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Germany Introduces Rent Controls

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Germany's cabinet agreed on Wednesday to cap ballooning property rents in high-demand urban neighbourhoods in a law set to come into force early next year.

In order to keep city rents broadly affordable, landlords will be barred from raising them by more than 10 percent above the local average for new tenants.

The law aims to alleviate exorbitant rental increases in Berlin, Munich, Hamburg and other popular cities which are pricing especially students and young families out of the market.

"The 'rental price brake' will help keep rents affordable for average wage earners," said Justice and Consumer Protection Minister Heiko Maas, adding that commonly seen rental hikes of 30 to 40 percent were "inacceptable".

Under the new law, which is set to stay in effect until 2020, property owners must also pay for estate agent fees, a charge so far normally levelled on tenants.

The unintended consequences of deflating the PIIGS. Inflating German housing costs.

Who knew?

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Those Germans are smart people.

Who'd have thunk a big city's (and consequently a country's) longterm economic wellbeing was centred on nurturing the next generation, not milking them and throwing their dried carcasses to the boomer elderly and foreign landlords?

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But, but, but...

Somebody said rent controls create shortages.

Pretty much the entire economics profession for starters. They will, if they bite sufficiently.

Housing being what it is it might take years to become apparent.

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But, but, but...

Somebody said rent controls create shortages.

Well oddly enough they are wrong, not for pure economic reasons but because govt can arrange otherwise. When there were rent controls in Britain UP TIL THE 1970'S THERE WAS also alot more social housing and lower immigration. Rent controls never resulted in a discussion suggesting there was a shortage of housing! There were moans about standards of private rented housing, so what's changed!!!????

Waht we need is lower LAND prices and these should be controlled, not the cost of building. Specualtion on Land should be properly taxed and loans for homes should be properly controlled to match incomes and capability to pay. I could have it all tickety boo within 5 years......

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So when you take away the"who will pay the most?" Way of letting a property, how will landlords decide who to let to? Sealed bids in brown envelopes?

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Well oddly enough they are wrong, not for pure economic reasons but because govt can arrange otherwise. When there were rent controls in Britain UP TIL THE 1970'S THERE WAS also alot more social housing and lower immigration. Rent controls never resulted in a discussion suggesting there was a shortage of housing! There were moans about standards of private rented housing, so what's changed!!!????

Waht we need is lower LAND prices and these should be controlled, not the cost of building. Specualtion on Land should be properly taxed and loans for homes should be properly controlled to match incomes and capability to pay. I could have it all tickety boo within 5 years......

Sure, if there is no market because you go all out communism then supply/demand and price distortion doesn't apply.

I guess then it's about kickbacks, fluke, who policy rewards and who it penalises.

... Oh actually it's kinda like that right frickin' now. And how unfair is that??? You trust these muppets to do right by you in a planned economy? Never mind all the flaws that a planned economy brings, that one has been tried too.

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Perfectly possible to both have rent controls and policies to increase supply.

For instance I would limit the availability of btl finance to new builds only. And you could also exempt from rent controls for the first seven years say.

+1.

Spot on.

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Perfectly possible to both have rent controls and policies to increase supply.

For instance I would limit the availability of btl finance to new builds only. And you could also exempt from rent controls for the first seven years say.

Not... really. Exemptions, a house is a long term investment, 7 years of doing what you want with it isn't a huge incentive to sink a lot of money into an environment which already has wafer thin returns. Truly we have enough barriers to stop building, and you're adding another one.

Even if you exempted new builds permanently (and investors took you on your word, fat chance of that) it would still have a negative effect. In a decade you would have a lot of people underusing old rent controlled property because it'd be cheaper than the new build stuff. Therefore all the new tenants entering the market would end up disproportionately crammed into the (relatively tiny) segment of housing stock < 10 years old. And what happens when supply is constrained? The price goes up. You'd end up with government mandated haves and have nots, which is what almost always happens when the government intervenes in a market.

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Not... really. Exemptions, a house is a long term investment, 7 years of doing what you want with it isn't a huge incentive to sink a lot of money into an environment which already has wafer thin returns. Truly we have enough barriers to stop building, and you're adding another one.

Even if you exempted new builds permanently (and investors took you on your word, fat chance of that) it would still have a negative effect. In a decade you would have a lot of people underusing old rent controlled property because it'd be cheaper than the new build stuff. Therefore all the new tenants entering the market would end up disproportionately crammed into the (relatively tiny) segment of housing stock < 10 years old. And what happens when supply is constrained? The price goes up. You'd end up with government mandated haves and have nots, which is what almost always happens when the government intervenes in a market.

There's a pre-1980 rent control precedent in the UK.

Before it's removal we averaged over 250000 homes built a year for 30 years.

