Housing madness: the state pays, tenants are worse off!

Housing madness: the state pays, tenants are worse off!

The situation on the housing market is a big issue not only in Vienna, but also in many other cities. Government spending on housing in Germany has increased despite a decline in the number of citizens' benefit recipients. A worrying trend is emerging: the rental costs of job centers to private housing companies such as VONOVIA have increased by 20 percent. But while tenants suffer from horrendous living conditions, the shareholders of the large housing companies are laughing because they are making record profits and paying out billions to their investors. The article “The state pays, the shareholders collect” shows a worrying picture, which shows the precarious situation of tenants, while in Germany the large housing companies are not investing sufficiently in new buildings, even though the shortage of living space is becoming more and more noticeable.

Vienna, like the German cities, is in a tense situation. Rents and additional costs in the private segment are also on the rise, while new housing offers are emerging only slowly. According to the Cushman & Wakefield Report, demand for living space is being further fueled by weak construction activity. It turns out that the housing situation is becoming increasingly precarious in many urban areas and that there is an enormous need for living space, especially in major cities.

Challenges in Vienna

Wiener Wohnen GmbH plays a central role in this, as it manages around 209,000 apartments, which accounts for around 25 percent of the entire housing stock in Vienna. But the challenges here should not be underestimated either: rising construction and financing costs are placing great pressure on non-profit housing. The latest figures from 2023 also show that the transaction volume for condominiums in Austria has fallen and prices in Vienna have fallen by around 5.6 percent. It is obvious: the housing industry is increasingly seen as a lucrative investment area.

In Germany, where the focus is clearly on listed companies, the framework conditions have changed due to regulatory challenges. The rent cap limits rents for new rentals to a maximum of 10 percent above the local comparative rent. However, this regulation does not apply in all areas, especially in the case of micro-apartments, which are an increasingly popular form of housing.

State action required

The unions and tenant protection representatives are therefore calling for government intervention and possible partial nationalization in order to support tenants again. Not only is there a lack of supply, prices continue to rise and residents' concerns can no longer be ignored. Government action could actually have a regulatory effect through new construction programs and rent controls. The regulations in the German market provide clues here. The report by Cushman & Wakefield describes the complexity of the legislation that can be found at both the federal, state and local levels.

In summary, housing is a hot topic in both countries. While tenants in Germany and Austria are suffering from rising costs and the large housing companies continue to profit, a change in market policy is needed to overcome the pressing problems. The future remains uncertain and it remains to be seen whether the necessary measures will be taken to improve housing conditions for everyone. In the meantime, those affected can only continue to make their voices heard and improve their situation.