Housing as a commodity

What might be a contemporary definition of public benefit in housing? Architectural historian Anne Kockelkorn goes inside the 100 Years of Presence. Journal addresses key issues in social housing in the FRG, examines the paradigm shift from quantity to quality in housing in the 1970s, and outlines scenarios that could lead to an improvement in the housing situation of many: away from housing as a commodity, toward an understanding of housing as a use value. An interview on the central point of the new publication " Housing question ".

How did social housing become a "housing commodity" in the FRG of the 1980s??

Housing was and is always primarily defined as a commodity in the legislation of the FRG, including social housing. For example, the nationally known protests at Kottbusser Tor in Berlin since 2012 are also a result of the legal definition of social housing as a time-limited agreement on occupancy and rent control. After the expiration of the time limit, these buildings fall back under the regulations of the free market and can be managed in a profit-maximizing way. This is exactly the situation of Zentrum Kreuzberg (formerly Neues Zentrum Kreuzberg, NKZ) at Kottbusser Tor: a 'socially' managed housing development originally financed with state funds is falling out of occupancy, while real estate prices at the same location are rising.

However, this definition of social housing as a temporary state of emergency (now fifteen, formerly thirty years), had a significant complement in the FRG until 1989, namely the Wohnungsgemeinnutzigkeit law (WGG). This law guaranteed a legal buffer between free market and public housing, in which it gave tax privileges to nonprofit housing developers and thus a competitive advantage over their competitors. This privileging of the non-profit status was cancelled with the tax reform of 1990. Since then, federal jurisdiction has lacked a clear concept of defining quality housing for ordinary and low-income households as a public good.

What followed the abolition of the Wohnungsgemeinnutzigkeit law?

The disappearance of the WGG facilitated real estate speculation and monopoly formation in the German housing market starting in the 2000s. It consolidated the ideological framework, which symbolically privileges the commodity over the utility value of housing. This ideological framework is held together by three principles: first, that the market can control urban development better than any politician; second, that housing market and demand consist of equal partners; and, third, that owner-occupied housing is the only proper economic form of housing and thus a kind of ethical and moral civic duty.

The pure form of this ideology can be read in the texts of neoclassical economics, for example already in essays by Friedrich Hayek in the 1920s or later by Wilhelm Ropke in the 1950s. Interesting in these texts is also the psychological stigmatization of the tenants of social housing as authority-dependent and initiative-less beneficiaries. The fact is that it was the other way around: Deregulation of the housing market unilaterally benefits most those who already own. At the same time, a high proportion of renters is more indicative of a society's prosperity than vice versa. Consider Switzerland, with one of the lowest ownership rates in the world (2014: 37 percent).

How did the discrediting of non-profit status come about in the 1970s?

The symbolic decline of the nonprofit is closely linked to the cultural and structural changes of the 1970s, as well as the inability of the major nonprofit housing organizations to respond adequately to these upheavals. The economic, cultural and political failure of the Neue Heimat is a vivid example. Economically, Neue Heimat pursued an expansion model geared to continuous production and economy of scale. Until the late 1960s, this model was able to work profitably, but starting in 1972, construction and borrowing costs skyrocketed; the Bundesbank's interest rate reached a historic high of nine percent in 1973.

As a result, not only did the company's large mountain of debt grow dramatically, but the cost rents in the new building also increased, which drove up the rental prices noticeably compared to the old building. Virtually overnight, a production model that had lasted nearly thirty years lost its viability. At the same time, in 1974, the housing market reached a parity of households and apartments for the first time since World War I. At this moment, the housing issue shifted its focus from quantity to quality and became a question of the housing form of differentiating life models. This mainly affected those who did not fit into the model of the nuclear family of mother, father and two children: the elderly, single people, single parents, students, homosexuals… At the same time, social housing became less attractive to middle-class small families due to rising rents and ever-increasing subsidies for home ownership.

Here the cultural and political reason for the failure becomes clear: At the historically significant moment of qualitative differentiation and increasing privileging of property, Neue Heimat was unable to articulate to its owner, the German Federation of Trade Unions, what added value it was providing to society. Nor has it succeeded in defining public utility other than through arguments of quantifiability such as comfort and hygiene. In the early 1980s, there was the corruption scandal involving CEO Albert Vietor. The urban housing form of the Fordist large housing estate and the political concept of the public benefit were increasingly brought to a common denominator and discredited together by these processes during the 1970s and early 1980s.

What might a meaningful public benefit look like in the housing field, today and prospectively??

A contemporary definition of public benefit could address both the housing and financing models without necessarily tying the two together. In 2014, the number of households of single people, single parents and same-sex couples in Germany overtook the number of households of heterosexual couples. At the same time, the labor market demands ever greater mobility, especially from highly qualified female employees. In this situation, different forms of shared housing are becoming a realistic model for ever larger shares of the population.

On an economic level, the praise of social tenants* could reverse their neoclassical discredit. The political protection of social housing tenants and their integration into a territorial policy of urban development slows down the socio-spatial polarization of cities and supports the equality of opportunities in a society. This is a key added value for everyone, which is particularly effective where real estate prices are rising. Social tenant protections ensure that opportunities in a biography are not fixed from birth by family, residence, and property ownership.

As far as combining form and economy is concerned, there are role models and pioneering projects at both levels. They are taught at German architecture faculties, published in professional journals and implemented as a political project by the Mietshausersyndikat (tenement syndicate). What is missing is the mediation between architects, the marketing concept of social housing associations and a definition of non-profit that is supported by city politics and gives such projects greater political weight.

What do privatization and financialization of the housing market mean for housing itself??

The relatively low ownership rate in Germany of 52 percent may seem like an indicator of stability by international standards, because the sheer number does not point to a massive mortgage crisis or a radical privatization push. In fact, the en bloc sales of social housing stocks to transnational private equity firms since the mid-1990s have fundamentally altered the status of private rental housing in Germany. In the meantime, monopoly-like consortia such as Vonovia or Deutsche Wohnen AG of a similar size to Neue Heimat operate on the German rental housing market. In political terms, however, the former, as stock corporations, are primarily geared to profit maximization. Due to their size, such companies can set rules and standards for urban development that have a negative impact on overall social cohesion.

The goal of a financialized rental housing market is to rent out products that are as cost-reduced as possible, that is: of inferior quality, to the highest bidder. The decoupling of the housing product from its use value has fatal consequences for tenants as well as for urban policy as a whole.

Discrimination and stigmatization of German neighborhoods is not yet as advanced as in French suburbs and U.S. ghettos, where racial and religious conflicts add to housing segregation. At this point, political intervention is needed in German cities, and this is where a vivid concept of public benefit could take effect.

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