Take for example our Federal Printing Office (Bundesdruckerei).
So Berlin is in the comfortable situation of that one no-good family member on social security who will always find someone to pay their bills. Why change anything, why stop spending all that money, if more keeps coming without any effort in any case?
Is there even consent? The referendum (Volksentscheid) hasn't happened yet. I wonder how this haphazard move by the current Red-Green coalition Berlin city administration is even legitimate when the referendum is only due more than a week from now. Unless this was done to pre-empt losing at the ballot box.
There's no upside _for them_ (remember, they already have apartment, they don't need another), only downsides.
If you have a busy highway and add more lanes will traffic jams go down?
This is a complex issue.
https://usa.streetsblog.org/2017/06/21/the-science-is-clear-...
Yes, but perhaps in neighboring/older roads instead of the fancy new lanes on the highway.
Three other fruit stores see the demand and open up, offering slightly different fruit and other higher margin products like pies and smoothies. People start coming from all over the city for fruit, and tourists come to try local fruit they can't get at home.
Now you have four busy fruit stores, and they gradually raise prices and focus on higher margin items instead of everyday fruits and veg.
This happens all the time with bars and restaurants, too, as a neighborhood gets trendy. And it can happen with housing, because upscale housing brings rich people to the neighborhood, which makes other rich people feel more at home, even in less fancy housing.
Thankfully it's not really anything like most people who have this NIMBY attitude, just the loudest ones.
[0] https://blocksandlots.com/wp-content/uploads/2020/02/Do-New-...
I've seen this happen in my city - there's a really renowned developer building high quality mixed residential-buisiness complexes - as soon as they started building a new site the surrounding prices went up, this happened in all of their projects I've looked into.
But they are the most extreme example. I'd guess that most of the neighborhoods that are seeing active development are increasing prices faster than the rest of the market.
Of course more apartments are needed and Berlin needs to grow in height and diameter. But also there is no point in landlords hardly putting any efforts in to keep apartments in good shape. Needed repairs and modern upgrades are labeled as luxury renovations which is just a total distortion of reality. At the same time there are small, non-corporate landlords which put in more effort, are more approachable but who in reality invested in a casino-like asset. IMHO real-estate makes only sense for institutional investors, private or governmental because any single error can be financially disastrous and needs to be averaged out.
That's why I backed the bill but I hope everyone is working towards something better...
Also there has been a general official agreement so far that modernizations justify higher rents. Which is just nuts because why would a one-time investment justify a basically indefinitely going increased rent...
Of course. In a healthy market (low transactions costs and sufficient number of participants leads to sufficient volume and price discovery, and thus competition, which eliminates economic rent seekers) you simply stop using the bad provider and switch to a good provider. Of course people hate moving even more than contracting an attorney.
And that's why advanced economies need consumer protection bureaus/agencies to counteract these inefficiencies. So they should bring the lawsuits to weed out the bad providers and incentivize keeping the terms of the contracts.
Unfortunately in the US these agencies are either non-existent or pretty weak, and their place was taken by class action lawsuits brought by opportunistic law firms.
> modernizations justify higher rents.
Well, a rental unit is like a field in a farm. Or maybe compare it to a greenhouse. If you replace the insulation on the greenhouse to something better now you can cultivate more/better plants, which means you make more money.
Investments (by definition) increase the capital value of the asset. More capital produces more output, so it can be exchanged for more money. For a housing unit the output is hedonistic value (aesthetic value, comfort value, better soundproofing, better plumbing, adding AC).
> Which is just nuts because why would a one-time investment justify a basically indefinitely going increased rent...
... it permanently increases the buying price of the unit. Just like with a house. If you renovate it you can sell it for more. If it's empty you can rent it out for more (in perpetuity).
The simple fact that there's a tenant doesn't change this.
Of course one must also consider amortization, but almost all rental agreements mandate that the owner actively maintain the unit, so its effect should be net zero, but if the market price of maintenance increases (because raw materials, plumbers, painters, etc. become more expensive) then it's not unreasonable for the rent to increase too. (And since the cost disease is especially affecting things manufactured/built/provided locally ... housing is getting a lot pricier. [0])
Also there's inflation. Which just by itself makes nominal rent increases a necessity.
[0] See https://phenomenalworld.org/analysis/the-class-politics-of-t... and http://web.archive.org/web/20191015142434/http://rationallys... ( https://www.stitcher.com/show/rationally-speaking/episode/ra... )
The article mentions a different deal that was struck separately without a referendum. I think there is not much support for buying back apartments for such prices.
https://gentrificationblog.files.wordpress.com/2021/08/ag-so...
This fits perfectly into the recent “eco, socially responsible, ev, wind and solar power, fridays for future, throw the baby out with the water green party support, take from the rich-give to the poor, 100kph Autobahn speed limit, we need to be the best example in the world at whatever cost” mental state of Germany. It doesn’t have to make sense. It is what it is.
Had they called it „paying out the last decade of profits to corporate landlords to keep the rent of 5% of Berliners instead of building new housing to lower the rents of 95% of Berliners“ (which is what‘s planned), I guess it would have way less support. It‘s a populist market rigging measure just as futile as the failed rent control and I‘m not looking forward to the impact on the city.