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German Tenant Union concerned about housing impact of Euro crisis

demands for investment prgrammes and non-profit housing sector 

On May 31 the assembly of the German tenant union DMB expressed concerns regarding “the still expanding negative impacts of the financial and Euro crisis and the neoliberal austerity policies on housing conditions in Europe, like housing losses for economic reasons, evictions and permanently increasing housing costs.”

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German Tenants Union against TTIP

May 31 a huge majority of delegates at the biannual federal assembly („Mietertag“) of the German tenant union “Deutscher Mieterbund” (DMB) voted for two motions expressing a political rejection of the planned free trade agreements TTIP and CETA. The delegates, who represent regional and local associations with a membership basis of 1.27 million households, were especially concerned about possible consequences of the  planned investor protection through state independent arbitral tribunals (“investor-state dispute settlement“) on rental laws.

For the development of an Anti-TTIP front in the housing field this clear standpoint of the big German tenant union is a big success.  Just in April some groups started to raise the international housing questions as part of the TTIP. See the statement here:

TTIP: a threat to social housing, land rights and democratic cities

German: TTIP: eine Bedrohung für soziales Wohnen, Landrechte und demokratische Städte

 

TTIP: a threat to social housing, land rights and democratic cities

                                                        Housing Action Groups in Europe, Friday, 17th April 2015

The undersigning organisations, united in the struggle for the right to housing and to the city, strongly support the protests against the planned free trade agreement TTIP (“Transatlantic Trade and Investment Partnership” between EU and USA) and the already negotiated CETA (Comprehensive Economic and Trade Agreement). All over Europe protests will take place at 18th April.

Environmental groups, consumer associations, trade unions and other civil society organizations since years have been warning that the free trade regulations discussed as  TTIP will undermine environmental standards for agriculture, health standards for food and labor standards for services. Because TTIP is negotiated in strict secrecy and because of the plan to introduce extra-static arbitral tribunals for investor protection (“investor-state dispute settlement”) many critics fear that the agreement will dispend national sovereignty and democracy. Anti TTIP-campaigners also expect negative consequences for the protection against fracking, for public education, municipal services and for regulation of financial products. We fear that TTIP will also have disastrous consequences on urban development, real estate, housing and land markets.

Because TTIP is discussed behind closed doors we cannot know the details and concrete consequences of TTIP on housing and cities so far. We do not know if these aspects are an issue i the negotiations at all. But we did not notice any signal from the negotiating parties that an exclusion of real estate, public/social housing or a regulation of financial investments will be discussed, and such an exclusion also would be difficult to implement. Thus, we have to fear the worst. TTIP and CETA can have much impact on housing and cities in our countries.

As far as we can figure out from scarce and confusing information TTIP has four targets: (1) reduction of non-tariff trade barriers, (2) protection of transnational investors, (3) harmonization of industrial standards,  (4) introduction of commercial arbitral tribunals. Each of these targets can affect housing, land and cities in various ways.

(1)   The planned reduction of non-tariff trade barriers may disallow existing or demanded national restrictions of transnational capital mobility and transactions, including regulations of trade with houses and land. So far, some countries in Europe still limit the right of foreigners to own (agricultural) land and houses. Others exclude parts of the land and housing from markets, i.e. through systems of social or public housing. Everywhere national property registration regulations could be interpreted as trade barriers. In the TTIP negotiations such market restrictions could be questioned. Consequently, more property could become targets for transnational financial investors. National or European regulations on mortgage systems can be seen as a trade barrier for the financial markets too. Because of stricter regulations mortgaged homeowners in the U.S: could be the first victims. All this can lead to an even faster globalization of housing finance. Besides the transnational concentration of capital the consequence will be an increased risk of new real estate and financial bubbles.

(2)   The discussed protection of transnational investor rights can directly affect national or local policies towards housing stocks, which are owned by financial funds or by joint stock companies with international shareholders and subsidiaries. This sector includes the wide-spread private-public partnerships in social housing and public infrastructure, even joint-ventures which have been pushed by the European Commission, i.e. in Italy. Any limitation of the commercial exploitation of the property – i.e. through improved rights for tenants, new urban planning obligations or taxation of transactions – can be interpreted as a violation of property rights and of investor security.

