Spacious living in a good place at a low price: there are fewer and fewer places inside and outside the Netherlands where you can. Unlike Vienna: In the Austrian capital, you can rent a centrally located 100 square meter apartment for less than 900 euros per month, including a few special extras. How is that possible?
Right behind the city‘s central station is the Sonnwendviertel, a number of modern apartment complexes linked with walkways and corridors around a communal courtyard. The more than 400 residents all have their own spacious balcony.
Isabella Weisskircher, who has lived in one of the apartments for seven years, gives a short tour: living room with open kitchen, along the island to the covered balcony with lounge furniture, a bathroom with bathtub, an additional room that serves as a walk-in closet and runs from the bedroom she so up her second, even bigger balcony.
With her boyfriend, she shares this 100 square meter apartment for 890 euros a month. Only power, heating costs and water will be added. Already included: access to a small cinema room, a climbing wall and a basement swimming pool with two saunas and a steam room. “Together, I lose about 30 percent of my income to my living expenses,” Weisskircher estimates. “I’m very happy here, I don‘t want to live anywhere else.”
What is special about this complex is that, in addition to houses for sale, it consists largely of ‘gemeinnützige Wohnungen‘: the great asset of the Viennese system. “That means providing good quality homes under favourable conditions, which we maintain over several generations,” Alexander Gluttig explains. He is the boss of EBG Wohnen, the housing corporation that built this and other apartment complexes according to this model.
The Municipality of Vienna commissions construction and assists in the financing of construction projects. As a result, the corporations have the assurance that they can obtain money for construction, and they only need to pay back the investments after about forty years.
According to rules of the Vienna municipality, they must offer these types of housing at the cost price. Profit can only be made to a limited extent, and that profit should return to investment in homes. That makes it look like the Dutch system.
One important difference is: the housing that the corporations offer are not social rent. This means that these ‘gemeinnützige‘ apartments are also available to people with higher income, up to 50,000 euros net per year. By comparison, in the Netherlands, a corporation has to rent housing to people with gross income below roughly 40,000 euros a year.
A rental price of less than 9, and sometimes even of 8 or 7 euros per square metre is no exception in Vienna. Economic researcher Michael Klien of the economic research institute WIFO calculated the benefit for tenants: “It saves around 160 euros per month compared to free sector rental housing.”
This system of housing corporations that build for a relatively wide audience dates back over a hundred years in Vienna. The city’s housing distress was already high at the end of the nineteenth century. When the Social Democratic Party came to power after World War I, the government took more responsibility for the construction of affordable housing. Especially after the Second World War, construction came on steam. Many homes were destroyed, others were flawed and obsolete. There has been a fairly continuous construction in Vienna for a long time. And the corporate homes were later not sold to commercial parties, as has happened in other countries.
Housing corporations operated for a long time in the Netherlands as in Austria. However, in recent decades they have been in a bad light due to various scandals, such as Vestia and Rochdale.
Since the 1990s, the Dutch government decided to leave more to the free market. The biggest change came after real estate investors in the Netherlands complained to the European Commission: the state-backed corporations would provide too many high-income people with housing and thus compete unfairly with commercial companies. The EC asks the Netherlands to change the rules, and the Netherlands pledged in 2009. Only low-income people are allowed to stay in housing housing housing.
meantime, 40 percent of Austrians rent a home in a housing corporation home that is not a social rent. And that also affects the private housing market, says Klien. “It also has a dampening effect on free sector rents indirectly, as they have to compete with the cheaper homes.”
Is that competition still fair? According to Klien, the Vienna market does not appear to be disrupted. “Complaints are therehere and there from commercial companies. But if you look at Vienna and Austria in general, you can see that the private sector is growing very fast. More homes are being built for profit than ever. So the argument that the corporations would displace private construction is very difficult to make right now.”