The Reform of Housing in Eastern Europe and the Soviet Union

The Reform of Housing in Eastern Europe and the Soviet Union The rapid political changes in Eastern Europe and the Soviet Union have had repercussions for many aspects of the socialist system. Housing policy, always an important part of the socialist agenda, has undergone extensive reforms in light of these recent changes. This has solved some problems but given rise to others. A centrally planned system of resource allocation led to low standards and uneven spread of housing provision, but where countries have moved away from a command economy they have faced a new set of issues as housing markets are transformed. The studies in this book highlight the various aspects of housing reform, including such issues as rehabilitation, private initiatives, housing quality, welfare requirements and home ownership. While in some countries policy-makers have adhered to the older methods of housing provision, in others the number of massive state-run projects has declined in favour of smaller privately funded enterprises. The latest changes reflect the socio-economic restructuring of the countries in general and thus housing can be seen as a spearhead for reforms throughout the system. The contributions are written by active researchers in the eastern bloc analysing the latest reforms, and academics from Western Europe who apply broader housing issues. The contributions analyse the external factors that have influenced the reforms and assess the outlook for the future. As a study of the effects of change in Eastern Europe and the Soviet Union, this book is important for sociologists, economists and political scientists as well as housing experts. Bengt Turner is a senior researcher at the National Swedish Institute for Building Research at Gävle. József Hegedüs and Iván Tosics are both sociologists at the Hungarian Academy of Sciences in Budapest.

The Reform of Housing in Eastern Europe and the Soviet Union Edited by

Bengt Turner, József Hegedüs and Iván Tosics

London and New York

First published in 1992 by Routledge 11 New Fetter Lane, London EC4P 4EE This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to http://www.ebookstore.tandf.co.uk/. Simultaneously published in the USA and Canada by Routledge a division of Routledge, Chapman and Hall, Inc. 29 West 35th Street, New York, NY 10001 © 1992 Bengt Turner, József Hegedüs, Iván Tosics All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data The reform of housing in Eastern Europe and the Soviet Union I. Turner, B. (Bengt) II. Hegedüs, J. (József) III. Tosics, I. (Iván) 363.5094 ISBN 0-203-97494-8 Master e-book ISBN

ISBN 0-415-07068-6 (Print Edition) Library of Congress Cataloging in Publication Data The reform of housing in Eastern Europe and the Soviet Union/ edited by Bengt Turner, József Hegedüs, and Iván Tosics. p. cm. Rev. and enl. papers originally prepared for the conference on East European Housing Reform held in Noszvaj, Hungary in April 1989. Includes bibliographical references and index. ISBN 0-415-07068-8 1. Housing—Europe, Eastern. 2. Housing policy— Europe, Eastern. 3. Housing—Soviet Union. 4. Housing policy—Soviet Union. I. Turner, Bengt, 1946–. II. Hegedüs, József. III. Tosics, Iván. HD7332.9.A3R44 1992 363.5′8′0947–dc20 91–23422 CIP

Contents List of figures and tables

vii

Preface

xi

1 Housing reforms in Eastern Europe: an introduction Bengt Turner 2 Albania: an introduction Örjan Sjöberg 3 Housing and housing policy in Albania Lena Magnusson 4 Bulgaria: an introduction Rolf Jonsson 5 Housing reforms in Bulgaria Myth or reality? Maya Koleva and Iskra Dandolova 6 Czechoslovakia: an introduction Ola Siksiö 7 Housing in Czechoslovakia: Past and present problems Peter Michalovic 8 Recent changes in the housing system and policy in Czechoslovakia: an institutional approach Jiri Musil 9 Germany: and what now, when the twain have met? Lennart J.Lundqvist 10 Housing in the colours of the GDR Peter Marcuse and Wolfgang Schumann 11 Hungary: an introduction Bengt Turner 12 Housing reforms in Hungary József Hegedüs and Iván Tosics 13 Poland: an introduction Stephan Schmidt 14 The housing system in Poland: changes and direction Edward Kozlowski 15 The housing market in Warsaw according to the mediators of the estate agencies Alina Muziol-Weclawowicz

1 5 10 19 23 33 37 50

57 59 114 119 142 147 165

16 Romania: an introduction Stuart Lowe 17 The housing sector in Romania: appendix Stefan Grecianu 18 The Soviet Union: an introduction Gregory Andrusz 19 Housing and housing policy in the USSR Natasha Kalinina 20 The reform of the Soviet housing model: the search for a concept Olga Bessonova 21 Yugoslavia: an example reconsidered Lars Nord 22 Reformism in Yugoslavia: introductory remarks Srna Mandic 23 A case study of conflicting housing pluralism in Yugoslavia: informal (self-help) activities in the formal housing system Drago Kos 24 Conclusion: past tendencies and recent problems of the East European housing model József Hegedüs and Iván Tosics

174 184 190 196 220 231 235 245

253

Appendix: housing reforms in Eastern Europe and the Soviet Union

266

Index

285

Figures and Tables FIGURE

7.1 Number of newly constructed homes in Czechoslovakia

38

TABLES

3.1

Age composition in Albania, 1965 and 1985

11

3.2

Structure of families by number of persons in 1960, 1969, 1979 and 1989

12

3.3

Families in 1969, 1979 and 1980 according to couples

13

3.4

Number of dwellings built by the state, by voluntary work and by individuals, 1946–89

14

5.1

Basic data on the main forms of housing provision

31

5.2

Occupants, occupied dwellings, rooms, useful floor space

32

7.1

Structure of housing stock according to the year of erection

41

7.2

Development of housing financing

42

7.3

Age structure of the housing stock in 1980

43

7.4

Development of housing construction financing in 1970–82

43

7.5

Structure of housing stock by applied quality criteria

45

7.6

Monthly payment for use of a flat

46

8.1

The basic features of state socialist housing systems

51

8.2

The most probable alternative housing systems in the future

54

10.1

Ownership

66

10.2

Tenure

66

10.3

Ownership and tenure

66

10.4

New housing construction

69

10.5

Housing construction and investment

75

10.6

New construction, by tenure

77

10.7

Modernization

81

10.8

Financing

82

10.9

Construction techniques

85

10.10

New construction and modernization, annual averages

97

10.11

Units built per 1,000 population, GDR and FRG

98

10.12

Existing units per 1,000 persons

98

10.13

Rooms per unit, new construction

99

10.14

Quality of units

99

A12.1 Definition of types of access to housing in Hungary

133

A12.2 Basic data on the main housing reforms in the three periods of housing policy

133

A12.3 Basic data on the main housing reforms of the last thirty years in Budapest

134

B12.1

Number of people

135

B12.2

Migration tendencies in Budapest

135

B12.3

Communal investments in different community categories between 1976 and 1980

135

B12.4

Number of dwellings

136

B12.5

Size of dwellings

136

B12.6

Number of inhabitants/100 dwellings

136

B12.7

Level of infrastructure

136

B12.8

Tenure structure of housing stock

136

B12.9

Tenure structure of households

137

B12.10 New construction

137

B12.11 Basic data on new housing built in 1986

137

B12.12 Type of contractor in the different spheres of new housing in 138 1986 B12.13 Financial requirements of the main types of new housing in 1987, related to the average income

138

B12.14 Waiting lists for state-allocated housing

139

14.1

Principles for credits in cooperative housing

155

14.2

Instalment as percentage of average salaries in owneroccupied housing

156

14.3

Outlays on housing stock maintenance, revenues from rents 157 and current charges, and the share of subsidies in the cities in 1988

14.4

Outlays on housing in the years 1986–8

A14.1 Housing situation in Poland in the years 1950, 1960, 1970, 1978 and 1988

157 162

A14.2 Construction and investment in Poland in the period 1950– 88

163

15.1

Structure of ownership in 1978 and 1985: Warsaw area

167

15.2

New flats produced through the national economy

167

16.1

Construction of urban and rural dwellings 1951–85

177

19.1

Capital investment in housing construction by sector

199

19.2

Total housing construction

199

19.3

Types of accommodation

200

19.4

Housing stock by types of tenure

203

19.5

Services and utilities in Soviet housing

204

19.6

Estimated distribution of urban households in terms of their attitudes towards reform

208

22.1

Housing production and major innovations through housing reforms

238

Preface This book is based on papers prepared for the Conference on East European Housing Reforms, held in Noszvaj, Hungary, in April 1989. The authors of the papers were asked to elaborate and extend their papers according to the guidelines supplied by the editors of this volume. The volume consists of at least one chapter for each of the East European countries, including the Soviet Union and what is now the eastern part of Germany, together with an introduction for each country, in most cases written by a researcher from The National Swedish Institute for Building Research. The researchers have also acted as co-editors of the chapters describing the respective country’s housing situation in depth. The reports are in most cases written by native researchers. The content and emphases differ among the countries, depending on how much is known about the housing market and housing policy, how complicated the present situation is and how much information is available on the present reform activities. The most extensive analysis pertains to the situation in the former East Germany. This is because it is only in that country that it is possible to begin a final evaluation of the leap from a centrally planned economy to a market economy. A book of this character demands an extensive administrative effort; the scientific tradition and, above all, the quality of the communication networks differ considerably between the countries dealt with here. Most of the administrative work was done by the Institute in Gävle, and Gunilla Bloom should receive all our thanks for putting far more secretarial work into this project than had been anticipated. Recognition should also be given to Jan Teeland who proof-read and gave help in editing the manuscript. There is a great need for information on what is going on in housing policy and in the housing markets in the ‘transforming’ countries in Eastern Europe, and this volume will undoubtedly benefit the on-going debates on these issues. It is also hoped that the book will be used as a textbook by all those students interested in learning more about the process of transforming a regulated and centrally planned economy into a market economy using the housing market as a test case. Bengt Turner, József Hegedüs and Iván Tosics Gävle and Budapest

1 Housing reforms in Eastern Europe An introduction Bengt Turner In early 1989, when this book was first discussed, the situation was roughly the same in a broad political context in all East European countries. Except for Yugoslavia, they had a common ideological basis in a Marxist ideology and, possibly except for Hungary, an economic situation characterized as a command economy. We define a command economy as one basically reliant upon a planned economy, with a centralized system of decision-making concerning resource allocation, combined with a low degree of democracy in the political system. At that time, there were signs of a marketizing1 in the economies. Most countries were developing a greater reliance on market solutions. Hungary, for example, was starting to accept private companies within limited and well-defined areas; the same applied to Poland and the GDR, even if the GDR did not show any real development towards the market. These tendencies towards a market solution were, of course, a reaction to the worsening economic situation in the Eastern countries, in combination with political changes that made the realization of these tendencies possible. The emergence of a secondary and unregulated economy has two explanations; part of the primary economy is so inefficient (or non-existent) that private activities can successfully compete in spite of legal barriers. But the emergence of the second economy can also be explained by a low standard of living for broad groups of households. It creates an incentive to raise one’s standard by earning more money, which is only possible by entering the second economy. Generally, administrative solutions through better command have not been considered. Instead a reliance on limited, controlled and ‘encapsulated’ market solutions has been advocated by leading political forces in the countries. This is of course an oversimplification, to which the descriptions of all the East European countries in this book attest. The difference in attitude towards the command vs. market solutions varies significantly between Albania at one extreme and Yugoslavia at another. In all these Eastern countries—and still back in early 1989—the situation on the housing market paralleled the other sectors of society—that is, extremely unsatisfactory. Space standards, quality indexes, the number of homeless households, the existence of a large number of households sharing dwellings, etc. show that the housing situation was much worse than in Western Europe—albeit it is more questionable whether the housing situation was that bad relative to the standard of living as a whole. The reaction to the situation on the housing market in some countries came somewhat earlier than in other social areas. Perhaps housing policy experiments on the housing

The reform of housing in Eastern Europe and the Soviet Union

2

market can be seen as forerunners of broader political and economic changes yet to come? And maybe it is possible to regard housing policy with a clear market approach as a testing ground for general policy initiatives. We should, however, bear in mind that the speed and extent of this approach differed between countries, and there were large differences between the initial level of marketizing. Before we continue by analysing the future development of the housing markets in Eastern Europe, we have to be more explicit in our description of the historical roots of the present housing situation and the housing policy context. It should then be possible to draw some preliminary conclusions on the probable effect of the recent political changes on the housing situation. This is also meant to form a basis of description, country by country. Let us first identify common features of the Eastern housing markets. First of all, the private rental sector is in the main non-existent in these countries. The introduction of socialism after the Second World War imposed the nationalization of private property, and that literally wiped out most of the private landlords, or otherwise greatly restricted their freedom of disposal and rent setting. In most cases, the property was left in the hands of local political committees, responsible for the maintenance of the property and allocation of dwellings. The introduction of a new political regime also meant a wave of construction of public housing in high-rise estates. The extreme shortage of dwellings, due to destruction during the war, justified such a policy. In some countries, e.g. Czechoslovakia, the high-rise estates were built and owned in a cooperative tenure form; and in other countries, the construction, ownership and allocation of dwellings were in the hands of workers’ cooperatives. It will be made very clear in this book that the means to implement this policy were indeed very different between the Eastern countries, but the aim was common: to ensure a sufficient construction of dwellings under the auspices of the state, thus banning private construction, or at least reducing the allocation of resources for private production. The situation concerning home ownership is quite different and extremely blurred. When the socialist regimes were introduced, the share of home ownership was quite large in most countries. It was not considered feasible, however, either in a political context or in view of costly public maintenance, to nationalize private homes. A number of political problems immediately emerged: how to allocate the private homes, how to handle capital gains, how society should organize mortgages and a credit market, and under what forms should new construction be permitted, etc? Most countries tried to starve the home ownership sector by strict regulations, such as zoning or making construction of private homes within built-up urban areas unlawful. No capital market was set up, making the task of raising money very complicated for the individual household. No, or scanty, access was given to building material. In some countries, the private sale of a single-family home was penalized, etc. Thus, the general policy was to limit the existence and use of private ownership of homes as much as was politically and practically feasible. This of course also applied to private, or joint private, initiatives in the multi-family sector. A change arrived during the 1970s and 1980s, however, and a policy more favourable to private initiatives and to the establishment of a housing market did emerge. The

Housing reforms in Eastern Europe

3

explanations of the change in attitude given in this book are enlightening, although it is doubtful whether any real change occurred in a country like Albania.2 Nevertheless, the reasons for these changes in housing policy towards market solutions seem to be twofold: push and pull factors. Push factors are due to the increasing unpopularity of high-rise estates, built from prefabricated concrete elements and which have been the predominant production of housing in all of Eastern Europe. The anonymity and sterility of the giant estates produced by this mass construction have caused a lot of dissatisfaction among the population. The dilemma of this mass construction is that it did not solve the housing shortage. The statistical appendix at the end of this book gives a massive impression of overcrowding, families sharing the same flat, unwanted cohabitation with relatives and widespread homelessness in most of the countries. There are also strong reasons to believe that the allocation through queues, which is meant to result in a fair distribution of housing, has not always been arranged according to social housing needs. The socalled nomenclature has given rise to possibilities to bypass the queue. Another possible explanation is the set of pull factors. They may be characterized as a growing trend towards privatization of the housing market, which predominantly means that the ownership sector has been allowed to flourish during the last few years in most of the countries. It may be that growing economic power for important groups in society, in combination with the failure of the state to provide satisfactory social housing for these groups, or to reward them in any other way, is the most important explanation of the trend towards a growing ownership sector. This explanation seems to be relevant in all Eastern countries. The ‘herding’ aspect of ownership undoubtedly contributed to a recognition and, eventually, a reinforcement of the ownership sector. In a turbulent economic situation, private ownership gained in importance for affluent groups in society who found it to be in their interest to safeguard the right to own property in socialist countries. The effects on the private economy were great, since imputed rents and taxation of capital gains were non-existent in these countries. The positive effects were alleviated by an extremely low nominal rate of interest, due to an ideological resistance to accept the existing high rate of inflation in most of the countries. Another reason for the liberalization of the attitude towards home ownership was that supporting private ownership was seen as a strategy to avoid the social unrest that might follow an unsatisfactory economic situation and the severe shortage of housing mentioned earlier in this introduction. The means of making comparisons with other countries evolved rapidly as a result of more and better information coming in from Western Europe, which created a deep interest in home ownership as a way of creating independence from the state. Indeed, the liberalization of the attitude towards ownership brought about a whole series of changes in the housing market. It became possible to form private cooperatives in some countries; it was suddenly permitted to build—by the municipality or small private firms—privately owned individual dwellings. And in some countries it was beginning to be possible to purchase some of the dwellings belonging to the public sector. There were even signs of a rehabilitation of the private landlord, especially in

The reform of housing in Eastern Europe and the Soviet Union

4

those countries where a limited, and highly restricted, private ownership of multi-family housing had been preserved. A large portion of this book is devoted to a description of the housing policy situation in Eastern Europe. The discussion is conducted in terms of enforced or proposed reforms, most of which signify a development towards a market economy or at least a marketconformity solution. The basic underlying hypothesis is that undertaken and proposed housing policy reforms in Eastern Europe are powerful indicators of political processes and economic changes in these societies. Housing policy can thus spearhead other changes in society. What will happen if the political changes are even more dramatic? Will housing policy lose its momentum? The answer is that it will not. Even if the citizens can enjoy more political freedom, the rules of the economy will not change automatically, although a non-socialist regime would of course give a strong impetus to such a development. The effects of the new political order in most East European countries will probably be that housing policy will remain path breaking. There is no logical reason for politicians in Eastern Europe not to let housing policy change in a direction that anticipates changes in the rest of the economy. In this respect, the recent changes in Eastern Europe may be regarded as a continuation of the changes during the 1980s. All the descriptions by country will elaborate on the points discussed above and the closing chapter will contain a summary and an evaluation of the hypothesis.

NOTES 1 The term ‘marketizing’ in this chapter is used to describe a market form in which individuals or a collection of individuals act with the aim of generating Ling profits, or in their own selfinterest. The meaning of market is used here in an economic sense, which means that the aim of a market is to perform an allocation of resources. ‘Privatizing’ will then mean a change in the command over the resource allocation process to individuals or a collection of individuals acting in their own self-interest. 2 Even in the GDR, which used to be considered an extremely static society, cooperatives and owner-built units, as well as private rehabilitation, were increasingly supported after 1981.

2 Albania An introduction Örjan Sjöberg Amongst the centrally planned economies and communist polities that emerged in postwar Europe, Albania stands out as being not only the smallest and least populous, but also the most independent minded. Indeed, following the breaks with the Soviet Union in 1961 and China in 1978, Albania has pursued a staunchly non-aligned policy in the foreign policy arena. Simultaneously, she has tried to implement a policy of self-reliance in the economic sphere, emphasizing industrialization and self-sufficiency in food products. This is not to suggest, however, that trade and aid have not been important to this small Balkan state. On the contrary, they have at times been vitally important for sheer survival, and foreign economic relations are still an important determinant of overall economic performance (Schnytzer 1982:101). Despite this, Albania’s adopted strategy has stressed the need to achieve self-sufficiency in order to maintain political autonomy. The pursued policies have implied not only a priority of import substitution schemes bordering on the autarkic, but also a reluctance to alter the basic features of the command economy introduced in the late 1940s and early 1950s. And as elsewhere among centrally planned economies, problems of management and performance have increasingly made themselves felt. In the case of Albania, the three latest five-year plans, running from 1976 up to the end of the 1980s, have effectively been lost. Real growth has slowed down and since the population has continued to increase at a rate more reminiscent of the Third World than industrialized Europe, per capita production has stagnated (Sjöberg and Sandström 1989). Beyond any reasonable doubt, the sluggish performance reflects structural weaknesses and a framework of incentives not conducive to high productivity. Albania, then, would on the face of it seem as likely a candidate for substantive reform as any of the larger Soviet-type economies, but this is as of yet not the case. On the contrary, foreign observers have been rather more impressed by Albania’s unwillingness to provide anything remotely similar to economic reform. In fact, Albania has remained the most orthodox among the centrally planned economies, a distinction setting the country all the more apart now that the winds of change appear to be strong elsewhere amongst European Soviet-type economies. Albanian officials, on their part, maintain that the existing system is basically sound and have until very recently barely admitted the need even for ‘fine-tuning’ (or përsosje, ‘perfection’, as it is known in Albania).1 True, methods of planning have improved and the range of products has expanded, but in face of the obvious difficulties experienced, Albania has long been conspicuous in hardly contemplating anything more thorough than campaigns against lax labour discipline and bureaucratic behaviour. In sum, the original system—modelled on

The reform of housing in Eastern Europe and the Soviet Union

6

that of the late Stalin years in the Soviet Union—is still very much in evidence (see, e.g., Schnytzer 1982). The two strands of an unreformed command economy and a striving for self-reliance, then, have clear implications for the more mundane matters of making a living and organizing everyday life. For one thing, the standard of living continues to be amongst the lower, if not indeed the lowest, in Europe. Food shortages have frequently been reported during the past half decade or so and food rationing has reappeared in the 1980s. In response, certain concessions with respect to the members’ private plots, for instance, have been announced, the latter being a sign of distress in a country much intent upon doing away as rapidly as possible with this particular vestige of non-socialist ownership and mentality. Consumer durables remain effectively rationed, and although little substantial information is available, access to TV sets, washing machines, heating stoves, etc., appears to leave much to be desired, not least when regional patterns of distribution are taken into consideration (these issues are discussed in some detail in Sjöberg, forthcoming b). Perhaps predictably, much the same is true of housing, as regards both availability and quality. Whereas little is known on the latter score, casual observation would seem to suggest considerable shortcomings with respect to housing standards. In particular, this applies to rural dwellings, where basic amenities such as running water, sewage systems, etc., are often lacking (Sjöberg, forthcoming b and Lena Magnusson in this volume). However, inhabitants of rural areas are arguably better off with respect to living space, although the larger rural families might infringe on the extra square metres to be found in cooperativists’ houses as compared to urban flats. Be this as it may, in a recent report, Albanian sociologist Zana Alia (1988:118) claims that 40% of the 85,000 (presumably mostly urban) apartments to be built during the period 1986–90 will have one room and a kitchen, and another 48% two rooms and a kitchen, while the remainder is to be made up by three-room flats.2 And although the three-generation family is no longer the rule in urban areas and although urban families have fewer children than do rural ones, nevertheless this presumably translates into fairly cramped living conditions. In fact, such a contention is amply testified to by a recently published order of the Council of Ministers, which gives 6 square metres per person (above the age of 10) of living space as the norm (Council of Ministers 1989:82).3 As far as the volume of housing constructed compared to demand is concerned, and as is made clear in Lena Magnusson’s contribution to this volume, little direct and comprehensive information is forthcoming. (Thus, while data on the demand for housing is not available, or only in indirect form, data on housing construction is.) But it would not seem unfair to conclude on the basis of available evidence that Albania has experienced some version of under-urbanization, a phenomenon often associated with savings on investment in physical and social infrastructure, including housing (in the rather voluminous literature, we may refer to, e.g., Ofer 1977, and Murray and Szelenyi 1984). It should be added at this point, though, that urban land use planning and legal restrictions on migratory movements could account for much of the slow pace of urbanization, issues which are discussed in some detail by Sjöberg (forthcoming a). Whatever the reason, the share of the population residing in towns has grown slowly during the past twenty-five to thirty years—from 29.5% in 1960 to 34.6% in 1987—and in particular during the period from the mid 1960s to the mid or late 1970s, when

Albania: an introduction

7

virtually no increase in the urban share was recorded (ibid., Table 1; these quotes refer to register data, rather than census returns). However, Magnusson draws attention to the fact that, given the generally high natural growth of the population, with an average annual increment of 2.1% during the latest inter-census period (i.e. 1979–89; see Höpken 1989), the number of urban dwellers has been augmented considerably, or by almost a quarter (or 23%) over the period 1979–87 and by in excess of 110% since 1960.4 Similarly, much of the urbanization pressure in present-day Albania obviously translates into rapid rural growth in areas immediately adjacent to major urban centres, such as Tirana (Alimehmeti 1988:6–7; cf. Sjöberg forthcoming a). In this perspective, the recent report of 9,000 apartments havingbeen built nationwide during 1989 (Gjyzari 1990:5)—2,000 units of which were constructed in the district of Tirana (Zëri i popullit January 1, 1990)—does not appear to be overly impressive. Incidentally, the verdict is almost equally dismal if we compare the volume of housing construction in 1989 with the target of 85,000 flats and houses to be built during the 1986–90 plan period as mentioned by Prime Minister Adil Çarçani (1986:270). This remains true in the event of private (rural as well as urban) dwellings not having been included in this particular statistic, which in turn would indicate a substantial if belated increment in state housing construction.5 And since the age structure of the Albanian population ensures a relatively high number of new entrants into adulthood every year, and hence into the ranks of those requiring housing of their own, it is not unlikely that shortages will persist. It would of course be unwise to try to predict future developments and therefore also the prospects, for reform, but one might at least raise the question as to how the prevailing housing trends can be maintained. The disequilibrium implied by low rents, not insubstantial subsidies and a low level of housing construction may well present decision-makers with some delicate choices to be made in a not too distant future. After all, at some point the pressure on the weakest link of the chain is bound to produce strains of either a financial or a social nature. A first step towards reform was in fact taken in the opening months of 1990. At the 9th Plenum of the Party of Labour of Albania, held in late January, it was envisaged that prices should better reflect supply and demand and, by implication, that existing subsidized prices should in many cases be adjusted; thereby an important principle was infringed upon. Also in the field of housing policy, as is pointed out in Magnusson’s contribution, some of these new openings can be noticed. Citizens are to be encouraged to build houses by their own means to a larger extent than hitherto. The construction of private housing should be more strongly supported by the authorities, as should agreements between groups of individuals to build their own flats. The latter seems to indicate the introduction of genuine cooperative housing schemes in Albania. Equally important, preparations are being made for the sale of urban single-family dwellings to occupants, and, in general, dwellers are invited to put more effort into the expansion and maintenance of existing housing (Party of Labour of Albania 1990). If this package of proposals represents a new departure6 or is simply a measure designed to offset the major current imbalances with respect to housing—thereby postponing for a while changes that in the long run are most likely imperative—remains to be seen.

The reform of housing in Eastern Europe and the Soviet Union

8

NOTES 1 Of late, material incentives have reappeared as a favoured option, the need for more strict financial controls have been emphasized, and readjustments of prices and wages have been proposed (see, e.g., Zanga 1990). As of yet, however, this hardly adds up to substantial economic reform. 2 It should be noted that Alia (1988:118) in fact refers to the 9th five-year plan (i.e. 1991–6), but it is clear from the context that those 85,000 units are to be built during the 8th five-year plan period. Cf. Çarçani (1986:270). 3 This interesting order details how housing allocation is supposed to proceed and lists persons entitled to apply for a dwelling (heads of families, provided that they are employed or retired) or those authorized for above-norm housing space. The latter privileged category includes officials on the level of a deputy minister or higher, party secretaries on the district level (subdistricts in Tirana district) and chairpersons in the corresponding executive committees, division commanders of the defence and security forces, heroes of the people, heroes of socialist work, artists and writers as well as professors and doctors of science. Finally, reasons of health—or rather, those afflicted by certain diseases—may also be so entitled (Council of Ministers 1989). 4 Which in turn can be separated into increases accruing from natural growth (about two-thirds over the full period 1960–87) and immigration (about one-third), secondary effects, i.e. the children born to immigrants, not being included in this rather conservative approximation. See Backa (1986:77), and Sjöberg (forthcoming a). It could be added that some of the growth has occurred due to the on-going process of designating new towns. 5 Normally approximately 10,000 dwellings are constructed each year, about half of which are built by individuals rather than by the state; see statistics quoted by Lena Magnusson in the present volume. If the 1989 figures represent a substantial increase in state housing construction, it is of course a first, but not necessarily sufficient, step towards alleviating current problems. 6 It appears that it has also become possible to criticize certain aspects of the pursued housing policy. Thus, articles (e.g. Faja 1990) have started to appear, formulating critical standpoints with respect to the aesthetic shortcomings and monotony of the prefabricated housing estates which have become an all too dominating feature of the modern Albanian townscape.

REFERENCES Alia, Zana (1988), Familja socialiste dhe struktura e saj. Tirana: 8 Nëntori. Alimehmeti, Faik (1988), ‘Mbi disa mundësi të planeve rajonale për rritjen e effektivitetit të ndërtimit dhe të organizimit të lëvizjeve demografike’, Buletin i shkencave teknike, 1988:4, pp. 3–8. Backa, Abdyl (1986), Riprodhimi i zgjeruar i produktit shogëror në RPSSH. Tirana: 8 Nëntori. Çarçani, Adil (1986), ‘Raport për direktivat e Kongresit të 9-të të Partisë për planin e tetë pesëvjeçar të zhvillimit të ekonomisë e të kulturëa të Republikës Popullore Socialiste të Shqipërisë për vitet 1986–1990’, in Kongresi i 9-të i Partisë së Punës të Shqipërisë, 3–8 nëntor 1986 (Përmbledhje materialesh). Tirana: 8 NRKvntori, pp. 215–98. Council of Ministers (1989), ‘Urdhëresë Nr. 1, datë 7.7.1989, Për administrimin e kërkesave për banesa dhe për shpërndarjen e tyre’, Gazeta zyrtare, 1989:4, pp. 82–90. Faja, Enver (1990), ‘Ndërtimit dhe fizionomia orgjinale e gytetit’, Zëri i popullit, 1 Feb. 1990, p. 3. Gjyzari, Niko (1990), ‘Për plotëaimin e planit të vitit 1989 dhe detyrat kryesore të projektplanit të zhvillimit të ekonomisë e të kulturës për vitin 1990—Raport i paraqitur në emër të Këshillit të Ministrave nga shoku Niko Gjyzari, kryetar i Komisionit të Planit të Shtetit’, Probleme ekonomike, viti XXXVII(VIII):1, pp. 3–16.

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Höpken, Wolfgang (1989), ‘Erste Ergebnisse der Bevölkerungszählung in Albanien’, Südosteuropa, 38. Jahrg., H. 9, pp. 542–8. Murray, Pearce and Szelenyi, Ivan (1984), ‘The city in the transition to socialism’, The International Journal of Urban and Regional Studies, vol. 8:1, pp. 90–107. Ofer, Gur (1977), ‘Economizing on Urbanization in Socialist Countries: Historical Necessity or Socialist Strategy?’, in Alan A.Brown and Egon Neuberger (eds), International Migration: A Comparative Perspective. New York, NY: Academic Press, pp. 227–303. Party of Labour of Albania (1990), ‘Mbi thellimin e masave për revolucionarizimin e jetës së Partisë dhe të gjithe vendit—Vendim i Plenumit të 9-të të Komitetit Qendror të Partisë’, Zëri i popullit, 4 Feb. 1990, pp. 1–2. Schnytzer, Adi (1982), Stalinist Economic Strategy in Practice: The Case of Albania. Oxford: Oxford University Press. Sjöberg, Örjan (forthcoming a), ‘Urban Albania: Developments 1965–1987’, in Franz-Lothar Altmann (ed.), Albanien im Umbruch. Eine Bestandsaufnahme. (Untersuchungen zur Gegenwartskunde Südosteuropas, 28.) Munich: R.Oldenbourg Verlag, pp. 171–223. Sjöberg, Örjan (forthcoming b), Rural Change in Albania. Sjöberg, Örjan and Sandström, Per (1989), The Albanian Statistical Abstract of 1988: Heralding a New Era? (Arbetsrapporter/Working papers, 2.) Uppsala: Dept. of Soviet and East European Studies, Uppsala University, Sweden. Zanga, Louis (1990), ‘Albania Moving Along, But Slowly’, Report on Eastern Europe, vol. 1:1, pp. 4–6.

3 Housing and housing policy in Albania Lena Magnusson

INTRODUCTION Albania or The People’s Socialist Republic of Albania holds a special position in Europe as a country with an ambition to be wholly self-supporting and also independent from other forces. Albanian society is organized with Marxism-Leninism as the official ideology. In 1976 Albania adopted a new constitution, which clearly proclaims a state in which the people’s dictatorship prevails. The People’s Socialist Republic of Albania is the state of the dictatorship of the proletariat which expresses and defends the interests of all workers. It is based on the unity of the people and has as its roots the alliance of the working class with the cooperativist peasantry, under the leadership of the working class. (Bërxholi and Qiriazi 1986) Albania is the most agrarian society in Europe; over 50% of the labour is employed in this branch of the economy. Albanian society is also the most collectivized in Europe; private property in principle is banned. One of the few exceptions to collective ownership is the possibility to build and own a single family house; but all other housing is owned by the state. In most of the East European countries, policies—including housing policies—are now turning in a more market-oriented direction, with different forms of privatization. What will happen in Albania in this respect? Is it conceivable that the rest of Eastern Europe can influence Albania, or will the Albanian state continue go its own way, as it has up to now? Although we might not be able to give a final answer to such questions at present, a background to the housing question can be sketched. This, in turn, might be helpful in improving our understanding of the probable processes at work. The intention of this chapter is to give a general overview of the housing system in Albania as a basis for a discussion on housing reforms.

THE ECONOMY OF ALBANIA Albania has a centrally planned economy with an emphasis on industrialization and selfsufficiency in agriculture. Despite a putative economic growth of 6% per annum during

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the 1981–5 five-year plan, with a gross national product per capita at an estimated 930 US dollars in 1986, the country still ranks among the poorest in Europe. The major constraints to economic growth are low productivity levels due to weak investment capacity and shortage of skilled labour. Agriculture dominates the economy, employing 50.5% of the workforce, and 80% of this output is produced by the country’s 492 agricultural cooperatives (Chamberlain 1988, Statistical Yearbook of P.S.R of Albania 1990). Albania is also the most collectivized society in Europe, in which private ownership of most goods, including cars, is banned as a matter of principle. After 1945 all capitalists’ property was expropriated, and the large land holdings were distributed among 70,000 landless farmers as part of the agrarian reform. The last remaining private land was nationalized in 1967. However, one of the few exceptions to the ban on private property was housing, which can be built and owned privately. Also private vegetable trading on a small scale, although formally prohibited in 1981, is today tolerated, albeit not fully accepted. The system of direct taxation of the population was abolished in 1969. The citizens pay no taxes or levies whatsoever, except for the indirectly imposed turnover taxes inherent in the dual price system that goes with Soviet-style planning. On the other hand, wages are low. The policy has been to equalize the wage differentials between different occupational groups and between people living in the countryside and in the cities. The wage differentials must not exceed 2:1 between the lowest and the highest paid in a workplace (Chamberlain 1988, Utrikespolitiska Institutet, Stockholm [Foreign Policy Institute] 1988).

DEMOGRAPHIC DEVELOPMENT IN ALBANIA Albania has about 3.2 million inhabitants (1989) and together with Turkey has the fastest growing population in Europe. The annual growth rate during the last forty years has been 2–3% due to the highest excess of births over deaths in Europe, 20.4 per 1,000 inhabitants (1985). The population of Albania has doubled since 1960. These figures can be compared to other countries in Europe with an excess of births over deaths— between—1.9 (West Germany) actually a deficit and 10.2 (Soviet Union) per 1,000 inhabitants (Statistical Abstract of Sweden 1989). As a consequence, the population in Albania is young; the average age is 26 years, the youngest in Europe. This can be compared to Sweden with a mean age of 38 years, and it is much the same in Hungary. In the table below (Table 3.1) the age composition in Albania in 1965 and 1985 is presented (Misja et al. 1987:169).

Table 3.1 Age composition in Albania, 1965 and 1985 (%) 1965

1985

Under 15 years

42.2

33.9

Between 15 and 29 years

24.3

29.8

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Between 30 and 44 years

15.7

17.4

Between 45 and 59 years

10.1

11.3

7.6

7.7

Over 60 years

Compared to most of the other countries in Europe, Albania has a larger proportion of young people and less old people. The age composition in Albania can be compared to that of Hungary and Poland, two countries where reform policies have been embarked upon. In 1985, Poland’s population had around 25% under 15 years and around 10% over 60. In Hungary, the same year, the proportion of people under 15 years was around 20% and over 60, around 15% (Statistical Abstract of Sweden, 1989). The main demographic trend in Albania has been a faster growth in the number of families than in the total number of population. During the period between 1969 and 1979 (census 1969 and 1979) the growth of the population was 25% while the number of families increased by 35%. During the period between 1979 and 1989 (census 1989) the growth of the population was 23% while the number of families increased by 46%. This resulted in a drop in the average family size from 5.6 to 4.6. The table below (Table 3.2) illustrates this process (Statistical Yearbook of P.S.R. of Albania 1988:34–5, 1990:41). One feature of Albania’s socio-demographic structure during the period from 1960 to 1989 is an absolute increase of all types of families, but a relative decrease of families with only one person, and families with more than six persons. On the other hand the proportion of families with two-three and four-six persons has increased.

Table 3.2. Structure of families by number of persons in 1960, 1969, 1979 and 1989 (a) Family size

Number of families 1960

1969

1979

1989

1 person

17,060

12,980

15,084

28,609

2–3 persons

46,832

55,673

79,890

157,615

4–6 persons

115,469

149,424

213,530

373,136

7–10 persons

81,521

107,807

135,842

107,864

11 or more persons

18,923

20,704

18,987

8,232

279,805

346,588

463,333

675,456

Total (b) Family size

Number of families (in %) 1960

1 person 2–3 persons

1969

1979

1989

6.1

3.7

3.3

4.2

16.7

16.1

17.2

23.3

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4–6 persons

41.3

43.1

46.1

55.2

7–10 persons

29.1

31.1

29.3

16.0

6.8

6.0

4.1

1.2

100.0

100.0

100.0

99.9

11 or more persons Total

It should be mentioned that the figures above only include ‘resident population’, thus leaving out semi-nomadic or otherwise not permanently settled persons or population groups (such as members of the Vlach and Gypsy communities). It appears from these tables that changes in family size in Albania have been different from the rest of Europe. In most countries in Europe families with 1–2 persons make up one- to two-thirds of all families; in Albania they comprise 9.5% (1979). In general these families are made up of elderly pensioned parents who live independent of their married children (Alia 1990). Marital status and the family as an institution are still important in Albanian cultural life. Traditionally, young people stay with their parents until they get married: no young single people enter the housing market as they are not allowed to apply for housing.

HOUSING IN ALBANIA Since no statistics explicitly describing the housing market are available, analyses must be tentative. However, a few basic facts can be brought to bear on our discussion. Albania is a country whose housing pattern has close links to agrarian society. Family size is comparatively large, on average 3.9 persons in urban areas and 5.3 in rural areas in 1989. Because of overcrowding and cultural traditions, it is rather common that more than one couple share one dwelling. This is illustrated in Table 3.3 below (Misja and Vejsiu 1985:59, Statistical Yearbook of P.S.R of Albania 1990). This is also in line with the tradition that the oldest son or daughter takes care of the parents and shares a dwelling with them (Proko 1989).

Table 3.3 Families in 1969, 1979 and 1980 according to couples (%) Total number of families with

1969

1979

1989

One couple

65.3

71.4

80.4

Two couples

26.8

24.7

18.2

Three couples

6.0

3.3

1.2

Four or more couples

1.9

0.6

0.1

100.0

100.0

99.9

Total

There are in principle three tenure forms in Albania: rented flats, privately owned single family houses and, recently, provisions have been made for cooperatively owned flats

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(Party of Labour of Albania 1990). Most of the dwellings in the cities are in multi-family houses. These dwellings are owned and allocated by the state. They are distributed by the people’s council of the city ward, i.e. in the end, by the local party committee (Proko 1989). The key factor in allocation is the number of persons in the family, and the necessity to provide for labour in industry, etc. In the countryside, where 65% of the Albanian population live, all kinds of housing are represented, but mostly privately owned single-family houses. Rural areas contain about 386,227 families, of which about 332,000 live in cooperatives (census 1989). Most of the cooperativist families live in private single houses, while state-owned flats are common among families on state farms. Most of the dwellings in urban areas in Albania are owned and built by the state. From the end of the Second World War and up to 1989 about 10–15,000 dwellings per annum, or 457,000, were built in the countryside and in the cities (Table 3.4). The predominant dwelling size was, and still is, one living-room, one or two bedrooms and a kitchenette. In 1989 the norms for dwelling space changed and the space increased by 20% (Statistical Yearbook of P.S.R. of Albania 1988:109).

Table 3.4 Number of dwellings built by the state, by voluntary work and by individuals, 1946–89 Years of construction

Total number of dwellings

Built by the Built by state voluntary work

Built by individuals

1946–50

12,114

1,114

11,000

1951–5

26,110

7,596

18,514

1956–60

47,413

11,734

35,679

1961–5

44,693

15,808

28,885

1966–70

73,213

16,587

12,458

44,168

1971–5

61,908

9,106

22,932

29,870

1976–80

56,390

16,144

10,182

30,064

1981–5

75,362

25,569

15,618

34,175

1986

15,049

4,742

3,319

6,988

1987

13,863

4,118

3,152

6,593

1988

15,121

4,447

3,767

6,907

1989

16,061

4,661

3,385

8,015

During the post-war period the state’s share in dwelling construction increased from 10% in the late 1940s to about 50% since the early 1970s. State housing has mainly been allocated to urban areas while dwellings in villages have been built by individuals. The plan for the next five years is that the share of dwellings built by individuals will increase again even in the cities.

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A slight change in policy might, however, be underway. In early 1990 the Party of Labour of Albania made decisions to the effect that the construction of private dwellings should be encouraged, not least among state farm employees who previously have been heavily dependent on state housing provision. Also in urban areas more leeway is to be granted to private initiative and for ownership of single-family houses; such dwellings on the outskirts of towns are even cited as likely candidates for privatization through being sold to their present occupants. Although the former could easily be explained away by referring to financial necessities—that is, an overburdened state budget—the latter move may indeed indicate that pragmatic considerations now have the upper hand over dogma in housing policy. The actual number of dwellings in Albania amounts to about 450,000–550,000. There are no statistics on number of dwellings constructed before 1944, only number of buildings (54,000), or number of demolished dwellings, which makes it impossible to estimate the housing stock properly. However, the, number of dwellings is less than the number of families. The concept of ‘dwelling households’ is not used in Albania, and more than one family lives in the same dwelling. Even if the family size has decreased, the household size still seems to be about six-seven persons. From an economic point of view, housing has accounted for 4.3% to 6.6% of the total investments in Albania during the last forty years (in Sweden, the corresponding figure is 23%). However, it seems that investments in housing have decreased since 1960. During the 1980s, investments in housing have accounted for around 5% of total investments (Statistical Yearbook of P.S.R. of Albania 1988, 1989). The state owns all flats in urban areas and those linked to state farms. The state builds flats in urban areas, both through its own organizations and through voluntary labour. The latter method has been developed since 1968 when a pioneer programme was inaugurated in the capital Tirana during the country’s ‘cultural revolution’ (Hall 1987). Voluntary work means that the state provides building materials and specialists, and those who are going to live in the dwellings carry out the work (Sjöberg 1989a). Using voluntary work for housing construction was important after the two earthquakes in 1967 and in 1979 (Portrait of Albania 1982). It is also a way to reduce the housing shortages. Families living in state housing, which most of the urban families do, pay a very low rent. The rent amounts to 2 or 3% of the monthly family income. It has been reported that the income from one or two work days is sufficient to cover rent payments while ‘payment for water, electricity, and other services of the kind are symbolic’ (Schnytzer 1982:108). When no statistics are available for dwelling cost in relation to income only an example can be given. The rent for a two-bedroom flat, living-room and kitchenette was 45 leks/month ($4.5) in 1990. The costs for water, electricity and heating (during winter) were 150 leks/month ($15). The average income per month is around 560 leks ($56).

SINGLE-FAMILY HOUSES IN ALBANIA For those who want to build their own house, the state gives loans to cover the building costs. These loans have been available since 1950 and are in principle open for everybody wanting to live in their own house. It is also possible to get loans for

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maintaining houses. The rules as of autumn 1990 for credits intended to cover building costs differ between urban and rural areas. First, there are no loans available for families living in cooperatives. Families living on state farms can get credit up to 35,000 leks ($3500). The interest rate is 6% and the loan should be repaid over a period of twenty to twenty-five years. Families living in urban areas can get credit up to 25,000 leks ($2,500) at an interest rate of 3%, to be repaid during five years (new law from May 1990). Both loans are intended to cover not more than 50% of the building costs, which in 1990 were from 50,000 lek for a three-bedroom single-family house. There are some restrictions on house building, as regards the size of state loans, the amount of land and the amount of building material available. It normally takes about sixty working days to obtain all the building material required for a single-family house, and it is necessary to make use of the informal economy (Sjöberg 1989b). The land restriction means that distribution of land for housing construction varies in different parts of Albania. Those who want to build a single-family house in an urban area may be allocated at most 150 m2, of land. If they want to build this house in the countryside they get 200 m2, whereas mountain dwellers may receive up to 300 m2 (Sjöberg 1991). There is a special national institute responsible for the construction plans for all types of dwellings (Instituti i Studimeve dhe Projektimeve të Urbanistikës dhe Arkitekturës, ISP). Three standardized types of single-family houses are built in Albania today. There is no information available on number of rooms, but the size is about 60–80 m2. Most single-family houses built in rural areas during the post-war period are likely to have a living-room and three bedrooms or more (Xhediku 1986).

STANDARD OF HOUSING There is almost no information about the standard of housing. Many dwellings in the countryside still rely upon open fires or hearths for heating and cooking (Sjöberg 1990). In 1989 16% of all residential buildings had piped water (63% in urban areas and 5% in rural areas) and, 30% had water-closets (66% in urban areas and 21% in rural areas). A few residential buildings have central heating, but most dwellings are individually heated, e.g. by wood. There is also a lack of maintenance in blocks of flats, and especially in the post-war prefabricated high-rise estates. The policy has been to build new flats and demolish the old ones when they can no longer be used for housing. However, in some respects the standard has been enhanced; there are dwellings with refrigerators and washing machines. In 1989 about 86,000 families or 13% had a washing machine and 14% a refrigerator. The main reason for importing these household machines is to make housework easier for women so that they can take part in industrial production.

THE LAND USE PROGRAMME IN ALBANIA One of the most important features of Albania’s domestic policy is to strengthen agriculture and restrain urbanization. On the surface, this policy appears to have been successful. During the period from 1945 to 1960 the share of urban population increased

Housing and housing policy in Albania

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rapidly; thereafter, it has stabilized at about one-third of the total number of inhabitants (Sjöberg 1989a). One way to subdue the growth of urban areas is to put a limit on physical growth around every city. This limit is called ‘the yellow line’ and constitutes the border between built-up and agricultural areas. Most of the cities in Albania have expanded to the yellow line, and have no further prospects of increasing their built-up areas. Given the restrictions on land, it is doubtful whether the families in cities have the same possibilities as families in the countryside to build their own houses. Another way of controlling the growth of the cities is to require permits from those who want to move to the cities. This permission is made conditional upon the acquisition of a permanent job and should in principle guarantee access to somewhere to live. A domestic passport is also necessary in Albania. The definition of Albania as a rural country is based on Albania’s own definition of a town (qytet). There are, according to Danemark (1982), three criteria for the status of town: (a) activity, (b) number of inhabitants and (c) impact on the surroundings. The determination of ‘activity’ is that the labour market shall be dominated by industry or by local and central authorities. There is no fixed lower limit for the number of inhabitants in a place called ‘town’: the smallest in Albania had about 600 inhabitants in 1987, and most of the urban communities (70%) had less than 10,000 inhabitants. The criteria for impact on the surroundings are that the town has to be a central point for the surrounding countryside.

CONCLUDING REMARKS AND AN UPDATE It is not easy to find any signs of housing reforms in Albania, but there is also a problem with lack of information about housing and housing policy. The Albanian authorities showed full awareness of the changes affecting most of Eastern Europe during 1989. Developments in these countries were quickly and accurately reported and it was repeatedly claimed that Gorbachev’s reformist line was counter-revolutionary in character and designed to turn the socialist system into a capitalist one. It was made clear that these reforms were not for Albania (Zanga 1990). Nevertheless, progress has lately been made in international relations concerning economic, industrial, technical, and cultural cooperation (Zanga 1990). It seems as if Albania has ‘opted for a mild glasnost of its own’ (Chamberlain 1988). The recently announced decisions with respect to housing policy (Party of Labour of Albania 1990 and as detailed above), however marginal they might appear to be at present, perhaps issue from a slow movement towards societal or economic reform. In May 1990 the reform policy began in Albania. The People’s Assembly (The Parliament) decided that all citizens in Albania had the right to a passport. They also allowed private entrepreneurship. In November 1990 the reform policy continued with the right for entrepreneurs to take credit abroad, which until then had been prohibited by law. Since November Albania was no longer an atheist state. The People’s Assembly also decided to hold free elections in February 1991, meaning elections with more than one candidate.

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In the area of housing the first state-owned flats have just been sold. From 1991 it will also be possible to buy newly constructed flats. In December 1990 the People’s Assembly decided to allow parties other than the Party of Labour of Albania. Since then the political situation in Albania has been unsettled.

REFERENCES Alia, Z. (1990) ‘The Family and its Structure in P.S.R of Albania’, Tirana: The ‘8 Nëntori’ Publishing House. Bërxholi, A. and P.Qiriazi (1986) Albania—A Geographical View. Tirana: The ‘8 Nëntori’ Publishing House. Chamberlain, G. (1988) ‘Albania’, The Europe Review 1988. Danemark, B. (1982) ‘Albanien-Några data om urbaniseringsprocessen, befolkningsutvecklingen, stadsplaneringen och den socio-ekonomiska relationen mellan stad och land’, Bidrag till öststatsforskningen, Vol. 10:4, pp. 61–113. Hall, D.R. (1987) ‘Albania’, pp. 35–65 in Dawson, A.H. (ed.), Planning in Eastern Europe. London: Croom Helm. Misja, V. and Y.Vejsiu (1985) Demographic Development in the People’s Socialist Republic of Albania. Tirana: The ‘8 Nëntori’ Publishing House. Misja, V., Y.Vejsiu and A.Bërxholi (1987) Popullsia e Shqipërisë (Studium Demografik). Tirana: Universiteti i Tiranës ‘Enver Hoxha’. Party of Labour of Albania (1990) The Deepening of the Revolutionization of the Life of the Party and the Country. The 9th Plenum of the CC of the PLA. Tirana: The ‘8 Nëntori’ Publishing House. Portrait of Albania (1982). Tirana: The ‘8 Nëntori’ Publishing House. Proko, P. (1989) Personal Interview. April 12. Schnytzer, A. (1982) Stalinist Economic Strategy in Practice: The Case of Albania. Oxford: Oxford University Press. Sjöberg, Ö. (1989a) ‘A Note of the Regional Dimension of Post-war Demographic Development in Albania’, Nordic Journal of Soviet and East European Studies, Vol. 6:1 pp. 91–121. Sjöberg, Ö. (1989b) Personal Interview. May 8. Sjöberg, Ö. (1991) ‘Rural Change in Albania’ (forthcoming). Statistisk Årsbok 1989 (Statistical Abstract of Sweden). Vjetari Statistikor i R.P.S të Shqipërisë 1988 (Statistical Yearbook of P.S.R. of Albania). Vjetari Statistikor i R.P.S. të Shqipërisë 1989 (Statistical Yearbook of P.S.R. of Albania). Vjetari Statistikor i R.P.S. të Shqipërisë 1990 (Statistical Yearbook of P.S.R. of Albania). Utrikespolitiska Institutet (1988) Albanien. Stockholm. Xhediku, E. (1986) ‘Coping with earthquakes in Albania’, Ekistics, Vol. 53, No. 318/319, pp. 162– 70. Zanga, L. (1990) ‘Albania—Moving Along but Slowly’, Report on Eastern Europe, Vol. 1:1, pp. 4–6.

4 Bulgaria An introduction Rolf Jonsson Bulgaria is a Balkan country situated on the coast of the Black Sea. The country has about 9 million inhabitants and the language is Bulgarian, a branch of the Slavonic group. There is also a substantial minority of Turco-Bulgarians, about 10% of the population, as a consequence of a long period of Turkish dominance. The capital Sofia is the largest city, with about 1 million people in its built-up area, and it dominates the national economic and cultural life. During the post-war period, Bulgaria has pertained to the Soviet hemisphere as a member of COMECON and the Warsaw Pact. However, there are also historical and cultural ties which connect Bulgaria with the Soviet Union. At the time of the Roman Empire, the territory of present Bulgaria was a part of the Roman province Moesien with a Slavonic population. In the seventh century the Bulgarians came over the Balkans, were assimilated with the Slavonic population, and the first Bulgarian nation was formed. At the end of the fourteenth century Bulgaria was swallowed up by the Turkish Empire and remained under Turkish rule until the end of the nineteenth century. A Bulgarian principality was established with support from Russia as an autonomous province of Turkish sovereignty in connection with the peace of 1877–8 after the Russian-Turkish war. In 1908 the Kingdom of Bulgaria was established. During the Second World War the national policy supported Nazi Germany, and in 1941 Bulgaria declared war on the USA and Great Britain, but not on the Soviet Union. In 1944 the Soviet Union declared war on Bulgaria and Soviet forces occupied the country. The Fatherland Front, a left-wing alliance formed in 1942, seized power with help from the Soviet Union in 1944 and set up a government. The constitutional monarchy formally ended when Bulgaria was declared a republic in 1946. In the same year elections were held and Georgi Dimitrov became both Prime Minister and First Secretary of the Communist Party. All opposition parties were abolished and a new constitution based on the Soviet model was adopted. Todor Zhivkov became First Secretary in 1954 and Prime Minister in 1962. When a new constitution was adopted in 1971 Zhivkov became head of the newly formed State Council, and remained so until he was superseded in November 1989 after big demonstrations against the regime. The recent wave of change in the political systems all over Eastern Europe has also had a great impact in Bulgaria. The Bulgarian version of Soviet perestroika—preustroistvo—was never a success; instead, the events of recent months indicate a development like that of the other East European countries. The position of the Communist Party as the leading force was abolished in January 1990 and free elections were held in the summer of 1990. In spring of the same year, forty different political parties were allegedly established.

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To understand the context of housing policy, a brief summary of the political structure up to the present could be of value. The constitution of 1971 states that Bulgaria is a socialist state of the working people, headed by the working class. The Bulgarian Communist Party is the leading force in society and in the state. In addition to the Communist Party there is a second party, the Agrarian People’s Union. The two political parties and a number of social organizations are united in the mass organization, the Fatherland Front. The supreme organ of power is the one-chamber National Assembly, which unites the legislative and executive activities of the state and exercises final control. It consists of 400 representatives elected for a five-year term. The highest constantly functioning organ of state power is the State Council, responsible to and elected by the National Assembly, which grapples with the basic problems of social management and development in the country. The Council of Ministers is the official executive and the administrative organ of state authority. Bulgaria also has local government. For administrative purposes the territory of the republic is divided into municipal and county councils, elected by the local population. Their function is to implement all economic, social and cultural undertakings of local significance in conformity with central directives. They prepare the economic plan and budget of the municipalities and counties within the framework of the State Economic Plan and the state budget, and direct their execution. A new constitution will probably be one result of the forthcoming election. The Bulgarian economy is based on a five-year planning system and industry is publicly owned. All foreign trade is a state monopoly. Three-quarters of the trade is with the other COMECON countries, mainly the Soviet Union. At the beginning of the 1970s Bulgaria was known as an East European country with a remarkably high and steady economic growth rate, and a palpable trend of accelerating industrialization has been connected with a significant movement of people to the cities. The stable economic growth of the 1950s and 1960s decreased in the middle of the 1970s and economic problems have been very severe during the 1980s, not to say disastrous in the last years of the decade. At the end of the Second World War Bulgaria was a backward agricultural country with small-scale and low-productivity farming. Following the establishment of the socialist government, large-scale, highly productive mechanized farms were set up. They were predominantly cooperative farms (in the 1970s, about 70% of the arable area) with state farms comprising another 15%. Even in the 1980s about a quarter of the workforce were employed in the agricultural sector. Industrial production also expanded quickly after the war. From an industrial sector totally dominated by food and textile industries, heavy industries such as metal, chemical and rubber, metallurgy, and fuel expanded significantly. The mineral and mining sector is also very important. However, the food industry accounts for about a quarter of industrial production. In the 1980s industry as a whole produced more than 50% of the national income and about 35% of the employees worked in the industrial sector. Another 8% worked in the construction sector. Many Bulgarian towns have very old roots, although new, modern communities have been created rapidly. The urban population overtook the rural for the first time in 1969. By the early 1970s, 90% of the rural population were living in villages with supplies of water and electricity available to virtually all communities. About three-quarters of the houses in villages were at that time of modern construction. The rapid urbanization in the

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1960s which transformed much of the Bulgarian landscape was a planned process, with each new or modernized town having its own development plan; housing estate projects were characteristic features of this process. The rapid increase in the population of the capital and the largest towns necessitated an acceleration of housing programmes, the building of cultural and community centres, and the expansion of transportation services and public utilities. The average size of a town increased from just over 16,000 people in 1946 to over 26,000 by the early 1970s, when there were fourteen towns with a population over 50,000, including six major cities with over 100,000 inhabitants. The number of dwellings per thousand inhabitants rose from 243 in 1965 to 307 in 1985. This high rate of new housing construction was not balanced by similar rates of reconstruction and modernization, which meant a relatively large proportion of obsolete and physically worn-out dwellings in the housing stock. Because of difficulties with building in the ancient parts of the towns, the establishment of residential suburban areas has been one solution. Still, the proportion of modern dwellings increased from 64% in 1975 to 70 per cent in 1985. The problems of overcrowded dwellings are still obvious. According to the general census of population and housing stock in 1985, a quantitative shortage of housing units still prevails, mainly in the big cities. At the same time, a considerable part of the villages have houses adequate for occupation throughout all seasons of the year, but are used by the inhabitants of cities only as ‘leisure houses’. The prevailing housing norm in Bulgaria is (1) an individual dwelling for each household and (2) an individual room for each occupant. Although the total proportion of overcrowded dwellings declined from 59% in 1975 to 48 per cent in 1985, that of the cities remained very high, 56%. Due to the low proportion of rented dwellings in Bulgaria—only 18% of the stock—the problem of overcrowded dwellings is most severe in that sector, with 75% of the dwellings overcrowded. The most common way of getting an apartment in Bulgaria is to buy a state-owned dwelling. According to the last census, the share of owner-occupied dwellings in 1985 was 81%, of which 59% were singlefamily houses. As Koleva and Dandolova show, until the end of the 1950s Bulgaria was characterized by a predominantly rural, agricultural way of life with a major share of private provision of multiple and single-family housing. From 1958 housing construction concentrated exclusively on state provision and the construction of apartment-type housing was at its highest level. This was a period of increasing urbanization. As urbanization slowed down and economic growth declined, private forms of housing construction increased again. The year of 1986 can be regarded as a turning point. The system of exclusive state provision meant that housing construction was a monopoly of the government. The housing needs were decided by the state, the housing and construction companies were owned by the state and municipalities, small enterprises for production of building materials were liquidated, and the prices for building materials in self-help provision were much higher than in state provision. But state provision could not fulfil the demands of housing. As a new social and economic policy was decided in the middle of the 1980s, the main point of this as regards housing policy was that the private form should be not only one of the forms for provision, but the major one. The government should only allocate state dwellings to socially weak groups.

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Koleva and Dandolova also refer to a new Property Law, approved by Parliament in spring, 1990. Without any restrictions, this law gives the citizens the right to possess real estate properties and sell them at market prices. With regard to the development of the political system towards a pluralistic one, and the concomitant social and economic effects, one may predict a line of increasing privatization in future housing policy in Bulgaria. What reforms will be necessary to change the housing legislative system and old bureaucratic structures in housing is hard to say. To obtain results with a novel housing policy, more dependent on market solutions, will probably require considerable changes in the old housing policy system.

5 Housing reforms in Bulgaria Myth or reality? Maya Koleva and Iskra Dandolova There can hardly be a greater mystifier than the totalitarian socialist system. In the mysterious silence of its depths craftsmen are busily weaving the invisible ephemeral robe of all-embracing plans and accounts: the new attire of the king from the old wellknown fairy tale. There is hardly a serious and significant vital problem that has not been falsified into a state of becoming unrecognizable. Only one example is dealt with below—the housing problem. The reference above to the fairy tale is a peculiar counterpoint of the image that was officially offered to the Bulgarian people, an illusion that lost its romantic aura and turned into a severe truth with hazardous consequences for the economy, the nation and the individual. This lofty utopia affected the entire nation. On one side were the suffering tax-payers who, instead of the promised prosperity, found themselves living in a monotonous socialist community, and on the other was the ruling caste that usurped power and competence.

NATIONAL ECONOMIC DEVELOPMENT PROBLEMS AND THEIR IMPACT ON HOUSING Now that the guideline is to develop a ‘socially orientated market economy’ which should not follow any ideological canons, but function only in accordance with the logic of the market, it would be reasonable to ask oneself: where are we standing now, i.e. how deep is the abyss of economic breakdown? Most Bulgarian economists think that we have almost reached the bottom. Firstly, an analysis of the Bulgarian economy would outline four points: the indicators of economic growth, the increase of foreign debts, the distorted commodity market, and the direction and dynamics of the reforms. The problem of the rates of economic growth ranks first among the others. The high and stable rates of the 1950s and 1960s were followed by a period of undeniable decline from 1966 to 1989: the average annual rates of growth during the successive five-year periods were 8.75%, 7.80%, 6.10%, 3.7% and 3.1% respectively. The annual increase of the national income for 1988 was 2.4% and preliminary data for 1989 shows a decrease of 0.4%. A more detailed analysis, however, shows that the rates achieved during the 1985–8 period are illusory. They were due, on the one hand, to initiating production capacities that should have started during the preceding five year period, and, on the

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other, to overloading the currency balance of the country: the last few years brought about an increase of foreign debt by 4.5–5.0 billion dollars reaching a critical level. The increased national income (by 3–4 billion leva)1 could hardly be considered a positive result of the government’s policy considering such a tremendous increase of foreign debts. All this can only mean that the chosen economic policy was not realistic under the existing circumstances. The price that the Bulgarian people had to pay for the ‘achieved’ rates was rather high. The disturbed balance of the inner commodity market became more uncontrollable—not unlike some other socialist countries. Shops became poorly stocked and queues to get into the shops became a common sight. The supply of food, housing, etc. diminished. During the 1960s, when growth rates were high, the level of satisfying basic needs was enforced by law, and the policy towards incomes was restrictive, these problems did not exist. The traditional, centrally planned economy had some well-tried tools that were able to guarantee almost automatically some increase of actual consumption. The relatively high standard concerning basic needs, the liberalization of the policy towards incomes, and the decrease of growth rates did away with this automatic mechanism. The consequences of the oncoming changes were expressed in an accelerated growth of private savings (money that there is nothing to buy with or ‘surplus’ money). The sum total was over 25 billion leva (including over 3 billion leva housing deposits) at the end of 1988 whereas the population was purchasing goods for 16 billion leva. Clearly this fact has placed the economy under heavy inflationary pressure, which is constantly increasing. Recently it was estimated that the current inflation rate exceeds 15% and it has been admitted that inflation in the 1980s averaged 5% or more. The previous Bulgarian government, perhaps because of the poor performance of the economy and perhaps because of international pressure, initiated economic reforms. In January 1989 the government passed Decree 56, meant to modernize and privatize the economy. There were many problems with the Decree, however, despite the fact that the language was extremely liberal and it looked like an ideal programme for privatization. The bureaucracy that administered it did not understand market forces nor did it show an incentive to make the reforms work. Closely related to Decree 56 was a change in the banking system that created nine new ‘Commercial’ Trading Banks. It should be noted that unlike the 1985 Banking Reform in Hungary, all these commercial banks are still government owned. They are not what the West thinks of as commercial banks. As a result of all these ‘reforms’, Bulgaria became one of the slowest countries to move towards personal and economic freedoms. At the time of writing, in May 1990, there were encouraging political signs. At present, representatives of the ruling Communist Party and the opposition are discussing a programme for economic reforms. As mentioned before, the aim of these reforms is a transition to a market economy. Without doubt this is the first real reform programme for the last forty years. The bad thing is that it will start at a time when the country is almost at the peak of an economic crisis: there are certain risks but there are also many chances for the Bulgarian people. The poor performance of the economy has an exceptionally unfavourable impact upon the development of housing, where the centrally planned resources are provided by the so-called ‘rest-principle’, i.e. giving priority to industrial production, leaving only the

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remainder of resources for the non-production spheres, including housing stock. Basic findings indicate a decline of housing production in the country since 1977 when the highest level was reached. This decline coincides with the decline of economic growth. The limitations of certain economic resources (labour, energy, etc.) constitute impediments to the construction and modernization of housing and its related infrastructure. At the same time, structural changes in lifestyle have increased requirements as regards housing standards and housing environment. What is typical of the housing problem in Bulgaria? 1 A marked shortage of housing stock, reaching a figure of 3,133.3 dwelling units at the end of 1985, of which 2,700 are occupied dwellings. The basic indicators concerning the housing situation in Bulgaria at the end of 1985, estimated on the basis of occupied dwellings units, were: ● 307 dwelling units/1000 inhabitants; ● 15.2 m2 living floor space/inhabitant; ● 1.2 inhabitants/room (kitchen excluded); ● 2.8 rooms/dwelling unit (kitchen excluded); ● 49.4 m2 living floor space/dwelling unit. 2 The physical state of the housing stock: ● 4.3% of all dwellings were substandard and dilapidated; ● 25.5% of all dwellings were substandard; ● 70.2% of all dwellings were modern. 3 Poor technical and sanitary standards in the dwellings: ● 35.4% of all dwellings were without a sewage system; ● 33.0% of all dwellings were without a water supply system; ● 1.9% of all dwellings were without electricity; ● 86.6% of all dwellings were without central heating; ● 36.3% of all dwellings were without bathing facilities within the housing units; ● 49.9% of all dwellings were without toilet facilities within the housing units. 4 In adequate size/living space: ● 15.6% of all dwellings had a living floor space of 29 sq.m.; ● 56.8% of all dwellings had a living floor space of 30–59 sq.m.; ● 23.5% of all dwellings had a living floor space of 60–89 sq.m.; ● 3.5% of all dwellings had a living floor space of 90–119 sq.m.; ● 0.6% of all dwellings had a living floor space over 120 sq.m. 5 Significant disproportions as regards the regional distribution of housing stock: ● only about 60% of the housing stock and 59% of the living floor space was located in towns whereas more than 65% of the population lived there; ● the predominant part of the worn-out housing stock was in the villages;

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● the severest housing shortages were in the six biggest cities. 6 Housing stock that was vacant or used for other purposes, in particular: ● vacant dwellings units, even in big cities (including the capital city of Sofia): their number increased from 58,000 in 1965 to 408,000 in 1985. The increased number of such dwellings was primarily due to the lack of economic incentive for sales and renting, but a considerable ‘contribution’ came from the unjust system of distribution of newly built dwellings. ● use of dwellings for administrative, health and educational purposes and as hotels. 7 Inadequate distribution of the available housing stock among households: ● Living in conditions of normal density of occupation (number of rooms equal to the number of occupants) are 30.3% of the one-member households; 33.4% of twomember households; 30.7% of three-member households; 13.7% of four-member households; 9.5% of five-member households and 8.7% of over six-member households. ● In conditions of insufficient density (number of rooms greater than the number of occupants) are 69.7% of one-member households; 54% of two-member households; 21.1% of three-member households; 7.8% of four-member households and 5% of five-member households. ● In overcrowded conditions, i.e. number of occupants greater than the number of rooms: 15.7% of two-member households; 48.2% of three-member households; 78.5% of four-member households and 85.5% of five-member households. 8 The ratio between average wages (the principal source of income) and house prices at the end of 1989: ● average annual wage: 2,808 leva; ● average annual living wage: 2,206 leva (in 1979 it was 955 leva); ● average price of a dwelling (90 sq.m.): 30,000 leva; ● an individual could buy 1 sq.m. housing area with 1.4 month’s salary; in other words a dwelling unit of 90 sq.m. costs eleven times the average annual salary.

FORM OF HOUSING PROVISION During the last four decades, a great variety of forms of housing provision emerged in Bulgaria, and therefore following a general social policy for the solution of the housing problem became extremely difficult. We are going to attempt a classification and generalization of the various forms of housing provision in relation to the typology used by Hegedüs and Tosics in this volume. Data is given in Table 5.1 in this chapter. State form of provision

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The construction process is carried out by state building companies. State construction enterprises have a monopoly on financing, building materials and land to produce the planned number of dwelling units in cities. If a household wishes to buy or rent a flat, it contacts the local Municipal Council which evaluates its housing need and makes a decision. If the respective household qualifies it is registered in a waiting list for buying or renting a dwelling. Every year the newly built units are offered to households at the top of the list and at a price determined by the Municipal Councils on the basis of a government-approved tariff. Prices increased only by 12% during 1979–88, whereas construction costs increased by 36%. Rents had not been updated for more than twenty years, i.e. since 1967. The difference between prices and construction costs is covered by subsidies from the central budget. Currently there is a fifteen-year waiting period to buy or rent housing in Sofia, ten years in most large cities! Two dominant institutions emerged in this housing sector: state construction companies, financed by direct budgetary resources, and allocative bodies (Municipal Councils) which administered the distribution of the newly-built state housing units. The former embodied the ideology of socialist production of new houses, the latter the socialist management of access to housing. Over the last forty years both of these institutions acquired an entrenched position in the system of housing provision. This led to a development of housing environment in cities characterized by a high degree of anonymity and uniformity. Most new state constructions were grey medium high and high-rise apartment buildings, common to all East European countries. Dwellings were built without taking into account factors such as incomes, family structure, way of life, preferences and motivation in the process of formation of housing needs; 70% of state-built dwellings (both rental and owner occupied) did not meet the citizens’ housing needs even at the moment they were acquired. As mentioned above, this form of provision of newly built dwellings can be divided into two subgroups: ● rental housing provision; ● provision of owner-occupied housing. Rental housing stock of the municipalities and of some departments comprises approximately 16% of the housing stock. It is built with budgetary means or financed by the respective investors. The public rental sector is the most heavily subsidized one. Rents have not been increased since 1967 and they do not cover maintenance costs by 37% at present. The municipalities and the departments are selling many of their units to the residents at prices well below cost. Dwellings for sale by the municipalities are being built with the help of loans granted to the municipalities by the State Savings Bank, the loans used being paid off by the purchasers (own means or loans from the State Savings Bank). Sales of this type of dwelling are controlled by the Municipal Councils as regards their price and the purchaser’s right to acquire a dwelling. This housing sector is also subsidized to cover the discrepancy between the price and the construction costs. The major problem of this subsector is not only the local government control of the price, but also restrictions on the right to transfer ownership. Owners often do not wish to relinquish their present dwelling, legally or illegally, when they acquire another.

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Private form of provision Self-help is the main form of private provision. This form is utilized by individuals, groups of individuals or housing cooperatives, with loans from the State Savings Bank, and with building materials available for sale on the market (there is a great shortage). People usually build their houses by their own efforts and with the help of relatives and friends (this is typical for the rural regions). They may, however, partially contract the execution of some construction operations or the entire construction of the houses with specialized construction enterprises (this is more typical for cooperatives in big cities). The costs usually are much higher than the costs of state construction because of buying materials at retail prices and paying workers illegally employed (in the ‘second’ economy). Another subsector is private rental, which is quite insignificant (2.2 per cent). However, very often it is the only way to obtain a roof over one’s head in big cities with severe housing shortages. Rental prices even in this sector are controlled by the local government—they are specified by a tariff but in practice this control can hardly be carried out in big cities. Rental prices are accessible to limited social strata and comprise about 50 to 80% of the average incomes of contemporary Bulgarian families (with two members employed). Because of the deepening housing shortages, ‘free’ rents are doubling, i.e. to the regulated upper rent limit (controlled by the Municipal Councils) and excessive rent is illegally included as an expression of the existing ‘black market’ in housing.

HISTORICAL CHANGES IN THE BULGARIAN HOUSING SYSTEM Each one of the known forms of housing provision was established historically, i.e. it has played a principal role in a concrete historical situation and under particular political and economic circumstances. It is well known that Bulgaria was one of the nations most similar to the USSR in its government, constitution and economic policy. However, Bulgaria was not like the Soviet Union as regards its real estate ownership laws, as the Bulgarian government, while preserving its rights over the land, permits and encourages private ownership of housing; 85% of Bulgarian housing is said to be privately owned. In the historical development of the Bulgarian housing system during the last four decades, three development phases can be outlined as follows: 1 The period with a predominantly rural, agricultural way of life when the share of private provision of housing and single-family housing prevailed. 2 The phase when misunderstood industrialization resulted in increasing urbanization and internal migration to big cities was at its highest, the proportion of state provision and the construction of apartment-type (multi-family) housing was at its highest level. 3 The phase in which the process of urbanization slowed down and aspects relating to the quality of life became manifest: the share of private provision, single-family and row construction began slowly to increase again. In the 1960s, Bulgaria moved from phase (1) to phase (2).

