This is why Berlin has banned homeowners from renting their flats out on Airbnb

Berlin, with Alexanderplatz on the horizon. Image: Getty.

Anyone planning a weekend getaway to Berlin may have received a nasty shock, when the city announced that it has banned residents from renting out their flats to tourists through Airbnb. The move comes as a result of acute housing shortages, unprecedented population growth and marked changes in Europe’s housing system.

Berlin has long been a go-to city for creatives. Even when it was partitioned into East and West, the city attracted an alternative crowd. And when Berlin’s population shrank – particularly between 2000 and 2012 – the resulting surplus of cheap accommodation drew young artists, musicians and hipsters who were being priced out of London, Amsterdam or Paris, due to prohibitive house price inflation and ever-increasing rental costs.

Berlin has remained affordable because of a law pithily known as Zweckentfremdungsverbotsverordnung, which prevents owners from changing the use of properties. This makes it difficult to convert residential buildings into commercial property, and has protected much of the city’s housing stock from development since the second world war. Similar by-laws also exist in other large German cities, such as Hamburg and Munich.

Housing squeeze

Two years ago, Berlin’s parliament altered this law to include short-term leases on “guest-flats”. This made the short-term leasing of entire flats illegal, with breaches punishable by a €100,000 (£78,000) fine. After a two-year notice period, the ban came into effect in May. Under the new law, it’s still legal to rent out rooms in one’s own flat – but they can take up no more than 50 per cent of the floor space.

German research has revealed that buying and renting flats to tourists – via online agencies such as Airbnb and Wimdu – has become highly profitable, with some businesses managing hundreds of properties. Partly as a result of this, Berlin – which once had a surplus of accommodation – now finds itself with a severe and growing shortage.

No vacancy. Image: Julienaksoy/Flickr/creative commons.

The city is expected to grow by about 45,000 inhabitants each year – and that’s before accounting for the 30,000 and 60,000 refugees who have arrived in the last two years respectively.

To address these pressures, the city plans to build an additional 220,000 dwellings over the next decade. According to Berlin resident and director of the UrbanPlus planning consultancy Thomas Knorr-Siedow, the planning department intends to bring on 20,000 dwellings annually, of which some 6,000 are to be built by municipal housing companies.

Planning bodies will help ensure that a third of all new housing is affordable, in line with Berlin’s rent control arrangements. And it is thought that Berlin has about 20,000 “guest-flats”, which – if made available for normal letting – could supply one year’s demand.


Making a racket

Housing is not the only factor feeding into this change. Besides the loss of permanent rented flats, short-term letting to tourists is seen as a nuisance by locals, who complain that stag and hen parties, mass pub-crawls and noisy all-night partying seriously denigrate the quality of life in Berlin’s central neighbourhoods.

Other cities are sitting up and taking note of this approach: for example, Amsterdam is currently engaged in trying to limit Airbnb rentals, too. Here, entire flats can now only be let out at the times when the owners would be on holiday, and have a vacant flat anyway. City authorities enforce a rule which limits short-term holiday rentals, using automated computer systems to monitor online advertising.

Richard Ronald, Professor of Urban Studies at the University of Amsterdam observes that:

The city of Amsterdam has struggled with the rise of Airbnb, and while it initially sought to regulate growth, it has increasingly been forced to crack down on the sector. In the context of Amsterdam’s large, but very tight rental housing supply, there have been concerns over landlords switching properties from regular contracts to short-term tourist lets. At the same time, tax avoidance and illegal subletting, especially among social tenants, has also been a concern.

What’s more, Amsterdam is a relatively small city, which is also a highly popular tourist destination, so it has long sought to maximise its tourist tax income, which is levied via hotels and hostels. Unregulated tourist lets impact on that income.

 

As Ronald’s animation (above) articulates, the real story here is the transformation of Europe’s housing system. Since the financial crisis of 2008, there has been a rapid expansion of private renting across Europe, resulting, in part, from the demise of home ownership. Young people often find themselves unable to secure a mortgage, or to rent from social landlords whose housing stocks have been depleted through subsidised or open market sales, so they have to rent privately.

 

In tourist hot-spots such as London, Barcelona, Berlin, Edinburgh and Amsterdam, a battle for the rental market has broken out, with housing and planning authorities coming under ever-increasing pressure to act on behalf of residents. Berlin, with its long tradition of rent control, has responded with this novel regulation. This move is likely to push housing back up the agenda right across Europe – especially in cities trying to balance a growing demand for rented accommodation, with a vibrant tourist sector. The Conversation

Douglas Robertson is professor of sociology, social policy and criminology at the University of Stirling.

This article was originally published on The Conversation. Read the original article.

 
 
 
 

A new wave of remote workers could bring lasting change to pricey rental markets

There’s a wide world of speculation about the long-lasting changes to real estate caused by the coronavirus. (Valery Hache/AFP via Getty Images)

When the coronavirus spread around the world this spring, government-issued stay-at-home orders essentially forced a global social experiment on remote work.

Perhaps not surprisingly, people who are able to work from home generally like doing so. A recent survey from iOmetrics and Global Workplace Analytics on the work-from-home experience found that 68% of the 2,865 responses said they were “very successful working from home”, 76% want to continue working from home at least one day a week, and 16% don’t want to return to the office at all.

It’s not just employees who’ve gained this appreciation for remote work – several companies are acknowledging benefits from it as well. On 11 June, the workplace chat company Slack joined the growing number of companies that will allow employees to work from home even after the pandemic. “Most employees will have the option to work remotely on a permanent basis if they choose,” Slack said in a public statement, “and we will begin to increasingly hire employees who are permanently remote.”

