The Federal Office for Building and Regional Planning

Publication Strategies of local authorities concerning their municipal housing stock - results of the case studies and overall result

Editor: BMVBS Series: Forschungen Issue: 151 Published: 2011

Project management BBSR:
Karin Lorenz-Hennig

Summary

Background and methodology

Municipal housing companies and municipal housing stock have traditionally played a key role in the German housing market. In recent years, planned or completed sales of municipal housing stock have caused a lively debate on the matter of housing policy. Against the backdrop of this debate, the Federal Ministry of Transport, Building and Urban Development and the Federal Institute for Research on Building, Urban Affairs and Spatial Development commissioned the Institute for Urban Research and Structural Policy (IfS) to conduct a research project on the strategies employed by local authorities in relation to their municipal housing stock. The aim of this study was to gather information about the current situation and the importance of municipal housing stock as well as about the strategies employed by local authorities in relation to this municipal housing stock.

Within the framework of the research project, a written survey was carried out of all cities and municipalities with populations of at least 5,000, as well as all counties. It was the task of the municipal survey to gather comprehensive quantitative data on the municipal housing stock. Furthermore, case studies were conducted in the cities of Munich, Essen, Kiel, Lübeck, Mainz, Potsdam, Velbert, Bautzen and Mühlheim am Main as well as the county of Hildesheim. The case studies were geared towards gaining deeper insights into the strategies of the municipalities in managing their housing stocks and on the cooperation of municipalities and municipal housing companies.

The results of the municipal survey were published last year (BMVBS 2010). The publication at hand introduces the results of the case studies and the overall result of the research project.

Findings

The survey of local authorities demonstrates the widespread distribution of municipal housing stock. 81% of the municipalities that took part in the survey either have shares in municipal housing companies or hold municipal housing units in direct ownership. The number of housing units involved is approximately 1 958 million, which means that, on average, one in ten residential units in these areas falls into the category of municipal housing stock.

Municipal housing stock is controlled to a large degree by municipal housing companies, in which local authorities hold a share. 34% of local authorities surveyed have shares in municipal housing companies, which own 96% of the municipal housing stock recorded in the survey. While residential units owned directly by local authorities are to be found in a very large number of local-authority areas (72% of cities, municipalities and counties), they only represent a small portion of the total number of municipal housing units overall (4% of the housing stock recorded in the survey).

The municipal survey and the case studies show that the local authorities who own municipal housing companies and housing stocks on a large scale attach very great or great importance to those assets in fulfilling municipal tasks. In the case-study municipalities, there was a broad consensus on the preservation of the municipal housing companies. Municipal strategies geared towards achieving speedy relief for the municipal budgets through the sale of housing companies or larger parcels of flats have lost significantly in importance since the mid-2000s. However, even in the past, only a minority of the municipalities had pursued such sales strategies.

The great strategic importance of the municipal housing companies and housing stocks relates especially to the supply of social housing, i.e. the supply of housing for broader strata of society as well as for specific social target groups. This is true also for municipalities whose housing market is relaxed at the moment. The strategic significance of municipal housing companies and housing stocks has grown for urban development. Furthermore, additional importance has been attached to tasks geared towards increasing energy efficiency and climate protection over the past years.

The generation of income for the municipal budgets is of far lesser importance for the cities, municipalities and counties than the contribution of the municipal housing stock towards the solving of housing and urban development policy tasks. Still, very many municipalities work on the improvement of the economic situation of their housing companies in order to improve the prerequisites for the permanent fulfilment of the municipal tasks at hand and to prevent the companies from encountering economic problems that could have an economic impact on the municipalities.

As regards the control of the shareholdings and the cooperation between the municipalities and the housing companies, the case studies yielded a very differentiated picture. It may be stated generally that the municipal practice differs greatly from the principles of a strictly target-oriented control, as it is laid down in the New Public Management. The definition of more detailed municipal objectives, target agreements with the companies and the control relating not only to finance but also to the housing an urban development tasks, have increased in importance over the past years. However, the respective developments are slow to take off accordingly. For instance, the instrument of target agreements is applied in the case study municipalities for certain purposes (e.g. in the area of housing capacity use) but there was no comprehensive agreement of both the functional as well as the financial targets in any of the case-study municipalities.

