Housing Story

Last night, on German public TV (ARD), at 8:15 PM, they ran a 45-minute documentary piece talking about the affordable housing crisis in Germany.  Title: Living. Renting. Rip-off.

They basically went and told the whole crisis, in a compacted way....which most people can relate to.  I highly recommend the documentary piece. 

For those who haven't grasped the current German crisis on housing....it runs along this way.  Up to the 1980s, there was social housing owned and run by local city governments and rent was controlled.  Rules were relaxed, and the cities were given the right to sell the apartment buildings to management companies.  Everyone felt this would work out OK.  Already by the early 90s....renovation was occurring, and the shocker came upon the end of renovation....where rent escalated (dramatically).  If you live in Dusseldorf, Berlin, Frankfurt, or any of the top forty cities in Germany.....you are affected by this rent problem.

So here's the insider story.  All of these buildings were built with a model which provided rental income to the 'owners'.  If you had a 100-apartment building, then you can plan to get monthly around 700k Euro.  This is for a building built in the 1960s, with rare renovation and general condition. 

Along came this new business model....you offer X-amount for that same building, have a five-year plan to renovate it, and transform it into a different business model.....either to sell it as condo-property in the end or to reach the high-end 1.4-million Euro a month from the same structure. 

Then you add in these shell-type companies, which run through five or six countries, and you the simple guy who can only afford 700 Euro a month are facing a crisis because the owner has a different business model in mind.  In some cases, you (the renter), have been there in the same place for 40 years. 

The people who buy houses?  Unaffected.  So around a third of society isn't really suffering from the crisis in Germany.  Resolving this mess?  Cities are talking about building more affordable apartment buildings but cost will be a factor.  Controlling the speculation folks?  It's not going happen.  So this problem is going to linger for a long time.