What do you think of when you think of Berlin?
These famous landmarks have been embedded into the face of Berlin and are remnants of a city that was once divided.
Berlin has experienced some of the most critical moments in modern history. It is where Adolf Hitler committed suicide in his elaborate bunker ending World War II and where the Berlin Wall physically and ideologically separated Berlin from 1961 to 1989.
However, Germany’s capital has come far from its dark past and has catapulted itself as one of Europe’s most desired cities to live because of its affordability, in comparison to other world capitals. Berlin has become a haven for millennials and it is a vibrant hub for tech start-ups such as Babbel, Zalando, and SoundCloud. Pop icon David Bowie once called Berlin his home for three years, and as a result, recorded the “Berlin Trilogy” before the capital was on anyone’s real estate radar. Bowie truly left a mark on the city and many have followed his footsteps and moved to Berlin to tap into the city’s raw creativity.
However, the increasing desire to live in Germany’s capital has inevitably led to the increase in housing prices.
This reaction is nothing more than supply and demand at play. When there is too little of something that’s in demand, prices escalate. Or in other words, there are literally not enough flats in Berlin, and the shortage drives up the rent and real estate prices exponentially.
So what does that mean for the city’s future?
You’re going to have to dish out more cash if you want to live in Berlin, and landlords, as well as developers, know that.
Sure, you can find affordable housing (mostly, if you commit to living in a flatshare) in certain neighborhoods in Berlin, such as Hellersdorf and Mahlsdorf, but that number is dwindling dramatically and for many, it’s believed that affordable housing will be unattainable within a few years. This is because everyone — that is, locals and expatriates— are on the lookout for a place to live.
According to Special Correspondent for Culture and Cultural Policy of Deutsche Welle, Gero Schliess, “The balance between available apartments and apartment-seekers is a disaster. Over the last five years, five times more people came to Berlin as new apartments were built. By now, there's a shortage of 125,000 apartments.”
Students and large families, in particular, have been severely hurt by the rise in housing prices, forcing many to either buy their apartment or face expensive renovations from the landlords trying to cash in big. These luxury renovations in central Berlin districts have been looked down upon by many urban planners because they know these upgrades can only result in raising the rent of flats significantly. Since these options are very unrealistic, many are forced to relocate to the outskirts of Berlin to afford a proper home or leave Berlin altogether.
Though the future may seem grim, there is slight glimmer of hope for residents of Berlin: City authorities are monitoring the rising prices in the real estate market and look to protect the rights of tenants by thwarting buildings from being sold exclusively to private investors through a legal procedure called “pre-emptive right of purchase.”
Through this method, residential properties are sold and regulated by a state-owned housing company, thus allowing more residents to stay in their homes without the worry of being kicked out due to not complying with paying a higher rent amount for new renovations.
These efforts are a part of Community Defense laws that allow the city to determine areas where rents are rising too quickly and ban luxury renovations that would give landlords the legal right to raise rents. Berlin also plans to assign 33 neighborhoods as “urban conservation areas” — meaning, residential property owners in these particular areas are banned from converting their residential buildings from rental properties into condominiums, as well as imposing any expensive redevelopment.
However, developers will be able to buy rental flats just outside the conservation areas and convert them into condominiums. This would also mean that they’re allowed to remodel some buildings and ask for higher rent for them. Though the shortage is felt by the majority of people planning to move to Berlin, there are still residential buildings scattered throughout capital not owned by private investors and charge less than the legal requirement. However, finding one of these cheap flats is rare.
Furthermore, Berlin Bureau Chief, Guy Chazan of Financial Times states, “Berlin must build an additional 25,000 homes every year to keep up with the growth in its population. But last year, only 8,000 were constructed.” In response to this shortage, “Berlin government officials plan to increase the number of affordable flats they own by 80,000 to 400,000 by 2026,” wrote Chazan.
He also mentioned that “The city’s six state-owned housing companies will buy 26,600 apartments on the open market and build 53,400 new ones: 30 percent of those will be reserved for low-income families.” However, January 1, 2016, already marked an important achievement in Berlin for low-income housing: the tenant's rent will be directly linked to how much they earn. Low-income families that live in social- or state-owned housing will pay “no more than a third of their gross income in rent,” and in order to qualify for public housing, “a single person should earn no more than €16,800 ($18,040) annually and a couple €25,200 ($27,060),” states the Berliner Zeitung.
Moreover, Berlin councils have even banned Airbnb to help alleviate a small percentage of this housing deficiency. This is a stark contrast from what Berlin in the nineties experienced. The city, at one point in the last decade, sold 80,000 council flats because they had such a large surplus of public housing. Those days are clearly over and now a rental brake is trying to yield this impending housing crisis from imploding, but it seems to many that it isn’t working.
This Mietpreisbremse or “rental brake,” which was initiated by the Großen Koalition, states that the rent established in the contract with a new tenant cannot be 10% above the local average rent; however, since Berlin’s real estate supply cannot keep up with demand, this so-called emergency brake is unable to put a full stop to the escalation in housing prices.
Native German and Stuttgart transplant in Berlin, Simon Groneberg states “After spending countless hours every week, over the span of 4 months of researching for a home in Berlin, and sending out hundreds of emails to landlords who posted their flats on real estate websites like WG-Gesucht, I ultimately had to settle for a super small place on the edge of the city last year. The place was overpriced and not properly renovated, but I didn’t have any other options to fall back on. Ultimately, it took me one year to find a proper flat that is worth calling home.”
Since city government officials know how intimidating landlords can be, they have enforced a new rule that requires landlords to publish the rent they charged the previous tenant, so the new one can see if and how much the rent has increased. Property owners will face a harsh fine if they are caught increasing the rent by more than what is legally allowed. However, according to City Lab writer, Feargus O'Sullivan, “Tenants must become amateur sleuths to track down the previous rent and then take their landlord to court to recover the money. And even if they win, they will only get reimbursed from the date at which they first filed a complaint. The number of renters prepared to go through this process has understandably been low.”
Berlin used to be a place where the low-to-average income earner could live comfortably, but the city’s affordability quickly became too popular to hide from the world, and now has become threatened by gentrification. While Munich still takes the lead for being the most expensive city in Germany to rent a student flat, Berlin’s average rent increased from €333 ($386) per month in 2010 to €416 ($482) per month in 2016 -- nearly a 25 percent increase, according to a report by the Cologne Institute for Economic Research.
All in all, for many Berliners, they fear Berlin will slowly lose its character and become a sterile replica of a generic metropolis. Two final questions remain: Can the city officials of Berlin buy and build homes as quickly as they hope to? Or will cool Berlin become dismantled by wealthy real estate investors? Unfortunately, many are unsure and only time will tell.
Is your hometown facing the same kind of housing crisis? What did your local government do as a response to it? Share your thoughts and your city’s stories in the comments area below.
Credits: Images by Brittany Garcia. Data linked to sources.