German real estate: Renters’ woes are speculators’ profitsGermany’s cities are facing a crisis: They’re just too popular. Living space is getting increasingly tight; property values and rent prices are skyrocketing. But the city of Ulm might just have the solution.
Ulm is buying up land
The city of Ulm in Baden-Württemberg is an example of how things could be reorganized in future. Here, the administrative system protects construction land from speculation — and has done for more than 125 years.
The administration of this alternative land policy happens not far from Ulm’s famous Minster. The local authority real estate office oversees the plots of land and buildings in public ownership.
“The city often buys up land decades in advance, with the specific aim of using them one day for a plot exchange, as construction land for its own projects, or for the development of industrial parks or residential areas,” explains the head of the department, Ulrich Soldner.
In 2017 the city of Ulm invested €33 million in buying new plots. Soldner’s team has now bought so many adjacent plots of construction land in 16 future residential areas that they’re ready to take the next step.
“The crucial aspect is that, with us, a development plan becomes legally binding once we have all the plots. Not before.” Specifically, this means that, in Ulm, construction land can only be purchased from the city itself, at a predetermined price set by an evaluation team. The private investor cannot sell on the plot of land purchased in this way to third parties at a higher price, and the circle of speculation is broken.
If the land is not used for its intended purpose, a clause in the Ulm contract says the plot must be sold back to the municipality. “It’s not possible to sell it on to third parties as property speculation,” Soldner explains.
For people renting in the city, this means the municipality has considerable influence on the development of new residential areas. Investors are bound by the condition that they must offer housing at a reduced price on 30 percent of the new-build in order to be allowed to buy the land.
Some 4,500 hectares of public land is now managed in this way. That equates to a third of the total surface area of the city. This is why Ulm doesn’t have the severe shortage of living space Berlin, Frankfurt or Munich are dealing with.
And this is the case even though the university city is a desirable location for many high-tech companies. Meanwhile, the state government of Baden-Württemberg has declared Ulm a model for all cities, and wants to end the taxation of land.
The federal government is hesitating: instead, it is merely scratching at the surface of the problem. Federal Justice Minister Katarina Barley (SPD) recently spoke in favor of tightening rent controls to put a stop to overpriced luxury redevelopments. It seems that some politicians in Berlin have yet to realize that the real root of the problem is access to property and land.