German Tenants’ Perspective on Privatization of Housing


Dr. Franz Franz-Georg Rips, Director of German Tenants Federation DMB:
Paper for speech at meetings in Bochum 20/21 11

1. Housing is a human right. All humans have a right to healthy, safe and affordable dwellings. This is true independently from income and financial circumstances. Housing is more than a roof above the head. Housing is also the basis for participation in the political, social and cultural life. And housing creates the conditions for peaceful coexistence of a multi-cultural society in the cities. Therefore, besides accommodation we are also speaking about active neighbourhoods and vital city districts.

2. The market by itself is unable to organize the right to housing. The market is socially and ecologically blind. Public control in housing policy therefore is indispensable. Housing policy is and remains a political task at the level of state and municipalities.

3. An important instrument of responsible housing policy is the accessibility of social housing (In Germany social housing means subsidized low-rent housings). By social housing we understand housing on which the state has an allocation right, in order to be able to accommodate disadvantaged households, and at regulated prices, which guarantee the affordability of housing. Independently from the status as social housings housing stocks in public ownership, particularly in the hand of municipalities are suitable and necessary, in order to secure appropriate housing for low-income households and all persons who are disadvantaged on the free housing market. The sell-out of dwellings in public ownership is an irresponsible dissipation of social capital. These sell-outs are the glaring opposite of sustainable policy. Short-term and one time cash flows on the one hand are countered by long-term social and economic disadvantages. The public salesmen finally give up influence on the organization of housing and city. They also exclude the inhabitants from participation chances, in the meaning of self organization of their life and residential environment, and diminish thereby the democratic state.

4. The buyers of the public housing are compromiseless aligned to management under the criterion of a maximum profit. For them the dwellings are exclusively economical goods -, not social goods.

5. The strategies of the speculative purchasers show uniform ways of acting. In particular:

  • Savings are obtained by transformation of the mortgage on the acquired real estates. Increasingly, internationally active banks are switched on.
  • Economical “optimization” by consistent reduction of jobs. By this the maintenance costs are to be reduced on a long-term basis.
  • From the acquired housing existence the raisins are picked, shifted into a good condition and sold this way by auction on the free housing market as single objects. This process gets frequently covered by the fact that at the same time and in close spatial proximity also an allegedly social compatible privatisation to the tenants is operated. In the result the interest is to achieve highest possible profits. This usually succeeds because the single sale realizes a excess of proceeds up to 300 % in relation to the purchase price.
  • programs for maintenance and modernization are not aligned on the basis of the criteria of sustainable management, but with the goal of greatest possible net yield.
  • In particular dwellings in worse locations are down-managed and neglected.
  • all possibilities of a rent increase and the reallocation of operating costs are excessively used.
  • by “tenants turn” programmes the new owners try to get rid of the tenants with lower income and to concentrate renting business on high performance tenant households.
  • the assignment of orders gets concentrated and is increasingly taken away from the local handicraft and local construction industry.
  • where possible, the use of the residential environment is intensified by compression (new construction within the neighbourhood), heightenings etc. and thus changed for the disadvantage of the original inhabitants.

6. Losers of these processes are:

  • the tenants, experiencing higher living cost loads and frequently clear quality loss in their residential environment;
  • the employees of the bought up enterprises, whose job security is endangered;
  • the local services and craftsmen, which are excluded increasingly from orders by the management of the acquired objects;
  • the regional money and credit institutes.

On the back of these groups the profits of the investors are gained.

7. In addition, losers above all are even the cities and the citizens living in it. The speculative purchasers are not partners in the process of urban development and with the solution of social problems. In particular they are no addressees for national and local advancement programs. The city and its citizens lose the capacity to act within the range of housing and town planning. Central problems of the social politics, e.g. the avoidance of homelessness, if this does not succeed: the accommodation of homeless persons, sufficient reproaching of affordable dwellings, the possibility for the control of allocation structures, peaceful co-existence of multi-cultural communities.. become clearly less solvable. In individual cases the capacities of the sold dwellings and housing enterprises must expensively be bought again.

The resulting processes are slow and are creeping. By the policy they are neglected, because punctual and up-to-date they are not perceptible. Surely it can be assumed that on a long-term basis the social tensions as effects of these processes will be clearly intensified.

8. Without developing a successful preventive strategy the housing sales will continue and probably even speed up. Distressed public households, the prioritization of the fiscal policy in relation to the social politics in the one hand, the world wide vagabonding volume of available investment capital, collected particularly in England and in the USA, on the other hand, form an unholy alliance and are the fertile soil for further purchases. The example of the Woba in Dresden, where a majority of the city council voted for the total sales of the municipal housing company, clearly shows that in the meantime even left parties, like in Dresden the Party of Democratic Socialism, give their agreement to such a policy of the sell-out of public property. The councils and administrations of the cities, the parliaments and governments on national level are not partners protecting against the sell-out politics.

9. Resistance therefore increasingly must be organized from the citizenry. Naturally the task is to increase the pressure to the political administration. First of all it is important to use the instruments of direct democracy (citizens’ initiatives, local and regional referenda and popular votes) consciously. A formal success would produce a noticeable deterrent effect. Such actions are successful only if new alliances develop, if social groups with same political contents and strategies link to each other and if the forces are effectively bundled.

10. The planned permission of REITs in Germany will intensify the utilization pressure in the housing enterprises. Exclusive profit adjustment within the management of housing real estates will clearly be strengthened. REITs in particular are also an assistance for the “grasshoppers” for organizing their exit after they have sucked the housing stocks. The DMB therefore will continue its fight against the permission of REITs in Germany.

Provisional free translation by Knut Unger