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Affordable Rents? A State of Emergency Intensifies
by Werner Rugemer and others
Email: marc1seed (nospam) yahoo.com
01 Oct 2018
Rents explode in cities after massive sales of public housing to brutal investors. In 1987, there were 5.5 million social apartments in Germany. Today, there are only 1.5 million. Land speculation is prevented in Vienna. The Vienna Housing Fund buys up possible development land.
AFFORDABLE RENTS? A STATE OF EMERGENCY INTENSIFIES
Rents explode in cities after massive sales of public housing to brutal investors. Affordable housing is in short supply. Something must happen quickly.
By Werner Rugemer
[This 2018 article published in verdi.de is translated abridged from the German on the Internet. German politicians make pilgrimages to Vienna and are astonished how the city creates affordable accommodations.]
In 1987, there were 5.5 million social apartments in the old Germany. Today, there are only 1.5 million in all Germany. Every year, 100,000 of them lose their rent ceiling and hardly any new affordable units are built. The need today is far greater than in 1987 on ac count of the low-income trend, the low upper-rent limits for Hartz IV recipients, the significantly higher energy costs and rent explosion in the population centers. Since 2014, the number of homeless in Germany has doubled to 860,000. Investors go unpunished when they force modernizations with criminal methods. They also go unpunished for the abuse of raising rental prices on tourists.
The Great Coalition admitted its 2015 rent brake did not control the rents. Quite the contrary! Interior minister Horst Seehofer, CSU, with German chancellor Angela Merkel, CDU, is preparing a “Housing Summit” in the chancellor’s office for September 21. The Advisory Board of the German economics ministry published an expert opinion with the misleading title “Social Housing Policy.” Professor Friedrich Breyer from the Thurgauer Economic Institute at the University of Konstanz is in charge. The institute is sponsored by a Swiss bank.
A neoliberal confession
The 38 professors on this board summarized their neoliberal creed. Social housing accomplished nothing and should be ended. The rent brake changed nothing, cannot be improved and should be rescinded. “Market interventions are counter-productive.” Release or deregulate the market! Then the conventional demand that is even counter to the market: Increase the housing subsidies!
The Great Coalition wants to help some higher-paid to apartments of their own. The distribution of modernization costs will be lowered from 11% to 8% per year. Seehofer’s proposals to “de-bureaucratize” permissions were applauded by the FDP. The causes of the state of emergency lie deeper; it is the result of three decades of privatization mania. The CDU/ CSU/ FDP government under Helmut Kohl abolished nonprofit housing cooperatives in 1988. Accelerated by the SPD/ Green government under Gerhard Schroeder, the state, territories and local communities sold hundreds of thousands of public apartments to brutal investors.
In 2012, the SPD/ Bade-Wurttemberg government sold 21,000 apartments. In 2013, Bavaria (CSU) sold 33,000 apartments. Now Seehofer pretends to bail renters out of the housing crisis. In the meantime, capital organizers like Black Rock combine highly profitable companies. Vonovia is at the top with 400,000 rentals (see also: Der grosse Ausverkauf, Verdi. Public 4/2018).
The Vienna example is different
Alternatives are possible in the middle of capitalism. For a long while, Vienna was a relocation city. In 2017, the average rent was half the average rent in Munich. This was possible because only a third of the apartments in Vienna are subject to the free market.
Vienna has over 900,000 apartments, 220,000 are direct public housing units, 200,000 are nonprofit housing enterprises and the rest have public rent ceilings. No apartments were sold. With foresight, the Vienna Housing Fund buys up possible development land… So land speculation is prevented. Vienna does not pay subsidies to renters like the German housing subsidy. Rather, all money is invested in “object promotion,” in building affordable apartments. Now, German politicians are making pilgrimages to Vienna and are astonished.
