Housing Markets are “Strained” Wherever the Issue can be Exploited to Win Votes

Published on 2014/04/15
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It is perfectly justified to criticise the fact that the notion of a “strained” housing market, which is the sine qua non of the rent freeze, remains hazy and is defined nowhere in the draft bill. The criterion likely to be used in real life is this:

The housing market will be strained wherever such a diagnosis and the concomitant implementation of the rent freeze will win votes for the incumbent government.

You will remember that the rent increase cap for existing flats was already lowered, and that the German states were authorised to lower it wherever they identified a strained housing market. State-level politicians made quick and exhaustive use of the option. Berlin’s housing market, for one, is officially strained citywide as a result. But is that actually true? Of course not. There are plenty of apartments to let in Spandau, for instance. Is it unreasonable to expect a tenant who is paying a square-metre rent of 4.80 euros on an ancient lease for a flat in a trendy district to move to Spandau? Do New Yorkers have a fundamental right to live next to Central Park? Does everyone have a fundamental right to drive a Bentley?

Dissenting voices can be heard from the Christian Democrat bloc who oppose certain provisions in the rent control draft bill. But we must not forget: The Christian Democrats themselves called for a rent freeze in their election manifesto. And it has been written into the coalition agreement. So it is safe to assume that the rent freeze will indeed be enacted – and that we will see only details corrected at best.

About the Author

Dr. Rainer Zitelmann is one of the leading experts for the strategic positioning and communications of companies.