, etc. At some point in the chain that means there's cheaper housing available.

This is a constant discussion in Helsinki, too. I think it's better to build expensive if that translates to good locations and high quality.

In Helsinki I'm wondering if building expensive buildings will make sure the 'bubble' won't break. Banks will just give people larger loans. Move to a situation like Sweden where you don't even intend to fully pay it back anymore. You're just renting from the bank instead of a landlord.

Same in Switzerland. The taxation laws and low interest rates lead to a perverse incentive where people get million CHF apartments that they never pay off because if they do pay it off their real tax rate would go up tremendously. So they just make interest payments on the debt.

That's true, but your premises are wrong for most of the luxury real estate market in European cities (and likely elsewhere). Most buyers are investors in one way or another and for them it's good enough if they believe that prices will continue to rise.

But does it matter who owns the place as long as someone lives there? I mean I assume that the investors are renting them out. If not, surely they're losing out on a very nice income stream, and it's hard to believe it's all that popular. There are probably some empty apartments — that's a requirement for a working housing market, given that people need empty places to move into — but the proportion of empty investment vehicles in a city as large as Berlin can't be that large.

From what I've heard, the problem here is a bit with expectations.

Institutional investors have higher expectations of return of investment and are more likely willing to forego a small rent in the hope for a larger future rent. They have more deep pockets. And on top of that, expectations from an international market, which Berlin did not match. Investors are expecting that to change in the long run. And the funny thing, with a limited supply in housing and an increase of investors with such a behaviour, it is a self-fulfilling promise.

The number of empty apartments in Berlin is hard to guess. Not an expert in that matter, but from a quick search, the number is anywhere between 0.8% and 2%.

Yes, it is important to have apartments empty for some time, so people can actually move, but as I understand, that is excluded from those considerations/statistics. We are looking at apartments which are empty for more than three months (which is theoretically illegal in Berlin).

Ah, all right. A significant stock of empty apartments would certainly be suboptimal in a city like Berlin. I'm not a big fan of bans on things that don't cause direct harm to people, but I don't see any reason to not heavily tax apartments that are kept empty.

Sparked from the the post, I read a bit up on it, and actually 0.8%-2% is actually on the lower side. 2-3% is supposedly the right amount for a well functioning market according to a local government source.

Keep in mind, what I wrote about investors is what I heard from people living there complaining about. So more a reflection of the emotions there, then necessarily factual.

> but as long as someone lives in those new apartments (who would have lived in Berlin anyway), it helps with the housing shortage and prices.

> At some point in the chain that means there's cheaper housing available.

Not at all: if you tear down a cheap apartment and replace it with a more expensive one the overall availability of cheap apartments decreases.

> Someone moves to the new, most expensive apartment in the city, someone else moves to their now vacant slightly less expensive apartment, etc. At some point in the chain that means there's cheaper housing available.

In The Netherlands there are actually quite a few people that don't want to upgrade from cheaper social rent housing to more expensive private rent housing. These people are called "scheefwoners", which to a Dutch person's ears make it sound like it's almost a criminal activity:

> Scheefwonen is a term that is used in the Netherlands for the living of people in a rental home despite their income being too high for that. So the tenants have an income that is too high for their type of home, so that they actually pay too little rent. With a given housing stock, the downside is that there are people who live in a rented house whose rent is high in relation to their income, which is undesirable for the residents themselves and / or socially in connection with the housing allowance. It can also play a role that the rent is low compared to the characteristics of the home. The Key Publication on the Dutch Housing Survey “Living in Unusual Times”, published in April 2013, showed that the number of households in rental homes with a rent below the deregulation threshold and an income higher than € 33,000 in 2009 was approximately 790 thousand.

Of course these people might have pretty good reasons why they prefer to keep living in cheap social housing. Perhaps these people want to save/invest more of their income, perhaps they like their neighbourhood or perhaps private rent housing is just too expensive. Either way, I feel it's wrong to say that these people "pay too little rent based on their income". That almost seems to suggest a certain percentage of income should be spent on rent or mortgage, whether one chooses to or not.

Again, this problem could be easily solved by just building more houses, but this is also very difficult to achieve in The Netherlands, due to ground speculation by municipal governments and a plethora of rules that a builder has to conform to when building new houses. This, combined with an average immigration of around 400-500 migrants a week means that for the next 15 years or so I don't believe this problem will be fixed, maybe not even in 30 years, unless some major policy changes are introduced. This situation is good for rent-seekers though, they will be able to ask a premium for a very long time.

Source: https://translate.google.com/translate?sl=nl&tl=en&u=https:/...

Compared to other capitals in Europe, they are doing it. It's of course a slow process, but it exists.

In Prague we have a comparable housing problem to Berlin but all the politicians tend to balme AirBnB and real estate investors and they all focus on some kind of market regulation. Mostly just talking about it because they know any strict regulation would be unconstitutional. From the technical perspective the solution is simple. We should just build more houses in big projects like we did 40 years ago which will drive down the unit price and also provide all the necessary infrastructure like public transport and schools. Pretty big portion (tens of percent) of Prague's housing capacity was build during the 40 years communist era. If we could successfully build huge housing projects like Jižní Město (https://en.wikipedia.org/wiki/Ji%C5%BEn%C3%AD_M%C4%9Bsto) during this awful regime whit very limited economic resources then it's surely doable now and in much higher standard. We just lack the political will to think longer then next 4 years till the next elections and to solve the problems instead of just talking about it and blaming someone else.

Berlin has enough space and I guess the pressure on properties outside the ring (e.g. Marzahn/Marienfeld) is less. However if everyone wants to move to Mitte/kreuzölln, then this creates lots of competition.

Paradoxically, more housing also increases rents. More citizens in the city leads to higher salaries, attracting even more citizens that need more housing...

Because the road and other related infrastructure may not be ready for the increased FAR ratio yet?

The supermarket in question has a bus stop right in front of it and is in walking distance from a train station and an underground station. The city center is a 15 minute bike ride away. It's not a neighborhood where you need a car.

Sounds a bit like concern trolling if this is used to stop or delay building new apartments that people would love to move into.

