Housing revolution: lessons from Berlin

Written by: Eleanor Chapman. Above image of Möeckernkiez, June 2014 by Ralph Meiling

The ‘crowd-sourced’ multi-residential project is emerging as an alternative approach in an increasingly impenetrable Australian housing market. Among the first was Breathe Architecture’s much-celebrated The Commons, with the beleaguered Nightingale project looking to follow suit. Meanwhile, online property development platform, Citiniche, is offering a range of themed potential development interest groups to would-be owner-occupiers. There is talk of a “revolution”.

Plans to “radically transform” the market, “empowering individuals […] without necessarily reducing profit margins” are announcements made on the Citiniche website. The prospect of a power shift is undeniably welcome, in a housing climate increasingly dominated by developers’ profit agendas. In May this year, the Senate Inquiry into housing affordability released its findings. While the mammoth 496-page report was optimistically sub-titled ‘The Australian Housing Affordability Challenge’, it’s doubtful that anyone seriously believes we’re facing much less than a crisis. The Federal Government has since resolutely dismissed all but nine of the report’s 40 recommendations, suggesting this is a problem that won’t be solved by national leadership any time soon. Could there be a more urgent time to take matters into our own hands?

Although ostensibly inspired by a UK precedent, The Commons and Nightingale development approaches (and now the Nightingale ‘model’) share much in common with a German approach known as Baugruppe (literally, ‘building group’). While Germany’s population, unlike Australia’s, is declining overall, the reverse is true for some of its larger cities. Berlin, in particular, is experiencing an acute housing shortage (predicted to need 137,000 new homes by 2025), with development pressures similar to Melbourne, Perth and Sydney. Unlike any Australian city, however, Berlin has a remarkable recent history of many and varied self-organised housing projects, with several offering alternatives to profit-driven development.

Admittedly, self-organised housing in Berlin had a bit of help getting started. In response to the many squats that emerged post-reunification, the city government implemented a self-help program, including legalisation measures and fixed-term building improvement subsidies. By the time the coffers dried up, many groups had secured their positions. A substantial number of disused buildings and available (comparatively cheap) land also remained, along with relatively little developer interest. According to Constance Cremer, director of urban development and planning practice STATTBAU, the early 2000s saw not a supply, but rather a “quality” problem. Available housing stock in centrally located areas was not meeting demand for particular kinds of households, especially families with kids. Compounded by the absence of any substantive city housing policy to follow the self-help program, these conditions attracted the first contemporary Baugruppe, inspired by earlier projects in southern Germany.

STATTBAU runs the Netzwerkagentur GenerationWohnen, a state-funded service that facilitates and promotes self-organised, particularly multi-generational, co-housing projects. Cremer and her colleagues provide free advice to guide prospective co-habitants through a typical process: forming a group, getting to know one another, planning a concept, finding a site, engaging an architect, agreeing on an organisational structure – all with the goal of ultimately living together. This is a lengthy and intensive period, not to be embarked on half-heartedly. While motives may vary – from saving money, to building genuine friendships with neighbours – generally there is a common interest in a long-term place to live. In the case of most Baugruppe projects, the group acts as a collective developer, eliminating the typical external developer’s profit margin. Shared spaces, such as common rooms, gardens, laundries and sometimes kitchens and guest rooms, can reduce capital costs further, if corresponding to a reduction in private apartment space.

Interestingly though, considering the fanfare greeting the Nightingale model in Melbourne, the comparable Baugruppe model is not at the forefront of any social movement over in Berlin. The entry prerequisite of capital funds (usually 25 to 30 percent of the development costs for one dwelling) limits this option to relatively affluent individuals. Such projects are sometimes attacked for creating exclusive communities: middle-class enclaves on the best pieces of land. Does an Australian version risk the same?

Lurking behind this question is a bigger issue about the value we attach to a place to live – one that cannot be ignored in the context of a discussion about ‘ethical’ apartment development.
In Australia, residential property has become almost exclusively defined by ‘exchange’ value: how much it can be sold for, rather than use value: benefits such as improved quality of life, social cohesion and less future reliance on welfare. This latter issue will become

increasingly important in Australia as our population ages, although the full impact may take a few decades to be felt. Home ownership rates dropped by seven to 10 percent for 25-to 44-year- olds between 1981 and 2006, and are continuing to decline. The Nightingale and Baugruppe models might not be purely profit- motivated, but they remain steadfastly within the market system, generating limited net benefits beyond individuals involved.

Another existing model signposts an alternative direction – housing cooperatives have enjoyed a long tradition in Germany since they first emerged in the late 19th century as a measure to address housing shortages. There are currently about 80 cooperatives in Berlin, owning a combined 11 percent of total rental housing. Generally speaking, the cooperative itself acts as landlord. Members buy a share within the development, receiving the long-term, inheritable right to tenure, in exchange for monthly rent payments. Sometimes the land is owned by a separate entity (e.g. a church or a foundation) and made available through a 99-year lease at a lower cost than equivalent market rents. In this scenario, the land rental is a permanent, ongoing cost, but over time, the dwelling itself will be paid off. Excluding land cost from capital expenses makes a share in a cooperative typically much more affordable outright than a deposit on a privately owned home. If a member chooses to leave the cooperative, he or she receives only the initial capital contribution, making the deal attractive to those looking for a long-term, secure place to live, as there is no profit to be made. In this way, land can be removed from speculation, eliminating a major contributor to unaffordability, and potentially improving equitable access to housing in desirable areas. On the other hand, the approach is likely to be a hard sell in an Australian context, where recent research by the Australian Housing and Urban Research Institute (AHURI) suggests that Australians prefer pathways to ‘normal’ home ownership. Might there be a way to bridge the gap between cooperative solidarity and privately owned homes?