What absurdity! The German government, territories and loc al communities proudly announced a 50-billion euro tax surplus in the first six months of 2018. The German state can take credits at zero-interest. In 2015, Matthias Gunther from the Pestel Institute made the obvious market-conforming proposal: the state should buy Vonovia. This would cost 20 to 22 billion euros. With that, 400,000 apartments would be under the public authority. Today, Black Rock & Co. will not sell their cash cow after the Vonovia initial public offering. Still, expropriation could be possible on account of the national emergency, anti-social conduct and compensation according to the German Basic Law. This could begin with a state blocking minority of 25 percent…
Investors profit with post-office firms… Modernization costs are shifted to the renters. Nonprofit housing companies as in Dresden should be reestablished. The German real estate agency sold property to investors. That should change. Properties should only be sold when social housing is constructed…
Affordable housing is a human right
Secure and affordable housing is one of the universal human rights. Some politicians have a catch-up need. They constantly demand observance of human rights in distant countries but tolerate the housing emergency here… The local communities issue millions of housing vouchers – but do not have the necessary housing. The constitutional state must be helped to its feet.
The current governments lack insight. Housing initiatives are launched in many cities like Berlin, Frankfurt on the Main, Dresden and Osnabruck. In impoverished Germany after the 1st World War, local communities built hundreds of thousands of nonprofit apartments. The pressure from below made all the difference.
AGAINST THE RENT MADNESS
By Leo Mayer
[This article published on September 21, 2018 is translated from the German on the Internet, www.linksnet.de.]
The protests against rent madness hardly left a mark on the German government. Over the weekend, German chancellor Angela Merkel (CDU) emphasized “We urgently need new apartments.” Horst Seehofer, Interior minister, declared the housing question is “the social question of our time. Let us act without delay so 1.5 million new apartments are built in this legislative period.” The SPD demands a short rent-freeze that quickly gives way…
Seehofer’s “Housing Summit.” A meeting of the Real Estate Lobby
On Friday (September 21), Seehofer organized a “Housing Summit” in Berlin. 11 federations of the real estate- and construction branches were invited. The German Renters Alliance, the DGB, social federations, homeless associations and environmentalists were missing. The list of participants shows the housing policy of the German government will be oriented in the desires of the real estate lobby and not in those dependent on affordable housing. “Renter federations are only planned as fig-leafs,” the Left Party (Die Linke) explained and said this round will not change anything in the exploding rents.”
Exploding rents and lack of affordable housing are the most burning social questions and drive people to the streets.
On April 14, “young parents with children, older couples, fleeing persons and students demonstrated under the motto “Resistance – Together against Displacement and Rent Madness.” On posters, they demanded “Housing, not Outer Space,” “Rents are not Citroens” and “We are expropriated when the rents climb.” 254 initiatives and organizations called to a counter-summit.
In Hamburg, 8,000 persons followed the call of 119 organizations and demonstrated for more affordable apartments in Hansestadt. Last Saturday, 11,000 persons demonstrated in Munich for affordable housing and against social exclusion.” Next Friday, thousands will protest before the chancellor’s office against the rent madness and the policy of the German government.
“2008 will be the year when the many impacted groups finally team up to give a cross-cutting dimension to the protest in great solidarity support by wide parts of the population. The political framework must be set on the national plane. An essential correction is necessary: “Away from the Market and to the Needs of People,” as it says on the Internet page of “Bizim Kiez.”
Alternative Housing Summit: Together against Rent Madness – Create a Policy of Housing for Everyone
On the day before the “Housing Summit” of the German government, a new alliance of renters, rental social movements, unions and social federations called to an Alternative Summit where alternatives to a market-based housing policy will be discussed. The nearly 200 organizations show a social breadth. A large majority in the country desire and urge a different housing policy.
“The market and the state fail,” the appeal begins. “Politics does not take the problems seriously and aggravates them by privatizing public land and housing companies. Speculation is given a free hand. Measures against higher land-, construction- and real estate prices are scarce commodities. Necessary legal rent improvements are rejected by the German government instead of effectively protecting renters in this market situation.”
• Strengthen rent brakes. Punish offenses with fines.
• Limit modernization cost increases to 4% of construction costs and cap it at 1.50 E/ QM a month within 8 years!
• Energy measures should be as rent neutral as possible!
• Prevent evictions! Improve protection against unlawful termination!
• Expand social and reasonably priced new apartments and introduce legal commitments! Make available incentives for at least 100,000 affordable apartments per year. Use the planning law for the common good!
• Regulate land prices and land use. Don’t sell public property for the top price!
• Strengthen owners and renters oriented in the common good and introduce new nonprofit housing!
