Berlin’s new rent cap, first steps towards affordable housing

Berlin’s new rent cap, first steps towards affordable housing

Ursula moved to Berlin to work as a UX developer four years ago, going through the excruciating process of finding a place to live. Her journey went from unfortunate situations in flatshares to short stay apartments. In March 2020 she experienced her last move in the middle of a pandemic to a studio apartment where 51% of her income will be spent in rent. After four years in the city, she realised that every time she went on a flat hunt, prices would have doubled and opportunities were more scarce.

Even if Berlin rents are not amongst the most expensive in European cities, the Global Residential Cities Index reported that in the past five years Berlin rent prices rose by 69%.  As a measure to mitigate what is considered a housing crisis, the German capital Senate approved a rent cap law that aims to freeze prices at the cost registered on June 18, 2019, for the next five years. A measure that aims to benefit 3.1 millions Berliners who are home renters and represent 85% of the city’s population.

The path towards an example of how rent control can benefit tenants and relieve a housing crisis is still to be defined, since the controversial law is yet to be approved by the federal constitutional court. Landlord associations and investors count on the federal government to declare it unconstitutional as they argue it violates the freedom of the market and the right to make a profit.

Housing block in Karl-Marx Allee. Source: author

Why Berlin?

After the fall of the wall in 1989, Berlin was considered to be ‘reborn’ thanks to the 1990’s urban underground cultures. The so-called creative class played an essential role in the local urban restructuring process that ended up having the city mayor describing Berlin as “poor, but sexy” in 2001, when living costs were considered particularly low amongst world capitals.

From 2010 onwards, the local government pushed towards a transformation of the city into an inclusive and diverse startup ecosystem. The traditional working-class and migrant neighbourhoods like Kreuzberg experienced the consequences translated into a radical change, tangible in the ethnic composition of the areas.

Like most cosmopolitan cities Berlin faced a rapid population growth, reaching an average of approximately 40,000 people moving into the city per year. New contracts and short term rentals allowed rents to increase, having old Berliners experience one of the most rapid rent increases in Europe.

According to the Financial Times, in 2001 Berlin had a vacancy rate of 5 per cent; by 2017, that had dropped to 1 per cent.

Rent cap precedents

Rent cap has been amongst the housing expropriation activist agenda for quite a while. The groups have been expressing their claims since 2015, based on article 15 of the German Constitution, which states that land may be transferred to public ownership for the purpose of nationalisation.

The non-profit Rent-watch (Mietenwatch) registered that only a few private housing companies control a significant part of the rental apartment market and thus also influence the price formation on the market. The rent-watch identified ten housing providers with the most online offers in the German capital. The property company Deutsche Wohnen alone owns over 100,000 apartments in Berlin.

The association states that living space is traded as a commodity as they found out that rent prices depend mostly on the housing provider.

The non-profit also found that “private providers hardly rent apartments below 10 € / m²” even if Berlin’s average rent is of 6.72 €/m² before the establishment of rent control. In addition to the lease, it is noted that some of these companies charge very high additional management costs, an average of € 3.98 / m².

While the Federal Statistical office states that the average Berliner spends 28.2% of its income in rent, Mietenwatch reported that only 4.4% of apartments are affordable for a single individual, based on the city’s average monthly income.

What does the law actually say?

The law stipulates that rent increases are banned for the next 5 years except for 1.3 % inflation scheduled for 2022. This means that old contracts cannot raise their prices, existing tenants can apply for a rent decrease and new agreements are not allowed to exceed 10% of the average price which is settled for € 9.80m².

Still to be approved by the federal court, this law would have effect in November 2020 and will exclude subsidised public housing and apartments constructed after 2014.

One of the main concerns regarding rent control is the negative effect it can have on renovations and housing improvements. The law permits reformations as long as these do not raise the rent by more than € 0.50 m².

If landlords decide to keep increasing the rent price, the violation of the law is punished with a fine as high as half a million euros. The measure may seem drastic, but it contemplates that only 5 % of the property is owned by small owners, and most property is managed by larger companies.

The law holds a particular clause for pensioner households and landlords whose primary source of income is rent. They can increase the prices if it is proven that they are not making a profit out of it.