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Until 1958, houses in the country were built by means of self-help and cooperatives, as well as by competing small state enterprises and private contractors. The private forms of provision predominant were self-help and market form At the time of the major political and social changes initiated in the country some forty years ago, there were no big private owners of land, real estate and capital. Most households occupied their own property. The relatively short period of normal capitalist development in the country did not provide for any significant capital and property accumulation, and, therefore, the expropriated housing stock from the ‘socially strong’ of the past was insignificant. This property was distributed among the socially weak. In the course of time these expropriated apartments gradually became private again: they were purchased by their new occupants. Thus this small share of nationalized dwellings disappeared rapidly. During this period of time, the government was totally involved with the task—which was beyond its abilities—of reorganizing the country’s agricultural system: development of heavy industry began and therefore the solution to the housing problem was neglected. The housing problem was brought to the fore in 1958 when a Decree of the Council of Ministers was passed which concentrated housing construction exclusively in the then created enormous economic enterprises of the Municipal Councils. Thus the investment policy and housing construction became government monopolies. The state acquired a hegemony in the process of directing resources for residential construction and regulating access to housing. The proportion of private provision gradually declined: ● 1965–70–42.2%; ● 1971–5–29%; ● 1976–80–20.6%; ● 1981–5–23.3%. In the process of formation of social demand, the consumers were eliminated, and thus it became to a great extent dependent on the production base and on the communist authorities’ views of the ‘objective needs’ of the citizens. The attitude indicated by the housing policy towards state provision and self-help provision of housing (one cannot speak of market provision at all, as private contracting forms were forbidden by the above-mentioned Decree) was very different. All efforts were directed towards developing the state form: in almost all big cities house building combinations were created, a great number of small enterprises producing basic building materials were liquidated, manpower was reallocated to state construction enterprises. In other words, the state form of construction was relatively well arranged as regards the legal, administrative and organizational aspects. Self-help was left to die out, and it was partially banned by some municipal councils at the beginning of the second period. Obstacles were raised against its development that could hardly be overcome—and they still exist: 1 High costs. The costs for self-help provision of housing are 30% higher compared with the price for purchasing new dwellings from the local municipality. There are several reasons for this:

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● For self-help construction, the prices of building materials are market prices, considerably higher than trade prices for materials used for the state-built dwellings; ● The wages of illegally employed workers in private construction are much higher (the difference being five to fifteen times); so are transport costs and the expenses for the use of the state’s industrialized construction mechanization. 2 Government monopoly on building sites is also difficult to overcome and therefore this self-help can hardly be implemented in big cities experiencing severe housing shortages. Large residential areas with substandard and physically dilapidated housing stock are commonly reserved for new construction carried out by the state. People occupying these slums are practically deprived of opportunities to solve their housing needs and are put in the humiliating position of having to beg from government institutions, sometimes for very long periods. 3 The supply of building materials is badly organized. In fact basic building materials are lacking on the market, which leads to the involvement of the black market for building materials, and prices that are unbearable for the average Bulgarian citizen. 4 The system of subsidies in the housing sector does not stimulate the development of private housing provision. As mentioned above, the price of newly-built dwellings by the state is lower, by about 18% per sq.m. (1988) than the actual construction costs. This is in practice an indirect subsidy, which unfairly decreases the housing expenditure costs of those having access to this form of housing. In private provision, the prices of dwellings reflect their actual costs. At the beginning of the 1980s, the state form of housing provision began to discredit itself, because of existing economic circumstances and its own ‘faculties’. The government admitted, albeit indirectly, its inability to fulfil its aims of solving the housing problem. Hence the principles of the state form of housing provision (centralization, administration, total norms, standardization and unification, anonymity, totalitarianism) no longer suited the myth of a new social and economic government policy in the middle of the 1980s. Therefore, a Decree of the Council of Ministers was issued in 1986: it was meant to be the beginning of the third phase in the development of the Bulgarian housing system. The essence of this official myth consists of the following: the private form of housing provision should be regarded not as just one of the forms but as a major one, with growing significance in the future, particularly in big cities and industrial centres, where the housing shortage is most critical. The efforts of the government should be directed mainly to: the allocation of state dwellings to the socially weak, to young families with many children; the development and completion of the social and technical infrastructure in the housing environment; the renovation and modernization of the existing housing stock. In reality, however, the main obstacles for the development of the private form of housing provision still remain. In other words, until now there have been no true and real reforms in the Bulgarian housing policy: the housing model has followed an illusory trend of development for many years. This has resulted in a permanently increasing housing crisis in the cities— despite all conjurations of the ruling Communist Party and government—depopulation of the villages and many empty houses.

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THE BEGINNING OF REFORMS IN THE BULGARIAN HOUSING SYSTEM In the course of the comprehensive political, economical and social reforms (from the end of 1989), radical housing reforms are expected. Even at this moment there are encouraging political signs, confirming this. On March 28, 1990, a change in the Property Law was voted in by the National Assembly. The essence of it is as follows: each Bulgarian citizen will have the right to possess an unlimited number of real estate properties (dwellings, houses, building sites, etc.) with no restrictions on living floor space, location and so on. Each owner will be able to sell his or her property at free market prices, without the involvement and the control of the local councils. Thus all real estate property rights are legalized. A radical price, taxation, banking and credit system was proposed by the new government. This policy is aimed at ensuring equal opportunities for the realization of basic human rights—work, habitation, decent income, etc.—as well as a softer financial and social differentiation than that posed by the market. The future will determine the dynamics and the direction of the vector of the Bulgarian political, economic and housing model. But there is one thing in which we all believe: the processes of change are irreversible; they are fast and radical. Bulgarian housing policy is now on the threshold of its greatest change, the stiff regulations of the totalitarian regime and the hypercentralization of Stalinist military socialism are being broken down and a transition to the development of a less controlled economy is underway. The results of this transition will become evident in the future.

Table 5.1 Basic data on the main forms of housing provision Year

Newly built dwellings

State

Percentage

Private

Percentage

1961

40,837

19,067

46.69

21,770

53.31

1962

43,708

20,687

47.33

23,021

52.67

1963

43,904

19,837

45.18

24,067

54.82

1964

47,837

25,114

52.50

22,273

46.56

1965

45,211

24,345

53.85

20,866

46.15

1966

43,414

26,063

60.03

17,351

39.97

1967

42,722

23,396

54.76

19,326

45.24

1968

42,686

22,273

52.18

20,413

47.82

1969

47,069

29,155

61.94

17,914

38.06

1970

45,656

27,201

59.58

18,455

40.42

1971

48,862

30,977

63.40

17,885

36.60

1972

46,542

30,804

66.19

15,738

33.81

1973

53,209

39,315

72.52

14,894

27.48

The reform of housing in Eastern Europe and the Soviet Union

32

1974

44,065

31,600

71.71

12,465

28.29

1975

57,151

45,495

79.60

11,656

20.40

1976

67,626

58,288

86.19

9,338

13.81

1977

75,885

59,891

78.92

15,994

21.08

1978

67,796

52,212

77.01

15,584

22.99

1979

66,223

52,336

79.03

13,887

20.97

1980

74,308

56,570

76.13

17,738

23.87

1981

69,011

54,868

79.51

14,143

20.49

1982

66,033

51,124

77.42

14,909

22.58

1983

67,187

50,815

75.63

16,372

24.37

1984

66,715

50,487

75.68

16,228

24.32

1985

61,986

45,853

73.97

16,133

26.03

1986

53,793

39,381

73.21

14,412

26.79

1987

60,488

44,536

73.63

15,952

26.37

Table 5.2 Occupants, occupied dwellings, rooms, useful floor space Total

Towns

Villages

1. Number of occupied dwellings

2,700,039

1,711,112

988,927

2. Number of individuals

8,788,596

5,681,264

3,107,332

3. Number of households

3,030,278

1,996,390

1,033,888

4. Number of families

2,729,177

1,735,462

993,715

10,135,408

5,983,856

4,151,552

6. Number of rooms per individual

1.2

1.1

1.4

7. Number of individuals per dwelling

3.3

3.3

3.1

166,024,431

100,894,323

65,130,108

15.2

14.1

17.2

5. Number of rooms incl. kitchen

8. Useful floor space (sq.m.) 9. Living floor space per individuals (sq.m.) Source: Statistical reference book (1989).

NOTES 1 According to the foreign exchange rate bulletin of the National Bank of Bulgaria at March 1, 1990, the exchange rate was 240.30 leva per $100; it changed to 969 leva per $100 at April 1, 1990.

6 Czechoslovakia An introduction Ola Siksiö Czechoslovakia, or CSFR, with its population of 15.6 million people could be said to have a rather favourable position among the East European countries when it comes to economic reforms, i.e. the transition from a socialist planned economy to a marketoriented economy—including reforms within the housing sector. On the one hand the economic position of the country is relatively good, its foreign debt amounts to 5.7 billion dollars (compared to its neighbours Poland with 37.3 billion dollars and Hungary with 20 billion dollars) and the country has an industrial tradition and an extended and differentiated industrial sector. On the other hand, this industrial sector is obsolete and worn-out and there are severe environmental problems in many cities and regions. Since 1968 the policy of the communist government has been to ensure the supply of consumption goods in order to avoid widespread discontent based on a shortage of commodities. This policy has resulted in a situation where basic consumption goods were available, but as in most other socialist countries, other consumption goods were not available within the formal socialist economy. The government was rather successful in maintaining this policy until the demonstrations and demand for political change in November 1989. However, it is important to remember that in Eastern Europe it was only in the GDR that the inhabitants had a comparable standard of living. The price the Czechoslovakians have paid for their relative prosperity has been the almost total state control and dominance of all sectors of society—including housing. Within this sector state domination has resulted in large-scale housing construction, standardization and uniformity in design, bad environmental planning and solutions, decreased capacity for state financing of housing production, differentiation of rents according to year of construction and tenure, absence of comprehensive planning, an inability to manage the repair and maintenance of the existing housing stock and a lack of efficient principles for the distribution of housing. This development and its roots in the activities in the housing sector—from the poor situation in the 1930s over the post-war period until the end of the 1980s and the anticipated changes of today—is described and commented upon in the well-informed and interesting contributions by Michalovic and by Musil. Michalovic shows the new construction rates as well as the kinds of housing that dominated in the five ‘stages’ between 1948 and 1988. He demonstrates the withdrawal of state subsidies to new construction since 1975, which reflects declining housing priorities. He also comments upon the prevailing conditions during these stages, which eventually led to a restructuring of the building industry in favour of large-scale state enterprises. This formed the base for mass housing construction, the outcome of which—

The reform of housing in Eastern Europe and the Soviet Union

34

especially in the period 1971–80—has turned out to be an essential problem for presentday housing policy, where rather poor-quality housing is coupled with decreased mobility and turnover in the existing housing stock. In 1986 Czechoslovakia had 4.9 million permanently inhabited dwellings of which 16% were cooperative dwellings, 36% were state-owned rental dwellings, 2% were enterprise-owned rentals, and 46% were owner-occupied dwellings. The owner-occupier sector is smaller and the cooperative sector larger in comparison to other neighbouring East European countries. In the transition process the cooperative housing tradition in Czechoslovakia (from 1959 and onward) in particular with its considerable proportion of the existing housing stock can be considered an asset for housing reforms in the new economic conditions to come. The authors not only show us in considerable detail that history does count; they also have something to say about the possible future for the Czechoslovakian housing sector. The total change needed to move towards a democratic society with a market-oriented economy in the CSFR will not only affect the industrial sector but also heavily influence the situation in housing because of the earlier massive state regulation. In Musil’s contribution we can read that the changes expected will be extensive and deep. Basically the orientation is towards a gradual introduction of a decentralized housing market system with certain price regulations. From a political point of view the proposed changes have roots in a social democratic and neo-liberal tradition; the latter seems to be stronger at the moment. In any case substantial changes should be expected in the field of housing. Musil gives us the background to the acute problems within the housing sector of today and the necessity of changing the framework of the housing market from a socialist planned system to a market-oriented one. He also advocates a diversification of the possible choices that consumers should have concerning types of housing and tenure. And last but not least, he stresses the importance of increased quality in future housing construction. These developments are intended to take place simultaneously with extended and farreaching economic changes and restructuring of the industrial production sector. These changes would be dictated by the market and involve a sizeable price increase for all kinds of housing and possibly also involve a rise in the unemployment rate to levels so far unknown in post-war Czechoslovakia. Housing has previously been a state responsibility and the cost of housing has not been included in wages; in a market system this will no longer be the case. With an increase in options for housing at market prices, it seems reasonable to ponder the effects of introducing such a system: what happens to affordability? Who gains and who loses? Here the authors are rather vague. The market ideas put forward by the authors obviously also demand changes in: 1 The financing of housing with a decreasing responsibility for the state, increasing responsibility (and possibilities) for the individual, and possibly the introduction of savings or mortgage banks for individual housing purposes. 2 The structure of provision and construction of housing, with the aim of improved productivity and increased quality control in new construction. Far less dominance by large state enterprises and the introduction of small contractors able to build smaller differentiated units—e.g. cooperatives of manageable size or owner-occupied

Czechoslovakia

35

housing—but also able to take care of the increasingly important renovation and maintenance sector. So far so good, but the ideas for the future housing market in CSFR obviously also include: 3 Changes at the political level or power in the housing process leading to an increase in consumer choices—covering, for instance, the fulfilment of a culturally defined discrepancy between Slovakia and Bohemia when it comes to expressed preferences for owner-occupier, single-family housing, the development of user control— including the owning of land, and decentralization of decision-making at least to the municipal level. 4 Changes towards improved equity in terms of fairer access to housing and more just distribution of any remaining housing subsidies. A market solution without any regulations or clearcut rules for distribution generally does not improve access to housing for the ‘weak’ groups of society as there is a tendency to leave out principles of distribution based on need in favour of principles of distribution reflecting different levels of resources. But it could be balanced with a subsidy system levelling affordability in such a situation. The authors do not expand very much on this matter. Many of the housing market problems taken up in the Czechoslovakian contribution may seem oddly familiar to readers acquainted with the situation in countries in Western Europe. This leads towards the conclusion that many of the current housing problems in CSFR might not be ‘system dependent’ (Marcuse 1989:2–8) or related to the existence of a socialist economy per se. Rather they might be ‘system independent’ since they are also present in capitalist economies in the West. However, the contributions, especially Musil’s, give a picture where the outcome—i.e. the list of current problems in housing with so many resemblances to the Western situation—has its original roots in the socialist malpractice of the period Musil calls ‘the second stabilized phase of state socialist housing systems’. In my opinion, in none of the cases are the solutions to these problems to be achieved simply by an introduction of common or conventional Western capitalistic markets, even if Czechoslovakia might possibly have more to learn from capitalist countries, especially from their failures, if the system-independent explanation to the existing set of problems is the right one. Consequently, in the case of Czechoslovakia it seems extremely relevant to raise the question of what kind of market seems most promising or most appropriate for solving the well-known problems in the housing sector? Would it be possible to discuss and maybe find an alternative—a new form of integration in society—between the old totalitarian state and an unreflected acceptance of the capitalist market model, especially in the field of housing? Such a market form should not only regulate the distribution side with its obvious unfavourable outcomes for large groups in society as in, for example, Hungary (Szelényi 1989:167ff.), but should also be involved in production. Can the existence of the widespread cooperative sector in Czechoslovakia not be a part in such a solution? This sector would have an even greater potential if it was restructured to contain smaller self-governing units along the lines sketched in the chapter. The task is huge and difficult but interesting. And so are the changes and reforms suggested by the authors.

The reform of housing in Eastern Europe and the Soviet Union

36

REFERENCES Marcuse, P. (1989): Some Theoretical and Practical Issues in Comparative Housing Analysis. Paper presented at the Conference on Housing Reforms in Eastern Europe, June 27–30, Noszvaj, Hungary. Szelényi, I. (1989): ‘Housing Policy in the Emergent Socialist Mixed Economy of Eastern Europe’. Housing Studies, Vol. 4, No. 3, pp. 167–76.

7 Housing in Czechoslovakia Past and present problems Peter Michalovic

INTRODUCTION Since the countries of Central and Eastern Europe turned away from dogmatic and totalitarian forms of socialism a unique situation has arisen. It is neither possible to revert to the old ways, nor possible to take over some of the available models which developed in West European countries after the Second World War. Subsequent development in this Central-Eastern part of Europe, where until now one social pattern dictated, shows significant differences among the countries, which reflect their different histories. Because of the position housing possesses within the value orientation of people it becomes a decisive indicator of the success of new social and economic reforms. From this point of view it is worthwhile to recall the past development of housing in Czechoslovakia. This enables us to understand the present state of affairs.

HOUSING BETWEEN THE WORLD WARS The present housing situation and the manner of solving housing problems in Czechoslovakia are the outcome of a long historical process. To explain the current situation we have to look back to the period of the First World War. Sociological studies of the 1920s point to the bad housing conditions in large towns. In 1921, in towns with more than 20,000 inhabitants, 86% of all dwellings were not equipped with elementary amenities (this and the following data are taken from Deyl 1985). The housing census of 1930 (already including all town agglomerations with more than 10,000 inhabitants) quoted a share of 75% of residential dwellings without such amenities. Up to 27.6% of all dwellings had only one habitable room; 40.8% of them, one room and a kitchen. Half of the remaining were two-room dwellings and only a little less than 30% were three-room or larger. Only 18% were equipped with a bathroom. In 1930 only 182,671 dwellings from a total of 596,479 were supplied with drinking water and in Slovakia the figures were only 23,800 out of 113,494 dwellings. A mere 2% had access to central heating. The shortage of dwellings was critical in many towns. Housing construction peaked in 1928, when altogether 101,573 new dwellings were built. In the following years the building boom decreased due to the economic crisis which had an especially ruinous character in Czechoslovakia, attaining the dimensions of a social disaster. Through 1933 production decreased by 40% as against 1929 (the largest decrease—by 44%—was

The reform of housing in Eastern Europe and the Soviet Union

38

recorded in March 1933). The highest unemployment figures overlapped with the maximum production decrease; maximum unemployment was recorded in February 1933 in the building sector—Labour Exchanges registered 117,776 persons without any work. In 1933 the building industry reached a critical state, from which it recovered only in 1934–5. For small building crafts dependent on busy building activity, the worst situation was in 1934 (Figure 7.1 shows this development from the point of view of housing intensity). In this situation two basic concepts of housing construction emerged: the constructivist concept following the establishment of the BAUHAUS and the concept of garden cities. The architectural avant-garde and leftist intellectuals developed the constructivist concept. The idea of garden cities was applied to enterprise housing construction, within which the mining companies played a significant role, and above all the housing construction of the Bata Concern. Constructivist approaches introduced the idea of the ‘smallest flat’, ‘the biologically minimum area standard’. The well-known ideas of German urbanism and architecture were extended by Le Corbusier’s points of departure, and by the ideal picture of the communist way of life, namely minimizing the family’s role, reducing it to a reproductive function, and the overemphasis on collective forms of life. The new housing construction in the 1920s and 1930s concentrated on the following forms: ● state-subsidized individual building (family houses) in workers’ colonies;

Figure 7.1 Number of newly constructed homes in Czechoslovakia, 1921–88 ● enterprise housing, which consequently, according to standard practice, differentiated between workers and clerks;

Housing in Czechoslovakia

39

● enterprise housing construction being intensified by the end of the 1930s, when the legal measures projecting the interests of inhabitants ceased to be effective; ● cooperative housing evidently differentiated according to the manner of financing and the amount of individual contribution. So we can say that in the 1930s, the basic outlines of housing construction were characterized by the architectural and urbanistic approach, as well as by the ownership forms of dwellings. The Second World War affected the housing stock very differently. Little-urbanized parts of the country and above all eastern Slovakia suffered most. Housing stock in towns was far less destroyed, but maintenance and reconstruction stagnated.

THE SOLUTION OF THE HOUSING PROBLEMS AFTER THE SECOND WORLD WAR In post-war Czechoslovakia a specific situation arose which was caused by the resettlement of the German population from the frontier areas to Germany. At the same time there was a certain mobility of people between Slovakia and Hungary. There was a significant and politically motivated tendency to settle the freed regions and dwellings gained by evacuation. This movement had important consequences for the migration of populations. Further important changes occurred after 1948—the year the communists seized state power. From this time a process of expropriation began and the private housing stock passed into the administration of municipal authorities. All bigger multi-family houses were nationalized. Municipalities also obtained the right to distribute flats in parts of rental houses which remained in private ownership. At the same time all land including building sites came into state ownership; land ownership ceased to exist and was replaced by the so-called personal use right. This development has led to the short-term solution of post-war problems by redistributing flats to inhabitants formally according to social criteria. Nevertheless, in reality political reasons have played a crucial role in distribution. To facilitate a description of housing problems and solutions during the ‘socialist’ period from 1948 to 1989 we can divide it into five stages: 1

1948–55

2

1956–63

3

1964–70

4

1971–80

5

1981–88

The first stage From 1948 to 1955 the number of flats built annually grew from 21,683 to 48,700. In this period a total of 285,112 flats were built (i.e. an annual average of 33,639 flats). In 1950

The reform of housing in Eastern Europe and the Soviet Union

40

the whole housing stock comprised 3,612,610 flats per 12,388,68 inhabitants (3.43 inhabitants per flat), or 292 dwellings per 1,000 inhabitants (Historical Statistical Yearbook of Czechoslovakia 1985). In 1948–55 basically only two forms of housing construction existed: the municipal (state), and the individual (which amounted to 36.3%). The entire contruction of housing was based on traditional technology. From the urbanistic-architectural view it was a question of single houses and block building, and the dwellings attained a relatively high standard in comparison with the pre-war level. Two-room dwellings erected with government means dominated. In towns individual housing construction did not exist at all. The allocation of flats in towns was absolutely controlled by the municipal authorities. The second stage Beginning in the 1950s a programme of industrialization, the same as in other East European countries, started also in Czechoslovakia. It brought heavy migration to the cities, especially in Slovakia, and consequently a high housing demand. Therefore, in 1955, the Industrialization Programme for the building industry was declared. On the other hand the dissatisfaction of city dwellers with living in buildings erected in the last century grew and a period commenced in which the consequences of the longterm neglect of maintenance of the older housing stock emerged: pre-war consequences of the economic crisis, no investment in housing during the war, housing policy wholly oriented towards new construction. The industrialization process beginning in 1955 meant a return to the constructivist concept from the 1920s, to the gradual development of prefabricated buildings, which took place parallel to the continuing traditional construction. Some important urban districts (housing estates) were produced, intended to be mirrors of the socialist style of living. The share of three-room dwellings began to increase in new construction, and the level of the standard of dwellings began to improve. From 1956 to 1963 the number of dwellings erected annually grew from 62,240 to 82,189. In total 567,473 dwellings were built in this period (the annual average was 70,934 flats). In 1961 the entire housing stock represented 3,819,873 dwellings per 13,779 inhabitants which means 3.61 inhabitants per dwelling or 277 dwellings per 1000 inhabitants (Historical Statistical Yearbook of Czechoslovakia 1985). In 1959 two other forms were introduced: cooperative housing, carried out by regional and professionally differentiated housing cooperatives, and enterprise housing. This development reflected the political changes of 1956 when the approved forms of pre-war housing construction were reconstituted. At the same time the share of individual housing grew to 32.8% of the total; individual housing now entered the towns. The third stage In connection with the transition to new technologies (mainly the panel system and cast concrete) changes gradually took place also in the system of normalization, accounting and housing economy. The definition of the dwelling and of the habitable room was changed, amending the standard from 4.0 m2 to 8.0 m2 per room and household member.

Housing in Czechoslovakia

41

The new Housing Economy Law No. 41 (1964) was passed and the new standard CSN 73.4301—Residential Houses—came into being. During the period of political liberalization in Czechoslovakia after 1963, an evident social movement began to create, among other things, a new view of the housing problem. A housing cooperative boom began in the towns; in 1965 most dwellings erected were in cooperative form, 49% of the whole number of newly built dwellings. The cooperative housing in the towns started to compete with individual housing; small housing cooperatives dominated, and were connected with enterprises and local authorities, whereby they complied with the individual interests and possibilities of the cooperative members. New cooperative dwellings were significantly differentiated as regards size and quality, large five-room cooperative dwellings started to be built and three-room dwellings became the standard. Bohemia and Slovakia had a very different development in individual housing construction by the end of this period. Whereas in Slovakia family house building comprised up to 60% of the total, in Bohemia this share was only about 15%. The high proportion of individual housing in Slovakia was due to the fact that the inhabitants solved their housing problems in a situation when no significant formal-legal barriers existed. The greater activity of families in Slovakia resulted from the small possibilities of obtaining high-quality housing and also from the traditional value orientation of the Slovakian people, for whom house ownership represents a basic status symbol. From this point of view it is interesting that this value orientation has survived with the Slovak emigrants in the USA (Novak 1985) and in the home culture as well. The development of family houses in Slovakia in this period was quite uncontrolled in many respects and often caused a deterioration of the locality or of whole regions—their architecture, the technical infrastructure, ecology and aesthetics. It also affected the economic infrastructure to a great extent. From 1964 to 1970 the amount of dwellings built annually grew from 74,301 to 112,136. Altogether in this period 594,304 dwellings were built (yearly average 84,900). In 1970 the total housing stock represented 4,238,989 dwellings per 14,333,616 inhabitants; 3.38 inhabitants per dwelling, or 296 dwellings per 1000 inhabitants (Historical Statistical Yearbook of Czechoslovakia 1985). The long-term stagnation of the total number of dwellings mainly resulted from the insufficient maintenance of housing stock and from the problem of the enormous rate of waste caused by changed use or demolition (see Table 1).

Table 7.1 Structure of housing stock according to the year of erection Erected

1961

%

1970

%

Before 1899

1,222,019

31.99

930,360

21.94

1900–45

1,846,434

48.34

1,686,645

39.79

1946–60

751,420

19.67

756,963

17.86

865,021

20.41

4,238,989

100.00

1961–70 3,819,873

100.00

The reform of housing in Eastern Europe and the Soviet Union

42

Source: Historical Statistical Yearbook of Czechoslovakia 1985.

In 1964–70 the opinion that the liquidated houses and dwellings did not have any important cultural and utility value dominated. Together with worthless buildings, historically and architecturally valuable buildings were also razed. During these years a large part of Czechoslovakian towns acquired their present urban form. By the end of the period the costs of housing construction were refunded to an increasing extent through the state budget (see Table 7.2).

Table 7.2 Development of housing financing (in mill. Kcs)* Form of construction

1965

1970

State and enterprise

1,213.9

5,242.9

Cooperative

2,248.2

5,379.7

Individual

1,832.5

4,370.9

Together

5,285.6

14,933.5

From this form abs.

1,888.4

8,707.6

The state budget: %

35.7

58.3

Source: Historical Statistical Yearbook of Czechoslovakia 1985. *Czechoslovakian Crowns.

The period 1964–70 was an important one because now the concept of social policy aiming at the quantitative solution of the housing problem began to be effective. Political promises were even made that the housing problem should be solved in the 1970s, and housing policy became one of the crucial items in the social policy of the state. The magnitude of the housing problem was thereby put in direct proportion to the magnitude of the communities—the bigger the town, the bigger the problems, the fewer the dwellings. The fourth stage In Czechoslovakia, the intensity of housing construction culminated during the period of 1971–80. In towns it took the form of building large housing estates using panel prefabrication technology, and it came to represent more than 90% of the newly erected residential multi-family buildings. The largest proportion of housing construction was state-enterprise construction, in which the socio-political concept of stabilizing employment and recruiting employees for enterprises through offering housing was implemented. The policy of stimulating the building of single-family housing was also applied. In 1971–80 on average 126,324 dwellings were built annually, most in 1975 (144,678). In this period a total of 1,263,417 new dwellings were built. In 1980 the total housing stock, i.e. permanently occupied dwellings, comprised 4,908,778 units per

Housing in Czechoslovakia

43

15,311,123 inhabitants or 321 dwellings per 1000 inhabitants (Historical Statistical Yearbook of Czechoslovakia 1985). At the same time the absolute number of older houses decreased significantly and a qualitatively new age structure of the housing stock emerged (see Table 7.3).

Table 7.3 Age structure of the housing stock in 1980 Dwellings erected: before 1899

573,825

11.69%

in 1900–45

1,396,707

28.45%

in 1946–60

739,576

15.07%

in 1961–70

994,904

20.26%

in 1971–80

1,203,766

24.53%

4,908,778

100.00%

Source: Historical Statistical Yearbook of Czechoslovakia 1985.

The important growth of state and enterprise housing construction entailed a greater burden on the state budget as shown in the survey of the development of housing construction financing (see Table 7.4).

Table 7.4 Development of housing construction financing in 1970–82 (in mill. Kcs) Form of construction

1970

1975

1980

1982

State and enterprise

5,242.9

9,294.0

6,881.4

4,178.8

Cooperative

5,379.7

5,421.4

6,331.1

5,928.0

Individual

4,320.9

6,809.2

7,307.4

7,378.1

Together

14,933.5

21,524.6

20,519.9

17,493.9

8,707.6

13,138.5

11,025.8

8,489.8

58.3

61.0

53.8

48.5

From this abs. From the state budget: % Source: Cillík and Koudelka (1987).

The population and housing census in 1980 revealed a new aspect of the problem, that of permanently and temporarily occupied dwellings. The figure of 4,986,778 dwellings mentioned in the official statistics represents the permanently occupied dwellings; the total number of dwellings in Czechoslovakia in 1980 was, however, roughly 5.5 million units. Hence half a million dwellings existed, which were formally, legally, and organizationally taken out of the housing stock. They represented mainly second dwellings. In the same year a housing deficit of 372,800 dwellings was registered.

The reform of housing in Eastern Europe and the Soviet Union

44

This phenomenon presented a new problem. While until the mid 1970s the crux of the housing problem lay in the absolute shortage of dwellings, from 1980 onwards the problems of the economic mechanism of housing construction, together with the distribution of dwellings and the use of the housing stock, became more significant. The fifth stage In 1981–8 housing construction in Czechoslovakia decreased. On average 91,052 dwellings were built annually, and cooperatives again had the biggest share of the new construction. State-enterprise housing was halted for economic reasons; in 1982 state expenses for housing construction were already lower than they were in 1970. From 1981 to 1988 a total of 728,417 dwellings were built, and it is expected that in 1990 there will be 5,470,600 dwelling units for 5,561,300 households in housing need (Historical Yearbook of Czechoslovakia 1971–1988). To the end of the described period it was thought that housing demand would be roughly at the level of the average yearly production. Due to the urgent need for reconstruction and rehabilitation it was expected that the total deficit would be 307,600 dwellings at the end of 1990 (Cillík 1985). This deficit has indeed already acquired a more regional character: and it concerns some town agglomerations where the market is in imbalance. While in big cities (Prague, Bratislava, Brno) there are thousands of applicants for flats, there are regions (e.g. East Slovakia) with empty flats. The basic objective for the 1990s concerns the introduction of economic market mechanisms into housing construction and housing administration. In association with political changes after November 1989, this trend is based on a completely new platform.

EXPERIENCE WITH MASS HOUSING CONSTRUCTION From the above description of the development of housing in Czechoslovakia a few general conclusions may be derived. The first and possibly the most important concerns the fact that from the end of the Second World War until 1955 housing construction in Czechoslovakia remained on the level of the years of economic crisis in the mid 1930s. Only after 1955 was a more dynamic housing construction evident: only in 1970 were more dwellings built than in 1928, when the pre-war building conjuncture reached its peak. Housing construction in its mass form followed the traditions of the constructivism which dominated Europe in the 1920s, and which was represented by the BAUHAUS of Hannes Meyer. Until the mid 1970s, the housing problem was considered as the shortage of hygienically convenient dwellings and consequently solved by demolishing inadequate dwellings. A significant fact here is that, up to the present, housing quality criteria were used which reflect the traditional elementary hygienic view: four categories of dwelling quality according to hygienic facilities, type of heating and direct lighting: 1 (a) central heating (b) bathroom, WC

Housing in Czechoslovakia

45

(c) direct light in living-rooms; 2 without (a) or (b); 3 without (a) and without bathroom; 4 without (a) and only partially direct light, bathroom and WC outside the flat. According to the census results the structure of the housing stock in 1980 was as shown in Table 7.5

Table 7.5 Structure of housing stock by applied quality criteria Category

Number of dwellings

%

1

2,295,328

46.8

2

1,306,054

26.6

3

497,808

10.1

4

809,588

16.5

4,908,778

100.0

Source: Historical Statistical Yearbook of Czechoslovakia 1985.

The inadequate technical-hygienic state of the dwellings led to their rapid liquidation. As regards the state-subsidized housing, new construction proved to be more effective than reconstruction and modernization of older buildings. This orientation towards new construction resulted in the extinction of enterprises able to perform reconstruction and modernization effectively. The connection between the objective need to remove the absolute dwelling shortage and the constructivist idea of industrializing and standardizing housing engendered large enterprises in the building industry. This was another internal organizational obstacle hindering the start of housing construction already at the beginning of the 1950s. It was necessary first to establish and equip the large building enterprises with technical facilities, which required time and means. When the new enterprises in the building industry were formed and made operational, they began to dictate their own technical and architectural concepts. The question of building repair, reconstruction and modernization became an unresolved problem and, characteristically perhaps, Czechoslovakia imports workers for the repair and reconstruction of historically highly valuable buildings. In towns maintenance problems were intensified by ownership relations. More housing was nationalized and the new owners were not able to ensure maintenance, not to mention renovation. A reflection of this situation seems to be the level of rent for the use of dwellings. The monthly costs of dwellings depend mainly on the dwelling category (especially the differentiation of municipal dwellings, where part of the stock was built before 1945 and 1989), on the time of construction during the period, and on the construction form (state-cooperative). The clearer picture can be seen in Table 7.6.

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Table 7.6 Monthly payment for use of a flat (rents in municipal dwellings, annuity, maintenance and operational cost in coop. flats) Two-room dwelling with kitchen, user area 55 m2

2

Three-room dwelling with kitchen, user area 68 m

2

Four-room dwelling with kitchen, user area 84 m

municipal cooperative

276 Kcs

from 1967

374 Kcs

from 1981

433 Kcs

municipal cooperative

341 Kcs

from 1967

428 Kcs

from 1981

535 Kcs

municipal cooperative

422 Kcs

from 1967

592 Kcs

from 1981

661 Kcs

Source: Ondrus et al. (1989).

In this situation some specific personal strategies emerged: ● orientation towards low-cost housing with lower standards in towns, together with an additional orientation to obtaining second homes in the countryside or in recreational centres; ● orientation towards single-family housing construction (which, mainly in larger town housing estates, remains accessible only to a certain strata of the population); this orientation is characteristic even when solving the problem of improving standards— in 1985 54% of the building owners had their own dwelling when they started construction work (Matejka 1990); ● orientation towards keeping the dwelling for relatives, i.e. occupation of the dwelling also in a situation when it is not necessary because the user has another permanent flat; ● orientation towards long-term stability of housing, which mainly results from the lack of possibilities to improve the housing situation by exchange of dwellings; ● orientation towards obtaining old dwellings of a lower standard, and renovating them. In larger towns this is difficult because of a shortage of such dwellings. After a deeper analysis of the existing conventional personal strategies in solving the housing problem we can say that passivity predominates. An active solution has in fact only been possible in individual housing construction and the purchase of older dwellings and their renovation. On the whole, post-war housing problems were referred to as social problems that were the responsibility of the state social policy, in effect reminiscent of the pre-war period. The state took over an increasing part of the responsibility for the solution of the housing problem and endeavoured to solve it by new housing construction. This policy weakened the initiative of the population and passified personal strategies. The emphasis placed on larger and larger numbers of dwellings, the attempt to solve the housing problem by quantitative methods, also brought about unfavourable

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consequences for social amenities in new housing estates and reflected an inadequate urbanistic completion of new residential zones. The urbanistic problem is at present a still growing source of dissatisfaction for the inhabitants (Zemko et al. 1978) and intensifies the orientation towards second homes and private homes (Stepová 1989).

A NEW CONCEPT OF STATE HOUSING POLICY The influence of the changed conditions and the opening for a broader spectrum of activities in housing necessitates working out a new conception of state housing policy with principally new starting points. It should be based on a fundamental change from quantity to quality in housing, accompanied by the transformation of the present housing sectors. At the same time it will be necessary to engender a conception of full value housing similar to that which was applied in a couple of developed countries in the 1970s (Gehmacher 1989). To elaborate the new housing concept, the first step is to set up the basic goals, the various mechanisms and the legislation from which the management and economic tools should be derived. Using the basic coordinates of present and anticipated development, these goals could be formulated in the following way: 1 changing over to market regulation by gradually introducing a housing market; 2 a consequent orientation to higher housing quality; 3 a new social balance. Key problems will have to be comprehensively attacked and solved in order to dislodge any surviving irregularities. The following measures may facilitate this: ● to grant equal rights to all forms of ownership—municipal, group and private—and to introduce communal property, allowing local autonomy over residential areas; ● to reintroduce the original character of the individual housing sectors developing from ownership forms; ● to introduce tenancy in relation to the social housing form; ● to renew the original function of the economic tools in the system of construction and use of the housing stock (own financial funds, subsidies, appropriations, credit, taxes and so on); ● to ensure the realization of conditions for the development of housing by demonopolization of the construction industry and a gradual balancing of demand and supply; ● to develop a new methodology for evaluating housing as a tool for renewing the intrinsic logic of the housing sectors (in the form of privatization and reprivatization, renewal of the character of building cooperatives, provision of a part of the less valuable housing stock for the disposal of social housing) and as a means for attaining higher quality; ● social and economic compensation depending on person and household derived from a normative minimum; ● to surmount the passive attitudes of people by stimulating their participation in solving the housing problem.

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The issues discussed in general point to the need to solve the housing problem in a more qualitative manner than that prevailing in the past. The most important task in the development of an effective housing policy reform is to achieve an accord between new economic instruments (loans, subsidies, taxes, etc.) and the action power of individual organizations and entrepreneurs. Along with setting up a base inclining the majority towards the housing market, it is necessary to take into account a need for greater activity and participation on the part of citizens in handling their personal housing situation. The basic thesis of the housing policy reform is the idea that the citizen alone can deal with his or her housing in new conditions. The state (republic, region, town) through its tools affects the formation of a balanced housing market in such a manner that housing is accessible to all population groups. The conditions and the environment for a long-term orientation of individuals to obtain quality housing need to be created. A form of housing savings applied in most West European countries can serve as an example of such orientation. It results in a large financial sum and construction loan with advantages from the state, mediated through specialized savings institutions (e.g. tax reductions, benefits). New economic tools concern not only new construction, but the administration of existing housing stock as well. A special issue is energy saving. Again we can use examples from all Western countries where energy saving was the only field in which, besides loans with favourable (or zero) interest rates, state subsidies were also provided. Problems brought about by housing policy reform should be solved in a systemic way as housing is a very complex phenomenon. Government measures would be specifically shaped in their application at regional and local levels. This also places new demands on housing research. Research has to help implement housing policy reforms by providing a foundation for concepts, by analysing, informing and warning about trends and connotations. At the same time it should provide feedback about the results and effects of given actions. Already today there are many urgent issues—efficiency of housing stock administration, construction forms and technologies, territorial planning, market surveys, social aspects of the housing policy, etc. After a period of ignoring the results of research the time has come to implement them to achieve qualitative changes in all the new sectors of housing.

REFERENCES Cillík, Z., (1985), ‘Rozvoj byvania a obytného prostredia’, (The Development of Housing and Housing Environment), VUSRP, Bratislava. Cillík, J. and Koudelka, F., (1987), ‘Optimalizácia distribúcie a redistriúcie bytov, správa bytového hospodárstva v procese skvalitñovania podmienok byvania’, (The Optimalization of Dwelling Distribution and Redistribution, Dwelling Management Administration in the Process of Raising the Quality of Housing Conditions), VUSRP, Bratislava. Deyl, Z., (1985), ‘Sociální vyvoj Ceskoslovenska 1918–1938’, (Social Development of Czechoslovakia 1918–1938), Akadémia, Praha. Gehmacher, E., (1989), ‘Das Konzept “Vollwertiges Wohnen” und die Arbeit der Wissenschaftlichen Begleitgruppe’, IFES, Wien. Historická statistická rocenka CSSR, (Historical Statistical Yearbook of Czechoslovakia), SNTL, ALFA, Praha 1985.

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Matejka, Z., (1990), ‘Bydlení-Predpoklady nasycení obyvatel a území domy pro bydlení’, (Presumptions of Saturation of Inhabitants and Territories with Houses for Living in), PgÚ CSAV, Praha. Michalovic, P., (1988), ‘Harmony versus Uniformity’, UEOS, Bratislava. Novak, M., (1985), ‘Przebudzenie etnicznej Ameriky’, (The Awakening of Ethnic America), PIW, Varsava. Ondrus, V. et al., (1989), ‘Sociálne aspekty bytovej politiky’, (Social Aspects of Housing Policy), VUSRP, Bratislava. Statistická rocenka CSSR 1971–1988, (Statistical Yearbook of Czechoslovakia), SNTL, ALFA, Praha 1971–1988. Stepová, V., (1989), ‘Ctyri otázky o druhém byglení’, (Four Questions about Second Housing), Socialisticky obchod c. 1. Zemko, J. et al. (1978), ‘Sociologicky vyskum nového obvodu mesta Brastislavy v Petrzalke’, (Sociological Survey of the New Bratislava District Petrzalka), USTARCH SAV, Bratislava.

8 Recent changes in the housing system and policy in Czechoslovakia An institutional approach Jiri Musil Czechoslovakia started to change its state socialist housing system later than other EastCentral European countries. At the present time the country is, however, approaching a crossroads where new patterns will be set for many years. In conjunction with the changes in the political and economic systems, a committee for housing reform was established and started to work in January 1990, several weeks after the November revolution.1 Some concrete recommendations for the government have already been agreed upon,2 but the whole package of reform proposals will be prepared and agreed upon most probably only after the 1990 elections. The structure of the main reform proposals is, however, already settled and thus it is possible at the present time to describe and analyse them. It should be stressed that the Czech and Slovak housing experts started a discussion on the need to change the existing housing system four years ago. It was a theoretical discussion, but with implicit political effects. In the year 1987 Charter 77 also produced a critical document on Czechoslovak housing dealing mainly with the housing problems of young people in Prague.3 Some participants in the discussion only repeated reformist arguments from the late 1960s, but others went further and started to propose more radical solutions stimulated by the Hungarian and, to a lesser degree, by the Polish housing reforms. But the main impetus for change came from analyses of the function of the Czechoslovak housing system. As a result three main approaches evolved: (1) the most critical and radical one, which can be designated as liberal, or social liberal, (2) the less radical one but also containing proposals for substantial transformations of the existing system, which can be designated social democratic, and (3) the least radical one, which adheres to the traditional principles of the ‘socialist state housing policy’4 but is trying to modify its set of tools and, in some versions, even accepts some elements of market institutions and mechanisms. This last approach can be called a reform socialist one. We shall not discuss it here, as it has no impact now. In the period starting in 1985, however, no one supported the existing institutional structure of the integral ‘administrative-rationing’ housing system, as it was labelled by its opponents: the crisis was evident.

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THE DISINTEGRATION OF THE STATE SOCIALIST HOUSING SYSTEM To understand the proposals for solving the crisis, it is necessary to describe the main problems in the existing Czechoslovak housing system. In Table 8.1 the main institutional features of the ‘revolutionary’ and ‘stabilized’ phases of the system are summarized.

Table 8.1 The basic features of state socialist housing systems Parts of the system

The first, revolutionary phase

The second, stabilized phase

1 Ownership forms —State rented housing and house building —Private housing in family houses forms —Private rented housing/negligible —Service housing —Old cooperative housing

—Stated rented housing —New cooperative housing —Enterprise housing —Private housing in family houses —Private housing in condominiums

2 Institutional forms of housing distribution

—State housing sector remains a combination of social service and commodity —In cooperative housing combination of social and market allocation —In private housing combination of market mechanisms and state regulation and support —Rent control in state sector, in cooperative and private sector

—Housing: a hybrid of social service and commodity —Housing allocation according to ‘objective’ needs and social class preferences of working class households —Housing allocated by local authorities according to waiting lists or state interests —Local authorities’ control of housing

transactions within the private sector combination with market elements —Rent control in the state sector 3 Socio-political goals and acts of housing policy

—Egalitarian housing policy and redistribution —Stress on the improvement of working class housing, rehousing of the upper classes —No speculation and profit in the housing sphere —Housing as a direct and integral part of the overall state economic strategy and policy, e.g. support of industrialization —General improvement of housing standards and the removal of the distinction between urban and rural communities

—More space for choice and differentiation of housing according to ‘merits’, —De-ideologization of the housing sphere, stress on functional and technical qualities —Redefinition of the social functions of individual forms of tenure and house building: a state housing: support of state policies’ goals, for households in necessary services, for families with lower incomes, with many children b cooperative housing: combination of private and collective interests

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4 Systems of financing house building, and management

5 Legal regulations of the housing system

52

—Stress on construction of ‘new socialist housing estates’ and on formation of environmental conditions for the socialist way of life

c private housing: for rural areas, small towns and more and more for people with higher incomes —More stress on urban renewal, less on urban expansion

—State budget resources used by communes —Private resources and state loans combined —House building and management of housing stock heavily subsidized by state

—State budget resources used by communes —Combination of state loans, state grants and private resources in cooperatives —State and enterprise resources combined —Private resources and state loans

—Housing legal norms are a part of the administrative law, i.e. non-contractual regulations —Strong centralization

—Housing legal norms remain a part of administrative law —Some decentralization, specific norms for regions

Table 8.1 is intentionally constructed in a non-evaluative way using the vocabulary of the official documents. Such a description cannot, however, reveal the failures and unintended effects of the state socialist housing system. The following difficulties were mentioned most often: ● The administrative rationing housing system is suitable for exceptional situations, e.g. the acute housing shortage after the war or due to other causes. With the rising standard of living and mainly with the improved housing situation, it ceases to be useful. ● The housing shortage is a relative concept. The possibility of measuring objective quantitative and qualitative housing needs is restricted during periods of housing shortage. With the improvement of the housing situation other methods have to be used, mainly those measuring the effective demand for housing. ● The system of ‘cheap housing’ which is a part of the state socialist housing system creates a permanent housing shortage—or a feeling of it—and the demand is always higher than the supply. ● The system of ‘cheap housing’ interrupts or makes difficult the interactions between the users and the producers of housing. It also makes a rational allocation of housing difficult. ● The predominant system of housing rationing leads to regional shortages of housing, due to the fact that it does not include any mechanisms which would stimulate users to choose their housing according to the costs in different regions, urban or suburban areas. In the short run it leads to many regional vacancies; in the long run, to growing losses of the housing stock. ● The rents based on easily measurable criteria, such as the size of the housing unit, useful surface floor, technical equipment, do not reflect the growing importance of environmental, location factors or other qualitative factors which can be important for the users.

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● The increasing importance of the so-called qualitative aspects of housing and the logic of the rationing system create many difficulties in their interaction. The difficulties include the growing number of regulations and norms, their vagueness and thus difficulties in their application. Many exceptions are needed. The growing bureaucratization of housing management is one important effect of these difficulties. ● One of the basic aims of the redistributive system of housing, as known from state socialist economies, was justice, conceived of in an egalitarian way. But with the existence or the introduction of housing tenures which differ in terms of legal rights of the users, of rate of rent for the same type of housing or of costs for housing in general, the idea of justice becomes meaningless. On the contrary new inequalities are created, as has been proved by the analyses of incomes in different types of tenure, i.e. in state and cooperative housing. The households in these two types of tenure pay quite different rents. For the same housing unit members of cooperatives sometimes pay two or even three times more than households in state-owned flats; but the incomes do not differ considerably. ● To the above-mentioned facts can be added the unjust and irrational system of housing subsidies. State housing is subsidized as a form of housing and there is a strict rent control in state housing. The rents did not change after 1964. But people in stateowned dwellings often have higher incomes than those living in cooperative houses. ● As in all systems with artificial prices, the moment when the revolutionary moral codes start to disintegrate and the controls become softer or less effective, the market reappears, but it is a black market. Simultaneously corruption, the informal economy and different forms of illegal transactions—i.e. transactions which do not fit the complicated legal regulations—emerge. ● Last but not least, among the problems of the housing system, the monopolistic structure of the building industry must be mentioned. The industry is composed of large enterprises dictating to the local authorities and simultaneously not reacting effectively to the demands of the inhabitants.

THE CHANGES EXPECTED IN THE CZECHOSLOVAK HOUSING SYSTEM We may expect extensive and profound changes in the Czechoslovak housing system. It will not be easy to carry them out. There are many vested interests, mainly in the building industry, and there is also a feeling that the existing system ‘functioned’ despite all its defects—but of course in its specific way. It was and still is a strongly centralized system and the transition to a new one, which in the view of most housing experts should be decentralized, will be not only difficult but gradual as well. The transition will most probably be associated with a decline in building rates, with tensions on the newly established markets, and regional housing imbalances caused by changes in the regional distributions of jobs because of the restructuring of old industrial regions. The first steps have already been taken. It was decided to remove the differences in rent levels for state and cooperative housing. The rents in housing units in privately owned family houses should be set by a contract between the owners and the tenants.

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In the same manner the strict state regulations concerning the sector of private family housing (i.e. in houses for one-two families) are questioned on, for example, the upper limits of useful surface space of a family house, the upper limits of the size of the housing lot. The market was also introduced to subletting when the local authorities’ controls were removed.

Table 8.2 The most probable alternative housing systems in the future Parts of the systems

The social democratic alternative

The liberal alternative

1 Ownership forms and —Equivalent role of all tenure house-building forms forms —Cooperative rented housing —Communal rented housing —Other non-profit-making housing associations —Private family housing —Condominiums

—As much private housing as possible —Private family housing —New condominiums and privatized state housing —Cooperative rented housing —Communal rented housing

2 Institutional forms of —Regulated housing market housing distribution —Abolition of central planning —The gradual introduction of the housing market according to regional conditions —Growing responsibility of communes in general —Some indirect regulation by the state

—Housing should be predominantly a commodity purchased and sold in the market —Regulated market in housing —The legal support of the establishment of the housing market —Active state policy aiming at the formation of a real housing market

3 Socio-political goals and acts of housing

—Housing system which would enable the households to find housing

policy

—Greater responsibility of households for their housing combined with a system of public support —Subsidies to households in all types of housing tenure —Housing allowances should depend on the income and housing situation of households —The protection of households in rented housing against the builders and owners —Need to formulate criteria of ‘socially’ acceptable housing conditions —Stimulation of housing mobility

in the market according to their choice and financial possibilities —System of direct allowances to households which are unable to cover expenses for ‘decent’ housing —Abolition of the non-selective housing allowances in communal rented housing —More responsibility of households for their housing —Introduction of economic rationality into housing

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4 System of financing house building and management

—As yet not explicitly stated —Introduction of so-called economic rents —Growing financial participation of households in acquiring housing —System of effective loans for those who want to build or buy a house or flat —Stimulation of the sale of all kinds of dwellings to households (personal ownership)

—As yet not explicitly stated, stress on greater variability in housing supply —Implicitly more stress on private house building, but communes and other public corporations can function also as housing ‘entrepreneurs’ —Non-profit housing associations accepted

5 Legal regulation of the housing system

—Radical decentralization of housing policy responsibilities from the state to the communes —Market transactions regulated by civic law codes, contractual approach —Legal norms protecting households against builders and owners

—Housing transactions being made in the market between independent subjects should be regulated by civic law codes, e.g. by so-called coordination type of law codes —Extensive decentralization in housing policy responsibilities

It is expected that soon, i.e. 1991, initial steps will be carried out in the demonopolization of large building firms. Many small private firms for house repairs and small construction tasks are already established and in the near future a rapid growth in this field is expected. From Table 8.2, which describes and summarizes the two most probable housing policies,5 it is obvious that these two policies do not differ extensively. The general trend can be described as a gradual introduction of a regulated housing market which for the time being will use upper price limits in some regions. The concrete forms of the evolving housing market are as yet unclear and they will be settled by a political process, i.e. in the post-election Parliament sessions. There is an inclination to construct a system which may be described as a social housing market system.

SUMMARY Compared with other East-Central European countries, Czechoslovakia started to transform its state socialist housing system late. The transition will be difficult and gradual; however, the first steps have already been taken. It was decided to remove the differences in rents for state and cooperative housing. Several regulations concerning the private building of family houses, the relations between owners and tenants in the private housing stock and subletting were removed. It is expected that in 1991 initial steps towards the demonopolization of large building firms will be carried out. Many small private repair firms are already established, and in the future a rapid growth in this field is

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anticipated. The general trend can be described as a gradual introduction of a regulated housing market with some price regulations.

NOTES 1 It is an ad hoc committee composed of academicians, housing experts and high officials representing the key ministries. The author of this chapter represents the committee in the Czechoslovak Academy of Sciences. 2 These recommendations are mentioned in the last part of the chapter. 3 Charter 77 Document No. 8/1987 ‘On Housing for Young People in Prague’. Typed manuscript. The documents of Charter 77 will be published in the near future. 4 We intentionally use the terms which were used in the official government papers. See for example the proposed conception of the state housing policy for the 9th five-year plan with the prognosis for the period till 2005, issued by the State Commission for Technology and Investments. It was the last proposal of this sort, and was published in October 1989. 5 The construction of Table 8.2 was based mainly on the following documentation which is as yet not published in any journals or any other public media:

Andrle, A. (1987) ‘The Development of Housing and the State Housing Policy in CSSR’, Internal publication mimeographed. Karen, O. (1989) ‘Some Suggestions for the State Housing Policy’, Internal publication of one of the Prague cooperatives, mimeographed. Komarek, V. (1990), ‘The Revised General Socio-Economic Prognosis’, (part dealing with housing), Publication of the Institute for Prognoses of the Czechoslovak Academy of Sciences. Rypacek, J. (1990) ‘The Standpoint of the Czech Commission for Technology and Investment Concerning Housing Policy’, mimeographed paper. Tepper, T. and Cepl, V. (1990) ‘The Conception of Housing Policy and Housing Law’, manuscript.

9 Germany And what now, when the twain have met? Lennart J.Lundqvist Have we been honest about the building of socialism in our country? Or have we consciously helped to spread lies?

Thus asked the Editor of the DDR-Revue in the belated final 1989 issue. Posing questions about the fate of different sectors of DDR society, she continued: Neue Wohnungen mit niedrigen Mieten?—Ja, für Millionen Menschen, vor allen aus der Arbeiterklasse. Aber auch immer mehr verfallende Bausubstanz besonders in Altstädten, von denen mehr wenige saniert wurden. Und damit nach wie vor Menschen, die unter schlimmen Bedingungen leben.1 This duality between impressive achievements and appalling neglect is effectively brought out into the open in Peter Marcuse and Wolfgang Schumann’s fascinating account of East German housing policy from the rubble of war to the rumble of Aufbruch. In many ways, the scale of the DDR’s efforts to ‘solve the housing question as a social problem by 1990’ is simply astounding. In October 1988, Erich Honecker handed over the keys to the 3,000,000th dwelling built since the inception of the new housing programme in 1971.2 Another impressive achievement is the severing of the link between ‘ability to pay’ and housing quality. All rents being kept low, the distribution of housing became as close to ‘social need’ as any country may ever have accomplished. But these successes have been achieved at a price. Marcuse and Schumann’s DDR account is a story of seemingly total disregard of the economic aspects of housing production and maintenance. In particular, their efforts to grasp the meaning of ‘credit’ and to translate it into terms meaningful to Western observers are revealing, and warn of the enormous problems of adjustment now that economic union with the BRD is established. Marcuse and Schumann show how the iron-clad political will to legitimize the SED rule made the political leadership turn a blind eye, disregarding constitutionally guaranteed local administrative powers and individual rights of co-determination. Again, to quote the DDR-Revue editorial: Mitbestimmung der Arbeiter und Werktätigen?—Was nützt das gesetzlich verbriefte. Recht dazu, wenn von einer bürokratischen, verkrusteten und

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überalterten Führung nur das zur Kenntnis genommen wurde, was man gern hörte?3 The principle of ‘democratic centralism’ has prohibited, or curbed, individual and nonstate collective initiatives and responsibility. In the end, the eagerness to gain the confidence of the working class by favouring its members in housing allocation also failed. In fact, the ‘voting with the feet’ surging in 1989 seemed to promise a solution to the housing question as a social problem by 1990 in a way quite different from Honecker’s vision; not by building away the housing shortage, but by creating a shortage of households to fill the flats. The flats remain, however, firmly planted in what was, up to October 3, 1990, East German ground. There are millions of them, no more than five-ten-fifteen years old. So now that the twain—East and West—have finally met, they are a necessary part of both the problem and the solution to the region’s housing question. But what will happen to the historic achievements of the DDR housing policy? Can the nearly ‘classless’ distribution of housing be saved when new and necessarily more cost-conscious rents are determined in order to save the resources invested? These questions must inevitably be posed as Wiedervereinigung is implemented. Tentative answers could be aired, but we will not do so here. It may suffice to point out that the situation holds both threats and promises. There are threats to the social order that has, after all, been both based on, and a result of, the principles of the Honecker programme. There are promises of a new and more democratic, consumer-oriented approach to housing provision. At best, the outcome may provide a unique and beneficial combination of both socialist and market principles of housing provision.

NOTES 1 Lore Uhlmann, ‘In eigener Sache’, DDR-Revue, 11–12/89, p. 1. 2 David Kendall, ‘The GDR Housing Programme: Problems and Prospects’, Nordic Journal of Soviet and East European Studies, 6(1989), p. 71. 3 Uhlmann, op. cit.

10 Housing in the colours of the GDR Peter Marcuse and Wolfgang Schumann Between the time when Gorbachev took office in the Soviet Union and the resignation of Erich Honecker in the German Democratic Republic, Germany maintained its separateness from the rest of East European developments, in particular the reform movements there, with the claim that it had ‘socialism in the colours of the GDR’. This chapter examines housing ‘in the colours of the GDR’ during this period, with some references to the brief reform discussions that immediately followed it, but ended with the absorption of the GDR into the Federal Rebublic of Germany (FRG). Were this chapter written just a year earlier (it was finished in September, 1990) its theme would have been very different. It (like many articles before it) would have described the main characteristics of the housing system of the GDR as if they were each identifying the inherent characteristics of a single coherent system, and the questions raised would have been about the successes or failures of that system, perhaps particularly in comparison with that of the FRG.1 After the new October revolution in the GDR, however, a whole additional set of questions emerged. Those new questions arose out of attempts to re-evaluate past policies and decide which have succeeded and which failed, which should be retained and what new policies should replace those that have failed. The assumption behind those questions was that past policies have not all been necessary parts of a single coherent system; that some are, in a phrase we have defined elsewhere, ‘system dependent’, while other parts are ‘system independent’.2 Whatever the current political status, those questions seem important ones, and this chapter attempts to begin an answer. ‘East European’ is an appropriate historical, but a treacherous analytic, definition of the system with which we are concerned.3 As a historical category, it is based on the experience of the German Democratic Republic, Czechoslovakia, Albania, Bulgaria, Hungary, Poland, Romania and the Soviet Union in the forty post-war years. Analytically, the East European model breaks down into at least two components: economic—social ownership of the means of production, planned pursuit of economic equality, priority of planning over market mechanisms; political—centralized, commandstyle decision-making, Stalinism. Both are then shaped by: the specific international situation in which they historically developed, including the political conflicts of the Cold War and the economic conflicts with competitive capitalist systems; the particular system-independent decisions of particular leaders; different leadership structures, and historically particular situations out of which particular policies arose. Since we are concerned here both with historical explanation and with policy implications, the components of the historical system need to be disaggregated.

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THE QUESTIONS OF SOCIALISM AND CENTRALISM For the purposes of clarity, therefore, we formulate the questions to be addressed as follows: 1 What GDR housing policies were parts of, and inseparable from, an attempt at a socialist organization of its economy? 2 What GDR housing policies were parts of, or stem from, its centralist-authoritarian political structure and the desire to maintain the power of those in its leadership? And, in order to develop the answers to the foregoing two questions, there is a third: 3 What GDR housing policies came about because of factors not systemically related either to a socialist economy or to a centralized-authoritarian political structure, but rather to other contextual factors, among the most prominent of which are likely to be the following? (a) International influences: war-time destruction, post-war reparations, the virtually unquestioned influence of Soviet models in the early years, the predominant influence of the FRG today. (b) ‘Mistakes’: ideological rigidities, failures to reconcile conflicting priorities, adoption of directly contradictory policies.4 These are system independent, although the difficulty in overcoming them may be system dependent. They stem from choices among alternatives realistically available within the system. (c) Shortages, of housing, of building materials, and of labour resulting from other factors, but exercising an independent influence on future developments. The distinctions made above are of course theoretical constructs imposed on a historical reality in which all of the separate factors existed together, influenced each other, and so, intertwined, mean that ‘proof of any particular causal relationship is impossible. In the particular case of the GDR, much evidence that would be very useful is simply not (yet?) available. Statistics, for instance, are woefully weak in detail, and in some cases are simply fraudulent; the bases for decisions at top party or government levels are not known, records of debates are not available, motives and reasoning are concealed under layers of self-serving rhetoric. Nevertheless, some larger conclusions can at least be hypothesized, and the available information supporting them marshalled. In very broad terms that information suggests: many positive accomplishments have resulted from the socialist characteristics of housing policies in the GDR, but their implementation and effectiveness has suffered severely from problems initially created by international influences, and thereafter by conflicts between a socialist economic and a centralist authoritarian political system. By the 1980s the shortages thus created in turn led to ever increasing difficulties, ultimately contributing to the events of October, 1989. The net result was a set of housing policies that look very good on paper, in terms of goals, administrative structure, physical standards, distributional criteria, but that fall far short of their stated objectives in reality. A detailed look will show in case after case how policies apparently well intended and well designed have produced certain positive results, but ultimately failed to achieve their proclaimed goals or were distorted in practice.

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THE DECISIVE INFLUENCES AND EVENTS Urban policy in the GDR did not follow a straight, or even a consistent, line in its development, although each change in policy tended to be presented as a logical evolution of prior policies. Radical shifts in policy did in fact take place, and were often caused by factors totally outside the housing system. The following main stages can be distinguished: 1 1945–9: The period of direct Soviet control, in which many of the basic lines of development were laid down; reconstruction from the ruins. 2 1949–61: A period of consolidation of power, with shifting policy, but at all times dominated by considerations of relations with the Soviet Union, the existence of the Cold War, and competition with the FRG, all of which find their expression in the goal of increasing productivity to surpass the levels of the West. 3 1961–71: Pressured economic growth, first, briefly, after the construction of the Wall, some liberalization, some willingness to experiment and permit alternatives to be explored; then a sharp tightening of control and harsh integration of all elements of society into the centralized, SED-dominated state system. 4 1971–80: A quest for social legitimation, a shift to the goal of increased consumption as a means to strengthen legitimation of the prevailing order; the formulation of this goal in purely quantitative terms. 5 1980–9: Stagnation, a recognition of some of the limitations of policies having only quantitative expression, and a growing tension between prevailing older policies and popular aspirations. In more detail: 1 1945–9. Direct Soviet control. From the end of the war to the founding of the GDR. Recovery from the destruction of the war, partial adoption of concepts of progress from the 1920s, e.g. in architecture. Direct Soviet control. 1945—End of the Second World War, establishment of the Soviet Occupation Zone in East Germany; Commencement of the construction of the Frankfurter Allee (Stalinallee, Karl Marx Allee) in the style of the 1920s. 2 1949–61. Consolidation of power. From the founding of the GDR to the construction of the Wall. Establishment of the GDR as a socialist state, under the domination of the Socialist Unity Party (SED), supported by and subservient to the Soviet Union. Shifting urban policy, first in the image of Stalinist practice in the Soviet Union. Considerations of Cold War politics and competition with the FRG overwhelming other factors. Housing and city development policy in the service of industrial expansion and the consolidation of power of the SED. Socialist realism in art, determining both subject-matter and style. October 7, 1949—Founding of the German Democratic Republic; 1950—First Building Conference, decision to shift to industrialized housing construction; ● Founding of Stalinstadt (later Eisenhuttenstadt);

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July 27, 1950—Sixteen Foundations of City Development promulgated, after expert tour of the Soviet Union; classically socialist in their formulation;5 September 6, 1950—First Aufbaugesetz,6 Reconstruction law establishing public control of city development and making it part of economic planning system; emphasis on construction in central city areas; 1952—First Stage of the Stalinallee, in the image of Moscow; Autumn 1952—Forced heavy industrialization, worsening of consumer goods supply; March 5, 1953—Death of Stalin; June 17, 1953—Suppression of workers’ protests with Soviet tanks in the streets of Berlin and other cities; October 23, 1953—Price reductions as part of New Course to deal with sources of unrest, coupled with increased political repression; April 8, 1954—Ulbricht elected First Secretary of SED; September 20, 1955—New relationship of partnership with Soviet Union, ending of reparations; February 19, 1956—XX Congress of the CPSU, denunciation of Stalin, election of Khruschev; focus on modernization of the entire society in the GDR; October 23, 1956—Invasion of Hungary by Soviet forces; 1956—Beginning of mass production of industralized housing, at city edges; 1957—Increased support of all forms of cooperative housing construction; 1959—Second stage of Karl Marx Allee in Berlin, with modern industrialized construction; April 25, 1960—High point of statutory collectivization of agriculture;7 August 13, 1961—Construction of the Wall, with prefabricated concrete panels constructed by the industrialized building concerns; brief hopes for liberalization. 3 1961–9. Pressured economic growth. From the construction of the Wall to the end of the Ulbricht regime. Stabilization, establishing the formal and social identity of the GDR, legitimation of the rule of the SED as a party transforming the country into a modern industrial power, with heavy ideological pressures, including city construction. Investment in modernizing and expanding infrastructure, complete shift to industrialized prefabricated panel construction, concentrated in representative city centres and new towns. Growth of public ownership (Volkseigentum) as the dominant legal form. Hopes for liberalization. Socialist realism as method rather than subject. Economically oriented regional planning. 1961—Beginning of work on the General Plan for Berlin; January, 1963—VI SED Congress, cultural liberalization, New Economic System inaugurated, limited decentralization; ● Decision of Politburo to found Halle Neustadt as City of Chemical Workers; ● Decision of Politburo to support development of sociological studies; October 15, 1964—Ousting of Khruschev; December 3, 1965—Suicide of Apel, Minister of Planning, partially out of fear of return to dependence on Soviet Union; December 18, 1965—Attack on Haveman, Heym, Bierman, at Central Committee meeting; ending of reform phase;

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April 6, 1968—New Constitution, including right to housing;8 August 21, 1968—Invasion of Czechoslovakia; 1969—Coalition of Social Democrats and Christian Democrats in the FRG, easing of tensions between the two Germanies; 1969—Publication of General Plan for Berlin; 1970—Beginning of Construction of Leninallee in Berlin, lined by massive industrialized housing complexes, reconstruction of the inner city of Leipzig. 4 1969–80. Quest for social legitimation. From the rise to power of Honecker to the VII Building Congress. Push for popularity by the SED. Priority to the production of consumer goods and the improvement of housing conditions, instead of investment in modernizing industry. Housing construction on the peripheries of cities, for economy and speed, and neglect of city centres. Relaxation of economic regional planning. Renewed growth of Berlin. October 7, 1969—Twentieth anniversary celebration of founding of GDR. Pointing with pride at new city centres; ● GDR formally recognized by the United States, other states; ● Funding cuts for construction of high-rises in city centres, e.g. Frankfurt/Oder; 1970—Strikes at Gdansk shipyards in Poland, formation of Solidarity; May 3, 1971—VIII Party Congress of the SED, election of Honecker to replace Ulbricht, pragmatic over rigid ideological goals. Priority to housing construction. 1971—Abandonment of New Economic Policy; conversion to state ownership of thousands more enterprises;9 May 29, 1973—Adoption of the goal of ‘solving the housing problem’ by 1990,10 followed by adoption of the Housing Construction Programme of October 2,1973, modified May 18–22, 1976, to solve the housing problem ‘as a social question.’11 ‘Housing construction instead of city building’; 1975—Decision to build Marzahn, Hellersdorf on largely open land at the edge of Berlin; 1976—Refusal to permit Wolf Bierman, critical singer, back into GDR; 1980—VII Building Conference, decision to give higher priority to modernization and preservation. 5 1980–9. Stagnation. From the VII Building Conference to the opening of the Wall. Slow stagnation of the economy, declining investment in modernization or in infrastructure, growing realization at all but top levels of the limits of quantitative growth policies, criticism of large city-fringe developments, and of inner city decay, generally growing dissatisfaction with housing and urban policies, but with limited real impact. 1981—X Party Congress of SED; intensive instead of extensive reproduction, including construction. Decision against Stage IV modernization, demolition. ● Declaration of Martial Law in Poland; May 29, 1982—Central Committee decision to give priority to rehabilitation over new construction;12 recognition of growing contradiction between housing and urban planning processes, but ineffective response;13

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1985—Experiments with prefabricated panel construction as in-fill in the inner city (Berlin); Election of Gorbachev as General Secretary of CPUSSR; October 7, 1989—Fortieth anniversary of the founding of the GDR; Gorbachev visit; Protests, suppressed by police; October 9, 1989—Massive street demonstrations in Leipzig; October 18, 1989—Resignation of Honecker, election of Egon Krenz Party Secretary; November 9, 1989—Opening of the Berlin Wall; November 13, 1989—Election of Hans Modrow as Minister-President; December, 1989—Resignation of Krenz; March 18, 1990—General elections, victory of the Christian Democratic Union. The importance of events outside the GDR to housing policies within the country, reflected in the nature of the key dates above, suggests where one should look for similarities and differences in GDR policies compared to those in other East European countries. The basic economic and political systems were similar during most of their history, and the dominance of the Soviet Union, both as economic and political power and as example, was clear in each. The GDR differed from its ‘brother countries’, however, in two important respects. It was the most technologically and industrially developed of all the East European countries, the only country approaching it in level of development being Czechoslovakia. And it had a neighbouring state, the FRG: capitalist, highly developed, supported by the United States and the other victorious capitalist powers, after the Second World War, representing three-quarters of what had been a single country, a neighbouring state willing to accept and provide support for any household wanting to leave the GDR. The competition with the FRG influenced virtually all acts of the GDR;14 the flight of some 3,173,74815 individuals from East Germany to West Germany between 1950 and the end of 1988, with over 300,000 more leaving in 1989 and 132,328 in 1990 before the elections, contributed dramatically to shortages of labour that characterized GDR development throughout. Ideologically, also, competition with the FRG played a critical role in the development of GDR housing policy, dominating all other considerations in the early years. GDR writings and speeches about housing are replete with references to how ‘competition between the two systems is mirrored in architecture and construction’,16 how construction should create cities that would be ‘a living testimony to the advantages of socialist city building and own social system’.17 As the Minister of Housing expressed it: housing should create conditions ‘which would solidify the pride of working people in their socialist nation and advance the development of their socialist way of life’.18 As in the rhetoric about the advantages of home ownership for the defence of the established system on the other side of the Great Divide, ideology and housing policy were constant companions in the GDR. We start with what should be one of the most basic of the common principles underlying housing policy in all countries calling themselves socialist: the forms of ownership.

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THE LEGAL STRUCTURE OF PRODUCTION, OWNERSHIP AND USE: AN OVERVIEW In Marxist theory the legal forms of ownership, the structure of property rights, are key characteristics of an economic system; they are created by, constrain, solidify, and channel the basic tendencies of the political structure. For a socialist system, social ownership of the means of production has always been considered a sine qua non,19 although the definition of ‘social’, and in particular whether state ownership is equivalent to social ownership,20 is a question increasingly under discussion. All agree, however, that private ownership of the means of production is inconsistent with a socialist economy. Ownership of property for personal use falls in a different category, however.21 It does not support the exploitation of labour in the process of production, and it may be appropriate to satisfy various personal needs. Just how far it is appropriate has long been a matter of debate among socialists. The experiments with collective kitchens, common living but not sleeping facilities, shared recreation space, gardens, etc., in the 1920s in the Soviet Union and Austria (as well as in ‘utopian’ communities in other countries) all testify to the attractions of sharing, making non-private, key items of personal consumption, but the short-lived character of attempts to implement such ideas testify to their difficulty, and in any event they played no significant role in the post-war GDR. Legally, the key distinctions were between socialist ownership, which included public ownership (Volkseigentum) and cooperative ownership, on the one hand, and, on the other hand, individual ownership, which included personal ownership, which was allowed, and ‘capitalist’ ownership, which was discouraged.22 As to housing, what ‘personal ownership’ should mean was a significant question. In the Soviet Union the house a family lives in is explicitly denominated personal property in the Constitution.23 In the GDR it is ‘housing serving personal needs’. The house a family lived in could be ‘owned’ by it for its own use; was that true, even if the space was much too large for the family, and ‘use’ of the excess was minimal? Could it be rented out to others? Could it be sold for a profit? Could it be inherited? If so, could the heirs sell it to others? The answer in the GDR was a combination of socialist logic and realistic pragmatism.24 Personal ownership, that is to say, ownership by the occupants of a house for their own use, was clearly permitted; no ideological difficulty there. The Constitution itself reflects the distinction between the means of production, to be socially owned, and personal property, which could be individually owned.25 But was such ownership ‘private’? The house could be inherited, and used by the heirs; it could only be sold or rented out, however, with the permission of the local authorities, and for a price subject to their approval—and held very low. If it was in public ownership, it could only be bought privately if it was a one-family house. If the unit was much too large for the owners’ own use, it could, in the immediate post-war years, be assigned to another household. In each of these cases, GDR practice was consistent with that of most East European countries after the war, and with that of the Soviet Union since the 1917 revolution. For clarification, we differentiate in this text between the following. Personal ownership means ownership of property for direct personal use, with limited rights of disposition, excluding profit. Private ownership means ownership for purposes of profit

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and other than for own use, however limited the possibilities of such profit may be. Cooperative ownership, thus, is not private ownership, in this discussion. It is conceptually a form of personal ownership, but is treated as a separate legal category here, in accordance with customary usage. Historically, the desire to eliminate all forms of capitalist ownership in the GDR was regularly balanced against the interference in efficient production that would result from untoward nationalization of property. In 1945 the Social Democratic Party, for instance, wished to nationalize much more of the economy than did the Communist Party.26 Immediately after the war only the property of war criminals and Nazi leaders was confiscated, and the major land reform of September 1945 took only holdings of more than 100 hectares.27 The proportion of individually owned units was reduced over the course of time not by transfer of existing units to social or cooperative ownership, but rather by the increasing percentage of all units publicly built or built by cooperatives. Single-family individually built units amounted to only 8% of all units built in the first half of the 1970s, climbed to 13% in the second half, but consistently ranked well below socially built units. As of 1981, 54.3% of all housing units28 were personally or privately owned.29 No good figure is available as to how many of these are single-family homes; the best estimate is approximately 30%.30 The figures are provided in Tables 10.1–10.3.

