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Inside the Vienna model of social housing

Vienna’s high-functioning housing system looks to survive long after its centenary, and, like the cyclical lift in the city’s Rathaus, will continue to be one of the last of its kind.

By Jonny Ball

Kurt Puchinger takes us to his office via a Hapsburg-era “paternoster” cyclical lift. Housed in the vast, neo-Gothic Wiener Rathaus, or Vienna City Hall, the city’s housing director is excited to show us this rare contraption made up of around a dozen continuously moving wooden compartments, taking passengers, many of whom are nervous at the prospect of jumping from a moving elevator, on a potentially never-ending rotation around the Rathaus’s ornate floors. “It’s one of the last of its kind,’’ Puchinger says with a smile.

A director of the Viennese housing and planning department, he is tasked with the maintenance of Vienna’s impressive system of subsidised public housing, a hallmark of the city’s social-democratic traditions going back a century. In the Austrian capital, more than 60 per cent of residents live in 440,000 social homes, about half owned directly by the municipal government and the rest by state-subsidised, not-for-profit co-operatives. These council houses are not built just for the low-paid, unemployed or hard up. Nor do they resemble the so-called “sink estates” lamented in the rhetoric of the British political classes. The upper income threshold for a single person to qualify for a social home is €45,510, or £40,000 – a yearly salary that would put you in around the 80th percentile, or the top 20 per cent of earners in the UK.

For a couple, the upper combined income limit is €67,820 – over £60,000. Tenants’ incomes are not continuously assessed, so pay progression throughout a resident’s career does not jeopardise their right to remain in public housing. The average rent on a one bedroom property amounts to 21 per cent of an average resident’s income. In Paris, the average is 46 per cent of income. In London, it’s 49 per cent. Vienna’s housing subsidy is paid for with a 1 per cent levy on the salaries of every Viennese resident, half of which is deducted from wages, and the other half matched by employer contributions.

“Our policy is based on the basic statement that housing is a human right,” Puchinger explains. “For 100 years this has been the philosophy of the Viennese Social Democratic Party.” This year marks the centenary of so-called “Red Vienna”, when Marxists in the Social Democratic Party initiated a radical reformist programme of municipal socialism – mass housebuilding, public education and healthcare – creating a proto-welfare statelet in the former seat of the collapsed Austro-Hungarian Empire. The Social Democrats have been the dominant party in the city legislature ever since.

“We don’t want to have a situation where you can identify the social status of a person by their home address,” says Puchinger. “Wherever you live you’ll find all kinds of social groupings and for us this is one of the most important things we want to do.” Integration and economically mixed communities are the watchwords, along with high-concept modernist architecture that in other European capitals would be the preserve of the well-to-do. Studies have shown that real integration of households of different professions and backgrounds promotes social solidarity, reduces crime, improves health, increases social mobility, avoids ghettoization and alleviates the kind of pervasive moods of detachment, disenfranchisement and alienation that characterise the reputations of some of the UK’s “left behind” areas.

Vienna’s generous housing model stands in stark contrast to the Cameron government’s “Pay to Stay” policy surcharging council tenants earning more than £30,000 a year – an idea that was dropped before implementation due to its impracticality (housing associations had no mechanism for forcing residents to declare their incomes). The late union boss, Bob Crow, and Kate Osamor MP (allocated a council house when she was a homeless single parent), have been criticised for living in social housing despite their relatively high salaries.

[See also: This policy could help Labour solve the housing crisis]

But short-sighted conservative parsimony isn’t an inevitable part of the British political psyche. In 1949, Nye Bevan, architect of the NHS and doyen of the Labour left, proclaimed his vision of new municipally owned housing estates, in which “the working man, the doctor and the clergyman will live in close proximity”. His Housing Act removed the reference to publicly subsidised housing exclusively for “the working classes”, and aimed for the replacement of slums and ghettos for the poor with the “living tapestry of a mixed community”. Swept to power on a wave of postwar optimism, the reforming Labour government of 1945-1951 would leave a seemingly indelible mark on British society. Large parts of its policy programme were accepted and left untouched by the Conservative Party in government, including the idea that the state should play a large role in housing provision, and the UK variant of the Keynesian consensus – paternalistic welfarism, state intervention and a mixed economy – came to be known as Butskellism, a portmanteau of Labour and Conservative’s postwar Chancellors. By 1979, despite several periods of Conservative government, Bevan’s dream had come a long way to being realised; not only did almost a third of all households live in public housing, but 20 per cent of the richest tenth of the population did too.

This consensus fell apart with the election of Margaret Thatcher and the passing of Right to Buy legislation in 1980. Michael Heseltine, implementing the Housing Act in his role as Secretary of State for the Environment, framed the Bill in emancipatory language. “Certainly no single piece of legislation has enabled the transfer of so much capital wealth from the state to the people,” he said. Long-term council tenants were given the opportunity to buy their houses from local authorities at a huge discount. But while councils were obliged to engage in the piecemeal privatisation of their assets, they were forbidden to use the receipts to build new social homes, leading to a gradual depletion of social housing stock. The number of new council houses being built fell by 85 per cent by the end of the decade. As wealthier inhabitants took advantage of Right to Buy, the less wealthy residents continued to rent, and as council and housing association stock diminished, dwellings remaining under council or housing association control had to be allocated on a needs basis to those on the lowest incomes, the unemployed, the long-term sick and financially vulnerable. Now, after 40 years of Right to Buy, only 17 per cent of the population live in social homes, less than half of the 1979 peak. Half of all social homes have at least one resident with a long-term illness or disability. Average household income is 40 per cent less than in the private rented sector, and less than half the average of home-owning households. The “living tapestry of a mixed community” envisaged by Bevan has faded.

The private sector, meanwhile, has boomed. Average house prices in London were four times the average salary of prospective buyers in 1999, but by 2017 prices were 14.5 times the average salary, following a 300 per cent increase. The dream of a property-owning democracy has faltered for millions of struggling families and younger generations.

Adding insult to injury, over 40 per cent of London’s sold council houses have found themselves in the hands of private landlords rather than owner-occupiers, with many of the new low-income private tenants receiving housing benefit to cover their rents. Thus the public has paid for the policy failure three times: first to build the council house; second to subsidise the discount when it’s sold under Right to Buy; and third when the Right to Buy becomes a Buy to Let, when the former social home is bought by a landlord charging unaffordable rents to less wealthy tenants in receipt of housing benefit. Since the introduction of Right to Buy, the amount of money the government spends on housing benefit has increased by 600 per cent. Before the introduction of the policy, 80 per cent of government’s housing spend went on social homes, with the other 20 per cent going on housing benefits. Now, housing benefits make up 95 per cent of the government’s housing spend, with only 5 per cent spent on new social housing. The Labour Party’s Housing For the Many Green Paper describes this as a transfer of spending from bricks to benefits. In 2017, less than 1,000 new government-backed homes for social rent were started across a country of 65m people with an acute housing crisis. In Vienna, a city of less than 2m inhabitants, “the target is to build between 8,000 and 9,000 social homes every year” – a target that is regularly met, according to Karl Puchinger.

Does Vienna ever intend to follow a similar path to the UK, reducing new building and allowing social renters to buy their properties? “We do not sell any buildings,” Puchinger says. “Buildings that are owned by the city or by a subsidised social building company are not allowed to be sold. We’ve never privatised and we never will.” If Puchinger keeps his word, Vienna’s high-functioning housing system will survive long after its centenary, and, like the cyclical lift in the city’s Rathaus, will continue to be one of the last of its kind.

This article was originally published on 3 September 2019.

[See also: An “essentials guarantee” can end the need for foodbanks]

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