The rent cap, however, is more complicated than only charging €9.80 per square meter. Landlords have until April 15 to provide tenants with a letter that states their rental conditions such as the age of the building, energy usage and particular features.

A group of legal experts called Wenigermiete have become relevant actors in the calculation of rents, since they claim that 90% of renters are eligible for a rent reduction. The association developed a free online tool which allows tenants to calculate the potential cost reductions with the implementation of the rent cap.

Housing block in Karl-Marx Allee. Source: author

Will the local government have the capacity to enforce the law?

Although most Berliners are pro-rent cap, there is still scepticism on whether the law will actually become effective. The capability of the local government to enforce the law is put in doubt and landlords keep trusting a lack of capacity amongst authorities to find and fine all law violators.

Housing providers turn to the easiest way to avoid the regulation: renting to foreigners moving to Berlin for the first time. The floating population enters a hypercompetitive market without knowledge, time or legal tools and this can lead to desperate measures, making them both victims and scapegoats for the increase in rent prices.

Experts claim that the lack of capacity to enforce the rental cap law may lead to the growth of a grey housing market.

What is the current discussion among rent cap detractors?

The owner protection association “Haus und Grund” bet for the federal government to stop and reverse the law, their main argument is that this is an “entry into an ever more extensive state intervention spiral to hide the self-created problems on the housing market”.

Haus und Grund’s opinion coincides with that of the Christian Democrat party and Berlin-Brandenburg Association (UVB). Their argument is that rent control will lead to a lack of investment from real estate developers, housing production will decrease, and existing flats will be in a deteriorated state.

The rent cap is also criticised by building and housing cooperatives who claim that it might bring uncertainty in the market. These groups find that their existence will be threatened since their user’s fees are already below the market price, and the rent increase is a tool that allows them to modernise, provide maintenance and build new housing blocks.

Amongst the detractors, there is a proposal for the federal government to create “a fair housing market” by opening the market to new investment and housing development. However, the existing housing shortage has already caused Berlin Real Estate investment to record the highest transaction volume in Europe of around 3.11 billion euros with private and public funds, followed by Copenhagen with 2.43 billion euros.

In short, the housing shortage is non-exclusive to Berlin; it is experienced in almost any major capital city, the difference is how activists and the government in Berlin decided to deal with it. The establishment of rent control in Berlin opens a relevant discussion for big cities facing gentrification, displacement and excessive rent charges. A rent cap may be only replicable under a similar governmental composition (left-green coalition) and consistent pressure from activist groups. The Berlin case brings to the table a relevant discussion on fair policy and housing provision in cities facing similar problems. Not leaving aside the fact that, even with stringent laws, there is always room for a grey market that puts tenants into hazardous situations. Also, if Berlin managed to set a precedent with this so-called radical regulation,  affordable housing might involve a longer process than what it seems.

As for Ursula, if the law is activated, she might be able to reduce her rent to a third of the price she is currently paying.

Legal Design Thinking for Open and Collaborative Innovation in Sustainable Fashion

Legal Design Thinking for Open and Collaborative Innovation in Sustainable Fashion

After a sunny Easter break, the Urban clinic is back to hold its fifth and last module on Friday, April 17th and Saturday 18th. The LabGovers will be supported by a team of experts: Lina Krawietz and Joaquín Santuber co-founders of the think tank “This is Legal Design Thinking”…but do you actually know what really is Legal Design? Under our perspective, law should be a tool accessible and comprehensible to everybody. This is why Legal Design arose. Firstly, it is based on three principles: communication, transparency and engagement. Its goals are to simplify the legal jargon in order to make it accessible and comprehensive to non-initiated persons, and secondly to build a communication to make legal procedures more efficient. “Designers” skills will be very useful for the last adjustments of the project. How will students implement and acquire such tools?

During the workshop of Friday afternoon, the Team of “This is Legal Design Thinking” will present a case study and examples of different way to design and create solution in order to make privacy policy accessible and comprehensible to everyone. After that, they will give some advice about how to protect ideas from competitors, and finally a discussion will materialize between the team of experts and the students. 

The LabGovers will be divided in two groups for the co-working of Saturday, under the supervision of Lina Krawietz and Joaquín Santuber and a reunion will take place all together at the end of the day to hear about what the other group did and discuss it. 

Don’t hesitate to keep up with us and discover more about Legal Design following us on our social media: Instagram, Facebook and Twitter!