This is especially true if governments want to introduce new regulations. The introduction of private insolvency regulations or the requisition of empty flats for social housing, which are realistic expectations in possible progressive governments after elections in Spain, could be attacked by funds like Blackstone or Goldman Sachs, which have already invaded the domestic housing and mortgage market. As a consequence even countries which already have private insolvency regulations (many) or allow requisitions (i.e. Italy and France) could be under pressure. Necessary improvements of the security of tenure could be attacked by U.S. shareholders as well. The introduction even of a little stricter rent regulation, as just happened in Germany, could be understood as a threat of the investor security if US or Canadian shareholders in German housig compenies, like Blackrock or Sun Life, think that the fair value of the housing companies is affected.

(3)   The harmonization of industrial standards potentially affects the whole range of consumer rights and may lead to a weakening of standards for construction and building material, for facility services and architects, for financial products and mortgage contracts. Regarding construction products it can become a threat on ecological standards (i.e limitations of tropical woods), health standards (i.e use of unhealthy substances) and social production standards (i.e. working conditions). Because public authorities at the same time will be forced to take the cheapest offer from company, global competition  will push the already existing race to the bottom.

(4)   The planned arbitral tribunals (“investor-state dispute settlement”) will judge violations of the free trade agreements without being bound through national laws, constitutions or international human rights. In many countries they will simply be extra-constitutional. According to the constitution of many European countries, property leads to social obligations. That is not the case in free trade agreements. In this context it is important to note, that already the risk of a high claim for damages by big companies will have strong influence on legislation. (“chilling effect”)  Governments will not dare to improve rent control or limit building permission on a territory if they have to fear a claim of billions of dollars because of the financial losses of investors.

We don’t know, if any exclusion of housing and real estate from TTIP will be discussed in the secret negotiations. However, it is hardly possible to reduce TTIP on specific branches or investor seats and exclude such central sectors as real estate and its finance, if free trade with services and material is the aim. If there is a free trade with agricultural or extraction products construction material cannot be excluded from that free trade. In all branches companies can have transnational shareholders, specific subsidiaries or financial investors in funds and bonds, who can claim to be affected by any national regulation. Transnational investors also can easily change the composition of their trust and holdings if that is necessary to avoid taxes or regulations on specific branches. I.e. a private equity firm, so far indirectly invested into agricultural land, renewable energy, cinemas and housing could easily construct a multinational company which combines the energy, land and property business and therefor claims transatlantic investors’ interests in all these branches. Banks simply can use existing subsidiaries or set up special vehicles in Europe or the U.S. to attack national regulations at the arbitral tribunals. Even smaller landlords or other investors could build joint ventures in the U.S. or Europe in order to be able to claim transatlantic investor rights. For sure, national lobbies of the real estate sector will think about such solutions if that gives them power in national disputes on housing policies.

This all will have deep effects on local urban development and master planning. A transatlantic firm which has bought land in an development area could claim a violation of investment security if the city council later decides to reduce the commercial building density, increase the  portion of social housing construction or green spaces, or stop the  project. This will give much more power to private developers in the master planning of large urban development projects like water fronts, factory outlet centers, or urban cleansing of traditional neighborhoods.

Local democracy will be lost. This is even true for local housing policies and public building. Local plebiscites for alternative urban plans or better social housing, as currently on the way in Berlin, could be confronted with the option that transatlantic commercial courts will stop the implementation. Municipal building standards – like the obligation to use environment friendly products or to pay minimum wages to foreign construction workers – would be under pressure as well.

Finally, TTIP and CETA will heavily influence policies at the European Union level. In the construction, facility and financial industries many consumer and product standards could be under pressure if they do not harmonize with those in the U.S. Demands for stricter regulations of hedge and private equity funds, of stricter taxation on cross-border transactions, for binding housing rights standards and for social  housing obligations would have to face another strong challenge. Then the attacks of the European Commission against public/social housing in many countries had only been a foreplay of what can happen with TTIP. The handing over of Europe to the global financial markets would be completed.

Thus, as organizations of local tenants and inhabitants we have to fear that the planned agreements will cause another heavy push towards privatisations and investor-control in our cities and villages. TTIP can trigger another tsunami of dispossession of people from their land, housing, social infrastructure and democratic territorial management, in Europe, Northern America and beyond. Instead of learning the lessons from the 2007/08 crashes and it’s aftermaths it will continue the globally destructive path of neo-liberalisation, which gets backed by so many governments and agencies, including – in the field of housing and cities – the preparation of the UN-conference Habitat III.

We must stop them.

We need strong alliances between European and North American social movements, including organizations of inhabitants and tenants, demanding governments not to approve the TTIP.

