On February 23, Berlin’s rent freeze turned one year old, and the only thing we’ve learned so far is that no one will agree on whether this “experiment” was successful or not.
Berlin’s rent cap law means that rents for 90% of Berlin’s apartments were frozen at the June 2019 level. The data is in from various studies, and they’ve shown two basic trends. Firstly, rents have gone down in Berlin – by an average of 7.8%, according to a new survey by ImmobilienScout24. This is a fair achievement, especially considering that fully three-quarters of properties in Berlin are still being rented above the legal limits.
But the other trend is that the number of apartments available to rent – at least those built before 2014 – has dropped by 30%. Instead of renting out apartments, it seems property owners are either selling them, keeping them empty or possibly renting them out privately without posting ads, in which case who knows what they’re charging.
In other words, the rent cap has been pretty good for people who already have a place to live but has made life even more of a nightmare for people looking for one. That same ImmobilienScout24 survey said that, over the past year, the average number of people responding to every single rental ad almost doubled, from 128 to 214.
It’s been pretty good for people who already have a place to live – but has made life even more of a nightmare for people looking for one.
Both sides of the argument will feel vindicated by these numbers, which means that – like pretty much every argument these days – no one will change their minds. That in itself could be enough to defeat the whole experiment before we even really know what it means, since politicians get cold feet when a new idea sounds too uncertain.
Another thing we’ve learned in the past year is that the legal confusion has made things worse. Since Germany’s Constitutional Court has yet to decide whether the rent cap is constitutional, even if they do find a new apartment, renters have a “shadow rent” darkening their contracts. This means they might have to pay back these rental savings if the court throws the law out. This is stressful.
The two perspectives make clear that the main problem is not the facts, but picturing the problem. One side thinks the main problem is the lack of housing on the market – as long as there are places for middle class people to live, everything will be fine. Who cares if they have to pay an extra 10% rent a year?
But then the other side sees a much bigger problem with the whole system of rent in general. People are starting to notice that just living is becoming too expensive, and that the way to make a living these days is not by finding a job and working, but by having lots of money and putting it into something that will get more expensive in future. Something like property in Berlin, in fact. And that’s the other thing we’ve learned from this rent cap business – it’s not harmed the value of Berlin property at all: Prices for buying apartments have gone up by nearly 10% in the past year. One way or another, speculating always beats working for a living.