Rental ban to end Berlin’s reign as holiday lets capital

Berlin’s reputation as one of Europe’s coolest yet cheapest cities has boosted tourism by 275 per cent in only two decades. But Germany’s capital is preparing to turn its back on budget-flight visitors with new rules which will outlaw cut-price private accommodation.

Legislation which comes into force on 1 January will make it illegal for the owners of Berlin’s estimated 12,000 private holiday apartments to rent them to tourists for short breaks. Those who fail to obey the rules risk being fined €50,000 (£41,700).

The new laws are both a response to Berlin’s lack of affordable flats for longer-term rentals and an attempt to answer complaints from residents about the influx of weekend visitors to what the director of Berlin’s tourist marketing agency has called “the capital of holiday lets”.

Residents have become incensed by what they claim are noisy, backpacking and unwelcome weekend visitors arriving on Ryanair and easyJet. They are among the record 10 million tourists who will have visited Berlin this year. “They party half the night, use the balconies to call up on their mobile phones all the time, and they dump their household waste and bottles in organic waste bins,” said Daniella Steltzer, a resident of the Charlottenburg district. “I want to live in a residential apartment block, not a cut-price self-catering guesthouse.” (read more)

Germans worry Berlin is becoming too wealthy for its own good

Just like elsewhere around the world, internet sites for vacation apartment rentals such as Airbnb were booming here — until last month.

That’s when the city passed a new law banning the trade after residents complained that a spike in vacation rentals was exacerbating a housing shortage that has pushed up rents in a city famous for its relatively affordable real estate.

They also objected to what they said was an influx of rowdy tourists attracted by the city’s famous, and famously cheap, nightclubs.

“We are creating the law so that the uncontrolled growth on the housing market is no longer possible,” Michael Müller, the city senator in charge of urban development, told the Berliner Zeitung newspaper.

That decision is raising objections from critics who say it will have little effect on rental prices, which they say are really rising because of the government’s failure to encourage new construction.

But the issue reflects a wider debate about the kind of place Berlin is becoming.

Economically challenged since the fall of the Berlin Wall in 1989 reunited the city’s two halves, the capital is finally getting rich.

This year, the economy grew faster than the national average for the first time.

The city that Mayor Klaus Wowereit famously called “poor but sexy” in 2004 may even soon work its way out of debt.

Those who oppose the ban on vacation rentals say it’s wrongheaded because it will put a brake on two of the main engines for economic recovery: the booming tourism industry and vibrant startup scene, which helped create some 30,000 new jobs this year.

Overnight stays by tourists rose to a record 26 million this year, and entrepreneurs founded some 32,400 new businesses, according to the Tagespiegel.

Airbnb — which has demanded clarification about how the law will affect residents who use the site to rent their own apartments when they’re traveling — says its guests alone generated more than $130 million for the city over a one-year period.

But others say that by raising prices, the boom is threatening to change the face of a city that has recently attracted a population of bohemian, creative types that have made it into one of the world’s most vibrant places to live.

Living here has been so cheap because when Berlin was divided, the former West Germany more or less paid people to live here. Even after reunification, the lagging economy and a glut of buildings east of the Wall kept rents so low that for 20-odd years, artists, musicians and leftists didn’t really need jobs to survive.

This year, however, rents rose by a stiff 8 percent, steeper than in any other German city, according to the German Institute for Economic Research.

Despite the increases, the cost per square meter for a Berlin apartment remains about a third of wealthier cities such as Hamburg and Munich.

But like music fans who rebel when their favorite indie bands makes it big, no one seems particularly happy about the city’s new wealth or its hip international profile, which old-timers blame for driving up the rents and attracting legions of American poseurs.

The ban on vacation apartment rentals is part of a growing backlash that has seen protesters attack investors at a business convention and anti-gentrification activists vandalize a newly opened hotel.

Set to be phased in over two years, the law will push as many as 12,000 apartments back onto the rental market, the government says. (full article)

Bundesbank worries about possible housing overvaluation; German prices up 8¼% in 3 years

Housing prices in German cities have been rising so strongly since 2010 that a possible overvaluation cannot be ruled out, according to the Deutsche Bundesbank, the German central bank. Over the past 3 years, the prices for houses and apartments have risen by a total of 8¼%.

This is the finding of an article contained in the Bundesbank’s most recent Monthly Report. According to this article, there are no signs of substantial exaggerations in the housing market as a whole. Nevertheless, price rises have been observed in urban centres, in particular, which “are difficult to justify based on fundamental factors”, the Bundesbank says.

The rise in prices in the past 3 years is due to a “marked gap between property prices in urban and rural areas”, the article explains. In Germany’s largest cities, prices of apartments have risen by more than one-quarter during this period. The Bundesbank says that this could “give rise to fears of a broad-based property price boom”.

Exaggerations in urban centres

Calculations prepared by the Bundesbank indicate that prices in the urban housing markets could be up to 10% higher than the level which can be explained by demographic and economic factors alone. “In the attractive large cities, the upward deviations in this segment are as high as 20% in some cases”, the study revealed. This applies to price developments in the large cities of Berlin, Hamburg, Munich, Cologne, Frankfurt am Main, Stuttgart and Düsseldorf. These figures are the outcome of an empirical study. As the Bundesbank emphasises, however, these findings are fraught with a considerable degree of uncertainty.(read more…)