[Finance] Rental price freezing.

[AmexRuislip]

A BBC report, stating that Berlins left wing government has approved a plan to freeze rental prices in the capital for the next five years.
It may only apply to 1.4 million properties, but not for new builder social housing, which is regulated separately.
Perhaps some of the UKs cities can learn from this decision and implement in to our high rental pricing.

When we first came up here in 1996, we rented a one bed flat for a year at £450 p/m.
Now £1000 p/m.
Our flat was one of nine flats owned and rented out by a retired judges, so the mind boggles on their retirement plans.
Luckily we now own our own house, where the mortgage has been paid off.
I sympathise with singletons and couples who struggle to find affordable rent, especially within the London boundaries.

More >>>>>>>>>>>>>>>

 

[Papak]

Why mess with a free market economy?

 

[Herr Tubthumper]

This has been a huge discussion over here for some time now. The city has also introduced legislation to severely halt the March of AirBnB as well; this has had quite an impact.

 

[Weststander]

The overwhelming need is to build millions more homes. Our population has increased by 8 million since 1997, as well as all the people living off the radar, plus family units are smaller due to divorce etc.

Freezing rents won’t create the three million new homes Shelter state we need. It’s so unfair on the millions of people living on sofas, families with relatives or friends, in B&B’s, and bodged outbuildings and loft spaces illegally squeezed in by unscrupulous landlords.

 

[beorhthelm]

consensus of economists is that rent control is a bad idea. two main objections are it reduces the amount of rental property available and lowers quality. why would landlords invest if there is no return? rent in London is utterly ridiculous, but the solution is in increasing supply not reducing it, or making incentives to locate elsewhere.

 

[Herr Tubthumper]

consensus of economists is that rent control is a bad idea. two main objections are it reduces the amount of rental property available and lowers quality. why would landlords invest if there is no return? rent in London is utterly ridiculous, but the solution is in increasing supply not reducing it, or making incentives to locate elsewhere.

The consensus for Berlin/Germany or London/U.K.?

 

[beorhthelm]

The consensus for Berlin/Germany or London/U.K.?

world consensus, basic economics goes beyond individual cities or politics.

 

[golddene]

consensus of economists is that rent control is a bad idea. two main objections are it reduces the amount of rental property available and lowers quality. why would landlords invest if there is no return? rent in London is utterly ridiculous, but the solution is in increasing supply not reducing it, or making incentives to locate elsewhere.

They would say that wouldn't they? I would too if I had a vested interest. Buy to let landlords moved their money into property when their interest income was substantially reduced when rates were dropped due to the banking crises, and of course the governments decision to release pension pots so those who wished could invest in second/ third or more properties.

 

[AmexRuislip]

This has been a huge discussion over here for some time now. The city has also introduced legislation to severely halt the March of AirBnB as well; this has had quite an impact.

In Hillingdon, a lot of the affordable housing has gone over to Notting Hill housing association, who have expanded big time into the borough.
This is happening a lot in London, where boroughs are crossing over to gain the housing compliment.

 

[sully]

They would say that wouldn't they? I would too if I had a vested interest. Buy to let landlords moved their money into property when their interest income was substantially reduced when rates were dropped due to the banking crises, and of course the governments decision to release pension pots so those who wished could invest in second/ third or more properties.

So what do you think will happen to the quality of rental property if the rents were frozen / capped / reduced?

Unless the government are going to supply the housing and subsidise it, trying to control rents artificially won’t work. In fact, it’s far more likely to make matters worse.

 

[Herr Tubthumper]

world consensus, basic economics goes beyond individual cities or politics.

Really? Who exactly has said this?

Germany already has some of the toughest rent laws already in Europe. Various and numerous types of rent controls, including capping of increases, already exist here and have been around for many years if not decades. Neither have markedly decreased volume or impeded the quality as you suggest. FYI 60% of German residential property is let, and in the main is owned and funded in a very different way to the U.K. I really can’t see how you can sweepingly state it’s bad when markets, cultures, law and economies are so different between the U.K. and Germany are also so different.

 

[AmexRuislip]

Really? Who exactly has said this?

Germany already has some of the toughest rent laws already in Europe. Various and numerous types of rent controls, including capping of increases, already exist here and have been around for many years if not decades. Neither have markedly decreased volume or impeded the quality as you suggest. FYI 60% of German residential property is let, and in the main is owned and funded in a very different way to the U.K. I really can’t see how you can sweepingly state it’s bad when markets, cultures, law and economies are so different between the U.K. and Germany as so different.

Is the German mortgage 'system' still passed on through family, by the way of a 99 year mortgage?

 

[Eeyore]

Why mess with a free market economy?

Because the ones who struggle the most get shafted.

 

[Herr Tubthumper]

Is the German mortgage 'system' still passed on through family, by the way of a 99 year mortgage?

Good question. I think so. I now have a 40 year mortgage and I’m 50.....it’s highly likely someone else will be picking this up before it ends

 

[Eeyore]

I'll never forget when I had a rental revaluation by my old landlord and it went up 15%.

I got a letter from the estate agent which effectively said that as market rates were increasing they were doing it because they could.

 

[beorhthelm]

Really? Who exactly has said this?

Germany already has some of the toughest rent laws already in Europe. Various and numerous types of rent controls, including capping of increases, already exist here and have been around for many years if not decades. Neither have markedly decreased volume or impeded the quality as you suggest. FYI 60% of German residential property is let, and in the main is owned and funded in a very different way to the U.K. I really can’t see how you can sweepingly state it’s bad when markets, cultures, law and economies are so different between the U.K. and Germany are also so different.

it was based on a survey of economist. perhaps they had no German respondents.

though if they need to continue with further controls, maybe they havent cracked this yet either?

 

[AmexRuislip]

Good question. I think so. I now have a 40 year mortgage and I’m 50.....it’s highly likely someone else will be picking this up before it ends

I always thought it was a great idea, when I was over there.
Nearly purchased a property with then partner, but things didnt pan out, so that financial idea didn't get off.
Wouldve been worth it though, if it happened.

 

[LamieRobertson]

Yet another another ticking time bomb....more people renting now....rents only going one way...smaller pensions....housing allowance caps....not going to be much fun in old age for a fair number (in the UK)

 

[Papak]

Because the ones who struggle the most get shafted.

Not an acceptable answer imo.

If you can't afford to live in Berlin, move to somewhere you can.

My parents did it 40+ years ago when they got married and couldn't afford to buy where they grew up - not a new idea being priced out of an area you would like to live or think you are entitled to live in.

 

[Herr Tubthumper]

it was based on a survey of economist. perhaps they had no German respondents.

though if they need to continue with further controls, maybe they havent cracked this yet either?

One thing to remember is this law is an extension of a pre-existing law which does not cover new-builds. It seems to work and is routinely monitored. I think the cap was last made at 3% about 2 years ago. All we are seeing here is a tweak, but the way it’s been reported it’s seems like a radical new law; it isn’t. Personally I feel they need to bring in legislation for new builds as well.

We are finding our way here, the city became the third largest city in Europe, and capital of the 4th biggest world economy overnight just less than 30 years ago. It’s a unique city in this sense and residential property supply and demand is all over the place; the tools to control it may need to be bespoke.