Are the good days gone?

Finding a flat in a decent neighbourhood is becoming increasingly difficult. Unless you’re ready to pay big bucks. What happened to Berlin’s legendary affordable housing? And how did we get here?

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Photo by Sonia Teruel Rabadán
Finding a flat in a decent neighbourhood is becoming increasingly difficult. Unless you’re ready to pay big bucks. What happened to Berlin’s legendary affordable housing? And how did we get here? It’s a sunny October afternoon and a group of 20-odd people gathers in front of a handsome Altbau building on Hermannplatz. A Berliner would immediately know what’s going on – a flat viewing. The crowd consists of dreamy-eyed couples, young Arabic-speaking families and students in pairs, all armed with Schufas, letters of recommendation, bank statements, work contracts and introduction letters. It’s a small horde for the location, as the viewing was subject to registration. In this sought-after neighbourhood of ever-hip Neukölln, an open viewing would draw up to 50 or 60 hopeful tenants. Barbara, the realtor, is 15 minutes late. She suggests applicants take turns to avoid the rooms overcrowding. The blonde woman in her forties stands in the hallway and collects the portfolios of those who are interested in the apartment – and most of them are. The 70sqm, first-floor apartment with a small balcony is the ideal of anyone looking for a flat in this area. “I wanted to move to Neukölln or Kreuzberg, because most of my friends live around here” says Liat, a 26-year-old Israeli art student. “I have been looking since June. I thought I’d find a studio in a couple of weeks… But it’s been four months, my university has started and I’m still homeless, crashing at a friend’s!” Liat laughs, almost embarrassed. Although her parents’ support means that she could afford this flat, advertised for €1128 per month including utilities – which is still a good €2 less per sqm than the highest-pricing neighbourhoods – she doubts landlords would choose a student like her: “I think I should give up on the idea and start looking for a room in a shared flat. And even that I know won’t be either cheap or easy.” Rooms in the area go for an average of €600, she says. Realtor Barbara seems to confirm her worries: “It’s a competition. No one will remember how kind you were at the viewing, we are only looking at your documents.” With brutal honesty she asks: “If someone earns minimum wage and there is an applicant who has a salary of €4000, who would you pick?” Rio prices in Berlin
It’s a competition. No one will remember how kind you were at the viewing, we are only looking at your documents.”
Lara, a fortysomething lawyer from Brazil, didn’t need to fight hard to score her €2800, 100sqm Altbau apartment near Kollwitzplatz. Not that she believed it to be a bargain. Or her dream home. She was just pressed for time and determined to get her two children a house within walking distance of their father’s, for the one year the divorced parents would spend in the same city. “I tried searching on my own from Rio. I browsed rental websites and asked all my acquaintances and friends – in vain. Then, once in Berlin, I just entered the first big agency and asked for their portfolio.” Companies like Spot a Home, Wunderflats, Homelike, Nestpick and Home Coming are more than happy to help well-to-do foreigners, who struggle with German and the complicated paperwork, find a beautiful, furnished apartment in record time. “This was pretty much the only available and affordable option in the area I was looking in. And when I say affordable, I realise it’s super expensive for Berlin. But I could afford it because the rent I’d get from my Rio apartment easily covered it. It was free, so I took it.” Lara is a typical example of the demographic real estate agencies are preying on – foreigners from countries where housing is so expensive that they won’t be daunted by rents twice the local average – as a matter of fact, the Mietspiegel, or Berlin Rent Index (a yearly report that gives an average of the newly contracted rents as published by the Senate), lists Lara’s street at a worth between €12 to €17.54 per sqm.
Mietpreisbremse anyone? So how are these companies getting away with prices like these, given Berlin’s famously strict housing regulations? As prescribed by the Mietpreisbremse (rent cap), newly closed rent contracts must not exceed an officially calculated standard rent for comparable flats in the area by more than 10 percent. In theory, this should apply to furnished apartments too, which in Lara’s case would account for a maximum of €2000 per month. However, landlords are allowed to charge extra for the included furniture in the so-called “amortisation fee” – a maximum of two percent of the interior’s value. And if the apartment is advertised as a “luxury home”, the rent price can climb significantly, an option often suggested by the real estate agency, who directly profits from marked-up prices, by charging a percentage of the monthly rent. For Lara’s flat, this meant an exorbitant 20 percent of the €2800 rent, i.e. €560 each month! But then again – why would a landlord want to give such a high monthly cut to an agent? For Fabiana, the owner of Lara’s flat, it was a matter of convenience. When she and her husband decided to move to Frankfurt for work, they didn’t want to give up their Kollwitzplatz Altbau, and turned to one of the aforementioned agencies who advised in favour of the furnished rental option and the prospect of lucrative earnings. They also promised to take charge of the advertising, viewings and the chosen tenants while they were away. “It sounded very attractive. Not just more rent money than we thought, but also the comfort of having someone take full responsibility – all in one.” Two years later, Fabiana has mixed feelings: “Looking back, we realise that when giving 20 percent, and taking into account that the flat was empty for over two months, it isn’t the great deal we expected.” They’re now considering looking for an agency that will cut them a fairer deal, even at the cost of lower rent income.