Since it's removal we've averaged 150000.

Put simply, I'm not convinced rent control limits house building. Other factors in play clearly have a much much more significant impact.

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There's a pre-1980 rent control precedent in the UK.

Before it's removal we averaged over 250000 homes built a year for 30 years.

Since it's removal we've averaged 150000.

Put simply, I'm not convinced rent control limits house building. Other factors in play clearly have a much much more significant impact.

This has been mentioned before.

Pre-1980 house building was essentially full on nationalised. This is what Attlee intended all along with the planning acts, government was supposed to do the vast majority of the building. So was there really a market? It was a state industry. Like so many back then - post war practically communist consensus and all.

Then Maggie showed up, and wanted to increase private ownership. Excellent. Which she did, to beneficial effect. What she did not do was remove the states boot from the throat of the house building market. Now, 3 decades down the line, that oversight has had terrible consequences.

The solution is to finish what she started and create a truer free market. Unfortunately 80 years of planning has rotted the public's brain. People here don't even realise that the UK is anomalous, but it is. The proles are used to their haves and have nots, and the haves vote for their own narrow self interest in the status quo, and the have nots are generally beguiled by the same socialist ******** that largely put them in this mess in the first place, hence this guff about rent controls from Milibrain.

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There's a chap at work who believes in price controls and similar policies. As if you can just decree people to be rich, by snapping fingers. It seems to be based on a touching belief in what is 'fair'. You may as well argue about whether physics is 'fair', if the shortages are there the shortages are there, and they will impact price, and there is nothing the government can do about it beyond increase the misery.

Dear lord. If it was that easy we would've done it a millenium ago. Whenever the Roman emperors tried fixing prices misery followed. Why would this be any different? Either it'll do very little if it doesn't distort the market, if it does distort the market then net misery will increase.

Germany has declining population and a free planning system (compared to our stalinist one anyway). Of course rents there are low. When I was in Berlin the place was like a ghost town compared to London, there was simply nobody there in comparison. I got a photo of me standing on Potsdamer Platz U-bahn on a Friday night at 8pm and the platform is deserted, there's just me in shot. Try that in Leicester Square at the same time. Of course Berlin rents are cheap, rent control has nothing to do with it, they must be awash with supply.

The UK population is going up and up, and house building is FAR below what is needed to even break even with the increased population. There's a pretty damn good reason why housing here is more expensive than it is in Germany, and it's blindingly obvious, and rent control isn't going to help.

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This has been mentioned before.

Pre-1980 house building was essentially full on nationalised. This is what Attlee intended all along with the planning acts, government was supposed to do the vast majority of the building. So was there really a market? It was a state industry. Like so many back then - post war practically communist consensus and all.

Then Maggie showed up, and wanted to increase private ownership. Excellent. Which she did, to beneficial effect. What she did not do was remove the states boot from the throat of the house building market. Now, 3 decades down the line, that oversight has had terrible consequences.

The solution is to finish what she started and create a truer free market. Unfortunately 80 years of planning has rotted the public's brain. People here don't even realise that the UK is anomalous, but it is. The proles are used to their haves and have nots, and the haves vote for their own narrow self interest in the status quo, and the have nots are generally beguiled by the same socialist ******** that largely put them in this mess in the first place, hence this guff about rent controls from Milibrain.

So it's not possible to have a free market in the UK because of the proles, and houses were cheaper and more plentiful because of socialism, but that was a boot on people's throat? I'm a bit confused by all that to be honest.

You're saying we can't and won't have a free market because of people's mindsets in the UK with regards land - I sort of agree with that, but don't forget we're a small island and most of the land has been divided up and owned by the same folks for nearly 1000 years.

It's really more a case of "pick your boot", you're rather focusing on the problems with the left leg and ignoring the fact the right leg did a stupendous line in kicking the majority of the people for nearly 900 years before the left leg even existed.

Socialism by and large is - rightly or wrongly - the reason most people of a certain age in this country own their homes. My Granddad returned from the war trained to kill. He had no home. A generation didn't. They felt Britain owed them something and within a few decades millions of homes were built and home ownership became the norm. Private builds were about what they are now btw. The notion state building scuppered the market is misplaced.

Note also that home ownership wasn't the norm pre-socialism in the UK - most were renting from either the local Land owner, and later the factory, or pit owner. That was the norm. And for centuries.

I'm rightwing but the state and socialism have a place in 20th/21st century politics. You need an effective left wing AND an effective right wing for the people in the population sat on the back of the beast to fly forward. Too much of either wing and it's lots of circles followed by a horrific crash. We've had too much flying to the right for 35 years now with no effective left and the crash is coming.

This is the era of the failings of the free market and the prevailent trickle-down ideology.