Who would do that? The same people with an incentive to restrict supply? Call me cynical but that's how it works elsewhere.

But they won't. What does that tell you about the politicians promoting this rent control policy?

That all they care about is getting reelected by people who live there and want free stuff, rather than solving real, hard problems?

Why build more? There's plenty of abandoned/empty housing everywhere in big cities? Unfortunately i don't speak german so i can't give you stats about Berlin, but in Paris alone it's >200 000 empty housing units according to official statistics.

Building more is definitely the wrong solution to housing. Just remove the capitalist vampire landlords making a profit on basic human needs, and let everybody enjoy free housing for life!

EDIT: Corrected stat.

EDIT2: Funny to see people downvoting without argument. Are you all against Article 25 of the Universal Declaration of Human Rights, stating "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" ?

How is it that rents are so high and yet there are empty housing units? Don’t landlords want the money?

Why collect rent when the property price keeps increasing regardless? Saves you from having to deal with the tenants and saves you tons of worries/busywork like:

- How tedious will it be to find suitable tenants (do you want to go through 1000 emails)?

- Will they make a mess of the place?

- Will they call you at random times to complain about neighbors?

- Will you have to organize and deal with mechanics when e.g. the heating breaks?

And so on. If property prices go up x% per year, buying housing is a great investment even if you leave it empty. And yes, this is a serious problem in larger cities, where investors (domestic or even foreign) just buy up housing without any intention to let people live there, exacerbating the problem.

To be clear, I am just a tenant, but the above incentives for investors are straightforward to see.

> Why collect rent when the property price keeps increasing regardless?

Because then you get the property price gains and the rental income on top!

I don’t doubt this is happening, I’m just trying to wrap my head around it.

As an individual person with a heart, it's hard to wrap one's head around. But the problem is landowners are usually very rich and soulless, when not actual corporations who have nothing human at all. To them, an empty apartment is just a line in a spreadsheet that will bring them money sooner or later. Renting the apartments would be more trouble for them, despite bringing in a little more money.

Seems like a market opportunity. Take on the rental risk and management costs for some fraction of the rent payments. Insurance can be used to hedge against damages.

Many companies are doing that already, and it's not working as a strategy for housing people (despite making some people very rich). The problem is that housing is a market to begin with. Basic commodities like housing shouldn't be subject to speculation and other capitalist nonsense.

They might think it's more profitable to wait so that they can sell or rent the unit later at a higher price.

> How is it that rents are so high and yet there are empty housing units?

Rents are so high BECAUSE there are empty housing units. If all available housing units went on the market, rent prices would collapse along with the real-estate speculative bubble, which is precisely what landlords are trying to avoid.


People can't live without housing so demand is not elastic. Plus the housing market is special regarding spatial location. Applying regular market rules as if the housing market behaved the same as, say, the screwdrivers market, does not make sense at all.

In 99% cases it's the government/zoning rules that prevent increasing the supply of housing not private investors not wanting to build enough.

That's just pro-landlord propaganda but i've never seen actual evidence of that. I have seen evidence though that landlords and public powers conspire against the population to gentrify neighborhoods and drive prices up, leaving tons of apartments empty so they can make more money speculating.

It is more nuanced; the private investors want to make profit as quick as possible, they do not care about long term development of the area (many politicians either, they might not be in their position after next election).

The private investors won't do infrastructure either - it is expensive - so they want to build where the infrastructure is already in place. So that's why we see trying to increase density.

So the zoning rules are there as a conterweight to this.

Absolutely not. Investors fight with tooth and nails to keep the prices up because it's more profitable than building.

And in many cases it's private investors buying houses for speculation (either by increasing rent or by using them for AirBnBs) the ones that drive prices up, not an increase of supply.

In any case, my point is that applying market rules to housing does not make sense, it's not a competitive market at all and never can be.

Just curious, would you happen to have a reference for Paris handy?

You can find an article on paris.fr website claiming 17% empty housing in Paris (and rising) in 2019 : https://www.paris.fr/pages/le-saviez-vous-17-des-logements-p...

So my bad for giving a wrong number the >1 million is in fact 3 millions for the whole of France (~8%). For Paris it's "only" ~240000 (according to 2019 paris.fr numbers) which is on the scale of one empty apartment in the heart of Paris for every mishoused person ("sans domicile fixe") in the whole of France, according to official statistics (which may be too optimistic on the number of mishoused people).


According to INSEE (official statistics), between 1990 and 2015, population has grown 0.4%, housing units have grown 1%, while abandoned housing units grew 2.8%. Now may be a good time to say that secondary housing (vacation houses for the privileged elite that can afford it) is NOT abandoned housing according to these stats.

> ... just build more housing instead.

Exactly. And the Mietendeckel caused new construction to essentially stop completely. Way to go!

Nope. Your article was for the first half of 2020. For the whole year of 2020, the numbers were down again, fourth year running.

"16.03.2021: Heute hat das Amt für Statistik Berlin-Brandenburg die Baugenehmigungszahlen für das Jahr 2020 veröffentlicht. Die Zahl der Baugenehmigungen sank in Berlin das vierte Jahr in Folge."



And the effects already started in 2019, when the law was planned:


If it's been happening for four years, how did the Mietendeckel cause it?

In 2015, a similar but less draconian "Mietpreisbremse" was enacted at the federal level. 2016 was the year the construction trend turned from yearly increases to declines, and it has been declining consistently ever since.

In 2019, in anticipation of the Mietendeckel, the decline became significantly steeper.

Several large companies announced that they were halting all new construction and renovation projects.

At the same time, inventory has practically disappeared. So instead of "unaffordable" housing[1] for new tenants, we now have no housing for new tenants. (Existing rents were already protected).

[1] Berlin is still cheap compared other large German cities and certainly compared to most capital cities of industrialised countries or places like SF. It's just not quite as ridiculously cheap any longer.

> I wish Berlin would just build more housing instead.

The problem is: Berlin can't. There is not much free space for new construction in Berlin proper, with the exception of "Nachverdichtung" such as you propose with apartments over parking lots - and these have the downside that they are horribly expensive, simply because it costs potential developers a lot of money to acquire the land!