The Airbnb ban: hot air? For Julia Wolters who’s been working in real estate for over 10 years, such practices are standard among profit-hungry realtors, but she says it doesn’t always pay off. “We see it all the time. Flats which are too expensive don’t get rented full-time. Of course you always end up finding someone to pay that money, but people are not stupid. They compare, and sky-high rents mean low occupancy.” She says that alongside taking a high fee, many agencies in Berlin offer little transparency in regards to their prices. Administration and service fees are often only presented once the contract is drawn up. “We only accept flats for which the total rent is clearly stated. Our customers can see in advance what they will end up paying, but that’s pretty rare in the industry,” says Wolters, who now runs Exberliner Flat Rentals. In her business, the burden of the commission fee is on the tenant, not the landlords – who get their flats advertised and rented entirely free of charge. “It allows us to have good offers and develop a long-term, trusted relationship with owners,” she says. It also means that she has no interest in artificially inflating prices. As a matter of fact, she’d offered Fabiana to advertise her flat for €1800 to €2000, which didn’t sound attractive to the young Belgian at the time. “We try to keep our prices within an acceptable range in regards to the Rent Index,” she says. “The crazy times of wild Airbnb rents are behind us. I feel the ban helped. We were given flats from owners eager to switch from short-term holidays to furnished renting.” She’s referring to what’s known as Berlin’s anti-Airbnb law which stipulates that anyone renting out more than half of their flat for less than two months at a time, must register as a business. The idea behind the government’s regulation was that holiday homes would become available for long-term rent at more reasonable prices. But while it is now harder to find an entire Berlin apartment on Airbnb, some users continue to simply rent the rooms out individually, flying under the radar and using different web portals. Like with furnished flats, one can cheat, and the impact of the new legislation on the rental market is hard to assess. “When the Airbnb ban came into action we thought it would be our chance to look for a great new flat in a neighbourhood we liked. Well, we were wrong,” laughs Martin, a young freelance graphic designer with “regular clients and good income”. Competition was too tough and rents too high in his favoured location of Kreuzberg, and he and his partner ended up moving into a 65sqm flat on Wedding’s Leopoldplatz, for €887. “People can’t afford Kreuzberg anymore, so they move to Wedding.” To him, Berlin’s definitely changed. “Berlin is no longer the mecca for young creatives that it used to be, we need to accept that. It’s actually turning into a small New York.” One can argue Berlin is still way cheaper than NYC, Paris or London, but the average income is also comparably low. Our tip: secure a job abroad and get a home here – that may be your best bet for enjoying the famous Berlin lifestyle these days!
Exploding rents According to the latest Wohnmarktreport (a comprehensive annual survey of the Berlin market by two real-estate investment companies), rent prices in the city have increased by 8.8 percent between 2016 and 2017, and a whopping 54 percent over the past decade. Last year, the average rent for Neukölln flats on the market was €9.83 per sqm, while some neighbourhoods averaged €12.22 (and up to €17.92 in Schillerkiez). In Prenzlauer Berg one would have to count with up to €12.67 on average (or up to €18 for Kollwitzplatz), according to the report. Those who desire to live in Mitte have to reach even deeper into their pockets and pay about €15 (above €20 for Unter den Linden/Friedrichstraße/ Invalidenstraße). Popular neighbourhoods in Friedrichshain, Kreuzberg and Schöneberg, are, on average, around the €13 mark per sqm – up to €18 for the top tier. Students are among the ones most affected by the increasing prices. A fresh study published by the Cologne-based German Economic Institute shows that students pay 67 percent more rent now than they did in 2010. After comparing the big German cities, they’ve also found that Berlin has seen the most dramatic rents increase in the past decade. The study looked at 30sqm apartments with good public transportation options to the universities and could barely find anything under €700 including utilities.