• Push back the owner lobby and make real estate ownership transparent!
• Punish discrimination, create more barrier-free housing and prevent homelessness!
From the Call to the Alternative Summit
200 Academics: “Housing for People, not for Profits!”
Over 200 academics are involved in the debate. “Housing for People, not for Profits!” is their demand. In the journal “sub\urban zeitschrift fur kritische stadtforschung,” they warn: “Housing is a basic need. If it becomes unaffordable for a growing part of the population, this causes social division and threatens the social cohesion.”
In their appeal, they urge “a real social housing policy” and “protection of existing rents, nonprofit orientation and democratization.”
“The market fails to create a socially-contractual housing supply. Therefore, the decisive intervention of the public authority is necessary. Housing may not make people poor. Reasonable existing rents must be protected from increases through the expansion of rent protection rights. Rent-hikes should be limited. Instead of canceling the rent brake, it must be applied more restrictively – and controllably. Living in cities must be possible for persons of all income groups. Therefore, more social housing to supply all needy persons and not less is vital. A sustainable and social urban development needs reliable partners and local communities able to act. For that, public and civil society, nonprofit-oriented supporters of nonprofit or cooperative housing are necessary. Local communities must again be able to control the local housing supply and urban development through public holdings” (excerpt from “For a real social housing policy,” Academics urge protection of existing rents, nonprofit orientation and democratization”).
Many concrete proposals for a social orientation of housing policy are “on the table,” they declare. These extend “from restraining rent profiteers, abolishing shifting modernization costs and (re-) communalizations of housing to democratization of planning procedures and communal housing companies.” The examples given by “project initiatives, self-organized housing groups, small cooperatives and foundations committed to social ideas could help as practical “experiences in implementing and organizing nonprofit housing and communal forms of accommodation.”
TOGETHER AGAINST THE RENT MADNESS!
By Housing is a Human Right
[This call to action published on September 12, 2018 is translated from the German on the Internet, www.blickpunkt-wiso.de.]
A “Housing Summit” of the German government will take place in the German chancellor’s office on September 21. A broad civil society alliance is organizing a “counter-summit” and a demonstration for affordable rents parallel to the “Housing Summit” of the German government.
End the Rent Madness! - Together against division, repression and homelessness. Affordable living space for everyone instead of more profits for a few.
Germany has a housing crisis.
Particularly in the cities, land-, real estate- and rental prices skyrocket absurdly. As a result, real estate wealth increases at a breakneck speed.
The profits for a few climb while thousands upon thousands of people live in fear of losing their apartments on account of rent increases, privatizations of their apartments and of not finding suitable housing. More and more income goes for rent. Wage increases are eaten up. In many places, housing has become a poverty risk. Homelessness grows. Social agencies often must reject people needing care. Discrimination and partly open racism aggravate the search for apartments. In the meantime, the housing market loses thousands of affordable units week after week through rent hikes, changes of residence, modernization and privatizations.
The market and the state fail. At least, 1 million reasonably-priced apartments are lacking. Despite the great need, the market does not supply any reasonably-priced new apartments. Instead, pseudo-luxury units are built and offered at exorbitant prices. Politics does not take the problems seriously and even intensifies them by privatizing public land and housing companies. Speculation is given a free hand. Measures against higher land-, construction- and real estate prices are in short supply. Necessary improvements in rental laws are refused by the German government instead of effectively protecting renters and housing applicants.
Together for a Different Housing Policy
Still, more and more people are resisting displacement, join forces as tenants or house communities and do their utmost for their neighborhood. Rationing public housing or social housing works, whether in energy-efficient building modernization or very reasonable new buildings. However, politics refuses the necessary framework.
Enough of this rent madness!
A broad union of non-parliamentary institutions, groups, associations, parties and unions demand a long-overdue change of course in housing- and rent policy.
• Strengthen rent-brakes, threaten with fines; drastically reduce normal rent increases!
• Limit cost-increases for more modernization to 4% of the investment!
* Prevent evictions! Improve protection against privatization!
• Expand social and reasonably-priced new apartments!
• Make available incentives for the Federal government and states so at least 100,000 affordable apartments can be built every year. Use the planning law for the common good!
• Regulate land prices and land use, do not sell property at the top prices!
