Social housing in Germany

Link to Statistics on social housing in Germany
Link to the most recent News from CECODHAS members in Germany

Photo: tenants party-Housing Cooperative, Spar and Bauverein' Dortmund

Overview of the social, co-operative and public housing system in the country
’Social housing’ represents 6% of the total housing stock and is declining gradually. The right of municipalities to allocate dwellings to the neediest households does not translate any longer into the construction of new social dwellings; therefore it is difficult to talk of a “social housing stock” in Germany. Instead, since 2001 the system for social provision of housing is based on allocating dwellings from the existing stock, on a case by case basis, through a “social” temporary convention between the municipality and the landlord, which sets the rent at a price lower than the market for people who cannot afford a dwelling otherwise. In Germany, there are four different categories of housing companies: municipal housing companies, owned by municipalities; co-operatives, which provide rental co-operative dwellings, accounting for 6% of the total housing stock; organisations owned by churches (significant sector in Germany, especially in the provision of social services); housing companies belonging to private investors and, most recently, to national and foreign investment funds, after the privatization of municipal companies. These are grouped in regional federations, which are in turn members of the national umbrella organization, the GdW (Bundesverband deutscher Wohnungsund Immobilienunternehmen). Every year, 100 000 social housing conventions come to an end.
At the same time, the sale of municipal housing stock, although strongly opposed by tenants’ organizations, is increasingly used as a way to tackle the budgetary crisis municipalities are often facing. Social housing dwellings are expected to diminish by one million in the period 2002-2010.

Market trends
With the exception of Cologne, Stuttgart, Frankfurt and Munich, where the market is tight, the German housing market as a whole is balanced. Overall, housing offer is bigger than demand, resulting in 439 436 vacant dwellings (out of which 48 220 are not in physical conditions to be used anymore). Nevertheless, German regional housing markets show very different pictures: prices and rents in several major cities in the West have increased moderately in response to raising demand. In other places, however, previous excess supply has left the market depressed in the face of poor general local economic conditions. Given the fact that supply and demand on housing markets are broadly in balance, the emphasis in housing policy is no longer placed on increasing the supply of housing in quantitative terms. What is more important now is to pursue a nuanced funding policy which places greater emphasis on the housing stock in cities, like in Cologne, Stuttgart, Frankfurt and Munich, where there is a housing shortage. Another problem that needs to be faced is the fact that low-income people, living on social benefits, experience great difficulties in accessing affordable housing. 57% of Germans rent their houses, especially in urban areas where the predominance of rental tenure allows security of tenure (long term lease), stability of rent price (regulated market), diversification in the offer of housing and quality standards, and higher mobility. Private rental dwellings account for 51% of the total housing stock, while only 43% of the housing stock is owner occupied across the country as a whole, the lowest share in the EU. On average, housing expenditures represent about 24% of the total households’ expenditures, slightly above the EU average.

Policy developments
Since the first of January 2007, the Bund has given up its competence on housing and has delegated it to the Länders, with a yearly compensation of 600 million euros. Since then, housing policy is the competence of both the Bund and the Länders. The latter can legislate freely in the absence of federal law, or legislate according to federal law when it exists. However, municipalities are subject to federal law which puts an obligation on the councils to financially cater for those who are “particularly vulnerable”. Within the general rules stipulated by the Federal Act, the rules of assistance differ widely amongst the various Länders, whereas it is the municipalities themselves who actually implement Länder’s decisions. Since 2001 reforms of social housing policy have been made and more flexibility has been introduced into the system. Social housing no longer benefits from special tax concessions, whereas the public subsidies are open to everyone, meaning that companies as well as private individuals can apply, albeit the subsidies are confined to occupancy and rent control rules, and to those within a certain income bracket. Social housing is in long term decline following this switch in policy from supporting specific providers. In some parts of Germany municipal housing companies owned by the Länders or the Bund have completely been sold to fill the financial gaps in the municipal economy. They are the object of asset management policy aimed at transferring them to investment funds (national or international). Overall, the German Finance Ministry estimates that over 600 000 dwellings have been bought up by foreign funds. Funds aim to make returns through renovations, sales to tenants, other disposals, managerial and financial efficiencies and price rises. Even so, many cities still have at least one publicly-owned property company providing housing.