The housing market in Berlin is currently on everyone's lips.
And a referendum has been launched that aims to expropriate the Deutsche Wohnen AG.
After expropriation the Berlin state government could directly determine the prices for these apartments and indirectly influence the prices for the housing market. However new apartments would not be created through an expropriation and thus won't give an answer to the growing demand in Berlin. The Berlin state government would simply transfer its own failure in social housing construction and the consequences of the next election to the Deutsche Wohnen AG. See:
[Economics] Berlins looming housing scam
Now the Berlin state government is trying to limit the level of rents with a law. Not least because of the failure of public housing this may be assessed as a cheap trick.
With this in mind the behavior of the Berlin state government should be considered. If Katrin Lompscher (The Left) does not demonstrate for the expropriation of Deutsche Wohnen AG she is Senator for Urban Development and Housing in Berlin since December 2016. And since 2001 the Berlin state government has been continuously led by Social Democrats. Nevertheless both have failed to prevent the current situation in the housing market.
The plan for the construction of 30,000 predominantly cheap rental apartments in Berlin is not met. And instead of the planned 6,000 apartments only 3,000 were completed by the state of Berlin until 2017. [8] [9] [10] [11] In addition fewer building permits are issued on a regular basis. According to the Office of Statistics nearly a quarter fewer building permits were issued from January to March 2018 than in the same period in 2017. [12] [13]
Between 2007 and 2019 only 12,880 social housing apartments were created by the Berlin state government. In Hamburg which is only half the size 28,500 social housing apartments were created duringin the same time. [14] At the same time the state of Berlin recorded the largest decline in public housing from 137,000 to 116,000 during the same time. [15]
Such a policy affects the entire housing market and pushes prices down. Such intervention by the state in the market is largely harmless as technical innovations due to competition in housing are secondary. And housing construction results in apartments as assets which in turn generate income in the form of rents and are therefore comparable to investments.
The perhaps attractive idea of simply prohibiting higher rents will not be without consequences. If costs increase with prices and wages for landlords, then frozen rents will inevitably become a problem someday. At the latest then the quality of the rental apartments decreases. And new apartments do not arise as a result. In addition the question arises on who wants to build apartments in Berlin.
At the end of such a law any measures of public housing policy could be criticized. If the statutory regulation of rental prices fails, then public housing could also be meet with rejection in the future. The argument could be that public housing policy is always failing and this should be better left to the unregulated market. The successful public housing construction as in Graz and Vienna as an option for Berlin could then be discarded.
This rental price brake was decided on March 5, 2015 with the votes of CDU, CSU and SPD. The goal of this rental price brake is to slow down the rise in rents. The rental price brake of 2015 stipulates that for new leases, the rent may not exceed 10% of the local comparable rent. And the federal states determine the introduction of this rental price brake. [24] [25]
At the latest with the report from the scientific service of the Bundestag the Red-Red-Green Senate in Berlin has to deal with a question. Wouldn't it have been easier from the beginning to focus on construction in public housing? That it would have made more sense was foreseeable from the beginning anyway.