No TTIP! 

signatories 
AK Kritische Geographie Frankfurt a.M. (critical geography group), Germany
Bond Precaire Woonvormen, The Netherlands
Bündnis Zwangsräumung Verhindern (Alliance Stop Evictions) Berlin, Germany
CANTIERE/ Comitato Abitanti San Siro, Milano, Italy
Droit au Logement  (Right to Housing) and No Vox, Paris, France
Eisbrecher Wuppertal (Right to the city group), Germany
Encounter Athens, Athens, Greece
Habita – Associação pelo Direito à Habitação e À Cidade, Lisbon, Portugal
Housing Action Now, Dublin
International Alliance of Inhabitants
London Group of participants in European Housing Rights
MieterInnenverein Witten u. Umg. e.V. (Tenants Association) and Habitat Netz e.V., Witten, Germany
Mieterforum Ruhr (Ruhr Tenants Forum)
Plataforma de Afectados por la Hipoteca (PAH), Spain
Solidarity for All, Athens, Greece
Tribunal des Evictions (Genève)
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MIPIM 2015: Destructive Istanbul canal project presented as highlight

Also Turkey and Istanbul are very present at the MIPIM this year. One of the “highlights” is the presentation of the giant project of a canal between the Marmara Sea and the Black Sea. This  “second Bosporus”, one of president Erdogans manic ideas, is a fundamental threat to nature and man.

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Statement of support for Anti-Blackstone actions of today

Tenants Association of Witten (Ruhr, Germany)

From the point of view of the Tenants Association of Witten (Ruhr, Germany) we can very much welcome the actions of today in Barcelone, New York City and San Francisco, which protested against the housing business of Blackstone, one of the largest private equity firms worldwide.

In our region since the last decade we had to learn that the business models of companies like Blackstone are creating social and physical damage in our cities. They do not only rob former publicly controlled and financed social housing stocks from the people and trsform into merchandises at liberalized property markets. They are also transforming the whole social infrastructure of peoples housing into a playground for transnational financial speculations. This creates heavy damage for our cities and daily life. Rent increases, uncontrolled mortgage bubbles, systemic material disinvestments, precarious working conditions for the employees, bad maintenance and value stripped housing companies are the necessary consequence of a “financial industry”, which is using the (expected) cash flows from rents and mortgage interest for the construction of speculative financial “products”, offered globally to wealthy people and financial funds.

Rental mass housing in Germany has been heavily affected by sell outs to transnational private equity funds since 2000. Among the actors of the transaction chains were also Blackstone funds (Bremen, Berlin, Mannheim). But – following its opportunistic business model – the “engagements” of Blackstone in these investments only were short term and Blackstone in general did not play a major role in it compared to other financial investors like TerraFirma (UK based), Fortress (US) , GoldmanSachs, MorganStanley, Cerberus… In Germany more than 1 million former social rental housing units through state promoted privatisations and transaction processes got under direct control of transnational financial markets. After exits of the funds during the past 2 years today most of the financial investments in German housing assets meanwhile is organized via publicly listed joint stock companies. Among major shareholders are sovereign wealth funds from Norway and Abu Dhabi but also funds managed by big investment companies like Landsowne (hedge funds), SunLife (secrurities and funds), Wellington and Blackrock, which actually is a former spin off from Blackstone, today with more the 4000 bn. USD assets under management. Because of all the liquid capital seeking for good “performance“ (halfway secure and a profitable assets) the international speculative business of the new real estate joint stock companies in Germany is booming. The market capitalization of the largest stock companies has nearly doubled within 18 months. A very fast concentration process is going on in this sector, creating i.e. a housing stock company with more than 350.000 units… In our towns in the Ruhr district 10 – 20 % of the rental housing stock is directly controlled by joint stock companies and financial investors. As tenant unions we are permanently struggling with them.

From this background we feel very related to the actions of today, although we are not specifically faced to Blackstone as a direct financial investor into our landlord firms at the moment.

We think the today action has been one of the first coordinated transnational actions against Real Estate Private Equity at this scale.

Even if the main struggle is about reclaiming social control on the housing stocks at the local grass roots through its users, although the main solution is the expropriation of the housing-capitalists and the socialisation of the whole housing system,  it is also important to take more action steps at transnational levels. Becoming able to blame the wrong system at the real stage of its transnational development may be a precondition for the invention of non-nationalist, non-exclusive answers to the global crisis of hosuing and cities. We hope that transnational activism against transnational financial landlords and mortgage speculators continues, enlarges and that we may learn to organize strategically, so that one day transnational corporate action can become one of our daily tools in the defence of the right of tenants and homeless and mortgage victims at many places.