Fear your socialist bogeyman if you will. I don't blame you. They've been training us to do exactly that for most of my lifetime as well.

Edited by byron78

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This is an interesting change. Germany has had rent controls for sitting tenants for years (no more than a 20% increase in any 3 year period I think). Once a tenant moves, the landlord was able to increase rents to market levels.

Based on my understanding, this change limits the amount that landlords are allowed to increase rents between tenants.

The whole ethos in Germany is that your home is your home no matter whether you buy it or rent it so the rent controls make sense for sitting tenants.

I am ambivalent about the new changes. I can see that they make sense in places like Berlin where "new tenant" rents have close to doubled in the last 10 years.

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So it's not possible to have a free market in the UK because of the proles, and houses were cheaper and more plentiful because of socialism, but that was a boot on people's throat? I'm a bit confused by all that to be honest.

You're saying we can't and won't have a free market because of people's mindsets in the UK with regards land - I sort of agree with that, but don't forget we're a small island and most of the land has been divided up and owned by the same folks for nearly 1000 years.

It's really more a case of "pick your boot", you're rather focusing on the problems with the left leg and ignoring the fact the right leg did a stupendous line in kicking the majority of the people for nearly 900 years before the left leg even existed.

Socialism by and large is - rightly or wrongly - the reason most people of a certain age in this country own their homes. My Granddad returned from the war trained to kill. He had no home. A generation didn't. They felt Britain owed them something and within a few decades millions of homes were built and home ownership became the norm. Private builds were about what they are now btw. The notion state building scuppered the market is misplaced.

Note also that home ownership wasn't the norm pre-socialism in the UK - most were renting from either the local Land owner, and later the factory, or pit owner. That was the norm. And for centuries.

I'm rightwing but the state and socialism have a place in 20th/21st century politics. You need an effective left wing AND an effective right wing for the people in the population sat on the back of the beast to fly forward. Too much of either wing and it's lots of circles followed by a horrific crash. We've had too much flying to the right for 35 years now with no effective left and the crash is coming.

This is the era of the failings of the free market and the prevailent trickle-down ideology.

Fear your socialist bogeyman if you will. I don't blame you. They've been training us to do exactly that for most of my lifetime as well.

There's something particularly poisonous about the English (I guess Anglospheric?) left, though, something bad with Ingsoc, something deeply authoritarian. You can't have a one party state but Ingsoc and Tories? Authoritarians vs semi-authoritarians. Maybe if we had Liberals and Tories, but the UK needs Ingsoc like it needs the bubonic plague, and I would've thought Gordon Brown would have rammed that home good and proper. I have no idea why but there it is. Perhaps the Fabian Society is to blame? They seem like a bunch of complete ar5es who are influential behind the scenes. Who knows, not me, but there it is.

When the downtrodden are being fed fairy dust like rent controls and they are lapping it up, there is a problem. I am well aware of the right wing boot, I cited it above, that is reason why there are planning laws unrepealed. And what are the left gonna do? Ignore that problem, and instead bring in a policy that is almost barking, the one disaster that economists right across the spectrum actually agree on, as if Diocletian is still on his throne and threatening traders with death if they sell above the government decreed rate. Not fix the problem, they are at best going to do nothing, at worst make it way worse. ( On top of all that they'll probably have bar codes tattooed on our foreheads for ease of processing down at the government people farm if the last Labour government was any indication. ). Labour simply don't have the intellectual circuits to do something like abolish planning, I'm not sure they would comprehend such an alien thought process as to remove a rule.

There simply is no alternative to these barking policies in this country because actual Liberalism has almost no voice (the LibDems sure aren't it). UKIP nimbyism or Ingsoc's authoritarian madness. I guess I'm voting UKIP anyway because I'm sure as hell not voting for the modern fascist party, but damn. What a choice.

“The notion that a radical is one who hates his country is naïve and usually idiotic. He is, more likely, one who likes his country more than the rest of us, and is thus more disturbed than the rest of us when he sees it debauched. He is not a bad citizen turning to crime; he is a good citizen driven to despair.”

Edited by EUBanana

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So it's not possible to have a free market in the UK because of the proles, and houses were cheaper and more plentiful because of socialism, but that was a boot on people's throat? I'm a bit confused by all that to be honest.

You are not alone on that one. In fact I've not read such a pile of rubbish on here for a long time.

How anyone can blame socialism for a problem that has been going on for hundreds of years and is essentially a problem of private greed and vested interests is beyond me.

Attlee was in power for a very short time after the war (he did a a lot though, and a lot was good and kept by the Tories).

There was a huge private building industry, building private houses, after the war, before the war, and during the inter war years/

The Tories massively extended the 'green belts' during the 1950's, by Housing Minister Duncan Sandys. I've absolutely no doubt Labour would have done too, had they been in office.

