Capital Language Solutions | Road Map for Affordable Housing

Road Map for Affordable Housing

PlattenbauWhen you think of a road map, it’s quite likely that the first thing that springs to mind will either be a street atlas or the plan developed by stakeholders in the Israel-Palestine peace process. The term “road map” now means more than just a plan of streets and highways. In a world of digital, online maps and satellite navigation equipment, the term road map has come to be used primarily to describe a streamlined plan that matches short-term and long-term goals, defines timescales, milestones and deliverables and also outlines risks and how resources are to be allocated. And now Berlin has one! The fresh and much heralded “Roadmap for Affordable Housing.” Read on to find out more.

  • Senate to grant state-owned housing companies increased access to development land
  • 30% of newbuild apartments will be available for between €6.00-€7.00/m² per month
  • Road map designed to secure long-term economic viability of state-owned housing companies

The Road Map

Berlin’s Senator for Urban Development and the Environment, Andreas Geisel, recently submitted what he has christened a “roadmap for 400,000 affordable state-owned rental apartments” in Germany’s capital city. His proposals are designed to create a new and long-term partnership between Berlin’s political establishment and the city’s municipal housing associations. The roadmap has cleared its first hurdle, gaining approval from Berlin’s political authorities and representatives from the municipal housing association, who came together in mid-April to officially sign the agreement.

The Road Map’s Partners

Andreas Geisel had the following to say at the agreement’s signing ceremony: “Given the heated demand for housing in Berlin, it’s clear that the six state-owned housing companies are key partners in efforts to supply a broader cross-section of the city’s population with affordable housing.”

Geisel emphasised the social ideals that underpin the role of state-owned housing companies in Berlin’s rental market: “Even in the midst of widespread euphoria surrounding Berlin’s impressive growth, we shouldn’t lose sight of those Berliners who can’t always manage on their own. Our housing companies stand as a guarantee for the provision of affordable rental housing and secure tenancies.”

Ambitious Targets

The road map adds a political commitment to the housing companies’ previously announced plans to increase their stock of rental housing in Berlin, and sets some pretty ambitious and concrete targets (although the associations still have some wiggle room should things not quite work out as planned):

• The housing associations will do everything necessary to increase their stock of rental apartments by 80,000 to 400,000 by the year 2026. Of these, roughly 26,600 will be added to the associations’ portfolios via acquisitions and 53,400, including 17,800 subsidised apartments, will be newbuilds.

• With a clear focus on those Berliners who have the most difficulty finding appropriate and affordable housing, approximately 30% of the newly built apartments will be subsidised. This means that rents of between €6.00 and €7.00 per square metre are achievable, with the average set at €6.50/m².

• The Senate will increase the amount of state-owned land it makes available to the housing companies, simultaneously providing them with more development land and boosting their borrowing capacities. The associations will retain any profits they generate and reinvest them in fulfilling the roadmap’s targets.

• The associations will produce annual reports on their progress towards the roadmap’s targets, including a report on the status of new project developments and on changes in the associations’ economic circumstances. They will identify any adjustments that might be needed to correct course and fine-tune their activities if they diverge from their forecasts.

• Portfolio growth is linked to the associations’ economic performance, and the associations guarantee that they will maintain their financial good standing.

• Construction costs will be capped at €2,000/m² of living space in order to secure the provision of affordable housing, even for those apartments financed on the open market. This approach is designed to not only secure the long-term economic viability of the associations, but also to maximise the number of affordable rental apartments available to the most vulnerable members of society. This is in keeping with the founding principles of the state-owned housing associations and is a key point in their articles of association. The cap can be lifted if specific market, construction or legal specifications mean that higher construction costs are necessary.

• The state-owned housing companies are committed to generating cost savings via standardisation and series production of the construction components they use. Given the scale of building involved, this should be entirely feasible. They will also be required to explore and implement innovative construction and project management techniques.

€11.5 Billion to Invest

Over the next decade, the companies plan to invest a total of €11.5 billion in expanding their portfolios. This has been described as the municipal housing sector’s key contribution to easing Berlin’s over-heated housing market.

Unsurprisingly, the city’s green and left-wing politicians have decried the road map as “insufficiently ambitious” and have called for two-thirds of the newly built apartments to be made available at an average of €6.50 per square metre per month, rather than the 30% envisaged by the road map. So far, there has been little response from the real estate industry, although that will probably change in the next few days.
What do you think? Is this a case of unnecessary state interference, or could it provide Berlin’s rental housing market with just the boost it needs? Let us know in the comments below.

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