Can Vienna’s model of social housing provide the inspiration to tackle Europe’s housing crisis?

Wolfram Mack, 63, has lived almost his entire life in the Schmelz municipal housing estate in the heart of Vienna, which he says is “like living a village.” (Vianey Lorin)

With its small buildings and numerous private gardens, the Schmelz municipal housing complex in Vienna’s 15th district could easily be mistaken for an affluent suburban housing development. Wolfram Mack has lived here for most of his life. The retired plumbing contractor rents a 95 m² flat for €360 a month, below the average price for social housing in Vienna, because he has lived here for so long. And he has never given a moment’s thought to leaving. “It’s wonderful here, it’s like a village. Everyone knows everyone, you feel safe,” he says. “And there are a total of 300 gardens throughout the complex! We really live in a green oasis.”

Schmelz is one of the oldest public housing complexes in Vienna, which are referred to as “communal” when they belong to the municipality. It is part of the legacy of the period between 1919 and 1934 known as Red Vienna, in which the Austrian capital saw a rapid expansion of public housing. At the end of the First World War, living conditions in Vienna were dire, with many people struggling to feed themselves and the poorest residents crowded into sub-standard housing.

When the Social Democrats came into power in Vienna in 1919, they undertook a massive programme of public housing construction, funded primarily by a housing tax on the wealthy and a tax on luxury goods such as champagne and certain leisure activities. The result: by 1934, 60,000 housing units had been built. But this policy came to an abrupt end during the Austrofascist period of 1934 to 1938, followed by the Nazi period of 1938 to 1945.

The Social Democrats of the SPÖ (Sozialdemokratische Partei Österreichs) returned to power after the war and continued their policy of building public housing.

Between 1945 and 1956, 50,000 new homes were built. As a result, Vienna now has 220,000 municipal housing units, a quarter of the capital’s entire housing stock.

In order to prevent ‘pockets of poverty’ or ghettos from forming, this housing is spread throughout the city, including in the very touristy 1st district, just a stone’s throw from St. Stephen’s Cathedral, a major attraction in Vienna’s historic centre.

Although these dwellings are social in nature, they are not only intended for the city’s poorest residents. The income limit to access them is set at more than €3,200 net per month for a single person. “Here we like to say that everyone can live in communal housing, from taxi drivers to university students. This ensures social diversity and helps to promote community spirit,” as Markus Leitgeb, spokesman for Wiener Wohnen, Vienna’s municipal property manager, told Equal Times. “A resident’s address reveals nothing about their income.”

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On average, rents for these units vary from €300 to €750 and range in size from studios to four-room apartments. They are often criticised for being allocated practically for life: tenants can remain in their flats even if their incomes rise in excess of the limit.

60 per cent of Vienna’s residents live in rent-controlled flats

In addition to public housing, the second pillar of Vienna’s housing policy are subventions paid to developers who build affordable housing. There are around 200,000 subsidised housing units in the capital. This means that almost half of Vienna’s housing stock consists of social housing and, according to municipal figures, 60 per cent of the city’s residents live in rent-controlled flats. This has an impact on rental prices overall, including in the private sector: according to a study by Deloitte, the average cost of housing in Vienna is €9.8/m² compared with €27.8 in Paris and €20.1 in London.

“The city of Vienna is responsible for a large number of housing units and keeps their rents fairly low. As a result, overall rental prices remain moderate compared to other cities,” explains Leitgeb. This is a model that many other cities could follow.

Last September, the city of Berlin announced that it would buy back – for a total of around €900 million – 6000 public housing units that it had sold to a private landlord in 2004… for €400 million. Vienna, on the other hand, has always retained ownership of its housing, which has kept rents affordable. This is one of the reasons that the Austrian capital was named the most liveable city in the world for the tenth time in a row by Mercer and for the second year in a row by the Economist Intelligence Unit, a sister company of the English weekly The Economist.

Although Vienna’s model is rightly praised, it is not a recipe against poverty. “Social housing in Vienna is not only intended for the poor or very poor, it is intended for the working-class and to some extent the middle-class,” Christoph Reinprecht, sociologist at the University of Vienna, tells Equal Times. “Today, it is very difficult for low-income earners to enter into these categories. It’s not entirely inclusive.” In short, “the strength of the social housing system helps to protect the socio-economic status of a large part of the population, especially those with low incomes, so yes, it protects them from poverty, but at the same time, very poor people remain at significant risk of being excluded.”

A model worth fighting for

Vienna is not entirely immune to the increases in rental prices that can be seen in many European countries. Between 2008 and 2016, rents for privately owned housing Europe rose by more than 40 per cent. Anxious to preserve its legacy as ‘Red Vienna’, the city decided to act. In 2015, it launched a new municipal housing construction programme with the goal of building 4000 new units over the coming years, the first 120 of which were completed last November. In November 2018, Vienna passed a controversial new law requiring that all new buildings larger than 5000 m² include at least two-thirds subsidised housing, for which rents may not exceed €5 per m2.

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The conservative Austrian People’s Party (Österreichische Volkspartei, ÖVP) in Vienna has denounced the policy as “state interventionism” and “retrograde socialism.” The Social Democrats reject this criticism and defend government action in the housing sector: “The situation in Vienna is significantly better than anywhere else. This is obviously due to the fact that the city has always been strongly involved and pursued an active policy in the housing sector. Vienna has taken measures to ensure that housing doesn’t become a pure commodity. Housing is a human right and should be guaranteed as such,” says Georg Niedermühlbichler, member of the Vienna City Council for the SPÖ and member of the committee on housing.

In order to continue their housing policy, the Social Democrats hope to hold onto city hall after municipal elections in 2020. But the party is in a crisis: in last September’s parliamentary elections, the SPÖ obtained 21.2 per cent of the vote, the worst result in the party’s history.

The previous municipal elections in Vienna also saw historic gains by the far-right FPÖ, which managed to snatch a district town hall and compete with the SPÖ for the vote of municipal housing residents, long the exclusive domain of the Social Democrats.

Housing policy will thus play an important role in the upcoming elections. “The FPÖ, ÖVP and NEOS [liberal party] are all very conservative and economically liberal. They state very clearly that they consider Vienna’s housing model to be bad. They want the market to play a greater role in regulating the sector. This will obviously result in massive increases in rental prices and possibly even the sale of communal housing. This scenario could wipe out 100 years of social democratic housing policy in no time at all,” says Niedermühlbichler.

In this context, a defeat for the SPÖ would represent a major upheaval in Austrian politics: except for the periods of Austrofascism and Nazism between 1934 and 1945, the Social Democrats have held the city hall of Vienna since 1919.

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