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Are furnished Flats to blame for the Housing Shortage in Berlin? The Fact-Check

Christine Kandler Von Christine Kandler
Facts and Faces

When George Clooney comes to Berlin to film, he lives in a furnished apartment- just like his other acting colleagues, and whole film crew.

George Clooney is also quite rich. He earns tens of millions of US dollars per film. He also runs a small tequila company, which he sold for 1 billion dollars. It can also be assumed that he doesn't advertise environmentally harmful coffee capsules for nothing.

When George Clooney comes to Berlin, he rents a very generously proportioned luxurious apartment – equipped with the finest of everything. Such an apartment costs perhaps 12,000 €/month, with a size of 120 m². George Clooney would doubtlessly not consider this an extortionate rent.

Spiegel Online and other media probably do. In the last months there have been countless repetitive reports about alleged misappropriation and exploitation through the letting of furnished temporary housing. The rent freeze and rent cap in Berlin has also been introduced, which will also apply to temporary furnished living. It is ridiculous to consider that should someone in an income bracket like George Clooney rent a house that was built before 2014, he may only pay a maximum of 9.80 € rent / month per m² - plus 70% luxury surcharge, and 1€ if it is a good location.  

It's true that the situation is out of control and urgent action is needed. But the question remains - what should be done? Neither the rent freeze, or a clampdown on furnished rentals will solve the problem. Before we can begin to discuss meaningful solutions, it must first be established what types of furnished apartments there are, what rights landlords and tenants should have, and why temporary housing is important for large cities. However, even the highest quality media publications seem to be more concerned with polarizing opinion, and ultimately deepening the problem. 

One article in particular published in Spiegel Online last month; "Trend on the rental market 68 square metres, furnished -3230 Euro" by Henning Jauernig, provides a polemic and one-sided portrayal of temporary rental.

To give a fuller view of the developing crisis, the following article will challenge the main statements of Jauerning's claim. The author doing the fact-checking has experience arranging temporary furnished apartments in Berlin for 15 years.

Statement One: 'Between 2005 and 2018, the number of furnished apartments in Germany quadrupled to 127,500'

A distinction must firstly be made here between short-term and long-term furnished rental. While the former are targeted at regular tenants, long-term furnished flats are more commonly found in Mikroapartment - complexes built for students. There is also an important difference to be aware of between private landlords who rent out furnished apartments and serviced apartments. The latter are commercial, hotel-like rentals, where customers/tenants can also book services that not private landlords do not offer.

In claims such as the above, it can be gathered that these types of furnished apartment have been lumped together. This can be partly down to the fact that rental platforms do often mistakenly advertise a large number of serviced apartments, i.e. offers that have not “attracted“ the rental market.

“Trend on the rental market 68 square meters, möblierte -3230 euros“. This is the headline of the article. However, the reader is not told what kind of furnished apartment this is about, how many tenants can live there, any details on the standard of furnishings and fittings - and whether other services are offered. It fails to recognise that a rental rate for a luxury apartment whose target group is CEOs, is not the same thing as charging extortionate flat rates for all apartments. Rip-offs and extortion – these terms are a reaction to any rent over 9,80€ per m². Why shouldn't a CEO, for example, who has worked for a higher income, have the right to rent an expensive luxury apartment if they stay a few months in another city? Will expensive, high star restaurants also fall under the same criticism of being a ‘rip-off’ because not everyone can eat there?

If an apartment is offered for 3230 Euro as in the example and is a serviced apartment, this includes 7% VAT, and can be rented out to the target group – tourists - for less than two months. Private landlords are only permitted to rent to people who are in a city for professional reasons and who rent for two months minimum. Anything else can be judged as misappropriation. There is an exception that the apartment may be so expensive because it can be rented for only one month – but you are unlikely to find more information about the complicated requirements of this in the article.

Statement Two: Number of furnished flats amounted to 3% of total supply in 2007, 14% already in 2018

In this claim it is suggested that 14% of all apartments offered in Germany are furnished apartments. It is, however, unclear how such an assessment was made. Presumably, only offers advertised on the most common real estate platforms were found. It must be taken into account that these do not reflect the total figures of all rented flats. In Berlin, for example, cooperatives are statistically the largest landlord group. These apartments are not marketed by well-known platforms such as Immobilienscout etc. It’s also a given that competition for affordable apartments is always high, and any rentals available for more normal prices won’t stay online for long. What remains are the less attractive and overpriced apartments. Empty flats are usually also rented out by other means, such as via housing cooperatives. These usually have long waiting lists, so most apartments are not actively advertised at all.

The fluctuation is much higher for furnished flats on a temporary basis. Most tenants only rent for a few months so the same flats will be offered again and again. If it is clear when the tenant will move out, even if it will be several months before that date, the furnished apartment will become available again. Unfurnished flats are usually, if they even appear on platforms, are only ever online very briefly and then rented out over years or decades. Furnished apartments, on the other hand, are almost always online. Therefore, it be devised that this example of figures is a misrepresentation.

Statement Three: Since 2005, 10,000 apartments with complete furnishings have been added in Berlin, and one-third of all apartments offered there are now furnished

Here, too, the question remains unanswered of where this data comes from, and the proportion of commercial serviced apartments and student flats that make up this figure. By the way, assisted living apartments are also apartments with complete equipment that are offered.

The article deliberately does not specify these statistics. This mistaken breakdown of the facts merely serves their argument by considering furnished flats as one category. By clarifying further, they would offer readers the opportunity to understand why furnished apartments exist, and what benefits they have. Instead they present the simple world view, a war between exploitative landlords and ripped-off tenants. This inflammatory idea is predominant in an overwhelming number of articles on the subject of furnished renting. To present more differentiated statistics with this statement would be to undermine their argument – which brings into question if these figures can be trusted at all.

