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Landlords and housing companies are forcing out longtime tenants in an attempt to capitalise on Berlin’s surging real estate market. Can renters ever beat the system?

Last October, for the first time in Berlin’s history, protesters gathered to stop a family from being evicted because of unpaid rent. In 2006, a new owner had purchased the Gülbols’ apartment building on Lausitzer Straße in Kreuzberg and increased rent by nearly 20 percent; the family had been struggling to make payments ever since. Unfortunately, the protest only delayed the eviction. Early morning on February 14, the 800 police officers surrounding the demonstrators made sure that this time, the Gülbol family was successfully removed from their home.

Gone are the days of endless beautiful apartments standing available at bargain rents. Now housing prices in Berlin are rising rapidly – up 28 percent in the last five years; 20 percent since 2010 – and few new homes are being built. And still newcomers keep arriving. Seeing a golden opportunity, property owners and investors are using evictions, neglect and buyouts to drive out poorer tenants and bring in the new money. While some, like the Gülbols, have no choice but to leave, others are realising that in this city, it (literally) pays for renters to know their rights.

The legally savvy

Compared to more expensive German cities, not to mention London, Paris or New York, Berlin apartments remain a steal. In London people spend 59 percent of their income on rent, in Munich it’s 28.6 percent and in Frankfurt am Main it’s 31.1 percent. Berliners only spend 27.4 percent of their earnings on rent, although due to lower salaries they are left with less disposable income.

Still, the affordability and spaciousness of Berlin apartments helped add an extra 41,000 to the city’s population in 2012.

Penny Morgan* was one of these newcomers. When Morgan emigrated from the US to study in Berlin, she too expected paying rent to be the least of her concerns. “Sure, finding a place is tough,” says Morgan. “But once you navigate all those horrible castings I figured you’d be safe.” However, after scoring a beautiful Altbau apartment in Schöneberg last April, she discovered the darker side of Berlin’s property market.

One month after she had moved in, Morgan and her flatmate Simon Schmerling* (photo) found out the landlord wanted to increase their rent from €700 to €970. “It was such a shock,” says the Berlin-raised Schmerling. “I’d already moved twice during the previous year and thought I could finally settle, but there was no way I could afford to pay that much extra.”

Neither Morgan nor Schmerling were on the rental agreement, leaving them entirely dependent on the main tenant, Kati Dietrich*, to fight the increase. “The next months were so stressful,” Morgan remembers. “Until it became clear that actually, the landlord just wanted to scare us out.”

The owner had not raised the rent a single cent for over 12 years. While Berlin’s average rent per square metre rose from €6.49 in 2010, to €7.40 per sqm in 2011 alone, to the current amount of €7.85, the Schöneberg apartment remained only €5.30. Schmerling thinks “the owner was slow to realise what he was missing out on, but then wanted to get us out quickly for richer tenants to take over.”

Currently it is only possible to raise rents 20 percent over three years in Berlin. Starting this spring, a new law caps that limit at 15 percent. Owners therefore sometimes bluff to scare out their old tenants, to be able to renovate their property and demand higher rents in accordance with the latest Mietspiegel (the neighbourhood average, on the basis of which rents are calculated).

Luckily for Morgan and Schmerling, Dietrich was intent on keeping the flat and hired a lawyer to fight the exorbitant increase. Had the owner been within his legal rights, Dietrich would have been left sitting on a fee of over €1000 for a court trial, and Morgan and Schmerling would have been homeless. As it was, however, the owner quickly backed off and increased the rent by only €150 a month, of which Dietrich covers almost half.

The ousted

It may seem surprising that rule-abiding Germans would resort to such scare tactics, but owners and investors alike know that the profit potential of Berlin property is worth the gamble. According to a survey of 500 real estate experts by the consultancy company Pricewaterhouse-Coopers in January, Berlin is the top recommended city for purchasing residential property.

This has tightened the market, which was already stressed because the city continually fails to build the additional 12,000 apartments every year that the Berliner Mieterverbund says are needed to accommodate increasing housing demand (in 2012 only 7034 were planned). Furthermore, too many property proposals are solely for luxury apartments, unaffordable even for middle-income people. For example, on March 6 the construction company Gruppe Groth presented their plans for up to 530 apartments at Mauerpark at an average rent of €9.50 per sqm.

