Resident Revenge against Developers

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Resident Revenge against Developers
By: George Hammond, Financial Times
11 April 2019

Rising house prices and rents have sparked protests in London, Berlin and New York. Residents show how citizens are taking on city developers.



BERLIN—Last Saturday, as the sun shone on thousands of Berliners gathered in Alexanderplatz, one placard stood out in the crowd. Written on it — beneath a grotesque cartoon shark, driving a car and eating dollar bills — was “Miethaie raus!”: “Rent sharks out!”


Tenants had taken to the streets incensed at spiralling rents. Their protest march fired the starting gun on a campaign that could see Berlin’s renters wrestle 240,000 apartments out of the hands of large corporate landlords.In parts of the city, prices have more than doubled in the past 10 years, according to a study by property portal Immowelt. Many blame companies such as Deutsche Wohnen, Berlin’s largest landlord, which owns about 110,000 apartments in the city. “We are seeing dramatic social cleansing. The cause, as we see it, is the growing financialisation of the private rented sector,” says Helge Peters, a member of Expropriate Deutsche Wohnen and Co, the group that organised the march.


The campaigners in Berlin are not alone. Residents in New York and London have assembled in recent years to protest about high rents and house prices — casting property investors and developers as villains. In both cities, they have successfully halted multi-billion-dollar development projects. Often it is the city’s young adults — many locked out of home-ownership by stagnating wages and rising living costs — who are in the vanguard.

City planners and politicians should take this “anti-development politics” seriously, says Anthony Breach, an analyst at the think-tank Centre for Cities. Above all, investors need to take heed. “It’s important for investors to understand: there is significant political risk to them because we can take away their social licence to operate,” says Peters.


A Global Phenomenon


In Haringey, north London, a tussle between the council and residents boiled over last year when campaigners successfully lobbied against an ambitious £4bn regeneration plan. Among those voicing opposition was Jeremy Corbyn, the Labour Party leader and possible future prime minister.“One of the things that made it come unstuck was that it was unclear how much social rented housing was in the plan,” says Breach.


The plan — a partnership between Haringey Council and the Australian developer Lendlease, called the Haringey Development Vehicle — would have seen two council estates in the borough rebuilt. Some residents were sceptical, believing that once their homes had been knocked down, there would be no space for them in whatever was built next.


“We have to think carefully about who local communities think new housing is for,” says Alex Lifschutz, director of Lifschutz Davidson Sandilands, an architecture and urban planning practice which has worked on major projects in London. “It generally isn’t aimed at [residents] — they’re already in homes.”


The Labour-led council sought to calm nerves, but suspicions about the developer’s profit motives proved hard to dispel. With the HDV still in the balance, local elections saw the incumbent councillors swept from power by challengers from the left of their party, supported by Momentum — the left-wing group that backs Corbyn.“An element of this was an intra-Labour party issue... But there were also synergies with a wider anti-development movement,” says Claire Kober, the former leader of Haringey Council who was ousted over the HDV. Joseph Ejiofor, the council’s leader, declined to comment.



Similar concerns dogged the development of Amazon’s second headquarters in Queens, New York. The tech giant announced in November that it planned to invest $3.6bn and create 25,000 jobs in the borough. “New York can proudly say that we have attracted one of the largest, most competitive economic development investments in US history,” said Governor Andrew Cuomo when the news was announced.


But New York did not say that. Instead, residents had a blunt message: “We don’t want you in our city.” Petitions, marches and the involvement of high-profile figures such as the newly-elected congresswoman Alexandria Ocasio-Cortez demonstrated a level of opposition that made Amazon baulk, and the company reversed its decision in February.


“It shows that everyday Americans still have the power to organise and fight for their communities, and they can have more say in this country than the richest man in the world,” said Ocasio-Cortez at the time.


‘Common anti-housing politics’


All three campaigns have roots in socialist politics. Corbyn and Ocasio-Cortez have both identified as democratic socialists, while Expropriate Deutsche Wohnen & Co is pressing the government to pass a law which would create a public body, democratically controlled and run by tenants, to manage the housing.But the campaigns are not simply ideological, and not all of those campaigning would call themselves socialists — even the UN’s housing adviser, Leilani Farha, has called out behaviours of corporate landlords such as the US company Blackstone in recent weeks.


There are practical causes too: London, Berlin and New York have all seen the creation of thousands of high-paid, high-skilled jobs in recent years, many in the technology sector. “A real issue,” says Lifschutz, is that “even a modest worker in a financial services company will be earning £50,000-plus and a nurse or a social worker will be earning £25,000.”The housing markets in these cities are not as multi-tiered as the jobs markets on which they rely. With a steep decline in social housing in London and New York since the 1980s — following the “Right to Buy” policy of the UK’s Conservative government and the sharp reduction in federal spending on subsidised housing under US president Ronald Reagan — “the incumbents and those who need to live on relatively modest rents are under pressure”, says Lifschutz.


