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Yes, Berlin has become expensive. Although the rents in the capital are not yet at the level of Munich, Stuttgart or Hamburg, but the trend is questionable: it was almost 90 percent of Berlin rents between 2008 and 2018 upwards. The rise is as steep as in any other German city.
Correspondingly large is now the joy of many tenants, but especially of left-wing politicians: Because their party friend, city development senator Katrin Lompscher, has submitted a bill on so-called Mietendeckel, which should make living significantly cheaper, especially in the most popular areas of the capital.
Accordingly, for all apartments completed before 2013, new price caps should apply, initially for five years, to which tenants may refer. The exact amount of rent depends almost exclusively on the age of the apartment. Was it built between 1991 and 2013, the owner may demand 7.97 euros per square meter. For the popular old-style apartments from the turn of the century, the upper limit is only 6.03 euros. And it does not matter whether the apartment is located in the coveted and expensive Prenzlauer Berg, where such objects are often rented for 17 to 18 euros, or in the rather cheap Lichtenberg.
Farewell to the market principle
If this bill is passed in this way, Berlin will become the laboratory for a housing policy that will almost completely abandon the market principle. All tenants pay almost the same - and who gets what apartment, even more than before is a gamble. With all the good will behind this design, that's economic lunacy.
There are many good reasons to regulate rents. The real estate market works differently than the markets in economics textbooks. This is mainly because the supply can not easily adapt to demand. The construction of new apartments often takes years - and in the coveted inner city locations, where the demand is particularly high, often can hardly create more living space, because now almost everything is fully built.
This often turns the housing market into an El Dorado for speculators, who can buy real estate where demand is soaring, and make huge profits over the years.
A wise policy should mitigate such effects - for example, by creating publicly subsidized, cheap housing or by the rental price increase legally dampens, as it is at least tried in the rental price brake.
Demand is expected to rise and supply will hardly grow
But what Senator Lompscher plans now in Berlin, has nothing to do with it - and is in many ways unfair:
- On the one hand, wealthy tenants in high-earner districts such as Charlottenburg, Mitte or Prenzlauer Berg can look forward to rent reductions, which they would not really need from a social point of view.
- On the other hand, small renters who have bought a home for their pensions, expect that their revenue, with which they have just been able to pay off the loan so far, in the future simply a few hundred euros lower. Unfortunately, not everyone can afford such losses. In order to avoid insolvency, the bill also provides for a so-called hardship clause. But whether that applies, the district office must decide. And anyone who has ever dealt with a Berlin office knows that you're probably broke before you even get an appointment.
- Even those who are not landlords at all, but who bought an existing condominium two or three years ago, which they own themselves, now have a much lower value - although they really can not help the rising rents.
All this could perhaps be dismissed as an ugly collateral damage of an important project, if not for a much greater injustice: the division of the housing market into insiders and outsiders. Inside are all the lucky ones who have a nice cheap apartment. Outside those who would like to live in the city center, but in the future will have practically no chance to do so.
New prospects must stay outside in the future
Because if the Lompscher design is implemented, the already high demand for apartments in Berlin should be even greater. The supply, on the other hand, will hardly grow. According to the Senator's plan, new buildings should be excluded from the rental cover. But who is already building new apartments, if he has to reckon that these may also fall under the rental cover at the next rental in a few years? The risk is likely to be too high for many.
The problem of scarce housing in cities will never be solved to everyone's satisfaction. If more people want to live in a particular neighborhood than there is housing, someone will always be left behind. The only question is: who? And according to what criteria?
With the newly planned Mietendeckel the answer is: The previous tenants may stay - and sometimes have to pay significantly less than before. All new prospects - whether student, worker or management consultant - stay outside. This has little to do with social justice.
Video: Mietendeckel in Berlin - When the state intervenes in the real estate market
MIRROR TV