Poor in the affluent city – Living to survive in Munich

Dialogue forum on 9 May 2019

Munich is one of the richest cities in Germany – as well as one of the most expensive, especially for those who pay rent. Not everyone is able to keep pace with price trends. What are local politicians doing to prevent gentrification and urban poverty? Dieter Reiter, the Mayor of Munich, talked with Karin Lohr, CEO of BISS e.V., and Sophie Wolfrum, Emeritus Professor for Urban Design.

Munich is a thriving city with considerable economic strength, a low unemployment rate, and a high quality of life. But take a look behind the scenes and a different picture emerges: The number of people affected by poverty, and who earn less than €1,350 per month, is increasing year by year. According to a poverty report from the City of Munich, some 269,000 people, or a sixth of the population, were living below this poverty line at the latest count. 

Fair payment and recognition needed
“Many people suffer because of their poverty,” Karin Lohr pointed out. As CEO of street magazine BISS, she knows the problems at first hand. “People are more unhappy and die earlier, they pay a lot of money for poor accommodation, have insecure jobs, and little hope of improving their lives. The promise of former times that everyone could achieve a better life for themselves no longer applies today. That is not acceptable,” said Lohr. She argued that, apart from affordable accommodation and a job with fair pay, what the affected people needed most to improve their lot was recognition from other people. 

The problems in Munich cannot be solved without help from Berlin and improved background conditions, explains Reiter.

Mayor Dieter Reiter admitted that people with average incomes could barely afford the rapidly increasing rents and property prices, and that this poses a poverty risk. He pointed out that the average Munich household spends more than 40% of their income on rent. A few years ago, the figure had been just 20%. The city is building more houses and apartments than ever before to create affordable accommodation – in many cases in the face of public opposition. For more clarity about price developments, the Mayor has commissioned a new rent index that considers all the key facts, including existing rents, instead of using only new rentals over the last four years like in the past.

Children and old age as poverty risk
Reiter is also making continual efforts to influence federal government policies in Berlin. “We should start a discussion about land value and social restrictions on property,” he stated. But he added that there is currently next to no chance of changing anything in this area. To address the poverty risk for children or the elderly, he would like to provide the needy with specific benefits, but his hands are tied by the federal Act on Determination of Needs (Regelbedarfsermittlungsgesetz). 

Prof. Sophie Wolfrum had no doubt that a clear policy was needed from the central government in Berlin. “Particularly in terms of existential living conditions – such as land prices, water and air – politicians need to create structures that protect and encourage the weaker members of society,” she said. The government has to support the constitutionally guaranteed basic right to accommodation, she added, as otherwise a widening gap would develop in society. “Because land accounts for 70% of the costs for a new building, it is at the heart of the housing issues,” she stressed. In this context, Wolfrum referred to Article 161 of the constitution of the Free State of Bavaria, which allows for a levy on increases in land value for the public good. “I would appeal for the application of the existing legislation,” she said. In addition, the city should make every effort to get instruments like urban design development measures, that allows for planning new districts and changing old ones, up and running. 

Opposition to new areas for housing development 
It is with precisely measures like these that the City of Munich plans to push ahead the construction of new districts in the north and northeast of the state capital. But the mayor repeatedly encounters fierce opposition on this subject. It comes from residents, who talk of traffic gridlock, urban sprawl and environmental degradation, as well as from farmers, who believe they are not being paid enough compensation for their land. “I have problems with a situation where someone owns arable land at €16 per square metre, and we offer them €300, and the person in question uses terms like expropriation,” said the mayor. He even has to listen to local residents abusing him. “They have managed to portray us as the bad guys. But I predict that we will build in the north simply because it is the only place we still can.” It is virtually impossible to satisfy every stakeholder group.

The existing laws should be applied, demands Wolfrum, pointing at article 161 of the Constitution of the Free State of Bavaria.

In terms of urban planning, Reiter is doing everything possible to prevent socially deprived districts developing, like those in Paris or London. As compensation for being granted new building permits, and in line with socially fair land use, private developers must make a financial contribution towards the costs for building roads, schools and daycare centres, and also meet a quota for subsidised and affordable apartments. “We need to maintain a healthy social mix in the city’s districts,” Reiter argued. “That is one of the reasons why there have been no yellow vest protesters in Munich up to now.”

Enhance social cohesion
With the topic of old-age poverty too, one cannot avoid the rising rental prices in Munich. Because there have only been small increases in pensions, some senior citizens have to spend between 70 and 80% of their income on accommodation. As a result, an increasing number of people are dependent on initiatives like the Münchner Tafel charity because they do not have enough money for food. “These are things that are a disgrace for a city like Munich,” Reiter declared. For BISS CEO Lohr, every person in Munich has a duty to get involved through voluntary work, for instance in an association. “That is important to maintain social cohesion,” she said. At the same time, she had praise for improvements like the social ticket for public transport, which allows people to escape the isolation within their own four walls. “This means that people don’t suffer marginalisation on top of their poverty. An urban society has a duty to create places like the Gasteig cultural centre in Munich, where you can stay all day without having to pay,” Wolfrum added. 

The experts were asked many questions by the audience.

Further discussed were ideas for more intelligent use of housing space. Many older people live alone in large apartments. There is a city platform for apartment exchanges, but nowadays, smaller apartments are just as expensive as large ones that were first leased a long time ago. “And you shouldn’t replant an old tree,” Reiter reminded the audience. On the question of the misallocation of subsidised apartments, the mayor saw no easy solutions. It would certainly create living space if people with higher incomes had to move out of apartments that were publicly subsidised. On the other hand, such people would have to look for somewhere else to stay, and would then quickly find themselves back in the system for homeless people. 

Reiter stressed that the problems in Munich could not be solved without help from Berlin and under improved background conditions. Working alone, he said, the hands of local politicians were often tied. He warned that it could take some time before the Berlin government initiated changes – if, in fact, it did anything at all. For BISS CEO Lohr, it was clear that each one of us is able to do their bit to making this a better world. “I would encourage everyone to get involved and to do something. That will improve conditions generally. And everyone benefits from helping: The person who is helped sees an improvement in their situation, and the person who lends a hand feels happier, or perhaps even fortunate.”

17 May 2019