According to the Bündnis gegen Zwangsräumung, whereas before people facing eviction or increased rents simply sought help, for the past year “more and more want to get involved as activists” – as the Gülbol case showed.

But community solidarity can be powerless in the face of large-scale housing corporations, as Benjamin Dumas* (who had to sign an agreement that he wouldn’t discuss his case) experienced firsthand. In 2005, the Frenchman moved into a €216 per month flat on Reichenberger Straße. Originally the apartment was owned by an elderly couple, but after they went bankrupt, Dumas received a letter from the law office Groß Rechtsanwälte informing him to transfer his rent to them. “I suspected something fishy was going on. That some big company was trying to get rid of tenants and appropriate the premises.”

Over the next months, his building became increasingly derelict. Water pipes burst, there was graffiti in the hallway and the front door was smashed – yet no one responded to Dumas’ maintenance requests. In an act of rebellion, he stopped paying rent. For eight months he heard nothing. Then he received a notice of eviction, stating he either had to repay all outstanding rent within two weeks or vacate the premises. “I think they let the bill grow that much to be able to evict me easily.” Dumas’ suspicion seems well-founded as legally speaking, a landlord has the right to evict a tenant after they have failed to pay only two months’ rent.

“Around then, [large housing company] Ziegert took over the building,” Dumas says. “Within months they sent architects to the premises, and when I requested maintenance work from them, I was once again graciously ignored. The whole scheme was obviously to let the building rot and discourage tenants from living there, while pushing away other potential renters.” It became clear that he would have to leave his home of more than eight years to make way for future, wealthier tenants. “But I also wanted my revenge somehow. So I held on.”

In the end, Ziegert offered Dumas three options: he could buy his apartment after renovation for the sum of €150 000; he could stay on as a tenant but for three times the rent; or he could accept the amount of €10,000 to vacate the flat. He took the money and ran.

The profiteur

Clearly, one needs to be savvy to navigate the survival camp that is Berlin’s property market. But with a bit of luck, it is also possible to take advantage of an owners’ desperate struggle to increase their building’s value.

This was the case with John Lang, an architect and bar owner. Lang moved into a stunning 100sqm flat on Sophienstraße in 1997, for which he paid €500 per month. After 15 years of watching central Mitte become increasingly posh, Lang decided it was time for a change of scenery. “My friends thought I was mad and that I should chain myself to the flat, but I had something else in mind.”

That ‘something else’ began to take shape in 2010, when investors bought the building with plans to renovate it. Lang knew they would either have to find temporary living spaces for all tenants for the duration of the construction, or convince them to vacate the premises voluntarily.

“I had this moment of internal triumph, because I’d heard of people being bought out of their places,” the German remembers. With his upstairs and downstairs neighbours already relocated, Lang waited, knowing the pay-out offer would only grow with time. He had to sign an agreement that he would not disclose the precise amount he received, but according to a real estate expert, €500 per sqm would be the likely rate.

“I think these sort of deals have become even more frequent since then,” says Lang, who moved to Prenzlauer Berg in December 2011. “In February an Australian neighbour from Sophienstraße told me she’d received a similar offer.”

Cross roads

After the Wall came down, the upgrading of Berlin was inevitable. First Mitte and Prenzlauer Berg were cleaned up; next, investors followed creative crowds to Kreuzberg and Neukölln. The circle is almost complete; finding an apartment under €7 per sqm within the S-Bahn ring is already nearly impossible. Meanwhile, owners are becoming more creative in ousting their old tenants to be able to upgrade the last unrenovated properties in central Berlin. Certain districts are beginning to curtail gentrification – such as Pankow, which has forbidden luxury renovations and placed restrictions on the use of apartments as holiday rental flats.

However, it remains unclear to what extent these limitations can keep Berlin’s social fibre from ripping and prevent ghettoisation. Schmerling, for one, remains uncertain about how much longer he will be able to stay in the apartment in Schöneberg. “I’d say it’s only a matter of time before the owner thinks of some new strategy to get us out or increase the rent. And as a student, what choice would I have but to move?”

* Names changed.

Berlin rents in numbers