The reluctance of older people to relinquish under-occupied homes has compounded the problem, he adds.“


[In Berlin] the original sin was the decision by a previous city government to privatise huge chunks of city housing,” says Peters. GSW Immobilien, a publicly-owned housing association with about 60,000 apartments, was sold in 2004 to a private equity consortium including Cerberus Capital Management and Goldman Sachs. “A historic mistake,” says Peters. GSW has since been acquired by Deutsche Wohnen.


Where Deutsche Wohnen stands accused of rising rents, developers in the UK have been criticised for crowding out local interests in the pursuit of profit. The campaigns share “a feeling that it’s big business against the little people”, says Lifschutz. Corporate landlords, tech companies and big developers can represent different heads of the same Hydra. All herald change: new arrivals, rising rents, a shift in the composition of local jobs.


“Since the 1970s we’ve seen a return to city living among professionals. We’d expect a common change in their politics — it’s unsurprising that activists are using the same language and techniques internationally,” says Breach.


A Nimby by Any Other Name


The motivation behind some of these groups is often couched in noble terms, but are urban anti-development campaigners really so different from any other group of “not in my back yard” campaigners?


Before its plans in Haringey collapsed, Lendlease had taken a leading role in the massive regeneration of Elephant and Castle. That area has been fundamentally reshaped in the nine years since the developer laid out its plans. As the local skyline has rocketed upward, so too have property prices — up 84 per cent since 2007, according to Hamptons International.


In Mercato Metropolitano, a disused paper factory just north of Elephant and Castle station given over to food stalls and bars, vendors tout craft beers and sustainable produce to a well-heeled crowd that would not have been much in evidence before Lendlease’s arrival. On a recent evening at the market, one suited young man was overheard saying to another: “I heard they’re planning to knock all this down.” “That’s gentrification,” lamented his companion.


“Look at the population who takes part [in anti-development campaigns]: it’s always first-wave gentrifiers who want the neighbourhood to remain a museum to the day they arrived,” says Breach. “There are very rarely working-class people in leadership positions.”


The reluctance of older people to relinquish underoccupied homes has compounded the problem


Mercato Metropolitano, as it happens, is set to expand significantly.


In Haringey, says Kober, opposition to development “was very much coming from the affluent west [of the borough], even though the development was taking place in the east. These people just wanted to defend the status quo: they didn’t want to see anything change.”


In that regard, says Breach, these movements “have a lot in common with traditional Nimbyism”, which in the UK has been spearheaded by “small-c” conservatives seeking to preserve rural, greenbelt land. Conversely, the fight against urban development is being led by those who identify as progressives. “They have different viewpoints but arrive at the same destination: a resistance to change,” he adds.


What comes next?


“A secondary cause of our campaign is to send a clear signal that predatory investment is not welcome — you cannot come here and expect to profit off the back of Berliners,” says Peters. But without investment — predatory or otherwise — what propels development?


In Peters’ view, there is an important distinction between “investors that want to create jobs and those that want to own real estate”. You can have a dynamic economy without the pressure of high housing costs, he insists. Everyday Americans still have the power to organise and fight for their communities Alexandria Ocasio-Cortez Others are less convinced. Successful expropriation would “burn Germany’s reputation as a stable business environment,” Jörg Schwagenscheidt, head of asset management firm PMM Group, and previously chief operating officer at Deutsche Wohnen, told the FT last month.


In London, the planning vacuum left by the HDV has not been filled; in New York, the Amazon windfall will not be forthcoming. Campaigners — enraged by housing crises and hostile to new development — are in a bind.


One way forward is more sensitive planning and better engagement on the part of developers, says Lifschutz. “You have to have the private, the social and the affordable housing and the shared community space.” Another approach is to use existing stock more efficiently: offering tax breaks to older people who are under-occupying homes to encourage them to move on, he says.


London’s mayor, Sadiq Khan, has incentivised the construction of affordable homes by promising fast-tracked planning permission for schemes which offer at least 35 per cent affordable housing. The measure has already made a difference, says Félicie Krikler, director at Assael Architecture, a London-based architecture practice. “I’m seeing all my clients now saying ‘we’ll provide 35 per cent’, because they know they won’t have to go through the viability assessment [a protracted negotiation process]”, she says.


Getting the balance of property type right — and regaining public support — might be the only way to advance, says Breach. “Local government is under so much pressure in terms of austerity and has to meet local manifesto commitments. Public-private partnerships are one of the only ways of doing that without selling off assets at a massive discount through [schemes like] Right to Buy,” he says. “Does that mean these schemes are higher risk? Yes, but does that mean it will stop? No.”


Original article


Photo: Demonstrators in Berlin protesting against gentrification and rising rents on 6 April 2019. Source: Odd Andersen/AFP.



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