• Push back the owner lobby, make real estate ownership transparent!
• Create more barrier-free living spaces, prevent homelessness!
• Adjust the costs of lodging and housing subsidies annually so they are just to reality!
Housing is a human right – no land for speculation!
Come to the Alternative Housing Summit on September 20, 2018 and protest with us the next day before the German Chancellor’s Office.
“RENTERS PAY THE BILL FOR THE FAILURE OF THE MARKET AND THE STATE”
by André Holm
[This article published on March 24, 2016 is translated from the German on the Internet, www.blickpunkt-wiso.de.]
André Holm on the housing supply and the housing shortage in Germany. He is a co-worker at the Institute for Social Service s of the Humboldt-University in Berlin. Gentrification, housing policy in international comparison and European urban policy are three of his research themes.
What are the reasons for the housing shortage in certain metropolises and regions in Germany today?
André Holm: The housing shortage threatening in some cities has different causes. Besides demographic effects and the strong migration gains of some cities in the last years, there are economic and political causes that led to the current problems. Reducing the insufficient apartments to the imbalance between strong population growth and stagnating or even declining construction activity would be too simple.
One cause is obviously that investments in new affordable apartments are not economically attractive enough for the majority of private market actors. This has more to do with the growing profit expectations of investors than with the high construction costs. No great interest in building new apartments will arise as long as high profits can be realized by speculating on strong rent increases. Even if lobbyists of the construction industry refer again and again to the cumbersome licensing procedures in construction projects, building was not prohibited in Germany,
The trifling building of affordable apartments despite increasing population numbers show the much praised market mechanisms are not effective. That local communities nearly everywhere are withdrawing from building new apartments can be added to this market failure. Unlike earlier decades, market failure is not balanced by state investments. Renters pay the bill for this double failure of the market and the state with rising rental prices and the apartment-seekers who are entirely excluded from the housing supply.
What kind of living space is lacking? In what cities and regions is this lack of housing particularly great?
André Holm: Affordable apartments for households with low and medium incomes are lacking above all. There is no housing shortage n the luxury realm where the prices are even falling. The lower the income, the harder is the housing supply. Individual studies show low earners often spend 50% or even 60% of their low incomes for housing. Not much is left for life. The situation in the growing big cities and in many university tows is very drastic. Monopoly positions of suppliers benefit from the growing population numbers. The paradox of the current situation is very clear here. Because the housing markets are overstrained and prices rise, there are few incentives for building new apartments since high profits are already amassed. The problem can only be solved with substantial restrictions on possible profit expectations.
What role did privatizations of the German housing stock play in the past and what role could public housing play in the future?
André Holm: The extensive privatizations of the last 15 years contributed to a market radicalization. Most big portfolios were sold so privatization was interesting for institutional investors. Far more than two million units are more or less directly privatized by banks, real estate funds and other financial market actors. Privatization was the door-opener for the growing influence of financial market logics in the housing supply. This has very different consequences for renters. While profits are realized through dis-investments and savings in personnel in relaxed housing markets, speculation pressure increases in cities with strong demand. Junk real estate and luxury upgrades are two sides of one and the same coin. For cities, this is particularly bitter because the possible actions for local communities have narrowed with the growing problems in the privatized realm. The greater the public stock of a city, the greater the supply and the effects on the housing market. Public ownership in housing is actually very effective compared with other housing policy instruments. Without public housing, housing companies could be forced to economize as can be unfortunately observed in many cities.
Would expanding social housing help?
André Holm: Yes, expanding social housing would at least increase the number and the share of reasonably-priced apartments in the short-term. But the current incentives of the Federal German government, territories and local communities are not sufficient to compensate the withdrawals of earlier periods. While the incentives increase, the number of available social apartments continues to decline. The incentive systematic of social housing faces three great problems. Building apartments is very expensive. The systematic increase of rental prices by reducing incentives makes rents increase and social housing is limited in time. A large part of the incentive funds was given to private housing companies which made available social housing at halfway reasonable rents for usually 20 years. After the incentive time-periods, the social bonds end and former social apartments are subject to normal market conditions. This leads to higher rents and to displacement of low-income residents. Incentive funds should contribute to the permanent supply of social housing.