The solution would be to build out internet connectivity and public transport in the suburbs in Brandenburg so that employers don't all concentrate in Berlin.

There's plenty of space. I've walked by countless empty lots and abandoned buildings that could easily fit dozens or hundreds of new apartments. I'm sure there's plenty of ridiculous legal challenges to actually building on those spots, but that doesn't mean that there's no land available.

Please no suburban sprawl while Berlin still has such low density compared to other cities. There are still lots of fairly central areas with single family homes. Just upzone them and let people get rich selling their land to developers.

> Please no suburban sprawl while Berlin still has such low density compared to other cities

A city should be worth it to live in and provide enjoyment for the citizens, not be a glorified chicken coop for people.

That is EXACTLY what you get by building dense housing. You leave room for the important things that a city offers: services, events, jobs, greenery all in walkable or bikeable distance.

Otoh sprawl development leads to dead neighborhoods, car dependence and long commutes. It also uses space that could be left to nature instead.

Have you been to Berlin? We have amazing public transportation network, I never had a car living here for 5 years already, and never felt I need one (at least not before the pandemic). And also coming from a country with dense housing (Russia), I really appreciate we are not sitting on each others heads here.

"Dense housing" is code for "chicken coops" with the only space people have for themselves being 40 m² for a family of four. Seriously, thanks but no thanks.

There is a middle way between US-level sprawl and Japan-style chicken coops - and I definitely hope we don't go the Japan route.

No, "dense housing" is code for multistory buildings in a mixed-use neighborhood (like you already find in many parts of the city!). It doesn't matter very much whether those apartments are 30 or 200m^2, the density is several times better than in a neighborhood of single family homes as you find them just a few km outside of Berlin's city center.

Japan style housing, just like British, is "dense" in the sense of buildings being physically close. It's not what the post is about - it's about building buildings with higher number of storeys.

What about Tempelhofer Feld? What about all the Kleingartenkolonien inside and by the Ring?

Has Berlin built over all its brownfields? If so, very commendable.

Here in Prague we have quite a few brownfields that could be home to at least 50 thousand people (Rohanský ostrov, Bubny, Kolbenova), but the development is extremely slow.

> Has Berlin built over all its brownfields? If so, very commendable.

Well having some undeveloped space is actually quite nice to enjoy in a city. We don't have to live packed narrowly on top of one another.

But more specifically, brownfields (previously-industrial spaces) are usually highly polluted. Some are full of heavy metals and chemicals that you really don't want to displace into the air by digging into the soil... Some people are doing it, but it either costs billions of euros in depollution, or greatly affects the health of nearby population, and often both.

Where I was born (Ostrava, a heavy industry city), there was a giant, massively polluted brownfield right next to the city centre.

It required several years of sanation works to clean up, but now it is built over and serves the needs of the population. [0]

I believe that this is a reasonable use of public money, even though private developers profit from it. Or possibly finance it through a Public-Private Partnership project.

The alternative is to let poisoned land within borders of a big city stay poisoned forever. Which does not sound either people- or environment-friendly.

[0] https://www.ostrava.cz/en/podnikatel-investor/real-estate/br...

The amount of unused space is Berlin is just so massive. Even in Friedrichstraße, which is a hype neighborhood with great amount of activity, you have hundreds of square meters completely unused, with wild plants growing around and random waste accumulating.

From what I understand it is very difficult to do something with that space, either because people refuse to sell or because of bureaucratic red tape.

Wild plants growing around in a city, the horror!

When you have wasted space in a city with massive rent increase, then yes, it's horror. The land could be easily used to create new park areas, stores, or housing units. Instead you have absolutely nothing other than waste accumulating.

Well, either you build over the growing plants in the city, or you raze plants in the outskirts. The former gets complaints because people want greenery in the city, the latter gets complaints because of sprawl, added traffic and unnecessary pollution.

> The amount of unused space is Berlin is just so massive.

What's wrong with that? Enjoy the little green space you have left while it lasts. Have a BBQ with friends over there, maybe? The gentrifiers/developers won't be so long to remove every last bit of green and freedom in your neighborhood, as they did everywhere else.

I think you wouldn't enjoy your BBQ in a place like this, which is I think the OP refers to: https://www.alamy.com/berlin-germany-new-buildings-and-indus...

Actually i did quite a few times! I would not recommend to live in a place like this due to high industrial pollution, but a brownfield is quite nice to have a neighborhood BBQ with some music... COVID/police concerns aside, of course.

Nobody is talking about removing the green parts. I'm talking about completely unused wasteland in active parts of the city. The space could be used to create actual parks, stores, or more housing units, but it is instead just a place where dust, wild plants, and waste accumulate.

>What's wrong with that?

...The high housing prices.

High housing prices has to do with treating housing as a market and not as a basic human need. Prices are correlated to supply and demand, only if you take into account that the biggest landlords willingly leave apartments/buildings empty to drive up the prices (speculation).

Okay, then the lack of housing.

If you have statistics, i'm interested, but to my knowledge there is no housing shortage in Berlin. If anything, there's more housing than ever before, it's just trapped in the hands of landlords who want to speculate on it.

The point is, it wouldn't matter if it is trapped in the hands of landlords who want to speculate, if there is enough housing to go around, because they couldn't determine the market.

It is illegal to keep an apartment empty for more then three months. So if you are aware of any empty housing, feel free to denounce it (https://www.stadtentwicklung.berlin.de/wohnen/zweckentfremdu...). In 2018, 1,9% of the flats in Mitte were subject to an ongoing official procedure on those grounds. The owner can simply claim, they are reforming, but I presume there are limits to that too.

How many flats are really empty is unclear.

I've read that according to the Senat,

- there is an estimated 0.8%-2% of the flats unoccupied

- down from 3.5% in 2011

- ideally, it would be between 2-3%.

The Taz is not particularly strong on keeping opinion from facts separated, but that's where I got it from: (https://taz.de/Spekulativer-Leerstand-in-Berlin/!5749397/)

> Even in Friedrichstraße, which is a hype neighborhood with great amount of activity, you have hundreds of square meters completely unused, with wild plants growing around and random waste accumulating.

