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Crowdfunding and Solidarity Transfers for Socially Sound Rents
Overview
Many German cities and urban agglomerations are suffering increasingly from rising rents – for many people, housing is becoming a luxury item. While policymakers rely on rent caps, alternative living and housing projects such as the Mietshäuser Syndikat (‘apartment-house syndicate’), which has been operating across Germany for years, continue to gain importance. Municipalities can also profit from these solutions.
Background
The Mietshäuser Syndikat is an investment company for the joint acquisition of residential buildings. It was formed in 1989 by former squatters in the German city of Freiburg. Its primary aim is to support people who wish to organise their housing arrangements collectively and sustainably at socially sound rent levels – in self-managed buildings of their own, making them independent of landlords’ plans to raise rents, or demolish or convert buildings.
In the course of the first construction project on the site of a foundry in Freiburg, the (later) founder members of the network began lending money to friends, relatives and acquaintances at low interest. Thus the idea of direct lending to cover funding gaps and provide equity shares needed for realising autonomous housing projects was born. At the same time these small loans form the basis for keeping rent costs low on a sustainable basis. Later on the solidarity transfer was added as a further instrument of support.
Objectives
The Mietshäuser Syndikat is there to provide financial, organisational and planning support s to low-income groups that possess few assets or none at all, when they wish to purchase residential buildings. When construction projects are implemented, particular attention is paid to sociological research and urban development approaches that help achieve ecological sustainability.
Activities
In some projects, such as those in Mannheim or Leipzig, the Syndikat is also involving the local authorities to an increasing extent. It seeks to get administrators and policymakers on board as partners when looking for suitable properties or when converting sites, and to offer them alternatives to selling municipal real estate and land on the open market. Options include the Syndikat persuading the local authority to enter into leasehold agreements and incorporate more housing policy directives into master plans. In order to continue profiting from low-interest loans in the future, the Syndikat intends to press ahead with developing innovative models for the alternative funding of housing projects – for instance based on revolving funds for prefinancing.
Effects
The Mietshäuser Syndikat network encompasses 94 housing projects and 25 project initiatives across Germany. The Syndikat forms the link between them, and acts as a control body with a right of veto. Without the approval of the Syndikat no housing projects may be sold nor may individual apartments be converted into properties owned by individual occupants. The two shareholders (the Syndikat and the housing association) each have one vote. Decisions on all other aspects such as conversion, renovation or use are taken autonomously by the residents of the housing project in question.
Each housing project is a legally independent entity with a company of its own (the German equivalent of an LLC). For each new housing ownership company the Syndikat contributes a capital share of 12,400 euros, which is generated from the membership fees of the Mietshäuser Syndikat association. Each individual housing association contributes 12,600 euros. These two amounts together make up the so-called capital stock of the LLC.
Similarly to the principle of cooperatives, the members of the Mietshäuser Syndikat association make an initial contribution of 250 euros (or more). The housing associations are also members of the association. The deposits do not accrue interest, but are repayable upon withdrawal. As at the end of 2013, deposits totalled 338,000 euros.
The capital stock of 25,000 euros is used for the planned purchase of housing. The remaining capital – or at least a part of it – is financed by crowdfunding, in the form of direct loans from local supporters of the housing projects in question. These are often friends or relatives, or people who would like to actively support the housing idea. Increasingly, social media are also being used to advertise the projects and attract funding. In most cases up to 40 per cent of the purchase amount is obtained in this way. Shortfalls are made up by low-interest bank loans.
Savings are invested directly with the housing ownership LLC on the basis of a legally valid loan agreement between the lender and the borrower. The low-interest direct loans help close gaps in funding and guarantee the residents sustainably low rents. These are calculated on the basis of the costs of the repayment instalments plus interest. As these costs fall over the years, the surpluses generated by established projects will be used to kick-start new initiatives.
A further cornerstone of the Syndikat results from the solidarity transfers paid by each housing project. For every square metre of space used, 10 cents are paid into a fund every month. These funds are then used e.g. for infrastructure measures, consulting and start-up costs, and for later renovation work, or are made available as loans to close funding gaps for new projects.
Conclusions
When marketing their own land, municipalities face a dilemma. On the one hand they can seek to obtain the highest sale price – though by doing so they may narrow their scope e.g. with regard to shaping the social and cultural balance in the neighbourhoods that are then created. Alternatives to this are offered by various living and housing projects such as the Mietshäuser Syndikat, which have been attracting considerable attention in recent years – and are also winning recognition in other EU countries such as Austria and Spain. They use alternative financial instruments such as crowdfunding, direct loans and solidarity transfers. The primary aim of such projects, i.e. providing living space at socially sound costs, matches the interests of local authority decision-makers – as do the principles of cultural diversity, the participation of residents in decision-making and environmental sustainability. One typical example is multigenerational houses, which also deliver a response to the increasingly pressing issue of demographic change. In the long run, these housing projects can pay off for the municipalities. After all, urban planning that lacks social balance, resulting for instance in high rates of crime in certain hot-spots, places a considerable burden on municipal budgets.
Contact
Mietshäuser Syndikat
Adlerstr. 12
79098 Freiburg
Germany
T +49 (0)761 281892
info(at)syndikat.org
Images
Categories:
Integrated urban development
Participation and urban planning
The social city
Regions:
Europe
Germany
