To offset crazy high demand and prices, the only option is to increase supply (build taller, denser apartments/condos) or limit demand (disallow foreign buyers who speculate or invest, increase property taxes for owners that rent out their houses)
See e.g. Berlin vs LA: https://goo.gl/aNHzGQ
In Berlin all rents are controlled by default[1]. And despite similar purchase prices, rental prices are half of LA's.
[1] only newly built units or those renovated for more than 1/3 the value of the unit are allowed to be rented without price restrictions. This keeps the vast majority under rent control.
https://www.welt.de/finanzen/immobilien/article150877146/Die...
There's more than enough housing for higher-income people, so rent control there is moot.
I have friends in London whose rent (in the same apartment) went up 10% every year for years until they had to leave the apartment. This is not happening in Berlin.
Rents in Berlin are a joke compared to London. You can actually get cheap and plentyful housing just outside the city, but then you'll need a car as well.
Either way 15% in 3 years is still rent control.
> Either way 15% in 3 years is still rent control.
...which affects very few people.
There are some places that suddenly became "hip", where rent increases drove out lots of low-income people, which caused political backlash. These people really just had to move to less popular places.
This has been the case for the last couple years at least. What do you attribute the discrepancy in rent increases vs purchase price increases if not for rent controls?
Do you know nobody living cheaply with an old contract that they would never get today, and that their landlord can't increase to market rate? Cause I know loads such people and this would not happen in a place without rent controls.
Rents don't go up proportionally, simply because the demand isn't there. During the US housing bubble, rents didn't go up either, while property prices went through the roof.
> Do you know nobody living cheaply with an old contract that they would never get today, and that their landlord can't increase to market rate? Cause I know loads such people and this would not happen in a place without rent controls.
That's because most contracts specify that increasing the rent follows the standard procedure: Over three years, rent can rise by up to 20% (15% in Berlin), if the comparable rents in the area have risen as well (which is influenced by market rate). Ultimately, this limits the pace at which rents rise, but not the extent. In Berlin, only very few areas could sustain such growth, whereas in places like Munich where people earn way more, rents have risen much higher.
This is also not the rent control specific to Berlin (which is what you originally referred to), these are federal regulations.
All of Germany is under rent control in that context, and IMO it works compared to exploding rents in the US and other countries (UK, Israel, most places really aside from some of continental Europe).
That's because most contracts specify that
increasing the rent follows the standard
procedure: Over three years, rent can rise
by up to 20% (15% in Berlin), if the comparable
rents in the area have risen as well (which is
influenced by market rate). Ultimately, this
limits the pace at which rents rise, but not
the extent.
It all depends on your contract. Some contracts may put limits on rent increases in. Yes, in Germany there effectively is rent control that prevents a doubling of the rent within a year, but generally rents don't double within a year.
If those rent controls were good enough to satisfy the affected people, why are there protests and demands for additional laws for even more rent control in places like Berlin? Why is living in Munich so hard to afford? At what point does rent control start to "work"?
For starters, Berlin is known to be one of the cheaper German cities until recently ("poor but sexy"). In addition, the climate, geographies, and economies between LA and Berlin are significantly different.
Because income is one half of LA.
You'd end up paying 25$ for a coffee just so that the barista can afford their overpriced housing.
If you're just raising the cost of living, but not the standard, you're not gaining anything for anyone.
I'll offer a lay-person first-person view in contradiction to this theory: rents set a solid bottom salary level acceptable to people. A typical Bay Area rent can consume 100% of your salary once you have a family involved.
As countless HN threads discuss, i'll pre-answer the typical nay-sayers. Yes, i realize I can raise my entire family of four in a studio apartment. I choose not to. Most people I know choose not to. Yes, i realize I can raise my entire family on ramen noodles, i choose not to. Yes, perhaps i'm picky. Yes, I realize I can drive 5hrs a day and live in a nice house -- I choose not to (mostly because my workday is already 10+hrs.). Yes, I can have roommates live with my family (seriously, someone suggested this on another HN thread. This is down-right creepy. I dont want a roommate living in the same house as my 1yo daughter.)
Call me prissy, but I just figured that Ivy League educations, CS degrees from top-5 institutions, 15yrs of experience and two decades of hard work would afford me more than a studio apartment.
Where does this all put me? It means I have a hard-hard bottom on what salary is acceptable in the Bay Area. Practically speaking, it has meant that I stay in NYC where live is more affordable (yes, i've done the math 10x and can demonstrate it.). I have a great live in NYC on a good tech salary. I'd give up half my quality of live to live in SF, which means that I need a much, much higher salary in SF to make it worth moving there.
Look how rent control turned out.