Solutions from Vienna to address Europe’s housing crisis

Karin Zauner-Lohmayer calling for more social and affordable housing.

Apartments in Europe are becoming more and more expensive. A European Citizens’ Initiative is now calling on EU authorities to exclude public investment in social and affordable housing from EU debt calculations. EURACTIV Germany reports.

The housing market in European urban areas is tense and rents have been on a sharp rise in recent years. According to Eurostat, one in ten persons in Europe is overburdened by housing costs.  Those who spend over 40% of their income on rent fall into this category.

Karin Zauner-Lohmeyer from Vienna no longer wanted to witness this. In March, she launched the European citizens’ initiative “Housing for all“, which now has the support of organisations in 21 EU member states.

The initiative calls for a better legal framework in the EU when it comes to investments in subsidised and social housing. If the initiative manages to collect one million signatures from at least seven different EU member states by 18 March 2020, the EU Commission will have to respond to its demands.

The housing model of Vienna is considered to be best practice. Compared to German cities such as Berlin, social housing was never privatised, 45% of the housing market is subsidised and 60% of the population lives in subsidised or social housing. The high proportion of capped rents takes the pressure off the market.

“Real estate has increasingly become something that attracts many investors and speculators have been driving prices up. Low interest rates are allowing money to be stashed into the housing market,” according to Zauner-Lohmeyer.

This cannot go on, according to Zauner-Lohmeyer. For years, calls have been made to improve EU legislation regarding social and affordable housing. One request after another was sent to Brussels but nothing happened.

“Now we are trying to change things with a citizen’s initiative,” she said.

Although housing is a national competence, the EU can influence investments in social and affordable housing by amending EU rules that relate to state funding, competition law and fiscal rules, according to supporters of the initiative.

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Increased investments for social housing

Since the financial and economic crisis of 2008/09, investment in social housing has been halved. The investment gap amounts to approximately €57 billion per year, according to the High-Level Task Force on Investing in Social Infrastructure in Europe.

To close the gap, the citizens’ initiative is demanding that EU debt and deficit rules – the so-called Maastricht criteria – no longer apply to public investment in social housing so that it can no longer be qualified as debt.

“Our goal is to increase the scope for investments in cities and municipalities in Europe. Infrastructure in many cities is decaying, but the Maastricht criteria is blocking investments,” said Zauner-Lohmeyer.

The initiative also proposes that the European Investment Bank sets up a fund from which non-profit and public housing developers can obtain further financing.

A new Europe-wide regulation, under which users of online platforms such as Airbnb will be forced to pay the same taxes as those who own conventional accommodation, is also intended to further reduce the burden on the housing market. Incentives to offer short-term housing are currently too attractive, argue supporters of the initiative.

“We will exhaust all legal possibilities to ensure our requests are implemented,” said Zauner-Lohmeyer.

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Difficulties in accessing funding pools

Asked by EURACTIV to comment on the initiative, the European Commission responded that it is up to EU member states to determine their own investment priorities. The Stability and Growth Pact offers room for flexibility, said a Commission spokesman in reference to a communication from 2015.

But Zauner-Lohmeyer said this does not give member states enough leeway. And subsidies currently provided by the EU for the expansion of social infrastructure are difficult to access, particularly for non-profit housing developers, she said.

Reiner Wild of the Berlin Tenants’ Association also sees it this way. Together with the German Tenants’ Association and the German Trade Union Federation, he is supportive of requests made in the citizen’s initiative. “We very much welcome the fact that Vienna is showing strong commitment on this issue,” said Wild.

The Berlin market is particularly interesting for real estate speculators because of the low starting prices. Although rents are still much lower than in other cities, prices are increasing much faster.

Now the Berliner Tenants’ Association is collecting signatures for three different initiatives: a petition demanding expropriation of large real estate companies such as ‘Deutsche Wohnen’; a petition to remove property tax from operating costs under local tenancy laws within the framework of property tax reform; and the European citizen’s initiative, which has now been added to the list.

“A lot is happening. Ideas are now in need of support so that these can be implemented. Otherwise, the situation will get out of hand,” Wild said.

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[Edited by Frédéric Simon]

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