Two things: I think you put too much value to Friedrichstraße, and likely Mitte in general. It is the physical and historic city centre, but that doesn't have the same meaning as it has in other cities.

Second, in many parts in East-Berlin, you have a unclear ownership of houses and ground with competing claims. People have been disowned by the Nazis, Soviets, or by the GDR. The families have gone into diaspora and are partly spread over the world. Random people may have moved in and layed their own claim.

The ownership is unclear and spread. And it is a battle to lay claim to your _part_ of ownership. The ground is gaining worth over time. All ingredients, which do not expedite the development of land.

I don't give special value to Fridrichstraße, it's just an example of land being wasted in a massive city with important rent issues.

This is a catastrophe and very disappointing.

Here is a little personal anecdote: I used to live in the center of Berlin Mitte when I was a student, had rented a Penthouse apartment for 450 Euro/mo incl. additional costs (but without water, gas, electricity). It was affordable. Then a Bavarian multimillionaire bought the house from the original owners. I was already abroad most of the time, so I didn't experience the loud works his people conducted to get old renters out. However, he did cut off my telephone cable, something the phone technician realized when I returned and was able to fix.

Later he threatened to build a balcony - "and this might take a long time" - unless I agree to pay a higher rent. The classic ugly move. I negotiated with him for a while and in the end the raise was not so bad. However, I realized that I have to get out anyway - he wouldn't stop until I'd have left, you cannot fight a landlord with evil intentions in the long run even if you're a member of renter protection like I was. So I left Berlin and never returned, not even for a visit. I never asked but would estimate the same apartment at around 1600 EUR/mo today, with an ever increasing tendency.

Now I live in another country, ten years have passed, and the same happens in the city I live in. Rents are rising continuously, I've already seen people photographing the houses in our street, several of them are being totally renovated, new apartments are always "luxury apartments" as if any local could afford these (it's a poor country, ca. 800 EUR average income), and an agent from Sotheby's Real Estate rang my doorbell recently to ask if I'm the owner of my apartment.

You cannot escape this trend unless you want to live jobless on the countryside. I'd buy an apartment like most of my colleagues if I had the money, but it would mean having liabilities for the next 20 years and I only have time-limited contracts in Academia.

It's frustrating to know there is a real risk I'll have to spend my later years in the most ugly suburbs and slums of an otherwise beautiful town, even though I have a rather decent salary in local terms, while most of these houses with unaffordable "luxury apartments" are bought by foreign investors. By the way, many of the new apartments are empty, apparently only serve as investments.

I think it's the opposite. The rent cap (at least in the way it was implemented) achieved nothing to solve the problems that exist in the Berlin rental market. It led to a huge decrease in rental supply. Yes, rent may have been cheap for the few people who managed to get a place, but it was a lottery with dozens of applicants for each flat. This mismatch of supply and demand is exactly the kind of thing that would be solved through pricing in normal markets.

And rents rising as a city becomes a more desirable place to live just makes perfect sense. If you are convinced that this will happen in your city maybe now would be a great time to buy a place?

> If you are convinced that this will happen in your city maybe now would be a great time to buy a place?

Did you miss the part were they explained they can't do it because they only have a temporary assignment? This sounds a lot like "just be rich".

The reality is that a lot of people simply cannot afford to just "buy a place". According to some statistics [0], 40% of Americans (i.e. a "rich" country), are just one missed paycheck (or unexpected expenditure) away from homelessness. If you belong to the 60% that aren't and never experienced the situation, I understand how foreign the concept might seem to you.

[0] https://www.cbsnews.com/news/40-of-americans-one-step-from-p...

Yeah, that comment was admittedly a bit flippant. But I would say that OP can't expect to have the flexibility and low capital requirements of renting but get the benefits of stability and profiting from price increases that a property owner would have. There are sacrifices in terms of work and flexibility (and location) that people make because they want to buy their property.

You actually made me create a HN-Account to reply to this.

This is not true. The cap didn't apply to new flats. Which means that nobody wanted to invest and build new housing, but instead created artificial scarcity, there are a lot of empty buildings now because very few people can afford some of the abhorrent prices.

So yeah supply and demand totally worked. /s

> This mismatch of supply and demand is exactly the kind of thing that would be solved through pricing in normal markets.

The very opposite. The market optimizes for maximum profitability, not for maximum savings for renters or best quality of life.

There's a reason why governments have been building cheap housing across the last 100 years in most developed countries.

The market is how we find a compromise between tenants' desire for low rents and landlords' desire for high rents. I don't think you can say it optimizes for landlord profitability but it obviously also doesn't optimize for savings of renters. I agree that this is not perfect, but I think it's the fairest proxy we got. Attempts at regulating rents directly usually end up causing all sorts of unwanted side effects and make things worse for both tenants and landlords.

That said, I'm not opposed to the government building cheap housing. I think that's actually the best solution to an undersupply of housing.

> I think it's the fairest proxy we got

You are simply rehashing the idea that free market is holy and magic. Instead, housing is inelastic. Also, apartments are non-fungible goods.

Furthermore, they have a ton of externalities. (e.g. access to transportation, shops, workplaces, schools)

All of this breaks every assumption around free market theory. Unsurprisingly, governments intervene heavily in the housing market almost in every developed country. The only exceptions lead to a combination of slumslords exploiting the poorest people and gated communities for the wealthy.

>>You are simply rehashing the idea that free market is holy and magic. Instead, housing is inelastic.

Housing is not inelastic at all. Economists have studied the effects of laws reducing land-use rights, and have found they impose massive social costs, in the form of less housing construction, that leads to less affordable housing.


> less housing construction, that leads to less affordable housing

You mean that decreasing housing supply correlates with increasing price?

Because that's exactly what inelastic demand is: https://www.investopedia.com/terms/e/inelastic.asp

Demand might be inelastic, but supply and price are not.

There are dozens of appicants for each flat anyway, with or without the cap.

Not everyone can just buy a place, if rents keep increasing only rich people will be able to afford living in the city, you need a lot of non-rich people to actually run the city though: cashiers, nurses, teachers, firefighters etc. It's not that easy.