Table 10.1 Ownership (%)31 All units 1971 of which32 1–2 family Publicly owned Cooperative Personally/privately owned

Multiple family 1981

27.5

3.6

23.9

31.5

9.9

1.2

8.7

13.9

62.2

31.8

30.4

54.3

36.7

63.1

Total

Table 10.2 Tenure (%) Tenant

63.0

Subtenant

6.4

Cooperative

7.7

Owner-occupier

22.9

Table 10.3 Ownership and tenure (%) Publicly owned

34.7

Cooperative

16.6

Privately owned rental:

27.7

KWV administered Privately administered

6.9 20.8

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20.8

For 1989, consolidated figures are available, but as estimates.33 The most striking aspect of these figures is that, in an economy viewed as strongly socialist, only one-third of all units were publicly owned, one-sixth were cooperatives; the large bulk of all units were privately owned—and not single-family owner-occupied units either, but in multi-family buildings. Perhaps a third of all tenants, and a fifth of all residents, live in privately owned buildings with private landlords.34

PERSONAL OWNERSHIP (OWNER-OCCUPIED UNITS) Pragmatism and political necessities rather than economic ideology dictated policies towards new construction of personally owned units. Immediately after the war, subsidies were given to immigrants wanting to settle on land in the GDR, having been driven from their homelands elsewhere;35 both politics and the need to develop the agricultural economy dictated this help. At the same time, smaller farming households and later residents of collective and cooperative farms were given similar financial assistance.36 Subsequent changes in the attitudes towards ownership were produced more by non‘housing’ events than by any logical attempt to correct failed policies. A year after the uprising of 1953, a series of measures was initiated, and later extended, intended to promote home ownership as a way not only of marshalling private savings for housing, but also of increasing productivity, and, most important of all if least expressed, regaining and keeping the confidence of the population in its political rulers. These measures included: ● Permitting savings at interest for purposes of buying or building a house.37 ● Permitting the purchase of one home per household, either from the state or from other private owners. Occupants were given priority in purchasing; resale to others was permitted, but purchase of a home from the state was not permitted for anyone who already owned a home, and such purchases were allowed only in the form of unlimited rights to use, rather than transfers of legal title.38 ● Making land available to individuals who wished to build their own homes, without charge, for an unlimited period of time (although ‘ownership’ was not technically transferred), free of real property taxes for ten years, free of public controls over occupancy, but only where the employer offered help in terms of financial assistance, materials, or technical services.39 ● Providing help, after 1957, for farmers wishing to build their own homes, as part of the general attempt to prevent an exodus from the countryside to the cities.40 The change of regime in 1971 produced a change in housing policy also, one designed again to provide material incentives both for increased productivity41 and for support of the new regime. As part of an overall reorganization of the housing system, individual building for owner-occupancy was newly encouraged. Priority in support was given according to three quite different and partially inconsistent criteria: (1) social need (families with three or more children, young couples without places of their own, and those who could build their own homes and thus make units available for those with

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greatest social need); (2) families of workers and farmers belonging to farm cooperatives; and (3) those best able to succeed in building by themselves. Further reflecting the awkward mix of priorities, the use of prefabricated components was strongly encouraged; more than 50% of all individually built units were to be thus built.42 Detailed regulations were adopted covering locations (to be provided by local communities from publicly owned land, if no privately owned land was available), technical assistance, access to materials in short supply. Responsibility for implementation of the regulations, including the provision of materials, was decentralized to the localities43 in 1976.44 But decentralization never got off the ground. The responsibility for planning the production of materials was national, under the jurisdiction of the Ministry of Building. Local input in planning or building remained subordinate to necessarily bureaucratic and unnecessarily rigid national decisions. To increase the still very limited volume of home production resulting from these decisions (approximately 11% of all construction), permission was granted in 1978 for single-family home construction by publicly owned enterprises for non-predetermined owner-occupants. Localities were required to decide quickly on applications for sites and building permission, and then to make materials available to the extent necessary to implement their decisions. The policy succeeded: production of single-family units increased by almost 50% in 1979. The explanation for that fact may lie in economic, rather than social, pressures and policies, however. Most commentators believe enterprises entered the ‘speculative’ housing field not so much to contribute to easing the housing shortage as to ease their own difficulties in finding and keeping a suitable workforce, by putting themselves in the position of offering housing as a reward for productivity and loyalty.45 The disadvantage of the policy became clear the more it succeeded: single-family construction is expensive in terms of materials, land costs, infrastructure. By regulation attempts were made to encourage row house construction rather than free-standing individual houses; figures are not available as to the effects of that policy. This history of policy changes explains some, but not all, of the changes in levels of construction. Between 1945 and 1952, every possible form of construction was encouraged, given the absolute shortages. With the shift towards mass prefabricated construction in the early 1960s, the number of individually built units fell sharply. With the new policy orientation of 1971, it began to climb again. Table 10.4 gives the figures in detail, including the percentage of individual construction to total construction. Not policy decisions, but practical realities, dictated results: the availability of ‘Trummer’, salvaged materials left after war damage, made individual building relatively easier than state or mass building immediately after the war, and prejudices against the form could not realistically impede its use. When prejudices changed under the pressure of political protest, the shortage of materials rendered the new policies largely ineffective.

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Table 10.4 New housing construction Year

Cooperative

Private

Publicly owned

Total

1945

0

3.2

6.1

9.3

1946

0

3.2

6.1

9.3

1947

0

3.2

6.1

9.3

1948

0

3.2

6.1

9.3

1949

0

3.2

6.1

9.3

1950

0

3.2

6.1

9.3

1951

0

9

20

29

1952

0

10.8

11.8

22.6

1953

0

4.3

25

29.3

1954

0.5

3.9

27

31.4

1955

3.2

4.5

22

29.7

1956

4.9

4.9

21.5

31.3

1957

7.8

8.4

29.5

45.7

1958

14.7

8.9

26

49.6

1959

31.4

8.4

27.5

67.3

1960

40.6

5.8

25.5

71.9

1961

54.1

7.5

24

85.6

1962

50.7

6.1

23.3

80.1

1963

40.3

5.8

23.2

69.3

1964

30.5

3.5

35.3

69.3

1965

21

2.1

35.2

58.3

1966

15.5

2.8

35.1

53.4

1967

17

2.4

39.7

59.1

1968

15

2.1

44.8

61.9

1969

13.9

2

40.6

56.5

1970

13.6

2.3

49.9

65.8

1971

11.2

2.2

51.6

65

1972

19.6

2.4

47.6

69.6

1973

26.2

5.2

49.4

80.8

1974

31.6

9.5

47.2

88.3

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1975

36.7

11.2

48.1

96

1976

37.4

11.1

54.6

103.1

1977

40.5

11.8

54.5

106.8

1978

43.1

11.9

56.9

111.9

1979

37.3

17.8

62.2

117.3

1980

39.2

19

62

120.2

Source: Statistical Yearbooks of the GDR; Melzer (1983:86).

PRIVATE OWNERSHIP OF LAND AND RENTAL UNITS On questions of land ownership and ownership of multiple units of rental housing, the GDR differed significantly from the Soviet model. Land per se was never nationalized in the GDR. In the countryside, the bulk of the land was converted into cooperative ownership46 through the pressured collectivization of 1960, the nationalization of Grossgrundbesitzer land—those owning more than 100 hectares—and of war criminals; in the cities, only land or buildings belonging to war criminals, those who left the country, or to large owners, was nationalized. The bulk of land is still privately owned— no one knows just how much and the question is becoming an important one today. Under socialism, in theory, land should have no exchange value since it was not the product of human labour,47 and it was treated as such; that is, if publicly owned, it was put at the disposition of building enterprises without charge.48 Complete nationalization of land and housing was implemented not for ideological, but for very pragmatic, reasons: the hope that private owners would maintain their own buildings, invest in their repair, take responsibility for them, thus relieving the state of some of the burden at a point where its resources were already strained to deal with that part of the housing stock it could not avoid caring for directly. The disadvantages of the private ownership thus permitted were anticipated, and were to be dealt with by tight controls on rents, evictions, sales, and even occupancy. No expansion of private ownership was allowed, i.e. no building of private rental units. The shift to active encouragement of individual building in 1971 was accompanied by an explicit prohibition of the construction of rental units, as well as of individually owned units in multiple-unit structures; the logic was to prevent either unearned (not for labour expended) profits or distribution based on income or wealth in violation of the preference accorded workers and farmers.49 By the same token, the sale of land was kept under tight public control: any sale had to be approved by local authorities, who could impose such conditions as they thought necessary, including in particular limitations on the selling price.50 Land required for state purposes—and that included land required to fulfil the plan, e.g. on which to build housing—could be taken by the equivalent of eminent domain.51 Such takings are pursuant to Article 16 of the Constitution, and carried out under the Reconstruction Act of 1950.52 Compensation for takings was required under Article 23 of

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the Constitution, but the amount to be paid was of course not specified there. Article 26 of the Constitution, in classic socialist terms, provides: [Increases in the value of land] which arise without the investment of labor or capital [are] to be made available for the whole. The amount to be paid was intended to indemnify the owner because of the taking, that is to pay the owner what the owner would have received if he or she had sold the land. But since sales were strictly controlled, and the possibilities of profit from use almost nil, that was not a very high amount in comparison to what a private market would generally have provided. It was in fact generally based on historic pre-war prices.53 Further, it was not paid at once, but over a period of years, since the benefits of its use (and the consequent damages) were similarly spread over a period of years, payable at the rate of 3,000 marks per year, with interest at 4% on the unpaid balance.54 On the other hand, for single-family owner-occupied units of five rooms or less, if the owner possessed no other unit, he or she was entitled to a replacement unit, instead of compensation, with an appropriate monetary adjustment if values differed. Since real values could thus be maintained, this was a much preferred form of compensation for those entitled to it.55 A new form of land disposition was also developed: the transfer of the Right of Use (Nutzungsrecht).56 It could be given to cooperatives, social organizations (trade unions, youth organizations, etc.) or individuals for their own use. The transfer is made on condition that the transferee build on the land and use it in accordance with the purposes for which the Right of Use was given. The Right of Use can only be transferred by its owner to another who has no other housing unit, and for their own use; it can also be inherited. The Rights of Use were a particularly favoured means of stimulating personal investment in housing, for they served the express political purpose of highlighting the link between social ownership and individual personal use.57 Controls over the private profit-oriented use of buildings were just as tight. Rents were initially frozen in all of pre-war Germany in 1936, and the levels then established were maintained as ceilings in both parts of Germany immediately after the war. In the GDR they remained in force for units that existed before the war and have not been substantially modernized since then. Rental was undertaken directly by the local authorities, sale required their approval (see Allocation, below); in the early years, the authorities assigned households to units they considered under-occupied, and thereafter they exercised this right essentially only as to vacant apartments (those of Übersiedler, for instance). Evictions, whether for non-payment of rent or for nuisance or even for own occupancy, are permitted only if suitable alternative accommodation is provided; for all practical purposes, this means landlords have no control over occupancy and tenants have full security once they are legally in a unit. The combination of private ownership of rental units with rigid controls over the rental arrangements did not produce the desired result, however. Rent controls embody a permanent tension, and will tend always either towards progressive weakening and termination or to progressive strengthening and effective suspension of all conventional private landlord/tenant and property relationships. The latter has—till this year—been the case; private landlords have shown no interest in their properties other than to collect the

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minimal rents; and since investment could not produce a profit, rents could not be raised, buildings could not be profitably sold. Often landlords offered their buildings for no payment to communities and generally were turned down; the communities as well as the landlords saw ownership only as a burden, requiring investment but no financial return. Logically, the original policies, which have failed, should be changed: either private ownership should be ended, or it should be permitted to have an economic effect. No suggestions for change, however, were seriously discussed in recent years; ideological rigidity, plus the lack of an attractive alternative, have led to preservation of an unsatisfactory status quo. The new relationships with the FRG, however, and the apparent willingness to accept private foreign investment in other spheres, quickly began to produce interest by owners, absentee as well as in residence, to change the system. Modifications in the direction of liberalizing private ownership rights will undoubtedly come soon.

ROLE OF THE STATE The importance of the state’s role in housing lies not only in the manifold prerequisites for housing which it provides, as in all developed countries (roads, sewers, planning, services, utilities), not only in its widespread formal ownership (substantial, but not as great as in some other East European countries), and not only in its control over provision and allocation (see below), but also in its redirecting of national resources into housing from other areas of the economy, and perhaps from certain population groups to certain others. The figures show a comparatively high level of investment directed towards housing; considering consumer subsidies in the aggregate, broken down as they are in the official statistics, food got an annual subsidy, for 1989, of 32 billion marks, consumer goods 12 billion, and housing 16 billion.58 The level of subsidies can be determined from the following figures (we use the Plan figures for 1989, as representing the most realistic picture of policy decisions as of 1989; actual expenditures for the year will be distorted by the influence of the turmoil of the post-October months):59 ● Of the total of 9,658 million marks expected to be spent on new housing construction (exclusive of single-family owner-occupied homes) in the Plan for 1989, 39% was to be paid from outright grants from the state, 5,704 from loans, overwhelmingly from the state or state banks, and overwhelmingly at reduced interest rates. Further, 4,091 million marks in addition to the 9,658 million was allocated to payment of interest and amortization on current and past loans for housing construction. State grants were overwhelmingly used for infrastructure and site development, loans for the construction itself. Only 195 million, or 2% of all expenditures on new construction, was expected to come from users’ or owners’ own equity. ● New construction of single-family homes, by contrast, was expected to amount only to 1,180 million marks (9% of expenditures on new construction). None of this was to be subsidized, but 930 million of it was to be financed by state-provided loans and only 243 million marks (21%) by owner equity.

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● Modernization expenditures were expected to amount to 1,968 million marks, (20% of expenditures for new construction). Of that 613 million was to be directly subsidized (31%), 48% paid by owners (individual and coops), 21% financed by borrowing. ● Repairs were expected to cost 6,492 million marks, 67% of new construction investment, and of that amount 55% was to be paid directly by the state. ● Operating costs, not including amortization or interest or repairs, but including administration, utilities, and maintenance, were expected to be 7,643 million marks, of which 60% was expected to come directly out of the state budget. ● Of total expenditures for housing from all sources, expected to be 31,016 million marks in 1989, only 6,088 million, or 20%, was expected to come from occupants, including all rents and equity of owners. ● Rents from all tenants (of state, cooperative, and privately owned units) were expected to total 4,950 million marks. Total expenditures for operating costs and repairs (not including modernization) were expected to be 14,135 million marks. Thus rents were expected to cover only 35% of running costs of occupancy for tenants. If the cost of amortization and interest were to equal 50% of operating costs, rents would cover only 23% of total costs. ● In privately owned rental housing, state subsidies are substantial: they amount to 2,353 million marks for operating costs and repairs. Private contributions to these costs (presumably only rents, since landlords are not investing in private housing) amounted to only 2,265 million marks. Thus subsidies to private rental housing amount to 51% of what limited amounts are currently being expended on operating costs for such housing. ● Operating costs have climbed steeply in the recent past, even in as controlled an economy as that of the GDR, in large part because of increases in fuel costs. State subsidies increased from 1,600 million marks in 1980 to 4,265 million marks in 1989, an increase of 166%; subsidies for repairs increased 193%; but total rental payments in the same period increased only 29%.60 To phrase it differently: in 1980 rents equalled 58% of operating costs and repairs; in 1989, they equalled only 40%.61 ● The longer-term picture is even starker: operating cost subsidies increased 1,821% between 1971 and 1989; for repairs they increased by 728%. A case study recently undertaken for the Ministry of Finance shows the same pattern of heavy subsidy. For a typical newly constructed unit in Marzahn, in Berlin, one of the largest new developments in the country, assuming a 68 square metre apartment of three rooms built in 1980, the total rent, including utilities, would be 123.85 marks. Operating costs and repairs alone would cost, unsubsidized, 420 marks. A rent really covering costs, including amortization, direct infrastructure, but without any charge for interest, would be 848.75 marks. Thus the rent would cover only 29% of operating costs, and only 16% of total costs. The distributional impact of these subsidies is hard to unravel. Who benefits from housing policies has to do with who gets what housing, who pays directly and how much, for that housing, and who pays indirectly, and how much, for it. Who gets what housing is fairly easily answered: workers are preferred over non-workers, including white-collar workers; certain occupational groups are given special preferences (actors, literary personalities); and party members and government officials receive specially privileged housing.62 The incidence of taxation supports the same general direction of

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redistributional impact: level taxes, with industrial workers somewhat favoured over white-collar workers. Rents are uniform without regard to incomes. The overall redistributional impact of housing subsidies therefore seems slight, except to the extent of favouring the politically powerful and certain special groups.

THE PROVISION OF HOUSING: NEW CONSTRUCTION Housing construction policies clearly indicate the separate influence of the factors discussed at the outset of this chapter. The destruction of the existing housing stock caused by the bombing during the Second World War, together with the backlog of housing need resulting from the Nazi postponement of all attention to non-war-related domestic needs during the war, produced a critical housing shortage at the starting point of housing policy for the new socialist state that was established in 1949. The shortage was more critical than in Czechoslovakia, Hungary, or Yugoslavia, where damage from air raids was less, but proportionately comparable to that in the Soviet Union or in Poland, where on-the-ground fighting took a devastating toll. Western and eastern parts of Germany probably suffered comparable damage as a result of bombing during the war. Klaus von Beyme gives63 a list of German cities with the percentage of wartime damage; cities on both sides suffered major, and others minor, damage. Staemmler64 estimates that 10% of the housing stock was lost in the territory of the GDR, 18% in that of the FRG; other estimates are much higher, for both territories. But von Beyme states that losses from reparations exceeded all losses from bombing during the entire period of the war; reparations were overwhelmingly paid by (or taken from) the territory of the GDR, while the western sectors benefited from the Marshall Plan. Certainly the eight years immediately following the war produced a very different impact on thé economies of the two areas. In the West, what was originally the US, the British, and the French zones of occupation, the Marshall Plan provided, in credits and grants, over $21 billion dollars for the reconstruction of the economy of what became the Federal Republic of Germany; reparations paid, by contrast, were much smaller: 2,161,060,000 DM (1953 values). In the East, what was originally the Soviet Occupation Zone, reparations paid to the Soviet Union were estimated at 99,138,888,889 DM (1953 values).65 While housing units per se were not of course included in reparations, much of the industrial infrastructure, from steel rails to plant and machinery, were physically removed and shipped to the Soviet Union. The provision of an adequate supply of housing was thus made substantially more difficult. Such provision was not in any event a high priority in East Germany during either the existence of the Soviet Occupation Zone or, after 1949, the new German Democratic Republic. The overall history of housing construction shows a low priority for housing for the first decade or so after the war, in the periods of consolidation of power and of pressured economic growth; then a substantial increase in the period of the search for social legitimacy, beginning with the decision in 1971 to ‘solve the housing problem’ by 1990, with construction increasing year by year to 1980, and then a tapering off in the period of growing discontent, but with a sustained substantial pace till the October events

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of 1989. Until 1971 the five-year plans for housing construction regularly fell short of their goals; thereafter, according to the official statistics, they regularly exceeded them.66 Volume The figures show the trends in Table 10.5.

Table 10.5 Housing construction and investment67 Annual averages

Square metres68

New units

Investment69

1949–50

1,775

558

1951–5

2,556

2,366

1956–60

37,746

3,701

3,396

1961–5

72,538

4,339

3,966

1966–70

59,334

3,925

4,581

1971–5

75,917

5,520

7,237

1976–80

111,877

7,134

10,489

1981–5

122,613

7,448

11,798

1986–7

116,545

7,080

11,969

The plans for the years after 1990 called for a reduction in the pace of new construction and increasing attention to large-scale rehabilitation of older units, with less prefabricated panel construction for what was built new, and increasing support for cooperative forms of ownership.70 Location Socialism has long held conceptions of how a city should function that included a subordination of the commercial uses of downtown to cultural and civic uses, conceptions that suggest the appropriateness of residential uses in downtown areas even where they would in a market economy not be financially feasible. [Under socialism] there was an end to the idea that no housing should exist in the heart of the city. The producers in this way [through the placement of their housing] took over for themselves the centers of their cities.71 In contrast to the capitalist city, from which cultural uses are constantly displaced, the centers of the socialist city should become concentration points of social communication. Tying central-city functions in with housing located near the city center increases the liveliness of such centers.

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The implicit assumption behind this last point—that cultural uses of downtown would be facilitated by residential uses there—may be logically flawed72 and empirically hard to demonstrate, but it has the advantages of pragmatism: with shortages of consumer goods for sale, and weak tendencies towards concentration of tertiary services in downtowns, residential uses were often the only ones that could carry the kinds of construction of high-rise dominants that were a consistent goal of GDR city development policy. Thus in city after city, e.g. Berlin, Leipzig, Dresden, downtown high-rises planned for office use ended up being devoted to housing simply because housing had the allocations of resources required for that construction, and business enterprises did not.73 Further, with declining population and a declining economic base on which to draw, business uses of central city locations were not much in demand, even had the resources for their development been present. In the period of consolidation of power, ideological and political conceptions led to large-scale demolition of older housing and commercial areas in downtowns, and the location of significant investment in housing in their place. Strong, and classically socialist, provisions for condemnation through eminent domain facilitated such developments. But, as the SED’s power became established, economic forces became decisive. In the period of pressured economic growth, downtown rebuilding was expensive, and ambitious plans were regularly postponed or scaled down for lack of available financial resources. The adoption of the Housing Construction Programme in 1973 led to giant semiindependent housing developments typical of the Social Legitimation phase. Marzahn in Berlin, Grunau in Leipzig, the Fritz Heckert development in Karl-Marx-Stadt, HalleNeustadt, Gross-Klein outside of Rostock, are the best examples. In each case they were planned, although the plans were not in each case fully executed, with a full range of community services, facilities, stores, social infrastructure—all that was considered necessary for a well-developed socialist life. Tenure forms State enterprises, cooperatives, and individual builders for own use constitute the basic forms of housing construction in the GDR, as in most other East European countries. Unlike some, there is no private sector in construction for anything other than singlefamily homes. The basic mechanisms of state control over housing production operate at several levels: the comprehensive national plan determining the number of units to be produced and the availability of the resources—labour, materials—for their production, the regional and then local plans developed to implement the national plan; and the locally developed spatial plans for development. Negotiations between these two mechanisms then develop specific projects. In those negotiations, locally developed priorities generally came off second best, the obligations and powers provided for by the plans dictating which of the local priorities could and could not be implemented. For an overview of the distribution of new construction by tenure see Table 10.6.

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Table 10.6. New construction, by tenure74 State %

Cooperative %

Private %

1950

39

0

6175

1955

63

12

25

1961

29

66

5

1971

79

18

3

1980

45

45

10

Public Thus, in the public building sector the large building concerns (Baukombinate) built what the plan called for them to build, whether it was what was locally desired or not. Contrariwise, what was locally desired could only be built if it was provided for in the plan; the Kombinate had no incentive to depart from the plan’s goals. The emphasis on prefabricated construction reinforced the rigidity of the centralized planning system: even if a Kombinate had wanted to shift to individualized or concrete forms of construction, or do rehabilitation, it did not have the combination of resources necessary to do so. What it did not have for alternative forms of construction thus atrophied; by 1989, for instance, only one brick kiln was working in the entire GDR. Only in the five years 1958–63 did state construction fall below one-half of all new building, and substantially all of that, after 1963 never less than 80%, was in prefabricated construction. Cooperatives The typical cooperative in the GDR provides a limited-equity tenure, little different from publicly owned housing except in the requirement of an initial lump-sum payment (together with an investment of labour for which money may also be substituted), which is repaid when the occupant moves out, and a slightly lower current payment (not technically rent, but hardly distinguishable). Economically it might be called lump-sum rental housing. Its main advantage has been that, because it had a separate waiting list for units, one was likely to be able to get a unit more quickly than if one was on the waiting list for conventional publicly owned housing. Cooperatives were reintroduced on to the housing scene as part of the set of measures intended to remedy the conditions that gave rise to the 1953 revolts. They were seen as a way of supplementing existing state construction, rather than as an ideologically desirable form of ownership—although arguably limited-equity cooperatives represent a form of social ownership fully consistent with Marxist principles, and are forms of social, rather than individual, ownership, in official statistics and discussions in most socialist countries. Despite their origins in pragmatism and political pressures, there was hope that the legal form of cooperatives would prompt greater investment of resident time and money in the care and improvement of their own units, thus relieving the burden on the state.

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The unique feature of the GDR cooperative system in housing is its link to the workplace. Under the 1954 law,76 Workers’ Cooperatives77 could be established by certain enterprises (mainly larger industrial firms) as sponsors, with membership limited to their employees (and their immediate families after their death). Three objectives were to be thus achieved: the investment of enterprise funds into housing on behalf of the enterprise-sponsored cooperative; the support of that class politically considered the most important, industrial workers; and the creation of a stable core of cooperative members to undertake the work of the cooperative. Such Workers’ Cooperatives were strictly regulated, and required to adopt standard by-laws established by the state. They were entitled to request the allocation of building sites from the local authorities without payment, and were entitled to preferential terms on loans for construction. Larger estates, rather than small developments, were contemplated. Because the new statute was not widely used, in 1957 the range of enterprises entitled to act under it was broadened to include smaller firms, private firms, retail shops, and craftsmen, as well as governmental bodies and universities.78 A further goal of Workers’ Cooperatives, to establish a close physical connection between housing and workplace and reduce commuting time, was never realized, since the locations available for housing construction were primarily in outlying, unbuilt-up areas of cities and towns, and assigned almost without relation to the location of the workplaces of their future occupants. For a brief period between 1957 and 1961 the GDR flirted with support for an otherwise quite conventional form of cooperative housing: non-profit cooperatives formed by any group that desired to work together to provide housing, without regard to workplace. Non-profit housing, both as cooperatives and as non-profit corporations, had been a major player in the housing field in Germany before the war. But they were regarded as capitalist forms by the new GDR regim; their tax benefits were abolished, property taxes on their property were increased, mortgages even on war-damaged property were not forgiven, many units were nationalized. But in 1957 the pressures to increase housing production led to the support of non-profits that had been organized in cooperative form, and they were given the same benefits as Workers’ Cooperatives.79 In the four years between 1958 and 1961 the restructured non-profit cooperatives built, respectively, 6,900,19,400, 20,900, and 24,500 units, and in the last three of these years built more than the Workers’ Cooperatives.80 But in 1962 the productivity of the Workers’ Cooperatives increased sharply, and in 196781 the non-profit cooperatives were relegated to the management and, where possible, improvement of the substantial stock of units they already owned: some 330,000 units in 1970. The strong preference for workplace-related cooperatives is only explicable by reference to ideological rigidities, and to the advantages they offered for continued political control. Ideologically, the working class was the ruling class; its position within the relations of production defined its class character. Linking housing directly to that position thus ensured the priority of members of that class, and emphasized the basis within production of their position. The link is not entirely ideological; in fact, relations at work do undergird many aspects of life. A study by an outside observer found that, of all the many and complex organizational adherences required of the average dutiful citizen in the GDR, those based on relations at the workplace were the most meaningful (outside the family and perhaps the church).82 Similar findings exist for capitalist

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countries; the importance of the work-residence link is apparently systemindependent, although the manner and impact of its utilization in housing policy is very system dependent. But that system dependence is political, not economic. Economically, a residenceworkplace link ties a worker to his or her employer; that promotes loyalty and subservience, but impedes mobility, results presumably not ideologically desired in a socialist economy. But, in a politically centralized and undemocratic system, in which the workplace is centrally controlled, tying residence to work is a further method of insuring integration of the worker into the dominant, centralized system of rules. ‘Voluntary’ cooperatives, by contrast, are by definition independently formed, and could provide the basis for non-integrated voluntary organizations, organizations that could, if allowed free play, end up acting much as those organized with great difficulty in the recent past, e.g. as Neues Forum did, in opposition to the regime. Thus political concerns, perhaps even more than ideological predispositions, led to the downgrading of voluntary cooperatives in favour of workers’ cooperatives in the early 1960s in the GDR. The key element explaining the original attractiveness of those Workers’ Cooperatives was in fact not their inherent advantages but rather the disadvantages of the alternatives. They offered a way for households not otherwise entitled to social housing to improve their position. In the normal operation of the housing system, priorities were established strictly according to need. Thus, once a household got a minimally adequate unit, it had no chance to improve its situation. Minimal rents provided no incentive for ‘overhoused’ households to move from units too large for them; the shortage of housing meant that mobility outside the official needs-determined allocation system was virtually nonexistent. As a member of a cooperative, however, a person was entitled to a unit built by the cooperative based, not on need, but on time of becoming a member, work rendered for the cooperative, and a limited down payment. The hope of better housing, not of profit, motivated membership, for units could not be sold or rented by their ‘owners’ if they no longer needed them themselves; on moving out they simply received their original investment back. By the mid-1970s much of the attractiveness of cooperatives for their original intended users, young families, was lost, not so much because the cooperatives changed, but because the massive public housing construction lessened the need for the cooperative alternative. Since young families had priority claims to public units in the normal course of events, the three year wait they had to put up with was about the same in public as in cooperative units. Coops became proportionately more attractive for those not entitled to priority in the public system: single-person households, divorced people, and others who were low on the priority list of the allocation system but nevertheless had a strong desire to improve their housing. For others, the greater investment required in cooperatives was hardly offset by the slightly lower current costs, and produced no other significant advantages. The cooperative system produced significant numbers of housing units, but not as many as the regime desired. In the seven-year plan in the early 1960s a high point of 55% of all units constructed was reached; the plan had called for 62%. Not surprisingly, most members of cooperatives simply considered themselves as tenants, not ‘owners;’ the psychological impact of cooperative ownership was negligible. The force of the sponsoring enterprises often resulted in construction at locations not desired by local

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planners, and social concerns were largely ignored in the planning and allocation process. In the reform of 196383 tighter integration of cooperatives into local plans was provided, even in the knowledge that it would limit the actual number of units likely to be built. The concentration of construction on large developments, and their use to support industrial development, further reduced the potential of cooperatives, even though from 1960 the merger of smaller Workers’ Cooperatives into fewer larger ones was officially encouraged. Further changes in 197284 permitted the substitution of labour for cash as a member’s contribution to a cooperative, and broadened eligibility as well as tightened the relationship between enterprises and their sponsored cooperatives, but did not significantly change the volume of construction. In 1973 the entire set of regulations and amendments was recodified85 relations to local planning authorities were tightened, and, most important, social priorities similar to those established for the allocation of publicly built units (particularly preference for large families) were introduced, although the necessity for an enterprise to attract workers from out of town, and willingness to work and to pay for membership in the cooperative, continued to remain criteria for participation. The limits of the contribution cooperatives could make to new construction were essentially set by the limits of national resources in labour and materials available for housing, and the competing demands of public authorities and enterprises for those resources. As of 1960, Workers’ Cooperatives had built about 264,000 units; by 1985 684 cooperatives had some 600,000 units. In the period 1970–80 between 30% and 35% of all new units were built by cooperatives (see Table 10.4). More people wanted to join cooperatives as a way to obtain better housing than could be satisfied; it was not the legal forms that got in the way, but the absolute limits on material resources. Nevertheless, cooperatives in the GDR represented a missed opportunity. The relation of the member of the cooperative to his or her housing has been little different from that of the tenant in state-owned housing to his or her living accommodation. Neither was involved in planning, neither had effective control over maintenance, or tenancy, or the possibilities of improvement, neither had the sense of choice in how they lived or where they lived. The merger of smaller cooperatives into fewer giant ones made the formalities of membership control86 even remoter. Yet cooperatives offer a form of ‘socialization’ that indeed could have been different from mere ‘nationalization’. Before now, that would have involved a relaxation of central control, a relaxation the political system (rather than economic considerations) would not allow; today that situation is changing. In March, 1990, the 787 Non-profit and Workers’ Cooperatives joined in an Association of Housing Cooperatives of the GDR, representing a claimed membership of over 3,000,000 persons in 1,100,000 units administered by cooperatives with 12,000 employees, and currently producing about 45% of all newly constructed units. According to the Association’s announced plans, its members would in the future also build single-family homes for owner-occupancy, and become involved in rehabilitation as well as new construction.87 Private For the construction of private housing, formal controls were much simpler, and dealt primarily with the allocation of land. Private land could not be transferred without public

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consent. Before 1970, publicly owned land was not used for private construction. As of that year, as part of the policy of encouraging private construction for the builder’s own use, ‘rights of use’ could be given to individuals for public land, provided they complied with local priorities in what they did, could show that they had the capacity in fact to build, and did not own any other housing unit.88 The policy was effective; the proportion of all housing constructed privately rose from 3.5% in 1970 (it had of course been a third of all units in the immediate post-war period) to 15.8% in 1980. (See Table 10.4 above.) Rehabilitation Rehabilitation has long been one of the recognized weak spots of GDR housing policy, and many attribute the rise of the citizens’ movements and the October revolution in significant part to the deterioration of inner city housing in cities like Leipzig and Dresden. Neither during the period of consolidation of power nor the following period of pressured economic growth was rehabilitation a concern of housing policy. Old areas of cities were more likely to be seen as vestiges of old and undesirable eras than as historic legacies to be preserved, or even investments from which benefit could still be obtained. In the mid 1960s an experimental rehabilitation programme was carried out in Weißensee, a suburb of Berlin, and in a few other areas, but these remained isolated cases.89 The figures show the slow movement towards rehabilitation. Because the figures for modernization in the official statistics mix low, medium, and high levels of modernization in one pool, they can only be used as a rough indicator of the situation (Table 10.7).

Table 10.7 Modernization90 Modernization of all housing construction (%) 1960

10.7

1965

14.5

1970

13.5

1980

29.0

1985

43.1

1988

49.0

While these figures show substantial activity, the best current estimates are that somewhere near 25% of all inner city housing stock now requires rehabilitation. The net result may well have been a loss of units from the occupied stock year after year over perhaps fifteen years. Financing The financing of housing in a socialist economy logically plays a very different role than in a capitalist economy, but the differences seen between the GDR system and that of

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most Western countries are not entirely system dependent. That financing should not be the source of profit, undertaken for, and also limited by the possibilities of, monetary gain, is inherent in a socialist economy, and in fact is the situation in the GDR, as it is in other East European countries. But that housing should be built with state funds as to which interest is not calculated in accordance with economic accounting practices reflecting alternative use of resources, discount rates, the supply of money, etc., is not inherent in a socialist economy. The actual pattern in the GDR, reflecting the lack of direct orientation to profit and a partial but clearly incomplete consideration of the economics of resource utilization, was neither systematic nor systemic to socialism. Its weaknesses reflected the very real difficulties of integrating political with economic bases for decision-making which are systemic to a planned economy (as, indeed, in quite different ways they are to a market-based economy); but they also reflected in part the ideological rejection of the lessons of capitalist economics, whether relevant or not. Conventional discussions of financing housing in socialist countries are often very misleading. The figures summarized by the Deutsches Institut für Wirtschaftsforschung, for instance, are as follows in Table 10.8 (in billions of marks).91

Table 10.8 Financing 1970–5 State subsidies

1976–80 5.6

new construction

(5.0)

modernization

(0.6)

Credits

9.5

15.4

23.7

1.9

2.4

22.9

35.6

Occupant equity (new const. & mod.) Total

But by using basic categories derived from capitalist economies, and ignoring the connection between rent policy and financing, the concept ‘credit’ is given a meaning entirely inappropriate in an economic analysis. For ‘credits’, in the GDR, for example, are loans given by the state,92 repaid out of rents either with no interest or with below ‘market-rate’ interest, with amortization often over 200 years. Those rents are in turn artificially (that is to say, without regard to economic costs) held down by governmental action, the difference between economic rents and actual rents thus being subsidized by government. Thus state ‘credits’ were in effect repaid with state subsidies. As an example: in the financing prospectus for a typical cooperative apartment, construction costs are presented in a 1958 official brochure93 at 20,000 marks per unit, of which 8,000 is provided by government ‘loans’ with no interest, amortized at 0.5% a year (i.e. over 200 years), 9,000 by a loan with 2% interest, similarly amortized, and 3,000 of occupant down payment. The resulting rents, calculated according to ‘economic principles’ based on these terms, are then further adjusted according to the needs of the household, including factors such as number of children, age, and class position, and not changed regardless of changes in operating costs or repairs, etc. Thus the term ‘credit’ is

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largely a booking transaction between the central state ‘loaning’ agency and the local housing administrative agency, whose budget is also governmental. We have found no single example of a foreclosure based on failure to repay a loan, even though the extent of rent arrears in the GDR is an openly secret scandal. The category ‘credits’, thus, should be dropped from analysis of the financing of housing as it has been undertaken in the past in the GDR; only the distinction between ‘government’ and ‘occupant’ payment has economic reality. New construction has then overwhelmingly been financed directly by government. Private—better, as we use the term here, personal—investment has run at about 10% of public investment at least over the last twenty years, despite strenuous efforts by the state to encourage it.94 Encouragement for such occupant investment has shown the same attempt to mix ideological prescription with pragmatism that we have seen in other areas dealing with individual ownership and construction. In theory, until all could be guaranteed a socially acceptable minimum, none should use up scarce resources in obtaining substantially superior accommodation. At the same time, incentives had to be provided to encourage savings for investment in housing, and to provide material incentives for performance at work in one of the most important material areas, housing. To accomplish the second without violating the first, to provide incentives without promoting inequality, both the home ownership programmes and the cooperative programmes provided advantages for savers, but not in the form of substantially bigger or better homes, but in the form of homes more quickly acquired, and acquired in a somewhat superior form of tenure. While providing incentives for work performance was a goal running throughout the economy, encouraging savings has traditionally been a feature of housing policy, and was, out of necessity, in the GDR also. Even in the early days after the war, where an equal contribution in labour in clearing and reconstruction was asked from all, it was decided pragmatically to permit the substitution of money payments for labour. The same principal was, as we have seen, followed in the requirements for membership in cooperative housing associations in the 1970s. Finally, often overlooked in comparative discussions of costs, investments, and financing of housing in socialist countries is the fact that in some, the GDR included, land is not figured as a cost factor. However one considers the labour theory of value on the basis of which the cost of land is ignored, the result is to conceal a major element that is considered a cost in other countries’ calculations, and thus comparatively to understate the extent of state subsidy in the GDR.95 This subsidy is applied to all forms of housing construction and use, whether public ownership, cooperative, or personal—none pay for the land on which the housing is built.

PLANNING AND DECISION-MAKING Formal decision-making structures for housing, as for many other fields, look logical and democratic on paper, but the realities have tended to be very divergent from the forms. The guiding principle on paper, and in the speeches of government officials and party leaders, has been the unity of social and economic planning. In somewhat parallel fashion there has been the supposed unity of national and local planning. The reality has rather been the dominance of economic and national planning over other considerations. To

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some extent the problems in coordinating the two approaches are common to any government making claims to democracy: arguments about decentralization and the ‘economic productivity’ of housing investment have occupied the UN, the US, France, Great Britain, and the FRG repeatedly over the years. What differentiates the situation in the GDR from that in these other countries are the extent of the legal power of government, its concentration at the national level, and perhaps the unwillingness to recognize the discrepancy between theory and practice at many levels. The result in fact has been, in the GDR, a heavy dominance of economic over social, and central over local, concerns in the planning of housing, although with some floor of social considerations remaining as a result of systemic ideological convictions. Control over the production of building materials and the allocation of construction labour was vested in the Ministry of Construction. The Minister sat in the Council of Ministers, the highest administrative body in the government. The Council of Ministers set fundamental government policy. It, in turn, in legal theory, but certainly not in fact, was subject to the decisions of the Legislature; in fact, it has been subject to the decisions of the Central Committee of the Socialist Unity Party, and many governmental decrees, including key ones in the field of housing, have been issued jointly by the Central Committee and the Council of Ministers. The State Planning Commission, whose chair also sits in the Council of Ministers, was charged with developing the detailed plans which effectuated the Council’s decisions; those plans were binding on the State Building Enterprises (one for each of the fifteen regions, plus other local and specialized concerns) which undertook the actual construction of housing, as well as on the various state enterprises that provided the building materials, produced building equipment, did the site preparation, prepared the infrastructure, etc. Local authorities,96 however, gave out the contracts pursuant to which the regional State Building Enterprises did the actual construction. Thus localities, within the framework of the national plan, selected sites and decided on the details of construction, jointly with the State Building Enterprises. Those enterprises themselves were subject to the national plan; thus their flexibility in negotiating with local authorities was severely limited, and thus the scope of local decision-making is likewise severely limited. A municipality could not, for instance, decide it wished to use funds allocated to it for modernization rather than new construction, or to build with brick rather than concrete panels; the national plan allocated so many panels to specific regions, and so many (or so few) bricks, and what was planned had to be executed. While the plans themselves were presumably based on input from local authorities, the time span between initial suggestion and final execution ran into many years, and both initial decisions and intermediate changes could be made centrally without consent and even without consultation with local authorities.97 The theory spoke of the ‘twofold subordination’ of State Building Enterprises, i.e. to the central Ministry and to the local Council; in fact, the local Councils had minor influence, and negotiations were as likely to be between the Enterprise and the Ministry as between either and the local Council. Changes in these relationships were among the most frequently heard of local reform demands in the GDR after the October revolution. The relationships in theory are sufficiently complex as to be impenetrable through local democratic processes. Decentralization of planning decisions, the breaking up of the large and monopolistic State Enterprises, and direct citizen participation in decision-

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making at the local level were among the top reforms discussed after October. They are closely inter-related; a local decision to substitute steel frame and brick for concrete prefabricated panel units, for instance, requires the availability of bricks and steel, which in turn in the past always hinged on national decisions often made many years before consideration of a local project has even begun. In practice, that system proved a failure.

CONSTRUCTION TECHNOLOGY AND DESIGN In the early post-war years, few choices were available as to methods of construction or design. The debris of the destroyed had to be cleared before its replacements could be built, and in the process the components of the old had to be used to begin the construction of the new. But by 1949 attention could be paid to longer-range solutions to the pressing housing shortage. Following the model of the Soviet Union, and acting on the partially naive ideological faith in the potentials of technology, the commitment to industrialized building systems was made, and has been adhered to steadfastly since. Both the early decision and its steadfast implementation in the face of mounting criticism have solid economic foundations. As a way of building on a large scale quickly, industrialized construction indeed has advantages over customized techniques, although the quality of the result may not be as high. For a socialist society in which it is easy to overcome the problems of market aggregation necessary to achieve the economies of scale required for investment in industrialized construction to pay, problems which have aborted its development in capitalist countries, industrialized construction is indeed a good possibility. The investment then having been made, it makes economic, if not social, sense to utilize that investment as long as it is productive. The history in the GDR parallels the history in most East European countries in these regards, and not by accident. The evolution from conventional construction to block construction (small prefabricated units, less than a room wall long, without windows or doors installed, and plastered over on the exterior at the joints) to full prefabricated panel construction can be seen in Table 10.9.

Table 10.9 Construction techniques98 in % Conventional

Block

Panel

1950

100

0

0

1958

88

12

0

1961

49

46

5

1965

6

65

29

1970

5

45

50

1980

13

12

72

The two turning points in industrialized construction emerge clearly from the table. In 1960, for the first time, more than half of all housing was built with industrialized

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techniques. But the techniques were crude, and housing quality was not a priority. With the turn to consumption in the period of the quest for social legitimation, a sophistication in the use of panel construction also developed; by 1970 it was the dominant form of construction. WBS 70, the system developed in 1970, first fully implemented in 1972, permitted not only slab but also square and tower construction, a better treatment of corners, and was adaptable to commercial and community space uses also; by 1980 it constituted 60% of panel construction,99 53 square metres becoming the mandated average size of units. Many social aspects of industrialized construction were at first considered entirely positive. The large scale of construction which efficient industrialized techniques demanded also permitted planning on a large scale, the integration of traffic, and social, economic, and housing investment to maximize efficiency in each. The large scale further permitted an emphasis on collective facilities, which could be efficiently better provided on a large scale, and were considered more conducive to a socialist lifestyle than the privatized, individualized facilities which piecemeal development would foster. Aesthetic dogmas were revised, and the traditions of the Bauhaus, previously severely criticized as capitalist and decadent, were rehabilitated. And, finally, the uniformity of units in prefabricated housing supported the emphasis on equality which was important for the socialist ethos. Just as in the 1920s, ‘the similarity of the units and the facades should show the equality of the occupants’, as was written about the Hufeisensiedlung of Bruno Taut in Berlin.100 The ‘Wohntrabis’ of the 1960s had many social and political similarities with the ‘Wohnfords’ of the 1920s, although GDR authorities would not have concurred in the analogy, nor certainly in its implications. The criticisms of mass panel construction nevertheless accompanied the dominance of the form, at least until the 1980s. The quality of housing was after all a matter of political importance: In this period of sharpened class conflict between socialism and capitalism…[it is important to show] that only a socialist society is in a position to create a built environment which permits the allround development of the personality and the evolution of a truly social way of life.101 Thus the criticisms of the years around 1970, quite widespread among architects and sociologists,102 as well as among many users, were accepted by the Minister of Housing in 1973;103 but after the adoption of WBS 70 (and the planning of several large-scale new towns; see Location, above) little else was done to respond to these criticisms. As the extreme housing shortage began to be alleviated, the dissatisfaction with the monolithic new estates became more vocal. Part of the cause was aesthetic/social: the architectural literature, for instance, always uneasy about the limitations of industrialized construction, began to criticize it in earnest (and be allowed to do so) in the period of growing discontent: In the GDR, as in other countries that took up industrialized building, monotony became apparent, essentially determined by the schematic ordering of identical building and construction parts.104

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Harald Bodenschatz’s formulation is telling: The concrete facades (have come to) symbolize powerlessness against planning policies.105 While general issues of alienation are hard to demonstrate empirically, and often run counter to other findings of general satisfaction with units in new developments, the level of satisfaction is almost always lower with the social infrastructure than with the units themselves, and almost always lowest with location, particularly the problems of commuting to work. The resulting instability in the inner city workforce was a recognized problem; it grew as the proportion of the workforce employed in the tertiary sector grew.

THE USE OF HOUSING The GDR Constitution is often cited as providing that every household should be allocated a housing unit appropriate to its needs: In the GDR the satisfaction of the need for a housing unit has become a constitutionally guaranteed right of every citizen.106 The provision is indeed a strong one, exceptional in the concreteness with which obligations are imposed on the state. But the right to housing is limited in two classic directions, as the text of the constitutional provision makes clear: 1 Every citizen of the German Democratic Republic has the right to housing for himself and for his family corresponding to the possibilities of the social economy and the local conditions. The state is obligated to realize this right through the support of housing construction, the preservation of existing housing, and the public control of the just distribution of housing. 2 There is legal protection in case of eviction. 3 Every citizen has the right to the inviolability of his housing.107 The two limitations’ to the extent economically possible and to the extent locally feasible, reflect the two sides of housing provision whose separation (and, till very recently, the denial of whose separation, in the claim of the ‘unity of economic and social policy’) characterized GDR housing policy. On the one side is the national, centralized, system of production and rehabilitation of housing, including the production of materials and then the allocation both of labour and and materials; on the other side is the local allocation of newly built and existing units among claimants. These two sides of housing, systematically united in capitalist economies, in which the market’s classical function is the coordination of supply and demand, were separated in the economy of the GDR. The separation is reflected in the distribution of powers within the governmental structure: production is determined at the central level (although executed by enterprises nominally subjected to local influence), and allocation is

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determined by local bodies (although in broad terms subject to national influence). The major determinant of production is economic, both in the sense of coordination with total resource utilization and in the sense of serving the furthering of production. The major determinant of allocation is social, in the sense of setting priorities according to social needs. The demands of political rule, of course, heavily influenced both sets of determinant. The separation of production from allocation occurs for two reasons in the GDR. The first is system dependent: the ideological commitment of a socialist society to guarantee that the basic human needs of all its members are met. The constitutional provision quoted above reflects that commitment; it exists, on paper, in every society calling itself socialist. The number of units needing to be produced is thus determined simply by the population size and composition; no decision needs to be made as to who the prospective recipients are, in order to know whether or not more units are needed. Under capitalism, ‘effective’ demand, not demand per se, determines production; the prospective buyers of units to be built need to be known, by nature if not by name, before any unit is built. Not so, inherently, under socialism. But the separation of allocation from production serves an additional purpose in an authoritarian, centralized socialist state: it permits the key decisions to be kept at the central political level, and reinforces the domination of the apparatus that controls the use of resources. The control by the party leadership of the centrally planned economy was, until 1989, absolute; economic goals were central political goals. How much housing was built, in what sizes, by what methods, by whom, for how much, and in what places, were all determined centrally. Localities could then merely distribute what they were given; they could shuffle a predetermined number of units around from one person or group to another, but not determine the overall shape of the housing in their jurisdiction. Even in the extent of their shuffling around of units they were subordinated in major ways to central control; as we shall see, the allocation of units consigned to enterprises was outside of communal control, and the central power to establish priorities for occupancy was simply delegated to localities, revocable at the central will. Economic power=central power, social concerns=local concerns, in the political structure of the GDR over most of its history; the identity of social and economic policies of which Erich Honecker was so proud has been in reality the domination of economic over social goals, central political power over local democratic decision-making. Even within the allocation process, the ability of localities to decide on priorities as to who should be housed where was limited by central control of two major spheres: the direct consignment of jurisdiction of specified housing units to enterprises, and the setting of rents. We shall take up first the nationally established procedures affecting enterprise housing and rents, and then move on to those decisions as to priorities that localities could in fact make themselves. The regulation of rents For privately owned rental units, the policy of the GDR was never in any doubt: profit should not be made from the ownership of housing, period. Thus rents, frozen as of 1936 by the National Socialist regime,108 were kept at that level by the Soviet Occupation Administration,109 and thereafter by the GDR. No rent increases were allowed without the

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specific approval of the local housing administration. The results were rents in the range of 0.60 to 0.80 marks per square metre.110 For units that had been employer or non-profit owned prior to the war, the rents after the war were still lower, since these had been subsidized or written down in 1936. In 1967 the intersection of economic and social policy again showed the importance of stimulating production as an influence on housing policy: employers were permitted to reduce charges to residents of their housing who were also employees, while charging non-employees significantly more.111 In any event, for private owners of rental property the net result was at best a total loss of interest in any current improvement or even maintenance of their property, since no current profit or profit potential existed; at worst, for them, the policy amounted to what was called ‘cold socialization’, a situation where donation of the property to the state was in effect more advantageous than keeping it. The loss of any incentive for maintenance was a problem for tenants as well as landlords, and lead to a consideration of modification of the rules for existing private owners early among reform proposals. For new housing, which means public and cooperative housing, since new private rental housing was not permitted, rents had to be set otherwise. While economists in the GDR constantly argued that rents should be set at least to cover operating costs and depreciation,112 and occasionally official lip service was given to the concept, rents were in actuality always set politically to buttress the claim that socialism was guaranteeing the basic necessities of life for all. Thus for new housing they were set at levels equivalent to those of existing older housing, ranging from 0.60 marks per square metre in the smaller cities to 1.20 in East Berlin.113 The claims of such a policy were certainly politically important; the achievement of it through nominal rents was, however, only one of many options that could have been chosen.114 In each of the changes in rental policy put into effect during the first forty years of the GDR, the objective of achieving at least costcovering rents was spoken of but rejected in favour of only moderate and politically palatable changes. The moves in the direction of price reform, in particular in 1964–7, which attempted to make prices more realistically reflect market conditions, largely skipped over rents,115 with the exception noted below. In this sense housing has always had a privileged position in the GDR. The first change in rent policy was in 1966: rents for new construction were increased in general relation to building costs, resulting in an approximately 30% increase in the rents of newly constructed state housing over previous levels. Charges for hot water, for central heating, and for particular amenities in construction were also raised. The changes were part of an overall effort to reform the industrial price system, to institute a ‘Neues Okonomisches System’, and accompanied other changes in the calculation of costs for new construction.116 The change met much criticism, in part because its limited application only to units built after its effective date meant that households living across the street from one another in buildings built only a year apart and to identical standards might end up paying very different rents.117 To ameliorate hardships that were caused by the increases, rent allowances were given to low-income families with four or more children in 1967,118 the first instance of demand-side, occupant subsidies in GDR housing policy. The rent increases of 1966 were, in effect, withdrawn in 1972:119 flat rents were set for all units built since January 1, 1967, ranging from 0.80 to 0.90 marks per square metre in most of the GDR to 0.90–1.25 marks in Berlin; if rents before the new law were higher,

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they were lowered to this level, if they were lower before, they were not raised. Demandside considerations again played a role, but very crudely; the new rent reductions only affected households earning under 2,000 marks per month. Honecker’s election was in 1971, and the new rules were part of the key role he gave to housing policy in his overall strategy. Perhaps more interesting in long-range terms, occupant housing subsidies were increased in 1976, to provide that families with several children would receive subsidies sufficient to bring the proportion of their incomes devoted to rent down to 3%, as long as that income was within specified limits.120 This latter restriction was dropped in 1981, so that occupant subsidies, housing allowances, to bring rents down to 3% of income were payable for these groups regardless of the level of their income.121 Actual costs of operation of housing can perhaps best be estimated by looking at the rents for cooperative units, which in theory cover actual costs (bearing in mind earlier comments on absence of land costs and interest calculations). Since units were often in the same buildings as publicly owned units, and in any event were generally built in the same fashion to the same standards, costs should be comparable in both sectors. Sample figures suggest a rent of around 0.60 marks per square metre in most of the GDR, 0.85 marks in Berlin. Table122 gives the comprehensive breakdown. Noteworthy are: administrative costs are about 20% of total operating costs (Bewirtschaftungskosten+Verwaltungskoste+Repairs), perhaps twice as much as in developed capitalist countries, but not unconscionable, considering the absence of profit and the social goals expected to be pursued in addition to the Western ‘housing’ goals. The method of financing and the calculations as to repayment and interest have already been the subject of comment above. The relative meaninglessness of the differentiation among means of financing is shown by the fact that, to avoid different levels of rents for similar accommodation because of differences in building costs, a rent ceiling is set for cooperatives at the level of the rents for newly publicly built units. Cooperatives should in theory always have a lower rent because the occupant has already invested equity in the construction. But the ceiling may mean, for expensive projects,123 that rents do not cover costs. If that should happen, interest payments are simply reduced or amortization dispensed with.124 The relationship between rent levels and levels of subsidy is virtually impossible to ascertain, given the figures available. On the one hand, it would seem, from the above description of how rents were set in publicly owned and cooperative units, that most rents cover operating costs and some level of depreciation, and that subsidies cover land ‘costs’ and ‘interest’, neither of which are calculated at economic levels in the GDR. On the other hand, Erich Honecker proudly told the Central Committee of the SED, in 1975, that simply the operating costs plus reserves for maintenance and repairs for newly built or modernized units amounted to 3.00 marks per month, and that on the average occupants paid only 0.80 to 1.25 marks per month; thus the state subsidized, according to Honecker, two-thirds of the operating costs of such housing.125 The DIW tried to make some very crude calculations putting together figures from various sources, and suggests the operating costs may in fact be somewhat higher and subsidies slightly lower.126 Costs of heating, electricity, gas and water, and occasionally other services, are, however, customarily charged for separately in the GDR, and must be added to ‘rent’ in all of the foregoing discussion to get a gross rent figure. Almost none of these costs are

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separately metered or otherwise tracked to individual units; they are rather averaged over all units in a development. That has the clear result, acknowledged as undesirable, that incentives to reduce use, e.g. to save energy, are minimal. Shortages, rather than policy, lead to that result; as much separate metering as possible was to be installed as soon as the equipment and labour became available. In the meantime, however, utility costs are substantial; they amount on average to perhaps one-third of gross rent. The figures, in terms of percentage of income, are given in Statische Jahrbrücher der DDR127 The following conclusions seem warranted from the often contradictory figures that are available: ● Rents were extremely low in the GDR in relation to income, and have been declining rather steadily; they were, on average, 4.0% of income in 1960, 2.7% of income in 1980. ● Utilities and direct charges were a substantial and rising component of gross rent, going from 1.2% of income in 1960 to 1.6% in 1980. ● Construction costs were almost entirely paid for by the state in publicly owned housing, and subsidized up to 85% for cooperatives, whether the subsidies were called grants or credits or were simply provided in kind, as with land, capital, or labour. ● The level of total subsidy for new construction and for operating costs was almost identical, and has been over the last 30 years. Eliminating operating subsidies, thus, would in theory have doubled the amount of subsidy available for new construction. The allocation of units Market rents did not, for system-dependent reasons, play the allocative role in the assignment of housing units to individuals which they do under capitalism. Nor was there any experimentation with the use of rents to allocate housing according to preferences, such as might be possible even within a socialist system. Thus the administrative decisions establishing priorities for housing remained in a system of prolonged shortage, critical in determining who shall live in both existing and newly built or modernized units. The legislation providing for governmental control of housing allocation was sweeping, and covered the occupancy of units in public, cooperative, and private housing, as well as sales and transfers of private units.128 The requisitioning of units and their assignment by public authorities to those most in need was a characteristic feature of most war-devastated economies in the mid 1940s. Original provisions to that effect covered both East and West Germany.129 The public powers granted under them were, however, continued and in many ways expanded, as a matter of principle, by the GDR, and are not seen as temporary but rather as a desirable permanent part of a rational system of housing allocation. The original GDR legislation of 1955 provided for state allocation of all housing units, with a few minor exceptions; the somewhat more flexible legislation of 1967 simply made it the responsibility of the local communities to provide for a proper distribution of housing units, and gave them the authority to do so.130 Housing commissions were created in each community, made up of public members serving without compensation, appointed at the suggestion of political parties and popular organizations and enterprises. They advised as to the disposition of units. A formal department of local government made the final decision. It had the power to allocate

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newly built units, to evict and relocate residents, and to allocate units becoming vacant. Its powers covered not only publicly owned units, but private ones as well. The housing office also issued leases for units; it could void existing leases and grant new ones according to its own established criteria. City councils, at least since 1967, have considerable flexibility in establishing such criteria. General priorities for allocation were provided in the national legislation. They included: ● the urgency of housing need, by economic, social, and societal standards; ● the suitability of housing becoming available, allocating housing by unit size, condition, and household composition; ● meeting statutory goals for particular population groups. Among the enumerated population groups are: ● Members of the working class ● Those working on shifts ● Young married couples ● Families with more than two children ● The handicapped.131 Much scope was allowed local authorities in applying these categories, supplementing them with others, etc.132 Leipzig, for instance, by vote of its City Council, adopted the following priorities: ● Solving the housing problems of working class households, particularly those employed in designated key enterprises; ● Providing relocation housing for those living in condemned units; ● Improving the housing of families with several children in inadequate housing; ● Providing for young couples and families; ● Providing for the elderly or those in ill health; ● Relocating those living where new construction or reconstruction is planned.133 The appropriateness of particular units to particular households was determined by relationship to fixed standards, which again were spelled out locally. For Leipzig, for instance, the following were in effect: ●

1 person

1 room

●

2–3 persons

2 rooms

●

3–4 persons

2–3 rooms

●

4–5 persons

3–4 rooms

●

5+ persons

4+ rooms.134

These procedures were, with some notable exceptions, essentially rational and socially just, by most standards. Some results were unplanned: the priority for young families, for instance, resulted in singles constituting 60–70% of those on waiting lists. And the procedures of course did nothing to reduce the overall shortage; in 1989 750,000 households had pending applications for units. The most important point, and one

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characteristic of socialist systems, is that income and wealth did not play any role in the allocation of units. For that to be true, of course, rent levels did not play a significant role in allocating housing, and, as we shall see, they did not in the GDR. Therefore a different system, not relying on the market for allocation, was essential, not optional; its existence is system dependent. But just how non-market allocations were to be carried out was not determined by the system itself. Here the dominating ideological commitment to economic growth, to stimulating production, was evident. The first of Leipzig’s priorities went to ‘supported enterprises’;135 the urgency of housing needs is measured by a person’s economic as well as social role. The preference of ‘working class household’, however, is political, not economic; it reflects the ideology that the domination of the SED rests on the power of the working class which it leads. Further, a crudeness in the criteria is evident, perhaps a survival of the early days of desperate shortage when the differences, e.g. between a large and a small three room unit, were relatively unimportant. But today, the fact that the regulations permit the authorities to assign units by room size rather than square metres, and equate well-furnished up-to-date units with older less well-furnished or run-down units, gave, in practice, a wide range of discretion to local authorities, and was hard to defend. Improving these criteria was high on the early housing reform agendas. Certainly the outstanding exception to the use of social criteria for allocation was the treatment of Sonderbedarfsträger, those with ‘special housing needs’. The category was a purely political one. It included some relatively harmless groups of actors, musicians, athletes, whom the GDR was very concerned to keep satisfied. But it also included members of the party and the state bureaucracy, leaders of key organizations whose support was necessary to the regime (trade unions, women, youth), leaders of the armed services, the security police. Generally these key groups received the best of the new housing, in separate buildings although not in separate neighbourhoods. These were among the privileges of the nomenklatura that came under heavy attack in the fall of 1989, as in the case of Wandlitz, the one-family-house walled quarter of the top SED leadership. Because rents are so low across the board, the misallocation problem so common throughout all large social housing systems was particularly acute in the GDR. A household, allocated five rooms while their three children were young and grandmother was still living with them, kept their apartment after grandmother died and the children moved out. Theoretically the state had the right to take their unit and relocate them elsewhere, or to assign another household to share their unit. In practice, neither of these options could be entertained without severe resistance, and they were virtually dead letters. Housing exchanges are the only institutionalized way in which individual preferences for housing could find expression. Such exchanges were handled through advertisements, often placed in local papers, posted on bulletin boards, or otherwise circulated; and also by listing in the office of the local housing administration agency. Many communities had computerized exchange listing services. A family might have found a partner for a trade because each had a preference for the other’s location, or because a larger apartment up more flights of stairs was traded for a smaller one lower down, or better located; thus size, location, condition, room lay-out, could all be adjusted to individual preferences. Such exchanges needed to be officially approved, but as long as significant

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new misallocation neither resulted nor gross unfairness appears, exchanges were routinely approved.136

MANAGEMENT AND MAINTENANCE The system for the management and maintenance of housing looks both logical and fair, on paper. The largest chunk of rental housing, including much privately owned and some state-financed owner-occupied units, were managed by KWVs (Komunale Wohnungs Verwaltungen, or Communal Housing Administrations). The KWVs allocated units, collected rents, did repairs, approved exchanges and sales, provided supplies and skilled labour for occupants’ improvements, and laid out the guidelines for how much and what kind of new housing was required approximately where. While KWVs were municipal agencies, they had branch offices at the neighbourhood level. Between the individual tenant and the KWV was a set of representative bodies that provided, on paper, for a democratic and user-oriented housing administration. Each rental building was supposed to have a building committee, Hausgemeinschaft (HG) with a steering committee. The HG could decide if it wished to do routine maintenance of its building itself, in which case it was paid by the KWV for its work, or it could choose not to do so, in which case the effective rent was slightly higher. The same options existed with the maintenance of outside spaces, shrubs, flower gardens, etc., but the administrative entity here responsible was the local Garden Administration. The HGs jointly formed a Neighborhood Committee, Wohnbezirksauschuss (WBA), which was responsible for the allocation of building supplies and workers from the skilled trades for those needing repairs or wishing to make improvements in their buildings—both of which needed the prior approval of the HG. The system, despite its apparent rationality, was a constant source of irritation to many residents in the GDR; few had a good word to say about the KWVs or the WBAs. They were not responsive, were bureaucratic, prone to political influence and/or bribery, wasteful, unimaginative, ineffective. The problem was twofold. The first part was shortage of materials and of labour. Long waits were customary for almost anything, from three weeks for a plumber to fix a leak (although emergencies seemed to be handled promptly) to years for materials to renovate an old unit. The second part was political: WBAs were organized by the National Front, the coalition of political parties and ‘mass organizations’ that the SED used as part of its network of influence and control, and thus decision-making procedures were often obscure and perceived as biased. Whether, apart from these two critical conditions, the bureaucratic implications of the system would have lead to similar criticisms, or whether it could have developed as a fair method of dealing with problems earning the confidence of those affected, is impossible to tell. The physical impact of shortages in maintenance is everywhere to be seen: peeling stucco, unpainted exteriors, broken roof tiles, missing gutters, crumbling steps, a general sense of shabbiness and decay. It is worse in the smaller cities, particularly bad in larger unprivileged cities like Leipzig, better in the privileged ones like Berlin or Rostock. With rents covering less than one-third the cost of routine maintenance residents had no financial, but only a political, claim to adequate levels of maintenance and repairs, and

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the lack of local democratic participation in public decision-making left them at the mercy of other priorities.

THE LINK BETWEEN HOUSING AND PRODUCING ENTERPRISES In each of the first three periods of GDR housing history, housing policy played second fiddle to economic growth. Even thereafter, speech after speech of Honecker’s and of his Minister of Housing, Wolfgang Junker, stressed the contribution good housing should make to stimulating productivity.137 A tight and direct link between housing and producing enterprises in fact characterized housing policy throughout the history of the GDR. Whether such a policy is (1) a necessary system-independent attribute of sensible planning in a complex industrialized economy, (2) a system-dependent accompaniment of socialist goals and power relationships, including the priority accorded members of the industrial working class, (3) a result of international pressures to expand production, or (4) comes from an isolated political hierarchy’s attempt to maintain its independent power, is debatable; all four factors seem to have played a role. The policy was more starkly articulated and executed in all the socialist countries,138 and perhaps most of all in the GDR than in capitalist ones. The priority accorded industrial workers in the allocation of housing fits in well with the policy. Priority to industrial production marked GDR housing policy from the very outset. The cities to whose rebuilding first attention was given were the industrial centres of the country.139 The Reconstruction Law (Aufbaugesetz) of 1950 gave priority to the largest industrial cities: Berlin, Leipzig, Dresden, Magdeburg, Karl-Marx-Stadt, Dessau, Rostock, Wismar,140 Nordhausen. New cities (Hoyerswerda, Eisenhuttenstadt, Schwedt/Oder, Stalle-Neustadt) were founded to support industrial development; they also received priority in housing construction. With the new economic policy of 1963, however,141 the use of housing as an ‘economic lever’ to stimulate production, in lieu of the prior rigid administrative rules, was strengthened. Although no exact figures for the proportion of units built as enterprise housing are available, estimates are that in the early 1960s 40%, and in the late 1960s 45%, of all new housing was provided directly by or for enterprises for their workers.142 In addition, the Workers, Housing Cooperatives, units were also connected to their members’ employment. Enterprises also had a priority claim on the allocation of housing units becoming available, under the allocation system described earlier. Its specific purpose was to facilitate the meeting of national planning goals;143 it was not part of a policy to distribute housing according to need. Socialists having long criticized employer housing as a form of further exploitation of workers, tying them to their employer and weakening their ability to fight exploitation, the equivalent policies under socialism had to be distinguished away. The rationale given was that workers under socialism could not be evicted even from an enterprise-bound unit without a replacement unit being provided144—and that, in any event, workers were not exploited under socialism.145 There may be other differences, however. From the outset,146 enterprises were not allowed to profit from the rental of units assigned to them; any excess of rents over costs had to be

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used for the better maintenance or improvement of the housing itself. Further, the state determined which enterprises could provide housing; it was not an option of the enterprise. For some of these reasons, the interest of enterprises in housing was strong on the first allocation of a unit, but their interest in subsequent management, which very often was for tenants no longer with the employer, was never very strong. The selection of eligible enterprises is interesting:147 Enterprises of Special Importance (Schwerpunktbetriebe), the Ministry of National Defence, the Ministry of State Security, and the Ministry of Internal Affairs. Economic priorities and political domination determined the selection, not housing need criteria. These preferred enterprises were entitled both to participate in the use of a special housing construction fund, and to get priority allocation of units from the local housing departments.

THE POLITICAL USES OF HOUSING The direct connection between housing policy and political power in the GDR hardly needs emphasis. From the instrumentalization of architecture to provide support for a politically desired GDR national identity, to the insistence on development of forms of housing conspicuously other than those of the FRG, to the ups and downs of official aesthetics, to the adoption of the Housing Construction programme as a centrepiece of the quest for social legitimation of the Honecker regime, housing in the GDR has regularly been the tail on the political dog. As Staemmler formulates it: …social policy, which is to say almost exclusively housing policy, was adopted in order to counteract the failing identification of the people of the GDR with the policies of the SED.148 But one general aspect of the politics/housing nexus is worth spelling out separately: the ‘socialist way of living’, and how housing contributes to it. The concept of a socialist way of living is somewhat nebulous. There are a number of official formulations; typical might be: The responsibility of the architect in the GDR is to provide for the spatial organization of the socialist way of life, to stimulate its further development through his work, and to reflect the socialist picture of humanity through the particular means of architecture.149 Fred Staufenbiel has gathered a number of definitions in the series of sociological studies he organized at Weimar; the formulations he presents are inconsistent and in large parts empty, but a kernel of what was later called ‘solidarity’ emerges from them as perhaps the central theme. The evidence suggests, however, that housing policy did not help significantly in achieving that goal.150 Equality, integration, is one of the components of the social policy aspect of GDR housing that has, however, been largely successful. One author formulates it:

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The social policy of the party and the state, with the housing construction programme as its centrepiece, has contributed to the equalization of the living conditions of all classes and strata of society…151 The impact on the lives of women has also been noticeable. The often voiced emphasis on the equal rights of women has led to an insistence on the provision of day care and children’s facilities as an accompaniment of housing development that has been implemented even where resources for other infrastructure and facilities ran out; the standards set and implemented are on a high level.152 Economic pressures led in the same direction; the GDR had an exceptionally high percentage of women in its labour force which virtually demanded a corresponding attention to child care. The emphasis on the family, in so many of the official statements on housing, and in particular the family as a buttress of the prevailing order, suggests that in addition to an abstract commitment to equality, an instrumentalization of housing to maintain an existing economic and political order was involved.153

THE RESULTS The numbers As we have seen (above, under New Construction) the housing stock of the GDR was in slightly better condition than that of the FRG at the end of the war, the economy in worse condition. With that in mind, the results in the GDR can be compared with those in the FRG (Table 10.10).

Table 10.10 New construction and modernization, annual averages units, FRG

units, GDR

sq. metres, FRG

1966–70

490,780

72,796

40,279

1971–5

581,161

121,733

51,189

1976–80

379,695

162,625

38,898

Since the population of the FRG was at least three times the population of the GDR throughout these years, the per capita construction plus modernization (but see note on the definitions of modernization below) in the GDR surpassed that of the FRG by the late 1970s, despite all of the relative handicaps described above. Table 10.11 gives the per capita figures.

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Table 10.11 Units built per 1,000 population, GDR and FRG154 GDR

FRG

1950

1.7

7.4

1956

1.9

11.2

1961

5.4

10.1

1971

5.1

9.1

1975

8.4

7.1

To interpret these figures properly: in new construction, measured in units built per person, the GDR started at a much lower volume of construction, but surpassed the FRG by 1976. Because units were smaller, however, the GDR was at only 70% of the FRG; in number of square metres built per person, fixtures, equipment, and quality were significantly lower.155 The net result was as follows (Table 10.12).

Table 10.12 Existing units per 1,000 persons156 1949

270

1970

355

1981

393

1985

410

1986

415

1987

418

1989

422

The ratios for 1981 were still significantly below Sweden, the FRG, and Austria, but slightly higher than the United States and Great Britain, and significantly higher than Czechoslovakia, Bulgaria, or Poland. Those figures do not, of course, reflect quality, nor size of units. In the latter, the GDR is comparatively not as well off; the figure for square metres per unit is 62, compared to 99 in Sweden, 99 in the FRG, 96 in Austria, 76 in Czechoslovakia, 68 in Poland. That difference is, however, complicated by the different percentages of single-family homes, as a rule substantially larger than apartments: 53% in Sweden, 60% in the FRG, 45% in Austria, 26% in Czechoslovakia, 47% in Poland, only 14% in the GDR.157 Within these gross figures a number of trends were important. One was the very slow trend towards units with larger numbers of rooms (Table 10.13).

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Table 10.13 Rooms per unit, new construction158 1

2

3

4

5+

1970

11

37

33

13

6

1980

8

33

37

15

7

1987

8

31

38

16

7

Differences in rooms per unit are significant within single cities. In Berlin, for instance, in the newly built Marzahn development, units have more rooms (average 2.68) than in the old neighbourhood of Prenzlauer Berg (2.08), but the density of occupancy is substantially higher (only 23.9 square metres per person, compared to 34.5).159 That reflects the ability to apply public standards in Marzahn, both in construction and in assignment of units by need, and the corresponding inability to do so in existing neighbourhoods. Quality of units still leaves much to be desired (Table 10.14).

