Social Housing in the German City of Mannheim

I visited the city of Mannheim Germany in October to speak with both city officials and social housing staff about affordable housing in this mid-sized German city. I met with Arno Knobel who works for the city of Mannheim.  He focuses his attention on strategic issues including urban renewal and long term planning.  For instance he works on the cities’ 2 year rent index study and also works on a housing study that monitors the quality, quantity and situation of the stock within the city.  Also present was Anke Schmahl from GBG Mannheim.  That is the social housing company for the city of Mannheim.  She works on special projects and coordinates a lot of the information with the city, university and other special projects that might come up.

Basics:

Population: 331,907

42% of people come with a migration background.

23% of the population comes with a foreign background.

The city overall is seeing a plus migration ration on average.

The births to deaths ratio follows the German trend of more people dying than being born.

Positive population growth numbers come from migration.

Social Housing

The city of Mannheim presents an interesting contrast to other German cities visited. For example, the city has only around 6,000 social housing units total.  That includes units owned and operated by the social housing company GBG and other owners throughout the city.  However, GBG owns around 19,200 total units.  Of those 19,200 units only around 3,120 are social and they have the right to another 249 units throughout the city to use for social purposes.  That means a majority of the stock is not considered social.  What is different in this situation is the unique contract the city and the social housing company came to.  They agreed in 2001 to keep the units owned and operated by GBG affordable in nature.

Mannheim is no different than any other German city in terms of expiring social housing contracts. If you read anything I write, I report regularly that social housing contracts in Germany are expiring by the hundreds if not thousand each year.  While a lot of contracts are expiring in Mannheim, this special contract with the city and the housing company allows the units to stay affordable.  That is not insignificant because the social housing company in Mannheim owns around 15% of the total housing stock with over 19,000 housing units.  The average rent price in Mannheim for a non-social unit is around 6.71 euro per square meter.  In comparison the rent prices for a GBG unit is around 5.71 a square meter.  This tells us two things.  The rents in Mannheim are lower than the average rents in general for most of Germany and especially the German state of Baden Wurrttenburg. The second thing we learn is that Mannheim does look at GBG (the city social housing company) as a large enough entity to calculate average rents of only their stock.  I could not get an average rent price for just the 6,000 social units in the city.  Mannheim is comparatively cheaper than other cities in the area.

Mannheim Average Rent per Square Meter: 6.71 euro

Stuttgart Average Rent per Square Meter: 7.61 euro

Heidelberg Average Rent per Square Meter 8.13 euro

Freiburg Average Rent per Square Meter 7.53 euro

Special Groups:

When asked about special groups that Mannheim must concern itself for, the staff of the city pointed me to the “Wohnen in Mannheim” or Living in Mannheim report for 2014. In the report I found that there are certain groups with increasing needs.

  • Households between the ages of 50-65: These are households that are now smaller because children have left. That means they may be looking to downsize and also possess buying power because of the reduction in money spent on their children. This group should grow by over 4.8% by 2030.
  • Younger Seniors between 65-80: This group of seniors is forecasted to see an increase of around 3% by the year 20130.
  • Older seniors of 80 and more: The battle continues to create and retrofit enough apartments for this increasing group. The city expects this group to be its largest increase in terms of housing needs with a whopping 10.8% increase by 2030.

There is also interesting information that shows some groups will actually see shrinking numbers.

  • Families with Children under 18: They expect these households to decrease by over 3400 in the future. They will need to try and adjust figures with the immigration of refugees over the upcoming few years.
  • Starter Households: These are households from 18-25 years of age. They expect a 9.6% decrease in the number of these households in the future.       A change in immigration from Syria, Iraq, Pakistan and other southern EU countries could change these predictions.
  • Young Households age 25-30: They expect a 4% decrease which is bad news since this group tends to have more buying power after finishing educations and trainings.
  • Middle Age Households 30 to under 50: Expectations are for a 7.6% reduction.

Financing

Financing of social housing in Baden Wurrttenburg is not the best in all of Germany. While the amount of money being made available is ok at 80 million euro per year, the conditions are poor at best.  Right not the interest rates in the market is quite low.  That means the private market can get just as low of interest rates as the state provides.  On top of that, the bureaucracy of working with the government discourages many investors from working with the state.  In 2014, a new rule will no longer allow an investor who uses social housing funds from the state to make more that a 2% a year return on profit.  If an investor happens to do this, they will have to return all of the money back to the state.  This new and overly strict regulation is making it tough to encourage social housing especially in Mannheim.  With the rent prices so low, the costs of a new social housing unit plus the regulation make it tough for housing to be built.  Because of this, no new social housing has been built in Mannheim for the last 20 years.

Future Building

One interesting aspect that Mannheim possesses is the former military bases close to the city. The city has been working on buying the portions of the former military base.  They hope the purchase will go through soon and a plan to build on the property is ready.  In three phases the city will work with private developers to build over 2000 units.  Of those 2000 units, 400 will be social.  The city is working with developers to make sure that the social aspect is included. The name of the first development will be very un-German.  It is called Benjamin Franklin Village.  That is homage to the areas name as it was when it was an American military base.

The new building will be a welcome sign in Mannheim. The demand forecasts that Mannheim will need as many as 11,300 new units of housing by the year 2030.  That means the city should be building around 630 new units per year to keep up with demand.  Mannheim has averaged around 445 units a year so that number should increase if they are to keep up with demand.

Social Housing as a Legacy: I asked staff about the feelings of social housing in the city in comparison to other cities in Germany.  They feel like social housing is a strong tradition in Mannheim and is expected from the citizens of the city.  Some of the people in the city feel like there should be more but the people I spoke with told me that the situation is really strong in Mannheim.  In addition, the overall price for rent is low in Mannheim.   To help protect the existing stock, the city is very aggressive in rehabbing older housing to help preserve it for the longer term.

Future: Mannheim enjoys both a rich tradition in social housing and a willingness of the city leaders to preserve it. Because of the forward thinking of housing advocates throughout the city’s structure, Mannheim is poised to keep up with the demand for affordable housing better than some of its neighboring cities.  In addition, some of the opportunities to build new social housing in former USA military areas will only increase the total number of units in the city.  Low rent prices and strong forethought positions Mannheim to grow smartly for the future.

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