DIP partner Aengevelt has analysed a political position paper by the Hans Böckler Foundation, according to which, according to media reports, the socialisation of private housing companies could increase the supply of affordable housing. According to Aengevelt’s findings, the reporting is based on an erroneous perception of the paper, in which there is no justification as to why socialisation should slow down the rise in rents. Therefore, it cannot be used as an argument for socialisation.
Last week, the media widely reported on a paper called a “study” by the Hans Böckler Foundation, which deals with various options for the socialization of private housing stocks in Berlin. Several reports saw in the paper proof that socialization could slow down the increase in rents – such as the Tagesspiegel; similarly also B.Z., Süddeutsche Zeitung, Spiegel Online, Focus Online and numerous others. In fact, it is not a study, but a “policy brief” – i.e. a political position paper – of the trade union-affiliated Hans Böckler Foundation with the title “The transfer of large housing stocks into public ownership – options and pitfalls”.
Among other things, this position paper contains the sentence: “However, affordable housing for households with low and middle incomes can only be guaranteed if there is a sufficient supply of non-profit or public housing.” (p. 2) The choice of words in the conclusions on page 20 is much more restrained: “Such a stock can slow down the rent dynamic (…)” – here there is only one “can” formulation. And the authors themselves come to the conclusion: “The socialization of large housing stocks of private housing companies is not a solution to the lack of housing in tense cities.” (p. 19).
The thesis that socialisation can slow down the rent dynamic is not substantiated in the policy paper of the Hans Böckler Foundation. The paper, which is already very short at 20 pages, mainly deals with the question of how the transfer of private housing stocks into public ownership could be organised under company law, favouring the option of integrating the private housing stocks into the six existing state-owned housing companies.
The thesis that public housing stocks are slowing down rent dynamics is both the conclusion and the premise of the study. There is no justification whatsoever – neither empirical data is used nor comparative price analyses are carried out, nor are model calculations made. There is not even a literature analysis. The only reference to this thesis is from an earlier publication by the authors of the study (Dullien & Krebs 2020), who also did not carry out a scientific analysis, but exclusively presented basic regulatory positions that postulate the superiority of public housing construction over a market-based housing supply. On the question of why public housing should cushion the rise in rents, there is only the remark that it creates “more affordable apartments for the same amount of building land, as it can focus on apartments below the luxury segment”.
The majority of low-cost apartments in old buildings are in the hands of private landlords, who often charge significantly less than the market rent because, for various reasons, they do not use rent increase opportunities or only use them with delays or in part. When private investors take advantage of public funding and build social housing, their rents are identical to those of municipal or state housing companies because they are set by the funding body. Public and private housing companies are confronted with the same construction costs and manage their apartments according to the same business logic. The educational institutions of the housing industry do not differentiate according to the owner of a housing company when teaching the business methods of housing management.
Since the “Policy Brief” of the Hans Böckler Foundation does not contain any justification as to why the socialization of private housing stocks should slow down the rent dynamic, it cannot be repackaged by the reporting as evidence for the alleged rent reduction through socialization.
Dr. Wulff Aengevelt, managing partner of the DIP partner Aengevelt Immobilien: “The broad media coverage of alleged price-dampening effects of socialization on the rent level is based on a shortened and erroneous perception of a political paper whose authors cultivate an ideological preference for a state economy, but in the publication there is no scientific analysis and no justification as to the extent to which socialization should increase the supply of affordable housing. On the contrary, the authors of the paper themselves admit in conclusion that socialization cannot mitigate the critical undersupply that has been observed for years, especially in the low-cost housing segment. Consequently, the political actors cannot refer to this paper either.”
