Why Berlin has banned Airbnb

Starting May 1, Airbnb will be banned in Germany's capital.

Under the new law, called Zweckentfremdungsverbot, the German government will ban short-term leases in Berlin under Airbnb and its competitors in order to free up more affordable housing in the city.

It is “a necessary and sensible instrument against the housing shortage in Berlin,” Andreas Geisel, Berlin’s head of urban development tells The Local. “I am absolutely determined to return such misappropriated apartments to the people of Berlin and to newcomers.”

Because it is more profitable for homeowners to rent out rooms and entire apartments through multiple short-term stays rather than a long-term lease, opponents of the San Francisco-based startup accuse Airbnb of causing even more of a housing shortage in the city.

“The supply-demand imbalance, mixed with an activism-prone culture and a population that is about 85% renters, has resulted in a chaotic landscape,” wrote The Wall Street Journal’s Eliot Brown last fall. And Berlin’s housing crisis will likely get worse as it intertwines with Europe’s migration crisis. “Frustrations over housing have literally spilled into the streets, leaving landlords to deal with smashed windows and occasional threats to their safety.”

Berlin’s population has continued to grow in the 21st century while housing development continues to lag behind. Whereas the city witnessed an influx of almost 50,000 new residents in 2014, only 7,299 new housing units were completed. If growth continues at the same pace, some say Berlin will need as many as 20,000 new housing units a year to effectively keep up with demand. But the same city rules that make it difficult to build new homes (such as strict rent laws and a “tenant-friendly political landscape”) have also caused Airbnb to thrive in the city.

“Berlin is the unchallenged Airbnb capital of Germany: More flats and rooms are offered here than in Hamburg, Munich, Cologne and Frankfurt combined,” suggests a Berlin v. Airbnb report from the German college FH Potsdam. “According to the data that Airbnb makes publicly accessible, around 11,700 accommodation units are offered for rental in Berlin each day…. This means that out of the 1.9 million flats in Berlin roughly 1 in 240 can be found on Airbnb.”

And while Paris, New York, and London have the most Airbnb listings in the world with 40,000, 34,000, and 23,000 listings respectively, the top list changes drastically when comparing demand instead of sheer quantity. According to Airdna, a group focused on Airbnb’s data and analytics, Berlin ranks above these three cities in demand. With an average occupancy rate of 61.6 percent, Berlin has the 7th highest Airbnb demand in the world, the most of any other European city besides Lisbon.

Zweckentfremdungsverbot does not come as a surprise to Berlin homeowners, because the law was passed in 2014, granting homeowners a two-year adjustment period before implementation.

And if landlords are found violating the new law, they could face a €100,000 (or $113,000) fine. But the new law is not cut and dried: Homeowners are still permitted to rent out single rooms in their home, but the rented area can’t comprise more than 50 percent of the entire property. 

“Landlords will also be able to apply for official permits to rent out entire apartments short-term from the local borough,” explains The Atlantic’s CityLab. “Their applications must include a convincing explanation of why they need to rent the apartment short-term, which will be scrutinized and quite possibly rejected by the borough. For those that are approved, the apartment can be rented for no more than the average rent per square meter for the local area.”

Valued at $25.5 billion at the end of 2015, Airbnb is the third most valuable privately held startup. As a result of the April 30 deadline, listings in Berlin dropped 40 percent by March.

“We will continue to encourage Berlin policy-makers to listen to their citizens and to follow the example of other big cities such as Paris, London, Amsterdam, or Hamburg and create new, clear rules for normal people who are sharing their homes,” said Airbnb spokesman Julian Trautwein. He added that Airbnb “helps many Berliners pay their rent.”