This type of declaration has been echoing through workspaces since Twitter made its announcement on 12 May, particularly in the tech sector. Since then, companies including Coinbase, Square, Shopify, and Upwork have taken the same steps.


Remote work is much more accessible to white and higher-wage workers in tech, finance, and business services sectors, according to the Economic Policy Institute, and the concentration of these jobs in some major cities has contributed to ballooning housing costs in those markets. Much of the workforce that can work remotely is also more able to afford moving than those on lower incomes working in the hospitality or retail sectors. If they choose not to report back to HQ in San Francisco or New York City, for example, that could potentially have an effect on the white-hot rental and real estate markets in those and other cities.

Data from Zumper, an online apartment rental platform, suggests that some of the priciest rental markets in the US have already started to soften. In June, rent prices for San Francisco’s one- and two-bedroom apartments dropped more than 9% compared to one year before, according to the company’s monthly rent report. The figures were similar in nearby Silicon Valley hotspots of San Jose, Mountain View, Palo Alto.

Six of the 10 highest-rent cities in the US posted year-over-year declines, including New York City, Los Angeles, and Seattle. At the same time, rents increased in some cheaper cities that aren’t far from expensive ones: “In our top markets, while Boston and San Francisco rents were on the decline, Providence and Sacramento prices were both up around 5% last month,” Zumper reports.

In San Francisco, some property owners have begun offering a month or more of free rent to attract new tenants, KQED reports, and an April survey from the San Francisco Apartment Association showed 16% of rental housing providers had residents break a lease or unexpectedly give a 30-day notice to vacate.

It’s still too early to say how much of this movement can be attributed to remote work, layoffs or pay cuts, but some who see this time as an opportunity to move are taking it.

Jay Streets, who owns a two-unit house in San Francisco, says he recently had tenants give notice and move to Kentucky this spring.

“He worked for Google, she worked for another tech company,” Streets says. “When Covid happened, they were on vacation in Palm Springs and they didn’t come back.”

The couple kept the lease on their $4,500 two-bedroom apartment until Google announced its employees would be working from home for the rest of the year, at which point they officially moved out. “They couldn’t justify paying rent on an apartment they didn’t need,” Streets says.

When he re-listed the apartment in May for the same price, the requests poured in. “Overwhelmingly, everyone that came to look at it were all in the situation where they were now working from home,” he says. “They were all in one-bedrooms and they all wanted an extra bedroom because they were all working from home.”

In early June, Yessika Patapoff and her husband moved from San Francisco’s Lower Haight neighbourhood to Tiburon, a charming town north of the city. Patapoff is an attorney who’s been unemployed since before Covid-19 hit, and her husband is working from home. She says her husband’s employer has been flexible about working from home, but it is not currently a permanent situation. While they’re paying a similar price for housing, they now have more space, and no plans to move back.

“My husband and I were already growing tired of the city before Covid,” Patapoff says.

Similar stories emerged in the UK, where real estate markets almost completely stopped for 50 days during lockdown, causing a rush of demand when it reopened. “Enquiry activity has been extraordinary,” Damian Gray, head of Knight Frank’s Oxford office told World Property Journal. “I've never been contacted by so many people that want to live outside London."

Several estate agencies in London have reported a rush for properties since the market opened back up, particularly for more spacious properties with outdoor space. However, Mansion Global noted this is likely due to pent up demand from 50 days of almost complete real estate shutdown, so it’s hard to tell whether that trend will continue.

There’s a wide world of speculation about the long-lasting changes to real estate caused by the coronavirus, but many industry experts say there will indeed be change.

In May, The New York Times reported that three of New York City’s largest commercial tenants — Barclays, JP Morgan Chase and Morgan Stanley — have hinted that many of their employees likely won’t be returning to the office at the level they were pre-Covid.

Until workers are able to safely return to offices, it’s impossible to tell exactly how much office space will stay vacant post-pandemic. On one hand, businesses could require more space to account for physical distancing; on the other hand, they could embrace remote working permanently, or find some middle ground that brings fewer people into the office on a daily basis.

“It’s tough to say anything to the office market because most people are not back working in their office yet,” says Robert Knakal, chairman of JLL Capital Markets. “There will be changes in the office market and there will likely be changes in the residential market as well in terms of how buildings are maintained, constructed, [and] designed.”

Those who do return to the office may find a reversal of recent design trends that favoured open, airy layouts with desks clustered tightly together. “The space per employee likely to go up would counterbalance the folks who are no longer coming into the office,” Knakal says.

There has been some discussion of using newly vacant office space for residential needs, and while that’s appealing to housing advocates in cities that sorely need more housing, Bill Rudin, CEO of Rudin Management Company, recently told Spectrum News that the conversion process may be too difficult to be practical.

"I don’t know the amount of buildings out there that could be adapted," he said. "It’s very complicated and expensive.

While there’s been tumult in San Francisco’s rental scene, housing developers appear to still be moving forward with their plans, says Dan Sider, director of executive programs at the SF Planning Department.

“Despite the doom and gloom that we all read about daily, our office continues to see interest from the development community – particularly larger, more established developers – in both moving ahead with existing applications and in submitting new applications for large projects,” he says.

How demand for those projects might change and what it might do to improve affordable housing is still unknown, though “demand will recover,” Sider predicts.

Johanna Flashman is a freelance writer based in Oakland, California.