Tuesday, November 3, 2015

The Index Story

A number of months ago in Germany....the political folks (both CDU/CSU and SPD) got all hot and hyper over rising rent costs in the country..  So they invented a "brake" which was to stop escalation of rent prices.

From a persona prospective....if you looked at the broad picture....there were significant numbers of apartment houses in major urban areas of Germany which had been put up in the 1960s or 1970s....never renovated or updated....and syndicates or companies swept in to buy the buildings....putting down capital to fix and renovate the structures, and after years of reconstruction....yep, big shocker....rent was going up by double and triple what it was before.

The folks who kinda complained a decade ago about this building being out of date but seemingly happy to pay 650 Euro for a two-bedroom place....got real enthusiastic to see new bathrooms and updated doors put in.....with landscaping updates.  But when the note came of a six-month warning.....rent going up to 1700 Euro in some cases....they were forced into moving and discovering that there just aren't that many 500-to-700 Euro apartments out there.

This brake deal was the temporary fix to all of this.

So, I noticed that the ARD folks commented on the applied nature of the law..  They say....roughly 259 cities in Germany fit the profile and could use the brake to slow down rental prices.  But presently, a quarter of them are NOT applying the new law.

Reason?  Well, you need rent data and a rent index to base the new controls upon.

What they generally say is that you need to take information.....hire out some expert, and he invents a mythical formula to cover the situation, thus giving you an index number for the city to control rent.

The cost of this expert?  The journalists claim ten thousand Euro for a small city, and into six figures for big cities.   Oddly, by the way they wrote the law.....the data isn't really a recent collection but can go up to four years in age.

This is kinda like the heat-index law thrown onto renters....where you can only get a heat-index form from some certified heat specialist, and for a house...it could go up into the 500-to-700 Euro range to get one simple certificate to provide for a rental situation or sales situation.

Will the index dilemma dump a political mess onto local mayors?  I'm guessing eventually newspapers will release the cities with the names and try to shame the city councils into going ahead and spending money to get this index.

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