that is about an additional more restrictive form of rent control on top of the already existing nationwide rent-control laws:
"The court ruled on Thursday that the Berlin government had overstepped its powers in introducing the law, as federal law governing rents was already in place."
this does not support an argument against rent control in general, but only against outright freezing rents in place which is what this law tried to do.
the stories about landlords getting around the rent limit by charging extra for furniture are also not helping the argument because the law covered that too, so they were effectively breaking the law. the only argument that is valid is the fact that less units were available for rent, showing that this particular law didn't work. but again, this does not prove that rent-control on general is bad.
german rent-control generally means that rent may not be charged higher than about 20% of the average rent in an area. this means that rents are still somewhat flexible and they can rise, but not excessively so.
Rent control in Germany also fixed the housing shortage and creates great incentives for new construction. In 2022, Germany had a record in new apartment and buildings finished - 2023 will probably even better. The new ECB interest regime of 4+% actually had very limited effect on the market in this respect thanks to rent control.
Like honestly, rent control is just beyond dumb. There are like 1000 ways that actually solve the problem - but unfortunately they require cities and bureaucrats to work instead of just passing a law. Supply and demand. If it takes LONGER to get a building permit that to actually build a housing complex… When cities are not planning ahead creating new space (argh, infrastructure, public transportation, this sounds like work…
i am a bit confused. rent control in germany works, but then you are arguing against it?
actually i disagree that simply allowing to build enough property will work. businesses tend to charge as much as they can, and if we want actual competition in rent prices, then the supply would have to vastly exceed the demand and not just meet it. with all the best intentions, that is not going to happen, and i don't think it is desirable either.
> and if we want actual competition in rent prices, then the supply would have to vastly exceed the demand and not just meet it.
So, having less than 1% of the housing stock go to AirBnB supposedly makes cities unaffordable but increasing the supply of housing will not have the opposite effect until supply greatly exceeds demand? Why?
because prices aren't lowered until there is pressure to do so. and that won't happen until enough properties remain empty that it starts to cost money. as far as i can tell, the preference currently is to leave properties empty instead of renting them out at low prices, so all creating more supply will do is to create more empty properties, unless landlords are literally forced to rent them out at lower prices.
part of the "problem" is that rent contracts are unlimited, so if rents are to low, then it may make sense to wait until they rise before renting out, especially in sight of a law that doesn't allow any raises for the time being. but as the article points out, many instead opted to sell outright.
So, to your point, this law of capping rents would then incentivize landlords to keep rental units vacant? Wow, sounds like exactly the kind of effect one can expect from laws suggested by Red-Red-Green in Berlin that lack any common sense or basic understanding of markets.
the very article you posted earlier shows that when the price controls were applied, a significant amount of rental properties were instead offered for sale. my interpretation is that these sellers didn't think that renting out at those prices was worth it, or soon wouldn't be.
i highly doubt that these people, when confronted with a more competitive market would choose to lower rent to compete instead of again just sell.
so i highly doubt that more rental units will automatically lead to lower rents.
“ so i highly doubt that more rental units will automatically lead to lower rents.”
They will IF landlords can expect positive returns on their investments given a certain price level. You can dig into the public filings of companies like LEG, Vonovia and TAG who publish the average rental prices and the occupancy. In cities with supply exceeding demand, rents are lower (e.g., high vacancy rates). Example: https://irpages2.eqs.com/download/companies/legimmobilien/Qu..., page 5.
There is of course also a big callout with respect to “correlation does not imply causation”, e.g., it is very likely that there is a hidden confounder (economic prosperity) that drives down vacancy rates and drives up rents which ties back to my earlier argument that capping rents doesn’t make sense if the cities, politicians and bureaucrats fail miserably at their jobs.
Maybe get a business degree or learn something about it. Your statements make me cringe very much the same way an MBA explaining LLMs to you may make you very miserable.
There is no single company that dominates a city or market enough to “profit from keeping rental units vacant at scale”. Vacancy rates and driving them down is a massive talking point in investor calls. High vacancy is bad because investors mainly care about rental income. The aforementioned companies achieve 3% or so organic rent growth - which is LOWER than inflation.
You have very little understanding of how the business world works and I’d recommend to take a couple of courses or classes in that field. It’s the same suggestion you would give an MBA type posting his opinion about programming or ML on Hacker News I suppose.
There are strategic investors though that buy run down buildings without any intention of renting them out ever but holding them for speculation. This is wrong and harms society. Land zoned for urbanisation is a right that is granted by society and has implicit value only from society granting these rights. Speculations on these artificially (by said society) limited building permissions needs to be eliminated. The space does not have much “inherent value” in itself (e.g., assuming no building for the ease of argument) - but only gains value by being artificially limited in quantity by society.
"The court ruled on Thursday that the Berlin government had overstepped its powers in introducing the law, as federal law governing rents was already in place."
this does not support an argument against rent control in general, but only against outright freezing rents in place which is what this law tried to do.
the stories about landlords getting around the rent limit by charging extra for furniture are also not helping the argument because the law covered that too, so they were effectively breaking the law. the only argument that is valid is the fact that less units were available for rent, showing that this particular law didn't work. but again, this does not prove that rent-control on general is bad.
german rent-control generally means that rent may not be charged higher than about 20% of the average rent in an area. this means that rents are still somewhat flexible and they can rise, but not excessively so.