Table 10.14 Quality of units160 in % of all units Bath or shower

Interior WC

1971

39

39

1981

68

60

1985

74

68

1989

79

72

The comparable figures for the FRG, in 1985, were 90% and 94%.161 Among cities within the GDR there are comparable differences; Rostock in 1989, for instance, had 81% and 81%, Dresden 72% and 58%.162

EVALUATION OF INDIVIDUAL POLICIES Comparative statistics suggesting the ‘accomplishments’ or ‘failures’ of a given set of housing policies are of limited uses, because their circumstances are so varied and the inter-relationship of policies so complex. This is particularly true if comparisons among different countries are involved. A relative judgement might be more useful: the level of satisfaction in each country with its housing provision, a level which presumably is based on quite different expectations in each country but reflects accurately what citizens think their housing system has achieved in comparison with what they, in their particular circumstances, think it should achieve. For the GDR that comparison is of course coloured by the neighbouring presence of the FRG as an alternative standard, providing perhaps a higher level of expectation than would otherwise exist. Evaluation, therefore, may be useful primarily to indicate the areas of satisfaction and the areas of dissatisfaction. The available evidence may be summarized as follows:

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● The low level of rents was widely felt to be a major advantage of the system. Erich Honecker considered it one of the greatest accomplishments of socialism in the colours of the GDR, and even today reformers convinced that rents should reflect economic costs tread very carefully with suggestions for increasing them. ● Housing had a relatively preferred position among consumer goods, along with essential foodstuffs (bread, milk), in terms of price subsidies; in part this was at the expense of exceptionally high prices for ‘luxury’ goods such as consumer electronics. ● The low level of rents did not result in a net satisfaction with housing conditions, however. Housing problems ranked high in most opposition political platforms and in sociological studies and questionnaires. As a minor indicator of dissatisfaction, the level of arrearage of rents is now widely assumed to be rising; while it was formerly blamed on ‘insufficient socialist consciousness’,163 and was not counteracted by any danger of eviction or suit, its increase probably has more to do with dissatisfaction than with either morality or ability to pay. ● Of all aspects of the housing supply that were referred to as problems, unit size stands out. In housing exchange efforts, moving to a larger apartment is consistently what is most desired; in return, worse equipment, poorer locations, older buildings, higher rents are all acceptable.164 A study of cooperative housing residents in Gera165 suggests that the official guidelines, cited earlier in this chapter, understate the desires of residents by almost exactly one room in each category. ● The use of pre-cast panel industrialized construction in large monolithic estates at the fringe of towns has led to widespread dissatisfaction and feelings of alienation; even older, less well-equipped units in historically grown neighbourhoods result in more feelings of being at home, and generally of resident satisfaction. Desires for singlefamily homes are strong, although sometimes expressed as, and often confused with, desires for home ownership.166 Studies of nine different cities in the GDR, done over a period of years by students under Fred Staufenbiel at the HAB in Weimar, document these feelings.167 ● The construction programmes have achieved significant results: 7,100,000 units are now, according to official statistics, available for 6,600,000 households, giving a ratio of 422 units per 1,000 persons in 1989.

THE REFORM DISCUSSIONS Housing and urban issues were critical components of the reform discussions after the downfall of Honecker. Community-based citizens’ movements provided much of the initial basis for the Octobe 1989 changes; bad housing conditions in Leipzig, in the eroding inner city as well as in the large bleak new prefab developments on the outskirts,168 are part of the explanation of why the demonstrations began and gained such strength in that city. In many other fields, the advantages of the Western-style market economy were very alluring; in housing and urban developments doubts were more frequent. Many in the GDR doubted that the new market-based forces would provide the solutions they sought. A Peoples’ Building Conference in early January in Leipzig was still largely devoted to flaying the old building concerns, the Kombinate, the abjectly dependent local officials, the spineless city council. Few new concrete proposals came

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out of it; its most immediate effect was to stop further construction of some new panelized units, but without decisions on alternatives. But at the same time serious consideration was already being given at the national level to the hard details of possible alternative policies.169 Two issues stand out: the sale of publicly owned land, and rent reform. The sale of land early on posed a visible threat. Speculators in the West bought up claims by dispossessed or uninterested Westerners to East German property as quickly as they could, claims that were considered worthless before October. Cars with FRG licence plates cruised residential areas photographing houses for potential investors. The West German Real Estate Association warned its members against using straw men to buy East German property; the law prohibited unauthorized sales to non-citizens, but everyone knew it to be prevalent. In the central cities, the pressure from Western interests became powerful. Banks, advertising agencies, law offices, technical experts of all sorts, the tertiary business services sector, are all looking for space; most cities have developed catalogues of offers, and are just waiting for legal clarification before selling off property as fast as they can. The possibilities are immense; the party’s planning for inner city development always out-ran its resources, so that large prime empty spaces remain everywhere in the center of towns. In Leipzig, for example, public firms interested in paying for the eight high-rises that were to ring the city centre were never found; only one was ever built, and that as social housing, not the planned use for the space. Now, the economically effective demand is growing. Leipzigers are taking notice. So are Berliners: the cruising Western cars do not go unnoticed. On the Baltic shore summer places to rent are already hard to find. Foreign firms have explicitly demanded the right to own property. Land is taken as one of the few things former GDR firms and cities have to offer to joint ventures from the West. The opposition to these threats is still focused exclusively on the issue of ‘sale’, the dominant defensive thought is only to allow Erbpacht, essentially ninety-nine year leases. That such leases can lead to all of the damage that sale could produce, that the market pressures they can generate can subvert public planning goals just as much as sales can, is not understood. Many fear that in negotiations with Western buyers people from the GDR will be as babes in the woods. As to rent reform, the issues are clearer, and people can visualize dangers much more readily. When letters from an absentee landlord arrived at one building in Berlin, a tenants’ association was formed in quick response. A city-wide tenants’ union followed shortly thereafter, and a national union was thereafter formed. At the Berlin founding meeting, single-family owner-occupants threatened with claims of former property owners from the West, claiming their ownership survived an ‘illegal’ nationalization of many properties in the late 1940s and early 1950s, asked to have their concerns included in the tenants’ union statement; they were turned down by a divided vote, on the grounds that tenants were tenants, owners were owners. The pattern is familiar, and the implications also. In the election campaign in March 1990 all the parties promised that owners would be protected against pre-nationalization claims. None of the parties made an issue of protecting public ownership of multi-family houses from such claims. When that becomes a hot issue, as it undoubtedly will, it may be too late to form the coalition that would be needed to protect both tenants and owner occupants.

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There is general agreement that, regardless of how private absentee owners are handled, some reform of the rental system in municipally administered housing is necessary. Subsidies in general, including rents, need restructuring. Bread was so heavily subsidized that it was cheaper than the grain with which it was baked; farmers fed it to their pigs (the stories are) for economy. Television sets, on the other hand, cost far more than their Western competition. And rents only covered a fraction of the costs of maintenance and operation of housing. All this was because prices were administratively fixed, with political goals: everyone should be able to afford bread and housing, television is a luxury. As integration with the West proceeds, prices will inevitably be restructured. Prices for children’s clothing were already raised at the beginning of the year, with a corresponding increase in the allowance paid parents for children (Kindergeld); new price increases were similarly to be matched by increases in pensions, Kindergeld, disability payments, etc. Initially, in the spring of 1990, the thought was that rents could similarly be raised, with housing allowances to offset the increases. Work had started on some necessary underlying calculations; they showed (see above) that rents for a typical newer unit would have to be increased 3.4 times to cover only operating costs, and 6.9 times to cover all costs including amortization but without interest. But protests were so strong, and the arguments of housing professionals that rents were no simple commodity-subsidy question like bread (rents only remotely affect supply, monopoly affects prices, flat per square metre prices do not reflect values, units are misallocated, ownership pros and cons have to be considered) were so insistent, that rent reform has been shelved to a later time. Present plans are for the doubling of rents in January, 1991, with the pace of further increases to be left to the individual states. Other issues also occupied attention during the reform phase of the GDR— preservation of older housing in the inner cities, for instance—but were less controversial. Everyone is for housing preservation. When the head of the leading institution for historic preservation in the GDR, Peter Goralczyk, was asked whether it makes any difference who lives in the housing to be preserved, and said flatly, ‘No’, he was not challenged; issues such as gentrification had not surfaced yet. The larger changes, and with them the threats to the basic values of many who rejoiced at the revolution of October, were not yet in public view. Private landlords, according to the Ministry of Building, were to be encouraged to invest in their buildings by permitting rents that would return a profit on such investment; how that would fit in to a new overall rental structure was not explored. Other urban reforms met with overwhelming support. The huge building Kombinate should be broken up. Decentralization of housing construction authority to the local level, high on the agenda of all parties, should help neutralize the power of the building industry. Training in rehabilitation work should replace recruiting for mass prefabrication. Private architectural and planning offices should be encouraged, and much public work contracted to private firms. Wages should be raised in the building trades, so construction workers would stay in the field (and in the country); they were lower than much factory pay, and the work was harder. The law regulating private contracts should be developed, and the peculiarities of building contracts considered. The formation of smaller private building firms should be encouraged. Various housing tenure forms should be tried. Currently the focus is on smaller-scale cooperatives, but condominium

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ownership of single flats is also on the agenda. In many areas, FRG models will be taken over intact. The Ministry of Building and Housing—the ‘and Housing’ was added to its scope after the October events—is treading cautiously in its new jurisdiction, but its direction was clear. A trial balloon, which spoke of tripling rents and making payments to every household of 50–100 marks a month in compensation, got so little support and so much obvious criticism it was quickly dropped. The January 1990 programme170 the Ministry circulated was clear only in that it wanted to move to a market economy, ‘while retaining social protections’. The main component (apart from privatization of the building sector, proposed in detail) was the substitution of housing allowances for subsidized rents. The long-standing controversy over supply-vs. demand-side subsidies in many Western countries was barely known in the GDR. Individual ownership was to be encouraged; housing administration and the allocation of units was to be decentralized, cooperatives to be encouraged, and a private market to be encouraged throughout the housing sector, with the exception of publicly owned land, presumably to be retained in public ownership. Cautiously, rent increases were to start with second homes and with underoccupied units. Just how such occupancy had to be determined, given the increasing extent to which the old rules are being ignored and rentals and even sales taking place without formal sanction or even notification, was not discussed.

CONCLUSIONS: SOCIALISM AND CENTRALISM To return to the three questions posed at the outset of this study, as to the relationship between GDR housing policies to socialism, centralized and undemocratic governance, and outside factors the following conclusions emerge: 1 The socialist organization of the economy accounts for the following key characteristics of the GDR’s housing: ● Decision-making in the political sphere as to both general principles and detailed implementation of housing policy; hence also only a mediated influence of demand on supply. ● Comprehensiveness of housing policy, including public control over new construction, allocation, rehabilitation, sale, management, financing, demolition. ● A narrow range of new housing provision, from the best to the worst, and a narrowing difference in the quality of housing in general, as older more generous units deteriorate, and new units are built to a uniform quality level. Positively phrased, equality in housing provision; negatively phrased, an oppressive and unnatural homogeneity.171 ● A uniformly low level of rents across the board, with the highest rents being no more than 30% over the lowest rents, resulting in affordability for all. ● The social integration of housing both at neighborhood and building levels across income, although small privileged groups, e.g. functionaries, the nomenklatura, had significantly better housing in separate buildings but not separate neighbourhoods, and older persons tended to have older housing in older neighborhoods. ● The allocation of housing (with important exceptions) according to need, with none excluded from adequate shelter even at the bottom of the income ladder.

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● A strong preference for non-private forms of housing ownership, whether state or cooperative, the prohibition of new private rental housing construction, the devalorization of existing private rental housing, and the encouragement of private home ownership only as supplemental to other forms of housing provision. ● An ability to effectuate changes in housing policy rapidly, including a rapid increase in the pace of construction, once the central decision to accord priority to housing was made. ● Minor importance of credit in housing policy, in both directions: credit availability neither significantly promotes, nor shortage restricts, housing construction.172 ● Very restricted private property rights over either land or housing, essentially confined to rights of use (personal ownership). ● Control by the state over the allocation of land for housing, as to extent, location, etc.; thus complete public control of the location of new housing. ● De-emphasis on commercial uses of downtowns, downtown location for ‘uneconomical’ housing development. ● Strong emphasis, both in planning and in implementation, on child care, social, cultural, and recreational facilities integrated in housing development. ● Restrictions on choice in housing, monopolistic housing production firms, and inadequate incentives to labour, connected with difficulties in integrating a social market with a socialist economy. 2 The centralist-authoritarian political structure accounts for: ● Undemocratic decision-making as to general principles, and no regard to individual preferences as to detailed implementation, of housing policy. ● The exclusive reliance on industrialized housing production techniques, susceptible to central control and planning, producing a powerful industrial housing construction lobby. ● Monopolistic construction firms with low productivity and small wage differentials. ● The over-reliance on quantitative and easily measurable goals in housing policy, goals most easily subject to centralized planning and control. ● The almost complete neglect of small-scale and flexible rehabilitation of older areas, as difficult to implement in a centralized political and economic system. ● The neglect of neighbourhood issues, rehabilitation, improvement, development of services and facilities and in older neighbourhoods, which might have led to feelings of neighbourhood or regional autonomy and endangered central loyalty. ● The uniformity of planning and construction standards and architectural forms; neither the expression of preferences allowed by the market nor the experimentation and variation permitted by a decentralized democratic structure permitted to take place. ● The rigidities of the allocation system, kept under tight central control. ● The use of the housing allocation system to reward political loyalty.173 ● An ambivalence towards history, its subordination to ideological purposes. 3 Non-systemic factors played a significant and increasing role. They include international influences, ‘mistakes’, and shortages: ● International influences, beginning with the Cold War and the adoption of Soviet models of planning and construction, tapering off as East German experience and self-

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confidence grew, since November 1989 shifting to a predominant influence of the FRG. ● ‘Mistakes’, in the sense of arbitrary, not system-determined, choices among alternatives realistically available. ● Shortages, both of skilled labour and of materials, an increasing problem over time, caused in part by the above factors, but then taking on an independent influence of their own, limiting the possibilities of implementing even desired alternatives. Non-systemic factors accounted for: ● The priority given to industrial growth over development of the urban residential environment, a consistent feature of GDR policy through the beginning of the 1980s, resulting from pressure from the Soviet Union, and an internal (and subsequently considered mistaken) striving towards autarky. ● A subsequent (‘corrective’) over-allocation of resources to quantitative increase in the housing stock, at the expense of investment in modernization in other branches of the economy, and at the expense of improvements in quality. ● A fixation on the ideological implications of housing policy in order to differentiate GDR from FRG policies and to legitimate the social order of an independent East German state. ● An inability to relate rents to housing quality (including equipment, location, age), producing a significant misallocation of units by household size and a lack of ability to implement housing choice privately. ● A failure, at least until the mid 1980s, to recognize the need to shift from new construction to rehabilitation, from quantitative to qualitative goals, from uniform to variable construction. ● A neglect of resident preferences, poor choices of locations, lack of facilities, sterility in design, because of the mistaken assumption that social benefits would automatically flow from physically adequate housing. The results of the GDR system, with its particular combination of economic policies claimed to be socialist and political policies clearly centralist and authoritarian, all operating under very constraining international conditions, were very mixed indeed. For a brief period, in the late autumn of 1989, it appeared that some experiments, combining some past economic successes with measures to avoid and remedy past political failures, might be attempted. As this is written, however, after German unification, new experiments do not seem to be on the cards, nor is there much current political interest in a balanced assessment of what the past forty years in the GDR produced in housing, or why. As time goes on, the failure to ask those questions while their answers could still have affected policy may look more and more like a missed opportunity to take a whole fresh look at Western as well as Eastern housing policies.

NOTES 1 The very titles of the best studies of the GDR’s housing suggest this point of view: Hoffman, Melzer and Jenkins. 2 ‘System dependent’ refers to those characteristics which form or result from essential characteristics of the system in question. For a fuller discussion of the concept of system-

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dependent and system-independent characteristics, see Marcuse, ‘Towards Clarity in EastWest Comparisons’, 1989. 3 See Jozsef Hegedus and Ivan Tosics, ‘Disintegration of the East European Housing Model,’ in Andruz et al. forthcoming. 4 E.g. commitments to low rents and to rising standards, or commitments to mass industrialized production of housing and to comprehensive (‘complex’) city planning, or commitments to social equality and to the use of housing to encourage higher productivity. 5 For a description of the tour, see Hoscislawski, p. 22. 6 GB1. 1950, S. 965ff.; it also incorporated the Sixteen Foundations of City Development, above. 7 The date taken is that of the Volkskammer-Beschluß, Gb1. 1, S. 225, although the process was a continuing one; see Weber, Table at p. 317. 8 ‘Wohnnraum’, technically. Article 37. 9 Wynne, p. 231, Weber, p. 423. 10 9th Session of the Central Committee of the SED 11 IX Party Congress of the SED 12 Adoption of ‘Grundsätze für die sozialistische Entwicklung von Städtebau und Architektur in der D.D.R.’. 13 See Staufenbiel, and Flierl, in Marcuse and Staufenbiel, forthcoming. 14 For one of the many accounts of the ‘rivalry’ and the similarities and differences resulting from it, see Peter Bender. 15 Wirtschaft und Statistik 9/1989, reprinted in BfG Wirtschaftsblätter, Dezember 1989, Jahrgang 37, No. 12, p. 6. 16 Edmund Collein. I owe this and the following quotations to Thomas Hoscislawski. 17 Walter Ulbricht, in Bauakademie, supra, p. 14. 18 Wolfgang Junker, ‘Das Wohnungsbauprogramm der D.D.R. für die Jahre 1976 bis 1990’, in Deutsche Architektur, 12/1973, p. 708. 19 It is provided for in Article 12 of the GDR Constitution. It includes, at least, ‘land, natural resources, mines, powerplants, factories, banks, assurance companies, and other establishments important for the common economy’. See Herwig Roggemann, Die DDRkVerfassung, Berlin, 1976, p. 155; Melzer, p. 15. 20 The distinction, in German, is between ‘Verstaatlichung’ and ‘Vergesell-schaftigung.’ 21 The definition in Article 11 of the Constitution is very simple: ‘Personal ownership serves the satisfaction of the material and cultural needs of the citizen.’ As interpreted, it guarantees the right to personal ownership of such items as ‘consumer goods, earnings from work and savings, household items, the necessities of professional education and for the use of free time, and also housing serving personal needs and plots and houses serving personal recreational needs’. (My translation.) Melzer, p. 15, fn. 5. 22 For the somewhat anomalous handling of land ownership, see below. 23 Article 25, Foundations of Civil Law, December 8, 1961. There has been criticism of such a position, however, on the grounds of abuse for speculative purposes; see Alexejew, and Hoffmann, pp. 72–8. 24 For general discussions, see Melzer, p. 15; Hoffmann, Parts II and IV; Jenkis, pp. 25–172. 25 See Articles 11 and 12, and Roggemann, p. 155. Legal issues are more thoroughly discussed in an older standard work, Rainer Arlt and Günther Rohde, Bodenrecht, Ein Grundriß, Berlin-Ost, 1967, and more recently, in J.Klinkert et al. Eigentumsrecht—Nutzung von Grundstücken und Gebäuden zum Wohnen und sur Erholung. Grundriβ Zivilrecht, Vol. 2, Berlin-Ost, 1979, particularly pp. 20ff. 26 Weber, p. 110. 27 To give a sense of the extent of the reform: 2,300,000 hectares of land were taken, without compensation. Together with 500,000 acres confiscated from the Nazis or already in public ownership, this acreage was then two-thirds redistributed to some 500,000 small owners, and

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one-third kept for direct public use. The small owners were then more or less forcefully collectivized into some 20,000 cooperatives by 1960. Weber, pp. 111, 317. 28 For land in central cities, the estimates are even higher: 60% to 70% privately owned. 29 Volkszählung, 1981; Melzer, p. 82; for a discussion of subsidies to personal owners, see New Construction, below. 30 It is derived by counting all privately owned units in more than two family buildings, assuming that the number of landlords living in their own buildings is balanced by the number of tenants in two-family buildings. The figures for 1971 come from Jenkis, p. 30. 31 Statistiche Jahrbücher der DDR; Melzer, p. 156. 32 Calculated from Jenkis, p. 30. Figures may not add to 100 because of rounding. 33 Provided by the Ministry of Finance, March 20, 1990. 34 The necessary cross-tabulations unfortunately cannot be derived from the data at hand. To get private tenants: almost all residents of privately owned, multi-family buildings are assumed to be tenants, and some significant number of residents of privately owned one-and two-unit buildings must also be tenants. To get public tenants: all residents of units in publicly or cooperatively owned buildings. 35 Gesetz über die weitere Verbesserung der Lage der ehemaligen Umsiedler in der DDR, September 8, 1950, Gbl., S. 971ff. 36 See Melzer, 82 PP., 176, 177. 37 Gesetz über die Aufnahme des Bausparens, Skept. 15, 1954, GB1., p. 783; see also GB1. September 18, 1954, pp. 825, 844; Melzer, p. 82. 38 Gesetz über den Verkauf volkseigener Eigenheime und Siedlungshäuser, September 15, 1954, GB1., p. 784f. See also Melzer, p. 83. 39 Melzer, p. 83. 40 See Kurt Gittel and Hans-Joachim Förster, ‘Mehr Wohnungen schneller und billiger bauen’, Deutsche Finanzwirtschaft Heft 5, 1957, p. 69. 41 See Hannsjörg Buck, ‘Lockerungen für den privaten Wohnungsbau’, Deutschland Archiv, Vol. 5, p. 509ff, 1972. 42 Deutsche Architektur, Vol. II, Berlin, and ‘Bauinformation’, Bauakademie der DDR; Melzer, 1972, 1973, p. IIff.; p. 84. 43 Technically, to the ‘örtliche Organe’, the ‘territorial agencies’, which included the fifteen regions (Bezirke) and sub-regions (Kreise), as well as municipalities. That administrative structure has been much criticized as unnecessarily cumbersome, and will shortly be reformed. 44 Beschluß über Maßnahmen zur Vereinfachung der Vorbereitung und Durchführung des Eigenheimbaues, June 17, 1976, GB1. Para I, p. 307. 45 Melzer, p. 86. 46 For a more detailed discussion, see below, and Hoffmann, p. 44ff. 47 See Arlt and Rhode, p. 47, and Jenkis, p. 33. 48 Arlt and Rhode, pp. 49ff. They criticized the practice already at that time, but to no effect. Strengthened land allocation through planning was indeed continuously sought, but the Produktionsabgaben of enterprises did not function as substitute land prices, as was thought they might. Flächennutzungsabgabe, payments in lieu of rents, were never instituted for non-business uses, and shadow prices, though extensively discussed, were never instituted. See Jenkis, pp. 32–40. 49 Karl Schmeichen, ‘Eingeheime mehrgeschossig?’, Socialistische Demokratie, December 10, 1971, Melzer p. 85.8; 50 An ‘Unbedenklichkeitsbescheinigung’, a Certificate of Reasonableness, had to be issued for any transfer to be effective. Verordnung über den Verkehr mit Grundstücken, December 15, 1977, GB1., Part I, 1978, p. 73ff, and January 19, 1978, GB1., Part I, p. 77. The policy goes back much further, however; see Hoffmann, p. 351.

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51 The term used is ‘Inanspruchnahme’, ‘making claim to’, not ‘Enteignung’, which refers to ownership rather than use. 52 Aufbaugesetz, September 6, 1950, GB1. S. 965. See Jenkis, p. 40ff. 53 This result comes about without specific legislation, since rents were frozen at 1936 levels, and thus values, based on capitalized rents, would similarly reflect 1936 levels, or, with depreciation, even less. 54 Jenkis, p. 46. 55 The term used for such compensation is ‘Naturalentschädigung’, ‘compensation in kind’. Technically, the owner could be given an unlimited and free right of use of the replacement unit, or of land on which to build. Entschädigungsgesetz, P. 4, Abs. 1, and P. 6, Abs. 32. See Jenkis, p. 47. 56 It is provided for in 2. Gesetze über die Verleihung von Nutzungsrechten an volkseigenen Grunstücken, April 3, 1959, GB1. 1. S. 277. See Arlt and Rhode, pp. 203–35. 57 Arlt and Rhode, p. 222. 58 Estimate of Elvir Ebert. 59 From preliminary figures prepared for budget deliberations, Ministry of Finance, March 1990. 60 Excluding the relatively small number of locally administered units not in the hands of KWVs, for which comparable figures are not available. Figures are from worksheets provided by the Ministry of Finance. 61 These figures differ slightly from those used in prior paragraphs because they do not include the approximately 10% of costs financed through credits and/or by enterprises; that breakdown is not, however, available from this source. 62 See ‘The Use of Housing: Allocation’, below. 63 p. 32. 64 Staemmler, Gerlind. 1981. Rekonstruktion innerstädtischer Wohngebiete in der D.D.R., Berlin (West), p. 1. 65 The figures provided come from a study recently released by Professor Arno Peters in Bonn. Although based on reports of the Inter-allied Reparations Agency and the Federal Ministry for Intragerman Relations, they are controversial, and have become the subject of extensive political debate because of the call for reimbursement therefore frequently made in the GDR, but the relative magnitudes are all that is important for present purposes. For details of the calculations, see Die Volkstimme, December 18, 1989, p. 5. 66 Hoscislawski, p. 118. 67 Statistical Yearbook of the GDR, 1989. Marks are in constant 1985 values. Includes public, cooperative, and private units, and also includes infrastructure and social facilities built as part of developments. Investment figures include modernization, but modernization is not included under square metres produced; thus figures for 1986–7 show an increase in investment because of the growing role of modernization, but a decline in new square metres produced. 68 In 1,000 square metres of floor space in newly constructed units. 69 In million marks. Marks are in constant 1985 values. Includes public, cooperative, and private units, and modernization, and includes infrastructure and social facilities built as part of developments; 1951–5 average is for 1955 only, figures not available for other years. If figures for investment are compared with those in other countries, it should be remembered that no sums are allocated for the use of land in the GDR statistics; based on experience in other countries, land constitutes from 5% to 20% of the costs of social housing. 70 For a comparison of these results with those in the FRG., see ‘The Results—The Numbers’, below. 71 Collein, p. 157.

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72 As Bruno Flierl points out, downtowns should draw non-residents to them for cultural activities, and can never depend only on those already living there for their characteristic functions. 73 See Flierl in Marcuse and Staufenbiel. 74 Staemmler, p. 30, and Hoscislawski. See also Table 10.4 above. 75 The year 1950 was the last year of the land reform programme, and therefore saw an artificially high jump in private individual housing construction. 76 Verordnung über die Finanzierung des Arbeiterwohnungsbaues, March 4, 1954, GB1., p. 253ff, and Anordnung über die Zulassung und Registrierung der Arbeiterwohnungsbaugenossenschaften, May 14, 1954, Zentralblatt der DDR, p. 213ff. Melzer, p. 76. 77 Technically, but significantly, called ‘Workers’ Housing Construction Cooperatives’. 78 Melzer, p. 76. 79 Verordnung über die Umbildung gemeinnütziger und sonstiger Wohnungsbaugenossenschaften, March 14, 1957, GB1., Part I, p. 200ff. Melzer, p. 79. S. 80 See Melzer, p. 80 and sources cited there. 81 Vierte Durchführungsbestimmung zur Verordnung über die Umbildung gemeinnützier und sonstiger Wohnungsbaugenossenschaften, December 8, 1967, GB1. Part II, 1968, p. 49ff. 82 See Rueschemeyer for an excellent discussion. 83 Verordnung über die Arbeiterwohnungsbaugenossenschaften, November 21, 1963, GB1. Part II, 1964, p. 17ff, and January 3, 1964, GBI, Part II, p. 28ff. 84 Verordnung zur Änderung von Rechtsvorschriften über die Arbeiterwohnungsbaugenossenschaften, December 13, 1972, GB1. Part I, 1973, p. 53f. 85 Bekanntmachung der Neufassung der Verordnung über die Arbeiterwohnungsbaugenossenschaften, February 23, 1973, GB1, Part I, p. 109ff. 86 Formally, there were four full membership meetings a year which decide policy, an elected five-member operating committe and an elected three-person oversight committee. Melzer, 76, p. 147. 87 Neues Deutschland, March 14, 1990. 88 Gesetz über die Verleihung von Nutzungsrechten an volkseigenen Grundstücken, 14. December 1970, GB1. 1, S. 372. See Jenkis p. 42. 89 Hoscislawski, p. 131. 90 Statistical Yearbook of the DDR, 1989. 91 Melzer, pp. 89, 90. Even as to these figures, Melzer says: ‘it is exceptionally difficult to get a complete picture of the financing of new construction, since the relevant details are missing’. 92 Other forms of private financing, for instance by savings banks or the issuance of debentures, have played a trivial role. 93 Büro für Arbeiterversorgung beim FDGB-Bundesvorstand, Unsere Arbeiterwohnungsbaugenossenschafter, 2 Auflage, Berlin Ost, 1958, pp. 98–9; Melzer, p. 163. The absolute figures have of course changed (but not that much) with time; the relative point being made here is unchanged. 94 Erich Honecker, ‘Zur Durchführung der Parteiwahlen 1975/76’, Neues Deutschland, October 4–5, 1975, p. 4; Table 33, DIW, p. 89. 95 See Herbert Rothe, ‘Finanzierung des staatlichen Wohnungsbaus—Ausdruck einer sozialistischen Wohnungsbaupolitik’: Deutsche Finanzwirtschaft, Vol. 3, 1958, p. G 65, and Melzer, pp. 158–9. 96 ‘Örtliche Räte’, literally translated ‘territorial authorities’, meaning the regional, subregional, and municipal levels of government. 97 Typical of the problems have been the recurrent decisions, made centrally, to shift Enterprise workers from their own regions to Berlin, largely for political reasons: to make Berlin a showplace for the success of the regime and avoid invidious comparisons with the West.

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98 Kress, Siegfried, und Günther Hirschfelder, Industrieller Wohnungsbau. Allgemeine Grundlagen. Berlin, DDR, 1980, and Hoscislawski, p. 71. 99 Hoscislawski, p. 124. He provides floor plans for WBS (Housing Building System) 70 at p. 80, and a useful table summarizing the differences among the various construction series at p. 74. 100 Ludovica Scarpa, quoted in Harald Bodenschatz. 101 Kress and Rietdorf, p. 219; discussed, with other quotations, in Hoscislawski, p. 123–4. 102 Deutsche Bauakademie, Architektur und Städtebau in der D.D.R., Leipzig, 1969. 103 Wolfgang Junker, ‘Das Wohnungsbauprogramm der D.D.R. für die Jahre 1976 bis 1990,’ Deutsche Architektur, 12, 1973, pp. 708–712. 104 Gerhard Kosel, ‘Die Industrialisierung des Bauens in der D.D.R.’, in Architektur der D.D.R., 6, 1980, pp. 333–40, at p. 109, quoted in Hoscislawski, p. 109. 105 Bodenschatz, p. 9. 106 Niederländer, p. 43. 107 Artikel 37 der Verfassung; Zivilgesetzbuch vom 19 Juni 1975 Para. 94 abs 132; vgl. GB1. Teil I, S. 465ff; Melzer, p. 157. 108 Verordnung über das Verbot von Preiserhöhungen, November 26, 1936, RGB1., Part I, p. 955ff. It froze rents as of October 17, 1936. The history is provided in general in Melzer, p. 158ff, Manfred Hoffmann, ‘Sozialistische Mietenpolitik in der Deutschen Demokratischen Republik’, Zeitschrift für die gesamte Staatswissenschaft, Vol. 129, 1973, p. 246ff. 109 Melzer, p. 159, fn. 311. 110 Cron, in Melzer, p. 159, fn. 314. 111 Ordnung über die Wohnraumversorgung für die Werktätigen der Schwerpunktbetriebe und der Betriebe mit Werkwohnungen, September 14, 1967, GB1., Part II, p. 737ff.; Melzer, p. 160. 112 Depreciation is the sense of the writing off over a period of years of the costs of construction. For an early example of the argument, see ‘Wir werden mehr Wohnungen haben’, Deutsche Finanzwirtschaft, Vol. 5, 1957, p. 65, quoted in Melzer, p. 159, fn. 309. 113 Jenkis, p. 150. 114 See P.Marcuse et al., ‘Vorschlage zur Reform der Wohnungspolitik in der DDR’, 1990. 115 See Jenkis, pp. 143–9, for a history of price reform efforts in the GDR up to 1970. 116 For instance, amortization was increased from 0.5% a year to 1.8% a year. Melzer, p. 61, fn. 324. 117 Melzer, p. 161. 118 Verordnung zur Verbesserung der Lebenslage von Familien mit 4 und mehr Kindern durch Bereitstellung geeigneten Wohnraumes und Gewährung von Mietzuschüssen und anderen Zuwendungen, May 3, 1967, GB1., Part II, p. 249ff. 119 Pursuant to a decision of the 5th Session of the Central Committee of the SED, in April, 1972, Verordnung zur Verbesserung der Wohnverhältnisse der Arbeiter, Angestellten und Genossenschaftesbauern, May 10, 1972, GB1, Part II, p. 318ff., and Zweite Verordnung …, October 11, 1976, GB1., Part I, p. 438. 120 Verordnung über die Gewährung eines staatlichen Kindergeldes, December 4, 1975, GB1, Part I, 1976, p. 52f. 121 GB1., Part I, 1981, p. 389f. 122 Büro für Arbeiterversorgung beim FDGB-Bundesvorstand, Unsere Arbeiterwohnungsbaugenossenschaften, Berlin Ost, 1958, pp. 98–9, reprinted in Melzer, p. 163. 123 Expensive not because built to higher standards—presumably the standards are constant; expensive rather because of particular problems of topography, utility connections, weather during construction, mishaps, etc. 124 Melzer, p. 164, p. 336.

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125 ‘Zur Durchführung der Parteiwahlen 1975/76’, Neues Deutschland, October 4/5, 1975, p. 4. These figures are consistent with those summarized in the discussion of subsidy levels in ‘Role of the State’, above. 126 Melzer, pp. 164ff. 127 Statische Jahrbücher der DDR; Melzer p. 165. 128 The most recent versions of the relevant statutes are: Gesetz über die örtlichen Volksvertretungen in der D.D.R., Gesetzblatt I, Nr. 18, 1985, and Wohnraumlenkungsverordnung, October 16, 1985. 129 Kontrollratsgesetz Nr. 18, 1945. 130 Verordnung über die Lenkung des Wohnraumes, December 22, 1955, GB1. 1956, S. 3, and September 14, 1967, GB1. II S. 733. See Jenkis, pp. 54ff. 131 Verordung über die Lenkung des Wohnraumes vom 14. September 1967. In: GB1. II 1967, S. 733ff; Niederländer p. 45. 132 Gesetz über die örtlichen Volksvertretungen und ihre Organe in der DDR, June 19, 1975, GB1. Part I, p. 313f. 133 Manfred Mühlmann, 1977, Miete Reihe: Grundriß Zivilrecht, Heft 4, Berlin Ost, p. 13; Melzer, p. 157. 134 Mühlmann, p. 14. 135 Förderbetriebe. National prescriptions speak of Schwerpunktbetriebe, Target Enterprises. Mühlmann, p. 13. 136 See Melzer, p. 158. 137 Junker, p. 708. See Hoscislawski, p. 120. 138 See, for instance, Pickvance, 1988. 139 Melzer, p. 15, fn. 9. 140 Topfstedt, pp. 26–45. 141 Adopted at the VI Party Congress of the SED, January 15 to 21, 1963. See Jenkis, p. 159. 142 Jenkis, p. 160. The category ‘enterprise housing’ is itself fuzzy; it may or may not include units owned or directly controlled by enterprises, units allocated to enterprises out of the public stock, and units directly provided by enterprises for workers as part of their wages. 143 Borchert, p. 75; Jenkis, p. 59. 144 Although that unit did not have to, and was not likely to, be of as good quality as that provided by the enterprise. Borchert, p. 85. 145 This is an exact summary of the argument of Borchert, p. 76. See Jenkis p. 59. 146 Verordnung über Wohnungen für Werktätige der volkseigeinen und ihnen gleichgestellte Betriebe, November 6, 1952, GB1. S. 1187. 147 They are listed on p. 19 of the Wohnraumlenkungsverordnung of 1967. 148 p. 70; see Hoscislawski, p. 120. The theme is a continuous one; see for example the resolutions of the IX Conference of the SED in 1976. 149 Roland Korn, Chief Architect of Berlin, in Der Architekt, Journal of the Bund Deutshcer Architekten, B.R.D., Nr. 3, 1980, kp. 120. 150 See also Staufenbiel in Marcuse and Staufenbiel, and Rolf Kuhn. 151 Quoted from Rommeiß, in Autorenkollectiv, Umgestaltung von Städten. Probleme des Städtebaues und der Erzeugnisenentwicklung, Weimar, 1979, p. 50, in Hoscislawski, p. 120. 152 Hoscislawski, p. 117. 153 For a more detailed discussion of housing in relation to power, see Marcuse, Peter. 1987. 154 From Staemmler, p. 16; see Hoscislawski, p. 118. Excludes modernization. 155 Wolfgang Schuman and Peter Marcuse, forthcoming. 156 Einheit, 1989, No. 9/10, p. 960. 157 Figures are for 1984. Wohnen 2000, Bauakademie der D.D.R., 1989. 158 Central Statistical Office, 1988. 159 Magistrat der Stadt Berlin, 1988; Schuman and Marcuse. 160 Einheit, 6–89.

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161 Wohnen 2000, Bauakademie der D.D.R., 1989. 162 Central Office for Statistics. 163 Reinhard Nissel and Hans Reinwarth, ‘Fragen des sozialistischen Wohnungsmietrechts’, Staat und Recht, Vol. 2, 1974, p. 248. 164 Surprisingly, the only detailed analysis of housing exchange applications I have found is a Western one, Gerlind Staemmler, ‘Wohnungswünsche von DDR-Bürgern—Exemplifiziert an einer Untersuchung der Wohnungstauschwünsche Ostberliner Burger’, Die DDR im Entspannungsprozeβ, Sonderheft des Deutschland Archiv, 1980, p. 163ff. It examined 1,500 advertisements for exchanges in Berlin, 500 in Leipzig, and 650 in Dresden. 165 Summarized in Melzer, p. 167. 166 See for instance the usage, presumably unconscious, in summarizing a study finding a widespread desire for rentable single-family houses—as indicating a desire for Eigenheime (occupant-owned units)—in adjacent sentences in Melzer, p. 168. 167 Fred Staufenbiel, 1989. 168 See Kahl, Alice, forthcoming. 169 See ‘Das Neue in den Positionen zur Durchführung der Wirtschaftsreform im Bauwesen’, Ministerium für Bauwesen und Wohnungswirtschaft, mimeo. 19.1.1990. 170 See note above, especially pp. 21–3. 171 ‘Gleichmacherei’ is the apt German word for it. 172 See Hegedus and Tosics, 1990, p. 21. 173 Recent investigations have highlighted single-family villas in the government compound at Wandlitz in Berlin, the hunting lodges and vacation houses built for some top party members, and other little known abuses; the allocation of better quality new construction to members of the Stasi, for example, has been long known.

REFERENCES Alexejew, S.S., 1964. Das Zivilrecht in der Periode des umfassenden Aufbaus des Kommunismus, Übersetzung aus dem Russischen, Staatsverlag der DDR, Berlin. Andrusz, Gregory, Harloe and Szelenyi, forthcoming. Untitled. Arlt, Rainer and Günther Rohde, 1967. Bodenrecht, Ein Grundriss. Berlin-Ost. Bender, Peter, 1989. Deutsche Parallelen. Berlin. Beyme, Klaus von, 1988. Der Wiederaufbau. Berlin. Bodenschatz, Harald, 1989. ‘Zur Krise des Sozialstaatlichen Stadtentwicklungsmodels’, mimeo. Borchert, Annelore, 1960. Das Wohnungsmietrecht in der Deutsche Demokratische Republik, 2 Aufl, Berlin (Ost). Collein, Edmund, 1959. In Architektur und Städtebau in DDR, Deutsche Bauakademie und Bund Deutscher Architekten, Berlin (Ost). Deutsche Bauakademie, 1969. Architektur und Städtebau in der DDR. Leipzig. Einheit, 1989, N. 9/10. Flierl, Bruno, ‘Gesellschaftliche Zwecke der Stadtgestaltung’, in Marcuse and Staufenbiel, Aufbruch im Stadtischen Leben, Akademie Verlag, Berlin, forthcoming. Flierl, Bruno, 1979. Zur sozialistischen Architekturentwicklung in der DDR: Theoretische Probleme und Analysen der Praxis. Bauakademie der DDR, Institut für Städtebau und Architektur, Berlin (Ost). German Democratic Republic, Statistisches Jahrbuch, various years. Hoffmann, M. 1972. Wohnungspolitik der DDR—das Leistungs- und Interessenproblem. Verlag Deutsche Wohnungswirtschaft GmbH, Düsseldorf. Hoscislawski, Thomas, 1985. ‘Städtebau in der DDR’, Institut für Stadt- und Regionalplanung der Technischen Universität Berlin, Berlin.

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Jenkins, Helmut W. 1976. Wohnungswirtschaft und Wohnungspolitik in beiden deutschen Staaten. Hammonia, Hamburg. Junker, Wolfgang, 1973. ‘Das Wohnungsbauprogramm der DDR für die Jahre 1976 bis 1990’, Deutsche Architektur, 12, pp. 708–12. Kahl, Alice, forthcoming. ‘Leipzig-Probleme des Wohnens’, in Marcuse and Staufenbiel. Klinkert, J., E.Oehler und G.Rohde, 1979. Eigentumsrecht—Nutzung von Grundstücken und Gebauden zum Wohnen und zur Erholung. Grundrisse Zivilrecht. Vol. 2, Berlin (Ost). Korn, Roland, 1980. ‘Comment’, in Der Architekt, No. 3. Kosel, Gerhard, 1980. ‘Die Industrialisierung des Bauens in der DDR’, in Architektur der DDR, 6, pp. 333–40. Kress, Siegfried, and Günther Hirschfelder, 1980. Industrieller Wohnungsbau. Allgemeine Grundlagen. Berlin, DDR. Kuhn, Rolf, 1985. Lösung der Wohnungsfrage als soziales Problem. Berlin (Ost). Marcuse, Peter, 1987. ‘The Other Side of Housing: Oppression and Liberation’, in Bengt Turner et al. (eds), Between State and Market: Housing in the Post-Industrial Era, Göteborg, Sweden, pp. 232–70. Marcuse, Peter, and Fred Staufenbiel, forthcoming, Aufbruch im Städtischen Leben, Akademie Verlag, Berlin. Marcuse, Peter, 1989. ‘Towards Clarity in East-West Comparisons’. Typescript. Marcuse, Peter, 1990. ‘Vorschläge zur Reform der Wohnungspolitik in der DDR’. Typescript. Melzer, Manfred, 1983. Wohnungsbau und Wohnungsversorgung in beiden deutschen Staaten—ein Vergleich. Duncker and Humbolt, for the Deutsches Institut für Wirtschaftsforschung, Berlin. Niederländer, Loni, 1981. Wohnen. Leipzig. Nissel, Reinhard, and Hans Reinwarth, 1974. ‘Fragen des sozialistischen wohnungsmietrechts’, Staat und Recht, Vol. 2. Pickvance, Chris G. 1988. ‘Employers, Labor Markets and Redistribution under State Socialism: An Interpretation of Housing Policy in Hungary 1960–1983’, Sociology, Vol. 22, No. 2, pp. 193–214 (May). Roggemann, Herwig, 1976. Die DDR Verfassung. Berlin. Rueschemeyer, Marilyn, 1988. ‘Participation and Control in a State Socialist Society: The German Democratic Republic’. Working Paper Series #17, Harvard University Center for European Studies, Cambridge, MA. Schmeichen, Karl, 1971. ‘Eigenheime Mehrgeschossig?’, Sozialistische Demokratie, Dezember 10. Schuman, Wolfgang, and Peter Marcuse, forthcoming. ‘Wohnungspolitik’, in Marcuse and Staufenbiel. Staemmler, Gerlind, 1981. Rekonstruktion innerstädtischer Wohngebiete in der DDR. Berlin (West). Staufenbiel, Fred, 1989. Leben in Stadten, VEB Verlag für Bauwesen, Berlin (Ost). Staufenbiel, Fred, 1990. forthcoming. ‘Einleitung’, in Marcuse and Staufenbiel. Topfstedt, Tomas, 1988. Städtebau in der DDR, 1955–1971, VEB E.A. Seemann Verlag, Leipzig. Weber, Hermann, 1985. Geschichte der DDR, Deutscher Taschenbuch Verlag, Munich. Wynne, Martin, 1984. Housing in Europe. Croom Helm, London.

11 Hungary An introduction Bengt Turner Hungary was the first country in Eastern Europe—with the exception of Yugoslavia—to follow the path of privatization. It was also the first country in Eastern Europe where the Communist Party had the most significant losses in the first free election. Possibly traces of a pre-war tradition of democracy and a functioning market have survived in Hungary. In this section on Hungary, József Hegedüs and Iván Tosics describe the development of the Hungarian housing policy system. They divide the post-war period into four different phases. Because of their emphases on the more recent developments they address the first period only briefly when state control over the housing market was the most comprehensive. In the second phase, lasting from the mid 1950s to the end of the 1960s, state provision dominated, but private home ownership production in the villages also played a role. Most of the subsidies went, however, to the state sector. In the third phase, roughly during the 1970s, the role of state provision further increased in urban areas. Self-help production, as in the building of single-family houses, did increase in importance, but the emphasis on state provision in terms of subsidy allocation none the less remained the same. In the fourth phase, at the beginning of the 1980s, state provision faced a crisis; it was no longer possible to finance new construction with the same amount of budgetary means than before. Instead, increased options were given to private production, involving not only single-family houses, but also various forms of multi-family house building. Subsidies were extended to the private sector, and discrimination between state and private sectors almost disappeared. The authors then devote considerable attention to an explanation of structural development in terms of public choice. They remark that the old system, now slowly giving way to a market-oriented system, always has been in accordance with the preferences of affluent groups in society. Low salaries necessitated a system with highly subsidized housing, given as rewards to specific groups in society. With the emergence of financial problems, and the development of a second economy, the demand for supplementary, private solutions has emerged. These elements, strengthened by the recent political changes, point very much in the direction of a deregulated housing market with few subsidies. The authors are in some ways worried by this development, mainly because of the detrimental effects that such a change might have on those groups in society which also will receive subsidies in the future. Their housing situation will deteriorate rapidly, and

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there is a risk of segregation and further undermaintenance, as well as a low level of new construction in the future. An analysis of problems afflicting the present situation forms the basis for a discussion of the probable fifth phase of development which has recently started. An assessment was given on the new developments in a recent consultancy paper, written by a research group in the World Bank.1 They start with a statement that the longterm objective of housing reform in Hungary should be ‘the development of a more market-oriented housing system that is both consistent with the broader economic reforms concurrently in progress and protective of those least able to absorb the costs of adjustment process’ (p. 7). The research group also proposes as an immediate objective to create institutions that are more suitable for the new situation on the housing market. They stress the immediate need for enforcing provisional measures in order to facilitate the long-term objective. An example given in the report is formulated as, ‘if rent increases are not accompanied by a restriction on the sale of government units at less than their market value, then the improvement in one policy will simply lead to a deterioration in another policy’ (ibid. p. 7). Given these objectives, the World Bank report discusses a number of problems in the present situation. The following discussion will make use of this ‘catalogue’ of problems (p. 8ff. in the report).

SUBSIDY TARGETING Allocational equity It is argued that households with a high-income level receive a higher subsidy than households with a lower-income level. This subsidy is visible when it concerns home ownership, but implicit in the rental sector. The implication is that households with a high-income level, and the nomenclature, have better access to rental dwellings and single-family houses than households with a low-income level. The mechanism involved here is the exchequer system for allocation of rental units, and the impact of a better ability to pay the down payment on a constrained financial market for the ownership sector. Efficiency The price-income relation is distorted. Rents in the state rental sector normally only equal 2% of an average income, and the rent reduction corresponds to a 15% wage increase (World Bank report, p. 9). Daniel and Semjen (1987), whose research is used in the World Bank report, calculate that a 520% rent increase would be necessary to move to a market rent level. We call this an implicit subsidy. A visible subsidy is given to first-time buyers in the home ownership sector, which reduces the initial living costs, even if households have borrowed this amount—if the proper financial instruments existed. The effect is a misuse of resources, since the price signal is not correct. Virtually everyone can consume any amount of housing if they are

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successful in queueing, irrespective of the amount they would consume at a market price level. Budgetary issues Underfinancing of bonds, and the large amount of implicit subsidies in the public budget, divert attention from the cause of the grave inefficiencies in the housing market. The social distribution system There is a general economic problem of low wages co-existing with low rents. In a transition period this creates difficult problems with calibrating rent and wage increases, and is complicated by the non-state sector expanding at the same time. The problem is alleviated partly by the fact that most of the subsidies which are removed from housing and other sectors in the economy can be used to increase wage levels.

MORE EFFECTIVE USE OF THE STATE RENTAL HOUSING STOCK Allocation Most rental subsidies are given to households with a high-income level. A higher rent would create revenues to spend on poor households, and might even convince a number of high-income earners of the advantages of moving to the private sector, thus freeing rental units to those in need. Efficiency and rent structure Matras (1989:37) points to the erratic relationship of rent to value of housing services. The rent level is fairly uniform, irrespective of the quality of dwelling. In a new situation, market rents would obviously necessitate differentiating rents considerably, and would be an important measure to make better use of the state rental stock. Mobility Mobility is limited in the rental market. Households have a right to trade dwellings, which encourages mobility. They also have a right to sell ‘tenant ownership rights’,2 but the finance market is not flexible enough to permit borrowing for this purpose. This reduces mobility more than would be the case on a free market (read: a market with market prices). Maintenance There is severe undermaintenance in the state rental stock. This situation is worsened by the fact that the large monopolistic state maintenance companies (IKV) are inefficient,

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and need to be broken up. The problem of undermaintenance is aggravated in Budapest, where the share of older stock—within the rental sector—is large compared to other urban areas in Hungary, and where at the same time pressure for change is the greatest. It should be noted that Budapest’s city centre was formed largely in the same style as Vienna and Paris, when Hungary was double its present size—at the turn of the century (Lampel and Lampel 1990).

THE DEVELOPMENT OF A SUSTAINABLE SUPPLY OF HOUSING FINANCE Affordability The inflation rate is currently (1990) approximately 30% per year. In this situation a nominal rate of interest exceeding the interest rate would cause considerable problems, especially for low-income households just starting out in the ownership sector (including the condominium part of the sector). At present the state is subsidizing the initial mortgage payments. In a future situation with a reduction in state subsidies, we would expect a new policy that would solve the (initial) affordability problem by creating an indexed system for loans. Finance supply The lack of an orderly and sufficient supply of financial resources preserves the present situation of entrenched subsidies accompanied by a high price level in the private sector. The lack of free capital forces the government to arrange a system of subsidized loans. As the state budget is limited, this does not apply to all parts of the housing sector. Secondhand buyers are forced to take expensive loans on a private market. There are of course also problems which will emerge as the country moves towards a less regulated housing market. Tax deductions for interest payments on housing mortgages will affect redistribution and tax losses to the treasury, as the country introduces a personal income tax. This problem is well known in Western societies. There is also the risk of increasing homelessness and overcrowding for those lowincome households in the case of which increased rents are not compensated by increased wages. These problems have been discussed in an ECE report (1990). It is argued that a rent that covers all costs—including maintenance costs—might reveal a situation where the population is actually ‘overhoused’. The former subsidy policy may have hidden this fact. The real effects will, however, depend on to what extent Hungary can develop a housing allowance system that will protect the poorest part of the population. Even if there are problems associated with a shift towards a market economy, Hegedüs and Tosics’ chapter shows that this development is a logical result of a long period of increased emphasis on market solutions. The present changes in the political and economic context will further this development. The chapter also shows that this transition is very hard to achieve without undue hardship on the poorest part of the population. Hungary thus faces a problem that seems to be common to all East European

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countries. In this situation nothing else remains but the very cautious introduction of market elements tied up with the application of subsidy measures.

NOTES 1 Housing Sector Reform in Hungary, Draft, Infrastructure and Urban Development Department, The World Bank, July 1990. 2 This means in practice that the Hungarian housing market is one of the most privatized housing markets in the world. Even in true capitalistic societies there is a non-marketized sector, e.g. the public housing sector in the USA, or the ‘social dwellings’ in Iceland.

REFERENCES Daniel, Z. and Semjen, A., (1987), ‘Housing Shortage and Rents: the Hungarian Experience’, Economics and Planning, Vol. 21. Housing Sector Reform in Hungary (1990), Infrastructure and Urban Development Department, The World Bank, Draft, July. Lampel, E. and Lampel, A., (1990), Budapest (in Swedish), Byggforskningsrådet, T1:1990. Matras, H., (1989), Structure and Performance of the Housing Sector of the Centrally Planned Economies: USSR, Hungary, Poland, GDR and Yugoslavia, Infrastructure and Urban Development Department, The World Bank, Report INU 53. Turner, B., (1990), ‘Housing Market Responses to the New Economic Order in Eastern Europe’, Report to the Working Party on Housing, Committee on Housing, Building and Planning, Economic Commission on Europe (ECE), United Nations, Geneva.

12 Housing reforms in Hungary József Hegedüs and Iván Tosics In this chapter we deal with the changes in the Hungarian housing system over the past four decades, and at the same time we offer a theoretical explanation of these changes. To understand the Hungarian housing system, we will start by describing the main forms of housing provision. This is followed by a description of the changes in the housing system during the different periods. Next we propose a hypothetical explanation of the transition between the periods. Finally we analyse the most recent developments and the political problems of the model change.

THE MAIN FORMS OF HOUSING PRODUCTION (THEORETICAL CONSIDERATIONS) Three main forms of housing provision can be differentiated in the Hungarian housing system: state provision, self-build and market provision. The latter two can be called a form of private provision. The main difference between these housing provision forms lies in the feedback of population demand on housing supply. In state provision the feedback can only take place through indirect political mechanisms; in self-building through non-monetary relations;1 and in market provision, through the solvent demand. In Hungary in the past four decades several different housing forms evolved which changed over time. In the following we try to categorize the different forms of access to housing according to a general typology. The main dimensions used for the typology are: type of investment and financing; allocating institutions; tenure form; the concrete circumstances of the building process.2 State provision The essential characteristic of state provision is that the whole process, i.e. providing land, building the dwellings, financing and allocation, is done or is closely controlled by state institutions. There is no direct feedback, i.e. the quantity, quality and allocation of housing do not directly depend on the solvent demand. This provision form can be divided into two groups: the building and allocation of rented and owner-occupied flats. 1 In most cases rented flats are built from central budget resources and allocated by local councils.3 It is important to note that renting does not mean the same in socialist countries as in Western housing systems.4 2 There are many forms of state-built and owner-occupied housing depending on which institutions are involved in investment and allocation: (a) budget-financed flats

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allocated till the mid 1960s by enterprises and later by local councils (state cooperative flats); (b) flats financed by the National Savings Bank and sold (allocated) through local councils or the NSB; (c) enterprise or cooperative flats whose building and distribution are controlled by the enterprise or the council. Private provision In the private sphere individual initiatives play a decisive role in the process of building and allocation. State institutions can only have indirect influence such as limiting or increasing the supply of building sites, providing building materials, subsidizing loans, taxes, and imposing or lifting restrictive property rights, building codes. Buildings and transactions belonging to this provision form divide into two groups: self-build and market-type forms. 1 Self-build is a typical form in villages (but it is not rare in cities either). In this ‘reciprocal’ form of new construction homes are built through a special network of kinship, and the mutual help of neighbours and friends. The rules of distribution are based on tradition and local customs. In extreme cases all factors of the market can be eliminated; mostly, however, reciprocative and market-type factors are mixed. 2 Market-type transactions and building where most elements of the building process are determined by market conditions (sites are bought on the free market, building is done by craftsmen, etc.). The so-called ‘venture-type’ (speculative) housing can also be included in this category.5 The weight of the three main provision forms within the housing system changes over time. This means that the role these provision forms play in reproducing inequalities and power relations changes depending upon the influence of political and economic factors. Consequently, the chances for different social groups to have access to the main provision forms change. The frames of the main provision forms are marked out by political and economic processes. One of the characteristic features of East European housing was that private rental flats were legally prohibited until recently.6 On the other hand, the emergence and expansion of non-state forms of provision also depended on macroeconomic processes. It follows from the logic of East European (shortage) economies that excess incomes arose, which contributed to the emergence of private provision forms. The expansion of these forms only became dynamic with the development of the second (informal) economy and the concurrent increase in second incomes (Hegedüs 1988a, Hegedüs and Tosics 1988).

CHANGES IN THE HUNGARIAN HOUSING SYSTEM The past four decades of the Hungarian housing system can be divided into four periods (and we have just entered the fifth one). No fixed demarcation line can be drawn between the periods. The major housing acts (1956, 1971, 1983) and the measures taken in 1989 might separate the periods; but it would be a mistake to accept these dates as concrete turning points, since some processes precede, while others follow, a housing act by years.

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Thus it is better to say that these periods more or less coincide with the 1950s, 1960s, 1970s, 1980s and the forthcoming 1990s. ● This periodization is similar to the phases of development in macro economic processes. The first period coincides with the introduction of socialist ideas and the second with the last years of the economy based on direct central planning. The time of the third period in the economy was characterized by the New Economic Mechanism (introduced in 1968) and the phase of ‘recentralization’ (1973–8). In the course of the fourth period, from the end of the 1970s, the economy turned again, and more intensively, towards the market, but no radical institutional changes were undertaken. The years 1989–90 brought not only fundamental political changes but also radical modification of the housing system. The role of the main forms of housing provision in the different periods We will not analyse the early 1950s in detail as one of our previous papers deals with this era (Hegedüs and Tosics 1983). At that time housing was regarded basically as a state provision. Most of the market-type housing forms which characterized the previous capitalist housing system were abolished or placed under direct control (see e.g. the nationalization of the private rental sector). Also self-build was frowned upon politically. In the second period (lasting from the mid 1950s to the end of the 1960s) state provision dominated but self-help also played a significant role: it became the exclusive housing form in villages and had some significance in cities as well. Housing policy restricted self-help provision in several ways (through limited supply of building sites and materials, strict building regulation, etc.), especially on urban housing markets. In this period the market sphere did not exist in new buildings; its role was limited to the second-hand dwelling market. From the beginning of the 1970s the role of state provision in urban housing markets further increased in conjunction with the economic boom that characterized the East European economies at the time.7 Parallel with this, unlike in other East European countries, self-help provision in Hungary was strengthened through the dynamic improvement in the quality of self-built houses. This was a result of the fact that excess income from the monetarized and non-monetarized sectors of the second economy had been increasing. From the beginning of the 1980s state provision underwent a crisis marked by increasing prices and decreasing solvent demand for these housing forms. In this situation the state was forced to increase its support of the private forms of provision (releasing areas reserved for many years for state building, improving their infrastructure and selling them off as building sites). The role of market provision also increased.8 In this period excess incomes, derived from the monetarized sectors of the second economy or even leaked from the state sector, were invested in housing forms belonging to the market provision. At the end of the 1980s the economic crisis became acute, and the state budget could subsidize the private sector less and less, so the output decreased dramatically. Under these circumstances Hungarian housing policy further opened towards the market. The

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‘one family—one flat’ rule was lifted, and the way towards the private rental sector and speculative building was freed. Housing finance and subsidy system In the first two periods (up to the end of the 1960s) budget resources were almost exclusively used in state provision where the most characteristic forms were rented flats with very low rents and heavily subsidized, owner-occupied (so-called public cooperative) homes. Self-help and market provision forms were discriminated in financial terms as were other elements of the building processes (building permissions, building material and land supply). In the third period the most substantial part of the budget resources was still channelled to state provision but (a) the extent to which different forms were subsidized was highly differentiated, and (b) there was an increase in loan subsidy for housebuilding forms belonging to private provision. In the period 1973–8, however, in connection with the cut-back of the reform processes (recentralization), the share of state provision in budget resources was larger than before.9 The Housing Act of 1971 abolished free allocation of rental flats and an access payment was introduced. The budget burden was decreased relatively and the burden on the population increased. Rents were raised in 1971 for the first time since nationalization, but rental flats remained the most highly subsidized form in the housing system. Within state provision the share of owner-occupied homes with less budget and more population expenses tended to increase. These changes, however, did not modify the logic (the feedback mechanism) of state provision. In the fourth period, after the Housing Act of 1983, discrimination of private (self-help and market) provisions disappeared almost totally.10 Due to rising inflation along with direct subventions (e.g. subsidized rents), indirect subsidies (e.g. interest allowances) were of growing importance.11 The changing position of housing provision forms in the housing hierarchy During the first two periods, homes in the state provision were considered to be the best accommodation, with good ecological positions (inner city) and with all conveniences (heating system, bathroom) supplied. Homes belonging to the self-help provision were not only built in infrastructurally poor (lack of sewage system, poor road network) outlying areas of the cities and the countryside but were themselves of low quality (small floor space, bad-quality building materials). In the third period self-help housing forms improved their position in the housing hierarchy. Although self-built houses were still situated in less attractive areas, these homes were rising rapidly in value as regards floor-space and facilities. At the same time the quality of the homes in state provision remained unchanged or deteriorated as the floor-space did not increase and their ecological position worsened (they were typically built on enormous prefabricated housing estates in urban peripheries). A limited amount of new state housing appeared in higher-quality areas and the ‘more market-like’ forms of self-help housing spread to ecologically better areas as well.

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In the fourth period the above tendencies remained valid with the difference that the market forms of housing appeared in the best parts of cities where the newly built homes were of better quality than flats belonging to the state provision. This meant that private forms surpassed state provision both in quality and the location of new homes. Social inequalities and social housing In the 1960s higher social classes had better access to cheap or free homes in state provision (Szelényi 1983). Low-income social groups were squeezed out of state provision and were forced to solve their housing problems through private forms (selfhelp provision and purchasing second-hand homes). The housing policy of the 1970s gave low-income groups greater access to state provision, but higher social groups were not entirely excluded from these forms. The increasing social character of state provision was conditioned by the following processes: (a) homes belonging to state provision became less and less attractive, (b) urban self-help and market building forms earned more and more subventions through inflation. Consequently, the aspiration of the higher social groups was increasingly channelled into private housing. State construction decreased in the 1980s but through the filtration process and with the help of financial incentives12 the number of homes distributed to the lower-income groups did not drop until the mid 1980s. In private provision the gap between the price of the homes and earnings was widening, and the social groups with no access to second economy income sources and without marketable property fell out of this part of the housing market.

HYPOTHETICAL EXPLANATION OF CHANGES IN THE HUNGARIAN HOUSING SYSTEM In our view the formation of housing policy has been subordinated to the conflict between the state and the private sphere (Hegedüs and Tosics 1983). As we have seen earlier, political and economic factors determine the framework within which housing policy can be formulated. In this process the role of the state has special importance, but we also have to examine the pressure exerted by institutions and population groups on the state. One important feature of the East European housing systems is the role of the state which cannot be reduced to one of the three housing provision forms, but is much wider since it deeply influences the conditions and the possible effect of the other two housing provisions. This is the reason why the role of the state in East European housing systems cannot be evaluated by the share of state provision in the housing system. ● In a socialist housing policy the state has two tasks to fulfil. On the one hand, it has to ensure a workable housing system which contributes largely to the political legitimacy of state power. On the other hand, it has to ensure the apparatus of state bureaucracy an access to homes corresponding to their social status.13 The latter condition, called ‘state dominance’ in a previous paper (Hegedüs and Tosics 1988), means state control over the best parts of the urban housing markets.

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● Until the mid 1950s there was an attempt to fulfil these tasks exclusively through state provision. It became clear, however, that direct solutions have many disadvantages. In the next three decades, therefore, housing policy tried to apply indirect methods and also to use the other two provisional forms. In the East European housing systems the institutions and organizations of the housing market14—although having conflicting interests—were working within the state provision and their role in respect of private provision was only to control the processes. Their behaviour was determined by budget resources and central regulation; there was no feedback mechanism which could mediate the solvent demand of the population. This was the case in the first three periods of Hungarian housing policy when the conflict between institutions was over the acquisition of state subsidies. The new element in this situation in the 1980s was that these state institutions began to leave the state sphere and play an increasing role in the other two provision forms (either behaving as market actors or trying to improve the conditions of self-help). ● In the first two periods large enterprises and ministries had much better positions in the housing system than the local councils, that is the latter had only a small fraction of flats at its disposal. This situation changed in the third period: the 1971 Housing Act increased the possibilites of local councils to the detriment of enterprises, although during the time of recentralization in the mid 1970s, the large enterprises regained some of their earlier power. ● Compared to the first three periods, the system of institutional conflicts became quite different in the 1980s when all these institutions increasingly had to face the gradually emerging market conditions. Adjusting to market conditions caused particular conflicts for institutions which were traditionally involved in state provision.15 In the changes in the housing system influential population groups also play an important role through the feedback mechanisms. In the case of state provision these groups can press for an improvement in the quality of new flats, or they can successfully fight for the introduction of new housing forms or financing arrangements (which are advantageous for them). As compared to the ‘option of voice’, in the 1980s the ‘option of exit’ gained ground, and this largely contributed to the structural changes in the housing system. ‘Exit’ here means leaving the state provision and entering the self-help or market forms. The private sector was not really accepted politically and economically until this exit option was chosen by powerful social groups on a mass scale. ● In the first three periods the private provision forms were dominated by low- and middle-status population groups with little political influence. The quality of new housing in the private provision forms kept increasing, surpassing more and more that of flats in the state provision form. The growing quality gap was increasingly attractive to the higher-status social groups, who chose the private provision forms (i.e. the exit option) more and more often. The changing housing mobility strategy of the influential higher-status groups had an indirect effect on the changes in the subsidy system in the 1980s.16 The theoretical question is which forces move the housing system from one phase of development to the other? To manage the conflict between the state and the private

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sphere housing policy has different options. The choice between these options is the outcome of a very difficult political decision-making process in which the different alternatives are not formulated in a clearcut way. In the following we try to summarize the most important turning points in the formation of the Hungarian housing system. The first turning point was at the end of the 1960s when the significance of the second economy grew, becoming the source of self-help provision in the 1970s. In this respect, the economic policy promoting the increasing performance of the second economy eventually caused the spread of private (self-help) provision in housing. ● In the situation of a favourable economic period the Housing Act of 1971 could be seen as an attempt to channel private savings (partly the outcome of second economy activity) into urban housing, especially into state provision. This was to have been achieved through the new housing forms introduced in 1971.17 ● The effect of this measure was basically cancelled by two processes. Firstly, the second economy developed barter connections based on the kinship and neighbourhood networks. These non-monetarized forms of the second economy could not be converted into urban monetarized housing markets but strengthened the rural self-help housing provision. Secondly, in connection with the recentralization around 1972 definitive ‘counter-forces’ were developed against the new housing policy reinforcing the institutions interested in the entrenched subsidy system (e.g. large enterprises, state building industry). The second turning point can be dated to the end of the 1970s. Inflation accelerated considerably from the mid 1970s, and affected the building cost of state provisional forms (because of the substantial political bargaining power of the state building industry) but it did not appear to the same extent in the selling price. In this period of economic difficulties and budget deficit, the burden of the budget increased for the equivalent volume of housing construction. This tension led to the Housing Act of 1983, which brought significant changes in the state provision.18 ● In order to increase the demand for private housing subsidies were extended to private housing provision forms and other restrictions in connection with private housing were also released (building prohibitions for private construction in larger cities, etc.). This means that there was a restructuring of state subsidies in favour of private forms. For the same reasons a shift also occurred within the private provision towards the market form. The social groups already possessing some status in the housing market and with high income and access to second economy sources could improve their position in the housing system through the market provision. The third turning point arrived around 1989–90. Inflation rose even more and it became clear that the reserves of the 1983 transformation were exhausted: the state budget was less and less able to finance the wide-spread system of state subsidies (interest allowances, subvention for creating building sites, social support for families with children, local council support, etc.) for the various forms of private building. The state simply ran out of the budgetary money allocated to the costly subsidies for private housing. ● One of the central features of the Housing Act of 1983 was that it passed the growing burdens of the housing economy not directly on to the population but largely to the

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subsidized credit sector. Between 1980 and 1985 the share of credit in the total costs of housing rose to 46% from 27% in 1970–5. The direct burdens of the state budget decreased while those of the population remained unchanged. The increase in the share of credit, however, meant increasing the future involvement of the budget. In 1989, sums amounting to 4.5% of GNP were appropriated from the central budget as housing subsidies. This equalled 36% of total budget subventions, including consumption and the production sector. ● The hardest problem for the budget was interest allowance, which meant the difference between the fixed, low 3 percent rate of interest on long-term housing loans and the increasing rate of inflation which had been below 10% until the middle of the 1980s but reached 20–30% at the end of the decade. While in 1970–1 the interest allowance amounted to 9% of all budgetary spending on housing, it rose to 25% in 1980–5 and to 64% by the end of the 1980s. Another great burden on the budget (around 14%) was the building support for families with children, and the subsidizing of public rents. The latter amounted to nearly 13% or 9 billion forints annually without having any social or economic guarantees for this sum.19 Due to the pressure on the state budget, radical restructuring of the housing finance system and of the legal framework of housing was accepted during the course of 1988 and 1989. ● Since January 1989, the interest rate for long-term loans changed from 3% fixed to 19.5% variable rate (24.5% in 1990). Subsequent modification of hitherto concluded contracts has also been accepted. This legally questionable but economically more or less unavoidable decision was, however, overruled and withdrawn some months later as the first decision of the new Court of Constitution. In January 1990, state rents were increased by 35%. ● Parallel to the withdrawal or relative reduction of state subsidies and investments in housing, central institutions wanted to ensure the increase of private investments (an already known compensating-type idea). Recognizing the fact that property right limitations decreased the willingness of better-off population groups to invest more in the housing sector, one of the key elements of the socialist housing model, the limitation of property rights (one family =one flat), was lifted in June 1989 and even the legal prohibition on building for sale—speculative housing—was abandoned.20 These changes in the financial and legal system (together with the previously analysed relaxation of restrictions on public housing sales) were fundamental from the point of view of housing policy as a whole. Almost all constraints on the private sector have been abandoned; in other words, radical changes have taken place in the previous practice of slow, gradual privatization. The most important, ideologically based system determinants of the socialist housing model have all been lifted. Thus we can argue that the changes listed mark a third turning point in the development of Hungarian housing policy. This turning point also implies the dissolution of the socialist housing model in Hungary (see the concluding chapter on the use of this term).

TOWARDS A NEW HOUSING MODEL: PRIVATIZATION OF HOUSING AND ITS POLITICAL PROBLEMS

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Privatization is one of the most important items in recent debates on Hungarian housing policy. In contrast to the ‘productive sectors’ of the economy, in housing the main problem is not the extensiveness of public ownership21 but rather the level of deterioration and the lack of public capital to bring the public stock to up-to-date conditions. From an economic point of view privatization in housing would need new owners who are not only able to run the stock more effectively but also have enough capital to carry out the necessary investments. The problem, however, is even more complicated. Besides this economic aspect privatization in housing must take into consideration the special ‘acquired rights’ of sitting tenants and social aspects as well so as not to increase further inequalities among social groups. The property right dilemma Which public institution should represent the ‘state’; who should be the real institutional owner of public housing? Because of the unclear regulations local authorities, state management companies, and tenants’ associations alike can claim to have some property rights over a given part of the public rental housing stock and over the related development possibilities. The interest of these institutions in becoming owners is obvious: in some parts of the public rental sector (mainly in the inner cities) there is a huge rent gap between the present and the potential use of public rental housing. Thus institutions having successfully proved their property rights can earn large profits from gradually changing the use-patterns of the existing stock and/or making the best of the development possibilities. We will illustrate this point with some recent examples under the heading ‘Spontaneous Privatization’. Partly due to the priorities taken by economic and housing policies and in part due to the advantages of positions of power in recent decades certain groups in society have obtained advantageous and privileged housing positions. The question is how the new political administration will handle this inequality. Will they look for a compromise solution that will in effect get these groups to give up some of their advantages, or will they leave these advantages untouched or even increase inequalities by encouraging the marketization of favourable positions—i.e. low prices? One of the best known examples of such advantages is the acquired rights of tenants. This means (a) the right to exchange a public rental unit for another state rental flat, (b) the right to tenure swapping which makes the marketization of public rental flats practically feasible, (c) the right of inheritance. These are the tenants’ rights of disposal over their tenancies which—besides the low rents—made the acquisition of state rental flats exceptionally favourable. These property rights became the rights of tenants with the introduction of the socialist state rental sector. The allocation of public housing was historically a regressive process (especially in the 1950s and 1960s but partly even after that time) and the state was neither able nor willing to constrain the property rights of the influential social groups who acquired these dwellings. Howsoever acquired, the problem of what to do with these acquired rights (vested interests) of tenants exists and this seems to be a major obstacle for all efforts to reregulate the public rental sector. At the moment there are three different ideas for tackling the problem.