I know the market isn't perfect, but in theory if lowly paid workers can't afford to live in the city anymore they'll start looking for jobs elsewhere, which will force their employers to raise wages.

Sorry to be so blunt but that theory is really just false. There are no jobs elsewhere, the jobs are in the city. I'm also not a "lowly paid worker", I'm in the highest quartile of income in my country and work as a full-time researcher at university. Nevertheless, there is no cap on the rents in my area and they continuously increase even for my existing contract. They have increased sometimes by several hundred percent for new contracts in my area, so if we ever had to leave our current apartment, we'd be forced to spend more than 3/2 of our salaries on rent alone. Even relatively well-off families will have troubles getting affordable living space in the foreseeable future, thanks to AirBnB, hostels, and long-term investments into (right now mostly empty) luxury apartments. How the average family can do it in my country is mysterious to me, but I'd wager most of them only can because they have very old rent contracts which do not have in-built rent progression.

The market forces you refer to are fictitious. What happens in reality is that the middle class is dwindling, there is an ever increasing divide between land and house owners and mere renters, and at some point in the more distant future the whole system will break down.

> It led to a huge decrease in rental supply.

This was artificial though, as landlords were waiting to know the outcome of this ruling. It's not like the apartments just vanished from existence.

Sure, but I don't think it would have gone back to 100% if this law hadn't been overturned, since the law made it much more attractive to keep a property empty in order to sell it at some point.

Empty apartments are more attractive for buyers but if your intention is to rent it anyway, it wouldn't have made a difference, as the Mietendeckel ensured you couldn't rent it for more than what the previous tenant was paying.

This reminds me of the dispute on liberalizing parking space prices. An uber driver last week was super against it, saying it's not fair. His main argument? He has a price protected one. Meanwhile I do the 10 minute parking dance every evening, while going past paid, reserved and unused parking spots. (Bucharest btw, and they'll likely stay this way)

For two years I had to drive for 1-3 hours after work each working day to find space, just because our local authority decided to make paid parking as a pilot on most streets in the area and mine was not included, so everyone tried to park on those limited free streets and I couldn't get a permit for pilot ones. The paid ones of course were mostly empty and that put enormous stress on the few free ones. Complete lack of imagination from people who planned this and residents were not consulted.

This is something that irks me too. If you're an authority implementing paid parking, price it appropriately so that most of the potential clients would rather chose to park and pay instead of hunting for free parking in some other parts of the city. Once you have that parking lot full most of the time, only then you may juggle around with the price in order to bring it closer to a more desirable level.

So, the bavarian investor who upgraded his property is the bad guy here? While you spend your time abroad, blocking an apartment in Berlin's city center? Sure, low rents from decades ago are nice, but there has to be an equilibrium. Houses depreciate and if the rent is too low there won't be any money left to pay for upkeep. Unless of course, the bavarian millionaire has to take a loss and pay for that out of his own pocket, because eat the rich.

I was not blocking the apartment but travelling back and forth while doing my PhD, during one year. I lived there, and when I was away someone else was taking care of it. The Bavarian investor was definitely the bad guy, he illegally cut telephone cables and threatened me with making my life a misery in a way that was directly against German rent law. I had to consult with the lawyer from the rent protection association (Mieterschutzbund) who told me it might be better to keep an agreement with him since they only pursue lawsuits in more drastic cases - unfortunately such harassing is normal, although in the end illegal.

The rent was not too low, it was perfectly okay for the previous owners and I can assure you they did not lose money. They made enough money to pay a company full-time to take care of the building and relations to the renters. They merely earned normal amounts instead of seeking a 1000% return on their investment like the guy from Bavaria. There are greedy and fair house owners, it's as simple as that.

The op would have sublet presumably at the previous lower rate.

> Now I live in another country, ten years have passed, and the same happens in the city I live in.

The same is happening in my city (Baltics) too. We bought a new apartment 5 years ago in the city centre, at the time we paid €2250/m2 which was quite a lot. Now I'm seeing the standard price for new apartments being double that. The typical salary here is around €1000/mo[1], so these apartments are completely unaffordable to most people.

We were actually looking to upgrade (as we have a 1br apartment and now a kid), but we wouldn't be able to afford to buy a bigger apartment. Instead we bought land and are building a house on the outskirts of the city. We got lucky there too, as we completed the purchase right before COVID and apparently land prices have gone up a lot now.

You can still find barely affordable (usually older) apartments further out of the city, but if you want to live anywhere close to the centre you need to be earning a salary a good few multiples higher than the average.

[1] Thats for the country as a whole, but salaries vary a lot in different regions, so maybe for where I am it's higher.

Renting a penthouse/dachgeschoss apartment in Mitte costs more like 2k nowadays.

The rental situation is bleak. There's a two class system of people who got cheap housing 20 years ago and can never move (like in New York). If they move, they keep the apartment and sublet it.

Then there is a massive indiscriminate sellout of property to very rich foreigners. In some top locations you hear more Russian than German in the streets.

Otherwise, in the lower segments there is enormous pressure from refugees, who get government aid while low income Germans do not.

The people who decide everything (Red/Green party) most have cheap apartments that they got 20 years ago. They don't suffer from their own policies.

Keeping the apartment and subletting it is non-trivial since the landlord is not forced to accept it, and has no incentive to. Illegal sublets are common, but more inconvenient.

The part about hearing more Russian that German doesn't ring true to me, and reeks of xenophobia. Doubly so for the non sequitur quip about refugees.

An example of how bad the government in Berlin is would be the Pankower Tor project: https://www.tagesspiegel.de/berlin/froschlurch-muss-umgesied...

34 hectars (>90 acres) of waste land in a prime location can't be bulldozed to build 2000 new apartments because a rare species of toad was found to be living there, which can't be relocated because no state agency is responsible. The court case has been running for over 10 years!!!

The government in Berlin is hardly an exception. The rot goes to the top. The entire government is composed of incompetent Beamter biding their time till their fat pension, stuck in the good old days when you didn't have to do any work until the Oberstleutnant gave you an order.