Statement Four: 'Landlords try to push through even higher rents with furnished flats and get even more yield out of them'

Of course, there are also a few black sheep among temporary landlords who give them a bad name. Their goal is simply to rent out furnished apartments at the highest possible prices. For most landlords, however, good tenants are more important than maximum profit. Experienced landlords know how important a win-win situation is. If a tenant feels cheated, a landlord cannot expect them to adhere to their side of what they thought was a fair agreement. This may end up costing more in the end if the tenant decides to even the scales by neglecting the furnished apartment.

However, it is impractical to compare the cold rent according to the rent index or rent cap with the rent for a furnished temporary apartment. On average, these apartments are of a higher quality and are ready to move into and start living in straight away.  Not to mention the other factors that differentiate them from a normal rental apartment.

The higher rent attributed to furnished flats is namely due to the fact that they include all costs. This means all bills, consumption costs, set-up Internet, complete kitchen equipment, bed linen, and much more are all covered by the rent. The prospective tenant is paying to ease the process to moving into an apartment. This price also includes complete flexibility for the tenant, who can rent the furnished apartment until they have found their own. They are helped and advised by the temporary rental agency in detail, and do not face the worries that can make the apartment finding process so difficult. And if anything shouldn’t work, any equipment breaks down or is there a problem with the internet – they have no responsibility. This lies with the landlord, who has to take care of everything. The obligations for someone renting out their furnished apartment are numerous and open-ended – they have to organize inspections, handovers, and acceptances every few months. With unfurnished flats the expenditure is much smaller.

So why should the extra services provided not be worth paying for? Does it actually make sense for a tenant be able to rent furnished, without any responsibility or added bills, according to the same rent cap as an empty flat that they have to take of themselves? For landlords this would mean greater losses – for high expenditure.

Statement five: "Landlords are mercilessly exploiting people's housing shortages by offering them overpriced furnished flats”

The target group of furnished temporary housing is not tenants who are actually looking for an empty apartment, or those who want to rent for an unlimited period. Rather, they are meant for people who move to a new city because of work, and cannot immediately find an apartment. The majority of these employees in Berlin are from start-ups, mainly from the IT sector. They come from all over the world. They do not speak German, have no Schufa credit score, no certificate of freedom from debt, no local contacts, and are not familiar with Berlin. How are they supposed to find their own apartment immediately?

Furnished temporary apartments are intended for this target group, and make an uncomplicated and quick start possible. Many do not know how long they will stay in Berlin, whether the start-up for which they work will still exist in in a few years, or whether they will get better job offers elsewhere. This group would rather pay a little more for a high-quality, fully furnished apartment that already has Internet, electricity and everything they need. Most also earn above-average wages. These tenants often have to get to work from day one, and do not have time to take care of things like internet connection.

It makes no sense to demand that a furnished apartment must be offered according to the rent index or rent cover price. This is in all likelihood intended to ensure that no landlord decides in favour of this rental model. Exactly like the rent cover, this agenda is not thought through. Those who claim to want to protect tenants of furnished apartments from alleged excessive rents, will leave them no option but to stay in hotels or serviced apartments if furnished apartments are a thing of the past. And why shouldn't new Berliners who work here and pay taxes be allowed to live in an apartment that’s on the Berlin housing market? Without the option of a temporary rental, they won’t have a chance without facing an extremely stressful situation on arrival.

It is repeatedly claimed that temporary furnished letting deprives the Berlin housing market of apartments. This is not the case. Temporary furnished apartments in Berlin are available for all prospective tenants who move to Berlin. The campaigns against furnished rentals have an underlying implication that apartments should only be rented to people who have lived here for a long time. Those who already live here would live cheaply for the foreseeable future. The status quo would therefore be maintained, as all those who come to this city for the first time will not find a flat, and no one will move out if rents are capped.

Statement six: There is a need for fully equipped apartments in the luxury segment, but the supply far exceeds the real demand.

This statement also raises the question of how such an assessment has been made. Of course, the market is self-regulating. Overpriced apartments do not get rented out, and will eventually become cheaper. The more expensive serviced apartments will unlock one apartment per type, so some of these apartments will always be available. On many portals there appears to be a surplus of only the more expensive luxury flats, and the serviced apartment providers, however this is a false statistic. The cheaper and normal-priced apartments do not appear as often as they are more quickly rented out. Despite this, there is a continuous supply of reasonable non-luxury offers, and no tenant is forced to rent apartments at absurdly expensive prices.

Statement seven: Prices for furnished housing have risen even faster than those for conventional housing: “Since 2005 by almost 50%, prices for unfurnished flats "only" by just under 18

The ordering principle law, or ‘Bestellerprinzip’ has applied since 2015. With this in mind, of course, it’s understandable that landlords of furnished apartments charge their agency fees on a cost-neutral basis. Anything else would be absurd for a rental period of only a few months. De facto not much has changed for tenants. Before 2015, tenants had to pay an agency fee. In 2005, the level of furnished flats was by far not as high as it is today. At that time, many private apartments were offered for intermediate rent, i.e. during the absence of the main tenant or the owner. In these apartments the landlords would often store personal objects and clothes. It was only after 2005 that apartments were furnished to a high standard, and rented out exclusively on a temporary basis.

Private rentals have mostly only passed on their expenses (old rental contracts). The rent is of course higher in the case of apartments with high-quality furnishings, without any personal objects. The introduction of the new law, and the better quality of the apartments explain the fundamental reason for the price increase for furnished apartments by almost 50% between 2005 and 2019.

None of these article mentions that the small number of newly built apartments is to blame for the housing crisis.

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