In the European Union’s largest city, the pressure on the housing market is so great that its residents want to undertake a historic experiment. Five years ago, the citizens of Berlin asked the Senate of the German capital by referendum to draft a law that would end the dominant market power of large real estate companies.
Under this proposal, for-profit companies that own more than 3000 apartments would have been forced to sell them to the state of Berlin. But that didn’t happen. Meanwhile, average rents for new contracts have risen by around 50 percent since then.
In the elections for the Berlin state parliament on September 20, the Left Party (Die Linke) emerged as the largest political force. During the election campaign, the Left promised to implement the referendum result with determination and to bring the housing of large real estate corporations under public ownership. The term “expropriation” was also used frequently in the campaign. Whether Berlin will actually enter this new legal territory currently depends on the negotiations to form a governing coalition. However, the election result itself has brought attention throughout Europe to the severity of the housing crisis in many metropolitan areas.
DW presents some of the concepts and solutions that other European metropolises have already implemented.
Vienna: Municipality as landlord
The Vienna model is considered one of the exemplary European solutions to the explosion of rent prices. The Austrian capital faced a severe housing crisis after World War I. Beds were so scarce that workers slept in shifts and, in the overcrowded conditions, diseases such as tuberculosis spread.
The solution taken at that time continues to stabilize the housing market today. According to city data, Vienna rents out around 220.000 publicly owned apartments and administers another 200.000 units as subsidized housing. Around 60 percent of Viennese residents live in these apartments. This policy also has a stabilizing effect on the free rental market, helping to keep prices under control.
Basel: Public land, private buildings
The fact that housing is becoming increasingly expensive in many cities is also linked to the increase in land values, as a result of the attractiveness of urban areas. For this reason, many countries are considering ways to decouple rental prices from high land prices. One solution is to not sell land owned by municipalities, but to lease it out on a long-term basis, for example to housing cooperatives or socially oriented investors. Municipalities benefit because they do not have to cover construction costs, while investors are not forced to calculate high land prices, which they would then pass on to tenants.
One of the pioneers of this model in Europe is Basel. In the Swiss city, about 40 percent of all cooperative housing is built on public land. Cities like Barcelona and Lisbon have also been making increased efforts to establish and expand this model for years.
Paris: Repossession and conversion of buildings
The situation becomes more complicated when the land and buildings are already in long-term private ownership. For this reason, since 2014, the Paris municipality has enjoyed a right of pre-emption, which it uses particularly in neighborhoods where the pressure of displacement of residents is high, with the aim of increasing the percentage of social housing.
The target is that by 2035, 30 percent of the housing stock will be social housing. However, the increase so far is mainly attributed to new construction projects carried out by the city itself. Meanwhile, the French capital and surrounding municipalities are increasingly buying up commercial buildings to convert them into housing. In the surrounding Region, Île-de-France, 61 projects have been identified that could create up to 8.200 new homes.
Prague: Housing for key professions
The Czech capital, Prague, has found another way to keep in the city those workers without whom many services would not function: nurses, police officers, teachers or cleaners, who often have less financial means to afford rent than bankers or lawyers. In Prague, around 660 apartments have been built specifically for public sector employees.
The company that manages these apartments is a subsidiary of a Czech bank. Thanks to European financing and a 40-year long-term economic planning, rents are intended to be kept around 20 percent below the usual market level. The residents are not selected by the bank, but by institutions such as hospitals and public offices. They conclude cooperation agreements and can offer young employees the opportunity to rent housing at favorable prices. Other similar projects are already in the planning phase
Dublin: Rent at cost, not for profit
Even the Irish capital, Dublin, is struggling to keep low- and middle-income people in the city. After the financial crisis of the late 2000s, many properties were bought up by foreign investors. At the same time, tech giants, attracted by low tax rates, chose Dublin as their European headquarters, significantly increasing demand for housing. As a result, rents have risen sharply. There are long waiting lists in Dublin, as the supply of social housing is far less than the demand.
The Cost Rental Housing program, launched in 2021, targets a group that is often left out of assistance schemes: people with incomes below 66.000 euros per year, who earn too much to benefit from social housing, but too little to afford free market prices. Under this program, non-profit organizations and public institutions provide housing without a profit motive. As a result, the initial rents are significantly lower than in the market. According to a study by the ESRI Social Research Institute, they are on average almost 30 percent lower.
The Irish government aims to make 18.000 such homes available by the end of the decade. The demand was demonstrated last year in the Coolevally area, southeast of Dublin: over 4.200 applications were submitted for 104 homes. However, many more new homes will still be needed to balance supply and demand in Europe’s most sought-after cities. (DW)