Berlin’s Anti-Airbnb Law Will ‘Likely Fail’ in Court – But the Long View is Unclear

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Berlin, Germany’s ‘poor but sexy’ capital, has become one of Europe’s most desirable places to live, work and visit. Its culture scene is vibrant, bars and restaurants abound and its startup ecosystem has put it firmly on tech’s ever-expanding map.

But Berlin has seen rents rise more quickly than in any other city in Germany, with a surge of 5% between 2014 and 2015. The city is no longer a secret: its party culture has drawn crowds of revelers from all over for long weekends and holidays.

The city’s cost of living, once bargainous, is lurching skywards and local residents are being pushed out of the trendiest Kieze, or neighborhoods. At the forefront of this trend – or so the local authorities contend – are vacation rentals, in particular Airbnb, of which there are 11,701 listings in Berlin, accounting for 0.4% of all apartments in the city.

In May 2014 the government implemented its Zweckentfremdungsverbot (roughly translated: an outlawing on misappropriation) to ban the offering of rental flats as vacation ones. The two-year amnesty on that verdict ended this month, with transgressions potentially triggering a six-figure fine. The city has already lobbied successfully against Uber. But this is a different fight altogether.

Alongside Airbnb are companies like Wimdu, a local peer-to-peer renting firm heavily backed by Berlin’s VC giant Rocket Internet. It will take the Zweckentfremdungsverbot to court on June 8th. Wimdu’s communication head told Red Herring he’s confident of a win.

“From our point of view, most people think our appeal against the city will succeed, and in one month it will be dead,” said Bernhard Holzer. “We made the lawsuit that there are overall rights, and that if you have property you have the right to do what you want.”

Berlin already has a shortfall of 200,000 apartments, said Holzer. “We have 4,500, so it’s nothing.” The problem is “infrastructural,” he added, suggesting that the city is hiding far greater problems behind the attack on the vacation rental market.

But there may indeed be an issue.

Berlin has more Airbnb rentals on offer than any other German city. Only Paris and London, both of which are far larger cities, have more in Europe. The average stay costs €55 ($63). When you consider that the average 70sq m, one-bed apartment costs around €670 ($763) in the city centre, an Airbnb in the heart of Berlin costs around €33 ($38) more per night (an average hotel room costs €80 ($91)).

Combine that with the fact that there are over 1,167 Airbnb users offering more than one unit, and it becomes difficult to counter the argument that vacation rental sites are hiking property prices in the capital.

Alsino Skowronnek is a designer who decided to map out the impact of Airbnb on Berlin for a 2015 university data project, after having struggled to find accommodation. “A friend said ‘You can always get a rental on Airbnb’, but I thought that was weird and it got me thinking,” he told Red Herring. “Looking at the debate, people said Airbnb was taking way too much out of the market. But in my experience the debate was far too emotional, to support the debate either way.

“So we wanted to find that out, to nail it down,” he added. “But we found out how difficult a question it is to answer. The reason rents are rising in Berlin is not down to one reason.”

The biggest issue, Skowronnek discovered, was that Airbnb was not regulating users who offer dozens of flats for commercial use. These users, which he dubs ‘Power Users’, account for 281 units. “We found the whole claim of Airbnb was to stay with friends, suggesting you would be coming to a place where you knew everyone,” he said. “And 40-50 flats in one go, you won’t ever be able to give people their keys and other stuff. And Airbnb wasn’t really standing up to that either, and we found it was a bit of a shortcoming, to say the least.” (Airbnb declined offers to comment for this article)

As soon as Skowronnek released the data he got a call from Airbnb asking how he had sourced it. “They invited us to their office and we had a two-hour discussion. It was good, we learned a lot.” In Airbnb’s defence, he added, it removed a lot of the ‘Power Users’ from its platform. That represented a considerable win.

But now Skowronnek is being compelled to release data by the Berlin senate, which is desperate to uphold the Zweckentfremdungsverbot in a little over a week. He agrees, at least in part, with Holzer that the problem of Berlin housing is multifaceted and difficult to pin down. But Airbnb, and vacation rentals, are a bigger problem in neighborhoods like Kreuzberg and Mitte that particularly appeal to weekend crowds.

“If you take this city as an aggregate of the data, you’re not taking away a lot of the housing stock,” he said. “But I guess if you look at it on a more micro level, and you look at the neighborhoods where these places are, you come to realize there’s a deficit of flats in the places where these flats are appearing. People are being priced out of these areas.

“I’m not saying Airbnb is the only reason why this is happening, but it’s happening,” Skowronnek added. “On an aggregate level Airbnb is not a big threat to the housing market, but on a micro level it’s more of a structural problem.”

The law, he adds, is deeply flawed. And an attempt by authorities to get renters to snitch on those they suspect of putting up apartments for vacation rent has been received badly in a city that has endured the surveillance nightmares of East Germany’s feared secret police, the Stasi.

“Housing is the biggest topic for people in Berlin, and for the potential in electoral votes they had to say they were cracking down and doing something,” he said. “And Airbnb is an easy target to hit, because it’s a big American company with loads of money. Big hotels are also a problem. It’s not a very wise way of dealing with it. There are loads of ways you can regulate this without going to extremes – capping the number of days an apartment can be rented, for example.

“At the moment it’s a really big gamble – no-one knows what’s going to happen,” he added. “The law hasn’t had a big ripple effect. People aren’t fleeing from the platform yet! It’s going to be really interesting to see if there will be cases of people actually having to pay this fine.”

Holzer doesn’t think so, and argues that Berlin’s authorities have shot themselves in the foot through a lack of dialog with his and other companies. “In Berlin they don’t want to have private holiday apartments. It’s not just Wimdu, or Airbnb or any other companies.

“We tried to have talks for years, they didn’t want to talk and now we are in the court,” he added. “In Amsterdam we are in talks all the time, and in London they have some meaningful rules, but in Berlin this is not the case.”