Real Estate

ZIA President on the rent cap: “Regulation of the rent market failed”

Two rooms for 1,300 euros cold: after the rent cap has gone out, rents in the metropolises continue to rise. The real estate industry has a clear answer to this.

The Berlin rent cap has flopped and is now officially unconstitutional. For some it was a reason to mourn, for others a reason to be happy – and that far beyond Berlin.

The rising rental prices in the country are also making waves outside of the capital. Affordable living space is becoming scarcer almost everywhere, and in rural areas, too, rising prices are increasingly crowding out the locals. But what really helps against ever increasing rents: tougher government regulations or letting the market run free?

t-online spoke to Andreas Mattner, President of the leading real estate association ZIA, about this. He calls for more new construction – and has a clear message for the Greens with a view to the upcoming federal elections.

t-online: Mr. Mattner, in Berlin the rent cap has been history for a week. How many bottles of sparkling wine have you drunk since then?

Andreas Mattner: None at all, it makes me all rather sad.

Why?

Because the Berlin Senate has dared an experiment on the backs of the tenants that allows only two conclusions. Either the political decision-makers did not know the Basic Law – or they deliberately ignored it for ideological reasons. The latter is necessary because experts had warned the Senate against this law.

What do you mean by that?

Anyone familiar with the Basic Law knew beforehand that the rent cap was unconstitutional. The tenants’ repayment problems were also foreseeable. The end of the rent cap is the sad climax of a housing policy that has been misguided for years and that does not do justice to the goal of creating more affordable living space. Or to put it another way: State regulation of the housing market has finally failed.

Andreas Mattner: The president of the leading real estate association ZIA does not see further regulations as a solution to the housing shortage in the country. (Source: ZIA)Andreas Mattner: The president of the leading real estate association ZIA does not see further regulations as a solution to the housing shortage in the country. (Source: ZIA)

Or maybe not: After the rent cap failed, the desire to expropriate large housing groups should inspire even more people. Is the rent problem dividing Germany?

I do not believe that. If such a rigid rent policy were desired, the SPD would have to have much better poll numbers, after all, it has been calling for them for a long time. But most people know: expropriations create empty state coffers because of the compensation, but no new housing. In addition, the rent cap also showed the consequences of government intervention. The offer has halved, and anyone who previously could afford a rent of 20 euros per square meter on Kurf├╝rstendamm suddenly only paid around 6 euros. Many people see this critically.

At least as many are likely to be afraid that they will not be able to pay their rent and repayments now. Right?

No. In the real estate industry, we have been preparing for the tilting of the rent cap. The real estate companies will find a social solution with their tenants. As a leading association, we adopted a code of ethics with the German housing industry and the German Tenants’ Association as early as 2018, and expanded it to include provisions such as hardship clauses specifically for the failure of the cover. The landlords will find amicable solutions.

Andreas Mattner, born 1960, has been President of the Central Real Estate Association (ZIA) since 2009. From 1991 to 2008 the lawyer sat for the CDU in the Hamburg parliament. Since 1993 he has been a member of the management of ECE Projektmanagement, which is best known for its shopping malls. He was also a member of the CDU Economic Council for ten years.

But that doesn’t change the high rents. In Berlin, two cold rooms sometimes cost 1,300 euros per month. Is that still normal?

When people from New York, London or Tokyo hear about rents in Germany, they don’t understand our discussion. It’s like this: In many major German cities, those responsible have thrown the cart in the mud due to insufficient housing construction. And now the problem can hardly be solved – except by building, building, building.

We already know this mantra. However, it takes a while for a house to be finished. How, if not through government intervention in rents, can the government help tenants in the short term?

Correct, an active housing construction policy only becomes noticeable in the medium and long term. In the short term, it is therefore a matter of the state providing targeted support to those people who have difficulties with housing costs. One possibility for this would be, for example, to increase the housing benefit and make it accessible to more citizens.

A nice subsidy for the real estate industry.

Not correct! The money doesn’t go to us, but to the tenants who pay normal city rents.

Critics say that real estate should not even be an investment object, only speculation on the real estate market causes high purchase prices and rents. What do you reply to them?

There is nothing wrong with people investing in real estate per se, and the state still has the largest share of the rising real estate prices. High real estate transfer taxes, thousands of requirements in building law, more regulations for climate protection, participation in infrastructure costs – all of this ensures that real estate prices rise. Then there are other factors such as the price increase in building materials. It’s like the gasoline, half goes to the state treasury, then it also works if housing benefits are paid.

So you’re saying that speculation isn’t driving prices at all?

No. But if speculation helps to create living space, then speculation is not to be demonized. Because one thing is clear: we will never close the housing gap with government engagement alone. Experience from the GDR shows that a totalitarian central state does not mean that there are more or even better apartments or good administration. For the most part, private commitment is required to create enough living space.

There will be general elections in September and rents in the cities will play a central role in the election campaign. What do you expect from the next federal government?

I expect politicians to learn lessons from the Berlin rent cap – and recognize what I have already said: The regulation of the rent market has failed and does not solve the problem.

The SPD, the Greens, the Left Party see it differently. In their election programs they even advertise a nationwide applicable rent cap.

That’s true. However, these election programs were created before the Berlin rent cap failed. I therefore hope that the parties will question the methods of regulation. This is especially true for the Greens, who have a great chance of co-governing the country. You have to deliver apartments to the government after a few years and that is not possible without the private sector who are supposed to build the lion’s share of all apartments.

The opposite has recently been observed in Berlin, with the Greens calling all the louder that the federal government should now ensure lower rents.

I have always got to know the Greens as a party that analyzes exactly what effect which state instrument has. Of course, the Greens also have a substantive corset into which their politics must fit. However, you are always open to arguments. I’m building on that now. My appeal to the Greens is therefore: If you have the right to rule, if you want to be successful as a party, please remain sensible and pursue an ideology-free housing policy!

A possible government coalition would be a black-green alliance. How far should a potential Chancellor Armin Laschet get involved with Annalena Baerbock?

I do not want to give advice to anyone, neither Mr Laschet nor any other possible chancellor. The surveys are far too volatile for that. Who knows, we might get a three-party coalition.

Are you saying that you don’t care which coalition governs Germany?

No of course not. There are government constellations that think more progressively than others when it comes to housing policy and the real estate industry. In the end, it is the result that counts: the next government must be measured by how much new living space it will create in the cities.

How can this be done?

At least in the seven, probably even in the 20 largest cities in Germany, incentives are needed for new apartments to be built, including financial ones. In addition, building law must be simplified. In the past 30 years, 5,000 building codes became almost 20,000 – that’s far too many. And finally, we quickly need more building land in the big cities and in the surrounding areas of the metropolises.

There is enough space in the surrounding area and even more in the rural regions, and real estate prices and rents are relatively low. How much will this gap between town and country widen?

I think another city escape is possible. Even if many people – not least because of Corona – are now realizing that life outside of the trendy districts has advantages, the metropolises and their surrounding areas remain attractive. In this respect, the gap will continue to grow for a while.

Against this background, what is more worthwhile: buying a three-room apartment in Munich or a house in Vogtland?

That depends on your own needs and lifestyle. One of the most important factors in many people’s lives will remain work in the future – and despite more home offices after the Corona crisis, this will still take place primarily on site. This means that a large number of people will continue to want to live close to work. The decisive factor will therefore be how well the more rural areas are connected to larger cities, by rail and rail, but also with fiber optic cables and the Internet.

Thank you for the interview, Mr. Mattner.

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