Berlin: A City Plagued by Gentrification
By Noe Padilla
BERLIN — In today’s Berlin it’s hard to find an area of the city that is free of construction. Cranes are visible in every neighborhood, and almost every street has at least one building being renovated.
The notion of rapid change has been an element of Berlin’s identity since the 1989 fall of the Berlin Wall. Over the past three decades, regions within Berlin which had housed many of the city’s working class and immigrant-filled neighborhoods have now become expensive and aesthetically clean neighborhoods. Kreuzberg and Neukölln are a primary examples of neighborhoods which have squeezed out many of their former residents for newer wealthier tenants. Higher priced cafes and yoga studios have replaced the corner pubs.
The steady influx of people and money has meant the cost of living has also grown exponentially, which has led to gentrification across Berlin. The gentrification spread from Mitte and Prenzlauer Berlin in the newly free east to Kreuzberg, Neukölln and Friedrichshain, which had been low-cost border zones along the former Wall that suddenly found themselves at the heart of the city.
It has created a crisis within the housing market and has ignited the frustration of renters within the city. Over the past few years Berliners have been protesting increasingly loudly in an effort to force the government to do something.
Finally, this past June, Berlin’s municipal government announced there would be a five-year freeze on rental increases within the city. Although this was a victory for renters, housing activists are still skeptical about whether it will be anything more than a Band-Aid measure, rather than a solution to a historically complex issue.
At a time when the economy is booming and 30,000 to 50,000 people move to the capital in each year, it’s inevitable that gentrification occurs.
In Germany, gentrification shows up differently than the United States. In the U.S. it’s common for a real estate corporation to buy up a whole community just to tear it down and construct luxury homes and apartments for new, wealthier buyers.
This is not the case in Berlin, since a majority of the housing units are rental apartments. Realtors aren’t able to reconstruct apartments without displacing a large number of individuals. So, within Berlin, gentrification is felt through rental increases, loopholes that allow eviction, and the increasingly difficult task of finding affordable housing within the city.
Marijana Filipeti is one newcomer to Berlin who spent two years trying to find stable housing after moving to the city from Croatia.
When Filipeti, 26, came to Berlin, she knew that finding an apartment would be difficult, but she never expected just how hard it would be. For the first six months, she was constantly moving. At certain points she stayed in a farm, in a reconverted squatter building, and even in her friend’s apartment.
Finally, she was able to obtain a three-year lease on a relatively large room for $670 a month, but she still found herself in some trouble. Before she signed the contract, the landlord informed her that the rent was so cheap because in a couple months the roof of the apartment would be renovated, a job lasting a “few months,” and that the rent would stay the same.
During the period of renovation, Filipeti was forced to stay with an elder artist which hasn’t worked out. She decided to move to a new apartment after a few months of living with the artist and is currently is renting out an apartment from a doctor who is living outside of the country.
“We were there at least half a year, and again, the situation was not so very pleasant,” said Filipeti. “That roof is still under construction and it’s been more than a year and a half now.”
How did it get this bad?
Gentrification has recently reached a tipping point for the public, but the issue has been creeping up in Berlin since the 1989 fall of the Berlin Wall. And its roots go even further back.
Konstantin Krex, 30, a local activist on housing issues, says there is complex relationship between gentrification and the city.
During the 70s and 80s, West Berlin became a hotbed for people who want to live an alternative life, Krex said.
“They had a problem with exploding rents because people from all over the country and also people from all over the world that were interested in Berlin as a divided city came, and there was barely anyone investing in the buildings,” he said. “So those were buildings that you could actually live in, because they just had a certain standard. You would need a coal oven to be able to heat your apartment in winter.”
There weren’t enough housing units for the number of people coming in, who benefitted from government subsidies and a release from military services to live in West Berlin as a bulwark against communism. “A lot of students came, a lot of people who did not want to do the military service, because West Berlin was the only place in West Germany that you could go to,” said Krex.
So, the government began to tear down the old tenement buildings that were destroyed by the war and began to build new complexes to meet the demand.
Krex views this rebuilding of the city less as a form of gentrification, than a product of post-war reconstruction.
“Gentrification is market force. It just is the outcome of letting the market decide who is going to live where and who’s paying the highest price. That is gentrification,” said Krex.
But the 1989 opening of the Wall directly caused the modern gentrification problem. Post-Wall, the city found itself in a strange financial predicament. When Germany was divided, most of the Berlin’s industry had left to West Germany. This left the city starved for money, and after German unification speculators took notice of the city’s struggle.
“When the wall came down, real-estate speculation started to kick in, because people were anticipating that Berlin would become the capital again,” Krex said. “A lot of really clever real-estate investors started buying the beautiful old tenant buildings for literally nothing. They were thinking long term.”
During this period, the cost of living was relatively low compared to other major cities around the world. It was common for people to be able to afford to live in Berlin by working only “20 hours a week,” he said. But what may have been a suitable lifestyle for artists and thinkers did not make Berlin an economic powerhouse.
When the 90s rolled around the population dropped. “Young families were moving out,” Krex said, which lowered the overall wealth of the city. The expected economic boom never materialized and left the city in a financial rut, which forced Berlin politicians to take an unpopular measure in the late 1990s.
“Even though it was ruled by a very left government, they had to — or they thought had to — sell two-thirds of the publicly-owned housing,” said Krex. “It was mainly sold to really big financial investors.”