[1] Bevölkerungsentwicklung und Bevölkerungsstand im Land Berlin 3. Quartal 2018
https://www.statistik-berlin-brandenburg.de/statistiken/statistik_sb.asp?sageb=12015&PTyp=700&creg=B&anzwer=6&bok=1&bbok=1
https://www.statistik-berlin-brandenburg.de/publikationen/stat_berichte/2019/SB_A01-01-00_2018q03_BE.pdf
[2] Bevölkerungsprognose für Berlin und die Bezirke 2015-2030 2016 Januar
https://www.stadtentwicklung.berlin.de/planen/bevoelkerungsprognose/download/2015-2030/Bericht_Bevprog2015-2030.pdf
[3] Migration - Berlin will Flüchtlinge der „Sea-Watch“ aufnehmen 2018-12-28
https://www.focus.de/regional/berlin/migration-berlin-will-fluechtlinge-der-sea-watch-aufnehmen_id_10123046.html
[4] Libysche Flüchtlinge - Berlin würde "Sea-Watch"-Flüchtlinge aufnehmen 2018-12-28
https://www.rbb24.de/politik/beitrag/2018/12/seawatch-rettungsschiff-fluechtlinge-aufnahme-.html
[5] Flüchtlinge im Mittelmeer - Schiffe deutscher Seenotretter dürfen in Malta anlegen 2019-01-09
https://www.tagesspiegel.de/politik/fluechtlinge-im-mittelmeer-schiffe-deutscher-seenotretter-duerfen-in-malta-anlegen/23844206.html
[6] Lösung für "Alan Kurdi" - Deutschland nimmt Flüchtlinge von Rettungsschiff auf 2019-04-05
https://www.t-online.de/nachrichten/deutschland/gesellschaft/id_85536770/seenotrettung-deutschland-nimmt-fluechtlinge-von-schiff-alan-kurdi-auf.html
[7] Rettungsschiff "Alan Kurdi" - Vier EU-Länder nehmen Geflüchtete auf 2019-04-13
https://www.tagesschau.de/ausland/migration-fluechtlinge-rettungsschiff-103.html
[8] Leitung - Senatorin Katrin Lompscher
https://www.stadtentwicklung.berlin.de/service/de/senatorin_lompscher.shtml
[9] Wohnungsmarkt Berlin - Lompscher wird Ausbremsen von Neubau vorgeworfen 2017-09-12
https://www.tagesspiegel.de/berlin/wohnungsmarkt-berlin-lompscher-wird-ausbremsen-von-neubau-vorgeworfen/20319200.html
[10] Schupelius-Kolumne - Frau Lompscher ist eine Bausenatorin, die nicht baut 2018-01-06
https://www.bz-berlin.de/berlin/kolumne/frau-lompscher-ist-eine-bausenatorin-die-nicht-baut
[11] Debatte um Berliner Wohnungspolitik - „Entlassen Sie Frau Lompscher“ 2018-04-26
https://www.tagesspiegel.de/berlin/debatte-um-berliner-wohnungspolitik-entlassen-sie-frau-lompscher/21219842.html
[12] Wohnungsbau - CDU fordert Entlassung von Katrin Lompscher 2018-05-10
https://www.berliner-zeitung.de/berlin/wohnungsbau-cdu-fordert-entlassung-von-katrin-lompscher-30152164
[13] Nach bizarrer Personalentscheidung - Michael Müller müsste Katrin Lompscher entlassen 2019-07-06
https://www.tagesspiegel.de/berlin/nach-bizarrer-personalentscheidung-michael-mueller-muesste-katrin-lompscher-entlassen/22775650.html
[14] Sozialer Wohnungsbau - „Berlin hat es komplett versemmelt“ 2019-07-01
https://www.tagesspiegel.de/wirtschaft/immobilien/sozialer-wohnungsbau-berlin-hat-es-komplett-versemmelt/24478758.html
[15] Größter Rückgang in Berlin - Zahl der Sozialwohnungen sinkt 2017 um knapp 50.000 2019-06-19
https://www.tagesspiegel.de/politik/groesster-rueckgang-in-berlin-zahl-der-sozialwohnungen-sinkt-2017-um-knapp-50-000/24472242.html
[16] Studie: Gemeindebau – sozial treffsicher? 2016-03-22
https://diepresse.com/home/panorama/oesterreich/4951771/Studie_Gemeindebau-sozial-treffsicher
[17] HANAU - Graz macht’s vor 2017-04-26
https://www.fr.de/rhein-main/main-kinzig-kreis/hanau-ort66348/graz-machts-11047407.html
[18] WIRTSCHAFT - Wie sozial ist der geförderte Wohnbau? 2017-11-30
https://kurier.at/wirtschaft/wie-sozial-ist-der-gefoerderte-wohnbau/300.098.905
[19] Sozialer Wohnungsbau - Warum Wiener günstig wohnen 2018-09-20
https://www.deutschlandfunk.de/sozialer-wohnungsbau-warum-wiener-guenstig-wohnen.769.de.html?dram:article_id=428615
[20] Gesetzesentwurf liegt vor - Berliner Mieten sollen ab 2020 für fünf Jahre gedeckelt werden 2019-06-05
https://www.rbb24.de/politik/beitrag/2019/06/mietendeckel-berlin-entwurf-eckpunkte-fuenf-jahre.html
[21] Eckpunkte für Preisdeckel - Berlin wird zum Labor für Mieterschutz 2019-06-18
https://www.spiegel.de/wirtschaft/soziales/eckpunkte-fuer-mietpreisdeckel-berlin-wird-zum-labor-fuer-mieterschutz-a-1273080.html
[22] Bausenatorin Lompscher - Mieterhöhungsstopp auch für Staffelmieten möglich 2019-06-27
https://www.bz-berlin.de/berlin/mieterhoehungsstopp-auch-fuer-staffelmieten-moeglich
[23] Gesetzgebungskompetenz für ein zeitlich begrenztes Verbot von Mieterhöhungen und Vereinbarkeit mit Art. 14 GG 2019-06-18
