places & spaces



Financialization of Mass Rental Housing in Germany: Understanding the Transaction Cycles in the Mass Rental Housing Sector 1999–2015

in:Barbara Schönig | Sebastian Schipper (Eds.): Urban Austerity: Impacts of the Global Financial Crisis on Cities in Europe, Verlag Theater der Zeit 2016

1. Introduction
In Germany, since 1999, more than three million rental housing units have been traded in the context of
large‐scale transactions. Sales to “financial investors” played a dominant role among these transactions. In
this article, I propose elements for a narrative that may help to understand the reasons for these

The idea of austerity (in terms of budget cuts) has often been used as an argument for the privatization of
public shares in housing companies. However, this does not explain much. Privatizations are only one form
of housing transaction and they hardly contribute to lower public costs. One important example from the
German context is the abolishment of legal regulation of the tax‐privileged non‐profit housing sector, the
so‐called Wohnungsgemeinnützigkeit, in 1989. At first glance, this can be understood as an austerity
measure. The conservative‐liberal government argued that the “reform” would be able to increase tax
income. In the debate, however, the government had to acknowledge that the abolishment would cause
significant additional costs for individual housing support. The real motivation for the reform was not fiscal:
the government just wanted to “liberate” the regulated housing sector for commercial business (Lammert,
1988; Unger, 2013). The decision opened Pandora’s box. Fundamental regulations for more than 3.3 million
housing units in Western Germany (Holm, 2015) disappeared at once. As this example shows, it makes
more sense to describe such acts as being part of a broader process of neoliberalization, which includes
privatization, market deregulation, labor force wage cuts, and tax reduction for the wealthy as basic
As an institutionalized paradigm under a neoliberal regime, austerity reduces the capacity of states to
organize housing in a socially satisfying manner. This aspect, however, neither explains the financial
transformations in the private housing sector nor the origins of privatized assets. Concepts of austerity as
an institutionalized European project (Stützle, 2013) or as the “wrong” reaction to the crash of the Bretton
Woods system (Varoufakis, 2012) may help us understand the general macropolitical and macroeconomic
context. However, these concepts hardly deal with the specific history of mass housing and can hardly
anticipate specific progressive transformative policies in this field.
For these reasons, I prefer to read the housing transactions of 1999‐2015 and their consequences as
specific battles of marketization (Polanyi, 1978; Ebner, 2014) and financialization (Epstein, 2005; Lapavistas,
2013) within the history of accumulation regimes (Hirsch, 1986; Aglietta, 2000; Arrighi, 2010).
The role of financialization in the housing sector and within the context of the current crisis has been
mainly discussed in regard to the securitization of mortgages for private homeowners in the United States
(Aalbers, 2012), Spain (López & Rodriguez, 2010; see Muñiz, Chapter 14 in this book), etc. Here, I try to
show how the large‐scale transactions in the mass rental‐housing sector, in Germany, also served the
“creation of liquidity” (Gotham, 2009) from spatially fixed real estate values. I understand financialization
of housing as the production, letting, trading, financing, maintenance, and management of housing
according to the logic of financial product creation for institutional and rich private customers in
transnational markets. In the following, when we focus on ownership transactions, we must be aware that
they only mark one aspect of the transformation and that, in this context, the function of ownership is also
changing. Property (i.e. ownership of land and houses), for the financial industries, is hardly more than a
legal and fragile fiction, which is necessary for the construction of asset classes…


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