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1 Some state institutions argue in favour of the total and onesided reduction—or elimination without compensation—of these acquired tenants’ rights. They would propose first to ensure the total authority of state over public housing, i.e. renationalization of property rights, followed possibly by privatization on market prices decided by the state. 2 The other extreme opinion is represented by the Tenants’ Association, questioning the legality of the state’s efforts to regain rights of disposal over rental flats. The best situation for the tenants would be to obtain total property rights—possibly without any payment—from the state. According to this view, new, autonomous tenant associations should replace the public maintenance companies and obtain maintenance rights from the council, with property rights for the whole of the residential stock coming within their sphere of responsibility. 3 For us it is clear that only a compromise solution is conceivable for this delicate political problem. Tenants have obviously too many ownership rights; on the other hand, however, these rights can be taken away from them without any compensation (a significant share of recent tenants bought their public flats at their quasi-market price through private transactions).22 One possible compromise could be to admit the acquired rights of public tenants in financial terms, i.e. to give them a temporary ‘coownership’ of their dwellings. In this case tenants who become 20–40% co-owners of their dwellings have then to decide in a limited period of time (say in three years) whether to buy the state-owned part of the dwelling or to sell their own part back to the state. Rents should be increased to self-financing or ‘market’ levels and the former tenants could sell their part back to the state or would be eligible for not paying the full increased rents for a period of time, or for a bonus valid only for housing purposes when they leave the dwelling. There are some experts who deny the necessity of dealing separately with the issue of acquired rights of tenants. They claim that after the most necessary steps in the regulation of public rental housing (introducing a full prohibition on selling off state rental flats below market price followed by step-by-step rent increase) acquired rights will gradually lose their value, since they only represent the future value of state subsidies given to public tenants. The question remains, however, of how this ‘automatic’ solution, which would in practice lead to the abolition of tenants’ acquired rights without any compensation, would be accepted by the tenants themselves. At the time of writing, at the end of 1990, the first issue is partly resolved. According to the Law on Local Government (see the translation of that law in Urban Institute 1990) local governments have become the owners of public housing. It is still unclear, however, who can decide upon the non-residential public units (offices, shops, etc.) and upon the use of development possibilities (empty sites etc.). There is no political decision on the second issue, acquired rights. This irresolution is mainly due to the direct political consequences of any kind of decision. In this ‘period of uncertainty’, however, spontaneous privatization is of increasing importance because of the efforts of some institutions to get the most advantages out of the situation.

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Spontaneous privatization in housing Spontaneous privatization means the efforts of some public institutions (local authorities, state management companies, the NSB, the tenants’ associations etc.) to monopolize their property rights over public housing at the expense of the other potential public owners, not even taking into account the acquired rights of sitting tenants. Normally, spontaneous privatization aims at altering the ownership status of state-owned housing or future development possibilities (empty sites, enlarging or rebuilding options for existing houses). Some recent examples on spontaneous privatization in housing are as follows. 1 One district council in Budapest gave over rights of disposal of all empty sites in the district to a semi-private joint venture company. This company can sell the development possibilities to any of the potential investors without raising real market price competition. Because of ‘business secrets’ local control over the transactions is no longer possible, regardless of whether the price is the best one, the new use of the sites is appropriate for the neighbourhood, etc. Moreover, as the most probable outcome of the game is that the best plots will be sold first, there will be no possibility of making a deal with investors to reallocate one share of their profits made on the best plots to the development of run-down neighbourhoods with much less development potential. 2 Some local tenant associations try to make arrangements with the National Savings Bank or other developers to sell the empty spaces in their houses (in the roof, cellar, etc.) on the grounds that these spaces are in their property. In some cases these spaces are very valuable for office or store-room use and their effective use could bring in a lot of money for the local council which could be spent on run-down areas, too. 3 Borderline cases for spontaneous privatization are those in which local neighbourhoods try to take over the disposal rights on those development possibilities which were created as central state investments. In the case of one periphery housing estate in Budapest (Káposztásmegyer, which is not yet finished) the political organization of the local inhabitants claims the right of disposal over further development, including the already prepared basic infrastructure for several thousands of newly planned flats. The common problem shared by these cases lies in the fact that the choice of the new owners—and thus the decision on the use of development possibility—is not public. Therefore there is a potential danger that the selling price will not be the best, and there are even some chances of corruption on the part of the seller. A new approach to privatization The growing contradictions and inequalities of the spontaneous privatization process and also the necessity for a clear starting point before introducing new housing regulations warrant comprehensive new privatization regulations in housing. First of all it is mandatory to clarify the rights and duties of the autonomous local governments as owners of public housing. It is also necessary to work out a method of local decisionmaking so as to ensure appropriate public control, the representation of the interests of directly affected population groups, the calculated value of the acquired rights of tenants

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in case they buy (or do not buy) their dwellings, clarity in the auction process when selling to private developers, etc. Because of the huge problems which have accumulated in the Hungarian public rental sector in the course of the last few decades there is no doubt that this sector needs capital investment. The recent solution (selling to sitting tenants) has many serious problems: not only is the selling price too low but the majority of recent tenants do not have the financial means to be able to ensure the necessary capital for renovating their deteriorated houses. The obvious solution would be the involvement of foreign capital in this process—selling off some parts of the public sector to Western private developers. Indeed, as a consequence of the political and economic changes in Hungary there is considerable interest from Western developers to invest capital in the Hungarian public rental sector. The experience of some West European countries shows, however, that the involvement of private developers in the solution of the problems of the public housing sector has special problems and must be a strictly controlled process (Tosics 1988). There is a necessity for creating a regulatory system which, on the one hand, controls the profit foreign investors can take out of the rental sector without reinvesting in it and, on the other hand, ensures some kind of redistribution of financial means between city areas with different development potentials. The regulatory framework for privatization— which would be one of the most important elements of a new housing policy—must also ensure the interest-representation of the directly affected population groups. This is important not only for reasons of political democracy but also from the point of view of the potential investors. Local neighbourhoods have recently become politically much stronger than they were before and they can easily hamper all kinds of redevelopments if they are not involved in the planning process.

CONCLUDING REMARKS Having analysed the development of Hungarian housing policy in the last four decades it is clear that, following the third turning point and the political changes in the system, there is a high priority to work out a new housing policy. Recent economic circumstances have been quite unfavourable for the new housing policy: there is a serious economic crisis and central budget housing subsidies must be decreased. Economic difficulties seem to be, and in fact are, strengthening the views of those who argue against all forms of central housing policy and favour further reductions in budget spending on housing. It is easy to argue that housing expenditures were used very ineffectively in the past, and thus the reduction of budgetary spending would have little influence on the distribution of housing. While concurring with the critics of past policies, we do not agree with the immediate withdrawal of state subsidies from the housing sector. In our view it is necessary and possible to work out a new set of central policy goals and to ensure those central budget resources without which it is impossible to implement these goals. According to our analysis one of the first tasks is to identify and clarify the acquired rights of different social groups and to find compromise solutions to handle this problem. Another important task is the introduction of a new housing finance system and a better targeted housing subsidy system. Privatization can only follow these steps and must remain under

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the control of central and local bodies. This means that the privatization of housing should be postponed until after the privatization of the economy: the introduction of market prices in housing should not be much in advance of the distribution of market wages paid by the privatized economy. As a concurrent idea to privatization the deregulation of the public sector could be raised, aiming at a more effective institutional framework without allowing private exploitation of the rent gap. An equally important task is to protect those population groups who are the least competitive on the housing market. A new, market-consistent housing allowance system and some protection for low-income home owners are necessary preconditions from a social point of view to be able to introduce new financial regulation into housing.

REFERENCES AND FURTHER READING Bauer, T., (1982), ‘A második gazdasági reform és a tulajdonviszonyok’ (The second economic reform and the ownership) Mozgó Világ, 1982/11. Ferge, Zs., (1986), ‘Zsörtölötö megjegyzések Szelényi Iván és Manchin Róbert tanulmányához’ (Grumbling remarks on the paper of Iván Szelényi and Róbert Manchin) Medvetánc, 1986/2–3 Gulácsi, G., (1985), ‘Infrastruktura-fejlesztés—tanácsi beruházások—területfejlesztési politika’ (Infrastructural development, council investments, territorial policy) Manuscript. Hegedüs, J., (1988a), ‘Inequalities in East European cities: a reply to Iván Szelényi’ International Journal of Urban and Regional Research, March 1988. Hegedüs, J., (1988b), ‘Self help housing in Hungary. Hypotheses on the changing role of the private sphere in the housing system’ Paper prepared for the International Seminar in Kassel, April 1988. Hegedüs, J., Pártos, G. and Tosics, I., (1988), ‘A strukturált lakásrendszer modellje’ (The model of a structured housing system) Manuscript, July 1988. Hegedüs, J. and Tosics, I., (1983), ‘Housing classes and housing policy: Some changes in the Budapest housing market’ International Journal of Urban and Regional Research, December 1983. Hegedüs, J. and Tosics, I., (1988), ‘Transition to a new housing model?’ (‘Controlled’ and ‘market’ filtration in the Hungarian housing policy) Paper prepared for the 1988 International Research Conference On Housing, Policy and Urban Innovation, Amsterdam. Kertész, B., (1979), ‘A lakáslétesités és -fenntartás társadalmi terheinek alakulása és megoszlása az állam és a lakosság, valamint a lakosság egyes rétegei között’ (Changes and distribution of the social cost of house-building and maintenance between the state and the population and among the different social strata) EGSZI, Manuscript.

. Lowe, S. and Tosics, I., (1988), ‘The Social Use of Market Processes in British and Hungarian Housing Policies’ Housing Studies, 3/1988. Pickvance, C.G., (1988), ‘Employers, labour markets, and redistribution under state socialism: an interpretation of housing policy in Hungary 1960–1983’ Sociology, 22, No. 2., May 1988. Szelényi, I., (1983), Urban Social Inequalities under State Socialism, Oxford University Press. Szelényi, I., (1987), ‘Housing inequalities and occupational segregation in state socialist cities’ International Journal of Urban and Regional Research, March 1987. Szelényi, I., (1988), ‘Theses on mixed economies under socialism and capitalism (with examples from the housing economy)’ Paper prepared for the 1988 International Research Conference On Housing, Policy and Urban Innovation, Amsterdam. Szelényi, I. and Manchin, R., (1986), ‘Social policy and state socialism’ In: Esping-Anderson, G., Rainwater, L. & Rein, M., (eds) Stagnation and Renewal in Social Policy, White Plains: Sharpe.

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Tosics, I., (1988), ‘Inequalities in East European cities: Can redistribution ever be equalizing, and if so, why should we avoid it? A reply to Iván Szelényi’ International Journal of Urban and Regional Research, March 1988. Urban Institute (1990), Transformation of the Law on Local Government. Manuscript.

APPENDIX A: Basic Terms of Hungarian Housing: Types of Investors, Tenure Categories and Forms of Housing Provision. Most analyses of socialist housing systems are satisfied with the state-market dichotomy as the basis of categorizing different forms of new housing. Of course, it is possible to speak in a general sense about the ‘state sector’ as that part of the housing system which is dominated by state institutions in contrast to the ‘market sector’ where the decisions of individuals are predominant. But this categorization is not sufficient in the operational sense. In the following we try to separate the most important dimensions on the basis of which we can create a set of ‘housing forms’, relevant to the true situation in the housing system: ● rental accommodation (as a special form of this the so-called ‘tied accommodation’ also exists), ● owner occupied. Financing of the building process: ● state budget (until 1983 one given form of owner-occupied housing—public cooperative housing—was also built from state budget resources and this form was considered in the statistics as state housing); ● National Savings Bank (NSB) funds (these are distributed as subsidized and limited loans to the different types of owner-occupied housing); ● private savings. Organization of the building process: ● local authority, ● NSB for local authorities, enterprises or cooperatives, ● private. Allocation of new housing: ● local authority (partly based on waiting lists), ● ‘mixed’ forms (local authority, NSB, enterprises, cooperatives), ● ‘private’ (single-and multi-family housing). Forms of buildings and types of contractors: ● housing estates, built by state building enterprises or building cooperatives, ● multi-storey housing (built by building cooperatives or craftsmen or in self-help form), ● single-family housing (built by craftsmen or self-build).

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The different types of access to housing are characterized in Table A12.1; basic data about these forms over the last thirty years is given in Tables A12.2 and A12.3.

Table A12.1 Definition of types of access to housing in Hungary State provision

Private provision

Public rental housing

Public coop erative housing

Public Housing housing NSB asso housing ciation housing

Tenure

Rental

Owner-occupied

Financing of the building process

State budget funds

NSB funds

NSB+ private funds

Singleand multifamily housing

Purchase of dwellings (secondhand)

Private+ NSB funds

Private funds

Organizing State Local the (local council+NSB building council) process

Local Private council+NSB+building cooperative

No new construction

Allocation Central Local of new and council+NSB housing local council

Local council+NSB+ Private cooperative+enterprise

Private

Forms of building

Prefabricated+partly individual

New housing estates mostly in prefabricated buildings

Individual No new mixed building

Table A12.2 Basic data on the main housing reforms in the three periods of housing policy (in %) period

State provision

Private Total Total provision new Building

State Public Public Public Housing Family rental rental cooperative NSB association housing housing housing housing housing

Per year

I. 1961– 70 II.

9.1

14.6

9.4

3.7

−

63.2

100

56,700

The reform of housing in Eastern Europe and the Soviet Union

1971– 80

134

4.3

18.6

11.9

13.9

3.1

48.3

100

87,900

2.7

12.3

4.6

24.8

4.2

51.3

100

70,400

III. 1981– 7

Table A12.3 Basic data on the main housing reforms the last thirty years in Budapest Period

State provision

Private Total Total Provision new Building

State Council Public Public Housing Family rental rental cooperative NSB association housing housing housing housing housing

Per year

I. 1961– 70

12.1

22.8

20.1

8.7

−

36.3

100

10,800

4.3

18.6

11.9

13.9

3.0

48.3

100

16,300

2.7

12.3

4.6

24.8

4.2

51.3

100

13,490

II. 1971– 80 III. 1981–7

Within the private sphere we can find both the self-help and the market form of provision. These differ from each other in the process of building: if a single—(or multi)family house is built mostly by the family itself, it belongs to the self-help form; if it is built by craftsmen, it belongs to the market sphere. Most recently there is also a new category of market provision, the so-called ‘venture-type’ form (enterprises built for sale in auctions), but the volume of this type of new building is minimal.

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APPENDIX B: APPENDIX B: BRIEF SUMMARY OF BASIC STATISTICS ON HUNGARIAN POPULATION AND HOUSING Population

Table B12.1 Number of people (all data reflect the territorial division of 1 January, 1987) Year

Budapest

Other towns

Villages

Total (in thousands)

1920

1,232

2,226

4,529

7,987

1930

1,443

2,399

4,844

8,686

1941

1,713

2,597

5,006

9,316

1949

1,590

2,507

5,107

9,204

1960

1,783

2,949

5,229

9,961

1970

2,001

3,429

4,892

10,322

1980

2,059

3,985

4,665

10,709

1987

2,094

4,161

4,367

10,622

Table B12.2 Migration tendencies in Budapest (people moving from one type of community to another) From Budapest To Budapest

Other towns

Villages

Total (in thousands)

−

11,916

14,319

26,235

To other towns

6,887

25,087

54,589

86,563

To villages

8,764

39,330

60,215

108,309

15,651

76,333

129,123

221,107

TOTAL

Table B12.3 Communal investments in different community categories between 1976 and 1980 (calculations made by Gábor Gulácsi; see Gulácsi, 1985:109) Population Budapest

Councils and enterprises

Total (Fts/capita)

4,768

25,908

30,676

Other towns

11,533

21,507

33,040

Villages

10,740

4,626

15,366

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136

The housing stock

Table B12.4 Number of dwellings Number of dwellings in 1987 Budapest

Other towns 808

Villages 1,461

Total (in thousands) 1,621

3,890

Table B12.5 Size of dwellings (in %) Budapest

Other towns

Villages

Total (in thousands)

One-room dwellings

26.6

17.2

17.9

19.1

Two-room dwellings

43.9

49.4

48.3

48.3

Three-room dwellings

29.5

33.4

33.8

32.6

100.0

100.0

100.0

100.0

TOTAL

Table B12.6 Number of inhabitants/100 dwellings Budapest

Other towns 258

Villages 285

Total (in thousands) 270

273

Table B12.7 Level of infrastructure (proportion of housing provided with sanitation and water in %) Budapest

Other towns

Villages

Average

Running water

97.9

72.4

60.2

77.7

Indoor toilet

87.4

78.1

45.1

66.6

Drain-pipe (incl. purifier)

99.0

88.7

62.2

78.9

73.7

30.5

Public drainage system Bath or shower

39.0 84.9

70.7

Table B12.8 Tenure structure of housing stock (1984; in %) Budapest

Other towns

Villages

Average

Owner-occupied dwellings

42.4

71.1

94.2

75.2

Rental dwellings

57.6

28.9

5.8

24.8

100.0

100.0

100.0

100.0

TOTAL

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137

Table B12.9 Tenure structure of households (1980; in %) Share of households

Budapest

Other towns

Villages

Average

Owner-occupiers

33

61

84

65

Tenants

50

28

7

23

Living in relatives’ dwellings

10

6

7

8

7

5

2

4

100

100

100

100

Lodgers(subtenants) and others TOTAL

Table B12.10 New construction (the size of statebuilt and privately built houses) Size of flats, houses (in m2)

Year Flats, houses with three or more rooms (%)

State built

Privately built

1978

4.4

54.0

75.9

1979

9.9

54.2

78.4

1980

8.0

54.6

80.2

1981

9.7

54.3

84.8

1982

10.4

54.9

86.1

1983

10.0

54.9

89.4

1984

10.9

55.1

94.0

1985

10.9

55.7

96.1

Table B12.11 Basic data on new housing built in 1986 State rental Number of new dwellings Average floor space Average number of rooms

State built, owner- Cooperative and other occupied enterprise built

Privately built

7,622

18,711

1,900

41,195

57.1

56.7

84.1

99.6

2.0

2.1

2.7

3.0

68.2

94.9

31.6

0.6

Type of building: Medium- and high rise

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138

Multi-family house

13.8

5.0

62.2

6.0

Single-family house

5.7

0.1

6.0

89.8

12.3

−

0.2

3.6

100.0

100.0

100.0

100.0

Budapest

27.7

25.8

14.4

6.6

Other towns

59.6

69.7

78.6

34.4

Villages

12.7

4.5

7.0

58.9

TOTAL

100.0

100.0

100.0

100.0

Other TOTAL Category of settlement:

Table B12.12 Type of contractor in the different spheres of new housing in 1986 State rental Number of new dwellings

State built, owner- Co-operative and other occupied enterprise built

Privately built

7,622

18,711

1,900

41,195

Companies

75.6

91.1

24.7

0.4

Coops, other companies

18.1

8.8

21.7

1.5

Craftmen

2.9

0.1

10.5

24.2

Self-building

3.4

−

43.2

73.9

100.0

100.0

100.0

100.0

State building:

TOTAL

Table B.12.13 Financial requirements of the main types of new housing in 1987, related to the average income (partly based on estimates) Local council rental flat Average floor space Price of plot (000 Fts) Price of building or selling price (000 Fts) State support for two children

60 m2

NSB-built owneroccupied flat

Market, selfbuild

60 m2

100 m2

(900,000)

900,000

800,000

80,000

80,000

−

300,000

Housing reforms in Hungary

Cash needed for the site (000 Fts) Cash needed for building or buying the flat (000 Fts) Subsidized NSB loan (Fts, % rate of interest/year for 35 years)

139

300,000

−

−

70,000

270,000

190,000

NSB Loan

60,000

380,000

1,387

1,464

Monthly repayment (Fts) other subsidized loans

The main forms of these special loan schemes are as follows: Young families can have special subsidized NSB loans after a fixed period of saving; most employers give a certain amount of credit to their employees in case they build or buy a new flat; most recently local councils also support families acquiring new homes. (Fts, 3% rate of interest/year for 15 years)

80,000

monthly

30,000

70,000

monthly

Repayment (Fts)

366

853

Rent/month

612

Repayment (Fts)

160,000 1,107,554

Bank loan (Fts, 8% rate of interest/year for 10 years)

Total amount of cash Total monthly repayment Average salary Fts/person/month Total cost of flat related to income (m=month; y=year) Total cash related to family income (two adults) Monthly repayment related to the monthly income of one adult

70,000

270,000

490,000

612

2,860

2,871

6,300

6,300

6,300

142.9m (12.0y)

174.6m (14.5y)

11.2m

42.9m (3.5y)

77.8m (6.5y)

9.8%

45.4%

45.6%

Table B12.14 Waiting lists for state-allocated housing (end of 1986) Budapest Other towns Number of applicants for rental flats (i.e. applicants without flats) Number of applicants for state-allocated, owner-occupied flats

Villages

43,780

43,755

1,506

(36,485)

n.a.

n.a.

19,007

55,041

1,022

The reform of housing in Eastern Europe and the Soviet Union

(i.e. applicants without flats) TOTAL Number of applicants per 1,000 inhabitants

140

(13,927)

n.a.

n.a.

62,787

98,796

2,528

30.0

23.7

0.6

NOTES 1 The difference between the monetary and non-monetary form of the second economy was first mentioned by Hegedüs et al. (1988). 2 This typology serves the historical-sociological analysis of the paper; no data is available in this categorization for the past decades. In Appendix A we present a slightly different typology on the basis of existing data, but according to this categorization the self-help form and market provision cannot be differentiated. 3 There are other forms of rental flats (tied accommodation) where enterprises or ministries are the owners not local councils, Tables A12.2 and A12.3 contain data about these forms (called ‘state rental housing’), but this chapter does not detail them. 4 In most Western countries there is no direct connection between the rental and owneroccupied sectors. In Hungary, however, dwellings rented from local councils can be changed to owner-occupied flats through private transactions. In this way rental flats have an officially sanctioned market value. In this ‘private exchange’ a cash payment is made between the two families without reference to the council. It may be said that the private exchange of rental flats has to be considered as a market transaction. 5 This definition of the market provision substantially differs from the Western concept of the ‘market’. Even single-family houses built by craftsmen contain so much self-labour that in the Western sense of the word they would not be categorized as market provision. At the same time, the speculative form of building (housing built for sale by auction) is only a recent phenomenon. 6 In Hungary the first form of speculative building has been allowed since 1983 (enterprises can build flats for sale, they can get circulating funds from banks, and there are no restrictions on the selling price). Moreover, in 1989 the introduction of building new private rental flats was also allowed which means the lifting of all ownership constraints. 7 State investments increase in Hungary, and the budget share of the housing sector also grows: the share of state building within GNP was around 1.8–1.9% between 1955 and 1970 but 2.6% between 1971 and 1975 (Kertész 1979). 8 This means first of all an improvement in the ecological position, that is the market forms of housing provision begin to spread to the best urban areas. 9 This process was described as a strengthening of the ‘deep subsidy financing system’ in an earlier paper (Hegedüs and Tosics 1983). 10 See the last two columns of Table B12.13 in Appendix B. 11 Fixed amounts of NSB loans could be obtained at an interest rate of 3% for the building of owner-occupied homes. Since in the 1980s the rate of inflation was higher than 10% (expected to reach 20% in 1988), the interest subsidy was becoming the most important item in the housing budget of the state. 12 For example, a financial technique was introduced to urge people to give back their state rental flats, offering them three-five, later seven times the amount of the deposit fee. In this way the local council could obtain distributable homes much less expensively than by new construction. 13 Because the wages and salaries do not contain the cost element of housing, this could only be achieved through direct intervention in the distributional processes. 14 Central bodies, county and local councils, NSB, building companies, etc.

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141

15 For example, when creating new sites local councils have often faced a dilemma during recent years: if they sell them at market prices, they are accused of accelerating inflation; if on the other hand they sell them at a subsidized price, they do business at a loss. 16 In recent years local councils have paid a gradually growing amount of money to families who give back their state flats. This can be considered as an example of a new subsidy form which makes it easier to choose the exit option. Local authorities can argue that this subsidy costs them much less than the building of new flats. On the other hand, however, there is a widely held opinion that this method increases inequalities because it means support for already better-off (mainly medium-and high-status) families. 17 The most important new housing forms (or financing constructions) introduced at this time were: improved loan/terms for the more urban form of family houses (multi-family houses); a new form of coop housing (not so strictly controlled by the state); a new financial form of sale of NSB housing, with less state control (‘freely saleable NSB housing’). 18 The share of the cheapest housing forms rapidly decreased: the act abolished the public cooperative housing form and the special subsidy for industrial workers in large enterprises used only in state provision. 19 The subventions mainly served to maintain the generally low level of rents, with those living in larger and better rental flats (i.e social groups of higher status) receiving more support. 20 Despite the fact that both prohibitive rules were violated many times, their abolition is of fundamental importance. 21 The share of state ownership in housing is less than 25% and is only substantial in Budapest with approximately 50%. 22 According to the data of some empirical surveys this share amounts to around one-third of all recent tenancies (Hegedüs 1989).

13 Poland An introduction Stephan Schmidt Principally there are three systems for production and distribution of utilities in a society: the market, the hierarchy and the network. The general meaning of the systems can be summarized in the following way. The network is formed from ethnic, cultural and/or ideological links between individuals personally related to each other. The production and distribution of utilities are consequently carried out—that is, on an affective basis. Both the market and the hierarchy are expressions of an impersonal or abstract rationality: utilities are produced and distributed regardless of personal loyalty or friendship. The difference between the market and the hierarchy lies in the authority of agreements, which is decentralized in the former system and centralized in the latter. This means that the parties are entitled not to conclude an agreement in the market system, whereas the agreement is a responsibility in the hierarchy. The conception that society can be described and analysed in these terms is explicit in the works of the classic sociologists. Their prophecy that social and economic development would lead to a permeation of society by one single, abstract rationality, summarized in the conception of the perfect market or hierarchy, has not come true. In the modern society, production and distribution of utilities are not carried out solely by one system; instead, the three systems are combined in various ways in different societies and for different kinds of utilities. Neither can the relative importance of these systems for production and distribution of utilities be explained exclusively with reference to factors of economic and social character. Rather, the character of the overall system for production and distribution is mainly an expression for cultural, ideological and political conditions. This is evident when studying, for instance, the East European societies whose hierarchically organized command economies are unmistakably rooted in the political power structure. The analyses by Edward Kozlowski (Chapter 14) and Alina MuziolWeclawowicz (Chapter 15) of the housing issue in socialist Poland illustrate these theses. Poland was ravaged during the Second World War. The country was divided up at the beginning of the war between Nazi Germany and Stalinist USSR. When Poland was reestablished after the war, its population was substantially reduced; some 6 million Poles, or close to 20% of the population, died according to official statistics as a result of the war. After the end of the war the borders were moved westwards through Soviet annexation of substantial areas in the east, while at the same time, Poland received former German territory in the north and west. This re-created Polish territory thus comprised approximately 312,000 square kilometres with about 24 million inhabitants.

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143

By the end of the 1980s the Polish population had increased to slightly more than 38 million inhabitants. Population growth was considerable after the Second World War which is naturally reflected in the age structure: at the beginning of the 1980s about 55% of the population was below 30 years of age. After the war Poland was urbanized and industrialized; by the early 1980s some 60% of the population lived in urban areas. Out of the working population about 40% were employed in the industrial sector and about 30% in the agricultural and service sectors respectively. Compared to the years before the Second World War, this means that the relative number employed in agriculture has been halved, while the relative number employed in the industrial and service sectors has roughly trebled. The growth and age structure of the population, the transformation of the economic structure and urbanization have all contributed to a difficult housing situation in today’s Poland. However, housing is just part of Poland’s problem. In recent decades economic growth has been very weak, sometimes even negative. In the middle of the 1980s, the GNP only amounted to about US$2,000 per capita. No doubt, one principal reason for the economic crisis and its effects on housing lies within politics. Through the election of 1947, carried out in the presence of the Red Army, the Polish parliament, the Sejm, was re-established. The Communist Party (Polska Partia Robotnicza, PPR) received about 25% of the votes; but together with a number of support parties, PPR was in control of about 80% of the seats in the Sejm. The United Workers Party of Poland (Polska Zjednoczona Partia Robotnicza) was formed the following year by a fusion between PPR and the Socialist Party (Polska Partia Socjalistyczna). Five years later the Constitution, prescribing Poland as a socialist state, was passed. Even if the ‘leading role’ of the Communist Party (PZPR) in society was not inscribed in the Constitution until 1976, there is no doubt that the power of the state was hereby concentrated in the party and its Central Committee, finally to be put in the hands of its First Secretary. This development accentuated the incorporation of Poland in the Soviet development model with an essentially socialist and hierarchically organized economy. The housing system, established in Poland during the late 1940s, rested on two supports: administrative regulations inter alia in the form of rent control, nationalization and public distribution of dwellings, and a certain public aid towards self-help. Housing measures were of course implemented because of the catastrophic housing situation in the aftermath of the war. However, the measures also reflect the view of orthodox socialism on housing, focusing on problems of distribution. Housing is on no account a means of production, which means that it can never claim priority on the political agenda. The housing policy in socialist Poland seems to have been created from this ideological point of view; in the following decades housing never had priority access to financial and material resources. By centralizing the right of contract in the economy and by giving precedence to heavy industry, housing production became stagnant in the early 1950s. At the same time the proportion of dwellings produced outside the nationalized sector dropped significantly. This situation did not change until the mid 1950s, once again under the influence of political developments in the Soviet Union. The ‘De-stalinization Congress’ of the Soviet Communist Party in 1956 indicated the introduction of a more liberal’ policy in several East European states. In Poland Wladyslaw Gomulka came into power in connection with popular protests against the regime.

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144

Changes in the leadership within the Communist Party meant an ideological displacement of the main emphasis, which opened up possibilities for economic reforms. Within the framework of a mainly hierarchic, command system, some decision-making within the housing sector was delegated to local authorities and, simultaneously, the scope for private initiative was broadened. The policy seems to have been successful; from the mid 1950s housing production increased for a number of years. Initially the number of dwellings produced outside the nationalized sector rose, but in the early 1960s it dropped again. In his study, Kozlowski posits an explanation for this, namely, a growing mistrust of the regime. Political development from the early 1960s was characterized by a gradual return to an orthodox socialism with neo-Stalinist overtones. From this point of view, the share of non-socialized housing production could be taken as a criterion of the ideological climate in Poland and equally as a political barometer. During the late 1960s housing production became stagnant again, although the housing situation for a great number of Poles was characterized by overcrowding as well as a very low standard (cf. Kozlowski, Table 14.1). The political changes, which seemed to be absolutely necessary in socialist Poland in order to accomplish economic and social alterations, were sparked by revolting workers on the Baltic coast in the early 1970s. These uprisings helped to install Edward Gierek in the position of Party Secretary. The change of political leadership resulted in the precedence of private consumption, which was maintained by extensive loans in Western currency and, at the same time, the housing issue advanced on the political agenda. During the 1970s a comprehensive housing programme was elaborated for the first time. Earlier programmes mainly consisted of a quantitative rate of production; these rates were now supplemented by qualitative and social objectives. The programme was followed by a relatively high-rise in housing production directed towards larger dwellings of a higher standard. However, the control instruments for the housing production did not change in any decisive way; on the contrary, the principles of the hierarchic command economy were adamantly maintained during the 1970s. On the other hand, the principles for the distribution of dwellings were slightly altered. Within the public sector, the dwellings were to a larger extent distributed on a network basis. For the vast majority of housing applicants with no access to network resources, this meant extended waiting in the public housing queue. At the beginning of the 1970s, those living in municipal and cooperative flats were given the opportunity to buy their dwellings, but this privatization did not aim at the formation of a functioning housing market. The reform was justified on financial grounds and was surrounded by extensive legal restrictions and red tape. The different reforms and changes are expressions of various system principles; they hardly give the impression of being connected in a well-arranged manner. Gierek’s economic policy came to a standstill by the end of the 1970s. The fact that housing production had stagnated by this time and plummeted at the beginning of the 1980s was only one of many manifestations of the deep crisis that Poland had plunged into. The political crisis peaked during 1980 and 1981 in two phenomena, unique for a socialist country, namely the formation of a broad oppositional trade-union movement— Solidarnosc (Solidarity)—and the initiation of what may be described as military dictatorship. In December 1981, the military seized power under the command of General Wojcieck Jaruzelski.

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From a political aspect the development during the 1980s was characterized by the tension between Solidarity and a state authority that explicitly relied on the capacity of the military to control society. Solidarity, which ideologically reflects the history of the Polish working class movement, the national struggle for liberation, and the ethics and social philosophy of the Catholic Church, forced the regime, step by step, into negotiations and political reforms. Solidarity’s success must be seen in the light of the organizational strength of the movement—at times its members amounted to 10 million—and also a new Soviet domestic and foreign policy under Michail Gorbachev. As a result of talks between Solidarity and the regime, free elections to the Upper House in the Sejm and to one-third of the seats in the Lower House were carried out in the spring of 1989. The Solidarity candidates won 99% of the seats in the Upper House and 100% of the open seats in the Lower House. As a result of the election, Tadeusz Mazowiecki was elected the first non-communist head of government in any Warsaw Pact country. Of course, the dissolution of the acute political crisis has not solved the social and economic problems of Poland. Neither have the reforms of a market-like character implemented during the 1980s in, for example, housing, meant any immediate improvement for the average Pole, but rather the opposite. The case study of Alina Muziol-Weclawowicz of the housing market in Warsaw shows this. By the end of the 1980s the housing market of the Polish capital showed a number of crisis symptoms. Despite an acute lack of housing and poor housing standards, housing production is still at a very low level. At the same time, the proportion of households that own their dwellings has grown tremendously during the 1980s, partly under pressure from a galloping inflation: owning a dwelling has become a means to shield oneself against the ravages of inflation. Partly due to these conditions, the prices of flats have rocketed to astronomic heights for the ordinary Pole. People in Warsaw solve their housing problems by organizing chains for barter, either individually or through agencies. This method normally implies that the flat-seeker has already got a flat and consequently the housing market is relatively closed, mainly comprising households that own their accommodation. Openings only occur if a household leaves the market—primarily pensioners’ households. Pensioners form an economically vulnerable group in Polish society, to whom housing has become a sort of retirement insurance. In the Warsaw of housing scarcity and overcrowding, a dwelling is an economic resource of great importance to the life chances of the individual. The restructuring of ownership within the housing sector and the development of a market, though unstable, has added a new structural dimension to Polish society. Those who own their dwellings form, according to Alina Muziol-Weclawowicz, a new class. The growth of this new social class accentuated the need for reforms within the housing sector. At the same time it is quite obvious that marginal reforms of the earlier type do not offer a way out of the housing crisis. As Kozlowski points out in his chapter, the economic structures within housing have for decades been forced to conform to the principles of the hierarchic command economy. Marginal reforms inside or alongside a system, which is essentially hierarchically organized, always risk being incomplete. Neither can housing be isolated from society in general. Ultimately the reforms within the housing sector must link up and harmonize with civil society and its social and cultural structures.

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From this point of view the revival of political pluralism has implied that the state authority has become more congruent with civil society. Political reforms undertaken have paved the way for remoulding the economic structures in accordance with the broader social and cultural conditions in Poland. Of course, it is hard to prophesy the outcome of this modelling in reference to the housing sector. However, it seems clear that the future housing system of Poland will not be based only on one principle for the production and distribution of housing. Within the framework for such a pluralistic housing system, the specific nature of Polish housing will, as always, be determined by ideological considerations and the political strength of various social groups and parties.

14 The housing system in Poland Changes and direction Edward Kozlowski This chapter discusses the historical changes in the Polish housing system over the past forty-five years. The first part describes the main stages of housing policy; the second analyses the symptoms of the crisis in housing; and finally, recommendations are presented and opinions on further changes given. During the forty-five years of the existence of the Polish Peoples’ Republic housing policy underwent significant transformations, and, there was frequently a marked difference between the theoretical assumptions and the real sphere of this policy. Generally, during this period separate stages may be discerned: 1 the creation of a new housing system in accordance with the political assumptions and the conditions of reconstruction (1944–9); 2 centralization of decision-making, donations and a system of investment under conditions of intensive industrialization (1950–6); 3 a new housing policy based on a considerably increased standard of living/income of the population (1956–70); 4 an optimistic programme of renovation under conditions of rapid economic development (1971–9); 5 a housing crisis within the general social and economic crisis (1980–9).

THE MAIN STAGES OF THE HOUSING SYSTEM IN POLAND 1944–80 Policy assumptions of the new housing system (1944–9) The years 1944–9 were a period during which the systemic foundations of the new model of housing were laid. In short, this resulted in the implementation of the following measures: ● the owners of multi-family housing buildings were deprived of their rights to dispose freely of their property, while local housing authorities were empowered to lodge additional persons in already occupied dwellings; ● rents were pegged at very low pre-war levels; ● dwelling allocations followed housing authorities’ normative standards of housing area per person;

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● former German real estate (mostly in northern and western Poland) and dwellings said to be abandoned by their owners were taken over by the central or local authorities. Apart from administrative action, the erstwhile authorities also introduced certain economic instruments in their housing policies. Occupants (not necessarily owners) who had invested in reconstruction obtained the right to live on the premises until the dwelling was fully amortized, which in practice meant its whole useful life. Housing investments were primarily limited to the maximum utilization of the existing buildings (more or less demolished), in order to satisfy the needs of a minimum level of housing standards. However, it proved indispensable to start gradually building totally new houses. Doctrine, the difficult material situation of the population, as well as a larger disposition resulted in the establishment of a special state investment service (Neighbourhood Centres for Labourers—1948) with agencies in various areas. In this way investment was centralized, as was the concentration of construction, and simultaneously a very useful tool for the reconstruction and rebuilding of towns was established. Also, decisions were taken enabling the acquisition of areas indispensable for mass housing through expropriation, exchange or compensation. The introduction of public housing management made it possible to eliminate the basic cause of substandard housing conditions and housing poverty among the poorer part of the population. At the same time, however, it often resulted in the cohabitation of complete strangers in the same dwelling. Centralization of housing policy in the period of ‘building on the basis of socialism’ (1950–5) In 1949 a political and doctrinal transformation took place in the whole economy. In housing policy this was expressed by the authorities giving up support and help to construction and other initiatives that made use of private means. Even the formerly granted permits within the scope of exclusions from the public dwelling system were cancelled. The process of centralization also embraced the cooperative movement, and led to decreasing trust on the part of the population in relation to the authorities. It stopped social and individual initiatives and, above all, halted for a long time individual engagement in the system of satisfying housing needs. The authorities took over the provision of dwellings, and the population started to demand dwelling allocation. These processes also penetrated rural areas, in conjunction with intensifying the collectivization of the agricultural economy. Central subsidies to investors from the state budget were introduced—irrevocably. Also centralized were allocations of financial means for rented dwelling maintenance irrespective of the form of property. As rents and other payments connected with the use of dwellings remained at a very low level, financial means were insufficient for maintenance and renovation. The housing policy of this period was submitted to intensive industrialization processes based mainly on a rapid rise in employment and utilization of manpower reserves associated with intensive urbanization and migration. Simultaneously, considerable demographic development occurred, indicated by high natural growth and a significant marriage index. Investment in housing, though increasing, did not satisfy the

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growing needs, the pressure of which was markedly deepened by the uneven spatial dislocation. In this period, housing construction (financed with budget funds) accounted for 70% of all newly built housing units and for over 90% of dwellings for the non-agricultural part of the population. A partial modification of the ruling economic model and the introduction of a new housing policy (1956–65) In the face of increasingly serious negligence in the maintenance of the housing stock and backlogs in the construction of new housing units, decisions were made to create incentives for individual and collective involvement in housing construction. Maximum income levels were set, above which municipal dwellings were not allocated, payments were introduced for housing units built from public funds, rents for larger than normative dwelling areas were increased and, at the end of the period, rents in state-owned housing stock (municipal, companies’, and institutions’,) were raised to levels which matched maintenance costs. Housing cooperatives received assistance in various forms (financial, allocation of construction materials and land for development). Assistance extended to individual housing construction resulted in doubling the construction of housing units in just three years. At this point, the authorities imposed the so-called ‘enrichment tax’, which once again sapped the social confidence of the authorities, and immediately returned individual housing construction to the previous levels. This period also saw a decline in the share of dwelling construction financed with public/state funds. In 1961–5 the share was over 50% of all newly built housing units and over 60% of all dwellings earmarked for non-farmers. At the end of the period legislation was enacted giving even more state subsidies to housing. The increase of rents in state housing stock (i.e. municipal and belonging to enterprises) reduced the difference in the ceiling of charges to users of state and socialized dwellings; on the other hand, the reduction of the income limit determining the allocation of municipal dwellings caused a major part of the population to seek satisfaction of their housing needs through a cooperative system. During this time gross size and standards in housing increased considerably, and housing economy improved significantly. The decisions taken resulted in an increasing immigration of people to socialized housing cooperatives, and in the accumulation of financial means for housing purposes. However, these changes were not reflected in the development of housing, and particularly in a sufficient distribution of investment means on a central level. Economic difficulties caused additional reductions in general investment, and consequently a decreasing share of housing investments. Economic difficulties brought an overall decline in investment outlays and, consequently, lower outlays on housing construction. The authorities tried to achieve planned quantity targets by cutting unit costs and lowering standards (average dwelling size was reduced and savings on technical equipment were made). Municipal housing construction suffered serious cut-backs.

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This situation predictably drove large numbers of people towards housing cooperatives, which could not cope with the demand—especially considering that these were the years when the children of Poland’s post-war baby-boom were reaching maturity. The rent reform during the first period enabled full coverage of exploitation costs (excluding general renovation)—but only for a short time. The increase of funding for maintenance and of construction costs again differentiated the users of private houses and users of socialized dwellings. Economic property and the implementation of an optimistic programme on improving housing conditions (1971–9) Major changes were made in the overall economic growth policy, initially leading to rapid economic growth in national income and personal incomes in the cities and the countryside. All this led to the realignment of population needs: quantity was no longer the first priority; quality was becoming an increasingly important factor. The long-term housing programme of 1972 assumed that by 1990 every Polish family would have its own dwelling and each of its members their own room (the kitchen counted as a room). The next two decades were to see the doubling of newly built housing units and administrative methods were to be replaced with economic instruments. Unfortunately, reality was another matter: demographic processes cumulated in the 1970s, but the programme planned to provide the greater part of the increase in dwelling availability at the end of the 1980s. In the housing policy itself, important but not necessarily correct decisions were taken, for example as regards technology—prefabricated concrete slabs and capital-consuming plants producing prefabricated houses; and as regards organization—big production combines dictating conditions of construction from a monopoly position. On the one hand this resulted in decreasing the quality of execution, and on the other, increasing investment costs much more rapidly than in the remaining sectors of the economy. A significant change took place in the role of housing cooperatives, which were almost exclusively commited to multi-family housing, and which also took over the role of a substitute investor in municipally funded housing. Housing cooperatives became administratively and economically dependent on the state and departmental administration, and were submitted to the policy of employment and staff development of average and large industrial plants and institutions. In consequence, the system of dwelling allocation divided cooperative members into two groups: employees of offices and enterprises who received dwellings in a short time (and frequently became members of the housing cooperative at the moment of allocation), and those having a continuously increasing waiting period in the general allocation queue. The housing policy was particularly inconsistent from the financial point of view. Despite a rapid rise in wages and incomes, the idea of bringing rents to a more real level was abandoned, thus leaving them at 1965 levels. Also stabilized were exploitation charges in cooperative housing stock (at the 1972 level), as well as initial payments for dwellings in the cooperative system, and lump sums were calculated. The sale of dwelling units in municipal apartment houses was introduced; however, too favourable conditions of sale did not accord with public interest. At the end of the decade, housing

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construction dropped significantly, shortages increased, and the waiting period expanded considerably.

THE 1980s: A PERIOD OF DEEP NATIONWIDE ECONOMIC RECESSION Many years of one-sided economic and investment policies, the inadequacies of housing policies as well as the cumulation of demographic and social factors led to the collapse of the system designed to meet housing needs. The overall number of new dwellings completed annually fell from 284,000 in 1978 to 150,000 in 1979, i.e. to the level achieved twenty-five years earlier. Amongst the many sources and manifestations of the crisis, the following deserve separate mention: 1 Incoherent and inconsistent housing policy, namely: ● the lack of a precise definition of the duties and roles of central and local authorities in meeting housing needs; ● a formal barrier on access to cooperative dwellings (formal restrictions were imposed already in 1976), even though cooperatives were the leading organizational form designed to cater to these needs in urban areas; ● the co-existence of different forms of ownership and overlapping forms of administrative management of housing stock, which prevented the creation of a rational system for dwelling exchanges; ● preferences based on institutional, professional and hierarchical positions, which bypassed rational principles of payments for dwelling allocation and maintenance. 2 Difficult housing conditions, especially as regards: ● the population’s inflated housing aspirations, well above the levels warranted by economic and organizational constraints. This stemmed from the fact that once a dwelling—heavily subsidized with public funds—was allocated, the occupant treated it almost as his or her own property, albeit without the right to sell or legate it. ● very low indices of satisfaction of housing needs. Some 20% of the households, mostly young families, have no dwelling of their own, some 15% are queueing for cooperative dwellings (mostly in the largest agglomerations) and there are about 290 dwellings per 1,000 inhabitants. 3 Poor condition of the housing stock and municipal infrastructure, especially: ● a significant proportion of dwellings lack modern technical amenities, e.g. 23% of urban and 60% of rural dwellings have no bathrooms. There is a large proportion of old housing units—33% of urban and 40% of rural dwellings are over fifty years old, urban dwellings tend to be relatively small, the average dwelling area being 52 m2 and more than 60% have only one or two rooms.

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● municipal stock is largely dilapidated because the greater part of the maintenance cost is paid from public funds. Housing stock amortization is estimated at 80%, and by 1985 estimates, outlays on repairs of socialized dwellings amounted to a mere 3% of what was required for these purposes. ● an increasingly ravaged and frequently defective technical infrastructure, exploited beyond the limits of its normal useful lifespan and technical standards. 4 Rapid decrease in building and construction production: ● presently among the socialist countries of the COMECON only Romania has a lower index of number of finished dwellings annually per 1,000 inhabitants; ● in 1978–81 housing construction decreased 1.5 times, i.e. from 8.1 to 5.1 dwellings per 1,000 inhabitants. This level has been maintained until today, the decrease being most obvious in large towns (from 11.2 in 1978 to 4.9 in 1987). ● in the 1970s it was assumed that mass housing would be implemented using industrialized technology. However, lack of investment, poor circumstances and organizational shortcomings in enterprises producing houses lowered the index of their utilization to 65% (in towns of the highly urbanized voivoideships, below 50%). ● the present production of basic construction materials amounts to about 75% of the 1978 level; particularly serious are shortages of certain installation and finishing materials. 5 Illogical and unjust conglomerate of charges for dwellings: ● costs of obtaining a dwelling vary depending on forms of ownership and type of investor; hence municipal housing is fully financed from public means (local and central budgets); housing connected with industrial enterprises is financed from their own funds and low-interest bank credits (enterprises may provide financial assistance and other help to their employees in obtaining a cooperative dwelling or in the building of an individual house)—here the share of public means exceeds 90%. Cooperative housing is financed from members’ own funds, from bank credits and budget subsidies (with different conditions in individual and tenement forms of ownership)—here the share of public means exceeds 80%. Individual housing is mainly financed privately and from low-interest bank credit and public budget means—here the share of public means does not exceed 25%. ● charges related to the maintenance of housing stock depend on the form of ownership and management, and to a limited degree on the dwelling standards and rights of the user. Thus the largest subventions are granted to municipal housing stock and that belonging to enterprises—subventions constitute over 70% of the maintenance costs (including refurbishing and modernization). The maintenance of cooperative housing stock is subsidized only to a small extent (and, according to general assumptions, only in a temporary way)—about 15%. Private housing stock is almost entirely maintained by the owners (apart from private rented housing, in which subventions from the local budget amount to about 60% of the subsidies for ongoing maintenance costs). ● users of dwellings are also differentiated by subventions to the system of official charges for central heating and hot water, the water supply, gas, electric power: for

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example, users without central heating have greater expenses due to costs of heating the dwelling. Summing up the causes of the housing crisis, it may be assumed that, on the one hand, it was caused by external factors such as the general economic crisis, insufficient long-term investment in housing, the cyclic character of demographic processes, uneven spatial development of the country, etc. On the other hand it was also caused by the lack of a coherent system within housing, unstable and fragmentary decisions, unjustified and unjust priorities, nationalization of housing cooperatives and control over the sector, and a method of order and distribution to satisfy housing needs. This created favourable conditions for the establishment of a double pattern: a highly subsidized dwelling distribution and an unofficial turnover of dwellings on the free market. Simultaneously the accumulated funds for housing became separate from their destination and utilization. This led to a deepening social stratification caused by the differences in opportunities for obtaining a dwelling, and differentiation in the costs of obtaining and utilizing a dwelling (obtaining unjustified profits on building materials). This stratification is, first of all, of a generational character, but it is also connected with employment, location of employment and of residence, etc.

THE CHANGING REGULATIONS IN THE DIFFERENT SECTORS OF THE HOUSING SYSTEM General description of the system of charges under different types of ownership There are three forms of ownership with regard to multi-family housing in Poland: municipal, companies’ and institutions’, and private. Private ownership concerns multifamily blocks built before 1945, covered by the system of local authority allocation, which means that the right to dispose of the buildings is transferred from the owners to local authorities. Occupant fluctuation in this form of ownership has been negligible, while the volume of this stock has been on the decline. Municipal dwellings The construction of municipal flats has been financed entirely from central and local budgets; local authorities have recently taken over this financing out of their budgets. The construction of companies’ and institutions’ housing units is financed by their so-called company housing funds. The same rent principles apply in tenement dwellings in all types of ownership. Only individuals (not families) in very difficult housing conditions (living in less than 5 m2 per person) or in economic difficulties (average income per person below the monthly average in the socialized sector for the past twelve months) can apply for an allocation of a municipal dwelling. When a dwelling is allocated, the occupant has to pay a deposit sufficient to cover outstanding rent and other dues at the time the dwelling is vacated. This deposit is now equal to a multiple of the monthly rent: when a dwelling is occupied for the first time it is

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fifty times the monthly rent, while for dwellings formerly occupied, forty times. The value of the deposit has changed several times. For example, a flat of 45 m2 was equal to three monthly salaries in 1965 (after rents were increased), but by 1986, despite a threefold increase in rents, it had dropped to half a monthly wage and a year’s rent. It increased in 1988 to 1.4 the monthly salary and four years’ rent, only to fall back to less than an average monthly wage in the socialized sector in 1989 (Kulesza 1989). Current charges depend on the floor area and the standard of the dwelling. At present, the building’s location in a city is of little importance for setting charges. In 1983, after nearly twenty years of rent pegging, a system was introduced whereby a basic rate was used as the basis for rent calculation. Subsequent governmental decisions increased the basic rate, though this was irregular and not precisely correlated with inflationary processes. By 1989 it had increased from 6 to 50 zl per square metre; it now stands at 100 zl. The increases in the basic rate are dependent upon the installations provided: by 30% each for toilet, bathroom, gas network and central heating, but not more than 120% overall. In some cases, the rate can be cut: by 20% if the kitchen has no window or by 30% when the dwelling is occupied by more than one household, when it has no sewerage and water supply, or is higher than the fifth floor in a building without lifts, or in a basement and when the dwelling is in a substandard, obsolescent building. Moreover, regulations provide for a 50% cut in the basic rate if no electricity is installed (however, there are practically no such buildings). A cut in the basic rate can be awarded only for one of the reasons given above. Central heating, hot and cold water, gas and electricity are paid separately. Rent may also be increased in the following circumstances: ● if a dwelling exceeds the normative floor area (above 10 m2 per person) and the number of rooms exceeds the number of occupants, the rent for the floor area above the normative area is three times higher; ● if an occupant lives in a dwelling which is the property of a company or institution, but the tenant is no longer employed by that company or institution, the rent is four times higher; ● if an occupant lives in a dwelling without formal allocation, the rent is four times higher. Rent for a 45 m2 dwelling has been equal to the following percentages of the average salary: in 1965 (after a rise in rents) 9%, then, following a freeze on rents, this fell to 1.2% in 1982, increased to 4.1% by 1983, falling back to 2.8% in 1988, and 2.4% in 1989, despite a rise in rents (Kulesza 1989). Co-operative dwellings The centrally determined financing and crediting system remains in force with regard to the cooperative housing stock. The system of current charges was decentralized and now all cooperatives manage and finance their own stock. However, payments for central heating, hot water, electricity and gas are still fixed at the central level. In the early 1980s, the cooperative movement was centralized and in practice came under state management, which all but closed this channel for obtaining dwellings. To fill this void, new grass-root initiatives were launched to create new cooperatives outside the

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administrative framework of the already existing ones, capable of producing dwellings using their own members’ labour. When discussing the dwelling allocation cost to the occupant, we must distinguish between two forms of occupancy: cooperative tenancy and owner-occupancy. Each of these two forms gives different tenure and dwelling costs differ, depending on which of the two forms is chosen. In both cases cooperative members must make a down payment for the dwelling which has varied from period to period—from 10% to 20% of the anticipated construction cost. Down payments were higher for dwellings which were to be owner occupied. Cooperatives financed the rest of the construction costs with bank credits. Half of these credits were written off by the banks for cooperative tenants, while owner-occupiers could have up to 30% of their loan written off if they repaid the outstanding amount on moving in. Repayment times varied, tending to be longer (up to sixty years) for cooperative tenants. Interest on loans differed too: 0% to 1% for cooperative tenants and 2–3% for owner-occupants. Loans or the amortized parts were refunded to owner-occupiers if they moved out, but not to cooperative tenants. The crediting system had thus far ignored the inflationary processes. However, in 1989 an attempt was made to include this element in the repayment of housing credits. The principles in Table 14.1 are now in force.

Table 14.1 Principles for credits in cooperative housing (1984) Cooperative tenancy

Owner-occupancy

Down payment—[%] of construction costs

10

20

Bank loan—[%] of construction costs

90

80

Subvention (bonus) [%] of the loan

30

(30)

Repayment time in years up to

40

40

3

6

Interest rate [%] (until December 31, 1989)

A 30% bonus on loans was granted only to owner-occupiers who repaid all outstanding amounts on moving in. The interest rates shown above remained in force until the end of 1989 and the nominal value of annual instalments was calculated as 1% of the current dwelling value for cooperative tenants and 2% for owner-occupiers. If repayment thus calculated was higher then the amount calculated based on the unamortized part of the loan and its interest, then the difference was added to the nominal value of the outstanding loan. For practical purposes, this meant that credits would be repaid in half the time provided for in the relevant regulations. In 1990, a floating interest rate, adjusted on the monthly inflation rate, was introduced on housing credits. Years of constant changes in the principles applicable to housing credits came to produce a situation where instalments on housing credits could differ tens of times, depending mostly on building age and location. Instalments for owner-occupiers tend to be two to three times higher than for cooperative tenants. Table 14.2 is a presentation of

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instalments on a 50 m2 dwelling in relation to the average monthly salary, depending on when it was built (see Kulesza 1989).

Table 14.2 Instalment as percentage of average salaries in owner-occupied housing (1987) Before 1970

0.4

1971–5

0.6

1976–80

0.9

1983

3.1

1985

4.6

Source: Narodnoe khozyaistvo SSSR v 1989 g. ‘Finansy i statistika, Moscow, 1990, p. 154, 165

Given that cooperatives are supposed to be self-financing, current charges in cooperative dwellings are two to five times higher than for dwellings allocated by local authorities. Moreover, these proportions show important variations depending on dwelling age and equipment. Private dwellings Individual investors can obtain credits for house construction on the principles set for cooperative owner-tenants, which have been in force since 1989. Prior to this, there were different terms for individual house construction, which were far less favourable than for socialized construction. Private owners had to bear full maintenance costs and could draw credits (mortgage) for repairs or modernization. Private owners of multi-family houses can now obtain subsidies for repairs once every three years, amounting to 700,000 zl, which is a little less than the average monthly salary in the socialized sector. Apart from the rent (in dwellings allocated by local authorities) or current charges (in cooperative housing stock) the occupants are charged for electricity, thermal energy and gas. This is true also for individual house owners if they are connected to these utilities. Central heating and central hot water supply are paid in proportion to dwelling floor area (currently, 280 zl per m2 for central heating and 110 zl per m2 for hot water), while the cold water supply is subject to norms per person, which differ depending on dwelling standards: nothing is charged if a dwelling has water but no sewerage. A figure of 1.5 m3 per person is the norm for dwellings with water and plumbing, but without toilet and bathroom; 2.4 m3 for dwellings with water supply and toilet, etc.; up to 7 m3 per person in dwellings with water supply, toilet, bathroom and hot water. Nowadays, prices for cold water show strong regional differences: e.g. in Warsaw a cubic metre costs 500 zl, but in Lodz—900 zl.

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Outlays on housing stock maintenance and the sources of finance Inflation has led to a rapid increase in the nominal outlays on housing stock maintenance. Between 1986 and 1988, overall outlays on local authority and cooperative stock doubled, and this pace only increased later on.

Table 14.3 Outlays on housing stock maintenance, revenues from rents and current charges and the share of subventions and subsidies in the cities in 1988 Ownership type

Total outlays

Rents and charges

Subventions and subsidies in %

in zl per m2 monthly Municipal

147.0

38.0

74.1

Companies’ and Institutions’

160.2

40.0

75.0

Cooperative

71.2

68.2

4.0

Private

59.0

19.5

67.0

Source: IGPiK, 1988 Housing Investments

Subventions and subsidies for maintenance and repairs (without subsidies for central heating and hot water) increased more than twofold over these years. Table 14.3 gives a more detailed picture. It is currently estimated that subventions and subsidies for the municipal housing stock account for 85% of all outlays on this stock. In the cooperative stock, the policy of selffinancing, designed to cover fully the costs of maintenance and repairs with increased current charges, led to a decrease in subsidies from 17% to 4%. Global information on the outlays and sources of housing financing is presented in Table 14.4.

Table 14.4 Outlays on housing in the years 1986–8 (Current prices) Outlays on Housing

1987

1988

943.3

1,217.3

1,986.1

7.2

7.2

6.8

Population’s funds (%)

42.1

42.2

40.7

Social funds (%)

57.9

57.8

59.3

705.1

903.3

1,492.4

Total—in billions zl —as % of N1

Investment—in billions zl

1986

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—as % of N1

158

5.4

5.3

5.1

Population’s funds (%)

36.9

37.9

36.3

Social funds (%)

63.1

62.1

63.7

238.2

314.0

493.7

1.8

1.9

1.7

Population’s funds (%)

57.3

54.8

53.9

Social funds (%)

42.7

45.2

46.1

Maintenance charges and current repairs—in billions zl —as % of N1

Source: IGPiK, 1988, Housing Investments Note: Outlays were compared to the gross national income computed according to the SNA method

Outlays on investment in housing were increased by accrued interest in housing loans and bonuses and interest paid on the population’s savings earmarked for housing. The system of social assistance A system of social housing assistance, connected with that of current charges and rents, was introduced in Poland in the 1980s. It has undergone certain transformations and the following principles are now in force. Assistance takes the form of cuts in current charges or rents, and sums awarded as assistance are paid to dwelling managers, not to occupants. Assistance can be granted to occupants of local authority or cooperative dwellings, subject to the following conditions: ● the dwelling is not private property, i.e. it has not been bought from the state and is not an owner-occupancy; ● the occupant has no floor area above the normative standard which would amount to at least one room, for which higher rent is due; ● the occupant does not sublet a part of the dwelling, nor allows someone else to use it free of charge. Assistance can be granted to persons (households) in difficult financial conditions, i.e. when the average monthly income per person during the past twelve months did not exceed: ● 50% of the average monthly salary in the socialized sector in the previous year, if the applicant lives alone; ● 30% of the same if a multi-person household is the applicant. Here, charges are understood as the rent (current charges in cooperative stock), charges for central heating, hot and cold water. This term excludes charges for electricity and gas, and also—in cooperative dwellings—credit repayment. Assistance is granted for a period of twelve months, after which occupants can renew their applications. It must be noted that occupants have to apply for assistance: it is not granted ex officio, which limits the number of those receiving assistance in comparison to the number entitled to it. Research shows that only 8% to 10% of persons and households

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entitled to receive reductions, occupying cooperative multi-family flats, actually applied for assistance in 1988–9. The system designed to finance housing in Poland also includes other elements of subsidies and reductions, e.g. in the population’s savings system earmarked for housing purposes or in company housing funds. Transformations taking place both in this area and in the whole economy, and preparations for the introduction of comprehensive changes on October 1,1990, such as the new housing law, new credit, rent and social assistance systems, are more interesting, though too broad to be extensively discussed within the narrow scope of the present chapter. The changing regulation of new construction As regards housing construction the number of solutions is the largest and is extremely diversified: ● Major changes and enquiries are being undertaken in the system of construction financing, and especially in the crediting system. A turning point was reached when the categories of ‘a standard cost of building’ introduced in 1988 were applied when determining the limit of credits and subventions. On the one hand, this was to prevent unjustified cost increases, and on the other, it disciplined the investment process. Moreover, a system of preferences was introduced in crediting the construction of dwellings with increased heating standards, and of compact settlement (ribbon development). However, the most marked changes took place at the beginning of 1989, when anti-inflation elements were introduced into housing credits: credit is paid back in accordance with the value of the dwelling calculated annually (and not according to the building costs), and credit conditions were made the same for all investors. ● In 1988 the standard for designing dwellings was revoked which gave investors latitude as regards the floor area of the built dwellings, and voivoideship authorities were even recommended not to use the previous standards. ● In the 1980s the cooperative movement underwent considerable expansion (attracting especially youth and enterprises). Cooperatives may now build dwellings in compliance with the economic system utilizing local material, raw materials and manpower reserves (apart from construction defined in the Central Annual Plan). In four years the number of newly established cooperatives equalled the number of hitherto existing ones. ● Changes intensifying construction also include decisions enabling housing construction enterprises exceeding the implementation of the plan to make use of tax abatements, and they are excluded from constraints on wage funds and incomes of the employees. At the same time newly established companies and construction firms are released from the duty of paying income tax for ten years.

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AN OVERVIEW OF THE PROPOSED CHANGES IN POLAND’S HOUSING SYSTEM The system designed to finance housing has thus far relied on low rents and insufficient subventions. This has led to a considerable decapitalization of the housing stock, especially of municipal, private multi-family housing and companies’ shares. There are important disproportions in the population’s expenditures on tenement, cooperative and private dwellings, hardly justifiable by dwelling standards or comfort. The proposed changes in the system of rents and current charges concern mostly tenement dwellings and may be summarized as follows: 1 As of October 1, 1990: ● rents for municipal, companies’ and institutions’, and private flats allocated by local authorities shall cover all maintenance and ongoing repair costs; ● rents shall be fixed by landlords (owners or managers); ● rents for flats with modern standards shall be 30% higher; ● rents shall be fixed, based on the previous year’s costs, anticipated rise in costs and after consultation with occupants’ councils; ● there shall be no rent reductions (e.g. for veterans) or surcharges (for floor area above the normative standard); ● deposits shall be equal to ten months’ rent; ● occupants without formal allocation shall cover all costs connected with dwelling maintenance; ● the management of buildings may be turned over to partnerships, joint-stock companies, associations, cooperatives, etc. 2 As of January 1, 1991: ● tenants shall also participate in the cost of capital repairs. Charges equivalent to 1% annually of the current building value are proposed. It can be anticipated that the proposed changes will increase the responsibility of housing stock managers and occupants, and enhance the role of occupants’ councils in the management of the housing stock. The maintenance costs of company-owned buildings will no longer be included in their production costs. These proposals do not solve such problems as the relationship of rents to dwelling standards, etc., nor the eviction of occupants in arrears. They do not specify the principles on which tenement dwellings are to be allocated, nor do they solve the problem of subsidies needed to cover full maintenance costs. Changes in the system of housing credits aim to personalize loans, offering them directly to citizens rather than to institutions, which should give them more leeway in the choice of methods to secure their own dwellings. Loans are to be subjected to uniform principles and available for: ● the purchase of the title to a cooperative dwelling;

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● construction—individual or collective—of a one-family house or flat in a multi-family building; ● the purchase of a one-family house or flat in a multi-family building; ● construction of extensions to an existing building; ● transformation of premises not intended for occupancy (e.g. attics) into living quarters; ● repair, modernization and restoration of buildings and dwellings. New credit principles are to cut back on the existing preferences, mostly by: ● increasing down payments to 30%; ● abolition of the automatic writing off of parts of loans; ● alignment of the real interest rate, with the limitation that monthly repayments (principal plus interest) should not exceed 10% of the average monthly salary. It is anticipated that the difference between the ruling interest rate and these repayments shall be paid from the state budget. Those in the cooperative dwelling queue, who had made full down payments up to 1988 and gave up waiting for cooperative dwellings, will be guaranteed loans if they reapply. The fundamental fallacy in these proposals concerns credit repayment, where instalments are independent of construction costs and cost differences, e.g. between single-family and multi-family buildings, are disregarded. However, these proposals do provide for normative floor areas for which credits will be granted, though the normative standard stipulated in the proposed changes in the social assistance system seems more interesting. It is assumed that household expenditure on rent or current charges should not exceed 7% (it is now at about 2%) of their budgets. Assistance shall be granted to cover the difference between rent (current charges) for the normative floor area and the 7% of the housheold budget, stipulated above. The following assumptions have been made with regard to the normative floor area: ● one-and two-room dwellings—no limits; ● for bigger dwellings occupied by: one person—35 m2; two persons—40 m2; three persons—45 m2; four persons—55 m2; five persons—65 m2; more than five persons— 70 m2. Persons having purchased dwellings from the state, cooperative members enjoying the status of owner-occupiers and occupants who sublet dwellings or parts thereof would not be entitled to such assistance. Assistance shall be paid from local funds to the managers of the buildings. Two main points are advanced against these proposed changes: 1 the exclusion of credit and interest repayment on cooperative tenement dwellings from current charges; 2 the inclusion of charges for central heating and centrally supplied hot water into current charges, which leaves the occupants of dwellings heated by other methods at a disadvantage. Generally, the contentious issues are the following:

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● whether current charges should be centrally or locally fixed and what the limits of decentralization are in this respect; ● what should be the differences in charges and rents for dwellings in buildings of different ages, differing in degrees of decapitalization and how this should be taken into account given the differentiation of the housing stock within different districts, cities and between cities; ● what therefore should be the source for financing subventions and subsidies: the central budget or local budgets; ● how much regional differentiation is acceptable; ● to what extent dwelling prices can differ depending on their standard. There is no doubt that these issues and the concomitant problems will soon have to be acknowledged and solved.

REFERENCES A.Andrzejewski. Housing Policy, PWE. Warsaw, 1987. Assumptions of Long-Term Housing Policy (draft of 2nd Version). Ministry of Spatial Planning and Construction. Warsaw, 1989. A.Grabowiecka-Laszek. ‘Housing in the Period of 1950–1987’ (Statistical Data). Housing Problems No. 2–3. IGPiK. Warsaw, 1988. Housing Investment and Construction and Housing Stock Economy in the Years 1986–1987. IGPiK. Warsaw, 1988. H.Kulesza. Housing in Poland. Diagnosis. Summarized ‘Round Table’ Talks. Warsaw, 1989. Opinion of ‘Solidarity’ Concerning Housing Policy. Warsaw, 1989. A.Paszynski. Programme of Alternative Housing. Warsaw, 1989. Political Assumptions to the Model of Reformed Housing Economy (draft). Central Committee of the Polish United Workers Party. Warsaw, 1988.

APPENDIX

Table A14.1 Housing situation in Poland in the years 1950, 1960, 1970, 1978 and 1988 Years 1950

1960

1970

1978

1988

1. Number of dwellings per 1,000 inhabitants

234

236

248

266

284

2. Number of households per 100 dwellings

122

118

116

117

−

3. Average number of rooms per dwelling

2.34

2.46

2.87

3.15

3.41

4. Average number of persons per room

1.75

1.66

1.37

1.16

1.01

5. Average number of m useful floor space per dwelling

−

−

50.7

53.9

59.0

6. Average number of m2 useful floor space per

−

−

12.9

14.7

17.1

2

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person 7. Share of dwellings with central heating

2.1

7.0

22.2

41.5

56.3

8. Share of dwellings with bathroom

6.2

13.9

29.5

52.4

65.6a)

9. Share of dwellings with one—two rooms

−

58.0

41.5

31.0

25.6b)

10. Share of inhabitants with two and more persons per room

−

37.3c)

36.5

24.4

18.6b)

a) 1987; b) 1984; c) 2.1 and more. Source: A.Grabowiecka-Laszek, ‘Housing in the Period of 1950–1987’ (Statistical Data). Housing Problems No. 2–3. IGPiK. Warsaw, 1988.

Table A14.2 Construction and investment in Poland in the period 1950–88 Dwellings erected Year 1950=100% (59,500 dwellings)

Per 1,000 Per 1,000 Average inhabitants marriages number of m2 useful floor space

Share of nonsocialized sector

Investment inputs for housing (in billion zlotys— current prices)

1950

100.0

2.4

223

50.3

40.3

4.6a)

1951

98.3

2.3

216

50.3

30.8

5.8a)

1952

91.6

2.1

203

51.4

29.4

6.0a)

1953

116.0

2.6

264

51.3

28.2

7.2a)

1954

119.3

2.6

270

50.9

27.5

8.7a)

1955

149.6

3.3

344

47.1

31.7

10.2a)

1956

152.6

3.3

349

52.8

38.3

8.5

1957

205.7

4.3

477

53.3

38.7

13.1

1958

216.8

4.5

489

56.7

44.2

15.7

1959

231.3

4.7

495

57.8

44.7

17.5

1960

238.8

4.8

582

56.8

41.6

18.8

1961

242.4

4.8

611

54.5

38.0

20.5

1962

233.1

4.6

608

53.3

32.6

19.9

1963

239.3

4.6

648

51.8

31.7

21.0

1964

266.6

5.1

687

50.6

28.8

20.8

1965

286.6

5.4

852

49.0

26.1

21.2

1966

295.8

5.6

779

49.6

26.5

23.0

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1967

312.1

5.8

780

50.5

26.7

25.3

1968

318.2

5.9

734

51.6

26.7

27.7

1969

331.1

6.1

729

52.7

26.3

29.5

1970

326.4

6.0

693

54.3

27.6

33.1

1971

320.3

5.8

654

55.8

28.4

37.8

1972

345.4

6.2

668

55.2

25.2

42.1

1973

381.7

6.8

722

55.8

24.5

50.5

1974

419.8

7.4

782

56.0

22.9

57.7

1975

417.0

7.3

750

57.3

23.3

69.7

1976

442.9

7.7

807

58.5

24.1

86.1

1977

447.2

7.7

816

61.4

27.6

103.2

1978

476.6

8.1

867

62.2

26.2

115.6

1979

467.2

7.9

871

63.8

25.9

119.4

1980

364.9

6.1

706

64.0

25.7

125.9

1981

314.3

5.2

580

63.9

24.7

104.0

1982

312.8

5.1

589

66.7

29.8

276.4

1983

329.1

5.4

640

67.3

29.5

351.9

1984

329.2

5.3

687

67.9

28.0

432.6

1985

318.7

5.1

711

69.5

29.9

520.6

1986

310.9

4.9

718

71.0

31.0

641.3

1987

321.7

5.1

757

72.4

31.6

826.8

1988

320.5

5.0

33.7

a) Prices 1961 Source: A.Grabowiecka-Laszek, ‘Housing in the Period of 1950–1987’, Housing Problems No. 2– 3. IGPiK. Warsaw, 1988.