https://www.bundestag.de/resource/blob/650086/bda1f29871822f23137957df47e2f4bf/WD-3-149-19-pdf-data.pdf
[24] Große Koalition - Bundestag beschließt Mietpreisbremse 2015-03-05
https://www.spiegel.de/politik/deutschland/mietpreisbremse-im-bundestag-beschlossen-a-1021882.html
[25] WOHNUNGSMARKT - Das müssen Sie über die Mietpreisbremse wissen 2016-04-02
https://www.welt.de/finanzen/immobilien/article138840347/Das-muessen-Sie-ueber-die-Mietpreisbremse-wissen.html
After expropriation the Berlin state government could directly determine the prices for these apartments and indirectly influence the prices for the housing market. However new apartments would not be created through an expropriation and thus won't give an answer to the growing demand in Berlin. The Berlin state government would simply transfer its own failure in social housing construction and the consequences of the next election to the Deutsche Wohnen AG. See:
[Economics] Berlins looming housing scam
Now the Berlin state government is trying to limit the level of rents with a law. Not least because of the failure of public housing this may be assessed as a cheap trick.
Bad Public Housing
Berlin is growing incessantly. In the third quarter of 2018 3,634,069 people were registered in Berlin. [1,p.4] And the tendency is rising open is just how fast. Depending on the forecasted scenario it could grow by another 5% until 2020. Of course this raises the demand side in the housing market. [2,p.24] This development is not least due to the fact that more people are staying in Germany as a result of the migration crisis. And the Berlin state government has repeatedly taken in people who were picked up with ships off the coast of Africa. [3] [4] [5] [6] [7]With this in mind the behavior of the Berlin state government should be considered. If Katrin Lompscher (The Left) does not demonstrate for the expropriation of Deutsche Wohnen AG she is Senator for Urban Development and Housing in Berlin since December 2016. And since 2001 the Berlin state government has been continuously led by Social Democrats. Nevertheless both have failed to prevent the current situation in the housing market.
The plan for the construction of 30,000 predominantly cheap rental apartments in Berlin is not met. And instead of the planned 6,000 apartments only 3,000 were completed by the state of Berlin until 2017. [8] [9] [10] [11] In addition fewer building permits are issued on a regular basis. According to the Office of Statistics nearly a quarter fewer building permits were issued from January to March 2018 than in the same period in 2017. [12] [13]
Between 2007 and 2019 only 12,880 social housing apartments were created by the Berlin state government. In Hamburg which is only half the size 28,500 social housing apartments were created duringin the same time. [14] At the same time the state of Berlin recorded the largest decline in public housing from 137,000 to 116,000 during the same time. [15]
Good Public Housing
And social housing construction in Austria for example is a great success story. In the Austrian city of Graz a total of 564 municipal apartments were built in 2016 for a rent of only 5.81 euros per square meter. And in the Austrian capital Vienna there are council apartments in each district for a rent of only 5.80 euros per square meter. [16] [17] [18] [19]Such a policy affects the entire housing market and pushes prices down. Such intervention by the state in the market is largely harmless as technical innovations due to competition in housing are secondary. And housing construction results in apartments as assets which in turn generate income in the form of rents and are therefore comparable to investments.
The Rental Price Cap
Instead of pushing ahead with public housing however the Berlin state government is trying to limit the level of rents with a law. Senator Lompscher (The Left) and the Senate Department for Urban Development and Housing (Senatsverwaltung für Stadtentwicklung und Wohnen) have prepared a proposal for a law. By October 2019 the final law will follow and shall be passed in 2019. According to this the rent for rental apartments will be frozen for five years. However new apartments that were never been rented and apartments from social housing should be excluded, as they are subject to the special right of the cost-rent system. [20] [21] [22]- For all existing tenancies rents for rental apartments are to be frozen for five years.
