Thursday, September 25, 2014

Rental Caps in Germany

There's a new rule going into effect in Germany....over rental prices and just how much you can raise the rent.

The deal would work this way.  In a defined high density area (only metropolitan areas)....landlords would only be in a position to raise the rent by ten percent above the local average for similar style/age apartments.  This would fall into play, when you rent to new tenets.

Wavered deals? Yes of course.  If you build an entirely new building....for some period of time, it does not fall into the rent control situation.  If you put your building under a major renovation, then it would be excluded for a period of time from rent control as well.

Fixing a problem?

Germany has this major issue brewing in big cities like Berlin, Frankfurt, Hamburg, etc.  Appealing neighborhoods are magnets now for guys to come in and buy an apartment house.....put some cash into remodeling....then remark to the current tenets that the rent is going up.  Old rent was 750 Euro....when this project wraps up....the new rent goes to 1,300 Euro.

Tenets jump up....hostile and frustrated. They can't afford another 550 Euro.

The fact that the building was built in 1966....never really renovated before, and the rent has been at 750 Euro for almost a decade hasn't really dawned on them.

The fact that six of the surrounding twenty apartment buildings have been totally remodeled and a whole new crowd appearing on the street....also has not been noticed.

A city project to put in some trees along the street...adding another bus stop and doubling the frequency of buses....and cleaning the local park up.....hasn't been noticed either.

Public attention has been drawn to this topic over the past two or three years.  Political parties now have to pander to the issue, and do something....even if it's a fake solution that has no real weight to it.

In this case.....every single apartment building owner who wants to press the rent higher than ten-percent.....will bring in some renovation people and do something to put themselves in the waiver crowd.  It might be a new paint job on the building....newer bathrooms in every apartment....or a roof-top terrace for summer use.

What this make the rental cap topic a non-subject for two years.  Then some group will stand up and admit that this rental cap idea was pretty bogus.  And we will get right back into the middle of this mess.

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