15 The housing market in Warsaw according to the mediators of the estate agencies Alina Muziol-Weclawowicz

INTRODUCTION Throughout the whole of post-war Polish history, housing remained an important and unsolved socio-economic problem. From 1979 onwards we have observed a continuous decrease in the number of new flats produced and an expansion of the waiting list for new housing cooperatives. The waiting period for new flats became a political question during the 1980 crisis and again in 1989, during the round table negotiations between the government and solidarity. One possible way of solving the housing crisis is privatization of the housing stock. The main idea behind this concept is the increase in the share of construction costs and maintenance borne by the citizens. Housing policy in the current socio-economic crisis was oriented (until the beginning of 1989) on an immediate problem: to stop the decline in housing construction and to halt the deterioration of the existing housing stock. In the present crisis one can distinguish two elements: a long-term structural crisis in the building industry and a functional crisis (Andrzejewski, 1987). Generally, one can identify two sectors in housing: the state owned and private. The state sector consists of state property (i.e. local authorities’, communal, institutions’), and the cooperatives. The most important aspect of this sector is that the costs of construction and maintenance are subsidized by the state, whilst the tenants’ contributions are much lower than real costs. Cooperative property includes owners’ cooperatives and the tenants’ cooperatives. Housing constructed by institutions belongs to the investor. In the early 1970s the privatization of housing stock was implemented. The tenants in public and cooperative property were given the opportunity to buy the flats in which they were living. The financial resources from these transactions were to be directed to the revitalization of housing investments. The economic and social consequences of this new policy were not predictable. Although in terms of living conditions in the whole post-war period one can observe systematic progress, the question of the housing system in Poland was defined by the tremendous deficit of flats; and the gap between the number of households and the number of flats is still growing. Based on the sampling census of 1984 the estimated deficit of housing units was 2,097,000 in relation to the potential number of households (Zarski 1987). But the deficit registered in the socialized sector (according to the number of housing cooperatives’ members still waiting for their flats and the number of applications for flats in local authorities) has been estimated up to 2,280,000 housing units (it is possible that this figure is overestimated). Hence the deficit is equal to one-

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fifth of the existing housing stock. The housing shortage has obvious consequences for the socio-spatial pattern of Polish towns and has created competition in gaining access to the limited housing resources. Limited mobility (intra-urban migration) causes the widespread phenomenon of the ageing of inhabitants along with the ageing (deterioration) of flats. As a consequence, the evolving needs of families are not realized (Weclawowicz 1988). Competition between particular social groups for access to flats is guided by their social value to the labour market. For example, in the 1970s new flats in Upper Silesia were more available to newcomers, workers in heavy industry, than to the natives of that region. As a result the housing conditions of the local population have deteriorated. Legal regulations concerning the purchase and sale of flats are very bureaucratic. These regulations also make possible the exchange of flats between inhabitants of different housing sectors pending the approval of the local authority or housing cooperative. The factors most limiting widespread exchanges are: (a) shortage of large flats (the biggest demand is registered), and (b) rules of payment, depending more on the kind of investor and the age of the building than on the use-value of a particular flat (Kulesza and Wietlicka 1989). The majority of applications for flat exchanges within a given cooperative or local authority are for bigger flats. Exchanges between inhabitants organized by themselves (by advertising in newspapers) or by exchange offices are very popular. Floor space is charged according to current market prices. The free trade of flats is possible on the conditions that the flat is purchased from the cooperative or state, credit is redeemed and at least ten years of ownership. This ten-year period of legal ownership has been implemented to reduce speculation. In addition, if the profit from selling the flat is not reinvested in housing, the taxes are extremely high. The privatization of cooperative flats started in 1972; by 1978 only 10% of the total cooperative housing stock was in private hands. The rate of increase of private flats in the cooperative sector has been two times higher than the total increase of cooperative housing stock (Polkowski 1989). The privatization process has accelerated, particularly from the beginning of 1989, in tandem with the rate of inflation. Expectations on the radical reform of the subsidies and mortgage system cause additional pressure on privatization. Finally, a note on the legality of ownership. Hitherto, in principle one family can legally own only one flat. The tenants’ licences for cooperative flats are not transferable. The licences do, however, make possible the transfer of the flat to members of the family, which means that flats are now inheritable in Poland. All forms of legal action by tenants in providing flats for their relatives are forms of self-redistribution of flats.

THE HOUSING SITUATION IN WARSAW Housing conditions in Warsaw in comparison with the rest of the country are relatively good. The technical infrastructure and to a degree the density of occupancy in individual flats are better than in other big cities—only the size of flats is lower than the national average. In 1985 in Warsaw more than 68% of the total number of flats were small: onetwo rooms. The evolution of the ownership structure in 1978–85 in Warsaw is presented

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in Table 15.1. These figures do not include private flats in buildings belonging to the local authority or cooperatives.

Table 15.1 Structure of ownership in 1978 and 1985: Warsaw area [Flats in buildings of:] local authority No.

co-operatives

other socialized sector

private Total

50,364

216,071

206,915

40,151

513,501

9.8

42.1

40.3

7.8

100.0

51,632

214,776

256,204

48,430

571,029

9.0

37.6

44.9

8.5

100.0

1978 % No. 1985 % Source: Rey (1987).

In order to understand the housing market in Warsaw one must comprehend the role of the contemporary crisis in housing construction (Table 15.2), and the concentration of private flats and of the demand for new flats. There has been a housing crisis in the Warsaw area since 1976 (Muziol-Weclawowicz 1985). The production of housing units in 1986 was at 35% of the 1976 level.

Table 15.2 New flats produced through the national economy Total urban areas 1976–80

Warsaw No.

%

1,032,966

65,385

6.33

1981–5

723,820

39,324

5.43

1986–7

277,800

10,677

3.84

Source: Budownictwo mieszkaniowe w latach 1970–1981 i 1981–1987, GUS, 1983 i 1988.

In 1978, or six years after the new privatization was implemented (making it possible to buy flats from the cooperative and state sectors) there were 162,700 private flats. The Warsaw voivoideship share was 34% of the number of flats purchased by tenants from the cooperatives nationally (Polkowski 1989). In the cooperative sector in 1985, 24% of all new housing units were owned, while on the national level the figure was 7% (Gorczyca 1986). The privatization process is still progressing rapidly, mainly because of inflation and the formation of the new cooperatives with only owner status. Unfortunately there is no data about privatization of the state sector in Warsaw. The deficit of flats is concentrated in the biggest agglomeration. In 1978, the voivoideships of Warsaw and Katowice had more than 24% of the national housing

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deficit in urban areas (Lutostanska 1985). It is estimated that by the year 2000 the Warsaw area will require 276,000–335,000 new flats. The waiting list for cooperative flats is extremely long and the registered housing need in the socialized sector of housing reached 235,000 housing units in 1987, and 205,000 units in the cooperative sector. The information available about the shortage of housing units reveals an alarming situation. The quantitative problem can be described in terms of a deterioration of existing housing stock and a collapse of housing supply. While information about housing conditions, housing needs and decreasing trends in housing construction is available, there is a lack of analysis and research on the causes and consequences of these changes for the future. Nevertheless, we can identify the following factors as contributing to the current crisis: (a) lack of land with the technical infrastructure; (b) financial privileges of big state-owned construction companies, and the needs of small investors (i.e. private and small cooperatives with social initiatives) ignored by local authorities; (c) the preference for large-scale technology.

THE HOUSING MARKET IN WARSAW ACCORDING TO OWNERS OF PRIVATE ESTATE AGENCIES Housing crises and the free housing market have attracted the attention of many politicians. Nevertheless privatization has never been the object of detailed studies; such research has been impossible because of the current system of collecting statistical information. The only solution available was to collect relevant information by survey studies. A survey of agency offices for the purchase and sale of flats was carried out in May and June 1988. At that time there were forty real estate offices. An analysis of newspaper advertisements facilitated the selection of the most active agents; from the twenty-three agents selected sixteen have been interviewed. The questionnaire contained twenty questions dealing with three subjects: (a) the main features of the housing market; (b) spatial preferences; and (c) the characteristics of clients. Because of the open questions each answer had a very specific character. It was difficult to synthesize the results, but for an introductory study of the housing market they were an important source of information. The high divergence of opinion reflects the different experiences of agents as well as the very complicated and individual characteristics of each case. Such peculiarity in opinion reflects the unstable situation in the housing market. The answers, with one exception, are all credible, but the questions have not touched upon the functioning mechanisms in the offices. The questions distinguish between flats and houses, their purchase and sale (but respondents treated this as one problem). We have no precise responses as regards exchanges of flats; some agents treated these activities as purchasing-selling transactions, and some do not handle exchanges. The information collected on the question of house purchases-sales is limited because of the very sparse supply of single-family houses in Warsaw.

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CHARACTERISTICS OF WARSAW’S HOUSING MARKET Half of the agents declared that the most important feature of the housing market was that demand far exceeds supply. Another very frequent opinion was that the instability of the housing market (the fluctuation of supply and demand) is higher than in other segments of the national economy because of price increases, lack of large flats, the instability of the taxation system and legal rules. In all cases, the agents’ additional remarks touched on the significance of legal rules in imposing restrictions on transactions. Unfortunately it was impossible to estimate the extent of annual transactions. Certain agents indicated ten-thirty transactions annually. Such figures are not valid; probably the agents quoted the numbers on which their agency’s taxation depends. The estimates of the total number of annual transactions in Warsaw provided by some of the agents differ so much that we have no clear picture. Flat prices in Warsaw are a legendary problem, exploited by journalists. The market prices are extremely inflated and have no relation to the real cost of production. The figure provided by agents (May and June 1988) fluctuated from 200,000 to 300,000 zl per square metre up to 400,000 to 500,000 zl per m2. The most frequent and real price was estimated at 300,000 zl per m2 and, in dollars, between 200 and 300 per m2. The agents emphasized that small flats are cheaper than bigger ones and that the increase of prices in hard currency is not so great as that in zlotys, which rose by over 100% between the autumn of 1987 and June 1988. If we compare that level of prices with the average salaries in 1987 (29,184 zl monthly in socialized sectors) it will become clear that with an average annual salary one can buy only 1 square metre of a flat. Thus the agents’ clients are the financial elite of society and their incomes do not come from state jobs. The most expensive and the cheapest areas of Warsaw named by the agents have been confirmed by other surveys of housing preferences. Srodmiescie, Zoliborz, and Mokotow were indicated as the most expensive; in the latter, only the central part with old and high-standard housing. Sasaka Kepa, which is part of the Praga Poludnie district, on the right bank of the Vistula is also included in this category as an old, high-standard housing area. Among the new housing estates the highest prices are in Ursynow-Natolin. Although highly criticized and contentious, this estate does contain bigger and more modern flats. Furthermore the metro, currently under construction, will make it more accessible. The cheapest areas in Warsaw are in Praga Polnoc and some isolated areas in the peripheral zones of the city. The next question dealt with prices of flats in the suburban zones of Warsaw and other large towns in Poland. All the answers indicated prices lower by 30–50% in suburban zones, and by 50% in other large towns as compared with Warsaw. As regards the Warsaw agglomeration, diverse opinions have been given about the size of the housing market. Some agents claimed that suburban flats were very rarely introduced on the market, others mentioned that suburban areas generally provided the most offers. But single-family houses were more popular in suburban zones. Generally, detached housing located far from the centre is cheaper than flats in Warsaw; however, the price of 1 square metre is more or less equal. The most important factor differentiating price in this case was the size of the land and the technical standard of the houses.

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In terms of other large towns, the lowest prices are in Lodz while on the coast prices are almost equal with Warsaw. There were, however, differing opinions about prices in Cracow and Zakopane. Detailed studies of the responses reveal a powerful subordination of the housing market to the political and economic situation. For example, the wave of strikes in 1987 and announcements of price rises not even connected with housing caused supply stoppages and an increase of demand on the housing market. Before the referendum in November 1987 interest in the housing market increased but the supply of flats decreased. It has been noted that a high inflation rate and an increase in prices cause a reduction in market size by eliminating many possible buyers. One of the agents summarizing the fluctuation of prices concluded that supply and demand did not depend on the price levels but on general social apprehensions about the referendum and possible unknown future changes. The greatest demand was for large flats, while small flats (for example, two rooms and a kitchen) were in the greatest supply. The most popular were the smallest flats designed for single persons; their attractive price created a balance between supply and demand. The physical attributes of construction materials have been considered as one of the factors influencing prices. Most attractive were those flats constructed of traditional materials (a feature of the older and more solidly built type of housing, and with a better infrastructure). However, some of the agents indicated no relation between prices and types of construction materials. A very important factor for clients was the location of the flat in the building (ground floor, first floor or higher), and the condition of the flat in detail, for example flooring, and its level of maintenance.

SPATIAL PREFERENCES The survey responses did not give a classical picture of spatial preferences. The housing market has been mainly motivated by a desire to improve housing conditions through ownership or larger floor space. The survey questions have focused on obtaining information about the frequency of particular motives for exchanging flats, such as: 1 improvement of housing conditions 2 changing the social environment 3 changing the natural environment 4 closer location to place of work 5 better access to services 6 profit. Improvement of housing conditions ranked the highest. The profit motive too occurred quite frequently. Many agents denied the existence of a profit motive, at least in connection with the numerous exchanges of large flats for smaller ones. These exchanges usually involved persons who could not afford to live in the larger flat. The remaining motives were considered as not essential and varied from one person to another. In only one case was the motive of speculation mentioned.

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It was not easy to determine the areas of highest supply and demand. Only three agents who agreed to answer this question indicated a housing estate in Praga Polnoc (the lowest-priced area). Residents on this estate tried to sell their flats and move to another area. Other agents claimed that the only important criteria for preferences are the price and size of a flat. One can conclude that under conditions of a permanent flat shortage, location is unimportant. An additional question dealt with the number of buyers coming from outside Warsaw and their preferences. It was estimated that they constitute 10% of the total number of clients. Parents often buy flats for their grown-up children, generally small flats. The majority of agents viewed this group of clients as indifferent and uninformed about the ecological situation in Warsaw; they chose the central part of the city (which has declined in popularity among Warsaw citizens because of high traffic pollution) or the left bank of the Vistula river. However, in some cases there were indications of a specific location, namely one close to the family already living in the city. Some agents indicated that, regardless of the legal constraints imposed on newcomers to Warsaw (till 1983 Warsaw was a so-called closed city), there have been more clients coming from outside the city limits. At present the well-known housing problems effectively limit the flow of newcomers to the city; we now observe the beginning of a migration from Warsaw to the suburbs and other towns. Summarizing opinions from this part of the questionnaire one can conclude that the free housing market is neither functioning properly nor satisfying needs associated with location and housing environment. When investigating the housing market in Warsaw we must distinguish between preferences and the evaluation of attractive environments in particular parts of the city, and the actual decision about location undertaken in flat exchanges. The chronic housing shortage has meant that the first priority in the hierarchy of needs connected with shelter for the majority of families is to get a suitably sized flat as early as possible. After fulfilling this basic need, families attempt to obtain a better location (Rebowska 1986). The opinion of agents suggests that obtaining satisfactory locations, even for people with money, is rather difficult. In effect the whole society is struggling with one problem, i.e. how to obtain a flat which will be big enough for the individual family’s needs.

CHARACTERISTICS OF CLIENTS The last part of the survey included questions attempting to determine the social status, age and financial position of clients. These questions attracted less response (answers, comments) than the other survey questions. Financial status was mentioned, describing buyers representing higher financial groups, mostly the intelligentsia (with inherited family capital or hard currency obtained during work abroad) and from private enterprise. Working class groups were absent from this market. It is important to stress that clients were characterized by their particular life situation: inheritance, marriage between owners of two flats, division of family property or immigration from abroad. All these stages represent situations where exchange of flats is possible on the free market. One can observe certain age consistencies. Usually the buyers were 30 to 50 years old. The sellers, however, were elderly people in difficult

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financial straits, often forced to sell their large flats in exchange for two small separate flats, giving one to their grown-up children. However, there is a greater interest in exchanges on the part of people of different ages with relatively poor financial means.

CONCLUSIONS The questionnaire survey of the owners of real estate agencies has been designed as an introductory study of the housing market in Warsaw. The size of this market is very circumscribed by the low percentage of private flats and houses; it serves only those who have large financial resources or who suddenly have two flats at their disposal. The survey showed that in Warsaw society we can identify a specific ‘housing market class’ having an important role in the system of social stratification. To test this hypothesis we need more studies of other elements of the legal utilization of existing housing stock in Poland. The most important criterion for distinguishing such housing classes is financial power. Probably the ‘housing market class’ is not large and is dispersed spatially in the city. Because the main motive behind housing transactions has been improvement of housing conditions, this market cannot satisfy all preferences connected with the housing environment. It seems, however, that the market is the only means available to improve one’s housing conditions when the housing shortage is so great and the distribution of housing is centralized. However, the price levels in relation to salaries exclude the majority of society from utilizing the housing market as a means of solving their housing problems.

REFERENCES Andrzejewski, A., (1987), Polityka mieszkaniowa, (Housing Policy), Warszawa, PWE. Budownictwo mieszkaniowe w latach 1970–1981, (Housing Constructions, 1970–1981), 1983, GUS, Statystyka Polski, Materialy Statystyczne, 13, Warszawa. Budownictwo mieszkaniowe w latach 1981–1987, (Housing Constructions, 1981–1987), 1988, GUS, Statystyka Polski, Materialy Statystyczne, 60, Warszawa. Gorczyca, M., (1986), Przydzialy mieszkan spoldzielczych, (The Appropriations of Cooperative Flats), Wiadomosci Statystyczne, 10, pp. 11–15. Kulesza, H. and Wietlicka, B., (1989), Zamiana mieszkan—potrzeby i ograniczenia, (The Exchange of Flats—Needs and Limitations), Sprawy Mieszkaniowe, 2, pp. 7–15. Lutostanska, A., (1985), Deficyt mieszkan i jego rozmieszczenie, (The Flats Deficit and Its Spatial Pattern), IG i PZ PAN, p. 56, Warszawa. Muziol-Weclawowicz, A., (1985), Some Aspects of the Crisis in Housing in Poland, Geographia Polonica,5, pp. 99–112. Polkowski, L., (1989), Nabywanie uprawnien wlasnosciowych do spoldzielczych mieszkan lokatorskich, (Purchasing Owners’ Status the Tenants’ Cooperative Flats), Sprawy Mieszkaniowe, 3–4. Rebowska, A., (1986), Nieplanowane skutki planowej gospodarki mieszkaniami, (The Unplanned Effects of the Planned Housing Economy), Krakow. Rey, A., (1987), (ed.), Analiza stanu i cech szabudowy i zasobow oraz warunkow mieszkanio w ychwmie sciestolecznym Warszawie wedlug pierwotnych danych Narodowego Spisu Powszechnego 1978, zaktualizowanych nakoniec 1985r., (An Analysis of the Stages and

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Features of the Buildings and Housing Estates and the Housing Conditions in the City of Warsaw on the Basis of the Primary 1978 National Census Data, Updated to the End of 1985), BPRW, Warszawa. Weclawowicz, G., (1988), Struktury spoleczno-przestrzenne w miatach Polski, (The Socio-Spatial Structures in Polish Cities), Ossolineum, Wroclaw. Zarski, T., (1987), Ocena zmian sytuacij mieszkaniowej i zroznicowan spolecznych, (The Evaluation of the Changes in the Housing Situation and Social Differentiation), Instytut Gospodarki Przestrzennej i Kommunalnej, Warszawa.

16 Romania An introduction Stuart Lowe The overthrow of the Ceausescu regime in December 1989 marked the end of one of the most bizarrely deformed variants of post-war Stalinism. Under this system Romania was reduced to a state of impoverishment unparalleled in the East European socialist states, with the exception of little Albania. The crucial point, certainly in comparison with Albania, is that this abject situation was not always the case, for Romania was and remains a country of great natural resources. Under Ceausescu Romania entered a second phase of Stalinist development in the late 1970s which was pursued ruthlessly until his overthrow and execution. The evaluation of the development of housing policies in the last two decades is intimately connected to this accelerating programme of ‘systematization, modernization and civilization’. It is important to understand the radical nature of these plans because they lead to the intrusion of state activity into every aspect of social and domestic life, and had, as one of its key long-term policy instruments, control over housing policy and the building programme. An evaluation of Romanian housing policy in the 1980s fits uneasily into a volume concerned with housing reforms because the picture is essentially of counter-reforms in which state control of the housing market and construction intensified to a position of almost total domination. Even the informal market characteristics of some of the other socialist states, and which developed strongly in Romania in the 1980s, were effectively obliterated by ruthless social policing prescribed by Ceausescu’s nepotistic ruling clique based in Bucharest. It is not without justification that Romania has been described as a system of ‘socialism in one family’; forty of Ceausescu’s relatives held key posts in the military and civilian apparatus, and the hard-core of the Securitate militia were orphans whose education and welfare were personally supervised by the Ceausescu family. One in ten of the population was a paid informant or directly employed in the security services. These points are not made to sensationalize what was a tragedy for the bulk of the Romanian people, but to make it clear at the outset that a chapter on recent Romanian housing policy has to be written in the very specific context of the character and political methods of the Ceausescu government. The homogenization of society under the hegemony of the urban working class was the ambition of the Romanian Workers’ Party before the accession of Ceausescu. The chapter begins, therefore, with a brief overview of the political development of the country after the Second World War. Since 1965, under the increasingly authoritarian and vicious regime of Ceausescu, a second stage of development was engineered through an emphasis on regional policy and an obsession with urbanization for its own sake. The downgrading of agricultural labour and rural culture was accelerated in line with this

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policy. Two policies were of particular significance to the ambitions to create an urbanbased communist society, and are essential to understanding the role of housing policy: the administrative reforms of 1968 and the programme of territorial ‘systematization’ which was initiated in the early 1970s but only began to be implemented in the second half of the 1980s.

FROM WORLD WAR II TO 1965 The periodization of Romanian social and political development in the post-war era is very complex. Here attention focuses briefly on the two decades before Ceausescu came to power in 1965, following the sudden death of Gheorghiu-Dej. The immediate post-war years were a time of extreme hardship. The Soviet occupation of Romania in 1944 was accompanied by much bloodshed and the imposition of severe economic reparations, mainly in the form of agricultural produce. Harvest failures in 1945 and 1946 compounded the problems and there was widespread famine throughout the country in 1946 and 1947. The incorporation of Romania into the Soviet bloc followed a similar pattern to the other East European states: the subjugation of political opposition, the creation of the Romanian Workers’ Party (in February 1948), and a programme of intensive and rapid industrialization. However, from the outset there was a strong nationalistic wing within the Workers’ Party led by the Party Chief Secretary, Gheorghiu-Dej. His position was strengthened by a purge of Moscow supporters and after the death of Stalin in 1953 Romanian politics became increasingly nationalistic and independent. The popularity of the regime was enhanced not by a post-Stalin ‘thaw’ but by the pursuit of national independence. There was a gradual refusal to be subordinate to Moscow, particularly by refusing to supply agricultural produce. Soviet troops were withdrawn in 1958. Instead the government committed the country to a new phase of rapid industrialization. They built, for example, a huge steel works at Galati in the early 1960s, underpinning the emphasis on economic self-reliance. Gheoghiu-Dej died suddenly in March 1965 and the appointment of Ceausescu as Party Secretary, and later as President, was accompanied by the proclamation of Romania as a Socialist Republic. The important point is that Ceausescu continued and intensified previous policies. He built up international connections with Third World countries and was feted by the Western nations for his independence from Moscow (in Britain he was given an Honorary Knighthood by Queen Elizabeth in 1971, but was stripped of this honour shortly before his execution in 1989!).

URBAN DEVELOPMENT TO 1965 In the war years and up to 1948 the focus of urban change was on Bucharest, mainly connected with the urban-rural migration of refugees from war and famine (Ronnas 1983). The clearest trend was a westward movement from Moldavia and Dobrogea into Bucharest. After 1948 urban growth was associated with the first period of rapid industrialization focusing on the development of the primary manufacturing base and mineral extraction. Between 1948 and 1956, for example, the population of the coal

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mining town of Honedora grew by nearly 7% per annum. Brasov, Sibiu and Constanta, all key manufacturing centres, grew at 4% per annum. Nine towns doubled in size between 1948 and 1956. The growth of these ‘socialist cities’ contrasts with the slow development of Bucharest itself (due mainly to housing shortages), and to the decline of many provincial towns in rural areas. Apart from the industrialization drive, administrative reforms were also a factor in creating the uneven pattern of urban development in this period. The substitution of nineteen regions, based on Soviet administrative methods, for the fifty-eight traditional Romanian countries (judete) led to the decline of many of the former county towns, and Falcui even lost its urban status. In the decade up to the beginning of the ‘Ceausescu period’ in 1965 the urban population grew at about the same rate as the immediate post-war years, so that by that time nearly a third of the population lived in urban areas. But in this period there was much more interest in the development of the non-industrial regions as the drive to create a unified workers’ state under the hegemony of the urban working class intensified. Oltenia, for example, formerly a backwater of rural Romania, underwent rapid changes; coal and oil extraction in the Gorj area was singled out for particular attention. The second key element in the creation of socialism was the collectivization of agriculture. But the initial attempt at collectivization, in 1949 and 1950, was largely unsuccessful due to the sheer scale of the rural domain, based around some 3 million private farms and small-holdings. Many of the peasants were effectively self-sufficient and saw few benefits from the intrusion of state farms into their traditional way of life. An interim form of quasi-collective association was formed, with the households retaining their livestock and ownership of their small-holdings but the arable work undertaken collectively. In 1958 the socialization policy was stepped up and by the mid 1960s only some 4–5% of arable land remained outside the collective system, mostly marginal plots in mountainous areas. The appeal of urban life was weak and despite the mechanization of agriculture and the forced collectivization of the farms by 1966 migration studies show that 82% of the rural population were born in the area where they lived. The influx of people into the towns and cities in the post-war decades was thus primarily a product of famine, the ravages of the war and the Soviet occupation rather than the collectivization programme in the 1950s. Most urban growth in the decade up to 1965 was the result of natural population increase.

HOUSING—PROGRESS TO 1965 The programme of rapid industrialization, in common with most East European nations after the war, meant that the state gave housing a very low priority. There clearly were very grave shortages in the urban areas in the 1950s; between 1948 and 1956 the urban population of Romania grew by nearly 2 million, but less than 150,000 dwellings were built, and 70% of those were built by private self-builders. The contribution of the state sector was minimal, producing less than 7,000 flats per annum between 1950 and 1955. Under-urbanization on this scale is indicative of problems of widespread overcrowding, subletting and long-distance urban-rural commuting. In this period rural house building was more extensive than in the urban areas producing, for example, in 1951 3.32 units

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per thousand population compared to 2.49 in the urban areas. But by this measure parity between urban and rural building statistics was reached within a few years and remained about level until 1963 (Table 16.1).

Table 16.1 Construction of urban and rural dwellings 1951–85 Period Urban areas Total (000s)

Rural areas

Per 000 pop.

Private sector Total % (000s)

Per 000 pop.

Private sector %

1951–5

116,302

3.42

68.3

316,759

5.65

97.0

1956– 60

269,413

9.71

65.6

591,236

9.47

98.1

1961–5

348,999

0.88

40.2

556,625

8.83

98.0

1966– 70

386,934

10.59

15.9

260,734

4.42

97.0

1971–5

562,437

12.25

10.8

189,459

3.14

94.4

1976– 80

755,824

13.72

2.8

84,820

1.52

75.5

1981–5

642,000

10.85

1.9

65,000

1.20

60.1

Source: Annual Statistics.

THE ADMINISTRATIVE REFORMS OF 1968 In 1968 the post-war boundaries were abandoned in favour of a return to the judete, the old Romanian counties, although slightly fewer and larger than previously. The new system was based on a two-tier structure of thirty-nine counties and some 3,000 bottomtier bodies made up of rural and suburban communes and towns. The aim was to cut out several layers of administrative bureaucracy but the ‘hidden agenda’ of this reform was much more politically motivated. It seems clear that Ceausescu intended both to prepare the administrative ground for the systematization programme and to enhance his own power base at the centre by devolving the administrative apparatus and thereby weakening challenges to his authority and dividing political opposition. Officially the reform was meant to set the structure for the next stage of economic and political development: away from the emphasis on the rapid growth of the heavy industrial sectors and towards the creation of more balanced and integrated development. The intention was that the counties became more or less self-sufficient economic entities and the significant disparities in the levels of growth and development be evened out. The greater number of smaller planning units, based on the counties, was intended to be the basis for more sensitively directed and managed policy. Within each county there were to be some forty-fifty rural ‘communes’ and at least one main economic and functional centre (resedinta de judet). Communes were to have

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an optimal population size of 5,000 and a prescribed range of functions and services; a primary school, maternity clinic, and certain types of shops. Most towns also had their boundaries changed, usually extending them so as to enhance their status relative to the surrounding rural areas (Ronnas 1983). These plans were the foundations of the much broader ambition to create an urban-based communist society through the programme of ‘systematization’.

THE SYSTEMATIZATION PROGRAMME Systematization was adopted as the way forward to creating a socialist society at the conference of the Romanian Communist Party in July 1972, but had been discussed for several years before this. The 11th Party Congress in November 1974 reaffirmed this plan and summed up the logic of systematization as, ‘the gradual disappearance of the differences between town and villages by bringing the villages to the same level of development as towns’. The key mechanism for achieving this was to structure both urban and rural communities into a hierarchy of places. This model of development appears to be very similar to the ideas of the German neo-classical geographer Walter Christaller whose major work The Central Places of Southern Germany was published in 1933. Christaller treated towns as ‘central places’ whose basic function was to provide services to surrounding rural areas. These ideas were in turn heavily influenced by the work on locational analysis of Von Thunen nearly 100 years earlier (his The Isolated State was published in 1826). It must be something of an irony that progress towards the creation of the socialist society was heavily influenced by neo-liberal social theory. In Romanian systematization the rural programme was particularly highlighted because the many small and scattered villages, rooted in centuries-old cultural traditions, were regarded as a block to modernization and the development of socialism. In essence the purpose of this policy was to proletarianize rural Romania and sustain the industrialization programme without continued rural depopulation. At the conference of the ‘Chairmen of People’s Councils’ in March 1988 Ceausescu emphasized the importance of the administrative reorganization of the counties twenty years ago, ‘for the rational distribution of the forces of production’. He went on to say that it was now time (in view of the depopulation of some counties and rural areas), to radically wipe out the major differences between towns and villages, to bring the working and living conditions of the workingpeople in the countryside closer to the towns, to provide for the harmonious development of the whole country, to more powerfully homogenize our socialist society, to create a single worker people. At the same time it was seen as being vital that the new ‘urban’ villages did not encroach into agriculturally productive land. The importance of the urban villages as centres for the diffusion of ‘modernization’ and urbanization into the countryside is a recurrent theme in the official studies.1 The Romanian road to socialism under Ceausescu has constantly undervalued the contribution of agricultural production in the pursuit of Stalinist industrialization (Almond 1988). The initial phase of the systematization plan was to be

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implemented in the 1976–80 five-year plan. Research and plans for targeting at least 100 rural centres in each county for development into ‘agro-industrial’ centres were to be undertaken. All counties were expected to have at least six towns by 1980. In the second stage, from 1981 to 1985 140 agro-industrial towns were to be created by new investment. The investment planning was to be highly selective and concentrated on the new centres, particularly those villages designated to become towns. Here agro-industrial plans would be put in, along with artisan cooperatives and a range of service units and facilities. The timetable for the systematization programme operated on anything from a fifteen- to a fifty- year perspective depending on the magnitude of the plan envisaged. But it is quite clear that in the five years up to 1989 the pace of the systematization programme was intensifying and in 1988 a new timetable of only five years was set for the implementation of the plan. It is necessary to cut to almost half the number of villages, establishing those that remain and their size; all new buildings shall have to be erected only in those localities… One official study estimated that some 5,400 to 6,400 villages, out of 13,000, had no long-term future. The population of villages which had no development potential were to be moved into the agro-industrial centres to live in communal flats. But there is very little published about how these villages would be eliminated. The policy here appears to have been to withdraw all investment and not to allow new building, so that the villages withered away. The most aggressive policy of bulldozing villages, particularly in Transylvania, was widely reported in the Western media. Officially it was planned to demolish 443,000 houses between 1986 and 1990, with the aim of building 725,000. The scale of the bulldozing of complete villages was exaggerated and probably has not affected more than six to ten villages in total. But in every part of the country some demolition of traditional buildings in village centres has occurred as the drive to create the network of agro-industrial centres intensified in the few years before the overthrow of the regime in 1989.

HOUSING WITHIN SYSTEMATIZATION It is clearly not possible to evaluate recent housing policy in Romania as a field of policy which is separate from the systematization programme. The systematization plan, agreed by the Party Congress in 1972, was given a statutory basis in a law enacted in 1974. Within this legal framework very detailed specifications for the implementation of the systematization programme were described. Housing ‘policy’ is, in effect, subsumed within this legal context. The law envisaged that future land use planning in rural areas should adopt urban practices; settlement boundaries were to be very tightly drawn, land use zoning would be used to delineate the functional division of community buildings and facilities— particularly that civil offices and other service agencies should be housed in one multistorey building. New housing was strictly controlled. Completely against traditional rural house building practice—of small, single-storey family dwellings at the centre of a small-

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holding—the law dictated that all new dwellings should have a minimum of two floors, conform to standard designs, and building sites were restricted to 250 square metres with frontages of only 12 metres. Thus the strict land use zoning, the increase in the density, and the uniform architecture of the prefabricated blocks of flats were to give the villages a more urban appearance and minimize infrastructural costs. The appearance of somewhat incongruous five-storey blocks of flats in many Romanian villages is evidence of the initial stage of ‘urbanization’. The ‘homogenization’ of the population was also an essential ingredient of housing policy within the systematization programme. The uniformity of the building style, for example, was to enhance further the destruction of the difference between town and country. One of the official architects made the point very explicitly: The design of [internal] spaces is in keeping with a unitary legislation. The living-room, the bedroom, the bathroom, the rooms’ height and other dimensions are therefore the same in a small or a big town. Another unifying feature of these apartment blocks is the very low standard of construction, building materials and finish. They are almost always made of breeze blocks and often do not have a running water supply above the ground floor level, with most of the inhabitants dependent on outside standpipes or wells. Families, sometimes as many as six, have to share one kitchen and one bathroom. In these circumstances the homogenization of the population is clearly much easier to enforce. Moreover, in recent years the use of the central heating systems in blocks all over the country have been limited, even in the depths of winter, to a few hours a day. The systematization law permits the use of only one 40 watt bulb in each room. There are, of course, no gardens or space for the traditional husbandry typical of Romanian rural culture. The point is emphasized by the Deputy Director of the State Planning Committee, Alexandru Lazarescu: ‘new projects may be sited only in the heart of villages with a high construction density’. The precise quantity of flats produced in the rural state building programme is not known, but up to 1985 numbers were relatively small compared to the urban programme suggesting that up to then rural systematization was having a limited impact. But there is no doubt that since 1985 (until December 1989) the development of agro-industrial centres had a higher priority than previously. The systematization law requires a permit for private building, but these permits were sharply curtailed in the years preceding the 1989 Revolution. New private building in rural areas was reduced to an annual average of less than 8,000 in the period between 1980 and 1985, and will certainly have been less than this subsequently. The gradual long-term decline in rural building is clearly seen in Table 16.1. This is partly a consequence of rural-urban migration, with the countryside consistently losing its population. Romania used to be an almost entirely rural nation but in the Ceausescu era the rural population has been reduced further from well over 60% to less than 45%. Between 1975 and 1985 the rural population fell from 12.06 million to 10.66 million. The decline of rural house building is also due to increases in the costs of building materials in the private sector. Up to the mid 1970s rural building was almost all in the private sector, taking the form of self-build small houses on individual plots. Limited financial

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subsidies were available for this type of construction but were withdrawn. From the mid 1970s rural house construction and the share of the private sector was controlled under the systematization laws. From 1976 to 1986 there were less than 1.5 houses per 1,000 population built in country areas compared to 12 per 1,000 population in urban areas. The share of the private sector in the rural building during that decade was reduced to 65% and was consistently declining. The geographical distribution of rural building appears to be quite uneven and Turnock implies that some of this variation may be due to the possibility of building second homes in some areas. He also points out that a very significant part of rural housing activity is the renovation and reconstruction of existing houses, but he has no specific data (Turnock 1989).

URBAN HOUSING AFTER 1965 Media attention on the plight of the Romanian villages should not detract from the fact that the major thrust of the systematization programme centred on the urban areas. The construction of new flats increased rapidly in urban areas in the 1960s, and after Ceausescu came to power in 1965 state-built apartment blocks quickly came to dominate the building programme. Only 15% of new houses were built in the private sector between 1966 and 1970, while in the 1980s the contribution of the private sector was less than 1%. New state-built housing has been almost exclusively high-rise, using prefabricated concrete blocks. Massive city centre and peripheral estates have appeared in every major town and city. Such has been the drive for urban systematization and ‘homogenization’ that several provincial cities (e.g. Botosani and Pitesti) have been almost entirely rebuilt, involving the demolition of thousands of traditional houses and other buildings, many of considerable architectural merit. In the last few years of Ceausescu’s regime a large proportion of Bucharest’s outlying suburbs were demolished, sometimes using military tanks instead of bulldozers. The allocation of the state-built flats operates through a number of channels. Local councils have waiting lists, but priority is given to households involved in a job relocation. As in most East European countries state flats are a key instrument in labour mobility. Many of the large enterprises and institutions have their own blocks of flats for allocation to employees. In most other cases the trade union operates as the intermediary with local councils who are the development agency. Construction is carried out by public works departments of the local councils, so-called trust de constructii. The development programme is centrally determined and filtered down to counties, most of whom have design and planning institutes. Although reliable data is not yet available, it appears that the building programme has slowed considerably in the last five years. This is probably a reflection both of the deepening crisis of the Romanian economy and to a closing down of the period of massive quantity production of urban flats. The ‘quantitative’ problem was reaching an end point. The legacy which is left of hundreds of thousands of substandard flats, virtually non-existent infrastructure and in the context of a shattered economy means that it will take decades to revive and restore housing standards. Currently there has been a phase of political vacuum leading up to elections during the summer of 1990.

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As in a number of other East European countries, in Hungary and notably Bulgaria, a policy of selling the flats, as well as renting them, was adopted in 1970. As with the other countries the purpose of this was to recoup as much of the building costs as possible and to reduce the liability of the state for the costs of maintenance. Mortgages were offered at subsidized rates of interest (and according to Turnock were repayable over ten to twenty years). However, there is at the moment no data on the prices paid or the degree of subsidy in the sale of state-built flats. Prices appear to have varied according to size rather than location. It should be noted that owner-occupiers of state flats and renters enjoy very similar levels of property rights, so that the difference between owning and renting is not nearly as clear cut as it is in Western housing systems. This is an important point because it led to the growth in both sectors of the state-built apartments to a market for selling flats through the 1970s and up to the mid 1980s. Official sales of private flats and houses was common, and included the payment of a capital gains tax by the vendor. The growth of unofficial sales as well as official transactions caused a rapid inflation in the prices of state flats in more desirable locations. The state tolerated this situation until 1986 when very strict regulations governing all housing market transactions were introduced. This tightening of policy was not only a result of inflation, but also a product of the wider intensifications of the systematization programme. By controlling the housing market Ceausescu was advancing a powerful ideological assault on individualism and market mechanisms. Such a move contrasts sharply with the introduction of more openly market-orientated housing policies in other East European countries in the 1980s, notably in Hungary through its reform of the subsidy system and other housing instruments in 1983. The regulations to curb the Romanian housing market were enforceable due to the very strict levels of surveillance and policing in the country through the army of informers and telephone tapping marshalled by the Securitate. The formal and informal housing markets were rapidly closed down after 1986. In 1984 Ceausescu began, even by his standards, one of his most gargantuan and decadently lavish projects: the reconstruction of most of the centre of Bucharest itself. The megalomania is barely concealed in Ceausescu’s political address: Today I have inaugurated the task of building the House of the Republic and The Boulevard of the Victory of Socialism, the grandiose and luminous foundations of this epoch of profound transformations and innovations, of monumental building which will persist across the ages. At least twenty-four churches were demolished and thousands of houses were obliterated to make way for the huge palace and the new high-class flats which were to have been occupied by party functionaries and Securitate officers and their families. The impoverishment of the Romanian people in the pursuit of such a distorted and perverse vision of ‘socialism’ can have few parallels in history. The rebuilding of Bucharest and the systematization programme, at a time when external trade was under pressure and Ceausescu was seeking to discharge the nation’s debt liabilities (as a spurious point of national pride), resulted in ever growing poverty, scarcity and hardship for the mass of ordinary people. The creation of the ‘worker state’ was to have been ruthlessly pursued by the subjugation and enslavement of the people themselves. Housing policy was but one weapon in the armory of the ‘systematization’ of the Romanian people.

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REFERENCES Almond, M., (1988), Decline Without Fall: Romania Under Ceausescu, London: Institute for European Defence and Strategic Studies. Quoted in Romanian News, July 22, 1988. Church, G., (1979), ‘Bucharest: Revolution in the Townscape Art’ in R.A.French and F.E.I.Hamilton, Socialist City: Spatial Structure and Urban Policy, Chichester: Wiley. Ronnas, P., (1983), Urbanization in Romania, Stockholm: The Economic Research Institute, Stockholm School of Economics. Turnock, D., (1974), An Economic Geography of Romania, London: Bell and Sons. Turnock, D., (1989), The Human Geography of Eastern Europe, London: Routledge.

17 The housing sector in Romania Appendix Stefan Grecianu

INTRODUCTION Since the dramatic events of the Romanian revolution in December 1989 the general political background in Romania has changed. The totalitarian regime had erected a totally absurd and inefficient social and economic structure, which collapsed mainly because of economic disasters. The legacy of this immediate past is difficult to bear. Romania has now engaged in a gradual advance towards democracy and a normal, efficient economic structure; but this is a long-term process and the tasks awaiting the country in every field of activity, are innumerable. This appendix will try to describe the existing situation in the housing sector, which is mainly inherited from the time of the communist regime, and to present the efforts being made to redeem its negative aspects.

ROMANIA—GENERAL DATA (JULY 31, 1989) 1 Total area: 238,390 km2 2 Land use: (April 9, 1990) ● agricultural: 61.9% ● forests: 28% ● water: 3.8% ● roads and railroads: 1.6% ● human settlement: 2.7% ● other non-agricultural functions: 2.0% 3 Population (July, 1, 1989) a Total: 23,151,564 inhabitants Male: 49.34%; Female: 50.66% (Stationary) Urban: 53.32%; Rural: 46.63% b Average annual growth (last five years—approximate figures) Total: increases 100,000 inh/year Urban: increases 200,000 inh/year Rural: decreases 100,000 inh/year Predominant human migration: from villages to towns

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185

c Natural growth—annual rate Total: 5‰ Urban: 6.5‰ Rural: 3.5‰ (approximately stationary for the last five years) Very high death rate in the rural milieu: 13‰ d Structure according to age group: 0–29 years: 46.27% 30–59 years: 38.37% 60 years and more: 15.36% e Density (national level): 97.1 inh/km2 f Households (December 31, 1989) Number: 7,444,222 One person—15.7% Two persons—24.2% Three persons—21.5% Four persons—19.2% Five persons—10.4% Six persons—5.9% 4 Human settlement a Structure according to size: (number of settlements, Bucharest) Towns: more than 2 million inh:

1

(July 1, 1989)200,000–400,000 inh:

10 100,000–200,000 inh:

16

50,000–100,000 inh:

21

20,000–50,000 inh:

64

10,000–20,000 inh:

82

less than 10,000 inh:

66

total number of towns:

260

Villages:

more than 1,000 inh:

3,790

(January 1, 1988)

500–1000 inh:

3,567

100–500 inh:

1,220

total number of villages

13,223

b Average density in towns (1985, inh/ha) Bucharest:

101

300,000–400,000 inh:

100

200,000–300,000 inh:

90

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100,000–200,000 inh:

80

50,000–100,000 inh:

70

20,000–50,000 inh:

60

less than 20,000 inh:

45

c One example of land use in towns (Bucharest): Dwellings:

39.3%

Town facilities:

4.0%

Economy:

19.1%

Vegetation:

6.9%

Water:

4.4%

Circulation:

12.0%

Non-urban functions:

11.0%

Technical amenities in dwellings—national situation 1 Water utilities as a percentage of the local number of dwellings: 1987 Total

1989

Urban

Rural

Total

Urban

Rural

Water supply*

44

80

5

45

82

5

Sewerage

40

75

3

41

77

3

*Indoors.

2 Heating systems as a percentage of the total number of dwellings: 1978 Central heating Stove heating: natural gas Stove heating: solid fuel Other systems

1989 35.2

36

4.8

5

58.3

58

1.7

1

Serious problems existed during the totalitarian regime: heating and hot water were rationalized to an extreme minimum, especially in winter. These problems have mainly been solved now, but other problems still exist. In many towns and villages water is supplied only a couple of hours a day due to the condition and capacity of the network; garbage disposal is a serious problem, since appropriate funds haven’t been invested for a long time; roads are in bad condition and need extensive repairs, etc. Before December 1989, funds were not invested for these purposes, but instead pumped into absurd, immense and useless works: huge non-profitable enterprises, canals, palaces and villas for the leading family, new grandiloquent centres in the existing towns, etc.

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CONTRIBUTION OF THE HOUSING SECTOR TO THE MAIN NATIONAL OUTPUT INDICES Main national output indices, construction and housing sector 1 Investments devoted to housing (in billions of lei): 1985 Total investments Devoted to housing

1989

246.3 (100%)

236.4 (100%)

20.4 (8.3%)

19.4 (3.2%)

17.3

17.6

3.1

1.8

by the state by private persons

1985

1989

Investments in construction

110.6 (100%)

102.8 (100%)

Devoted to housing

19.3 (17.4%)

17.9 (17.4%)

16.2

16.1

3.1

1.8

by the state by private persons 2 Construction gross output as percentage of gross domestic product: ● 1988–8.8% ● 1989–8.8%

3 Construction net output as compared to national income (in billions of lei):

National income

Construction net output

1980

508.7 (100%)

44.8 (6.8%)

1985

705.8 (100%)

56.6 (7.8%)

1988

694.7 (100%)

56.9 (8.2%)

1989

628.3 (100%)

45.0 (7.2%)

4 Gross national product compared to (in 1989): ● Gross domestic product: GDP/GNP=2.42 ● National income: GNP/NI=1.27 5 Construction output and housing output (in billions of lei)

1986

1989

Total construction output

121.2 (100%)

123.0 (100%)

Housing output

27.2 (22.5%)

24.9 (20.2%)

6 Approximate contribution of the housing sector to the general domestic product:

1988–1.98%

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1989–1.78% national income:

1985–1.75% 1989–1.45%

NEW DWELLINGS VERSUS MAINTENANCE OF EXISTING STOCK 1 Structure of the construction output (in billions of lei) 1985

1989

Total construction output

121.2 (100%)

123.0 (100%)

New buildings

109.9 (90.7%)

106.0 (86.2%)

11.2 (9.3%)

17.0 (13.8%)

1985

1989

Total housing output

27.2 (100%)

24.9 (100%)

New dwellings

24.4 (89.7%)

23.3 (93.6%)

2.8 (10.3%)

1.6 (6.4%)

Current repair and maintenance work 2 Structure of the housing output (in billions of lei)

Current repair and maintenance work

3 Number of new dwellings built in 1985 and 1988: 1985

1989

103,916 (100.0%)

103,433 (100.0%)

by the state

87,569 (84.3%)

98,767 (95.5%)

by private persons

16,347 (15.7%)

4,636 (4.5%)

Total number built:

4 Since 1950 a significant number of new dwellings have been built: 5,460,300, of which 2,957,900 were built by the state. These newly built apartments are quite acceptable if we look upon them as intended for low-income households. In the last three decades serious advances in solving the problem of dwellings have been made, but the housing situation still has numerous negative aspects, such as: ● The funds invested per apartment were insufficient, which affected the quality of the finishing and the level of thermal insulation. Therefore, comfort levels in these apartments are not satisfactory and repairs, insulation and finishing have been requested and will now be carried out. It is noteworthy that since the annual apartment output has increased, their quality has gradually declined. Recently built apartment houses tend to be huge, ugly and nearly all alike. Very low costs had to be attained. Recently built housing areas also have very high densities of inhabitants. ● The importance given by the state to repair and maintenance was negligible. Houses built before 1950 especially were left in total abandonment until they reached a state of ruin and could be demolished. This was part of the policy carried out by the totalitarian regime. On the other hand, average private owners of dwellings,

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especially in the case of individual houses, could not afford to keep their houses in satisfactory condition, since no repair or maintenance subsidies existed. ● During the decade 1977–87, 180,500 dwellings were demolished, 98,000 in towns and 84,500 in villages. In 1988, 17,000 dwellings were demolished, the average yearly rate being 18,000. In large towns, central areas have been destroyed to be replaced by new ‘civic centres’. In Bucharest, 28,437 dwellings were demolished during the period 1980–90, 6,976 of which in order to erect the new civic centre. Unfortunately, the majority of these demolished dwellings in central urban areas were in good condition and included many architectural monuments. ● In the rural milieu, extensive destruction was intended by the communist leaders. However, only a few villages were obliterated such as: Buda (103 families), Cdoreanu (82 families), Vladiccasca (71 families), Dimieni (172 families). Some of the apartments built in villages possess no sanitary fittings and many of them could not be rented (12,400 dwellings).

BUILDING SYSTEM USED IN CREATING NEW DWELLINGS 1 Nearly all dwellings built by state enterprises are apartments in multi-storey buildings. Industrialized systems are largely used. Unfortunately, the pre-cast reinforced concrete units mostly used are very heavy, banish all functional flexibility and have poor capacities of insulation. These systems will gradually be abandoned and replaced with more sophisticated and satisfactory types of pre-cast elements. Best results have been attained by combining the use of pre-cast elements with traditional building techniques, a method which allows for an infinite variety of combinations. Use of a larger array of finishing materials and techniques is absolutely necessary. 2 Percentage of the number of state-built apartments according to the prefabricated (precast reinforced concrete) elements used: Prefabricated components used

1980

1985

1989

All components

46.0%

60.0%

66.8%

Several components: floors, beams, balconies, stairs, etc.

44.0%

33.2%

25.8%

Floors only

10.0%

6.8%

7.4%

18 The Soviet Union An introduction Gregory Andrusz Western specialists in Soviet housing policy have long acknowledged that: ● Soviet citizens have suffered from a dreadful housing shortage; ● the country’s house building record in terms of the number of units constructed has been admirable, although ● the quality of that housing has left something to be desired; ● inequalities have existed in the distribution and consumption of accommodation. The housing shortages have traditionally been described by foreign and Soviet observers in terms of the low average norm of living space per person, measured in square metres. Communal flats, where bathroom, cooking facilities and landings (if not living-rooms) were shared by a number of households, were extremely common. Waiting lists were known to be long, although official statistical data was unavailable. The lack of information on the growth in the number of households made it impossible to match the impressive annual increments in the housing stock against new household formation, a much more important statistic than the annual number of registered marriages. In this way many problems were denied through ‘not knowing’. Ignorance in this field of social life, as in many others, was bliss. The number of people renting a room (or a shared room) in a private house, or in a state or cooperative apartment, was unknown. Anecdotal information on private renting and the extortionate prices charged by landlords existed, as did occasional exposes in newspapers.1 But while individual exploitative landlords were identified and pilloried, the phenomenon itself was never systematically explored.2 In the course of its evolution, the Soviet Union has created its own form of housing allocatory system which is widely regarded by Soviet citizens as just as iniquitous as private landlordism (or even more so). State housing belongs to enterprises and organizations or to the local council (local soviet). In the case of the former, the right to ‘bestow’ accommodation has rested with a ‘troika’ consisting of the enterprise director, the party committee and the trade union committee (fabzavkom). As both Olga Bessonova and Natasha Kalinina observe, this power has ‘enserfed’ tenants. Formally, the local soviet relies on a housing committee to nominate residents from the waiting list. Having one’s name on this list means that entitlement has been recognized: this is normally dependent upon the applicant having less than 5.5–7.0 square metres of living space per person and thus being defined as ‘in need’. According to official estimates, currently about 14 million families are on housing waiting lists. But there is no way of knowing how many families living below this minimum are not on a waiting list.3

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Other factors are also taken into account when allocating accommodation, including whether the building is regarded (even by low Soviet standards) as unfit for habitation, or is to be demolished as part of an urban renewal programme. Points may also be given to long-time residents in company-owned hostels. Actual need, although an important criterion for being allowed to join a legal queue, is not the sole determinant of whether a person will be provided with accommodation. Since the early 1930s the government has issued decrees defining which groups of citizens may be prioritized in the allocation process and given special additional space entitlements. However, in a situation of acute shortage, rules conferring entitlement have been of far less importance than contacts in the distributional system. These issues occupy a central place in the essays by Bessonova and Kalinina. In addition, bribery and corruption both within and outside the formal, bureaucratic allocatory system are maintained by the propiska system (which restricts people’s ability to settle in republican capitals and other large cities), the constraints placed on private home ownership and the legal regulations placed on the functioning of a quasi-housing market. The term used by Bessonova and Kalinina—mafia—describes institutionalized corruption in both spheres. Perestroika and glasnost have given rise to, firstly, an explosion of complaints about infractions of distributional justice in the status of the ‘social fact’ of distributional injustice. For instance, the Soviet press carried articles on bribery and corruption throughout the 1960s and 1970s but there was a tendency in the reporting to portray illegal or anti-socialist conduct (in the allocation of housing, for example) as a product of individual deviance, malfeasance or as a ‘vestige of capitalism’. Corruption was never treated as an expression of a structural fault inherent in the system. Yet this approach to the phenomenon was quite contrary to Marxist theory, according to which social scientists should penetrate beyond the individual act to its institutional origins. Theory apart, to judge from the public outcry against the social injustices in housing allocation, the population has long been aware that the mode of distribution generated patterned forms of preferential treatment that were reprehensible. Although the issue of housing has not disappeared from the agenda of political parties and governments in West European countries, it has certainly slipped down considerably from the prominence it once enjoyed.4 In the Soviet Union, on the other hand, housing has risen to occupy perhaps the foremost position on the government’s agenda. For decades leading members of the Communist Party paid homage to the existence of the ‘problem’, but ideological rigidities anathematized a range of ways that could have been employed to deal with it. Unfortunately, the leadership was dinosaurian in its attitude: it did not want to hear the opinions of the public and preferred that both the intelligentsia and their own advisers refrained from offering remedies which might disturb the apparently tranquil Oblomovshchina that the leadership increasingly came to inhabit. This meant that the Politburo and other senior party members and ministry officials did not want to have to entertain new ideas either on how to manage the economy or on social policy. Unlike H.G.Wells who, after one of his visits to the Soviet Union in the 1920s, could evangelically proclaim: ‘I have seen the future and it works’, the generation of Soviet leaders prior to Mr Gorbachev’s accession also had glimpses of the future—only in their vision, the system had ceased to function. This is not pure hyperbole for, as far as housing is concerned, it meant that unless a radically new approach was adopted, the

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future would indeed be bleak. Yet fundamental change was something that the gerontocracy found too difficult and painful to contemplate.5 Thus, it required an acute societal crisis for the different social strata to accept that revolutionary transformations of the Soviet economic system and related political structures had to be introduced. Kalinina points out, however, that not all social groups see themselves as beneficiaries of reform in the housing system. In the case of the economy this entailed decentralizing control over production to enterprises which now have to be responsive to the forces of supply and demand in an increasingly market-oriented economy. The taxation structure too has to be totally refashioned with a shift to higher levels of progressive income6 and corporation tax, the latter including exemptions as an incentive, for example, to increase house building. The Soviet Union has much to learn from the West in the realm of housing finance and taxation. Thirdly, major budgetary changes are being introduced to increase the powers and functions of local government. The general decentralization implicit in these economic and political changes is intended to encourage entrepreneurship (predpriimchivost) and responsibility (otvetstvennost) amongst enterprise managements, local authorities and individuals in the consumer goods and services sector and in house building and maintenance. At the heart of these changes, indeed their underlying premiss, is the creation of a totally new set of property rights. The latter demand the establishment of a legal framework within which state property, leasing arrangements and cooperative and private ownership may co-exist. This does more than undermine the ideological foundation of Soviet Marxism’s project. Since the very notion of ‘private’ property is almost wholly alien to the Russian culture, an individualistic, private property ethic has to be created.7 This means that in the Soviet Union there is a regrettable but understandable tendency amongst theorists, publicists, politicians and the population towards political polarization caused by a misunderstanding of ‘private property’.8 The profound meaning of private property is not internalized as the hegemonic essence of a culture. Its importance for the study of housing derives from the relationship of housing to land.9 The transformation of property in land into a legal relationship becomes a necessity only when it is suitable for becoming a commodity. Until recently, Soviet theory treated as axiomatic that under socialism land had lost its commodity status. Nevertheless, the fact that ideology acknowledged that land had scarcity value enabling differential rent to be calculated suggested that both legal experts and economists also perceived that its commodity character had not been abolished; rather its circulation had been restricted. The issue now is: to what extent are restrictions on its ‘circulation’ to be removed? Western experience strongly suggests that only a small minority gains from a free market in land. However, the present mood amongst reformers in the USSR is so anti-statist that some consider that only the market can solve society’s problems. Yet, in the controversy over collective versus private ownership, it is generally agreed that collective life requires and imposes limitations on an individual’s absolute freedom to use that which he or she owns. In the former where the market is abolished, ownership is collective and use is granted. In contrast, the latter favours a system of private ownership moderated by public expropriation and controlled use. At the present time, the Soviet Union would appear to be in transition from the former to the latter. ‘Privatization’ is, thus, in reality a shorthand term for this process.

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193

The crucial difference between the two systems is that the former does not ‘require’ a bourgeoisie. Since even under collective ownership there has to be a group which fulfils some of the functions of the bourgeoisie, this continues to be performed collectively by the nomenklatura. Therefore the crucial question (crucial both theoretically and empirically) is how does the nomenklatura effect its conversion into a bourgeoisie during the transition from one system to another (a transition exemplified in the privatization of home ownership and housing construction)? Capitalist relations—the sine qua non for the establishing of bourgeois private property rights—which in Russia were being established in the decades prior to 1917, were submerged under the hegemonic influence of the feudal autocracy. With the overthrow of the monarchy in February 1917, the stage was set for a bourgeois form of republican democracy. The heroic tragedy which was substituted (by theoretically legitimated revolutionary opportunism) has now run its course and, as the Romanovbounded empire begins to disintegrate, the bourgeois revolution takes over where it left off: Gorbachev thus increasingly appears more the heir to Kerensky than to Lenin. It is a cliché to say that wars, revolutions and rapid social and economic change ‘produce’ casualties. Such passive acceptance sees the implementation of radical policies to reorientate the population in its values and visions as an unavoidable ‘historical necessity’ if specific social goals are not to be achieved. The status of cliché does not invalidate the statement; however, neither does it legitimate the actions which it describes, nor judge them in their consequences. Privatization in Britain has been accompanied by casualties. Soviet advisers on housing policy would do well to take these into account, while bearing in mind that the USSR currently lacks the institutional structures available in the West to mitigate some of the effects of privatization. J.M.Keynes may indeed have been correct in his declaration that ‘Practical men…are usually the slaves of some defunct economist.’ The question is: which one? Adam Smith, Ricardo, Marx or J.S. Mill? Schumpeter or Lange? Keynes, Kalecki or Hayek? Ironically, today in the Soviet Union economics is truly the ‘dismal science’: it offers only pain before plenitude. So, in the case of housing, prices will rise; this might well be a ‘good thing’ in the longer term for many or most people, but for many others there will be increased hardship. This will require the introduction of a more sophisticated system of personal subsidies and rebates (‘housing benefits’) and a larger role for sociologists and social workers to deal with the casualties decreed necessary by defunct economists. Even so, the high levels of overcrowding, the universally small flats and space standards and often low quality of external design and interior layout will not be remedied overnight by raising rents, or by selling state accommodation to sitting tenants or to cooperatives. This can only be done by increasing the supply of accommodation. But it is not just a question of increasing the supply. The policies being advocated by reformers reflect a profoundly felt disapprobation and contempt for the way in which individuals gain access to this vital commodity, the self-contained family home. Both Bessonova and Kalinina express a moral outrage at these gatekeepers—a far more diffuse group than those to whom the term applies in English—to whom they attach the Kafkian label of ‘distributors’ and who collectively appear as a ‘mafia’. Greater wage differentials and the simultaneous removal of fringe benefits, such as closed shops and special sanatoria, besides being key components in Gorbachev’s economic and social policy, are necessary concomitants of the demise of ‘the distributor’

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in the field of housing and elsewhere in the distributional process. In this way, Soviet housing policy might be seen as a handmaiden of the bourgeois revolution and of the restructuration of the class system. The chapters here by Olga Bessonova and Natalya Kalinina are prime examples of the new younger generation of Soviet scholars. They incisively cut through the swathe of formalism that has hitherto characterized so much writing on housing policy by Soviet authors. They demonstrate an impatience with the Catholic approach that constrained their predecessors whose recitations of decrees resembled the practice of Catholic scholars interpreting papal bulls. To say this is not to indict all previous writers on the subject. Some did try to send signals—some more easy to decode than others— conveying substantive information on the state of housing. Bessonova and Kalinina are writing within a setting of a radical transformation of the economy which their essays reflect. However, in the light of the ‘conservative’ opposition that revealed itself at the XXVIII Party Congress in July 1990, it remains to be seen whether the cost of producing and maintaining accommodation will be covered by higher charges in anything more than a small proportion of the housing stock. Indeed, a decision of the Moscow City Soviet in July 1990 accepted a widely held opinion, namely that each Soviet citizen has long paid for the cost of his or her flat and therefore should receive it free of charge.10 Who triumphed here? The ‘conservatives’, the champions of low prices for essential goods and services, or the ‘reformers’ who want to see the establishment of market prices and the privatization of state-owned property?

NOTES 1 L.Kurin, ‘Domik s kanareikami’, Pravda, April 6, 1975, ‘Na chastnoi kvartire’, Pravda, June 9, 1979. 2 That is not to say that the landlord-tenant relation was of no concern. In the mid 1950s a Soviet jurist criticized the law governing this relationship on the grounds that it overprotected the tenant. Moreover, she averred that in view of the housing shortage, it was essential that private landlords should sublet part of their property. The problem was that the rent which landlords could legally charge was scarcely sufficient to meet the landlord’s costs for maintenance and depreciation. As a result they were compelled to evade the law. Besides the issue of rent, the author tackled the other key factor in the landlord-tenant relation, namely eviction. In fact she argued in favour of the owner, placing his rights above those of the tenant who could be safeguarded by the legal provision of three months’ notice. See: M.G.Markova, ‘Ponyatie i osushestvelenie prava lichnoi sobstvennosti’, Vestnik Leningradskogo Universiteta (Seriya ekonomiki), No. 5, 1957, pp. 103–15. The fact that, on the one hand, such views were being publicly expressed but, on the other, not acted upon, can only be commented upon in a much larger study of Soviet housing. 3 Goskomstat, Narodnoe khozyaistvo SSSR v 1988 g., Moscow, ‘Finansy i Statistika’, 1989, p. 164; B.Kolotilkin, ‘Dreams of home’, Arguments and Facts International, October– November 1989, p. 10. 4 In the UK housing played a salient role in the manifestos of all British political parties at general elections between 1919 and 1979. At the 1979 election and subsequently, it has figured as a relatively ‘minor’ issue, with the exception of mortgage interest rates which, in any case, reflect the general level of interest. 5 It has to be made clear that the Soviet Union cannot claim a monopoly on such obstacles as a senile leadership, institutional inertia and group self-interest. Other European states, too,

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have had, at different times and to different degrees, to overcome one or more of these obstacles. 6 New legislation on income tax was introduced in May 1990. 7 This does not apply to the Baltic States where one had already existed. However, it was absent in other republics, notably the formerly nomadic society of Kazakhstan. 8 According to MacPherson, one of the key features of possessive individualism, whose origins lie in the seventeenth-century philosophies of Hobbes and Locke, is ‘its conception of the individual as essentially the proprietor of his own person and capacities, owing nothing to society for them’. The human essence, it was thought, is freedom from dependence on the wills of others and was, moreover, a function of possession. See: C.B.MacPherson, The Political Theory of Possessive Individualism, Oxford University Press, Oxford, 1964, p. 3. This position has to be seen in the context of the conventional view held by Western historians that in Russia the doctrine of individual rights had few adherents. Even for Bukharin and Preobrazhensky, the authors of the ABC of Communism (1920), the notion of an individual worker with interests opposed to the majority was not so much dismissed as ignored. In contrast to Western liberalism which sees the individual as having rights against the state and other collectivities, Soviet theory has assumed that effective political or economic action can only proceed from groups. In this conception, the individual worker enjoys no rights against the workers’ state (or trade unions) other than to participate in its activities. See: E.H.Carr, 1917: Before and After, Macmillan, London, 1969. This distinction between the two systems, deriving from their historical development, is noted by Marx in the Grundrisse. In his view, whilst only the vestiges of communal property remained in bourgeois societies, his studies of the Russian economy showed that communal property had by no means disappeared nor had the private element overcome the communal element. Furthermore, in the late nineteenth century, Chernov declared that since Roman law had only superficially touched Russia and the concept of property had not taken root in the minds of the people, it would be the task of the future socialist society to remove the veneer of Roman law. See: S.V.Utechin, Russian Political Thought, London, 1963, p. 143; H.J.Beerman, Justice in the USSR, Vintage Books, New York, 1963, p. 262. 9 See: The recent Soviet laws on land and property granting rights of use and hereditary transfer may be seen as re-enacting the historical process of creating private property in immovables. See: Osnovy zakonodatel’stva SSSR i soyuznykh respublik O Zemle, in Izvestiya, March 6, 1990; Zakon SSSR O Sobstvennosti v SSSR, in Izvestiya, March 10, 1990. The latter, the Law on Property came into effect on July 1, 1990. 10 Moscow News, No. 28, July 22–9, 1990, p. 2. Details on how the transfer is to be implemented were to be published in September 1990.

19 Housing and housing policy in the USSR Natasha Kalinina

INTRODUCTION In talking about the reform of housing policy it is useful to begin by answering the question: What precisely is being reformed? The first part of this chapter is devoted to describing the housing system established in the Soviet Union at the end of the 1980s. Trying to provide a more or less objective description of the housing system is in itself quite complex, particularly because of the enormous differences in the quality and quantity of information derived from three types of sources. The first source consists of decrees and resolutions of the party and government, slogans and programmes. These give some idea of the ideology that underpins the housing system. This information is freely available and disseminated as propaganda. Secondly, there are statistical data, official plans and forecasts and regulations specifying the formal inter-relations within the system which are issued as various types of Instructions and ‘Methodological Recommendations’. (In England these are called ‘Circulars’. GDA.) This information we designate ‘theory’ (as distinct from the ‘practice’) of how the housing system functions—that is, it describes how things ought to be. This is only available to a limited circle of people and is fragmentary. A third body of information depicting the real state of affairs is almost wholly absent. The principal sources here are the daily and periodical press (which often present a distorted picture), professionally conducted empirical studies (which until recently were, to put it mildly, not encouraged) and, finally, the everyday experiences of the individual researcher and members of his or her own circle. A measure of the objectivity of the present analysis and the opportunity for it to be used further is directly related to the quality of the information available for processing. As far as the latter is concerned it is for the reader to judge the source material. On the whole the first part of the chapter is a formal description of the existing system and recent changes to it and is, where possible, reinforced by footnotes. In this section the author has attempted to avoid making value judgements: the aim has been to describe what is (or was) leaving the reader to decide whether the system is good or bad, efficient or not. The second part is an attempt to provide a personal explanation for the evolution of the housing system, its past and possible future. The third section offers an analysis from the position of the participants in housing policy. This is based on both a study of documents and statements made by officials in relevant institutes and on information gained from talking to and working with these individuals.

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A BRIEF DESCRIPTION OF THE HOUSING SYSTEM AND ITS CURRENT CHANGES1 The housing construction industry The housing construction industry in the USSR involves the production of building materials, the actual construction of housing and a system for drawing up plans. Slightly more than 50% of the production of building materials for housing is mechanized (the figure in towns is almost 65%).2 Almost 95% of new urban housing construction consists of modular or frame-and-panel apartment buildings. At the start of the Twelfth Five-Year Plan no industrial base existed for the production of cinder blocks or cast-on-site concrete, even though plans had envisaged the creation of such a base. The overwhelming majority of apartment buildings are built according to standard models: specialized housing for, say, invalids or the elderly is practically non-existent. The small number of standardized models is being further reduced because of the technological backwardness of the housing construction industry. Recent government resolutions foresee the gradual conversion from the production of standard designs firstly to zonal and then to individual designs. Approximately 29% of residential buildings in terms of total living space consisted of one-four floors, roughly 26% had five floors, 37% six-nine storey, while the remainder were of ten storey or more.3 The building materials industry is technically and technologically backward: much of the equipment is obsolete, factories need to be reconstructed and housing construction enterprises are working to no more than 85% of their capacity. This has led the government to adopt a number of decrees dealing specifically with the development of the built material-technical base of the housing construction industry.4 Legislation passed with the intention of encouraging the growth of individual housing construction in cities has highlighted the problem of the growing gap between the financial ability of individuals to finance housing construction and the actual availability of building materials. It is this which has necessitated steps being taken to increase the amount of building materials available on the market for sale to the public. Housing construction financed out of state capital investment, which is the responsibility of republic level Ministries of Construction (of which there are four in the Russian Republic), represents 50% of all housing erected using government funds; two All-Union ministries of specialized construction are responsible for a further 2% of government construction; the construction agencies of Moscow, Leningrad and other cities erect a further 10%; while the construction organizations of other ministries such as those of energy and water are responsible for 33% of state construction; and, finally, the construction brigades of enterprises using the so-called ‘Khozsposob’ method of construction erect 3% of state-financed housing.5 Non-governmental construction brigades build housing with money provided by collective farms, housing cooperatives, and private individuals. The main problem faced by these brigades is how to acquire building materials. Since their needs cannot be satisfied through normal channels,6 the black market arises to meet demand. Official construction organizations are hampering the formation and development of firms to produce building materials and to construct housing.7 Soviet housing construction has three specific features: (1) plans are drawn up not according to number of apartments to

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be built but according to the square metres of space; (2) construction workers’ pay depends on the value of output; and (3) consumers have no control over the quality of construction. As a result, the construction of smaller apartments is neglected: construction organizations have an incentive to increase their costs. They prefer to demolish rather than restore old buildings and then construct new ones. The pressure on the builder to deliver on time leads to uncompleted blocks of flats being commissioned and registered as ready for habitation. In other words the system for inspecting completed dwellings and quality control in general is quite unsatisfactory. Steps taken by the government since 1986 to reform the economic and administrative system of housing construction have largely been unsuccessful.8 However, a majority of cities have now created a single agency to oversee construction within their jurisdiction, which means that all construction agreements must pass through the Soviets’ executive committees.9 At the same time the position of those advocating the use of leases and cooperatives to build housing is growing stronger, as is the struggle to ‘emancipate the labour of the builder’ from interference by officials. Planning and financing in housing construction The overall figure for capital investment in housing is based on comparing different estimates. The first factor to be considered is the normative estimate, which is designed to achieve a specified goal. As a rule this is the average living space deemed desirable, although recently the number of apartments necessary has also been used. Next to be considered is whether or not the necessary resources exist, and whether the materialresource base can be increased. These estimates are reworked several times before a compromise is finally reached.10 Although Gosplan’s estimates are currently based on the goal of ‘an apartment for every family’, they do not take into account the actual physical structural differences within the housing stock, nor the requirements of families consisting of several generations, nor the growth in the estimated costs of construction. In other words, the CPSU’s programme, which calls for the erection of 2,000 million square metres of housing, is quite inadequate to achieve the objective of providing every family with its own apartment by the year 2000.11 This objective is flawed in two respects. Firstly, the goal of building 2,000 million square metres, even if achieved, will be inadequate to meet the specified objective of providing each family with its own flat.12 Secondly this goal cannot be achieved because Gosplan has failed to calculate the demand for accommodation accurately; neither has it examined the capacity of the building industry and rising costs. Central government capital investment is divided by Gosplan among All-Union ministries and republics. Republican councils of ministers parcel out capital investment between regional authorities (oblasti) and republican level ministries. These resources are then divided among the cities (with, as a rule, capitals and provincial centres receiving a disproportionate amount) and various enterprises. On the whole, over two-thirds of all centralized government capital investment is channelled through these ministries.

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Table 19.1 Capital investment in housing construction by sector (% in comparable prices) 1985 State enterprises and organizations

1986

1987

1988

1989

75.8

76.4

77.3

76.4

77.5

0.7

1.0

0.6

0.8

1.1

9.6

3.7

7.5

6.7

6.1

Cooperatives (ZhSK)

5.0

4.9

4.8

4.5

4.0

Individual

8.9

9.1

9.9

11.5

11.4

100.0

100.0

100.0

100.0

100.0

Total in bn roubles

28.1

30.9

33.5

35.6

37.7

% of overall capital investment in the economy

15.6

15.9

16.3

16.3

16.5

Social organizations Collective farms 13

Total

Source: Narodne khozyaistvo SSSR v 1989 g., ‘Finansy i statistika’, Moscow, 1990, pp. 164–5, 530, 533.

Table 19.2 Total housing construction (%) 1985 State enterprises and organizations

1986

1987

1988

1989

70.8

71.2

71.8

70.0

69.5

Social organizations

0.7

0.8

0.8

0.8

0.7

Collective farms

7.2

6.7

6.0

5.6

5.0

Cooperatives (ZhSK)

6.9

6.8

6.8

6.6

6.1

14.4

14.5

14.7

17.2

18.8

113.0

119.8

131.4

132.3

128.9

Individual Total (million m2 overall (useful) living space)

Source: Narodne Khozyaistvo SSSR v 1989 g., ‘Finansy i statistika’, Moscow, 1990, pp. 164–5, 530, 533

Not long ago a package of decisions14 was adopted that called for increasing construction to be financed by enterprises and individuals and a gradual reduction in the amount of housing financed by centralized government capital investment. Another innovation is the change in principles used for allocation of land: a number of cities have introduced payments for land, although to date only enterprises are allowed the privilege of paying for land.15 The system of housing provision16 The basic methods of housing provision are the provision of government apartments through enterprises or local Soviets to people on waiting lists, the purchase of cooperative

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housing, and the purchase or construction of individual housing. To the extent that accommodation is used as a reward to employees and as a means of attracting and retaining labour, enterprise controlled housing converts the worker/tenants into a form ‘bondsman’. The amount of living space consumed by a person is the primary criterion both for determining whether he or she is in need of improved housing conditions and should be entered on a waiting list for either government or cooperative housing, or for granting a plot of land to build a detached home.17 Accepted as signifying a need for improved housing conditions varies from city to city, but is generally within the range of 5 to 7 square metres per person, averaging 6.3 square metres.18 At the beginning of 1989 each citizen of the USSR had an average of 15.5 square metres of overall floor space, and 10.4 square metres of living space: in cities the corresponding figures were 14.7 and 9.4 square metres; and, for rural inhabitants, 17.0 and 12.3 square metres. Between 1986 and 1988 the amount of living space per person increased by 0.6 square metres. The best provided-for inhabitants are in Estonia (13.7 square metres of living space), Georgia (13.4), and Latvia (12.5); while the worst off are in Tadzhikistan (6.4), and Azerbaidjan and Uzbekistan (7.9). Around 15 million people live in communal apartments, and a further 12 million live in hostels.19 Means and averages, however, do not properly convey the actual differences in people’s living space. At the beginning of 1990 there were 14.3 million families on housing waiting lists in Soviet cities and urban settlements. This amounted to 23% of the urban population and represented an increase of 400,000 families over the previous year. Between 1986 and 1988 some 6 million urban families improved their housing conditions, 91% of whom had been on a waiting list, and in 1989 a further 1.9 million urban families improved their housing conditions.20 It has been calculated that families joining the waiting list for better housing in 1989 will on average have to wait eight years: in some cities the waiting period may be over twenty years. At the beginning of 1989 18% of workers in enterprises were on the register for enterprise accommodation. The list for cooperative housing contains the names of a further 1.8 million families. Five million families live in accommodation which is defined even by Soviet officials as unfit for human habitation.21 Data on the proportion of the housing stock furnished with basic amenities is given in Table 19.3.