TAVOLA ROTONDA: “La partecipazione dal basso: problematiche di governance ed esperienze”

TAVOLA ROTONDA: “La partecipazione dal basso: problematiche di governance ed esperienze”

Venerdì 17 Aprile 2020, dalle ore 9:30 alle ore 18:30, si terrà, presso l’aula tematica del Dipartimento di Architettura dell’Università degli studi “Roma Tre”, la Tavola Rotonda: “La partecipazione dal basso: problematiche di governance ed esperienze”. 

Il suddetto incontro si inserisce nell’ambito dei Master biennali in: Culture del patrimonio; Conoscenza, tutela, valorizzazione, gestione; Economia e gestione dei beni culturali e del master annuale in Management-promozione-innovazioni tecnologiche nella gestione dei beni culturali.

L’evento, curato dal prof. Stefano Consiglio e dalle Prof.ssa Paola Demartini e Michela Marchiori, vedrà la partecipazione di Alessandro Antonelli, vicepresidente di LabGov.City, in qualità di relatore, il quale, durante la sessione pomeridiana, parlerà del protocollo metodologico “Co-City” applicato alla città di Roma, il caso “Co-Roma”.

Verrà illustrato come tale approccio, che prevede la costruzione di un ecosistema istituzionale a quintupla elica, tramite il coinvolgimento di cinque attori: il Civico, il Sociale, il Cognitivo, il Pubblico e il Privato, possa essere innovativo nella costruzione di quartieri e comunità collaborative urbane. Il progetto viene portato avanti da LabGov – LABoratorio per la GOVernance della città come un bene comune, tramite un programma di formazione/crescita, con la collaborazione di vari stakeholders.

La Tavola Rotonda sarà divisa in due sessioni:

Durante la sessione mattutina (9:30 – 13:30), interverranno:

Giuliano Volpe (Università di Bari), Paola Demartini (Università Roma Tre), Michela Marchiori (Università Roma Tre), Stefano Consiglio (Università Federico II), Marco D’Isanto (Dottore commercialista e consulente di imprese ed istituzioni culturali), Gregorio Arena (Università di Trento), Mauro Baioni (Università Roma Tre), Sandra Aloia (Fondazione San Paolo).

Durante la sessione pomeridiana (14.30 – 18.30), interverranno:

Enzo Porzio (Cooperativa La Paranza della Sanità), Fabrizia Cannella e Federica Fava (Università Roma Tre), Alessandro Antonelli (Vicepresidente Labgov.city – Luiss), Andrea Colafranceschi (Associazione Torpiùbella), Claudio Gnessi (Ecomuseo Casilino ad Duas Lauro), Nicola Brucoli (TWM factory).

#LabGovNonSiFerma #LuissNonSiFerma: La seconda attività di Sustainability online

#LabGovNonSiFerma #LuissNonSiFerma: La seconda attività di Sustainability online

Oggi si è concluso il secondo incontro delle #pilloledisostenibilità organizzato dall’Università Luiss Guido Carli, che ha promosso, durante le festività pasquali, attività online riguardanti tematiche ambientali.

La Clinica Urbana Interdisciplinare di LabGov 2020 ha aderito a questa bellissima iniziativa online organizzando due pillole di sostenibilità per rendere green questo periodo di quarantena.

In particolare, giovedì insieme ai tutor della Clinica Urbana Interdisciplinare Alessio, Julianne e Francesco abbiamo visto come realizzare un Orto in Balcone utilizzando materiali riciclati, come bottiglie di plastica e tappi di sughero, insieme ad alcuni consigli su come essere più sostenibili: “lo sapevi che anche solo cancellando le vecchie mail puoi ridurre le emissioni di CO2 nell’ambiente?”; nell’incontro di oggi invece, insieme agli altri tutor  Caterina, Lorenzo, Tommaso e Flaminia abbiamo visto come preparare del gel igienizzante per le mani, come disinfettare una mascherina e come riutilizzare rifiuti organici, che altrimenti, avrebbero un grande impatto sull’ambiente!

Per nuove iniziative, seguiteci sui nostri canali social e sulle nostre pagine.