More comprehensive and more formalised approaches to control with regard to the municipal housing companies are most likely found in larger municipalities with their differentiated administrative structures. Smaller municipalities avail of rather less formalised approaches to such control. Apart from the size of the municipalities, a strained housing market, serious economic problems of the company and a style of administration geared towards objectives and results favour a formalised type of control.

The municipalities are usually not able to put an exact number to the housing and urban development services rendered by their housing companies or even to calculate a "municipal yield" ("Stadtrendite") on their shareholding. The quantitative and qualitative data derived from the case studies as well as the assessments of the municipal actors interviewed make clear, however, that the municipal housing companies do provide significant services for their owners.

The great contribution towards the supply of social housing is of special importance, for which a number of factors are significant:

  • the concentration of social housing, in particular of social housing units allocated by local authorities among the municipal companies,
  • the additional housing allocation capacities secured through agreements of cooperation by the municipalities, especially in cities with a strained housing market,
  • the above-average readiness of the municipal housing companies to enter into new tenancy agreements with controlled rent levels and with a stipulated group of tenants, within the framework of subsidising new housing construction and investments into existing housing stock,
  • the outstanding role in housing households with special supply problems, which distinguishes the municipal companies
    clearly from other housing providers according to the expert interviews conducted during the case studies.

Apart from the social housing supply, the development of the cities and the local neighbourhoods is the second large field of action in which municipal housing companies make contributions towards achieving municipal objectives. Contributions in the context of urban restructuring and socially integrative city strategies are of special importance and in municipalities with a strained housing market also tasks of urban expansion. According to the results of the case studies, the municipalities have a particularly close partner in their housing companies as regards the tasks of developing their cities and the neighbourhoods, a partner who usually will participate actively in the relevant discussions of strategy and in the planning processes. The companies often identify especially strongly with the municipal goals, they introduce their own initiatives into the development of the city and the neighbourhood and implement comprehensive investments. This active role is explained in part out of their own interests, which the companies hold in certain areas as large-scale owners. At the same time, the municipal companies are, however, also more prepared than other groups of owners to work outside the box of their own housing stock and knock down some of their existing buildings in an urban restructuring process, for instance.

Outlook

Over the coming years, the role of the municipal housing companies and stocks will increase further for the supply with social housing due to the decrease in the number of social housing stocks. As rent control and the obligation to rent flats out to a certain social group of tenants are phased out for other owners, the own stock of the municipalities take on greater significance. But the municipal housing stocks themselves are also affected by the phasing out of such rent and tenant control. Whereas in the past, municipal ownership and such rent and tenant controls introduced by federal and state construction subsidy regulations coincided to a large extent, many municipalities will face the task of issuing their own stipulations on the types of tenants and rent levels with regard to their municipal housing stocks or to enter into respective agreements with the companies. Thus, an effective functional control is becoming exceedingly important for the municipalities. With this research project, a large variety of strategies pursued by the municipalities was established with regard to their municipal housing companies and stocks. This variety will increase even further within the scope of a further differentiation of the housing markets:

In case of municipalities with a strained housing market, the municipal housing companies play an important role in the construction of new accommodation. In part, the municipalities are expecting more activities in this field in the future than in the past. The decrease in social housing stocks has especially severe consequences for these municipalities so that they will count on an increased cooperation with the municipal companies in the field of social housing supply.

On more relaxed housing markets, the municipalities and their housing companies face other challenges. The construction of new housing is of lesser significance here. Accommodation seekers are more easily able to find a flat also without direct municipal support. In such cases, the cooperation of the municipalities and their companies in the area of social housing concentrates more on the group of households with specific supply problems. In these municipalities, the special responsibility is to be seen in adjusting the municipal housing stock to the demand changed by demographic developments and the differentiation of the housing offer to suit a broader range of groups requiring accommodation. In case of relaxed housing markets, the main tasks the municipalities request the housing companies to address the specific combination of investments into the existing housing stock, the development of the neighbourhoods, the focused construction of new accommodation in order to differentiate the offer as well as the partial demolition of buildings that are not in line with the market requirements anymore or pose an obstacle to urban redevelopment.


The abstract is part of the German publication "Strategien der Kommunen für ihre kommunalen Wohnungsbestände - Ergebnisse der Fallstudien und Gesamtergebnis",
Forschungen 151, Ed.: BMVBS, Berlin 2011
ISBN 978-3-87994-483-5, urn:nbn:de:101:1-201112164111
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