A few years ago I would've agreed.

Today I'm leaning more towards - "so what?".

As long as there's obviously enough space to waste on detached houses and land speculation in the middle of the city, it can't be all that bad.

If it was really such a big deal, "someone" would've paid "somebody" already to relocate the animals "after business hours", if you catch my drift. There's more going on behind the scenes for sure that we just don't know about.

It is that bad, but the people who are affected are not the ones making the decisions. Just like with the Mietendeckel. The politicians have nice apartments and villas already and high incomes, same with the ones who want to reduce welfare payments. They are rarely affected by the policies they enact.

> It is that bad, but the people who are affected are not the ones making the decisions.

It could be argued that they are - both indirectly (by electing the representatives that do make the decisions) and directly (by lack of [legal!] activism for their cause).

It's a case of pointing fingers instead of lifting a finger.

edit: what I mean by that is votes and protests do matter as does providing reasonable alternatives. I see that happen way too little in Germany. Try something in France and they set half of Paris on fire each time; not that I think that's better, but at least it shows that people actually care.

> If it was really such a big deal, "someone" would've paid "somebody" already to relocate the animals "after business hours", if you catch my drift. There's more going on behind the scenes for sure that we just don't know about.

Doesn't work, the next thing that will happen is the tree-huggers (B.U.N.D. and others) will get public money to re-establish the population and impose stricter protection measures. In Germany, the environment gets far far better protection than the people.

> In Germany, the environment gets far far better protection than the people.

So how come Glyphosat wasn't banned immediately then? How come nitrate in drinking water goes up [0] and treatment becomes ever more expensive while at the same time industrial livestock farming still gets heavily subsidised?

German politics still bends a knee to industrial farming, chemical industry, and heavy industry more than the environment, don't fool yourself.

There's a reason the insect population has decreased by over 70% in the last 3 decades [1]. All because the environment is top priority, I presume.

The reality is that still no-one cares and the few things that are being done (tunnels and bridges for wildlife to cross roads, relocation programs for endangered species, etc.) are blown out of proportion by critics while the big picture looks bleaker than ever.

FYI there's ain't going to be many trees around for the "tree huggers" to hug in a few years if things continue to go the way they do [2]. But yeah, it's all to easy with the us-vs.-them instead of tackling actual roots of the problems...

[0] www.umweltbundesamt.de/themen/wasser/grundwasser/nutzung-belastungen/faqs-zu-nitrat-im-grund-trinkwasser

[1] https://edition.cnn.com/2017/10/19/europe/insect-decline-ger...

[2] https://www.nationalgeographic.de/umwelt/2021/02/deutscher-w...

Well, yes. Because environmental activism is basically an instrument of NIMBYism, not anything based on facts, evidence or logic. Nobody really protests when farmers spread their poison, because that would be inconveniently far away, lots of work, etc. But protesting about the destruction of the neighbouring daisy habitat is an easy feel-good measure, and if you can NIMBY you way into higher value of your real estate by scarcer ground for housing construction, all the better.

And you don't see the contradiction there? On the one hand you say that the environment is protected more than the people yet here you argue that it's actually the people who benefit instead of nature.

Which is it?

People at large aren't really protected in any way here. Neither is the environment at large. There are just a small number of people who advance their interests by selectively pretending to protect some insignificant part of the environment. That this sometimes has big repercussions like cancelling major projects is sold as a big win for the environment, when it actually is a tiny, insignificant and non-proportional one. So in the presentation, we are doing a lot and sacrificing a lot for the environment (not really, but it is presented that way) when we are actually just doing nothing but to hinder progress in other areas.

Without arguing about the merits of protecting that species of toads, you can’t blame the Berlin government for things that are governed by federal and EU law.

Ultimately the owner/investor either has to find a way to move the toads or apply for an exception. Without an application, the state government can’t act.

well see that's the issue, state won't make an exception and owner can't move the toads

Full text of the court decision (German): https://www.bundesverfassungsgericht.de/SharedDocs/Entscheid...

Shorter press release (German, too): https://www.bundesverfassungsgericht.de/SharedDocs/Pressemit...

It's a classical application of the "federal law breaks state law" rule, which I think exists in the united states as well.

Basically a note from the press release:

There are various categories where the states or federal have the power to enact laws. In this case, it is part of the competing law section: As long as the federal government has not provided a conclusive law on the topic, the states may make their own laws. For renting there is conclusive law, so states are not allowed to make new laws regarding the topic.

You mean "federal law trumps state law"?

Yes. That's probably the analogous name from the english language sphere. In German, the rule is named "Bundesrecht bricht Landesrecht". I made a more direct translation to make it more similar to the original German name. https://de.wikipedia.org/wiki/Bundesrecht_bricht_Landesrecht

The phrase "Bundesrecht bricht Landesrecht" is even part of the German constitution, as Article 31.

I thought it was more "Federal law has already decided this and the state can't be more restrictive than the Federal law"

Here are some examples of ways berlin could have increased the amount of affordable housing:

1. Build more housing on land that is already owned by Berlin State

2. Increase the amount of housing support available to low income families

3. Prevent the migration of social housing units to the private market by extending existing contracts.

4. Close loopholes in the Mietpreisbremse that allowed landlords to dramatically raise the rent after renovations.

5. Block NIMBY movements from preventing the construction of housing projects

6. Fund the court system so cases can be resolved in less than a decade.

7. Increase the minimum number of social housing units in new developments to 50%


7. Why should the other 50% pay more? This is what I am uneasy about - if you work hard, live a modest life to save for a place to live, sacrificing hobbies, socialising, happier life in general and then you have other half who just don't care because they think they should receive everything from the state. This is extremely demotivating and make people question whether they were correct about saving and making sacrifice. I personally know people who became homeless on purpose as they found they could get a house much quicker this way rather than through working their bottoms off. Don't get me wrong - there are people who genuinely need help and I wholeheartedly support that, but I don't think the number is 50%.

or change rules for social housing to something like singapore. anyone who doesn't already own a house is illegible to buy a social housing unit (paid as rent). but it requires huge investments. I also don't want to work my ass off just to end up paying the same % of my salary to the landlord.