Many of the building were sold at a rate of $2.25 to $3.40 per square meter, and now many of those same buildings hold a value of about $11.25 dollars per square meter, according to a study conducted by Berlin HYP, a mortgage lender, and CBRE, a global real estate investment firm.
Now that the city’s economy has recovered, the city government is trying to buy back property to help provide affordable housing.
Meanwhile, even those who have been in Berlin for decades have recently faced eviction as landlords find any loophole to be able to avoid rent control laws and raise the rent.
In many counties in the U.S., landlords can increase their tenants’ rent by 10 percent as long as they hold a periodical rental agreement, if an individual’s lease is up for renegotiation, or if a lease allows rental increases.
But Germany has the Mietpreisbremse, a 2015 law that states landlords are not allowed to increase the rent unless they have made a ‘modernization’ investment in the apartment. For example, if a landlord decided to renovate the heating in an individual’s apartment, this would justify increasing a tenant’s rent under the regulation, which was designed to protect the tenant against rapidly rising rental costs. But it does not apply to new housing units which were constructed after the law, nor to pre-furnished housing.
And increasingly, investors and realtors have found loopholes to get around the system.
Economic Lecturer Ulf Heinsohn lost his apartment of 16 years in a prime Kreuzberg location to one of these legal loopholes. In Germany, an individual’s right to housing is strongly protected and it’s generally quite difficult for a landlord to kick someone out of their apartment. Tenants can receive an ‘admonishment’ after their first mistake — such as missing a rent payment -, but this isn’t enough to kick an individual out. It’s not until the second admonishment that a landlord has the right to evict a tenant, and each admonishment expires after three years.
“If it’s older than three years, the landlord cannot use it anymore,” said Heinsohn.
Heinsohn’s landlord used this clause to evict him from his home after he paid his rent a bit late one month due to a cash flow problem.
After the initial ‘admonishment’, Heinsohn took care to pay his rent on time, mindful of the looming consequences of a second infraction. But near the end of the third year after his first admonishment he found himself in some trouble.
In January, 2014 he withheld half his rent because the heater to his apartment was broken and German law states that when a tenant’s living conditions are uninhabitable, he has a right to request a rental decrease until the problem is solved.
“Heating was part of the contract and since this was found in every single room, I could reduce the rent by 50%,” said Heinsohn. Since the heating was not repaired in February, he paid just 50% of the rent for February as well — but failed to send a notice saying it was for the same reason. “So, he sent me a second admonishment,” Heinsohn recalled.
The landlord argued that since Heinsohn hadn’t alerted him that he was claiming the second month’s discount, Heinsohn had in fact failed to pay the full month’s rent and that was a justifiable reason to evict him.
It was, Heinsohn said, a pretext. “It’s not about, ‘I want to get you out.’ It’s ‘I want to force you to pay more rent’,” Heinsohn said about his second admonishment. “The landlord was essentially saying ‘I have canceled the lease now, but I’m willing to sign a new one with you with a 90% higher rent’.”
Instead of signing a new lease, Heinsohn sued the landlord for unethical practices. For the next six months, he was in court fighting his contract cancellation, and every time the court ruled in his favor.
But the landlord fought back and, on the fourth appeal, he won the case. Heinsohn was forced to move out of the apartment and pay the rent for the six months period of the court case.
Meanwhile a law was passed which allowed landlords to charge a ‘step-rent’ essentially the current market value of the apartment, during an individual’s grace period. This meant that Heinsohn would be forced to pay an unexpected sum of money to his landlord for the six months they were in court. He has filed a separate lawsuit against that says that while he no longer wants to live in his old apartment he will go to court to fight the “broken” system that affects rents throughout Berlin.
The issues plaguing the current market stems from the city’s history financial debt after the fall of the Wall, says Heinsohn.
Particularly, it was after the 2008 financial crisis that Berlin started to feel the effects of gentrification. People took their money out of financial assets and fixed interest investments such as bonds and life insurance and began to invest instead in the real estate market, says Heinsohn
“They begin to buy real estate, which drives up the real estate prices because of the sudden extra demand, which is not met by a sudden increase of supply,” he explained.
“So, it’s a certain group of tenants that are now squeezed,” said Heinsohn. “They have to increase the rent at the expense of those who cannot afford to buy a house.”
His own personal experience with a landlord who sought to replace longstanding tenants with new wealthier tenants, is typical.
This squeezing of the middle class has been the face of gentrification for many Berliners. The idea that realtors have been abusing their power in order to make a profit instead of recognizing the human element of the situation, is what’s been irking Berliners.
A law like the federal Mietpreisbremse was an attempt to address this issue, but even after being in place for almost four years, new problems keep emerging.
On June 29, Berlin created its own law which freezes any rental increase throughout the city. The City hopes that this move will reassure tenants that the government is listening to their worries and complaints. But even now renters are skeptical about whether this law will stop the gentrification that plagues renters.
Local resident and activist Krex is one of those.
“I’m not sure if this can really stop the forces of the market. The force of the market will be there as long as there are 500 people wanting that one apartment,” he said. “You have to find ways of regulating that.”
Noe Padilla is a Senior at the UC Santa Barbara who is majoring in philosophy. He is also working toward a certificate in Journalism is the News Editor for The Bottom Line, one of the university’s two newspapers.