You urge the re-introduction of non-profit housing construction. What do you mean and why is this sensible?
André Holm: The non-profit orientation can be described as a fiscal tax benefit for developments that serve the common good. A new non-profit housing project would have the goal of the permanent supply of reasonably-priced apartments. Businesses must be subject to a profit-restriction and to reinvesting profits in social housing. All revenue would then be reinvested in social housing. Such a revolving principle would solve the problems of social housing. A supply of social housing is unquestionably in the interest of the general public. As explained, we cannot expect any lasting contribution for social housing from private investors. This social blindness of the market is the nature of a profit-oriented economic mode and not an evil will of individual actors. The re-introduction of a non-profit orientation should strengthen the non-profit sector in the provision of housing. The development of a non-profit sector offers a necessary and possible alternative since the market fails and the state cannot comprehensively socialize the housing supply. This requires nothing less than the breach with the profit logic in the area of housing supply.
[This article first appeared in WiSO-Info, 1/2016.]
HOUSING SHORTAGE: MORE MARKET IS NOT THE SOLUTION
By Tony Kreb
[This article published in August 2018 is translated from the German on the Internet. Tony Kreb is a professor of macro-economic economic policy at the University of Mannheim.]
The advisory board of the German economy wants to lessen the housing shortage in the cities by deregulating market forces. This recommendation is based on a flawed analysis. Actually, wise public housing could reduce inequality and simultaneously improve economic growth.
In Germany’s population centers, housing space has become a scarce commodity that many people can no longer afford. Therefore, the German government not surprisingly is intensively engaged with the theme “affordable housing.” What can politics do to relieve the housing shortage in the cities?
The Proposal of the Advisory Board
The advisory council in a new export opinion proposes reducing public housing and rental brakes and instead increasing housing subsidies for needy households.
Deregulating markets is proposed that was followed intensively in the US and led to partly disastrous results – and to a rethinking.
The proposal of the advisory council is radical and has a certain charm. However, the recommendation of this council is based on an incorrect analysis that does not consider two theoretically grounded and empirically verified facts. Firstly, the supply of development areas is only limited so rent allowances force up the rents without increasing the number of affordable units. Secondly, housing space is a production factor that influences access to the labor market and the productivity of working persons. This connection between place of residence and productivity means pure free enterprise solutions lead to misallocations with negative effects on total economic production.
The advisory council scores its own goal with its analysis of the German housing market that ignores important economic connections. The deregulation of market forces is a proposal that was followed intensively particularly in the US and led to partly disastrous results and to a rethinking. The current housing policy in many large American cities emphasizes the production of socially-balanced districts with mixed use and is not limited to awarding housing subsidies for needy households as the council recommends.
What Wise Public Housing Can Do in Germany
In contrast to a pure market solution, wise public housing, socially-balanced housing in population centers, can simultaneously increase economic growth. Current research shows the considerable positive effects of successful housing promotion on affected persons. But, how can the Federal government carry out these expert insights in practical politics? With Martin Schheffel, I grappled with this question in a study for the Bertelsmann foundation.
In this study, we proposed an investment offensive of the Federal government and German territories permanently increasing the spending for public housing 5 billion euros per year (for 100,000 new apartments per year). We assume a gradual implementation of the program so the complete spending outlay will not occur until 2021. The additional funds will only be used for housing projects contributing to socially-balanced housing, as practiced successfully for several years in Hamburg and other German cities.
What could be the aggregate economic effects of this investment offensive? In our study, we answered this question with the methods of modern macro-economics. We summarized the conclusions of our analysis as follows:
• The public housing offensive creates good work and increasing prosperity;
Our calculations forecast 100,000 additional jobs and an increased GDP of 20 billion euros. Simultaneously, the number of working persons in the low-wage sector would shrivel and the number of unemployed would fall by 815,000 persons.
• The public housing offensive strengthens equal opportunities and lowers poverty…
• The public housing offensive improves public finances. Contrary to the frequent argument, stable state finances of public investments are not a contradiction. On the contrary, our calculations show a public housing offensive is fiscally sustainable. In the medium- to long-term, it finances itself through higher growth, more employment and increases state revenues. After 13 years, the investments would even realize fiscal surpluses contributing to liquidating debts.
