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Comment by WalterBright | Hacker News Reader

Rent control never works, but that never dissuades governments from trying it again and again.

https://en.wikipedia.org/wiki/Rent_regulation

It works reasonably well in the rest of Germany.

As for it not working in Berlin, I have a hard time to come up with _anything_ that works there, so my hunch would be that the housing market in Berlin is broken not because of rent control, but because it's Berlin.

It "works" (in that it doesn't cause problems like rationing by other means like queueing, under the table payments, subletting, or any one of the myriad other problems rent control produces) because it actually does nothing - it results in rents which are equal to what the open market price would have been.

Ultimately, if you want to reduce rents AND have a functioning market, you have two options (or a combination of them): (1) reduce demand, (2) increase supply.

You can't build forever anyway.. the demand is going to shrink in the future. Look at those countries where in 80s and 90s built too many houses (Italy, Spain for instance).. most of them are rotting now or are abandoned due to poor economy

> it actually does nothing - it results in rents which are equal to what the open market price would have been.

Lots of people living in rent-controlled apartments around the world would disagree.

With your pithy reply you miss the critical fact that the german version of rent control isn't actually rent control. It just pegs how much rent for any given apartment can increase to how much the rent in that area has recently increased. In practice this means that all rents increase at the same rate as before the "control" was put in place.

And it screws over anyone who wasn’t lucky enough to win that lottery.

The lottery of having already lived there? Only in the same sense as if I have a doll, you're screwed out of having that doll.

Rent control diminishes the incentive to make new housing, and causes rents on remaining housing stock to rise, generally. It privileges the people who have held onto their apartments for a long time at the expense of everyone who has had to move recently, at least as it’s been implemented in American cities.

Doll ownership isn’t a great analogy for housing.

It also nails the feet of the people who live there to the floor, because they know they can't get such a deal again if they move.

This is economically and environmentally inefficient, because it traps people in less desirable jobs due to proximity, and prevents them from moving closer to work.

Ah yeah, another huge problem that I forgot to mention. This really kills the liquidity of the market. You see the same dynamic with sales in CA due to Prop 13 - this makes it so that elderly people can’t afford to downsize, because their property taxes would go up 10-20x for many of them if they moved to an equivalent place, and it’s economical for people to sit on extremely valuable undeveloped land and wait for it to appreciate, because there’s next to no holding cost.

If there weren't for things like rent control or prop 13 those people would just be suffering anyway as rents or property values would increase where they live as well. So I don't see that argument making much sense. Thing like prop 13 is probably damaging because it inflates property values however.

Have you ever noticed the odd fact that children sometimes grow up and wish to rent a home themselves?

They already might live there with their parents, but if they want to move out and stand on their own feet, they would have to pay double or triple compared to their neighbours. Hence they can not move out from mum's basement if they don't want to move away.

Of course this helps resident retirees who don't move and whose children have moved out, even if it is an economically retarded policy -- and retirees vote. Same as California's prop 13, really.

Wait is subletting an actual problem in itself? Am I missing something?

I know if done in excess it could lead to fire code violations, landlords dislike not getting an increased share/concerns about increased maintenance, and would turn controlled rent holders into beneficiaries of a free cash stream over others not privledged but those are either technically separate issues or already in place really for the last one without subletting.

In this context (ie subletting against the terms of the agreement), I'd say it's a direct interference with the property rights of the owner, which to me is a problem, although I accept others might take a different view on that. But it also often comes with all the usual issues with gray markets - subtenants might in practice have very few enforceable rights, tax evasion can be common, etc etc.

It results in rents which are equal to what the open market price would have been.

This is a pretty strong claim to make. Can you provide data to substantiate?

The German Institute for Economic Research (DIW)'s study from June 2016 came to this conclusion:

https://www.diw.de/de/diw_01.c.535261.de/themen_nachrichten/...

> It works reasonably well in the rest of Germany.

How? Pretty much all large cities are much more expensive than Berlin, rent-wise (and in most other things).

Because it's a very effective populist policy to get support from the electorate.

It works fairly well in NYC, too.

Not without tradeoffs, mind you. But it does basically work.

So where does "not rent control" work for long term affordable housing in in-demand areas? I don't think I know of any city comparable to Berlin, in at least size and prospects, that hasn't had significant rent increases in the last five years.

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