Updated: Fri, 12 Apr 2013 07:48:35 GMT | By CBC News, cbc.ca

Berlin's skyrocketing rents leading to forced evictions



Berlin's skyrocketing rents leading to forced evictions

In one part of Berlin, a Turkish family is being evicted from the flat they have lived in for 21 years. In another neighbourhood, an entire block of tenants is taking their landlord to court.

All across the city, rents are increasing while salaries stagnate — forcing longtime Berlin families out of their homes to the outskirts of the city, where they can afford to live.

"We are here at Wriezener Strasse in front of a building where an eviction will be happening soon," said George Ledjeff, one of about two dozen people protesting outside the flat of Sevdi and Asyun Turkan, who recently lost a court challenge over a rent increase they say they couldn't afford.

"It's a very big problem," said Ledjeff, who has himself experienced a forced eviction by the same company. "Every year at least seven to eight thousand people are evicted by force and there's no system to take care of them. This family has a small kid. It's awful. We are here to support the victims so they know they are not on their own. There are people caring for them."

In February, about 500 protesters at another eviction scuffled with police and set cars ablaze as tensions heated up over the city.

Rent in Berlin is still relatively affordable compared with other European capitals, but as the city attracts more people and foreign investors, residential real estate prices have increased 32 per cent since 2007.

Available housing is in scarce supply, which means the city's rock-bottom rent prices are now history.

There are many reasons for the rising rent — supply and demand is one. Local governments are pushing up property prices and development costs by limiting the amount of land zoned for residential purposes. In the last 10 years, there's been a decline in the number of subsidized housing units in Germany, down to 1.6 million from about 2.6 million. The German Renters' Association (DMB) estimates there is a shortage of about 250,000 apartments nationwide.

By law, rents for existing tenants can't increase by more than 20 per cent in three years. However, the federal government's energy transition is inadvertently passing on costs to tenants. As landlords do "energy upgrades," they are allowed to raise the rent by more than that.

- Read about a tiny German village that's a model for the country's energy revolution

Meanwhile, Germany has also become a haven for Europeans seeking a safe place to park their money during the euro crisis.

"This is the capital of the strongest economy in Europe and we experience a lot of interest from buyers from all over the world," said Jacopo Mingazzini, managing director of Accentro, a Berlin-based company selling apartments, and Estavis, a company concentrating on residential real estate in Germany.

Last year, he sold more than 1,000 apartments, one-third of them to foreigners from 40 countries.

"Most of them are investing to have a safe haven for their money. Seventy-one per cent of our buyers last year rented out apartments and only 29 per cent were buying empty apartments they could live in, so the main motive for the foreigners is to invest in a safe manner in a market that is growing," Mingazzini said.

Foreign buyers now make up about 30 per cent of the market and the number of private buyers has increased by 35 per cent in the last five years. Whereas the real estate boom in 2004-07 was fuelled by a handful of large institutional investors seeking short-term profits, today's investors include private individuals seeking long-term security in the German capital, hoping to convert their modest assets into valuable real estate in case the euro goes bust.

Mingazzini said Germany is very different from Spain, Ireland or Italy, which fell into real estate bubbles and collapsed.

"I don’t know of any other town in Europe where I would rather invest, because the prices are going up, the rents are going up.… If you compare the household income with prices, the fundamentals are still very good in Germany," he said.

"Of course, growing rents will lead to changes in neighbourhoods. Those who can pay more rent are in a privileged situation and can chose a more central location, and those with less budget is forced to go where his budget leads him."

Pushed out

And that's exactly the problem, say many Berliners, who complain they are paying a hidden cost of the economic crisis.

They say the new apartment owners make a few improvements, then raise the rent to recoup their investment.

Joern Wegner and other tenants in his Prenzlauer Berg building are taking their Luxembourg-based landlord to court this month because the investor wants to build balconies for each flat and then increase the rent. The company has already built balconies for two vacant apartments and nearly doubled the rent.

"I have 38 square metres, a kitchen, bathroom, a studio apartment and I pay 320 euros a month including heating. They tried to change it to 460 or 500 euros in May," Wegner said, adding he earns less than €1,000 a month as a freelance writer and PhD student.

"I don’t even want a balcony. Because it’s so hard to get a new flat in this district, in this city, I have to do everything I can to stay in this flat."

Next door, Kolja Kosim and his girlfriend both have good jobs, but feel the same way.

'With the balcony, they want to charge us 100-200 euros per month more. We can't afford that. We would have to go to the outskirts and that would be stressful, because we both work in the city and we would have to take long trips to the places we work," Kosim said.

At a court hearing April 5, a judge ruled they don't have to accept the balcony and the higher rent, but the landlord can still appeal to a higher court — or propose other improvements.

"Looks good, but we don't know what they will try next to get us out," Wegner said.

Political solutions sought

It's not just Berlin. People seeking a new apartment in Hamburg, Munich, Dresden, Frankfurt, Dusseldorf or Cologne are paying at least 25 per cent more than they pay for the same size and standard elsewhere.

The rocketing rents are becoming a political issue in Germany, where about half of voters rent rather than own their homes. In Berlin, the percentage of renters is even higher, about 85 per cent. The country will hold national parliamentary elections in September.

"This is a hot topic and already many political parties are introducing parts of their election programs which concern the rental issue. Some of them are proposing an upper level on rent increases," said Konstantin Kholodilin, an expert in real estate markets at the German Institute for Economic Research.

The only way to tackle this problem is to increase construction rates on new, affordable apartments, he said.

"The demand has increased in the last 10 years, but the housing stock remained unchanged so we experience strong price increases."

That’s not a bad thing, Kholodilin added.

"If I were the mayor of Berlin, I would be happy about people wanting to live in my city, because these people bring new energy and ideas and new money to develop the city. The only issue is how to tackle the problem of conflicting interests of the old Berliners and the new Berliners," he said.

"The government of the city is struggling to keep this mixture of people having different origins and belonging to different social layers to live together and not segregate them into ghettos for poor and ghettos for rich. It's a difficult problem and I hope it will be solved."

Mingazzini agreed.

"We can't let Berlin stay unchanged after 1990. We should be glad investor money is coming here from outside. We should be glad about the development Berlin is taking and not complain about normal progress and change," he said.

Back on Wriezener Strasse, the protest is breaking up.

Sevdi Turkan says the city-owned property company, Degewo (German Society for the Promotion of Housing), is giving his family a few more days to move out of their apartment.

In the meantime, the Turkish-born couple have found a new flat, farther out toward the edge of the city. They'll be paying twice as much as they’ve paid until now.

"It's been very difficult for the whole family. Twenty-one years we were here," Turkan said through his interpreter, George Ledjeff.

"What we need in Germany are human rights," Ledjeff added on his own.

"Berliners are pushed out of the city, especially the minority groups. Nobody cares about them."

External Links

Alliance Against Forced Evictions in Berlin
German Institute for Economic Research website

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