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Germany: Tenants protest against financial investors in front of NRW parliament

Germany: Tenants protest against financial investors in front of NRW parliament

Members of the parliament and tenants organizers showed up and supported the tenant’s demands

In the morning of last Friday, October 26th, about 50 tenants, delegates from various neighborhoods and towns in the Rhine-Ruhr-area, gathered in front of the state parliament of North-Rhine-Westphalia (NRW) in Dusseldorf, Germany. The mostly elderly persons showed posters with crossed-out locusts and the slogan “Stop financial investors! Save our neighborhoods!”

The occasion for organizing this short protest was an expert-hearing of the parliamentarian “Enquete Commission on Changes in Housing Business and New Financial Investors”, which was holdin the parliament the same morning.

Following demands by tenants organizations, the commission had been installed in March 2010 in order to discuss the business models of Real Estate Private Equity (and other financial investors) in rental mass housing in Germany, its consequences on the housing stock and options for political reactions.

The expert hearing last Friday was dedicated to the debate on various legal instruments for the regulation of financial real estate investments. The commission will present its political recommendations in March 2013.

Consequences of housing financialisation in Germany

During the protest the local alliance “Ruhr Tenants Forum” distributed a statement reporting the drastic consequences of the sellout of many housing companies to private equity funds and banks during the past decade. In Germany more than 2 mio. rental housing units had been traded during that period. Today more than 320.000 housing units in NRW are under direct control of financial investors.

Among the large housing platforms under control of the financial market are Deutsche Annington (180.000 own flats, under control of funds managed by Guy Hands’ TerraFirma (London /Guernsey), LEG NRW (more than 100.000 units, controlled by funds managed by Goldman Sachs), GAGFAH (mainly controlled by the Wall street firm Fortress), Immeo (controlled by the French REIT FdL) and many other smaller fund controlled companies such as Griffin (Danish), Valbonne (NL), BSB/Rosebud (Israel).

All these “investors” have overloaded the housing stocks with debt and radically reduced the number of employees. Many of them do not invest enough into housing management, maintenance and repair. Some of the companies are over-debted or bankrupt. In other cases the refinancing of giant securitizations is unclear.

In towns with a high housing demand they are pushing away tenants through high rents after modernization. In Duisburg-Hamborn tenants get pushed out for a replacement of housing by retail. Other cases of planned demolition and replacement by more lucrative housing developments can be found in Essen.

Nearly everywhere housing management worsened after the transactions. Service bills are late, full of mistakes and not transparent. Cases of non-payment of service-bills by landlords and resulting cuts of water supply increase. The look of the houses and their surroundings became worse. Humidity is a problem in many constructions.

Cases from i.a. Aachen-Preuswald, Dortmund-Westerfilde or Essen-Katernberg show how whole city districts get into a downwards-spiral.

After the quantity of transactions decreased with the crisis after 2007, the number of housing sales again has been increasing since 2011.

While various real estate investors still are struggling with refinancing and all big investors initiated their exits through IPOs or asset and share sales, other segments of the financial markets are keen to invest much equity into German property. Obviously Germany – typically uneven to the cycles in other countries – is slipping into a housing bubble. An end of financial market driven business models cannot be expected.

In this situation Mieterforum Ruhr demands political strategies like the introduction of a landlord-license, stricter municipal housing inspection, a strategy of transforming bankrupt property into socially controlled land and housing and the strengthening of the public and non-profit housing sector.

German press release and cases:


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