Thursday, May 25, 2017

Apartment Regulation Efforts

There's a piece in Focus today which talks on the issue of affordable apartments.

So for probably a decade, there's been this issue brewing in metropolitan cities in Germany...affordable apartment dwindling.  This goes toward three central issues.  First, while rural regions of Germany are decreasing in's the opposite effect in cities like Hamburg, Berlin, Frankfurt, etc.  Second, building owners have figured out that if you renovate a building (say for the first time since 1960) can probably double the rental income of 700 Euro a month (which tends to make the place unaffordable to half of the normal city residents).  Third, whether the politicians like to admit it or not....income levels over the past twenty years have been mostly stagnant....even in urbanized zones.

Up in Koln, folks have noticed this odd trend.  There are tons of applications to build apartments in the region.  If you look back two years ago as an example in Berlin, they had 22,000 apartments on the city books to be built.  A large majority of these would have been in the affordable category.

But here's this funny thing....just because you have a permit to build on such-and-such apartment building, it does NOT mean that you will build in the time cycle that you described, and that you might take the slow path to such a degree....that maybe someone will see a better speculation deal, and offer to buy the lot, and get the permit with the deal....then build non-affordable apartments or condos.

So there is this suggestion....once you earn a permit to needs to state a period (probably two years but that is only suggested).

The chance to speculate or stall?  Gone....if this were to be adapted by the city.

There are continual efforts to invent city regulations and rules throughout satisfy the need for affordable apartments.  It's safe to say that very few of these efforts are working.

Getting cities to do their own investing and building (like they did decades ago in Vienna)?  You'd end up borrowing a fair amount of money via a bond program, and the affordability rates would be in relationship to what people can actually pay.  You might start to see ghetto-like neighborhoods go up because that was the customers that the housing was designed for.  None of the political parties really want that reputation hooked to them.

This rule change to hinder the companies hooked onto speculation?  I suspect that they'd go and find great legal ways to challenge the time limits and have the legal system draw this out for three to seven years.

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