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How Berlin Avoids A London Style Housing Crisis

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Can Berlin Buy Its Way Out of a Housing Crisis?

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The city’s boroughs can purchase apartment buildings to prevent spikes in rental costs. But is the area that does it most reaching the limits of what it can do?

Interesting read about tools that many UK towns could implement.

Berlin borough councils cap rents. They also have first refusal on any building coming up for sale.

A loophole for the rent cap is luxury renovation. But here the council often strong arms developers into signing an agreement not to carry out another loophole renovation for 20 years - otherwise it will exercise its right to purchase the property itself.

Full article at: 

City Lab

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They have also banned air BnB for entire property's iirc.

An absolute scourge on much of the UK imo.

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With rent caps you also get a black market second and third subletting rentals sold between people, like in Stockholm where it's rampant. Quite like subletting council property. 

Has Berlin solved that?

 

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No idea, but (the old East) Berlin is still a liveable city for ordinary families which is a major contribution to its wonderful ambience.

Gentrification has still hit hard. Fifteen years ago rentals were a fifth of comparable units in Munich. But at least the council makes an effort.

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There a sentiment, reflected by govt, that high house prices are a good thing. As long as tacit govt support exists for high house prices then we'll have this problem. I don't think it can last forever.

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21 minutes ago, Si1 said:

There a sentiment, reflected by govt, that high house prices are a good thing. As long as tacit govt support exists for high house prices then we'll have this problem. I don't think it can last forever.

Good  point. I think the demographic landscape will change this, with young people and their cat in hell's chance of a lifestlyle similar to that of their parents. 

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The Berlin authorities and city leaders work for the best outcome and welfare of the citizenry - ours don't.

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3 hours ago, Locke said:

Sure, it's not the only tool to create affordable housing. But I don't see anywhere in the article that the author claimed it was.

Your link includes the conclusion:

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Contrary to what housing activists seem to think, declaring that rents shall be lower will not magically make more housing appear. Put simply, the problem of too little housing — assuming demand remains the same — can be solved with only one strategy: producing more housing. 

So, there I disagree. If the only new housing to appear is offered at unaffordable rents, and rents allowed to spiral out of control, how does that solve a crisis?

Something you might like to consider, since your link uses LA as a reference point. When Berlin first introduced controls, it had a surplus of housingFollowing the re-unification of Germany, almost half the population lost their jobs overnight. Ossies migrated West en masse. Many towns in East Germany have demolished housing stock as surplus to requirements. 

That doesn't appear to validate the zerohedge hypothesis.

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In a shortage situation rent controls change the "highest bidder wins" market into a "first bidder wins" so is unjust by a different mechanism.

I have heard it means newcomers cannot live in the rent controlled areas (even if they are willing to outbid existing tenants) so end up living outside the area, paying higher rents plus commute cost so regional rent controls don't produce aggregate lower cost.

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At one point the damage caused by rent caps is less than the damage caused by landlords. 

In the UK, that point was reached in about 2003.  

I’m not in favour of capping rents, it’s a suboptimal solution with many bad consequences, but it is better than what we have right now. 

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Berlin has been the hip place to move / holiday for a few years now. Mostly with young europhiles who keep reading in the Guardian about how Germany is das awzum.

I suspect it will shortly become a very expensive place to live, especially when you compare wages to rent. According to this article rents are up 70% in 12 years (2004 - 2016)

https://www.thelocal.de/20170124/this-graph-shows-how-much-berlin-rent-has-skyrocketed-in-past-decade

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  • 406 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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