- However new apartments that were never been rented and apartments from social housing should be excluded.
- The law will also apply retroactively from June 18, 2019.
- The law is to apply to about 1.5 million rental apartments.
- Violations of the law should be punished as an administrative offense and a fine of up to 500,000 euros.
The perhaps attractive idea of simply prohibiting higher rents will not be without consequences. If costs increase with prices and wages for landlords, then frozen rents will inevitably become a problem someday. At the latest then the quality of the rental apartments decreases. And new apartments do not arise as a result. In addition the question arises on who wants to build apartments in Berlin.
At the end of such a law any measures of public housing policy could be criticized. If the statutory regulation of rental prices fails, then public housing could also be meet with rejection in the future. The argument could be that public housing policy is always failing and this should be better left to the unregulated market. The successful public housing construction as in Graz and Vienna as an option for Berlin could then be discarded.
The Report
In addition the scientific services of the Bundestag questions the proposed law. Thus a federal state such as Berlin can not introduce its own rent brake, as the German Federal Government has already introduced a statutory regulation of rental prices for a rental price deceleration. The tenancy law is thus already sufficiently regulated by the civil code (Bürgerliche Gesetzbuch). [23,p.3]This rental price brake was decided on March 5, 2015 with the votes of CDU, CSU and SPD. The goal of this rental price brake is to slow down the rise in rents. The rental price brake of 2015 stipulates that for new leases, the rent may not exceed 10% of the local comparable rent. And the federal states determine the introduction of this rental price brake. [24] [25]
Conclusion
If the new law fails, then public housing could also be rejected in the future. In the end the new law could also delegitimize public housing. The argument could be that this proves that public housing policy is always failing and that it should be better left to the unregulated market.At the latest with the report from the scientific service of the Bundestag the Red-Red-Green Senate in Berlin has to deal with a question. Wouldn't it have been easier from the beginning to focus on construction in public housing? That it would have made more sense was foreseeable from the beginning anyway.
[1] Bevölkerungsentwicklung und Bevölkerungsstand im Land Berlin 3. Quartal 2018
https://www.statistik-berlin-brandenburg.de/statistiken/statistik_sb.asp?sageb=12015&PTyp=700&creg=B&anzwer=6&bok=1&bbok=1
https://www.statistik-berlin-brandenburg.de/publikationen/stat_berichte/2019/SB_A01-01-00_2018q03_BE.pdf
[2] Bevölkerungsprognose für Berlin und die Bezirke 2015-2030 2016 Januar
https://www.stadtentwicklung.berlin.de/planen/bevoelkerungsprognose/download/2015-2030/Bericht_Bevprog2015-2030.pdf
[3] Migration - Berlin will Flüchtlinge der „Sea-Watch“ aufnehmen 2018-12-28
https://www.focus.de/regional/berlin/migration-berlin-will-fluechtlinge-der-sea-watch-aufnehmen_id_10123046.html
[4] Libysche Flüchtlinge - Berlin würde "Sea-Watch"-Flüchtlinge aufnehmen 2018-12-28
https://www.rbb24.de/politik/beitrag/2018/12/seawatch-rettungsschiff-fluechtlinge-aufnahme-.html
[5] Flüchtlinge im Mittelmeer - Schiffe deutscher Seenotretter dürfen in Malta anlegen 2019-01-09
https://www.tagesspiegel.de/politik/fluechtlinge-im-mittelmeer-schiffe-deutscher-seenotretter-duerfen-in-malta-anlegen/23844206.html
[6] Lösung für "Alan Kurdi" - Deutschland nimmt Flüchtlinge von Rettungsschiff auf 2019-04-05