Current research demonstrates wise public housing for all is worthwhile. Policy in Germany now needs innovative concepts how the state can realize the necessary offensive in public housing effectively and transparently. One promising option is the creation of a public investment fund that promotes building socially-balanced housing in close cooperation with communities and the construction industry. Other options are conceivable and should be discussed. Unfortunately, this is not true for the proposals of the advisory council.
COMMONISM: ABOLISH CAPITALISM
By Simon Sutterbutti and Stefan Meretz
[This article published on July 24, 2018 is translated from the German on the Internet, Streifzuege 73/ 2018, www.streifzuege.org.]
Without a goal, there is no way. Without utopia, surmounting capitalism is impossible. Most emancipatory movements intimate a liberated society through negative definitions – no state, no market, no socialization through work etc. Two positions within utopia theory will be sketched here.
The described utopia sees no problem in defining utopia and cheerfully outlines and makes plausible the utopian society. This is criticized by the second position of image prohibition that emphasizes all reflection about the future is an extension of today’s ideas and thus prolongs rule, work rage and separation of spheres. Turning away from the “status quo” and turning to pure criticism is urged.
In our book, we seek a way out by means of a third position, the categorical utopia. Utopia is not painted or described in its details. A categorical utopia tries to think how a society functions without the pressure to work, without property and without the state. It does not describe how we concretely live or reproduce.
Such a free society can only be the realization of human possibilities. These possibilities should be explored. For that, we need a theory of the person and society that can be discussed, examined and questioned. A utopia itself becomes discussable through this explicit substantiation. With the categorical imperative theory, utopia can become a discipline and a substantiated conversation.
In all history, we only restrictedly developed our human-social potency in exclusion societies, satisfying our needs at the expense of the needs of others. For me, it is subjectively function al to buy the cheaper cheese. With that, I promote working conditions that do harm to other persons and non-human nature. For me, exploiting other persons directly or structurally indirectly to better satisfy my needs is obvious.
This exclusion logic cannot be overcome ethically through individually different conduct. We can only surmount exclusion logic through social structures in which the best satisfaction of one’s needs involves including the needs of other persons. This is a society “in which happiness is neither accidental nor dependent on the unhappiness of others, a society in which I prosper when I include the needs of others.
This commonist inclusion society is the categorical utopia theory that we develop in the book “Abolish Capitalism.” We ask what social structures, mediating forms and “relations” promote inclusion. Two foundations are central from commons research: voluntariness and collective control.
In a society based on voluntariness, I cannot force anyone to grow strawberries for me or to remove garbage. Activities must be organized so doing them is important to people and gives joy. This is true for cleaning and cooking in a work group, for street repair in one part of the city and for working at blast furnaces in a steel plant. Voluntariness requires includes the needs of workers in all these structures.
Collective control demands including our mutual needs in using resources and means. I cannot simply buy the house with the most beautiful ocean view by means of money or appropriate the steel for the cheese factory that is needed for both building a school and the cheese factory. No, we set our needs in relation to one another and deal with limited means. We must endure arising conflicts in a way where prevailing at the expense of others is not possible.
We can only solve conflicts when we find a good solution for all of us. Including the needs of others, the inclusion logic, is also obvious here. The whole society could be permeated by a net of inclusion lines that make it subjectively functional for me to include the needs of others and my needs for others. “The free development of one is the condition for the free development of everyone” (Marx/ Engels) is concrete in this commonist inclusion society.
There is an interrelationship between utopia and transformation. The more clearly we understand utopia, the better we can define transformation. Transformation must develop those relations and forms of mediation that constitute the target society. The free society does not come from nowhere and can only be built and developed before the social breach in a still undeveloped limited form.
This development process of a new form of socialization joins the two central elements of reform and revolution. While revolution moves the breach or fracture into the center, the process is central is central for reform. Process includes a form breach in our abolition theory. The abolition must build and develop the liberating structures of the inclusion society. We can already recognize these structures in different ways in our present forms of organization on an interpersonal plane. The crucial question now is: How can the relations of voluntariness and collective control become socially defined relations?
This book is “an invitation to reflect again about utopia and transformation.” It is available free of charge (in German) on the website https://commonism.us.]