Only #1, #5 and #6 would actually improve the situation and not be a zero-sum game, the rest is socialism, just rehashed.

Socialism is the worker's ownership of the means of production not "when the Government does stuff"

Taxing unoccupied properties could help to ensure existing properties were actually used and not just held empty by speculators.

But yeah, the main solution is building stuff - I think we need to build residential skyscrapers in the West like they have in Eastern cities, otherwise the urban population densities we are arriving to are unaffordable for most citizens.

> Taxing unoccupied properties could help to ensure existing properties were actually used and not just held empty by speculators.

This won't work, as investors can hire people to live in the property and it will make it more expensive as a result, as someone will have to pay for that extra admin.

I'm sure that getting payed by people for living in the property, would be better than having to pay people to live there, but I'm no economist.

Important to note here is that while the Mietendeckel (rent cap) has been overturned, the Mietpreisebremse (rental price control) is still active. This is a very interesting development though.

Correct. Unfortunately, the Mietpreisbremse is not as "automatic", because there is no fine tied to it. This means the landlord will not reduce your rent unless you do something about it. It also brings a lower reduction than the Mietendeckel.

Unfortunately, many rent contracts had a "shadow rent" clause - a higher rent they'd have to pay retroactively if the Mietpreisbremse was repealed. A lot of people are about to get a really big invoice they have to pay within 2 weeks.

Fortunately, the Mietpreisbremse is retroactive back to April 2020, so you can start the process now and get a refund later.

Your action plan should be the following:

1. Use a Mietpreisbremse calculator to check how much you are paying

2. Contact your landlord, either alone or with the help of a tenants' union (Mieterverein)

3. If that fails, use a lawyer, or a service like Wenigermiete. If it get this far, the resolution will generally take around a year. This is the average resolution time.

I have worked directly with Wenigermiete. They explained the situation to me just last week, but they expected the court to resolve the case in July, perhaps even later.

Thanks for putting it nicely. This sums it really well.

I will write a longer practical guide for Berliners affected by this. It should go live today or tomorrow on allaboutberlin.com.

Ah thanks, that site is a goldmine of info for Expats in Berlin

Mietpreisbremse for Berlin wasn't renewed, so there is now no upper limit on Miete except the federal 20% every 3 years. (I think)

Not sure how it is in Germany, but in my country (UK) the housing problem seems to be completely artificial. If you are an individual you cannot just buy land and buy a house - it is impossible to go through all the red tape and even if you do, local council for reasons known to them will unlikely to approve. So the market is really in hands of a couple of huge development companies who mostly build shoeboxes that they call homes and don't build enough so that there is space for everyone and if they do it's too expensive for anyone anyway. These flats are more like a storage of value for foreign rich people. I think this is because those millionaires can corrupt any politician and get their way, whereas average citizen cannot do anything.

This is great. I also want affordable housing for everyone, but capping rents does not deal with the core problem: There's not enough supply. I am baffled how some people do not understand this.

Also, for many people in Germany buying e.g. a single apartment is an investment for their later retirement. It's not all big and evil real estate companies.

Everybody understands this, except people taking part in movements hijacked by the wealthy to block any new developments. Here in New Zealand they are using indigenous groups to achieve the goal of blocking new builds, in Germany it's the green movements.

Something tells me governments are also interested in real estate prices going up.

Housing situation in Germany for anyone born after 1980 is so fucked.

Housing situation in Germany is so fucked

Housing situation in London is so fucked

Housing situation in Spain is so fucked

Housing situation in Canada is so fucked


I'm not an expert, but I see a pattern there...

The whole Anglosphere seems to have issues with housing, in addition to those places you mention. It seems to be a common cultural issue where people gamble on property like crazy. I'm from Ireland, and this is true there (in the desirable urban areas where semi-decent jobs exist), it's true in the UK[1], it's true in the US, Canada, Australia and New Zealand.

New Zealand banned foreigners from buying property[2].

Among Brits, there's a (small) trend of retirees going off and buying a French Chateau and doing it up, because the cost of doing so will be the same or cheaper than buying a very modest place in many urban areas in the UK. This is spurred on by a popular TV show[3]

I'm not sure what the answer is. More construction, rent controls and banning foreigners from owning property, none of it seems to really fix the problem. Construction is often too slow, rent controls can put in place conditions for landlords neglecting properties, and banning foreigners will bring other problems too.

[1] https://old.reddit.com/r/britishproblems/comments/lvx0xg/pro...

[2] https://www.cnbc.com/2018/08/16/new-zealand-bans-most-foreig...

[3] https://en.wikipedia.org/wiki/Escape_to_the_Chateau

All the western countries go through urbanisation, and have been for the last few decades. Back in the days, industry would build a factory in a smaller country town with a few thousand inhabitants and employ half the population there. Nowadays, this rarely happens anymore, only big cities get any industrial development of larger scales. All the office-based parts of the economy also gravitate towards larger cities (often unnecessarily).

So demand for big-city-housing is rising permanently. This wasn't as much of a problem in the last decades. But then, central banks flooded the market with cheap money, making most "safe" investments unviable. Therefore the only "safe" investment left is real-estate which also drives up prices in addition to the increase in demand.

And here we are.

How do we fix it? Get central banks to stop printing cheap money. No idea how that will work out, because it also has other consequences beside the housing market. And stop urbanisation, make the countryside more viable for industry, commerce, office space. Improve transport around the countryside and suburbs. Curb speculation by promoting home-ownership (for the home you live in, not the 20 you rent out) through tax incentives and other measures (currently, in Germany, you pay lower taxes when renting out a property than when living in the same property, because when renting it out the mortgage payments are "business expenses").

This has to change, with the diminishing birth rates. Growth will stop then reverse. Housing maybe become an issue of dealing with empty buildings and abandoned neighborhoods.

Even with declining birth rates, there is still the global urbanisation trend, and the best paid jobs in knowledge sectors tend to cluster together. So while rural areas, and even entire countries (like some of the former USSR states) are emptying out, the cities where the best jobs are will keep rising in importance, and presumably, rental costs unless something drastic changes.