Today ended the second meeting of #sustainabilitypills organized by Luiss Guido Carli University, which promoted, during the Easter holidays, online activities on environmental issues. The Urban Interdisciplinary Clinic of LabGov 2020 joined this beautiful online initiative by organizing two sustainability pills video tutorials to make this period of quarantine greener.


In particular, on Thursday together with the tutors of the Interdisciplinary Urban Clinic Alessio, Julianne and Francesco we saw how to create a Balcony Garden using recycled materials, such as plastic bottles and corks, together with some tips to be more sustainable: “did you know that even just by deleting spam emails you can reduce CO2 emissions into the environment? “.

In today’s meeting instead, together with other tutors, namely Caterina, Lorenzo, Tommaso and Flaminia we saw how to prepare hand sanitizing gel, how to disinfect a mask and how to transform an organic waste into beauty cosmetics.
We encourage everybody to follow this sustainability pills to reduce the negative impact that some activities have on the environment!

For new initiatives follow us on our social channels and pages.

We like to talk about cities. How can we compare them?

We like to talk about cities. How can we compare them?

Photo by Andrea Rizzotti

London, Jakarta, Rome, Mumbai, Naples, New York, Boston, Beijing, Tokyo, Oslo. What do all these cities have in common? Much and little at the same time. In spite of some common traits, such as the presence of public space, mobility, water and garbage systems, parks, or governing bodies, these cities differ incredibly. Features such as their physical shape and their culture, or numbers like density and wealth seem incomparable. The question the arises, is comparison possible at all? It is legitimate to wonder whether comparing two or more urban areas even makes sense. To try to shed some light on this issue, besides logic reasoning, we can glance at how academia manages this problem.

First of all a sociological consideration: as two-thirds of the world population live in urban areas, finding local experts who talk about their city is rather easy. By consequence, it is clear that cities are not just aseptic objects but places where most of us live: there is an emotional component and attachment towards where we are formed or decide to live. Defending one’s own place and relative version of how a city functions can coincide with defending personal life decisions. From this tendency, a city-based knowledge might follow.

Let’s look at the discussion on whether electric scooters are good or not for our cities. Mobility sharing fleets arrived in Europe and the US in the last 3 years, following the same exact scheme. In some cities, it was a real success, while elsewhere a complete disaster. Drawing a single conclusion highly depends on the case we pick, while the truth lies in between: the same exact common sharing scheme fits well a city for specific peculiarities of that context, while not fitting another. While Mobike was successfully established in Florence, it completely failed a few kilometres south, in Rome. Technical features of the vehicle seem to be as relevant as the regulatory framework of the city, the commuting habits of its inhabitants, climate, and geography of the place. As there are so many variables, how can we understand differences and manage to compare cities? Let’s look at some examples from academia.

Main pitfalls of comparing cities

Comparing cities is made more complicated by the many disciplines and factors at stake. For the sake of simplicity, let’s look at political economy and urban politics, two fields where the high variety of socio-economic and geographic factors influence the analysis. Historically, there have been a number of competing visions of what cities key traits are and how they work  (Park and Burgess, 1925; Dahl; 1967; Wirth, 1969; Jacobs; 1969; 1984; Saunders, 1983; Rae, 2004). Kantor et al (2005) suggest that there are common pitfalls that make comparative analysis deceitful:

  1. The lack of a common framework. There is not one theory or framework considered by academia as an indisputable pillar to study and compare different cities. A valid exception to this is in the field of Urban Economics, where the city model of Brueckner is commonly accepted as the main framework to compare cities and regions (2011).
  2. The ‘depth versus scope’ problem. Some scholars only dig into the idiosyncrasy of few case studies. On the other extreme there is superficial research comparing many cases.
  3.  Contextual features. The urban contexts embrace the historical, cultural, geographic and demographic content of cities. This problem arises typically when many different cultures are encompassed in the analysis.
  4. Conceptual parochialism. The same concept has not the same meaning in all the cases we compare. A concept like decentralization has not the same meaning in France or the United States. Its meaning also varied across time. There are concepts highly dependent on the context.

Without a common ground, comparative research resembles a list of compendiums and monographs in different cities. The solution proposed by Kantor et al is twofold. On the one hand, deconstructing and being aware of the pitfalls is the first step. Secondly, the analysis should build upon a common framework based on categories, typologies, and variables that are defined beforehand to avoid the four pitfalls. A good example that follows this proposal is a framework constructed by Digaetano and Strom (2003) to confront urban regimes in different cities.