Table 19.3 Types of accommodation (census: January 1989) Families million

Single persons

%

million

%

Census total

73.1

−

16.4

−

No. of respondents

72.0

100.0

15.5

100.0

separate flat

38.6

53.7

5.4

34.9

detached house

24.3

33.7

5.1

32.7

2.4

3.3

0.6

4.1

of which those living in:

semi-detached house

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communal flats

3.49

4.8

1.31

8.4

hostels

2.29

3.2

2.69

17.4

other types of dwellings or sublet

0.91

1.3

0.38

2.5

less than 5 m2

4.38

6.2

0.57

3.8

21.72

30.5

1.6

10.5

29.51

41.5

2.26

15.0

15.5

21.8

10.68

70.7

71.11

100.0

15.11

100.0

Living space per person 2

5.1–9.0 m

2

9.1–14.0 m 2

15 m and more No. of respondents

Source: ‘Novye podkhody k resheniyu zhilishchnoi problemy: vzglyad iz Gosplana’, Voprosy ekonomiki, 1990, No. 8, p. 102.

To draw some overall conclusions from these separate facts, we can utilize the information gained from research undertaken in 1986 in the city of Tver.22 This city, located between Leningrad and Moscow, had a population of 442,000 people. Only 6% of the city’s families lived in housing that by today’s standards would be considered good (an individual apartment with all the modern conveniences and a room for each person). Some 29% lived in conditions that can be called adequate (an individual apartment with all conveniences, one room less than there are members of the family, but no less than 7 square metres of living space for each person; or a house with running water, internal plumbing, and a gas hook-up with the same amount of living space per person). The housing situation for the remaining 65% does not conform to modern standards: densities are high, conveniences are few, and individual apartments are hard to come by. Only 22% of these families are registered on waiting lists for improved housing conditions. The remainder have little chance of having their housing circumstances improved; moreover, the allocation of housing to families has been shown to be closely linked to their income levels.23 Although in general the standards of housing at which a family can be admitted to a cooperative waiting list are higher than for government housing, this is not universally true. In Moscow for example, a family can be entered to the local Soviet waiting list if it has more than 5 square metres of living space per person, for enterprises the figure is 7 square metres, and for cooperatives it is 8 square metres. In Tver, however, in all three instances the figure is 6 square meters. In other words, because the waiting list is closed, the figure of 22% queueing for housing underestimates the actual number of people who otherwise could be expected (would like) to place themselves on a register for better accommodation. Families in the queue for public/state housing are guaranteed living space of no less than 8–9 square metres per person, and sometimes the family structure (the age and sex of children) is taken into consideration and makes the family eligible for additional space. Certain individuals and social groups are entitled to additional living space (or room). This privilege applies, for instance, to individuals with a doctorate, particular illnesses,

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creative artists and senior officials. There are a number of reasons for this privilege. First of all, there is Lenin’s requirement that the intelligentsia should earn no more than the skilled worker and therefore the system involved a mechanism which enabled it to reward the intelligentsia, nomenklatura and members of the military without paying them higher salaries. Secondly, in a situation of shortage, payment in kind substituted for monthly payment. However, in fact not only does the intelligentsia rarely make use of this privilege, but they are only able to enjoy the space if they already occupy it! The Soviet housing system has particular forms of property rights and land use. It is forbidden for example to own more than one dwelling. Owners of cooperative housing have limited rights of disposal: to date they can neither give away nor bequeath their apartments.24 At the same time tenants in state apartments are granted life-long leases and they are even allowed to exchange and rent their property out and receive an illegal compensation for doing so. The laws and regulations which govern land use affect the extent to which individuals can take steps to meet their own needs for housing. Land belongs to the state which then allocates it to individuals and cooperatives wishing to build. The latter are not allowed to sell or lease the land granted them. The new law on land still prohibits the selling of land and its division amongst inheritors: there has to be an individual or collective owner.25 When considering these changes, two important and somewhat contradictory factors need to be borne in mind. Firstly market forms of housing provision are practically nonexistent in Soviet cities. A major constraint on the more widespread development of buying and selling of individual apartments is the existence of the propiska system.26 Secondly a limited, small-scale and rather unusual market for housing has developed. To the extent that the transactions involve an informal monetary compensation, an illegal market in state housing actually exists. The government has recently taken steps to support and strengthen individual and cooperative housing construction by broadening the rights of cooperative property, improving credit conditions for individual construction, and granting individuals the right to buy state-owned apartments. However, in practice little is being done to help their implementation; for example, in 1989 available credit only satisfied one-quater of national demand. The same is true for building materials. Under current competitive conditions it is the elderly, those with few resources, and inhabitants of remote villages who are in the worst position. Recently a new form of housing cooperative has appeared. In 1962 when the first decree on house building cooperatives was enacted, the state gave credit up to 60% of the cost of an apartment. This loan was repayable at an annual rate of interest of 0.5% over fifteen years. Then in 1988 the government introduced a new decree changing all this.27 Now, 75–80% of the cost of an apartment is granted for twenty-five years at 0.5% interest.28 Credit for individualized construction of up to 20,000 roubles can be granted for up to fifty years for rural projects and up to twenty-five years for urban projects; for purchasing cooperative housing, up to 5,000 roubles for ten years; and for purchasing individualized housing, up to 20,000 roubles for twenty-five years. Work on equipping individualized housing can be given credits of up to 4,000 roubles for rural projects and up to 3,000 roubles for urban ones, the term being ten years in both cases. The interest rates on such credits are 2% for rural inhabitants and 3% for city dwellers. Invalids from the Second World War receive interest-free credits.

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On the whole, then, the Soviet system of housing provision presents the citizen with a number of ways of improving his or her housing conditions. The speed with which better accommodation is obtained, as well as the chances for receiving a certain type, size, and quality of housing, depends on where a person lives, where he or she works and the industrial sector in which he or she is employed. Maintenance and repair of housing On January 1,1989, the Soviet Union had 4,400 million square metres of floor space, of which 63% was located in urban areas: 1.7 million square metres of this space belonged to private citizens, while 2.7 million were in the hands of the state (local Soviets or enterprises and agencies), cooperatives and social organizations. The ‘socialized’ stock (see table 19.4) had 49.6 million apartments, 22% of which consisted of one-room flats and 43% of two rooms. Hostels housing 18 million individuals accounted for a further 148 million square metres while some 60 million square metres of space consisted of housing that was either dilapidated or in need of repair.

Table 19.4. Housing stock by types of tenure (overall space) Total million m2

Urban %

million m2

%

Rural

million m2

%

Total

4,540.1

100.0

2,890.2

100.0

1,649.9

100.0

State-owned

2,486.1

54.7

2,090.6

72.3

395.5

24.0

municipal

1,046.2

23.0

1,025.1

35.5

21.1

1.3

employers

1,439.9

31.7

1,065.5

36.9

374.4

22.7

117.6

2.6

17.6

0.6

100.0

6.0

collective farms

104.5

2.3

8.4

0.3

96.1

5.8

Cooperatives (ZHSK)

167.0

3.7

163.9

5.7

3.1

0.2

1,769.4

39.0

618.1

21.4

1,151.3

69.8

of which:

Social organizations of which belonging to:

Owner-occupation

Source: Narodnoe khozyaistvo SSSR v 1989 g., p. 165, Statisticheskii press-bulleten, Gaskomstat, Moscow, 1990, No. 20, p. 13.

And, although running water is supplied to most state housing in towns, in many cities (particularly the older ones) water is available only intermittently, and is provided according to schedules which sometimes limit its availability to one or two hours a day. The unsatisfactory state of the infrastructure and basic amenity provision (Table 19.5) is

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matched by the unsatisfactory condition of the housing stock and the lack of resources devoted to structural repairs. In 1988 the latter received 3.8 billion, and in 1989, 4.3 billion roubles compared with a total of 36 and 37.7 billion roubles respectively going to capital investment in housing generally.29 Even then the small sums of money set aside for capital construction and repairs are not fully utilized because the rewards to the contractors carrying out the repairs are less than those which they would received for new building.

Table 19.5. Services and utilities in Soviet housing (in percentages of overall floor space) Urban housing Socialized stock (includes state, Cooperative and social organizations)*

Rural housing***

Hostels** Owneroccupied housing**

of which belong to collective farms and other rural employers****

1988 1989

Water

92.7

93.2

90

24

17

44

Sewage

90.8

91.4

no data

16

13

32

Gas of electric stoves

92.6

93.1

81

65

80

84

Baths

85.4

86.0

73

10

no data

29

* Narodnoe khozaistvo SSSR v 1989 godu: Statisticheskii ezhegodnik (The national economy of the USSR in 1988: A statistical annual) (Moscow, 1990). ** Vestnik statistiki, 1989 g. (Bulletin of statistics), No. 10, pp. 51–2. Data is from January 1, 1989. *** From data of the Institutes of TsNIIEP for Dwellings and TsNIIEP for Agricultural Construction. Data is for 1985. **** Statisticheskii press-bulleten, No. 21, Moscow, Gaskomstat 1990. The share of buildings having all services and utilities is 56% in cities and 7% in villages (***). At the beginning of 1989, 285 cities and urban settlements with more than 4 million inhabitants had no sewage systems.

In cities the rental charge for state housing has been 13.2 kopeks and 16.5 kopeks per month for every square metre of living space.30 To all intents and purposes rents do not reflect the building’s location or quality. Even though the rate at which rent is charged per square metre above the norm (in most republics the norm is 12 square metres per inhabitant, plus a further 6 square metres for a family) is tripled, this has no real significance for tenants.31 The state therefore subsidizes three-quarters of the maintenance costs of all public housing. Housing maintenance organizations (HMOs) continue to be centralized. An average sized HMO in Moscow employs about eighty staff to service 400–450,000 square metres of housing space. The government is trying to tackle some of the problems of rents in its recent decrees. For example, local Soviets have been given the right to impose a 15% surcharge on the cost of cooperative housing built in sought-after locations. Plans have been in hand for several years to vary rents according to the quality of the housing and a recent decree has

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re-emphasized the need to transfer the entire departmental housing stock to municipal tenure.32

A GENERAL VIEW OF THE HOUSING SYSTEM AND ITS PROBABLE TRANSFORMATION The housing system that had developed by the beginning of the current stage of housing policy (1986) was characterized by the following features: 1 A highly centralized and state-controlled system for the production of construction materials and housing units (in terms of investment and administration); 2 The volume and type of housing built is determined by plans issued by government decree; 3 The centralized redistribution of financial and material resources for housing construction between republican and local authorities on the one hand, and a variety of agencies on the other, leads to the subordination of the interests of the former to the latter; 4 The centralization of construction credits and housing purchases. There is little to distinguish different forms of credit. The financial sector is still very underdeveloped and all rates of interest are determined by the government. 5 The high and growing share of state housing construction, vis-à-vis an insignificant share of cooperative and a falling (before 1986) share of individual housing construction; 6 Abuse of rights by those using government housing and a restriction in the rights of property owners; 7 A system of land use in which payments are virtually absent and land users are subject to the arbitrary whim of powerful bureaucrats. In short, the Soviet housing system is characterized by total state control over production and the dominance of administrative over economic controls. The state intervenes in all aspects of housing supply through the centralized administrative system. This type of system makes it an ideally suited instrument both for closely controlling people’s living conditions and any changes that might be made in those conditions, and for distributing housing according to specific goals. The key factor of the housing system, determining its development, is to be found in the mode of distribution which here is taken to include only just the rules and regulations governing the allocation of accommodation. It also includes the whole institutional complex concerned with the production of housing. The historical factors responsible for the evolution of this system merit attention. In a system of developed socialism, the social status and standard of living of various groups are determined and distinguished not in terms of the means of production (property) but in terms of access to goods and status in the systems of distribution.33 The evolution of the housing system clearly shows which goals and whose interests are served by distribution under socialism. The Soviet government emerged from an armed seizure of power by the Bolshevik Party. The basic slogans of the revolution were the abolition of exploitation and the private ownership of the means of production, and a just distribution of wealth. The

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problem for the new revolutionary government was that it had to retain power and revive the economy at a time when the economic motivation to work had been sorely diminished. The government was assisted in its attempt to achieve these objectives by its ability to redistribute wealth. The massive resettlement of urban workers into the apartments of the bourgeoisie earned the Bolsheviks popular support, while the preservation of this distributory function bolstered the government’s authority and stimulated labour. The modern (1986) housing system took shape during the initial years of industrialization (and urbanization) and successfully functioned during the course of a long, structural reform of the economy. As Kordonskii34 points out, this system of providing housing is used for: 1 Regulating resettlement and migration: the difference between housing construction and the chance of receiving a government apartment stimulates movement, but the propiska system and the way in which accommodation is distributed place limits on geographical and occupational mobility. 2 Regulating employment: waiting lists within industrial enterprises and the varying abilities for housing construction (which depend not so much on the enterprise’s effectiveness as on the status of the enterprise or its branch of the economy) allow the government to control workers’ behaviour. 3 Selection and placement of personnel: the ramified system of privileges makes it possible to avoid rigid regulations and norms of distribution, and it supplies better housing conditions to higher levels of the nomenklatura which in turn create interest in career advancement. Thus, the housing allocative system is structured in such a way as effectively to regulate geographical and occupational mobility. The party, government and senior managers of the economy—the nomenklatura at various levels—exercise this regulatory function according to priorities handed down from above. Therefore questions about whose interests are served by the present housing system and which persons and roles occupy the best position in that system are purely rhetorical. Unfortunately, empirical research on the relationships between the nomenklatura and housing status is practically nonexistent.35 The general trend of reform in the USSR’s economic and political system allows us to formulate the goal of housing reform in the following fashion. A movement away from housing distribution according to status (mediated by the distribution of income and by access to the ‘distributor’)36 towards housing distribution according to income, based on the development of a housing market and a system of social guarantees. An analysis of the processes taking place as a result of initial economic reforms reveals two contradictory tendencies: 1 The development of new forms of economic activity (cooperatives, the movement of enterprises towards leasing arrangement and other forms of privatization and management buy-outs) is leading to the redistribution of income and consequently to changes in the standards of living of different groups. 2 Those losing their status and thereby experiencing declines in their standards of living seek to preserve their standards by demanding that the system of distributors be

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extended to themselves. Nevertheless, in all cases, this is at the expense of a market for consumer goods. These two tendencies, however, need not be mutually exclusive. Increased income can stimulate competition for access to the ‘distributor’. This will be the case if state enterprises are reformed, for such enterprises currently will seek to preserve their proprietary powers. Moreover, should the legalization of distributory powers for cooperatives or other new firms run into difficulties, the absence of a market, in particular for housing, would strengthen the tendency toward illicit exchange relations thereby increasing the power of those operating on the black market. It is difficult to find a solution to this dilemma. On the face of it, it would seem possible to tie access to the distributor with the level of income, closing off access to the wealthy. In reality, however, such a step is impossible for two reasons: firstly, because of the resistance of those who, by virtue of their position, despite having low cash incomes, benefit from easy access to other distributors; secondly and more importantly, the suppression of economic incentives for so many years has led to widespread passivity and parasitic attitudes in society. To link guarantees of consumption to income would mean undermining any desire to work or earn and this would prove to be an unacceptable action under current conditions. This raises the question of the sort of reform which is required. In the view of this author it should: (1) gradually expand markets that currently limit the consumer’s ability to purchase housing according to tastes (in other words, switch from distribution according to status to distribution according to income); and (2) compensate those who would lose their high status in the old system and who otherwise would resist the first step to reform. Now we shall examine possible attitudes towards reform, taking into account the fact that Soviet cities are divided into ‘distributory categories’ (as are all places of employment from ministerial bureaucracies to enterprises). The introduction of greater democracy in the system of local government, which increases the latter’s accountability to the electorate, strengthens the budgetary powers of the local authority, weakens centralized distribution of resources, and the development of local construction all contribute to the weakening of any possible opposition to reform. In contrast to this, especially in regions with distinct nationalities, active and increasing conflicts between native inhabitants and immigrants are sidetracking efforts at reform. As far as the distributory hierarchy is concerned, the gradual replacement of centrally directed capital investment in housing construction by resources from the social development funds of enterprises, the movement towards new forms of management, and the growing independence of economic enterprises are likely, for a variety of reasons, to contribute towards the creation of a housing market. The strongest opposition to such a market will most likely come from the state construction sector. Should housing construction be financed by individual enterprises, state construction agencies will no longer automatically receive 10% of the apartments built, a device which these agencies use to guarantee themselves an adequate labour force. Thus, reform along these lines would provoke a transfer of workers to cooperatives or other new forms of construction organizations. Local government could give a boost to housing construction by, for instance, encouraging the formation of private (that is, non-state) firms to produce building materials and erect new housing. This could be achieved through the

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imaginative use of credit, taxation and land use policies, which could simultaneously further promote cooperative house and individual home ownership. It should be stressed that building developments in this direction are still only in embryonic form. Interest in reform is not determined purely by the status of the city in which the people live or the enterprise in which they work but also by the family’s own characteristics, its level of information, the claims it can make for being given new accommodation, the size of its income and also its future hopes for receiving new accommodation. Furthermore those who would welcome or resist reform can be divided into groups according to three characteristics: their wish to improve their housing conditions; their ability to improve their housing under the current systems; and their ability to pay for improved housing. Table 19.6 is a personal attempt based on available statistical information and opinion polls to categorize groups in terms of their attitudes towards housing reform.

Table 19.6 Estimated distribution of urban households in terms of their attitudes towards reform Group Need for improvement

Current chances for improvement

Ability to pay

Estimated Attitude percentagetowards of urban reform households

1.

Satisfied, no desire to improve

None

?

30

Neutral

2.

Unsatisfied

None

None

23

Inertly against

3.

Unsatisfied

None

Able

20+ Neutral, but a potential majority could be against due to lack of funds

4. Unsatisfied None

Able and prepared to 2–3 pay

For reform

5. Unsatisfied Yes, including: persons scheduled to receive housing

None for the vast majority

Against

6.

Little, but they have power

Nomenklatura

23– 25

Against

The numerically largest group of opponents to reform (see Table 19.6) consists of those who have neither a chance to improve their housing conditions under the present system nor the money to do so under a reformed system. It is unlikely that this group will actively resist reform. A majority from this group are perhaps eligible to be placed on waiting lists for housing. A smaller number could earn the money needed to purchase or lease housing. Moreover, a significant portion of this group owns individual housing with few amenities, and these people will probably either be neutral or, if their interests are served, favourably inclined towards reform. Members in group 3 in Table 19.6 may be attracted into the reformers’ camp by the opportunities which economic reform offers for higher earnings (and thereby the formation of ‘a middle class’, that is group 4). On the other hand, the conditions which

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lead to an improvement in wages involve higher prices—and this could convert the majority of members of group 4 into opponents of reform. One possible way out of this dilemma could be to create a more sophisticated system of credit and finance. The strongest opposition to reform could come from those already on waiting lists for housing. In the first place, this group makes up roughly one-quarter of the USSR’s urban population. Secondly, because they are recognized as those most in need of housing, and because the development of a housing market would mean the transfer of resources away from agencies handling such waiting lists, such appeals to fairness could not be ignored. Thirdly, we should keep in mind that any change in a system of distribution that has existed for over sixty years and has had vital influence over all aspects of social behaviour would be particularly painful and undesirable for those people in the process of receiving housing at the time of the reform. Nevertheless, certain aspects of the old system’s modus operandi will work in favour of reform. One is the complete lack of rights of those on waiting lists in the face of the power of bureaucrats: being on the list makes one dependent upon the administration, and people resent that dependence. Another is the chasm between catchphrase promises, on the one hand, and a reality that forces people to wait a hopelessly long time without any inkling whatsoever as to when they will receive housing, what sort of housing it will be, and where it will be located. Therefore the question is how can those in a queue for housing be made more interested in wishing for further reform? Firstly, allow those who are able to pay for choosing the location, quality, and size of their housing to do so. The best state housing should be sold to cooperatives or individuals. This would have the effect of undermining an imported principle: mainly that of ensuring that ability to pay is not the sole criterion for being provided with high-quality accommodation. Secondly, the government might be made responsible for not observing its guarantees: that is, it could be required to compensate people for every year that they have to wait in a queue for housing from the moment that housing conditions were proved to be worse than the government had guaranteed. If a tenant gives up his or her place in a queue in order to purchase individual housing, compensation could take the form of money. In other cases compensation can be in kind, making available to the consumer housing of a higher quality than originally guaranteed. Thirdly, neither the first nor the second proposal will lead to reform if the status of those on waiting lists is allowed to deteriorate; that is, if the quality of low-cost housing declines and if the waiting period increases. Therefore, an increase in housing sales is possible only on the basis of a general rise in the volume of new housing starts. The growth-rate of investment and new housing construction also will affect vitally the length of time needed to implement the reform. Any analysis of how housing reform will be implemented must take into account the nomenklatura’s ability to affect that reform. Here it is necessary and useful to distinguish between two groups within the nomenklatura: (1) those who are directly involved in the distribution of housing; and (2) the remainder. The first group will provide the strongest opposition to reform. This assertion is supported by the results of a poll undertaken by this author, which showed that the majority of ‘practical workers’ see no need to reform the distributory mechanism. Even if we exclude from consideration the fact that this group benefits from the current situation, nonetheless any change would demand of them real work and new responsibilities which, to them, are undesirable. The current turnover

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within the apparat and democratic changes are making it easier to break this group’s opposition. Moreover, considering the radical mood towards bureaucrats in general and those who distribute housing in particular, it is quite possible that positions involving decisions over the distribution of housing would be filled through direct elections. The second group faces a situation in which throughout society there is a raucous campaign against prerequisites and privileges. At the same time, new ways for circumventing existing regulations and for strengthening the link between housing and social status are being legitimized.37 The underlying reason for this latter trend is that, as a result of the assault on bureaucracy and the increasing complexity of work in the confused conditions that currently prevail in the economy, the managerial strata within enterprises are breaking down.38 It is highly unlikely that a totally uncontrolled housing market sector could be introduced to exist alongside the current system of housing distribution. Although a large portion of the population is prepared to pay for better housing, in a free market prices would be so high that only a tiny group of rich people (including black-marketeers) could afford to buy housing. This would be unacceptable to the bulk of the people, and therefore the majority of the population (and bureaucrats, who would appeal to public opinion) would oppose such a step. In the current housing allocation system, the spread of housing cooperatives and the development of individual housing construction in cities provides a weak analogy to a free housing market. Waiting lists for cooperative housing are quite long, the amount of housing coming on to the market is stable but low, and the waiting period is comparable to that for low-cost housing. Rather than advocating that people pay for their housing, emphasis should be placed on satisfying existing demand for such housing. This can be accomplished by (1) raising the quotas for cooperative or individually constructed housing; (2) compensating those who give up government housing; and (3) developing forms of credit and tax concessions, offering a wider choice, removing government restrictions, and as a result, providing people with a stimulus to buy and build their own homes.

HOUSING POLICY: PARTICIPANTS AND THEIR INTERACTION The Communist Party (CPSU) plays the leading role in the Soviet government’s housing policy.39 The goals and tasks of housing policy, as well as the resources for implementing decisions, are determined at Party Congresses and the Central Committee’s Commission on Social and Economic Policy. The key (and in the final analysis, the determining) role in formulating these policies resides with the Council of Ministers and its subordinate agencies: The State Planning Committee, the State Construction Committee (and its subordinate State Committee on Architecture and Urban Planning), the Ministry of Finance (and corresponding banks), and the All-Union Central Council of Trade Unions. The problems, opinions, and wishes of the public which are gleaned from analyses of letters and appeals to party and state organs, press accounts and the occasional suggestion from the scholarly community, are also built into the decision-making process.

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The greatest weight—that is, the deciding vote—in policy-making belongs to the CPSU Central Committee, the trade unions, and, possibly, the Council of Ministers’ Bureau of Social Affairs. Gosplan, Gosstroi, the State Committee on Architecture and Urban Planning, the Ministry of Finance and banks, and, perhaps, the Committee on Reform all have a ‘deliberative vote’. The growing role of Parliament is partly reflected in the recent decision of the Supreme Soviet’s Committee on Construction to create a social organization, Zhilishche, to deal with all questions of Soviet housing policy. One striking example will serve to illustrate how policy is determined and implemented. In his speech before the 19th Party Congress in June 1988, Gorbachev said that ‘the proposals to allow citizens to purchase the housing they occupy from the government are well founded’.40 In December 1988 the Council of Ministers passed a decree on the sale of housing which, in terms of its desirable results and possible consequences, was rather poorly thought out. For instance, in response to a reporter’s question about who would benefit or suffer from the effects of the decree, the head of the CPSU Central Committee’s housing department replied: ‘It is difficult to predict. As of now there are no concrete results.’41 Needless to say, the number of housing units which have been sold has been small (in 1989–35,800).42 The central question presently being debated is how to ensure the full implementation of the decree. Suggestions vary from forced sales to turning over the entire corpus of state housing to individual ownership free of charge. As far as the policy-making process is concerned, while scientific institutes and individual scholars have the right to submit information, the latter have played virtually no role whatsoever in the policy-making process. Although a few suggestions on forming expert public advisory bodies and instituting democratic procedures for formulating policy have been advanced, they can only be expected to play a limited role, as Soviet research on housing problems remains in its infancy. Suffice it to say that for a long time there were no planned studies of the housing problem in any of the Academy of Sciences institutes. That is, there was neither an official order nor a decision to conduct research in-depth into the housing system. With the singular exception of questions of design and construction or the social-hygienic aspects of housing the organization charged with overseeing research into all aspects of the construction industry, including housing, has been the State Committee on Construction (Gosstroi). This committee, it should be noted, is almost exclusively concerned with the various aspects of the construction process and is not involved in distribution or consumption.43 Organizations from the Central Housing Research and Design Institute to the Ministry of Finance and the Central Council for Trade Unions agree that it is necessary to increase the volume of housing starts, even if this means reducing other forms of capital construction. From the ranks of scholars the loudest voices currently being heard are those of the left radicals, who are calling for a housing market. On the other hand their opponents insist that social guarantees be given in order to ensure a minimum safety net for those at the bottom of the housing system. In order to clarify attitudes towards the various proposals for changing the system of housing allocation, a survey was conducted of 187 people who participated in four group discussions on housing policy in 1989. What follows is an assessment of answers to the question ‘What must be done first of all to solve the housing problem?’ A majority of those polled favoured the simultaneous development of a housing market and the

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strengthening of social guarantees: 71% of those whose professions involve research into housing problems and 46% of blue-collar workers responded in this way; 20% of all those polled spoke in favour of a free housing market. A more detailed breakdown shows that 67% of architects, 38% of urban construction workers, 40% of sociologists, 25% of economists, 19% of jurists, and 12% of trade-union workers favoured a free market. Attitudes towards the current housing distribution system and its restructuring provide a good indication of readiness for housing reform: 9% of workers in the academy’s institute, 24% of workers in the applied sciences, 30% of those in administrative organs, and 46% of blue-collar workers believe that there is no need to alter the current distribution system. The transformation taking place in housing policy is a result of the contest of ideas and positions among responsible policy-makers in the field. The basic trend can be described as a move away from the principle of a primarily distributory housing provision system towards one in which labour collectives and individuals must ‘earn’ their housing. This trend currently contains two principal features: (a) the officially declared support for greater self-reliance in housing supply with housing construction being financed by the resources of enterprises, and through self-build; and (b) offering incentives to those finding housing, particularly those on waiting lists, such as preferential terms and priority rights to buy housing. Even a cursory glance shows that despite the generally correct goal, the means chosen to achieve that goal are insufficient: instead of stimulating professionalism, progressive technology in housing construction, and an increase in the number and quality of new completed housing, the first trait (a) will produce contradictory results. And instead of attracting the resources of those who want and are able to pay, the second trait (b) will neither attract idle monetary resources nor lessen social tensions. No matter which aspect of housing policy is considered, the positive changes are occurring in fits and starts. Policy decisions are not fully worked out, nor do they create the optimum conditions for realizing their stated goals. One need only consider, for example, the changes introduced into the administration of the construction and building materials industries, with the broadened provision of favourable credit terms in the face of inadequate resources, and with the decision on the sale of housing. Here the problem lies in the ongoing crisis within the administrative system. The centre is attempting to control all processes throughout the country at the same time as it is losing control of the situation: that the economy is becoming unmanageable is particularly evident in the construction industry, where cost overruns and production delays are growing. The old mechanisms linking central and local authorities are changing. For a variety of reasons, including opposition to reform, the latter no longer attempt strictly to fulfil central directives, as was the case in the previous six decades. Since the late 1920s, local organs of power have no housing policy distinct from that of the central or the republican government. Deprived of economic and political rights, local Soviets have been passive and lacked real responsibilities. As a result of the central bureaucratic paternalism towards the regions, social parasitism has flourished, and cities, provinces, and entire republics have been reduced to mere supplicants for resources. The effort to make authorities politically answerable to the people has only just begun. This long-standing lack of real responsibility is one explanation for the incompetence of local authorities, and it also explains their reluctance to accept the new central policies.

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Another reason for the trial-and-error nature of the housing reform movement is the lack of preparedness among professional circles, the weak empirical basis of research into housing problems, and the absence of any firm conceptualizations of reform. One of the most characteristic aspects of theoretical work in the field is the attempt to devise and propose panaceas for the housing problem, or parts of it, and impose some new system from above, for example by replacing some norms, pay rates, or types of housing with others, either throughout the country or only in certain republics.44 Not long ago a number of steps were taken that allow us to hope for an improvement in the situation: a questionnaire on housing conditions was included in the 1989 census; starting in 1987, data on the number of people on housing waiting lists, the lengths of the waiting lists and other previously unpublished information appeared in a statistical annual; and the study of housing problems was included in the research plans of institutes of the Academy of Sciences.

CONCLUSION Not surprisingly, the existence of the Soviet housing system for over sixty years has had a telling influence on the rapidity with which models of housing reform have changed. The stability of both the institutional structure and of social behaviour required by these structures has reinforced stability and resistance to innovation, and this has imposed severe demands on the mechanism of reform. First of all, overcoming the opposition of institutes and groups which have no interest in reform will require greater power than during the Brezhnev period. Secondly, considering the current correlation of political forces, it is likely that changes will lead to a worsening in the position of unprotected social groups and a sharpening of social tensions. Because housing problems enjoy a high-priority status, housing policy is a powerful weapon for influencing and altering the correlation of political forces. Therefore, monitoring the changes in the housing conditions of various groups of the population must be the concern of organs of power. Thirdly, the current housing system is served by a fixed financial-economic mechanism. The government’s capital investment in housing must not be reduced in either relative or absolute terms, since any reduction would simply transfer the costs of poor administration to the people. Instead, private owners should be the recipients of state financial aid. The implication of the above is that, in order to reform the housing system, especially in its initial stages, the government must offer strong, centralized assistance, and all of its agencies should cooperate in a clearly defined housing policy. As we have seen, the current regulatory system is not up to this task. Current prospects for housing reform are closely linked to the speed with which an active housing policy can be up to its task, particularly at the municipal level. The process of reform ‘from above’ has already begun; the old system of housing provision is breaking up. Forces in favour of reform and capable of giving a boost to the reform movement ‘from below’ are weak but gathering strength. Moreover, any delays in implementing a new policy might reinforce the social bases for reform. The political will for this exists, supported by: (a) the unmet plans for housing construction45 and the potential failure of the party’s political slogans; and (b) the imbalance between the

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consumer market and hopes of improving the situation at the expense of increased payments for housing. The key factor in these conditions will be the readiness of the local authorities (soviets)—not only at the provincial and republican levels, but also at the city and village level—boldly to assume the responsibility for changing the goals and resources of housing policy. In the meantime, the question of when the switch from normative distribution to a regulated market will be completed remains open.

NOTES 1 The social and political situation is changing rapidly and this naturally involves changes to the system of housing relations. Some changes, which are already evident or for which documents have been drawn up, may be found in the main text of the chapter. Other scant and contradictory information which is just emerging is not referred to in the text. In these cases it would possibly be better if descriptions were given in the past tense. However, since this would most likely only confuse matters, we would rather remind the reader that the descriptions given here apply to the period at the end of the 1980s. 2 According to data provided by TsNIIEP zhilishcha for 1986–8. 3 These figures for 1986 relate to buildings erected using the state’s resources. In 1987 the corresponding figures for buildings of these heights were: one-four storeys, 28%; five storeys, 29%; six-nine storeys, 33%; ten and more storeys, 10%. See: Annual Bulletin of Housing and Building Statistics for Europe, New York, 1989, p. 47. 4 O merakh po obesepecheniyu stroitel’stva zhilykh domov i drugikh obyektov sotsial’nogo naznacheniya sanitarno-tekhnicheskim i inzhenernym oborudovaniem, stroitel’nymi materialami i izdeliyami v 1987–90 godakh. (Measures to secure water supply and drainage, heating and ventilation, and building materials and components for housing and other socially directed building objects in the years 1987–90.) Postanovlenie Soveta Ministrov SSSR (unpublished). O merakh po razvitiyu industrial’nogo monolitnogo domostroyeniya. O dal’neishem razvitii material’ no-tekhnicheskoi bazy stroitel’stva zhilykh domov i drugikh ob y ektov sotsial’nogo naznacheniya iz polnosbornych zhelezobetonnykh konstruktsii v 1988–95 gg. O merakh po dal’neishemu razvitiyu i obespecheniyu ustoichivoi raboty tsementnoi promyshlennosti. O merakh po razvitityu promyshlennosti stroitel’nykh materialov v 1988–95 gg. (Measures to develop monolithic industrial house building. The further development of the material-engineering basis for the construction of housing and other socially directed building objects with prefabricated concrete elements in the years 1988–95. Measures further to develop and to secure the continuous production of the cement industry. Measures to develop the building material industry.) Postanovleniya Soveta Ministrov SSSR ot 24.9.87 (unpublished). O merakh po obspecheniyu vypolneniya utverzhdennykh na XII pyatiletku zadanii po razvitiyu material’ no-tekhnicheskoi basy social’ no-kul’turnoi sfery. (Measures to secure the fulfilment of the tasks prescribed in the 12th five-year plan regarding the development of the material-engineering basis of the sociocultural sector.) (Postanovlenie Soveta Ministrov SSSR. SP SSSR 1987, No. 28, art. 96.) 5 ‘Khozsposob’ is a method of construction in which an enterprise uses its own resources and materials. The enterprise creates a construction brigade and uses resources and materials obtained from its own supply department, or those saved from previous projects, or those obtained by bartering with other enterprises (for example: bricks for pipes, glass for cement and so on). 6 The 1988 plans for the sale of certain types of construction materials were 30% fulfilled. See ‘Priblizhaya novosel’ya. Mozhem sami’ (‘Approaching new housing. We can do it ourselves’) in Pravitel’ stvennyi vestnik (Government bulletin), No. 3, 1989. In that year

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sales should have encompassed 7% of wood-pulp products (dry wall etc.), 6.6% of veneer, 32% of linoleum, and 18% of window glass (derived from Narodnoye khozyaistivo SSSR v 1988 g., Finansy, Moscow 1989 and Argumenty i fakty No. 35, 1989, p. 3). 7 See, for example, ‘Spaseniye utopayushchikh’ (‘To rescue the drowning’), Sotsialisticheskaya industriya, 15.2.89; ‘Vygoda—slovo ne brannoye’ (‘Profit—not a dirty word’) Izvestiya 1989. 8 The contradiction lies in the fact that the central government passes laws to strengthen the independence of enterprises at the same time that it shackles them with countless demands, norms, and obliges them to adopt a certain organizational model of economic activity, to switch production to two or three shifts, and so forth. This inconsistency finds a clear expression in the creation of design-and-construction enterprises, which essentially monopolize the entire process. The sequence of reform is notable because the administrative structure (of, for example, Gosstroi, or the ministries) is organized first, and then the enterprises’ activities are defined. 9 This decree accords the rights to create the office of ‘single customer’ to the Council of Ministers. 10 See, for example, articles by Loktionov, V., Yatskar’, Y. and Agintas, I., in issue ‘Voprosy sozdaniya ASPR’ (‘Questions regarding the creation of ASPR’), GVTs Gosplana SSSR, No. 76, Moscow, 1986. 11 Current plans envisage the construction of 36 million apartments from 1986 to 2000. Specialists have concluded that no less than 54 million would be needed to resolve the family housing problem. See Arguments and Facts, June 9, 1989. 12 At present the possibility to set up an independent household is related to living conditions. It is virtually impossible for a young couple to separate from their parents if the flat in which they live is small. According to the statistics, large, two-or three-generational families are looked upon as constituting one household living in a self-contained flat. Overall, 35% (and in towns 45%) of all households are either forced to live with their parents or in shared (communal) accommodation. See Kosareva, N., Ronkin, G. and Pchelintsev, O., ‘Na puti k zhilishchnoi reforme: analiz i prognoz’, (‘Towards a housing reform: analysis and forecast’) Voprosy ekonomiki, No. 8, 1990. 13 Until recently only one type of housing cooperative existed: the so-called housing construction cooperative (zhilishshno-stroitel’nyi kooperativ or ‘ZhSK’), but which in fact had nothing whatsoever to do with ‘construction’. Housing construction cooperatives are formed before construction begins, and the building is financed by the future residents. Members might have to wait up to two years after paying their money to move into their apartment. The cost and quality of construction is controlled by the cooperative. A decree issued in 1988 marked the emergence of another type of housing cooperative, which is set up when a building constructed by the state is purchased by a collective of residents. It is planned that housing tenures of this type will in time account for over 50% of centrally funded state housing. 14 ‘Ob utverzhdenii pravil finansirovaniya i kreditovaniya stroitel’stva’, (‘On the establishment of regulations concerning the financing of construction’) Postanovlenie Soveta Ministrov SSSR, (SP SSSR, 1981, No. 7, art. 31); Zakon o gosudarstvennom predpriyatii. (Law of State Enterprises) Ukaz prezidiuma Verkhovnogo Soveta ot 30.6.87. ‘O merakh po uskoreniyu razvitiya individual’nogo zhilishchnogo stroitel’stva’ (‘Measures to speed up the development of individual housing construction’), Postanovlenie TsK KPSS i Soveta Ministrov SSSR. (SP SSSR, 1988, No. 11, art. 28). ‘O merakh po uskoreniyu razvitiya zhilishchnoi kooperatsii’ (‘Measures to speed up the development of housing cooperatives’), Postanovlenie TsK KPSS i Soveta Ministrov SSSR, (SP SSSR, 1988, No. 16, art. 43). ‘O prodazhe grashdanam v lichnuyu sobstvennost’ kvartir v domakh gosudarstvennogo i obshchestvennogo zhilishchnogo fonda’ (‘On the sale as personal property to citizens of flats

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in houses of the state housing fund’), Postanovlenie Soveta Ministrov SSSR, (SP SSSR, 1989, No. 1, art. 4). 15 See: ‘Tsena zemli moskovskoi’ (‘The price of Moscow land’), Ekonomicheskaya gazeta, No. 12, 1989. 16 Generally speaking, when describing Soviet housing relationships, the term ‘housing provision’ is not used. Statistical handbooks, scholarly literature, and practitioners employ the term ‘improvement of housing conditions’. 17 ‘Living space’ means the floor area of various rooms. It is distinguished from the overall ‘floor space’ of an apartment, the latter including, along with living space, the kitchen, corridors, bath, and other small areas. 18 See: ‘Dotatsiya teryaet prestizh’, (‘Subsidies lose prestige’) Ekonomicheskaya gazeta, No. 12, March 1989. 19 See Vestnik statistiki, No. 10, pp. 51–2, 1989. 20 Narodnoe khozyaistvo SSSR v 1989 g., ‘Finansy i statistika’, Moscow, 1990, p. 167. 21 See Vestnik statistiki, No. 10, p. 52, 1989. 22 Until 1990, the town was called Kalinin, when it reverted to its pre-revolutionary name. 23 Shatalin, S.S. (ed.), Tendentsii i perspectivy razvitiya sotsial’noi infrastructury (Tendencies and perspectives in the development of the social infrastructure) Moscow, Nauka, p. 175, 1989. 24 In accordance with the new law on ownership, a member of a cooperative has the right to dispose of his or her flat by selling or renting it, although there is some conflict between the rights of members and the rights of the cooperative itself. See Izvestiya 10.3.1990. Prikhod’ko I. ‘Voprosy obyazatel’stvennogo prava pri peredache kvartir v domakh ZhSK’ (‘Questions regarding the compulsory right of transfer of dwellings in ZhSK houses’) Khozyaistvo i pravo, No. 1, 1990. The new law on land legitimizes the life-long and inherited right of owning both rural and urban households, Izvestiya, 6.3.1990. However, enforced evictions and destruction of individual housing in urban areas to clear space for new blocks of flats occur nowadays, see ‘Khoroshee lomayut’ (‘Better to break’), Pravda, 6.3.1990, ‘Esli dom snesli’ (‘If they destroyed the home’), Pravitel’stvennyi vestnik No. 47, 1990. 25 After extremely heated debates the Russian Parliament ratified the new legislation On Land which legalized private ownership of land. However, the rights of owners remain restricted: the buying and selling of plots of land are mediated by the authorities. That is, first of all the owner of the land sells his or her plot of land to the local soviet (local authority) who then sells it to the new private owner. Moreover, it is forbidden to sell the land within ten years of its redemption. See ‘Debaty o zemle’ (‘Debates about the land’), Sovetskaya Rossiya, November 30, 1990; ‘Zemlya—krest’yanam’ (‘The land to the farmers’), Sovetskaya Rossiya, December 4, 1990. However, new relations in the sphere of land use basically concern agricultural users. Hardly any attention at all has been paid to rights governing urban land owners. See: 3.5 Zemel’naya reforma i agrarnaya politika, Perekhod k rynku. Kontseptsia i programma (The land reform and the agricultural policy. Transition to markets. Ideas and programme), Moscow, Arkhangel’skoe, 1990. 26 A propiska is a residence permit. A permanent residence permit is required in order for a person to be included on a housing waiting list, as well as to purchase a house. 27 O merakh po uskoreniyu razvitiya individual’nogo zhilishchnogo stroitel’stva. (Measures to speed up the development of individual housing construction) Postanovlenie TsK KPSS i Soveta Ministrov SSSR. SP SSSR, No. 11, art. 28, 1988. O merakh po uskoreniyu razvitiya zhilishchnoi kooperatsii. (Measures to speed up the development of housing cooperatives) Postanovlenie TsK KPSS i Soveta Ministrov SSSR. SP SSSR, No. 16, art. 43, 1988. 28 Credit conditions are currently in the process of being changed. As from January 1, 1990, the rates of interest paid on personal saving deposits were increased from 2–3% p.a. to 5–9% depending on the length of time a person has been saving. See ‘O povyshenii

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zainteresovannosti grazhdan v khranenii sberezhenii v uchrezhdeniyakh gosudarstvennogo banka SSSR’ (‘On raising the interest of citizens in depositing savings in the offices of the National Bank’). Ukaz Prezidenta SSSR, Izvestiya, 26.10.1990. It has been announced that there now have to be corresponding increases in the cost of credit. The rates charged for loans for housing cooperatives must rise from 0.5% to 11% p.a. However, the rates or interest charged for loans made before January 1, 1990, will remain as before. See ‘Starym Kreditam—starye stavki’ (‘Old interest rates for old credits’), Argumenty i fakty, No. 50, 1990. Nevertheless, at the beginning of 1991 credit conditions were still at the old level. 29 Narodnoe khozyaistvo SSSR v 1989 godu: Statisticheskii ezhegodnik (The national economy of the USSR in 1989: A statistical annual), ‘Finansy i statistika’, p. 169, Moscow, 1990. 30 The statistical average rent is always less than the base rate because of the number of groups which benefit from discounts. So, for instance, in Leningrad the base rental rate is 13.2 kopeks for 1 square metre of actual dwelling space, whereas in 1989 the actual amount paid was on average 7.6 kopeks. 31 According to government data, expenditure on housing amounts to 2.8% of a family’s aggregate income (Narodnoe khozyaistvo SSSR v 1989 g., p. 88). However, if we examine the proportion of a family’s budget spent on accommodation, then the figure is 10–12% for high-income groups and up to 25% for pensioners, with the average in the range of 15–22% (Kolotilkin, B., ‘Kvartplata i koshelek’ (‘The rent and the purse’), Argumenty i fakty, June 22–28,1989). The structure of a tenant’s annual outlay for 1 square metre of dwelling space is as follows; rents—19%; payment for communal services (central heating, water, sewage disposal, gas)—33%; electricity—18%; telephone—12%; television aerial—2%; running repairs—16%. This comes to a total of 10.5 roubles or 100%. No amortization deductions for capital repair work are made, for the latter are paid for directly from the state budget (Kolotilkin, B., ‘Kvartirnaya plata: Khozraschet i sotsial’naya spravedlivost’ (‘The price of housing: separate accounts and social justice’), Voprosy ekonomiki, No. 8, pp. 91–4, 1990). 32 O merakh po dal’neishemu sovershenstvovaniu raboty zhilishchnokommunal’nogo khozyaistva v strane. (Measures to further improve the working of the local housing economy of the country) Postanovlenie TsK KPSS i SM SSSR. SP, SSSR, No. 27, art. 92, 1987. 33 See Kordonskii, S.G., ‘Sotsial’naya struktura i mekhanism tormozheniya’ (‘The social structure and the braking mechanism’), Postizhenie, Moscow, Progress 1989. 34 See Kordonskii, S.G., ‘Sotsial’naya struktura i mekhanism tormozheniya’ (‘The social structure and the braking mechanism’), Postizhenie, Moscow, Progress 1989. 35 In our view, housing status may be described in terms of two criteria: housing conditions and prospects for their improvement. Differences in the provision of living space to various social groups are relatively minor; but they are quite large, particularly in Moscow, between overall floor space and the quality of apartments and buildings. The greatest differences, however, are found in the time spent waiting for improved housing and in the manner in which access to better accommodation is gained (special assistance, loans, credits, and so forth). A brief analysis of waiting lists in Moscow reveals the varying kinds of treatment someone on the lists might experience. Spending a year queueing is neither the only nor the most important factor in obtaining housing. Thus, in 1989, people who had joined the queue for the most part in 1980–1 received housing after a wait of eight to nine years. (See Vestnik ispolkoma Mossoveta, No. 13, p. 6, 1989.) At the same time, people who had joined the waiting list in 1975–6 (having waited some fourteen-sixteen years), also received housing, as well as those who had enrolled on the lists after them. Research conducted in 1985 in the agricultural region of Altai Province attests to the existence of a close correlation between a person’s position in the administrative hierarchy, and his or her housing prospects (Postizhenie (Comprehension), Moscow, Progress, 1989, p. 319). In addition, in Moscow (where there is a high concentration of high-level nomenklatura apparatchiks) 49% of all

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housing was distributed outside the waiting lists, whereas the average for the entire USSR was only 9% (see Vestnik statistiki, No. 11, p. 51, 1989). 36 The term ‘distributor’ (raspridelitel’) is used here to mean either a place at which, or a mechanism through which high-quality, or low-cost goods and services that are in short supply are distributed. The basic hallmark of distributors is that access to them is limited to specific groups (for example, workers of a given enterprise, or professionals of a certain level or above). The system of distributors (distribution system) was created in the very first years of Soviet power as a payment in-kind supplement to wages. In the 1930s a hierarchical card system for workers and dependents was added to the existing system of closed cafeterias, buffets, stores, and workshops. Modern forms of distributors include ration coupons, special food orders (usually made through the workplace), ‘special services’ in closed poly clinics and hospitals, rest homes, sanatoriums, and so forth. Currently, because of the growing consumer-goods shortage, the role of wages as a work incentive is falling, and the role of the distributors is increasing. The number of distributors, and the selection of goods they distribute, is growing correspondingly. The more rigid the hierarchy of distributors becomes, and the more the system of distributors retreats from its originally declared principle of equality, the more energy will be wasted—from ideological myths to militiamen at the doors—to keep their existence concealed. The existence of shortages is used to justify the existence of the system of distributors. But a system that distributes goods benefits from a shortage of those goods; thus, the question of ‘What (under socialism) comes first, the distributor or the deficit?’ requires special investigation. 37 See, for example: O rasshirenii prav kolkhozov i drugikh sel’skokhozyaistvennykh kooperativov po rasporyazheniyu prinadlezhashchim im zhilishchnym fondom. (On expanding the rights of kolkhozes and other agricultural cooperatives to organize their housing funds.) UKaz Prezidiuma Verkhovnogo Soveta SSSR Vedomosti Verkhovnogo Soveta SSSr, No. 19, 1989; Zakon o gosudarstvennom predpriyatii (ob’edinenii) (Law of State Enterprises (Societies)), Moscow, 1987; O vnesenii izmenenii i dopolnenii v Zakon SSSR ‘O gosudarstvennom predpriyatii (ob’edinenii) (On the introduction, modification and implementation of the USSR Law of State Enterprises (Societies)) Vedomosti s’ezda narodnykh deputatov SSSR i Verkhovnogo Sovet SSSR, No. 9, 1989. 38 See Belanovskii, C.A., ‘Sotsial’nyi mekhanism planirovaniya’ (‘The social mechanism of planning’), Postizhenie, Moscow, Progress 1989. 39 Writing at the beginning of 1991, it is fairly clear that the role of the Communist Party in the political life of the country has changed quite significantly and is continuing to diminish. Nevertheless, as far as determining the operation of housing policy on the ground is concerned, the party has not yet been displaced, while the role of republican and senior local party officials has undoubtedly been strengthened. 40 Gorbachev, M.S., O khode realizatsii reshenii XXVII s’ezda KPSS i zadachakh po uglubleniyu perestroiki. (The implementation process of the decisions of the 27th session of the KPSS and some tasks concerning the deepening of perestroika) Doklad na XIX Vsesoyuznoi partkonferentsii, Moscow, Politizdat, p. 12, 1988. 41 ‘Khotel by kupit’kvartiru’ (‘Would you like to buy an apartment’), Argumenty i fakty, July 8–14, 1989. 42 Khodzhaev, D.G., ‘Novie podkhody k resheniyu zhilishchnoi problemy’ (‘New approaches to the solution of the housing problem’) Planovoe khozyaistvo, No. 10, p. 63, 1990. 43 See, for example: Nikolaev, S.V., ‘Zhil’e 2000—lozung i real’nost’ (‘The dwelling in 2000—solution and reality’), NTR, No. 9, 1989; ‘O zhilishchnom stroitel’stve na XIII pyatiletku i period do 2000 g’ (‘Housing construction in the 13th five-year plan and the period up to the year 2000’), Zhilishchnoe stroitel’stvo, 1989, No. 4; ‘Osnovnie zadachi i osobennosti resheniya zhilishchnoi problemy’ (‘Fundamentals and characteristics in the solution of the housing problem’), Zhilishchnoe stroitel’stvo, No. 2, 1989.

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44 See, for example, ‘Kvartira—ne roskosh’ (‘A dwelling is not a luxury’), Komsomol’skaya prada, 28.3.1989; ‘Vygodnee otdat’ chem prodat’ (‘Better give than sell’), Pravda, 28.9.1989; ‘Pravo na zhil’e—ot utopii k real’nosti’ (‘A right to a dwelling—from utopia to reality’), Sotsialisticheskaya industriya, 25.8.1989. 45 The plan for the first half of 1990 was only 31% completed. Nationwide 30.2 million square metres of accommodation were erected, equivalent to 92% of that achieved over the same six months in 1989. Yet 1989 was not itself a great success story, for with 128.9 million square metres being built, this was 97% of the 1988 total. In other words, the decline between 1988 and 1989 has continued. See: Narodnoe khozyaistvo SSSR v 1988 g., p. 150; Narodnoe khozyaistvo v 1989 g., p. 156; Statisticheskii pressbyulleten’, No. 16, Goskomstat, Moscow, p. 3, 1990.

20 The reform of the Soviet housing model The search for a concept Olga Bessonova The process of restructuring perestroika currently under way in the USSR still does not orientate the concept of housing reform towards radically changing the system of housing relations. In many respects this is because at a certain stage in history the housing problem was transformed from an economic issue into an ideological one: it has passed from the hectic debates of the 1920s on the various methods of building and allocating housing and on the principles governing rent calculations, to making categorical statements to the effect that free provision of accommodation is evidence of one of the advantages of a socialist society. Since the possibility of arguing against this axiom was out of the question, the existing model of housing relations has not been subjected to a proper analysis. Thus social scientists and housing specialists find themselves at a critical juncture. They need to elaborate a theory which is capable of both explaining all the difficulties currently taking place in the housing sphere and also offering a basis for housing reform. The foundation of the existing Soviet housing model was established in the 1930s. The policy principles established in 1921–8 were abandoned for they conflicted with the decision to introduce a policy of rapid industrialisation (the five-year plans). The practice of maintaining different forms of housing property, the introduction of a system of amortization in the housing sector based on differentiated rent, the attraction of private capital into housing construction, and the development of a whole variety of housing cooperative forms did not suit those favouring rapid industrialization. Beginning in 1929 Stalin started dismantling the economic mechanism of housing provision which was still in the process of being formed. First of all, private construction was eliminated, housing cooperatives were subordinated to industrial enterprises and then in 1937 cooperatives were virtually totally abolished when their property was confiscated. This was done on the grounds that ‘they could not cope with their task’. Taxes on house building were imposed on the population and virtually all assets for housing investment were placed under the control of the state budget. Priority in the allocation of these funds was assigned to providing accommodation for manpower attracted to new industrial construction projects. The confinement of all forms of housing provision to the state and departmental control over housing resources became established as the major determining features of the Soviet housing model until 1955. Although housing policy under Khrushchev (1955–64) witnessed important changes in the existing model, these did not affect its essence. Legislation permitting the formation of house building cooperatives was passed and steps were taken to stimulate individual construction of housing. Of particular significance from a Soviet Marxist point of view,

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investments in housing construction were separated from industrial investment, thereby terminating the policy of regarding housing construction as part of the production process. An effort began to be made to create and implement integrated city plans. This was to be achieved by channelling state budgetary funds for housing through local government (i.e. local soviet) channels as well as through departmental channels. However, the new institutional forms found great difficulty in trying to overcome the resistance of the established economic mechanism. In most cases local Soviets failed to become the sole authority in their administrative jurisdiction. Private self-build in cities gradually became constricted and cooperative house construction (ZhSK) stabilized at 5–6% of the total annual output. After 1964, when Brezhnev came to power, this modified Stalinist housing model did not undergo any further significant change. Government decrees during his time in office emphasized working within the established model; this is reflected in the wording in which they were couched, for instance, ‘On the measures for further improving…’ or ‘On the further improvement…’.

THE MATURE SOVIET MODEL By the early 1970s the Soviet housing model had consolidated into its modern form, with the following characteristic features: 1 the domination of a state form of housing provision with no legal market for flats in the state sector and almost complete prohibition of market relations in the cooperative and private sectors; 2 a stable low rent neither reflected in the varying standard of comfort found in different types of accommodation nor by construction and running costs; 3 the allocation of available housing space to those on waiting lists either at the place of work or residence; 4 state determination of housing consumption norms in all sectors, including the cooperative and private sectors; 5 housing construction controlled from the centre through a multi-channel system of financing and resource allocation. The latter were distributed according to economic priorities and territorial and sectoral principles. 6 the insignificant role of cooperative housing construction derived from the fact that it could not compete with the state construction sector and the low rents charged by the state for its accommodation; 7 the almost total absence of private individual construction in large cities; 8 orientation towards multi-apartment construction in large monotonous residential estates, built by one construction organization employing assembly line production methods. As a way of justifying this model (essentially, the non-commodity character of housing with its low rent), it was officially held that such a system of housing regulation would ensure:

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1 the gradual removal (or at least amelioration) of inequalities in housing provision. Policy-makers in the 1980s genuinely believed that the housing policy being pursued would substantially reduce differences in provision among different social groups. 2 compensation for income inequalities; 3 equal access to housing facilities as laid down in Article 44 of the new 1977 USSR Constitution. The supreme goal of socialism—as it was stressed—was the more complete satisfaction of the constantly growing material and spiritual needs of all members of society. One of the most urgent needs of man is the need for accommodation. People were told that under socialism the state operates in the interests of all and takes care of its citizens. Therefore, the burden of satisfying housing needs (as one of the most expensive) is borne by the state itself. A great deal of publicity was given to the fact that people in the Soviet Union enjoy the lowest rents in the world, which cover only one-third of total running costs and amount to 3–4% of the family income.

THE MODEL’S RESILIENCE IN THE FACE OF ACCUMULATING CRITICISM By the beginning of the 1980s an enormous gap emerged between, on the one hand, the declared goals of housing policy and ideological doctrine, and, on the other, the real housing situation. Official bodies and government structures had tried to conceal: ● strong group, departmental, and territorial differentiation amongst the population in terms of housing conditions, with a considerable excess of housing space on the one hand, and severe shortages reflected in lengthening waiting lists and prolongations of the waiting period up to twelve-fifteen years on the other; ● the presence of a ‘shadow’ market in housing facilities in which government subsidies were transformed into substantial personal incomes by the illegal sale of state apartments, renting them for prices considerably higher than the state rent and engaging in financial transactions between various parties (including buyers and sellers) which occur during the housing exchange process; ● the existence of special rules for providing high-standard accommodation to a large group of Soviet and party officials who did not have to queue; ● widespread nepotism, and corruption in the distribution of accommodation as well as the use of state flats as ‘hard currency’ in transactions between economic agents (enterprises, organizations and institutions). It was in a situation of chronic housing shortage and political hypocrisy that the 27th Party Congress met in February 1986 and was compelled to proclaim the necessity of introducing new policies in all spheres of social life. The official statement concerning the change in housing policy may be found in the CPSU Central Committee Resolution ‘On the accelerated solution of the housing problem’. Its principal objective is to ensure the ‘unconditional implementation of the resolution passed by the 27th Party Congress on the provision of self-contained accommodation, either an individual house or apartment for each Soviet family by the year 2000’.

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Apart from small, planned changes in rent, the very title of the document assumed the continued use of the existing housing model. The main thrust of the above resolution— ‘to strengthen’, ‘to increase’, ‘substantially extend’, ‘to draw more and more’— demonstrates that politicians intended preserving existing methods of providing accommodation while increasing the volume of construction. The hopes pinned on using administrative methods—for instance, ‘mobilization of efforts’, ‘search for additional resources’ and even ‘All-Union Socialist Competition for the successful fulfilment and over-fulfilment of plans for housing construction’—illustrate an underestimation by the highest decision-making bodies of the disastrous economic and social situation then prevailing in the country during the late 1980s. According to calculations made by economists, if the goals set by the Party Congress in 1986 are to be achieved, then over 2 billion square metres or 40 million apartments will have to be built over the fourteen-year period, 1986–2000. This means that in the 12th five-year plan 570 million square metres will have to be built and in excess of 700 million in the 13th and 14th five-year plans. These figures have to be compared with the 500–550 million square metres erected in the 9th, 10th and 11th five-year plans. The serious doubts already harboured by economists about any real possibility of finding sufficient additional resources in the construction industry were submerged under the optimistic belief (or hope) that the housing targets could be achieved by a general upturn in the whole economy.1 In other words, the concept of ‘accelerating the resolution of the housing problem’ has been simply a part of the more general goal which seeks to increase the country’s economic growth rate. These policies and aspirations in the field of housing are still grounded in the 1960s housing policy. It was then that for the first time, the goal of providing each Soviet family with self-contained accommodation by 1980 had been laid down, and stress placed on the need to increase substantially the resources directed to residential building. This policy did not envisage any significant variation in the Stalinist housing model. Because of the visible success of this policy at the end of the decade, its perpetuation and reproduction in the mid 1980s was stimulated. The determination of housing need is the prerogative of the local authorities. This means that the minimum living space standard below which a household must be living before being eligible for a place on the waiting list varies quite considerably between towns, but tends to fall within a range of 5–8 square metres. A family having just 0.1 square metres housing space more than prescribed by the norm cannot join the queue and is not even considered to be in need of a new flat. In 1986, in the country at large, 84.5 million square metres of new housing were commissioned and tenanted. This figure was 6.5% higher than in 1985 when 79.3 million square metres were commissioned. Housing construction continued to grow in 1987 when, at 93.2 million square metres, it was 10.3% greater than in 1985. In 1988, however, housing construction declined by 2.7% in comparison with 1987, with a further decline in the rate of construction expected in 1989. In the first nine months of 1989 production was 6% down in comparison with the same period in 1988.2 The main problems which came to characterize the housing model in 1986–9 are closely related to the inertia effect of the structure and functioning of early economic structures and the increasing crisis in the economy. Due to the transition in 1987–8 of 80% of industrial enterprises to a self-financing basis—which means that they can be

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forced into liquidation for they can no longer rely on a government subsidy—funds for housing construction are now to come out of their profits, rather than from the central state budget. However, this partial economic reform retained the centralized distribution of resources (cement, bricks) and single pricing system. This led to a conflict between the decentralization of the financing of house building in the departmental sector and the centralized resourcing of construction. As a consequence some enterprises have substantially reduced the size of their financial contributions for house building, while a large number of other firms and employers are faced with problems associated with the material security of their monetary assets. These fears led to a rise in the amount of house building undertaken by enterprises using the direct labour method (khozsposob). The effect of choosing this method has been to increase construction costs and prolong the building time. Thus, whereas in 1987 25.4 billion roubles were required to build 93.1 million square metres of housing, in 1988 these figures were 28.9 billion and 92.0 million respectively. According to some estimates, the cost of constructing 1 square metre of housing space financed by enterprises is 30% higher than that financed from the state budget. Of particular significance is the fact that in contrast to 1987 when 8% of housing was built using the enterprises’ own funds, in 1988 these figures had already reached 36%.3 It is equally important to note that despite the new economic conditions, relationships between enterprises and the local Soviets have remained essentially the same. This has only exacerbated conflicts or contradictions between these two institutional complexes. The essence of this conflict lies in the fact that prior to ‘perestroika’ local Soviets were granted 20% of that proportion of the departmental housing space financed from the state budget. This amount of accommodation together with that actually created by the local Soviets themselves ensured that people joined housing waiting lists where they lived. However, now that enterprises have been granted economic independence, they are no longer obliged to surrender part of their housing to the local authorities (i.e. municipality, local soviet) for the simple reason that the accommodation was constructed using their own resources. Pressures applied by local Soviets in enterprises led the latter to reduce their own house building activities and to use their assets in other ways. This in turn has led to a sharp rise in the distribution of profits in the form of credits and loans to individuals, thereby enabling (and encouraging) employees in enterprises to build their own housing, join cooperatives or purchase state accommodation. It is in this fashion that traditional state forms of providing accommodation are declining and the establishment of a financial basis for the development of new forms is being stimulated. This is of critical significance for the transformation of the existing housing model.

SOCIAL PRESSURES FOR REFORM First, the policy of glasnost has revealed many ‘secret’ points: in the mass media a large amount of material has appeared on graft, string-pulling (blat) and self-provision of excellent housing by top-ranking officials and their children. The academic nature of ‘equal rights for housing in all social groups’ became evident. Secondly, economists and sociologists refute the thesis about the smoothing over of housing and income inequalities in Soviet society. Studies have demonstrated that under

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such ‘equal rights’ population groups with high incomes have a far larger quantity of free housing (which is in short supply) than those with low incomes. In addition, a positive correlation has been revealed between housing conditions and social status.4 Thirdly, over the years the myth about the cheapest and freely granted housing has been completely refuted, I think, now a majority of the population has finally realized that ‘our apartments are built on the money earned by us, it was only taken to the central fund through the distribution mechanism’.5 All the above factors have contributed towards the creation of a tense atmosphere throughout the country. It is possible to identify a growing mood amongst an increasingly large proportion of the population which favours the ‘expropriation of privileges’ and ‘a redistribution of housing (peredel)’. In one typical case, a radio broadcast announced that in the city of Minsk, the capital of Byelorussia, a certain woman was setting up a society for the ‘fair’ redistribution of housing space. She was given an opportunity to speak on the radio where she gave her private telephone number and suggested that people provide her with information about those who have ‘too much housing space’. Her intention was to draw up a list of such people and then to demand that the city authorities take away their flats.6 The main line of confrontation over housing now lies between soviet officials and the rest of the population for, sensing their positions to be unstable, many bureaucrats are hurrying to have their privileges legalized. Thus, for instance, in the town of KamenskUralskii (population: 206,000) the executive committee of the local soviet ruled that certain categories of citizens holding important posts were entitled to additional housing space (one room). These citizens included secretaries and departmental heads of city and district party committees, Komsomol City Committee secretaries and the city procurator. The provincial town literally exploded with the social scandal which ensued.7

FOUR THEORIES AND PRESCRIPTIONS FOR REFORM Natural redistribution A notion of natural redistribution, in this case of the housing stock, is beginning to mature at the grass-roots level, especially among blue-and white-collar workers and also low- and middle-ranking intellectuals as it carries hope of a revival in the socialist principles of social principles of social justice. Such a course of events has deep roots in Soviet history and communist ideology, which express a strong desire for equality and social justice. Immediately after the October Revolution a spontaneous process of resettlement and rehousing people in accommodation considered to be under-inhabited began. It was not until August 1918 that the government issued a decree expropriating private housing property, thereby, somewhat reluctantly, legalizing and systematizing these actions. In the publications of the 1960s and 1970s it is argued that strange (and unfounded) doubts appeared concerning the testimonies of the 1920s and 1930s about the spontaneity of the ‘great housing redistribution (peredel)’. Efforts were made to prove that the revolutionary period was completely under the control of the Bolshevik Party.8 Basic arguments for those doubts referred to Lenin’s pre-revolutionary project of expropriating housing

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facilities from the bourgeoisie, and Engel’s work ‘On the housing problem’ where he wrote that the first proletariat actions after the revolution should begin with the redistribution of housing space. This is true, but at the same time the actions of the revolutionary masses went far beyond rationality and the prescriptions of Marxism. Proof of the latter statement can be seen in the housing policy of NEP (1921–8) which started from correcting the mistakes made in the previous years, including the denationalization of 60–80% of urban housing space and categorical prohibition of administrative redistribution, and forcing tenants as well as houseowners to take in and share their accommodation with others.9 Thus, the expediency of ‘the rigid class housing policy of the “heroic” epoch of the Civil War’ was called into doubt.10 Seen from the standpoint of the present, these historical examples only confirm the potential power of the notion of redistribution. The justifiability of values supporting a more egalitarian society not withstanding, such a ‘policy’ would be wholly unacceptable in a civilized society. Monetary redistribution In order to counterbalance the above, economists have proposed a monetary redistribution concept. While this would allow the government to avoid crude administrative measures, it again presumes that a ‘bureaucratic’ means of calculating the proper economic costs of every family’s housing conditions exists. One suggestion is to provide housing free of charge. Evidently, if a state exercises regulation over housing relations, granting free or cheap housing to some social groups, it usually accumulates the necessary assets through the general taxation system. And, of course, the Soviet Union is no exception. However, the correlation between the population’s contribution to the state budget and housing space built for these assets over the course of time became more and more disguised, making it possible to create in the 1960s (and then to maintain) the myth concerning the dwellings granted to the people by the state. My research indicates that the distortion of real rent processes was historically formed as a transformation of the housing tax and rent. Such a transformation process took place in the 1920s to the 1940s when the housing taxes of 1922, 1924, 1927 and 1931 were to be allotted to housing construction, yet each reform was ‘absorbed’ by income taxes. By 1943, of the total income tax paid by the urban population into the state budget, 80% represented a concealed housing tax. Housing taxes and rent have always been complementary components in financing the housing sector in the USSR. Rent, from the moment of its introduction in 1922, has been the tool not only of housing policy, but of taxation policy as well, since it was based on the tenant’s status and income. In 1926 the state acknowledged that rent had to cease being a tax and instead become a charge for housing which would reflect the cost of its provision. However, as a result of the already-mentioned changes in housing policy, this did not occur. By the early 1960s, rent was no longer a fiscal device for extracting money from the population; and yet, it still did not reflect the real price of housing space. In fact, rent eventually came to be of symbolic value only. After the monetary reform of 1961 which saw the devaluation of the rouble by 10%—with the result that the rental charge was no longer 1 rouble 32 kopeks per square metre, but 13.2 kopeks—the income from rent failed to cover the running costs of the housing stock. The latter was now subsidized

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by the remaining (20%) income tax paid into the state budget. In other words, in the period 1961–88, income tax had come to cover all state outlays on housing, for both construction and maintenance. However, it should be stressed that this correspondence between the size of income tax and housing expenditure has not been deliberately intended by the government. Therefore, the free character of state housing in the Soviet Union is ensured by direct taxation, which in general permits the state to take into account the previous contribution of a citizen to the aggregate housing fund. When comparing housing payments of a family with its real housing conditions, in the opinion of the partisans’ monetary redistribution concept, it is necessary to devise a formula for redistributing government subsidies in order to compensate households for relatively worse living conditions.11 The monetary redistribution variant of housing reform can also be supported by wide groups of the population, because its basic thesis (similar to the natural redistribution concept) focuses upon the restoration of social justice. However, if we proceed in this direction with our reasoning, we should also consider the just nature of wage levels for different social groups in the past historical period, since they are the basis of the calculations, as well as the justice of taxation policy rates. If we take into account the fact that different social groups have their own concepts of social justice, the impasse of the above discourse becomes evident. Fixed free housing The notion of fixed free housing is advanced in an effort to overcome this impasse.12 This concept does not address the previous contribution to the total housing fund, declaring that each member of a socialist society has the right to a certain share of free housing. All space above this fixed share should be bought or rented, in the case of already-occupied square metres, for the total cost. These who do not have the guaranteed norm should be compensated in monetary terms. Thus, money-commodity relations, strengthening the incentives for labour and redistribution of housing space, do not infringe upon socialist achievements in the form of free-of-charge housing. The origin of this superficially attractive idea lies in pure socialist ideology and, in some way, in the successful experience of so-called Welfare States. The possibility of its implementation under the conditions in the Soviet Union can be evaluated only in accordance with Soviet reality which is characterized by considerable housing shortages and a great number of people living below the ‘sanitary norm’. What can be a social norm under these conditions? This problem is usually avoided, as are other concrete problems. However, it is not by chance that such or similar ideas are realized in countries with a high economic level of development and an absence of an absolute housing shortage, which allows them to establish levels of guaranteed social norms for every citizen. However, under the conditions of Soviet reality the idea of the fixed free character of housing can only lead to specific kinds of housing taxes and monetary redistributions. In this case, nothing will change for those who are on the housing waiting lists until an efficient mechanism appears for enabling the population to invest its assets in housing construction.

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Privatization and market relations Privatization and market relations is a policy specifically oriented towards overcoming the above problem. Essentially it is concerned with finding ways whereby people are able to contribute their own money to provide housing either through the purchase of state housing or the construction of individual houses by private building contractors. In fact, this idea, based on a number of government and party resolutions, has been put into practice since mid 1989. It marks the emergence of a new stage in Soviet housing policy. It is important to note, however, that the government decree allowing tenants to purchase their flats was not carefully thought through. It was adopted under the pressure of economic circumstances. On the one hand, it reflected the critical physical condition of state housing erected in the 1940s and 1960s; and, on the other hand, it was a response to the huge monetary savings held by the population in state banks. The unconsidered quality and partial character of the decree is reflected in the limitations it contains: purchase now concerns only flats which are already tenanted or houses which are subject to major capital repairs. According to the Prime Minister, Ryzhkov, the government intends to extend the provisions of this decree in the next five years (1991–5).13 As far as the present is concerned, this slow process of selling housing space has not influenced the general economic housing situation. Nevertheless, it has created the prerequisites for it, because it represents a fundamental rupture with the Soviet ideological doctrine of socialist (belonging to the state) housing. Many officials from the Ministry of Housing speak about the shock they experienced: ‘Only yesterday the private ownership of apartments was something one could not even dream about, yet today not only is it allowed but it has to be implemented, and campaigned for.’14 Besides making people rethink long-held preconceptions and prejudices, the privatization of housing triggers a conflict within the system whereby every Soviet citizen is required by law to hold a residential permit (propiska). Because the existence of the propiska system limits the freedom of movement and choice of place of residence, economic pressure is now being exerted to have it liberalized prior to its final and total abolition. Enactments on cooperatives in general, and on housing cooperatives in particular, are intended to stimulate the expansion of non-state forms of housing provision. Cooperatives, for example, are being established for the construction of individual houses. Recently, a state-cooperative joint-stock company, ‘My Own House’, announced that it was ready to start operations. Its founders are the State Committee on Architecture and Urban Development, the Housing and Social Bank (Zhilsotsbank) and the Union of Construction and Production Cooperatives. One of its basic aims is to decentralize projects concerned with individual housing construction.

