Reasonably priced housing Social Housing in a Squeeze

Anonymous housing complex
Anonymous housing complex | Photo (detail): © Arnd Zickgraf

In the larger conurbations and growth regions reasonably priced housing is thin on the ground. Compared to the national average monthly rent that at the beginning of 2013 was around six euros per square metre, the average rent in Bonn is a good eight euros per square metre, in Frankfurt-on-Main a little over ten and in Munich more than 13 euros – and still counting. The problem is that there is not enough investment in social housing schemes – often the only affordable housing for low-income earners.

“Live like a King on the Nibelungen Estate.” In the south of Bonn a private entrepreneur is building 23 luxury owner-occupied apartments on the river Rhine. A few minutes’ walk from there the traffic is slowly winding its way past a building site. “Lilla’s Park” will be a collection of 15 top-calibre, owner-occupied apartments right next to a tennis club - the going price for them is 187,000 euros for a flat with an area of 57 square metres. For low-income earners, single parents, students and pensioners it is becoming more and more difficult to find a place to live that they can afford.

Demand is growing, supply shrinking

According to the city of Bonn the number of state-subsidised housing units decreased from about 14,000 in the year 2000 to about 12,000 in 2012. This number is expected to drop to 8,000 by 2016 as from then onwards hundreds of apartments will no longer be subject to rent control. Public subsidized social housing may be rented for a fixed period only for a limited price. The landlords will then be able to demand much higher rents for the flats. At the moment over 3,000 people are looking for a council flat in the city - and all of them have an eligibility certificate. The percentage of low-income households that have to live off 1,000 euros a month is about 16 per cent and that is actually above the state average which is only 13.6 per cent. “ Over the last 12 years the city of Bonn somehow missed the boat when it came to social housing,” was the way self-employed credit counsellor, Ulrich Franz commented on the development.

Two reasons for the decline of social housing in Bonn come to mind: according to Bonn’s General Anzeiger newspaper the city sold all of its municipally owned flat in 2002. A total of about 2,500 flats were sold to a private housing developer for about 87 million euros. The newspaper went on to say that recently two building contractors returned funding for 106 rented flats back to the city. As a reason for this the investors explained that the going interest rate was only a little above that of the state-owned development banks. “There are hardly any reasonably priced flats being built at all. Even the non-profit housing associations are building mainly in the more upmarket segment,” as the German Tenants’ Association announced in the October 2012 edition of its newspaper. Likewise, in the university cities tens of thousands of affordable student flats are needed.

A tendency towards social exclusion?

Like many big cities the city of Bonn is growing to the detriment of low-income earners, single parents and pensioners. “This is an unhealthy development with a definite trend towards social exclusion,” says Mirco Theinen, manager director of the Bonn Tenants’ Association. It is not just happening in Bonn, however, all over the Federal Republic of Germany social housing is in decline.

The survey Bedarf an Sozialwohnungen in Deutschland (“Demand for social housing in Germany”) commissioned 2012 by the German Tenants’ Association has ascertained that there are only 1.66 million state-supported flats available to satisfy the present demand, which has been calculated at around 5.6 million housing units. It was found that over the past ten years on average 100,000 council flats had vanished every year from the housing market. In Baden-Württemberg, the state whose cities have the highest rents, the number of council flats dropped from 137,000 to 65,000. In 2001 in North-Rhine Westphalia there were still 844,000 council flats on the market, but in 2010 the figure shrank to about 544,000. According to the survey the main reason for this decrease is the fact that more and more flats are no longer subject to rent control. At the same time only a small number of new, rent-controlled flats are being put on the market. Every year only sees about 30,000 new council flats as a rule, 10,000 of them being newly built. If they were to keep up with the existing demand alone, the number of state-supported flats available every year would however have to be around 130,000.

The end of social housing?

According to a survey conducted by the market research institute GfK from spring 2012 the majority of Germans are convinced that social housing is going to be needed in the future, too. 98 per cent of the people asked were in favour of state-supported housing. Even the majority of above-average earners think that social housing is indispensable. The politicians in the municipal councils affected are also convinced of this, but investors unfortunately are going down a different road. Could this be the end of social housing?

“The party is over, social housing is facing difficult times ahead,” says Ulrich Ropertz, managing director of the German Tenants’ Association. The tendency at the moment is more towards making money with apartments rather than building new ones. Alongside this striving for profit he also puts the blame on erroneous predictions for the housing shortage. According to them the population of the cities was supposed to shrink and the people were supposed to move to the country. This was actually not the case - due to immigration the number of city dwellers actually did not shrink. The number of households is expected to continue growing until the year 2025 – predominantly in urban areas.

Christine Hannemann, Professor at the Stuttgart Institute for Housing and Housing Sociology believes that this shortage of affordable housing will lead to social tensions. She is however convinced, “No, this is not the end of social housing. On the contrary, it is going to be one of the main social issues of our times again.”