Ron Usher

Longer, but not toooo long, on the Vienna housing model and its relevance to globe wide housing crisis: Controlling Land Rent, Vienna Style Max Schranz is 26 and working on a master’s degree. He lives in a bright fifth-floor, 54-square-metre two-bedroom in Vienna’s Theodor-Körner-Hof, a 1950s city-owned Gemeindebau ten minutes from the main station. He pays €596 a month, put down no deposit, and holds an unlimited contract he could, in theory, pass to a child or sibling. “I’m aware it’s a pretty stress-free existence,” he said. “My friends in other European cities are a bit jealous.” On summer evenings he reads in the estate’s green courtyards. The city reached him through a programme for first-time tenants under thirty—something nearly impossible for a student in most other capitals. What looks like personal luck is simply how a large share of Vienna’s housing still works (The Guardian 2024). Given the linked crises of unaffordable housing, rising inequality, and global speculation in urban land, successful models for systemically controlling housing market prices are scarce. After forty years of neoliberal privatizations, few developed-world cities offer attainable systems for supplying affordable housing that map easily onto Anglosphere political economies. Singapore is often cited, yet its land—and thus its land Rents—is largely public. Shifting 100 trillion in urban land value from private to public hands seems politically improbable. Under post WWII Social Democrat regimes, both The Netherlands and Sweden expanded public housing , but neoliberal policies have since shrunk the non-market share while land Rents rose. Berlin was long praised for its large renter majority and protective laws. Massive transfers of public stock to private REITs produced a 50 percent rent rise and protests demanding the return of sold blocks (“Berlin Spends” 2019). Only one liberal-democratic global city has largely solved housing precarity in a form practical for other cities to copy: Vienna. It did so by controlling land Rent through taxation and related policies rather than by either stimulating or crippling private housing markets. The Vienna Model – The Beginning In the last days of the Habsburgs, Vienna displayed wealth by attaching grand façades on overcrowded apartment blocks. Sadly, behind the elegant facades, workers crowded ten to a 300-square-foot flat. Many slept four to a bed; some rented beds in shifts. This was a landlords’ city. Fewer than 60,000 of over two million residents could vote. One-month leases were common; rents rose freely; evictions were immediate. In 1913, 461,472 people—one-quarter of the population, including about 29,000 children—lived in asylums (Reiss 2017). Defeat in the First World War collapsed the monarchy and brought universal suffrage. The left governed from 1917 to 1934 (the “Red Vienna” period) until the fascist takeover put an end to non market housing programs. Unlike socialist governments elsewhere in Europe at the time, Vienna officials did not appropriate private land. They used taxation, not appropriation, as the policy tool to house their citizens. The Strategy Even before the Red Vienna period, strict rent control - initially imposed to protect war wives and never repealed - limited rent increases. This economic control had the initial effect of lowering highly inflated urban land values. It should be mentioned here that In most Anglosphere cities, strong rent control is often blamed for reducing new rental housing supply. The Canadian government has spent billions in subsidies to induce market-rate rental construction in the hopes that new unregulated supply will lower costs (City of Vancouver 2022b). Rental housing starts rose dramatically, but costs did not fall (Anderson 2022). Advocates claimed that even though new stock was expensive, new stock would open up cheaper old stock through a process called “filtering.” Support for this thesis is extremely weak; research shows that financial effects are minimal at best, are glacially slow, and that new units can displace rather than supplement affordable stock (Rosenthal 2014; Nygaard, Galster, and Glackin 2022; McDonald 2021; Condon 2023). Vienna’s approach differed. Strong rent control mitigated the market price for urban land while progressive taxes on expensive apartment units further undercut speculative land values. Development land prices fell while the city used new tax money to buy land at the new depressed price. Henry George’s ideas on land tax were known, yet leaders avoided a pure single tax on land value, fearing backlash from small owners. Progressive taxation of buildings (rather than bare land) plus rent control achieved a similar result: lowered land Rents. It's important to underline that the Vienna precedent broadens the land tax toolkit beyond pure Georgism single tax on land. We provide other examples in later chapters With urban land speculators driven out of the market, the city became the dominant catalyst for affordable housing construction. (Förster and Menking 2016). One-fifth of new housing produced was deeply subsidized social housing for the poor and disabled. However, most new housing went to average wage earners in the form of resident co-operatives or limited-profit housing associations that charge only cost-covering rents, reinvest profits, and limit equity returns (Marquardt and Glaser 2023; Mundt and Amann 2010). In the late 1920s roughly 30 percent of the Vienna city budget bought land and financed construction, funded mainly by progressive property taxes—higher on the most valuable units. These measures stripped speculation from the market. Now over 50 percent of Vienna housing units are in the non market sector. Rents for both market and non-market units are now less than half those for comparable units in Paris or other major European cities. This is because the strong non-market sector has weakened speculative pressures on urban land, which in turn holds down market rents. The Market Today It's not wise to ignore that Vienna is not immune to more recent globe wide neoliberal pressures. Pure social housing for the poor largely stopped being built by the city in the early 2000s; limited-profit associations took over building, and built fewer units. 1990s laws allowed condo conversions of former rental properties and rent-to-buy options for former non-market units. Pre-1945 rent controls were relaxed. Homeownership rose from 16 to 21 percent in seven years (Gutheil-Knopp-Kirchwald and Kadi 2017). Home costs rose relative to wages (Kadi 2015). Despite these shifts, Vienna still builds far more cooperative and limited-profit housing each year than most other European capitals. Roughly 40–43% of the stock is municipal or limited-profit, and when pre-1945 rent-controlled private units are included the share of residents shielded from full market pressures rises to around 60–65%. (City of Vienna, Housing market (socialhousing.wien)) This large protected base keeps market land rents lower; market rents and condo prices are typically 20–30% below those in Paris (Numbeo; City of Vienna / socialhousing.wien). The protected sector dampens speculative pressure on private land and the fear of missing out that inflates prices elsewhere. Advocates continue to worry about backsliding (Prager 2018; Verlič 2015), yet the system remains far more protective than most. Grassroots Design In contemporary practice, the city of Vienna acquires urban land, sets social and demographic goals, publishes subsidies, and lets stakeholder panels choose among competing nonprofit teams. Competition produces distinctive architecture rather than standardized mediocrity. Conclusion Vienna shows that land Rent can be effectively controlled through taxation and rent regulation without ending private land ownership or markets. The city successfully treated most of its land, over time, as a public asset; other cities can do the same. Housing only the poorest erodes political support for intervention, while including average wage earners sustains it. In Vienna, co-op rents cover costs and replacement and stay under 30 percent of average income. The result is a city that has largely tamed the force that elsewhere keeps turning housing into a speculative asset - and proved that land can still serve the people who live on it..