https://www.t-online.de/nachrichten/deutschland/gesellschaft/id_85536770/seenotrettung-deutschland-nimmt-fluechtlinge-von-schiff-alan-kurdi-auf.html
[7] Rettungsschiff "Alan Kurdi" - Vier EU-Länder nehmen Geflüchtete auf 2019-04-13
https://www.tagesschau.de/ausland/migration-fluechtlinge-rettungsschiff-103.html
[8] Leitung - Senatorin Katrin Lompscher
https://www.stadtentwicklung.berlin.de/service/de/senatorin_lompscher.shtml
[9] Wohnungsmarkt Berlin - Lompscher wird Ausbremsen von Neubau vorgeworfen 2017-09-12
https://www.tagesspiegel.de/berlin/wohnungsmarkt-berlin-lompscher-wird-ausbremsen-von-neubau-vorgeworfen/20319200.html
[10] Schupelius-Kolumne - Frau Lompscher ist eine Bausenatorin, die nicht baut 2018-01-06
https://www.bz-berlin.de/berlin/kolumne/frau-lompscher-ist-eine-bausenatorin-die-nicht-baut
[11] Debatte um Berliner Wohnungspolitik - „Entlassen Sie Frau Lompscher“ 2018-04-26
https://www.tagesspiegel.de/berlin/debatte-um-berliner-wohnungspolitik-entlassen-sie-frau-lompscher/21219842.html
[12] Wohnungsbau - CDU fordert Entlassung von Katrin Lompscher 2018-05-10
https://www.berliner-zeitung.de/berlin/wohnungsbau-cdu-fordert-entlassung-von-katrin-lompscher-30152164
[13] Nach bizarrer Personalentscheidung - Michael Müller müsste Katrin Lompscher entlassen 2019-07-06
https://www.tagesspiegel.de/berlin/nach-bizarrer-personalentscheidung-michael-mueller-muesste-katrin-lompscher-entlassen/22775650.html
[14] Sozialer Wohnungsbau - „Berlin hat es komplett versemmelt“ 2019-07-01
https://www.tagesspiegel.de/wirtschaft/immobilien/sozialer-wohnungsbau-berlin-hat-es-komplett-versemmelt/24478758.html
[15] Größter Rückgang in Berlin - Zahl der Sozialwohnungen sinkt 2017 um knapp 50.000 2019-06-19
https://www.tagesspiegel.de/politik/groesster-rueckgang-in-berlin-zahl-der-sozialwohnungen-sinkt-2017-um-knapp-50-000/24472242.html
[16] Studie: Gemeindebau – sozial treffsicher? 2016-03-22
https://diepresse.com/home/panorama/oesterreich/4951771/Studie_Gemeindebau-sozial-treffsicher
[17] HANAU - Graz macht’s vor 2017-04-26
https://www.fr.de/rhein-main/main-kinzig-kreis/hanau-ort66348/graz-machts-11047407.html
[18] WIRTSCHAFT - Wie sozial ist der geförderte Wohnbau? 2017-11-30
https://kurier.at/wirtschaft/wie-sozial-ist-der-gefoerderte-wohnbau/300.098.905
[19] Sozialer Wohnungsbau - Warum Wiener günstig wohnen 2018-09-20
https://www.deutschlandfunk.de/sozialer-wohnungsbau-warum-wiener-guenstig-wohnen.769.de.html?dram:article_id=428615
[20] Gesetzesentwurf liegt vor - Berliner Mieten sollen ab 2020 für fünf Jahre gedeckelt werden 2019-06-05
https://www.rbb24.de/politik/beitrag/2019/06/mietendeckel-berlin-entwurf-eckpunkte-fuenf-jahre.html
[21] Eckpunkte für Preisdeckel - Berlin wird zum Labor für Mieterschutz 2019-06-18
https://www.spiegel.de/wirtschaft/soziales/eckpunkte-fuer-mietpreisdeckel-berlin-wird-zum-labor-fuer-mieterschutz-a-1273080.html
[22] Bausenatorin Lompscher - Mieterhöhungsstopp auch für Staffelmieten möglich 2019-06-27
https://www.bz-berlin.de/berlin/mieterhoehungsstopp-auch-fuer-staffelmieten-moeglich
[23] Gesetzgebungskompetenz für ein zeitlich begrenztes Verbot von Mieterhöhungen und Vereinbarkeit mit Art. 14 GG 2019-06-18
https://www.bundestag.de/resource/blob/650086/bda1f29871822f23137957df47e2f4bf/WD-3-149-19-pdf-data.pdf
[24] Große Koalition - Bundestag beschließt Mietpreisbremse 2015-03-05
https://www.spiegel.de/politik/deutschland/mietpreisbremse-im-bundestag-beschlossen-a-1021882.html
[25] WOHNUNGSMARKT - Das müssen Sie über die Mietpreisbremse wissen 2016-04-02
https://www.welt.de/finanzen/immobilien/article138840347/Das-muessen-Sie-ueber-die-Mietpreisbremse-wissen.html
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