PRS Financialization II: privatization of public housing
The Week in Housing 04/04/2025
This week’s post in the series on PRS financialization looks at the mass privatization of former public housing in Germany and Sweden (see the first installment here). A bibliography can be found at the end. Also, a reminder that the second in our Making Rental Housing Affordable series will discuss the latest progress on Cost Rental Housing in Austria with Dr Gerald Koessl from 1-2pm on Wednesday April 16. We hope to zero in on some of the challenges that have emerged in the rolling out of Cost Rental here in Ireland, especially costs and affordability.
Unlike most of the cases evident in the international literature on PRS financialization, the German case does not originate in the years following the GFC, but instead in the context of the neoliberalization of German housing in the 1980s, 1990s and 2000s. The German housing system throughout the twentieth century and especially in the post-war era was characterised by a high degree of publicly subsidised housing, often provided by state and local government owned companies, as well as trade unions and corporations. This form of housing enjoyed significant public subsidies on the basis that they were let out at below market rents for thirty years (at least) after construction, under a principal known as ‘common public interest’ (Fields & Uffer, 2016). In the post-war era, in West Berlin over 85% of new housing was publicly subsidised, and often provided by state owned companies. Meanwhile, in East Berlin ‘private landownership was almost entirely abandoned and state-led housing associations provided housing, which became part of Berlin’s state owned housing stock following reunification’ (Fields & Uffer, 2016). By 1991, Berlin’s local authority owned approximately 480,000 rental units through various publicly owned companies, 28% of the city’s housing stock (Fields & Uffer, 2016).
This policy was, however, abandoned in the 1980s, and during the 1990s and 2000s much of this housing was effectively privatized (Wijburg et al., 2018). At the national level, from 1999 to 2011, around 1.4 million housing units were sold off, almost 3.5% of the entire German housing stock, with the majority of these units sold to institutional investors such as UK and US based private equity firms and hedge funds (Wijburg et al., 2018).
In the case of Berlin, this was motivated by the city’s fiscal difficulties. The city has sold more than 200,000 rental units over recent decades (Fields & Uffer, 2016). For example, in 2004 the US private equity firm Cerberus purchased one of Berlin’s municipal housing companies, which owned 65,000 rental dwellings, thus becoming the ‘largest landlord of Berlin overnight’ (Wijburg et al., 2018). Vonovia, which is today one of Europe’s largest landlords (it owns 400,000 units in Germany in addition to 60,000 units in Sweden and Austria, see Grander and Westerdahl, 2024), arose from the consolidation of two other institutional landlords, one of which acquired more than 60,000 rental properties from German Federal Railways (Wijburg et al., 2018).
Vonovia has also become one of the largest landlords in Sweden, in fact becoming the country’s largest landlord for a time in 2019 after it acquired two large institutional PRS landlords (Grander & Westerdahl, 2024). In a manner not dissimilar to the German example above, post-War Swedish housing featured widespread housing provision via Municipal Housing Companies (MHCs). However, since the 1990s these have been increasingly subjected to commercial pressures and ‘for-profit principles’, one consequence of which has been the sale of former municipal housing to private actors:
From 2001 to 2018, about 20% (or more than 165,000 units) owned by MHCs were sold… The majority, 95,700 of these 165,000 units (58%), were sold to private rental housing companies while 69,000 units (42%) were sold to sitting tenants (Grander & Westerdahl, 2024).
While much of this housing was originally purchased by local (i.e. Swedish-based) and relatively small companies, these have been increasingly acquired and consolidated by large international ‘financial landlords’, marking a rapid transformation of the country’s PRS (Gustafsson, 2024).
Institutional landlords who have acquired privatized housing have come in for scrutiny, with research suggesting they implement strategies including failing to maintain properties, increasing rents and displacing tenants (Fields & Uffer, 2016; Grander & Westerdahl, 2024; Gustafsson, 2024; Wijburg et al., 2018). Due to the highly concentrated nature of their property ownership, these strategies can also play a role in processes of gentrification. This has become intensely politicized in some neighbourhoods and cities, best exemplified by the famous Deutsche Wohnen und Co. referendum in Berlin, in which almost 60% of Berliners voted for the mass expropriation of units held by institutional landlords (an estimated 250,000 units) and their conversion into social rental housing.
Events & news
A new affordable homes portal has been released making it easier to find available affordable purchase and cost rental homes. The annual Vienna Social Housing summer school has been announced. A reminder that I’m no longer on Twitter so if you are organising any housing related events please email me to let me know and I’ll share them here: michael.byrne@ucd.ie
What I’m reading
This is a must read for anyone involved in social housing: a collection of essay from Shelter England making the case for social housing investment, from some real heavy hitter academics including Marianna Mazucato, Ken Gibb and Anne Petifor. Two new ESRI reports out last week. The first looks at migration and integration, including the differing housing experiences of migrant and Irish-born households. The second is their Spring Economic Commentary, which focuses on housing supply and includes a very useful box on RPZ reform.
References
Fields, D., & Uffer, S. (2016). The financialization of rental housing: A comparative analysis of New York City and Berlin. Urban Studies, 53(7), 1486–1502.
Grander, M., & Westerdahl, S. (2024). Financialization the Swedish way: How Vonovia became the largest owner of former public housing estates through transaction pathways and calculative practices. Journal of Urban Affairs, 1–19.
Gustafsson, J. (2024). Renovations as an investment strategy: Circumscribing the right to housing in Sweden. Housing Studies, 39(6), 1555–1576.
Janoschka, M., Alexandri, G., Ramos, H. O., & Vives-Miró, S. (2020). Tracing the socio-spatial logics of transnational landlords’ real estate investment: Blackstone in Madrid. European Urban and Regional Studies, 27(2), 125–141.
Wijburg, G., Aalbers, M. B., & Heeg, S. (2018). The financialisation of rental housing 2.0: Releasing housing into the privatised mainstream of capital accumulation. Antipode, 50(4), 1098–1119.
Yrigoy, I. (2021). The political economy of rental housing in Spain: The dialectics of exploitation (s) and regulations. New Political Economy, 26(1), 186–202.