As in 1919, Vienna’s revised Building Code hopes to dampen land prices and make the economics of affordable housing work again
In this season of centennials, the City of Vienna considers 2019 the anniversary of its famed Social Housing program. A hundred years ago, with migrants flooding the city from across the former Empire, Vienna elected its first social democratic mayor, Jakob Reumann, who set his sights on finding places for them to live. His first success: a new Housing Requisition Law (Wohnanforderungsgesetz), which allowed the city to take over large apartments, empty military barracks and hotels and over five years, to create some 44,800 new apartment units. In addition, rent controls kept land prices low, allowing the city to acquire the sites on which the Gemeindebauten of Red Vienna would be built.
Vienna’s current mayor, Michael Ludwig (SPÖ), is also a builder, having served as Housing Minister from 2007-2018 under former Mayor Michael Häupl. And his focus is just as clear: “Having a place to live is a basic right,” he has said repeatedly. “Apartments should not be the objects of speculation.” Thus the Bauordnungsnovelle (Revised Building Code), which came into effect April 1st, a joint initiative of the majority Social Democrats with Green Party’ Deputy Mayor and City Planning Minister Maria Vassilakou.
Under the new rules, all building sites re-zoned for residential construction must allocate two-thirds of the space for subsidized, affordable housing – at €5 m2, so a typical 60 m2 apartment would cost €300 a month. The final third would rent or sell at free market rates. The rules affect new construction of 5000 m2 or 50 apartments, high rises and existing structures that are rezoned, but not single-family houses. They include ceilings on land prices (€188 per m2), and the monitoring of transactions to prevent speculative hording. The rules designate residential districts where short-term rental platforms like airbnb will be forbidden, but also offer clear guidelines for long-term private rentals.
The intention, as with Reumann a century ago, is to dampen the growing pressure on prices in the Vienna real estate market since the turn of the Millennium. “The share of subsidized apartments in new construction has dropped from as much as three-quarters to a third,” Planning spokesman for the Greens, Christoph Chorherr, told Der Standard when the new rules passed in November, 2018. With the revision, he expects “at least a half” to meet the standards for subsidies that make them affordable.
The industry, of course, sees it differently. “This is going to do the opposite of what they intend,” said Michael Pisecky, spokesman for the Real Estate and Wealth Management Group of the Vienna Chamber of Commerce (Wirtschaftskammer Wien, a government-affiliated business support agency). Unable to make a decent return, he said, most owners will simply take their property off the market.
So far, the government, at least, believes the plan is working. “There are already signs that the speculation with building sites is abating,” Vassilakou told Presse am Sonntag. It won’t be exactly like 1919. As Mark Twain said, “History doesn’t often repeat itself. “But it does rhyme.”