Edited by aSecureTenant

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You are not alone on that one. In fact I've not read such a pile of rubbish on here for a long time.

How anyone can blame socialism for a problem that has been going on for hundreds of years and is essentially a problem of private greed and vested interests is beyond me.

Attlee was in power for a very short time after the war (he did a a lot though, and a lot was good and kept by the Tories).

There was a huge private building industry, building private houses, after the war, before the war, and during the inter war years/

The Tories massively extended the 'green belts' during the 1950's, by Housing Minister Duncan Sandys. I've absolutely no doubt Labour would have done too, had they been in office.

because socialism is the mantra of the state over the individual.

individuals have been taxed to the hilt "for the common good", and had extra people who aren't in the gang called over(or normally called gatecrashing the party over for a sleep-over and to raid the drinks cabinet that the invited guests and hosts all chipped in for.)

then in the morning they start to abuse you.....and they call you unhospitable hosts for telling them enough is enough and I want you to leave.

now if you held a party like that, how would you react?

I gues you would probably be aok with mates bringing a friend or two over, but when his/her mates want to invite their whole enteurage you would probably say no........but you weren't asked and they just did it anyway.

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You are not alone on that one. In fact I've not read such a pile of rubbish on here for a long time.

Nobody wanted to live in government housing in the 60s and 70s, unless they had to, cuz it was crap. Left leaning posters here often get a giggle about how nowadays council houses are looked on with envy by the great unwashed because the situation has deteriorated so much, a tacit admission that council housing was poor. Thats why Thatcher was wildly popular. And its true. What used to be sink estates improved out of all recognition. If she had also fixed planning so the children of the people she saved from those sink estates could be saved in turn we wouldn't have a housing crisis right now. Alas...

The best way to house people is to encourage private builds by individuals. Who do I vote for? Not Mr Rent Control is it. As I was saying, Labour simply don't have the intellectual circuitry to even fix the problem. More rules is all they can they can even comprehend.

That the Tories are almost as bad is hardly any compensation. But the Left championing something so destructive as rent control, something used as a case study in economics textbooks, is not going to help. if the poor believe their propagandists and think this is going to save them, they are fekked. And the Left in theory should be helping.

Edited by EUBanana

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Guest The Relaxation Suite

There are many reasons why Germany is racing ahead, with plenty of jobs affordable houses, strong pensions and good public transport and affordable higher education, and Britain is a collapsing craphole with none of these qualities. This is just another one to add to the list.

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Nobody wanted to live in government housing in the 60s and 70s, unless they had to, cuz it was crap. Left leaning posters here often get a giggle about how nowadays council houses are looked on with envy by the great unwashed because the situation has deteriorated so much, a tacit admission that council housing was poor. Thats why Thatcher was wildly popular. And its true. What used to be sink estates improved out of all recognition. If she had also fixed planning so the children of the people she saved from those sink estates could be saved in turn we wouldn't have a housing crisis right now. Alas...

That much is true, But social housing started off rather good. Many of the early estates were very well laid out such as the garden estates of the former LCC. Even some of the tower blocks and Balfron Tower in Poplar and Trellick Tower in Notting Hill have now become highly desirable and fashionable addresses, Indeed the blocks themselves are listed and protected. But there was an awful lot of crap thrown up during the 60/70's.

As far as no one wanting to live in government housing, that is because there was no need to. I was talking to my cousin about my Uncle and all he ever wanted was a Council house. Even when in Brighouse (where they lived) they were building new semi's for a sale for a few thousand pounds. This is of course when they were allowed to build, and before houses were financialised.

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Nobody wanted to live in government housing in the 60s and 70s, unless they had to, cuz it was crap. Left leaning posters here often get a giggle about how nowadays council houses are looked on with envy by the great unwashed because the situation has deteriorated so much, a tacit admission that council housing was poor. Thats why Thatcher was wildly popular. And its true. What used to be sink estates improved out of all recognition. If she had also fixed planning so the children of the people she saved from those sink estates could be saved in turn we wouldn't have a housing crisis right now. Alas...

The best way to house people is to encourage private builds by individuals. Who do I vote for? Not Mr Rent Control is it. As I was saying, Labour simply don't have the intellectual circuitry to even fix the problem. More rules is all they can they can even comprehend.

That the Tories are almost as bad is hardly any compensation. But the Left championing something so destructive as rent control, something used as a case study in economics textbooks, is not going to help. if the poor believe their propagandists and think this is going to save them, they are fekked. And the Left in theory should be helping.

the best way to improve council housing is for the people to build it themseves..via a community project.

if they have put a bit of sweat into making it in the first place,they will object to it being trashed.

county council franlky is too remote.the pepole building them should get rights as to who occupies them.

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