Ten years ago, the residents at Schönholzer straße 13, in the inner Berlin district of Mitte, asked themselves the same question. Their apartment building looks much like the others on the street and the shared ground-floor common room and roof terrace are not so remarkable. Of interest is the development structure: a combination of shared and private ownership, made up of 11 owner households and nine cooperative member households. When the group formed in 2005, led by architects Iris Oelschläger and Christoph Deimel, it initially planned to partner with an established cooperative, so as to include elderly participants who did not have the financial credentials to access a bank loan. Failing to find an organisation that met their needs, they opted to found their own. The Wohnungsbaugenossenschaft in Berlin e.G. (housing cooperative in Berlin, or WiBeG for short) was born.

Urban planner, Michael Stein, who has a long history with both cooperatives and Baugruppe (Stein delivered one of Berlin’s earliest contemporary Baugruppe projects in 2002 and currently chairs the board of established cooperative Am Ostseeplatz), supported the group. According to Stein, WiBeG differs from typical German housing cooperatives – members’ rental payments accrue, providing a pathway to ownership. A capital contribution of 20 percent was still required, in order to secure a bank loan. This is slightly lower than for purchasers (usually 25 to 30 percent), but more significantly, because the cooperative is a single legal entity, individual credit ratings are not scrutinised and contributions can vary within the group. If a coop member decides to leave, both the initial capital contributed and also the majority of rental payments (less interest and services costs) are returned. Stein is confident, however, that the majority will stay, pointing to the energy invested in developing the project, but also the ongoing support of the coop structure, with members burdened by fewer responsibilities than individual owners. WiBeG is continuing to advance this hybrid organisational structure – a recent phenomenon in Berlin – with its next project to commence construction in August, comprising a roughly 1:4 ownership:cooperative split. This pathway-to-ownership concept already has a local precedent in shared equity schemes, such as KeyStart and HomeStart in Western and South Australia respectively. A hybrid approach could take the Nightingale model one step further.

Meanwhile, in inner-south-western Kreuzberg, four multi- storey apartment skeletons stand unfinished and abandoned.

Möeckernkiez was to be Berlin’s biggest contemporary housing cooperative, with 464 apartments in total and a particular emphasis on barrier-free design. In 2007 the project’s initiators circulated a provocative flyer in the neighbourhood, asking, ‘anonymous investors or us?’ The kernel of an idea quickly drew interest and financial commitments from members and a piece of prime real estate, adjacent to Berlin’s Gleisdreieck Park, was secured. Sadly, idealism seems to have been undone by poor management, inaccurate cost-estimates and the unfathomable decision to start constructing four buildings at once before financing was approved. For every success story, there’s a cautionary tale – good intentions are not enough. The specifics of organisational, financing, management structures – and scale – matter.

The fate of Möeckernkiez also points indirectly to the petering out of the self-organised housing boom. Soaring investor interest and construction costs have made such projects harder and more expensive to initiate. Project manager and facilitator, Winfried Härtel, a relative old hand at steering aspiring co-housing groups, affirms this point. He penned a reflection in 2007 titled Why Berlin loves co-housing projects, but eight years on, says “Co-housing doesn’t really have any friends in Berlin right now”. Government support is also elsewhere, focused on delivering new social housing dwellings through its public housing providers. Nonetheless, Berlin is equipped with a few advantages, not least of which is a wide acceptance of self-organised approaches, and professionals with the skills to deliver them. The existence of ‘friendly’ German development banks, such as the GLS Bank and Umweltbank Nürnberg, as well as foundations with funds available to invest in social-interest projects, is also a significant headstart. In the absence of these factors, Australia could benefit from state-based programs, similar to the Netzwerk Agentur, to promote and facilitate alternatives and provide expert legal, organisational and financing advice, ideally incorporating overseas expertise.

In some ways, the conditions that are making it harder to do self-organised housing in Berlin are the most important lessons for would-be proponents in Australia. One major issue is diminishing access to land. Both Stein and Härtel maintain that the granting of an “option” on land, giving a group time to develop a design, gather members and arrange financing (with the added assurance for the bank that the land does not have to be purchased until all else is resolved) is among the most secure starting points for a pilot project. Stein’s next hybrid development will occur on church- owned land, where an inheritable 99-year lease agreement is in place. Härtel advocates a policy mandate, where 30 percent of publicly owned land would be set aside for self-organised housing projects, to be sold not to the highest bidder, but to the strongest concept, including provisions for low-income or social housing. While 30 percent might seem an unrealistic target in Australia, it’s worth noting that the Senate Inquiry recommendation concerning public land’s potential for affordable housing, was among the few to be accepted by the Federal Government.

Recent University of Melbourne research into family housing in central Melbourne recommends similar measures, referring to special land development arrangements that already exist in cities in the US and Canada. Perhaps the biggest challenge is to move beyond an understanding of housing as purely an investment chip. In addition to state-funded agencies, an independent coalition, uniting seemingly disparate initiatives (such as those in the Cohousing Australia fold, as well as shared equity programs), with the Nightingale group, could support and lobby for alternative housing models. Berlin offers no single solution, but rather a spectrum of approaches, only a tiny glimpse of which can be offered here.

To borrow urban theorist Peter Marcuse’s recent description of land trusts, alternative models like the Nightingale are “a tool, not themselves a goal”. Collaborative development and shared spaces are admirable aims, with real potential for realising different ways of living together. But their broader impact on equitable access to quality and secure housing can just as easily be negligible. Many and varied tools are needed, including advocacy for action at a structural level, without which, we are nowhere near a revolution. We should, by all means, embrace alternatives. But let’s consider too their limitations, look to fill in the gaps and raise the bar higher.

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