Table 1. The categories can adapt to different contexts trying to overcome the four pitfalls of comparative urban research. Typologies on different modes of urban governance, Di Gaetano and Strom (2003)

These five modes of governance, of course, are ideal types (see Weber 1962) and rarely if ever exist in pure forms. Powerful integration to build up a framework to look at a common object, which in this case is the institutional settings of a city, is to use a template that defines when and where the comparison among cities occurs. Gerring and McDermott propose a case study template to have a quasi-experimental grid to compare cities. Namely, they build-up four typologies identified through the question “is the comparison happening with a spatial or temporal variation?”.

Table 2. Four typologies of comparative analysis are extracted. Taking the comparison of one policy in two cities the comparison can occur in time or space or both. An Experimental template for case study research, Gerring et al (2007)

A fair conclusion

Without some kind of theoretical construct that highlights common properties shared by cities, the comparative analysis makes little sense. Comparing cities is tempting, but it is complicated. This reflects the same complex nature of urban areas, which are special places exactly because of their social, economic, cultural density and diversity. Comparative analysis should be made on common grounds, rather than being based on a number of ‘theories of the middle range’, as Merton calls them (1968). Otherwise, understanding whether a mobility sharing scheme will work is just speculation.

The “urban” is not defined in the same way by all fields and authors. What is a city and what are the boundaries of geographical, administrative, cultural demarcation? Nor is a unique methodological approach shared. So, should we still compare then? Yes.

Keeping Emile Durkheim’s dictum in mind, science begins with a comparison. By comparing and measuring relationships, a knowledge with greater certainty can be achieved. (Kantor, 2005).  Different urban disciplines such as urban economics, urban politics, urban sociology, urban geography, law and so on can’t be self-standing, as they describe a different aspect of the same urban global phenomenon.  By the same token, cities are not self-standing, they are points of a ‘Global Network’ (Dematteis 1994) where informative flows are growing exponentially (Castells 1989).

Groups of computer scientists and physicists like those of the laboratory directed by Michael Batty at the University College of London aim at creating a new science of the city. Formal models and higher data quality will add explanatory power, however, the complex nature of the city won’t allow for the existence of one single science or theory. Recognition of diversity, tolerance, and dialogue can bridge different fields building up more solid frameworks to compare different cities. City practitioners can use this knowledge to make a change.

Bibliography

Brueckner, J. K. (2011). Lectures on urban economics. MIT Press.

Castells M. (1989) The Informational City, Information Technology, Economic Restructuring, and Urban-Regional Process. Oxford: Basil Blackwell

Dahl, R. (1967) The city in the future democracy. American Political Science Review LXI.4, 953–70.

Dematteis Giuseppe (1994). Global Network, Local Cities. In: Flux, n°15, 1994. pp. 17-23;

Di Gaetano, A., & Strom, E. (2003). Comparative urban governance: An integrated approach. Urban affairs review, 38(3), 356-395

Durkheim, E. (1982) The rules of sociological method and selected texts on sociology and its method. The Free Press, New York, NY.

Gerring J. et al (2007). An experimental template for Case Study Research.

American  Journal of Political Science, Vol. 51, No. 3, July 2007, Pp. 688–701.

Jacobs, J. (1969) The political economy of cities. Random House, New York. (1984) Cities and the wealth of nations. Random House, New York.

Kantor P. and H.V. Savitich (2005). How to Study Comparative Urban Development Politics: A Research Note. International Journal of Urban and Regional Research. Vo 29.1, March 2005 135-51.

Merton, R. (1968) Social theory and social structure. The Free Press, New York, NY.

Park, R. and E. Burgess (1925) The city. University of Chicago Press, Chicago, IL.

Saunders, P. (1983) Urban politics. Hutchinson & Co, London.

Rae, D. (2004) The city. Yale University Press, New Haven, Connecticut.

Weber, M. 1962. Basic concepts in sociology, trans. H. P. Secher. New York: Citadel.

Wirth, L. (1969) Urbanism as a way of life: the city and contemporary civilization. In R. Sennett (ed.), Classic essays on the culture of cities, Appleton-Century-Crofts, NY.