Add the USA to that list.

Housing needs to not be an investment.

Sweden too. Not an expert either, but isn't the privatization of housing all over the industrialized world at the root of this, coupled with the currently ubiquitous need to crowd together in the cities? People have been able to buy properties in the city centers at fantasy prices, because of low interests and favorable mortgage arrangements and with the expectation that the prices will go on rising forever.

Which - spoiler ahead - they won't. Cities will within a decade or two have lost their luminosity, with the giant shift towards remote work that is about to take place, in parallel with the wiping out of brick-and-mortar businesses. Prices will reflect this, sooner or later.

> Which - spoiler ahead - they won't. Cities will within a decade or two have lost their luminosity, with the giant shift towards remote work that is about to take place, in parallel with the wiping out of brick-and-mortar businesses. Prices will reflect this, sooner or later.

That's the question as those in power wouldn't want to suffer the consequences.

I used to live in Dubai - i got there at almost peak rent/real estate... I look at rents now, and they're just under half what i was paying. Sometimes tides turn the other way too.

The way I understand it, investment is pouring into real-estate in countries thought to be long-term stable, mostly by investors in less-stable countries. The UAE has a lot going for it, but geopolitical stability isn't one of them.

Yeah but who wants to live in Dubai anyway. The only reason to be there is to not pay income tax.

Honestly, one great advantage it had was a good airport (and at least two other major hubs nearby for cheap transit flights with virtually no layover (e.g: there were ~25 flights a day to Doha at some point))

I made some great trips from Dubai - in Berlin now, every trip is a choice between crappy layovers or expensive airlines. There have been a few surprising exceptions (finnair being one)

I would prefer location where my chance to find female mate is greater than 0, and where I will not be on the hook for saying, writing, or doing something trivial and then persecuted under pretext of consuming alcohol.

That's a completely different story - and there are obviously many reasons I left Dubai.

But Dubai is not _entirely_ that repressed (believe it or not, you may date someone. (but technically, no sex outside marriage - didn't know anyone caught on that one though)). There were many caveats and "watch outs" for sure - the _general_ rule was "don't be a stupid drunk", "don't publicly insult anyone", "no overt PDA in public" and you were fine. Obviously that's not to everyone's taste and wasn't always uniformly applied.

It's like joining a game of Monopoly after a few rounds have already been played.

EXACTLY. This is how I feel as a millennial who hasn't started on the ground floor and doesn't have rich parents who did.

Yup, same in my country. I was able to buy a home recently, but my method of accumulating capital enough is just about mission impossible for normal peeps. It is really unfair. Government regulation and control of housing prices is the solution.

If it is the solution, why doesn't it work wherever they have tried?

Because people are good at gaming the system.

What about investors not wanting to invest a single cent into building new estate because it is not economically viable anymore? Is that gaming the system?

"Economically viable" must not be confused with "extremely profitable". Housing is economically viable as soon as revenue is positive in the mid- to long term.

Extremely profitable on the other hand is much more attractive to investors than economically viable. It promises short term ROI with great revenue and very low risk in overheated markets.

There's a balance to be struck here and thinking in extremes just isn't helpful.

And yes, I do consider buying up land and just letting it sit there until housing crisis becomes severe enough that developing luxury housing becomes profitable to be gaming the system.

It's funny how quick investors are to complain about something not being economically viable and praising the free market and its power to innovate, while at the same the cost of developing houses goes up and up and up.

Where's the innovation there? How come a portable supercomputer can be bought brand new for the equivalent of a day's worth of work today, while at the same time fewer and fewer people can afford to own a home?

Why hasn't the increasing demand for affordable housing spurred innovation in that sector and why is nobody even asking that question?

Housing in all winner-take-all cities are fucked. Here's hoping remote work can start to really spread things around with intentional communities trying to bring specific types of people together.

Depends where you live, I guess. Gentrification is a problem, so, I agree.

It doesn't matter where you live. The jobs are in Munich, Berlin, Wolfsburg, etc.

And a job in these cities usually pays the rent. Unless, of course, you work blue collar at smaller companies. Or are a long time resident. Then it sucks.

That being said, I'd say the situation sucks especially for older folks not owning their apartments. The generally higher educated post 1980 generation has it comparatively good.

I just take issue with such general blatant statements, things are never that simple.

It's the jobs that support the locals that don't pay enough. While the skilled workers might be able to afford the local rent, other residents progressively get pushed out.

Couldn't agree more. Being one of the skilled workers, I hate that development. That's why I also think the rent cap being overturned is a bad idea.

Yes. Since we have two levels of living costs, we should have two numbers of inflation! :)

This makes me wonder: is inflation calculated based on averages or based on medians?

I've been protected by this rule. I live in the north of Berlin. It saved me roughly 100€ a month. I found it fair for the appartment I rent. I can't say much about other cases.

Since I have to pay back the cummulative savings to my landlord in case the law is overturned(which happened today), I saved 100€ extra each month.

It's likely that I'll now have to increase my rent payment by 100€ and pay back roughly 1000€ to my landlord.

I'm happy I prepared for this situation. It's OK for me. However, I'm worried about friends that may haven't prepared...

100e is pretty good. For me it was 500e less, and it made it even less possible for me to move to a smaller place which I've wanted to do since breaking up with my ex.

>It's OK for me. However, I know others that will likely lose their flat now.

They won't just lose their flat. If they can't backpay the rent (thousands in some cases) their Schufa will be ruined which will make it even harder if at all possible to get a new place.

> They won't just lose their flat. If they can't backpay the rent (thousands in some cases) their Schufa will be ruined which will make it even harder if at all possible to get a new place.

Damn, I didn't consider this but it's true. Usually, landlords also want a Mietschuldenbescheinigung to check if you have rent debt with previous landlords.

What upsets me about the situation is that I feel like some people are experimenting with my property/contract/living condition. I'd prefer if they could just leave me alone. It makes me feel uncomfortable and unsafe.

There's still the Mietpreisbremse, which many people could try to apply. It's not as straightforward, but it's not a contested law.

Unfortunately, this takes time, and people will be asked to give the money back NOW.

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