CONCLUSION Although it is too early to draw any firm conclusions, it does seem that the Soviet Union has the rudiments of a future housing market. By this should be understood not only the buying and selling of existing housing, but also a type of investment market and market for construction. The term ‘housing market’ is often referred to in the media and professional journals. At present, however, it is only poorly understood and even then only as a rather general, often distorted idea, instead of as a set of complex, inter-related

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institutions concerned with money-commodity relations. This is quite understandable, since for a very long time virtually everything was distributed by the AdministrativeCommand System. But the absence of ideas about the possible institutional forms which the housing market could take—itself due to a lack of experience—is only one of the difficulties confronting its introduction. In fact this is not even the most important difficulty. As the saying goes: ‘should there be a wish…’ but proponents of the old social system do not have this wish, and their positions are still very strong. It is important to remember that the Soviet housing model is not only the baby born of the Administrative System, but also its stronghold, the tool for enslaving the workers, the source of power. It is precisely for this reason that the semi-serflike character of the existing model acts as the main obstacle to the introduction of a housing market, the most important attribute of which is the right to choose where one lives. Finally, it is well to emphasize that the housing policy of the Soviet state, during the course of its entire history, has been the reflection of both its general economic situation and political goals. The situation in the country at the end of 1989 was still very vague. Forecasts made by economists embrace a wide broad range of alternatives—from the complete return to an administrative system in order to combat the extraordinary economic situation in which the country finds itself, to the introduction of market mechanisms in all spheres of the economy. This is also reflected in the housing sphere. Appeals ‘to build more, exploit better, distribute with more justice’ are juxtaposed to confessions that ‘the housing problem cannot in principle be solved solely by directed planning and centralized financing’.15

NOTES 1 Aganbegyan, A.G., ‘Uskorenie i perelom’ (Acceleration and radical change), EKO, 1986, No. 6. 2 Narodnoe khozyaistvo SSSR v 1988 g., Moscow, 1989, p. 158. 3 Narodnoe khozyaistvo SSSR v 1988 g., Moscow, 1989, p. 162. 4 See, for example, Rimashevskaya, N.M. et al. ‘Razvitie sem’i i dinamika yeyo blagosostoyaniya’ (Development of the family and dynamics of its welfare), Izvestia SO AN SSRR, No. 12, p. 23; Ustyuzhanina, E.B., ‘Aktual’nya problemy sovershenstvovaniya raspredeleniya zhil’ya’ (Actual problems of improving housing distribution), in collected works: VNIISI, 1986, No. 7, p. 69; Shatalin, S.S., ‘Sovershenstvovanie raspredelitel’nykh otnoshenii’ (Improving distribution relations), ECO, 1982, No. 1, p. 16. 5 Popov, G.Kh., ‘Mekhanizm upravleniya i zhilishchnyi vopros’ (Management mechanism and housing problem), Nauka i zhizn’, 1987, No. 10, p. 45. 6 ‘Shvondery krichat “otdai”!’ (Shwonders shout give it back!), Literaturnaya Gezeta, August 16, 1989. 7 ‘Kvadratnye metry dlya “nomenklatury”’ (Square metres for the nomenclature), Izvestia, No. 267, September 24, 1989. 8 Broner, D., Ekonomika zhilishchno-kommunal’ nogo khozyaistva v RSFSR (Economy of housing in PSFSR), Moscow, 1968, p. 25. 9 Sheinis, D.I., Zhilishchnoe zakonodatel’ stvo, 4-e izd., (Housing Legislation, 4th edition), Moscow, 1929, p. 8. 10 Bol’shaya sovetskaya entsiklopediya (Great Soviet Encyclopedia), Moscow, 1932, Vol. 25, p. 447. 11 Kul’pin, E.S., ‘Razmyshleniya po povodu zhilishchnoi problemy’ (Ideas on the housing problem), Rabochij klass i sovremennyi mir, 1988, No. 4, p. 71.

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12 Perevedentsev, V.I., ‘O sovremennoi demograficheskoi situatsii v strane’ (On the present demographic situation in the country), Rabochii klass i sovremennyi mir, 1988, No. 4, pp. 65–6; Ronkin, G. and Kalinina, N., ‘Tsena besplatnoi kvartiry’ (The price of free apartments), Sotsialisticheskaya Industriya, June 13, 1989. 13 ‘Doklad N.Ryzhkova na S’ezde narodnykh deputatov’ (The talk of Ryzhkov, N., at the Congress of People’s Deputies), Izvestia, December 14, 1989. 14 ‘Kak kupit’ kvartiru?’ (How to buy a flat), Literaturnaya Gazeta, September 13, 1989. 15 Mikhailov, K., ‘Zhil’e dlya naroda’ (Housing for the people), Izvestia, October 24, 1989.

21 Yugoslavia An example reconsidered Lars Nord Once, not long ago, Yugoslavia was considered a pioneer within the so-called communist world. First among the countries with communists as their uncontested rulers, she defied the Soviet Union and took an independent socialist road of her own. The intentions might not originally have been to stand as a forerunner; her Communist Party, after all, was thrown out of the Cominform in 1948. However, it soon became evident that if the communist heroes of the Partisan movement wanted to stay in power, they had to develop their own brand of socialism—which they eventually did—and thereby, Yugoslavia’s unique position among countries with communist regimes was established (Brzezinski 1967:58–64, Hoffman and Neal 1962:107–51, Ulam 1952). Yugoslavia’s efforts to build her own form of socialism were undertaken in the name of self-management and decentralization. She turned a system of political administration, based on the pattern of the Soviet state socialism, into a ‘Socialist democracy’, characterized by the diffusion of power to enterprises and local units. Its special symbol became the workers’ councils, with their ideological roots in the Soviets and the Paris Commune. Within foreign policy, Yugoslavia’s independent stance was correlated to non-alignment. However, on one very significant point, the country saw to it that her departure from the main communist road was not too drastic: she took care to keep the Communist Party in absolute power, albeit with a modified name (Hoffman and Neal 1962:155–264, Neersö 1982). Yugoslavia’s attempt to reconcile a proletarian dictatorship with decentralized decision-making and a non-aligned foreign policy had something for almost everyone. Its anti-state aspects appealed to followers of the young Marx; its credo of decentralization attracted believers in participatory democracy; its supporting power to the workers excited advocates of a reformed trade unionism; its anti-Soviet orientation seemed rewarding for unsophisticated anti-communists; and its position between the power blocs was an example for the Third World. Only the supporters of centralized socialism under communist guidance and of a united communist front against capitalism had little to glean from the Yugoslav model. In Eastern Europe, the influence of Yugoslavia’s independent and reformed communism could be traced in, for example, the Hungarian Uprising in 1956 (Nagy 1957: chs 2 and 3), and, to a lesser extent, in the Prague Spring of 1968 (Nord 1974:254). The programme of Solidarnosc in Poland in the beginning of the 1980s attests to the fact that the Yugoslav views on social ownership and self-management have been of interest even in more recent times (Nord 1983).

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Today, the picture is different. In the turbulent events that at the time of writing (February 1990) are shaking the very foundations of the communist regimes in the Soviet Union and Eastern Europe, the former example does not seem to serve as a model for guidance and inspiration. The Yugoslavian alternative lost its attraction when the forces of change became dissatisfied with modifications and reformations of existing political and economic systems, preferring to struggle for a complete overhaul. No doubt it is easy to point at many plausible explanations for the lost interest. A very obvious one is Yugoslavia’s poor economy. Her inflation rate has, for example, in the eighties far exceeded that of any other European country—on average 51.8% during 1980–6, compared with an average of 10% for the other European countries (Statisticki kalendar 1989:191). The level of unemployment is another factor which has resulted in such a flow of people leaving the country that the Yugoslavs working abroad are sometimes referred to as ‘our seventh republic’ (Zimmerman 1987:81–3). The economic difficulties are, in turn, easy to blame on self-management, and, in fact, workers’ councils have proved not to function all that well. Participation by the workers in decision-making has, in reality, been low; power is in the hands of managers and technicians. That this power, nevertheless, is distributed more equally in Yugoslav enterprises than in those of other countries speaks in their favour (Baumgartner et al. 1979:96–102, Lydall 1984:121–2, Rus 1979:225–40). But for people who hope for the phoenix to rise from the ashes of their crumbled political and economic order, this consolation is not enough. However, finding other conceivable reasons for the present indifference towards the Yugoslav example is not difficult. The situation for Yugoslavs with respect to their wellbeing in general should also be of importance for East Europeans, unhappy with their own everyday life. And in this respect, Yugoslav experiences are not that rewarding: housing conditions are a case in point. As Srna Mandic points out in her contribution, housing has been no exception to the general pattern of reformism in socialist Yugoslavia. The decentralization of political and economic power also resulted in a series of housing reforms. During the first phase, responsibility for housing provision was transferred from a central to a republic and municipal level, and during the second phase, to the self-managing enterprises. The third phase encompassed a public innovation, called by Mandic ‘self-managing housing communities’, which, in fact, are to be found in most social sectors as ‘interest communities’. According to her analysis, it has all ended in failure. Although not all observers of the Yugoslav housing situation would concur with Mandic’s verdict, all seem to agree that there is a housing crisis. Shortages continue to be a great problem. As she has described elsewhere, the younger urban population, employees in low-productive industries, the less skilled, and those who get no support from their families, are especially affected (Mandic 1988:8). To this could be added that those lacking shelter can find little help in housing provided by the social sector. In the chapter here, Mandic shows that social housing has always been a minor part of the total production with the result that, in the beginning of the 1980s, only about one-fifth of all dwellings in the existing housing stock was socially owned and four-fifths were in private hands (Petovar 1988:4). Moreover, social housing is not, in practice, for everyone. Owing to the fact that one’s workplace plays a crucial role in providing housing, the distribution of social dwellings is far from equal. In law, there are allocation principles: housing needs, number of family members, length of service, and contribution of work are criteria

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(Ostojic and Dedijer 1980:VI). However, in reality, the enterprise or the institution where one works has complete freedom in deciding who should be fortunate: one’s position in the enterprise together with the success of the enterprise in making profits are, therefore, decisive factors (Burns et al. 1981:4–5). Official statistics also confirm that highly skilled workers, whether white collar or blue collar, have a competitive advantage and that those with the highest positions are much better off than the rest (Statisticki bilten 1675, 1988:11). The sense of unfairness that this pattern of distribution might provoke on the part of the vast majority of people who cannot solve their housing problems this way is heightened by extremely low rents for social housing. In 1980, they amounted to less than 1% of the construction costs (Lydall 1984:231). Actually, not more than 2.8% of all household expenses in 1983 went on housing as compared, for example, with 5.5% for tobacco and beverages (Statisticki godisnjak 1986:181). Evidently, Yugoslavian style social housing is not the same thing as social housing in capitalist countries; the corresponding phenomenon in Yugoslavia is called ‘solidarity housing’. It is provided by the municipalities in line with the theory of marginalist welfare policy. These dwellings are, thus, in Titmuss’ terms, distributed selectively according to ‘needs’ (1976:113–23). Less than one-fifth of the rental dwellings has been allocated in this way during the 1970s and 1980s, the figure in 1986 actually being only 12% (Statisticki bilten 1675, 1988:10). Accordingly, for most people looking for housing they are not a realistic alternative. The state of affairs could, therefore, be summed up in the statement that peasants and unskilled workers build their own houses while the middle class queues for public/social housing (Seferagic 1986:4). No wonder that a survey of young workers’ expectations of how to find somewhere to live indicated that only a quarter of them believed that any possibilities existed in the rental sector; 15% hoped to get a loan and build their own house, 13% were lucky to inherit a dwelling, and 12% saw an option in buying an apartment with borrowed money (Bezovan 1987:61). Thus, within housing in Yugoslavia, there are many traits that we recognize from capitalist democracies. Drago Kos’s article shows that the Yugoslav market, in fact, also functions in much the same way with regard to the interplay of forces. The influence of mass media is especially noteworthy. Actors that know the rules can use them to improve their position in the power constellation considerably. Irrespective of the formal decisionmaking structure, politicians cannot act in defiance of a case displayed in newspapers and television programmes. Other public authorities, sensing the way the wind blows, follow suit. However, relying on the mass media is not enough. An important key to the success of potential apartment owners, seems to be their ability to match the professionals in skill and competence—a decisive factor in corresponding groups in democratic capitalist systems. By mastering the methods and knowledge of their opponents, apartment owners can question their arguments. Such qualifications are not without problems, though. The possibilities of certain strata in society who lack the necessary capacities to further their interests might be restricted. Such a disadvantage is more or less important in different societies depending upon general attitudes to public welfare and the political-ideological colour of the government. In Yugoslavia, the official ideology speaks strongly in favour of publicly provided housing at the same time as the institutions of implementation seem to have been inadequate to do so. As shown by Kos, this may not necessarily be an obstacle to the solution of the housing problems, even for those not belonging to groups

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favoured by the formal decision-making structure who may be able to compensate their lack of formal power with an informal one. The real losers are those who cannot do this.

REFERENCES Baumgartner, T., Burns, T.R. and Sekulic, D., (1979), ‘Self-Management, Market, and Political Institutions in Conflict: Yugoslav Development Patterns and Dialectics’, pp. 81–138 in Burns, T.R., Karlsson, L.E. and Rus, V., eds, Work and Power. The Liberation of Work and the Control of Political Power. London: Sage. Bezovan, G., (1987), Stanovanje i stambena kriza. Stambene potrebe mladih radnika. Zagreb: CDD. Brzezinski, Z.K., (1967), The Soviet Bloc. Unity and Conflict. Cambridge, MA: Harvard University Press. Rev. and enl. edn. Burns, T.R., Caldarovic, O., Kregar, J., Sekulic, D. and Woodward, A., (1981), Citizen Participation in Housing Management and Local Community Development: The Case of Yugoslavia. Uppsala: Department of Sociology. Hoffman, G.W. and Neal, F.W., (1962), Yugoslavia and the New Communism. New York: Twentieth Century Fund. Lydall, H., (1984), Yugoslav Socialism. Oxford: Clarendon Press. Mandic, S., (1988), ‘Modes of Housing Regulation and a Yugoslav Blind Spot’, Paper for the International Research Conference on Housing, Policy, and Urban Innovation, Amsterdam, 27 June–1 July, 1988. Nagy, I., (1957), Imre Nagy on Communism. In Defense of the New Course. New York: Frederick A.Praeger. Neersö, P., (1982), Jugoslavien. Socialisme og selvforvaltning i praksis. Copenhagen: Socialistiske Ökonomers Forlag. Nord, L., (1974), Nonalignment and Socialism. Yugoslav Foreign Policy in Theory and Practice. Stockholm: Raben and Sjögren. Nord, L., (1983), ‘Solidarnosc och självstyrelsen’, Tiden, No. 4. Ostojic, J. and Dedijer, M, (1980), Komentar zakona o stambenim odnosima. Beograd: Savremena administracija. Petovar, K., (1988), ‘Nonproductive Capital in Housing—The Counterproductive Effects of Limiting Private Property’, Paper for the Conference on Housing between States and Markets, Dubrovnik, 16–19 September, 1988. Rus, V., (1979), ‘Limited Effects of Workers’ Participation and Political Counter-Power’, pp. 223– 47 in Burns, T.R., Karlsson, L.E. and Rus, V., eds, Work and Power. The Liberation of Work and the Control of Political Power. London: Sage. Seferagic, D., (1986), ‘Housing Perspectices in Yugoslavia’, Paper for the Conference on Housing between States and Markets, Dubrovnik 16–19 September, 1988. Statisticki bilten 1675. Raspodela stanova i kredita za stanove 1986, (1988), Beograd: Savezni zavod za statistiku. Statisticki godisnjak Jugoslavije, 1986. Beograd: Savremena administracija. Statisticki kalendar Jugoslavije, 1989. Beograd: Savezni zavod za statistiku. Titmuss, R.M., (1976), Commitment to Welfare. London: Allen and Unwin. Ulam, A.B., (1952), Titoism and the Cominform. Cambridge, MA: Cambridge University Press: Harvard University Press. Zimmerman, W., (1987), Open Borders, Nonalignment, and the Political Evolution of Yugoslavia. Princeton, NJ: Princeton University Press.

22 Reformism in Yugoslavia Introductory remarks Srna Mandic The socialist system’s relatively brief history has witnessed quite a number of reforms. It is reasonable to claim that Yugoslavia, in comparison with other socialist countries, has experienced an exceptionally high number of reforms—some estimates point to as many as sixty.1 Leaving aside the more general question regarding the nature of social reforms—a typically socialist pattern of the ‘top-down’ approach in introducing radical large-scale social innovations—I would like to point out one of the results of the intensive reform experience in Yugoslavia, namely: present-day popular scepticism and doubt about reforms as such. If each of the past major economic and political reforms, by the time of its introduction, seemed to embody a new, distinctive step forward in the Yugoslav path to socialism—‘an impressive new chapter in the history of socialist progress and development’—then what the 1980s brought about was a serious erosion of the popular meaning of reforms. The 1980s revealed not only that the last reform (like the previous one) failed to bring about the intended and desired social changes, but also raised questions about the very course of past reformism. Past reformism no longer seems to be a linear progression, but rather a shifting back and forth. The series of reforms as perceived today is manifesting a continuous conflict between policies and economy, a conflict in which the decisive role of politics over economy—investment decision-making being the core—has been shifting between more and less intensive forms. Thus the economic reform of the 1950s, by which the state planning became more decentralized, was stimulating for the economy at first, until the middle 1960s when the impetus disappeared. At that time another reform was introduced, providing the economy with more autonomy. Yet the autonomy of economic decision-making was soon restricted again with another reform in the 1970s (introducing the so-called ‘agreement economy’, discussed later in the text). The same pattern of first granting and then restricting autonomous economic decisionmaking can be traced not only in past reformism, but also in contemporary attempts to come up with a new reform platform. For instance, in 1982 ‘The Long-Term Programme of Economic Stabilization’ was introduced proposing more autonomy in the economic sphere. This was soon followed by another platform ‘The Critical Analysis of the Political System’, through which the realization of the first one has been blocked.

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This contemporary form of conflict between politics and economy, having not yet found a socially productive solution, is reflected in a permanent remoulding of legislation of incredible scope,2 soon to be proved insufficient. This contemporary inability to introduce a new reform (even though there seems to be a basic agreement about its market orientation) raises the following question: is it merely the temporary absence of a sound reform coalition which is responsible for the lack of success thus far, or has reform as a model of macro social innovation in Yugoslavia worn-out? So far, the next possible macro reform in Yugoslavia is still a problem, not a solution, and the outcome remains to be seen. All of the general remarks about Yugoslav reformism apply to housing as well. They contribute substantially to the explanation of the past as well as the present dynamics of housing reforms.

MAJOR HOUSING REFORMS IN THE PAST Housing, being highly context dependent, has been continuously adjusting to frequent social changes: major housing reforms have followed the pattern of macro political and especially economic changes (reforms), and there were also innumerable minor, yet important, changes. The series of housing reforms is to some extent analogous to the series of macro economic reforms, as described above. Before 1953 housing was subject to central state administration, providing and allocating the new mass urban housing. In 1953 a housing reform was introduced which shifted the responsibility for housing provision from the central to the republic and municipal state agencies. With the next economic and housing reform in 1965 the responsibility shifted further, to self-managing enterprises. Transformed from the previous ‘state enterprises’, these enterprises thus became the so-called social sector. There were two important consequences of this. In the sphere of production the large building enterprises—not owned and managed by the state any more—were granted relative autonomy in deciding on their product and its price. Thus they came to constitute the supply side of the market of newly constructed housing commodities. It was left up to commercial banks to provide the lending capital. The other consequence of the reform was that the self-managing enterprises became responsible for the satisfaction of housing needs of employees. In other words it was left to the self-managing system of decisionmaking in enterprises to create out of their income housing funds as well as to determine their purpose, i.e. to produce rental housing stock and/or housing loans, and the criteria of allocation to employees. Thus rental housing provision came to be institutionalized as a form of employment benefit. Enterprise rental provision was the only form perfectly compatible with the general self-managing model; other forms like commercial and cooperative renting were not to be developed and were considered inappropriate. The next housing reform in 1974 corresponded to a broader economic and political reform at the time, aiming to extend self-management as the model of regulation to almost all social spheres. It was intended to provide macro-level integration of all economic agents. Thus the so-called agreement economy was introduced, relying on direct agreements between economic agents. Direct agreement was meant to replace both ‘the blind forces of market’ and ‘statist’ legislation.

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The housing sphere was to adjust to these changes and ‘realize’ the proposed ideal through formation of self-managing housing communities (SHCs). This organizational form was analogous to the ‘self-managing interest communities’ that were formed in other spheres of social services (i.e. education, health care, etc.) providing a model of decision-making, in which both the consumers and the producers of the service in question were equally represented. Thus in the sphere of housing the SHC, formed at the municipal level, should provide an organizational form through which the following would be achieved: ● Coordination between the supply and demand side in housing construction. Representatives of both sides should participate equally in decision-making about the location, quality, quantity and prices of new construction in general (through participation in long-term planning in the municipality) and in particular (through direct agreements and contracts between purchasers and producers of particular housing estates). This organizational form of housing construction was called ‘socially directed housing construction’. ● Introduction of non-state welfare programmes in housing. Besides the housing funds of enterprises (that have proved to be insufficient), the ‘solidarity’ and ‘mutuality’ funds were created in the SHCs to provide rental housing and housing funds for the population whose needs could not be met through employment benefit forms. The organization of housing provision thus created is basically still present today. Without trying to analyse the actual causes of the failure of the self-management project as a solution of the conflict between the state and the market, the fact remains that a vast institutional administrative structure was created that proved highly inefficient, and in which actual responsibility for housing provision was indefinable. Thus far I have tried to sketch the main objectives of housing reforms in Yugoslavia (see also Mandic, forthcoming). Leaving aside the ideological load of arguments being used to legitimize their introduction, as well as the enormous scope of legal and institutional changes involved, let us consider one of the central points of all the reforms and some of its consequences.

HOUSING REFORMS AND THE TWO SECTORS What was predominately at stake in housing reforms was the new housing production of the social sector—i.e. of building companies being ‘state companies’ in the first period, ‘enterprises’ in the second and ‘basic organizations of associated labour’ in the third period beginning in 1974. The social sector housing production has been perceived as virtually the only promoter of housing provision, thus deserving all the supportive treatment. This was particularly noticeable in the formation of SHCs. Contrary to the proclaimed rationale, they turned out to function as a hyper-protective institutional environment allowing for a decrease in efficiency and in the productivity of the social sector housing construction.3 The particular mechanisms that lead to such a failure are discussed in detail in Chapter 23. Data in Table 22.1 shows that housing reforms have had a relatively weak impact on the relative proportions of housing provided by the two sectors: the private sector has

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accounted on average for 60–70% of the total annual production, oscillation being relatively weak. Notwithstanding the lower output of the social sector, it has still received a disproportionate share of attention and support.

Table 22.1. Housing production and major innovations through housing reforms Year

No. of completed dwellings— all

Dwellings produced by the social sector number proportion in %

Innovation in housing provision concerning the housing produced by the social sector Central State Administration

1945– 52

(planning, financing and allocation)

1953

38,198

9,099

1954

34,208

12,339

1955

29,849

12,907

24 Local State Administration (municipal housing boards and funds are created— 36 promoting mass, collective rented 43 accommodation)

1956

37,005

14,373

39

1957

44,725

18,095

41

1958

61,681

26,829

44

1959

60,611

31,150

51

1960

75,337

35,628

47

1961

100,175

43,215

43

1962

104,523

45,497

44

1963

110,183

43,623

40

1964

121,549

51,519

42 Introduction of Housing Market and Partial Self-Management

1965

121,972

44,578

1966

129,109

50,300

1967

127,600

45,147

1968

128,883

43,775

1969

120,116

39,929

36 Social building companies—enterprises constitute the supply side, while the demand is 39 performed by other enterprises (to provide 35 rental accommodation for their employees) and individual purchasers (loans are provided 34 by commercial banks and enterprise housing 32 funds)

1970

128,792

44,394

35

1971

125,776

39,123

31

1972

133,875

43,774

33

1973

134,819

44,693

33

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Introduction of Self-Managing Housing Communities (SHCs) 1974

145,034

55,128

1975

145,511

55,821

1976

149,933

60,721

38 The SHCs have provided an organizational form, through which the supply and demand 38 side in housing would be coordinated. Both 41 sides would participate

1977

142,175

52,582

37

1978

137,595

50,387

37

1979 145,697 55,528 38 in decisions about quantity, quality and price of new housing construction in general (long-term planning in the municipality), and 1980 136,697 48,583 36 direct agreement between both sides in the process of building a housing estate in particular. Solidarity and mutual aid funds are also created within the SHCs Minor Changes 1981 149,175 57,822 39 Channelling of additional, private finances to the social sector provision (cash participation to acquire rental accommodation; 1982 138,722 53,304 38 promoting individual rather than enterprise purchase of the social 1983 139,862 51,667 37 sector housing production) 1984 130,845 43,760 33 1985 126,589 42,706 34 1986 129,996 45,198 36 * Social sector here refers to enterprises, being ‘state enterprises’ in the first period, ‘enterprises’ from the middle of the 1960s till the middle of the 1970s and ‘organizations of associated labour’ thereafter. The difference between the number of all dwellings and the number of dwellings produced by the social sector is accounted for by private sector production.

What were the main features of private sector production? Bound to detached, family housing units in rural areas and city outskirts, private housing construction has found a way to develop. Since private ownership has been restricted to two housing units, it was limited to individual housing construction and no such thing as private property development could occur. Regarding the level of marketization, three distinguishable forms of services have developed in individual housing construction. First, unpaid and unregistered labour (i.e. self-help practices); secondly, paid yet officially unregistered illegal labour. These two forms belong to the so-called ‘grey’ or ‘informal economy’ which is of great importance for ‘survival strategies’ of the population in general. The third form is the paid and legally registered services of small, private firms, mainly craftsmen. Among the members of the lower social strata, self-help in housing construction undoubtedly dominates. Let us now consider the treatment of private housing production by housing policy regulation, compared to social sector production. In the domain of financing and urban planning the treatment of the private sector may be described in terms of tolerance rather than restriction.4 Between private and social

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sector production a sort of parallelism has evolved in which the two sectors do not interfere with one another. Non-interference is due to the segmentation of ‘supply’—not only in terms of rural-urban distinction, but also in terms of production of different housing types. Social sector housing production was predominately oriented towards a collective type of settlement, leaving it up to the private sector to produce detached onefamily housing units. This private-social sector dualism is noticeable in housing morphology, since the intermediary types of housing (semi-detached and row houses) virtually do not exist. But an important restriction of the private housing sector may be detected in its organizational forms. Limitations related to the size of private firms—the number of employees should not exceed a certain limit—as well as to the types of investment in housing which were legal. So the private sector was restricted to performing particular building operations and concentration of private capital in the housing sphere was avoided. Here we come to a paradox: private earnings and savings—substantially enlarged by the activities of an informal economy—could not be productively invested and saved against inflation other than by channelling into individual housing. A very similar trend has been reported for Hungary also (Hegedüs and Tosics 1987). Thus an important part of the national product was invested in private housing, on many occasions neither to be fully used, nor rented. As long as private housing construction is atomized, scattered, greatly nonmonetarized and bound to plots and types of housing not applicable to social sector interests, competition between the two sectors is avoided and the social sector is protected. This has been essentially the case in all the reform periods. And here we come to the decisive role of the state and party authorities in implementing such an organization of housing provision, which has prevented the private sector from developing in modern market terms. Rooted in the early post-war period, this attitude towards the private sector has not yet been subject to changes through housing reformism. As illustrated in Table 22.1, through the post-war reform periods the private sector has remained constant (with some variation in its output), while the social sector has been subject to frequent changes, particularly concerning its supportive institutional environment. And this has been changing, as pointed out before, in accordance with other macro political and economic innovations. Thus, permitted a bit of sarcasm, the social sector may be seen as a laboratory for testing out unique organizational ideas involved in particular reform stages. Were it not for such a substantial private sector production, experimenting in the social sector would not be possible to such an extent, since its failures would not have been compensated for by the private sector. However, this is the case not only in housing construction but also in rental housing provision. As previously described rental housing provision was virtually restricted to the social sector, ‘solidarity’ housing being only a minor supplement to the dominant form of renting as an employment benefit. This form has been presented as an embodiment of the self-managing model of housing from the middle of the 1960s to the beginning of the 1980s. Yet if societies—as regards the dominant type of tenure—may be classified into ‘cost-renting’ and ‘home-owning’ (Kemeny 1981), Yugoslavia of that period seems to be a society of ‘cost-renting’ ideology and ‘home-owning’ practice: by 1981 rental provision came to represent only 23% of the total housing stock (SZS 1983).

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In situations of scarcity in rental accommodation (the most advantageous type of tenure as the rents were kept very low), a total reliance on private housing resources was unavoidable for a substantial part of the population. A major role in housing provision has been played by kinship; thus multiple occupancy and staying in parental homes have served as hidden forms of homelessness. However, at the beginning of the 1980s, it became apparent that the scarcity of rental accommodation was far from being only temporary. In that period the general economic recession had already led to diminishing finances of enterprise housing funds. As the prices of the housing constructed by the social sector continued to rise, housing funds were increasingly used to provide housing loans and not rental accommodation. These circumstances were reflected in the reshaping of the ideology of housing policy, turning to the promotion of home ownership (see Mandic, forthcoming, for a more comprehensive account of these changes). However, lacking the accessible and affordable home loans it was—and still is—the young urban population intent on starting its autonomous housing career that is most victimized by these changes.

THE NEW HOUSING REFORM: ITS POTENTIAL AND POSSIBLE PROSPECTS It is still impossible to locate in time the beginning of the alleged new housing reform. There has been a lot of talk about it in recent years and also some attempts made. For example, in the two and a half years of Mikulic’s administration two housing reform platforms were introduced on the federal level, neither of them put into operation. First let us consider the possibilities of the new housing reform in terms of its potential popular support. A new, profound housing reform would not be possible without affecting the system of bonuses in an important part of the ‘already-housed’ population (low rents; long-term loans, granted before 1988, with interest rates not adjusted to the high inflation rate). As notions and rights in the housing sphere evolve and solidify to a great extent (Torgersen 1987), popular support for the reform is not likely, as it would increase household spending in an important part of the population (Simoneti 1989). It is the influential upper strata that have acquired a disproportionate share of bonuses.5 As pointed out before, younger cohorts of the urban population are the most affected, being at the moment victimized by the lack of sufficient options in housing provision. On the other hand, the vast majority of the population is satisfied with their housing,6 and hence not concerned with the problem of housing shortages. Another important factor is a great regional variability in housing provision. A comparison between the most and the least developed federal units reveals considerable differences: in terms of rental provision (proportion of rental dwellings being 33% and 11%), in terms of housing density (the average floor space per person being 19.3 m2 and 10.0 m2) and the equipment of dwellings with basic amenities (proportion being 86% and 29%), respectively (SZS 1983). The following are the crucial and most frequent questions referring to the new housing reform:

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● To what extent should the social sector be substituted by the state and the private sector in general and particularly in housing construction? Should SHCs be abolished? ● Where should the responsibility for provision of rental housing (also partly of housing loans) be located? Should it be retained in the domain of enterprise self-management or should it be (only partly?) transferred to the local state or even fully transferred to the commercial sector? ● Is the existing rental stock to be sold, and if so, to what extent and for what purpose? The scope of the arguments for selling is very interesting, for it reveals the scope of the generally opened dilemmas. Some economists (for instance, Simoneti 1989) propose to use finances thus acquired as development capital for enterprises—the owners of the particular rental stocks—while others propose to use it as an additional source of financing social sector housing production. Concerning particular proposals for the terms of sale,7 it is difficult to imagine how anybody besides the sitting tenant would benefit. However, the solutions to these dilemmas also depend on the general social context that should emerge out of the announced macro-level changes in Yugoslavia, which are at the moment highly unpredictable. Although they might soon disappear, three basic dilemmas still exist. Firstly in the sphere of economy, a shift towards a market economy is generally accepted, but there is no agreement whether the social sector should retain special treatment relative to the private sector. Secondly in the sphere of politics, political pluralism is agreed upon, yet the accepted forms of its manifestation vary from party pluralism (providing no special treatment to communists) to the non-party type of pluralism with a particular role for the Communist League. And finally should the answers to these dilemmas be delivered at the federal level and made compulsory to all the federal units or should those solutions having most local popular support be introduced? So far there is no agreement among the Yugoslav federal units. They seem to differ considerably in responding to these dilemmas, creating—or so it seems at the moment—distinctive socio-political contexts for housing reforms. However, such a plurality does not necessarily result in distinctive reform platforms. This may be exemplified by the situation in one of the federal units that has so far undergone the most profound political and economic changes where the SHCs and legal restrictions on private investment in housing were recently abolished. As political parties become recognized, they will enter the elections with their distinctive platforms. However, as far as the housing reform is concerned, these changes seem to be of little avail. In housing issues not only do particular party platforms hardly differ from each other, but they are basically very similar also to the official housing reform proposed in other federal units, where political groups are still fighting to be legally recognized as parties. The basic common feature of both types of proposition is privatization—further promotion of home ownership and a partial sale of the social rental stock. Beneficial effects of privatization are taken for granted by both sides, equally avoiding answers to any of the subsequent questions, one of which concerns the details of the formula that will enable the young urban population that has—like the population in general—low, and above all unstable, earnings to become home owners.

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NOTES 1 This estimate was made by the Yugoslav sociologist S.Letica, referring to the post-war period which witnessed thirteen economic system reforms, five constitutional reforms, two party reforms, etc. 2 During the two and a half years of office of Mikulic’s government, three platforms of essential changes in the economic system were proposed. An average of more than 100 acts (bills) per year were passed and more than 4,000 subsequent normative acts, averaging twelve per day (Institute for Economy, report by the Law Faculty of Ljubljana). 3 SHCs were to provide stable solvent demand for housing production that would thus be able to come up with affordable prices through large-scale industrial production. And until the 1980s, enterprises and the SHCs have provided highly predictable, stable and ‘easy to satisfy’ demand for uniform, large-scale multi-family housing. But instead of decreasing, the prices of new construction have risen, Why was the opportunity not used to reduce building costs?

Two principal factors are frequently pointed out. First, until recently, facing the stable and predictable demand the building industry has easily kept the supply well below the demand. In such circumstances prices could rise beyond all rational limits. Secondly, ‘close relations’ between large building companies and the municipal level state administration, established in the 1950s, have remained in operation, thus providing each large building company with its own ‘municipal terrain’ and opportunities for housing construction there. Thus competition between building companies was avoided and building monopolies created not only at the municipal level, but also at the communal level. For instance, the city of Ljubljana consists of five communes, each of them having its own prominent and protected building company. 4 Financing of private housing production has been relatively stable and some resources have been provided (first through municipal housing funds, later through commercial banks and especially enterprise housing funds, providing loans). In urban planning and land use policy private production was tolerated, unless social sector housing production was concerned— i.e. in the case of particular building plots in urban areas. The social construction was undoubtedly kept in a privileged position. 5 It has been pointed out by a number of observers that the dominant type of housing provision of the upper social strata has been rental accommodation (i.e. the least costly), while the dominant type of the lower strata has been self-help building (i.e. more costly not only in terms of effort but also in terms of finances (Seferagic 1985, Vujovic 1984, Caldarovic 1987, Bezovan 1987, Mandic, forthcoming). Such a pattern of inequalities in housing provision may be—with minor variation—attributed to all reform periods. 6 The Quality of Life in Yugoslavia Survey data reveals that, in 1987, 70% of the population declared satisfaction with their housing. 7 The 1987 Mikulic administration housing reform platform has proposed the sale of the rental stock for monthly instalments, that should equal to twice monthly rent for the same apartment.

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REFERENCES Bezovan, G., (1987), ‘Stambena politika u poslijeratnom razvoju’, pp. 81–90, in Bezovan, G. and Kuzmanovic, M., Stambena politika i stambene potrebe, Zagreb: NIRO ‘Radnicke novine’. Caldarovic, O., (1987), ‘Individualna stambena gradnja’, pp. 110–18 in Bezovan, G. and Kuzmanovic, M., Stambena politika i stambene potrebe, Zagreb: NIRO ‘Radnicke novine’. Hegedüs, J. and Tosics, I., (1988), ‘Is there a Hungarian model of housing system’, paper at the Conference on Housing Between State and Market, Dubrovnik 1988. Kemeny. J., (1981) The Myth of Home Ownership, London, Routledge and Kegan Paul. Mandic, S., (1990), ‘Housing Provision in Yugoslavia: Changing Roles of the State, Market and Informal Sectors’, in van Vliet M., and van Weesep J., (eds) Government and Housing Developments in Seven Countries: pp. 259–2721. Newburg Park, London, New Delhi: Sage. Mandic, S., (forthcoming), ‘Housing Provision in Yugoslavia: Changing Roles of the State, Market and Informal Sectors’ in van Vliet, M and van Weesep, J., (eds), The Deregulation of Housing, London: Sage Savezni zavod za statistiku, (1983), Statisticki godisnjak Jugoslavije, Beograd: Savezni zavod za statistku. Seferagic, D., (1985), Problemi kvalitete zivota u novim stambenim naseljima, Zagreb: IDIS. Simoneti, M., (1989), ‘Stanovanjsko gospodarstvo in gospodarska reforma’, pp. 16–23. Posvetovanje ZSSS, Radenci 1989. Ljubljana: Zveza stanovanjskih skupnosti Slovenije. Torgersen, L., (1987), ‘Housing: the Wobbly Pillar under the Welfare State’, pp. 116–26 in Turner, B., Kemeny, J. and Lundqvist, L.J., (eds), Between State and Market: Housing in the PostIndustrial Era, Stockholm: Almqvist and Wiksell Periodical Company. Vujovic, S., (1984), Drustvena nejednakost i stanovanje, Beograd: Filozofski fakultet.

23 A case study of conflicting housing pluralism in Yugoslavia Informal (self-help) activities in the formal housing system Drago Kos

INTRODUCTION The complementary co-existence of different housing systems is one of the most important characteristics of socialist Yugoslavia’s housing practice. By combining two dichotomous dimensions we can better understand its main features: (a) formal-informal and (b) legal-illegal. We thus obtain four types of ‘housing production’: 1. (+ +) legal and formal; 2. (+ −) legal but informal; 3. (− +) illegal but formal; 4. (− −) illegal and informal. Of course, this theoretical model does not cover the full spectrum of empirical evidence, but I think it helps to elucidate the various forms of actual building. The first type designates socially legitimized building, carried out by public building companies which are predominantly active within the framework of the formal sector of production. In our circumstances this type is almost identical with social (public) housing construction. The second type represents the most frequent self-help building. A characteristic of the third type is that, due to the social power of the agents, i.e. public building enterprises, the public only rarely gets to know details. And for the same reason most of these cases are legitimized in the course of time, after greater or lesser difficulties. The fourth type includes two socially unsuitable (or at least unwanted) practices: informal and illegal building, i.e. the type of building that evades planning regulations to the highest degree.1 From the planners’ (state) point of view, the fourth type is nevertheless the most contradictory case since it represents in fact an excessive housing practice. On the other hand, this practice is also interesting because it develops innovative self-organizing activities. Although it is accepted that legal and formal housing production is highly inefficient, other similar ‘irregularities’ are less known. This chapter intends to show that, because the legal-formal self-managing housing system (at the moment no longer in existence) was very complicated and difficult to penetrate, the parallel informal organizational structures and activitites were a normal and necessary consequence of it. I attempt to explore an example of inconsistent practice, i.e. a case of informal self-organizing by people who decided to solve their housing problem within the so-called ‘socially directed housing construction’. This form of housing production was in fact a large-scale building activity which formally merges the performers (designers, builders, banks) and the users of housing. This innovative self-management approach (a kind of big cooperative)

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changed the future apartment owners (either individual or collective—enterprises, and other institutions) from buyers to investors in construction. As will be explained further on, this innovative but ambiguous change of status was of crucial importance for the understanding of the concrete case study.

CHRONOLOGY Our analysis starts at the point when about 200 investors on the waiting list (potential apartment owners), who had already paid (invested) 85% of the full price, were informed about a new, 44% increase in the price per m2 of the already finished apartments. This occurred at the first constitutive self-management meeting of investors organized by DHE.2 The meeting was badly attended: only about twenty, i.e. 10% of the co-investors, were there. Nevertheless, the initial alarm signal was given, primarily because of the information about the high price increase and the not too persuasive presentation of the DHE representatives. Although their performance was very independent, they expressed themselves badly in sophisticated terms, their information was sparse, they were encouraging those present to give up, emphasizing the fact that there were many potential buyers still waiting. (Vodeb-Bonac 1985)3 In the first half of 1985 DHE convened two more meetings of the representatives of coinvestors at which they were informed mostly about new increases in the price that were to be approved, i.e. adopted by the co-investors. The higher price had already been approved by the performers, of course. The representatives of the co-investors were neither able nor willing to give their consent by themselves. Therefore they called a general assembly of co-investors on July 2, 1985. At this assembly DHE was to explain the reasons for the increase of the initial price by 87%.4 The co-investors unanimously rejected the new price, and proposed their own calculations. This meeting was very successful for the co-investors. They were actually constituted as an autonomous group and equal partner. The attendance was considerably better than at the first assembly; approximately seventy co-investors were present. The core of the group consisted of individual buyers who were highly committed and capable of providing arguments. The other side was represented through one single DHE representative who ‘tended to repeat himself,… avoided answers to concrete questions, which all provoked a wave of indignation and protests on the part of co-investors’ (Vodeb-Bonac 1985). The behaviour of the DHE representative had a strongly homogenizing effect on the assembled co-investors and contributed considerably to their further mobilization. They demanded that DHE prepare, with full consideration of their requirements, a new calculation in fourteen days. At the same time they prepared their final ‘strategy and tactics’ for future action. Thus the initiative was taken by the co-investors and they never again let it slip away. They became more self-confident in their actions. In the period following the meeting

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their commitments were most intensive. They took part in many meetings where in a most concise and persistent way they explained their case, particularly all the mistakes and failures discovered when checking DHE’s calculations and regulations. In the same period they finally succeeded in making their problem public. Journalists needed no urging but rather started to follow events on their own behalf quite intensively. In the first place they were seeking an authoritative answer to the question: ‘Can the initial price, determined at the commencement of building, be changed at the end?’ On September 27, 1985, all the persons involved received from the highest authority—the Republic Committee of Construction (the supplying ministry)—the answer that ‘the initial price of m2 floor space must be negotiated before the beginning of building at the latest. This means that it may not be changed regressively.’ At least when viewed from the outside, this was the crucial point in the whole affair: ‘At that very moment DHE changed its tactics and fully accepted the Committee’s view as well as the demands of co-investors’ (Vodeb-Bonac 1985). There followed a period of direct confrontation with the performer (building company) refusing to accept the demands of the Committee. The reaction of the co-investors was ‘political’. They convened the third general assembly of co-investors and proposed a compromise price that had been agreed upon beforehand with all those of importance involved except the builders. The proposed price was 25% higher than that which they held as the correct one. ‘This price was no longer subject to negotiation’ (Vodeb-Bonac 1985). However, the builders did not accept this compromise, even after several weeks of negotiation. Since agreement was necessary for the formal self-management confirmation of the price, the final solution was delayed until November 11, 1985, when the City Executive Council issued a decree determining price formation. The decree was based on the principles according to which the compromise price had been set and proposed by the co-investors. This administrative measure concluded negotiations over the final price of apartments in block E in neighbourhood VS1.

PROTAGONISTS A large number of individuals and institutions took part in the affair. This is not surprising in view of Yugoslavia’s extremely complex and ‘developed’ housing system. Slightly surprising, however, is the passive role of the so-called formal self-management institutions (self-management housing communities) that are supposed to play the most important part in self-management housing negotiations. This is the reason why the selforganized action of the investors was needed. The details cannot be explained here, but this finding fits well into the thesis of the complementary relationship between formal and informal housing production discussed in my paper ‘The formal and informal production of housing’ (1988).5 In spite of the numbers involved, the hierarchy as regards the importance of particular roles in the conflict is quite unambiguous: that is, (1) those directly involved in the conflict, (2) those indirectly involved in the conflict, and (3) observers. 1 Three actors were directly involved in the conflict: (a) co-investors; (b) DHE; and (c) builders (i.e. the authorized performer of the work).

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2 There were many institutions indirectly involved. These institutions tried for quite a long time to avoid the conflict. They can be divided into two subgroups: (a) institutions directly involved in housing issues and (b) primarily political institutions. In fact, nearly all social and political institutions were directly or indirectly involved— which is not accidental, of course. We would suggest that this very fact is most significant for the functioning of the formal self-management system. The housing system is just one of the more obvious examples of this general characteristic. Also the difference between specific ‘housing institutions’ and others of a more general (political) nature is paradigmatic in this concrete case. The role of general (political) institutions in the resolution of the conflict was more important, although not fully clarified, than that of the specialist institutions in housing issues. This fact is mentioned only briefly here, although it is one of the most important issues for understanding the ‘specificities’ of production and distribution of housing units. The reason why political institutions do no intercede is because housing issues are not just a technical or technological matter, but also in this sphere various political interests are confronted as well. Solving political housing issues simply reveals that the housing system is not sufficiently institutionalized in the sense of enabling the resolution of these issues primarily in a routine, ‘technologically’ smooth way. Politicization of this domain means in fact that at any time intervention is needed, and in each individual case, the resolution ‘technology’ must be determined. 3 The observers are the public. The public had considerable influence on events, particularly in the final phase, by means of the mass media. When the affair aroused the interest of the media, related features appeared in all the important dailies and weeklies as well as on television—which was particularly important. In the first phase part of the political leadership could also be placed among the observers, i.e. among those who were simply monitoring the procedures, but did not react. The intensity and commitment of the main actors, i.e. the co-investors, was too high. Not knowing which of the organs and levels was crucial, they launched a broader action than what was required. Metaphorically we might say that the co-investors caught a lot of useless ‘fish’ in their net; however, this large net ensured the catch of important, and even the biggest, ‘fish’. The action of the co-investors caused many subjects to find themselves on the ‘stage’, although in formal terms they are not directly involved in the resolution of housing issues. Instead of the formally provided relationship between performers and users that should have been coordinated by self-management and administrative mechanisms, many other subjects volunteered or were compelled to join in the issue. In short, a totally new situation occurred, structured in a rather different way than had been suggested by the investment programme for building the neighbourhood. This sophisticated structure has in fact never functioned in resolving a concrete conflict. No doubt at first sight we can distil from this presentation a few characteristics that have actually contributed to the failure of the functions of this formal structure of relations. Clearly there are many intermediate factors in the relation between co-investors (those waiting for apartments) and performers or ‘carriers of joint revenue’. Formally these two partners are supposed to coordinate their ‘uncontentious’ interests through the Chamber of Users of the self-management housing community and through DHE as the authorized investor. Such a procedure may be in accordance with the idea of self-

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management interest negotiations, but it is less in accordance with the actual balance of power when antagonistic interests confront each other. By analysing the real relationships between those involved a rather simple pattern emerges. We can ignore several executive and coordination committees that actually have no real decision-making power. The real (contentious) relationship exists merely between concrete users and concrete performers. Therefore it is quite normal that in the initial phase the conflict was actually (in the operative sense) between the users (co-investors) and the performers. What is ‘abnormal’ is that in the first place DHE, as the investor, almost totally identified with the performers. The involvement of co-investor and everything that followed shifted the focus of the forces involved from the performers to the users. Most clearly this shift can be observed in DHE’s position: towards the end, i.e. when the solution could be seen, DHE moved closer to the co-investors. This behaviour cannot be explained as a sudden realization but merely as a result of the actual change in the balance of power. The main feature of this considerable shift is the way it happened. Advocates or protectors of the formal self-management housing system would of course expect it to happen in the framework of the self-management housing community, where the construction formally belonged. This community of self-management interest was supposed to provide the ‘technical basis’ for the agreement between the ‘natural’ polar subjects. However, this process was not going on in the familiar institutional environment. Formal institutions, i.e. ‘formal technologies’ for the resolution of conflicing (self-management) interests, were hardly involved. For various reasons DHE, as the actual substitute for the self-management housing community, could not act as a neutral subject because its economic (the first phase) and political (the second phase) dependence on more powerful protagonists in the conflict was too great. Hence it is not surprising that DHE actually never represented the interests of co-investors, which it was supposed to be doing. Neither was DHE a neutral coordinator or intermediary between the users and performers, but rather acted as another performer (financial engineering) whose earnings depended on the final price. Because of its own financial interests DHE ‘identified’ almost wholly with the performer. Only after the political intervention did DHE ‘change sides’ and finally start to represent the views of the co-investors. How strong this political intervention had to be to cause the shift will probably remain a secret. The fact that DHE always took the side of the stronger opponent can hardly be described as of high moral value; on the other hand it was a pragmatic and rational act in accordance with DHE’s designated role. It is quite probable that DHE’s actions would have been different if, for instance, its economic interest had been fundamentally tied to a decrease in investment instead of depending linearly on the growth of investment costs. As already mentioned, this shift was a direct consequence of a long, very intensive, extensive and informed commitment of the ‘mobilized’ co-investors. They succeeded in drawing to the stage new actors who actually changed the formal system and relationships between those involved so that a new, i.e. informal, system of ‘construction organs’ emerged. In short, the intervention of co-investors resulted in the setting up and activation of an informal (housing) system. Our analysis deals primarily with the relationship between formal and informal action. Let us see, therefore, what differences there are in the relations between the actors

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involved from this point of view. It is interesting that they all availed themselves of two kinds of action: (1) the formal, i.e. the way normatively prescribed and anticipated, and (2) the informal way, resorted to because of certain powerful interests. The latter is often also a consequence of the formal system itself, which, because of its inconsistency, cannot function according to its own prescribed ways. Therefore we are dealing with two systems that are concurrent and complementary in function. Crucial differences between (1) the formal and (2) the informal forces are the following: 1 The shift of main actors in the basic conflict: co-investors move into the centre of action, DHE approaches them and thereby automatically moves away from the performers. 2 The shift of obvious and considerable ‘political leadership’ that actually emerges from the background and approaches the contentious parties. Until this occurred the contentious relationship was going on in a relative vacuum which provided enough leeway to ‘professionals’ in the housing sphere. Through the shifts provoked by the co-investors, this empty space eventually filled up, which considerably changed the main protagonists’ actions.

DRAMATURGY The events can be divided into several phases. Phase 1: the conception Initially the events were undoubtedly dominated by the authorized investor, i.e. DHE who was fully recognized by the performers as well as by the overall formal and informal environment. Co-investors were at that time still unorganized individuals who were doing their best to get on the DHE waiting list for apartments. Phase 2: the conflict The altered terms, announced by DHE, caused the first stage of mobilization among coinvestors. Later on this grew into an open conflict with DHE and the performers. Phase 3: the tactics and strategy From the start, the inequality in the positions of the two conflicting partners was considerable. Therefore the first task of the board of co-investors was to concentrate on housing issues from the legal, self-management, economic, political and ideological points of view. This period could also be designated as a study and research phase.6

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Phase 4: public confrontation The inclusion of the public was a successful gesture on the part of co-investors. They had the initiative, which meant that they had moved from passive objects of ‘bureaucratic arbitrariness’ to active ‘fighters for the right cause’. They very successfully activated the already existing ideological feelings about parasitic bureaucracy exploiting decent people. This created a very favourable public opinion. Phase 5: spreading the conflict In becoming public, the conflict between co-investors and the authorized investor acquired new dimensions. Publicity raised the conflict to a higher level, where elements not directly involved in housing issues started to play an active part. The basic lines of conflict expanded, self-management and political institutions joined the field of dispute. In this phase the affair reached its broadest dimensions regarding the number of participants. Phase 6: the decision In the preceding phase the proportion of forces changed to such an extent that the decision was merely a question of time. The question was only whether the decision would be a self-management or an administrative one. The situation now was a mirror image of the initial phase; the performers, i.e. the builders, now appeared as ‘solitary’ fighters. The entire affair, divided into several phases, has a strong resemblance to a classic dramatic structure of events. The first phase is the conception of the relationship between protagonists while the area of the plot is only in preparation. In the second phase the plot takes shape and soon expands into open conflict. Subsequent events heighten the tension that grows (in terms of content and participants) throughout the third and fourth phases. The drama peaks in the fifth phase when the turn of events occurs; then the final solution is rapidly brought about. We have here almost an ideal situation; however, this ‘ideal’ model results from complex actions (play and counterplay) on several levels. Crucial for our topic is the realization that these events were a consequence of informal intervention into a normatively determined self-managed environment. The fact that informal action is just an ‘extended’ functioning of a formally established group does not have much bearing in this context. It would seem that the self-management position of co-investors, taken literally, brought confusion into smoothly running, routine events. In short, selforganization and mobilization of one of actors involved destroyed the apparent and ‘unnatural’ harmonious relationship between the protagonists. As a matter of fact, the action of the co-investors has in a certain way re-established the ‘normal’ state of affairs, hitherto concealed under a Utopian self-management project.

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NOTES 1 The model of these four, more or less distinguishing, types are elaborated in my paper: ‘The formal and informal production of housing’, presented at the Conference on Housing Between State and Market, Dubrovnik, September 15–19, 1988 (published in Neformalno delo/Informal Work, ed. Ivan Svetlik, DE, Ljubljana 1988). Because of the intensive institutional changes in Yugoslav society in recent times this model should be modified. However, because the reforms are still in the initial phase in practice, the mixture of different formal, informal, legal and illegal housing practice is perpetuated. 2 DHE—Department for Housing Engineering at the Town Planning Agency which is the professional body (an authorized investor) supposed to represent the investors in negotiations with builders and help them to prepare the financial arrangements. 3 The manuscript report of one of the most active co-investors. 4 To understand this figure one should know that the inflation rate in 1985 was already very high but the increase in housing prices was even higher 5 Presented at the Conference on Housing Between State and Market, Interuniversity Centre, Dubrovnik, September 15–19, 1988. 6 The co-investors have compiled extensive documentation from this period.

24 Conclusion Past tendencies and recent problems of the East European housing model József Hegedüs and Iván Tosics The chapters in this book refer to a transitional period not only in the East European housing model itself, but also in the state of our knowledge about its development and future. The sociology and economics of East European housing was quite ambiguous until now when science enjoys a new freedom to express the real housing policy contradictions in the various East European countries. Even if there is a unique critical attitude in these chapters, the depth of criticism and the sharpness of the critics are rather different. A Western observer should not forget that science in Eastern Europe has always ‘enjoyed’ greater or lesser ideological control, depending of course to a different extent on the actual political climate of the given country. The uniqueness of this book largely lies in the fact that the conference for which the original papers were written was held in 1989 (in Noszvaj, Hungary) in the year of transition, but the final editing was done at the end of 1990, the year when political events were making such critical approaches into the ‘mainstream’. In our approach a critical attitude has always been accompanied by an attempt to understand the logic of East European housing systems, as we believed that despite the seemingly substantial differences there is a common background and history behind these systems. Thus in the first part of this concluding chapter we would like to discuss some common features of these systems and give an explanation of the differences. In the second part we deal with housing issues in the transitional periods; and in the third part, some political and structural constraints on transition are discussed.

AN OVERVIEW OF THE DEVELOPMENT OF EAST EUROPEAN HOUSING POLICY Key elements of the East European housing model: property rights and the planning system We strongly believe—and most of the chapters support this idea—that there is a common origin for the housing policy of East European countries (we call this the ‘East European housing model’), which may be taken as a reference point in understanding the actual processes and later divergencies of individual solutions for housing problems. The main elements of this model can be discussed under the headings of property rights, and planning system.

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Property rights The property right system was drastically changed in all East European countries at the end of the 1940s. This did not mean in all cases the introduction of an entirely new legal system, but there were some crucial modifications applied in each country which changed the content of the regulation of property management. A good example of this is that nationalization of the housing stock was not a precondition for controlling the private sphere; the regulation of the rights of tenants, the rent setting and the management were enough. Very different practical solutions led to the same result: the rental sector was almost totally controlled by state organizations (local councils), enterprises and maintenance companies. Private ownership as a form of ‘personal property’ (with the aim of obviating exploitation) was always a subject for political judgement, and its content could be changed according to the will of the political regimes. Even if the security of private property differed in East European countries, the logic was the same: the legal system, not the political system, guaranteed property rights. And very great changes in these political forces took place in the different countries in subsequent periods. Personal property or ownership was always the subject of political control. A good example of this is the ‘one-family one-flat’ principle, and the struggle against the socalled luxury building (i.e. against houses built far above a defined standard size and/or quality). Families having economic resources had to hide their high-standard housing as it could be dangerous to show a ‘too satisfactory housing situation’—only a politically strong elite (i.e. the nomenklatura) could do this without any risk. Paradoxically, state ownership (or state control) of the housing stock became in most cases a quasi-right, i.e. the users of state-owned flats practically enjoyed some freedom to transfer their right of occupancy through the black or grey market. The explanation for this development is that control over the user of state property is costly, if it is practised at higher levels of state administration. Thus, managing rights are given to lower levels of administration, and in most cases, to the user of the property. Given the political uncertainty of the property, the right tied to the actual control was transferred in most cases to the user. This is one of the most important contradictions of the system: the state has in principle an overwhelming power over the private sphere, but in the actual processes the lower levels (individual state firms and private persons) exert great influence on the actual use of the property. Planning system The planning system of East European countries was more a political category than an economic one. Planning means power over the distribution of the economic resources of the society. The general feature of East European housing was that resources spent on housing were controlled by the ‘planning system’, a power structure based on the dominance of one political party elite. Here again a great variety of solutions can be found, but the logic of the system was the same across all East European countries: the key decisions were made by this centralized planning system. One of these key decisions was the reduction of the influence of the demand side by introducing and maintaining low wage levels (maximizing direct redistribution of financial means). Another important feature of the system was control over the

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supply/investment side. Housing ‘enjoyed’ for a long time—for at least two decades from the end of the 1940s—very low priority in the investment policy of East European economies. This is very much in contradiction to the fact that the role of housing in socialist ideology is very important; it has to serve as one of the main proofs of the superiority of the system. As a result of the struggle between different political forces (interest groups committed to industrialization and thus interested in the lowest possible spending on the housing sector, versus population movements against low standards of living) from the 1960s onwards in most East European countries state budget spending on housing was increased substantially and huge mass construction programmes were introduced. Even in this period, however, a practice of ‘minimization’ was observable— the task was to achieve the politically set magic numbers of new construction using minimal state budget money. A third, very general feature of the planning system was the conflict between housing state and private housing. The chapters in the present volume prove that in practice the ‘state-private’ distinction had very little to do with the form of ownership: state housing included several housing forms where state agencies played decisive roles defining the quality, size, location and even the future user of homes independently of the form of tenure. A good example of this is the establishment of huge state enterprises producing prefabricated housing units during the 1960s; the term state housing was very much tied to the industry, and less connected to the form of tenure. In the case of private housing the same decisions were made by individuals. Within the housing sector the state provision form of housing relative to the other forms of provision always enjoyed a high priority in each of the East European countries, even if there were some differences. Most of the differences in the individual countries arose from the institutional structure of the ‘state’ and the distribution of power among the state agencies was also always the subject of change (see the problem of sectorial and territorial planning.) In some countries, e.g. Hungary, state housing lost dominance with the growing budget problems gradually; in others this dominance changed only as a consequence of the collapse of the political system. As a general consequence of this housing model, in the East European countries there was a permanent shortage of housing, because individual consumption of housing was controlled by strictly regulated wage policies and also by the different components of supply (building land, building material, building permission). This shortage was, however, accompanied by a kind of hidden surplus in the form of overhousing families in the rental sector because rent policy did not force tenants to economize with costs. There were also examples of surplus in the private sector in the form of empty, unused private housing units. These represented a form of accumulating wealth, but because of the regulations it was not worth while—or it was even politically and economically dangerous—to rent those units out on the market. All these factors led to a very irrational use of the housing stock. This type of macro regulation of the housing system also led to irrational household strategies. State housing was so cheap that it did not require any form of individual financial accumulation, saving or more effort in the economy. Those families who had access to state housing for one reason or another had received a ‘Christmas present’, which had nothing to do with their economic behaviour. At the same time, in the private sphere—because of the strict control and regulation (limiting and taxing the supply)—

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prices were so high that most families had no chance to obtain a private home. This sphere consisted of a real estate market and self-help/self-build housing. In the latter case, even if this was the best for the state, from a macro rational point of view the use of the resources was very questionable. A further consequence of the over-regulation of the housing market was the development of the black or grey markets where the transfer of occupancy rights and side payments on real estate markets took place. Illegal building, a second-hand market of building material coming from state construction projects, a black labour market and corruption were the characteristic elements of this system, causing great harm to the whole economic and social system. The periodization of the East European housing model Most authors (Bessonova, Michalovic, Hegedüs and Tosics, Koleva and Dandolova, Lowe, Kozlowski, Mandic, Marcuse and Schumann) presented a historical overview of the development of housing in the country they dealt with in terms of periodization. Although the actual dates of the periods differ in each case, it is possible to advance a general model of changes in East European housing policies, based on the hypothesis (Hegedüs and Tosics 1990b) that the originally adopted model had periodically been revised. Because of the changes in the political and economic situation of the eastern bloc itself, efforts to ensure state dominance were almost periodically weak and strong. These changes can be described in housing along the dimension of ‘privatization’, i.e. the level of control over non-state forms of housing. In almost all Eastern countries periods of anti and pro-privatization followed each other. ● The 1950s were dominated by efforts to ensure the total control of the state over housing processes (even with direct nationalization and reallocation of private housing). The level of housing production was low due to the higher priority of other sectors of the economy. ● From the last years of the 1950s, as a consequence of political unrest, in some of the Eastern countries a growing emphasis was given to improving living standards and to satisfying people’s housing needs. Having no means to increase substantially the state supply of housing in many countries the state relinquished control over the functioning of the market. ● The late 1960s and the 1970s constitute a period of recentralization, when—on the basis of the relatively rapid economic development of the East European countries and optimistic forecasts of future development—huge state building industries were established and new state construction dominated urban housing markets. ● From end of the 1970s the growing economic crisis put an end to the expansion of state housing and the relative importance of private housing forms was allowed to increase in order to avoid the collapse of the housing market. In the earlier decades (1950s, 1960s) changes were dominated more by political factors and therefore the periods were more unified among the countries in question. In many cases the modifications of housing policy simply followed the changes introduced, and because of the growing differences in the economic situation and also the economic

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policy of these countries, periodization became more and more particularized in the individual countries. Growing differences and the split of the common model of housing Detailed analysis of the housing policy of individual East European countries can of course also show important differences from the outset, e.g. regarding the extent and method of nationalization of land and housing (one extreme being the USSR, the other possibly Bulgaria and the GDR) or the development of different forms of tenure (in Bulgaria private housing remained the most significant while in the Soviet Union state rental housing became clearly dominant; cooperative housing remained insignificant in some countries while it became substantial in others), etc. These differences, however, can be considered as insignificant model variants which did not alter the essence of the model, i.e. the dominance of the state over all aspects of the housing system. More important changes in the housing sphere, leading to the split of the model, occurred as a consequence of changes in politics (Yugoslavia) or in the economy (Hungary). From the 1960s onwards these countries decreased substantially the level of state dominance over some sectors of the housing system, developing important submodels of the East European housing model. It can be argued that in these countries the basic elements of the common housing model were altered before the whole political system changed at the end of the 1980s. Housing in the period of change: most recent developments The collapse of the East European housing model was closely related to the unclear regulation of property rights and the failure of the planning system. ● In the state rental sector the different attributes of the ownership rights of dwellings (decision-making power on allocation, maintenance, renewal, selling, etc.) were very much mixed between different levels of institutions—central government, political bodies, enterprises, local authorities, public maintenance companies—and also the tenants themselves enjoyed a unique set of ownership rights (Hegedüs and Tosics 1991). In the owner-occupied sector the ownership rights were limited in several ways and changing degrees in the different countries depending more on actual political considerations than legal regulations. From the end of the 1970s it became clear that the whole economic system had to be changed or reformed more radically than had been presumed to have been done in the optimistic scenario of the 1960s. Hungary (and Yugoslavia) headed this process where from the beginning of the 1980s gradual changes were introduced in the economy. These changes reached the housing system as well and were marked by the increasing role of the private sector, some privatization and decentralization within the state sector, modification of the housing finance system, etc. In the other East European countries, however, only a few reform steps had been taken in the economy, which in most cases did not substantially affect the housing sector. By the end of the 1980s it became clear in Hungary that the significant reform steps introduced at the beginning of this decade towards a mixed economy (Szelényi, 1989)

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with the establishment of a more or less independent private economy had not solved the problems of a socialist economic and political system. Due to the growing pressure of a huge international debt, a powerful part of the old political elite, which managed in this ‘reform decade’ to transfer its political power to economic wealth, opened the way to change the political system itself. Some months later similar political changes took place in most of the other East European countries. This system change created a completely new scenario for economic (and housing) reforms.

HOUSING ISSUES IN THE TRANSITIONAL PERIOD The effects of political and economic changes on the housing model In the majority of the East European countries the collapse of the housing model occurred as a direct consequence of the change in the political system at the end of the 1980s. The main new trend in politics is the process of democratization of the ‘party-state’ system. Communist parties in most Eastern countries have collapsed and in some countries they have disappeared almost totally. Their follow-up parties are losing the leading role and are in most cases becoming part of the political opposition. This trend is, however, not universal; the speed and form of democratization is in some countries seriously affected by nationality problems and varies a great deal from national to local level (on the latter it is more difficult to achieve real changes). In the economy the main trend is towards privatization in order to decrease the overwhelming preponderance of state ownership. In some countries major financial reforms are taking place including the reshaping of the monetary system. Serious and mutually inter-related problems have to be handled in almost all Eastern countries, such as high foreign debt, rapidly growing inflation and unemployment. Thus, we can argue, the transitional period from a command to a market or mixed economy brings completely new problems, the regulation of which needs new methods, so far unknown in East European countries. Both new trends, democratization and privatization, have serious consequences for the housing sector of the Eastern countries (although in none of these countries has the problems of housing played a significant role in the change of the political system itself). When the decision-making hegemony of the party was dissolved, one consequence was that many—previously only formally independent—institutions became active in the housing arena. Property right restrictions have been lifted in most Eastern countries, which makes investment in housing potentially attractive to some actors and at the same time increases speculative tendencies. On the other hand the state, in connection with the budget crisis, has decreased its direct intervention in the housing market. These developments create quite different situations in the owner-occupied and public rental sectors of East European countries. There is also an increasing polarization observable within the owner-occupied sector (with growing differences between market and selfhelp forms).

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The increasing priority of housing reform as one of the initial steps of economic restructuring Following the political changes, housing has again become one of those areas which is the focus of political debate in East European countries. One of the main reasons for paying extraordinary attention to housing is its large impact on government budgets. Without the implementation of housing reform, i.e. easing the economic burden placed by housing subsidies on the central budget, it seems impossible in most East European countries to introduce any kind of general economic reform. In this respect housing reform is one of the preconditions of the restructuring of the economy (Renaud 1990). At the same time, however, it is clear that housing is politically one of the most sensitive areas. All market-oriented housing reforms must be carefully designed and balanced with social measures. Thus, we can argue, the present task of East European countries is— instead of a general improvement in the housing situation as such, which was emphasized in the last decades—to make economically feasible and politically acceptable a marketoriented restructuring of housing policy. Problems in the state rental sector Given these circumstances it is clear that serious difficulties will soon emerge in the public rental sector, which was the recipient in the last decades of most of the state housing subsidies (even if the effectiveness of the use of these subsidies was extremely low and for this reason overconsumption of housing and substandard quality are typical for the sector as well). Within the framework of a general price increase in the housing sector public tenants will most probably have to face the largest price increases (Turner 1990). A list of problems is given below in connection with the rental sector. Property rights One of the most obvious shortcomings of the East European housing model was the inappropriate definition of the property rights of housing units, or more precisely, the excessive dominance of state ownership accompanied by the elimination of almost all forms of private ownership (Hegedüs and Tosics 1990b:2). Even the existing categories sometimes have a very different meaning from that in market economies. In most cases the special ‘socialist’ type of regulation did not fulfil its expectations, i.e. the restriction on free transactions of owner-occupied houses (Bulgaria) or the official sanctioning of capital value of public rental dwellings (Hungary) caused more distortions in the functioning of the housing system than benefits. Thus these ownership forms have to be re-regulated. In the course of this process the superfluous legal and administrative constraints on the effective use of individual property should be lifted. The recent dubious situation of tenants of public rental housing should be clarified and public institutions should regain their full disposition of public property. The gradual reintroduction of private rental housing—ensuring the necessary public control over it— is also an important task. In connection with the separation of owners and tenants of rental dwellings it also seems unavoidable to reintroduce the eviction process with careful

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regulations protecting those tenants who have only temporary difficulties in paying the rent. Privatization—the search for new owners Privatization is a logical step today in those countries where the state exerted its dominance directly through nationalization of significant parts of the housing stock. The extent, form and financial regulation of privatization is, however, very much debated as it means a shift in the wealth- and power-relations within society. Most East European housing officials interpret privatization as the transfer of public rental housing to individuals. There are many potential problems with this concept. Firstly, given the present low-income level of East European countries, privatization to sitting tenants can only function in the case of extremely low selling prices. Because of short-run financial considerations governments sell off public housing cheaply—their main asset which could be one of their main sources of income in the long run in the event of a proper rental housing policy. It is also clear that privatization to tenants with heavily subsidized prices does not provide any guarantee for solving the maintenance problems of multi-family housing neglected in the previous decades. Besides this, it increases inequalities. The essence of privatization should be ‘not to hand out the property, but rather to place it into the hands of a better owner’ (Kornai 1990:82, quoted in Renaud 1990). ‘Better owners’ could be local governments (decentralization of ownership), non-profit companies, cooperatives, tenant organizations, etc. These kinds of ‘semi-public’ organization are, however, lacking at the moment in most East European countries. Marketization: setting prices Here the question is: should rents be increased to supply-demand-determined market levels or are there serious arguments not to allow market principles to prevail wholly in the rental sector? Most experts agree that the minimal necessary level of rent is one which fully covers maintenance costs. Further increase in rents, to include all economic cost elements of housing (capital, cost, etc.), must be taken into consideration in accordance with incomes and the targeted subsidies. But even at the maintenance-cost level, rents should be differentiated according to the market value of the units. From Western practice it is clear that market-determined differentiations in rent lead to serious city-development problems, such as the increase of segregation and, especially in the best areas, to gentrification. These problems could, however, be handled with planning tools, instead of eliminating the idea of rent differentiation itself. Subsidization: protecting low-income tenants Significant rent increases cannot be introduced without the implementation of a household-oriented subsidy system. The idea of housing allowances provides the basis for the ‘third solution’ (Hegedüs et al. 1990a,b), avoiding the problems of low rent levels or low-price privatization. Although the system of housing allowances is one of those rare housing market interventions which—if carefully designed—has equalizing effects as being compatible with market principles, the implementation of such a system is not easy in East European societies. There are technical problems, such as the poor registration of household income and the shortcomings of the administrative system of

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registering: no one knows who is living where. In addition there are also serious political counter-arguments. Housing allowances are judged to be too ‘centralizing’ and thus incompatible with the new trend of local autonomy. And there are social groups—most notably among the middle class—which would have to pay much more rent while receiving only small allowances or none at all. These strata of society would have to face a real worsening of their financial situation. Problems in the owner-occupied sector and in housing finance In the East European housing model the owner-occupied sector, as well as housing finance, were assigned a secondary role following the decisions on the volume of new state construction, its distribution among settlements, composition by technologies and unit size (Hegedüs and Tosics 1990c:35). Financing considerations were raised primarily as budgetary factors. Building loans—based on the savings of the population—were supplied on long-term bases with fixed and low interest rates (1–3%). Credit policy systematically discouraged self-building with lower loan ceilings and higher interest rates compared to the ‘building for sale’ forms of state institutions. State-guaranteed loans were complemented by enterprise loans and strictly regulated by legal means (employers were allowed to support only those housing forms sanctioned by the official housing policy and only to the extent prescribed by it). Financing of housing was indirectly supported by a kind of ‘forced saving’. This refers to the fact that savers received negative interest on their savings in real terms. The only reason for saving under such banking conditions was the lack of alternative possibilities, especially the lack of opportunities to invest in the economy. In short, the East European housing finance system had very little to do with banking practices. In connection with the poor finance possibilities a substantial proportion of new owner-occupied housing was built in self-help form and the role of supply-demand considerations was minimal. By the end of the 1980s it became clear that the housing finance system and the regulation of private housing must be totally changed. Besides the difficulties of the state budget, the rapid increase of inflation and the new possibilities for the population to invest savings in the economy created completely new conditions. Very shortly East European countries will have to make basic decisions concerning the regulation of owner-occupied housing and their housing finance system. We shall illustrate the main ideas of a possible new system in the case of Hungary. The problem of existing loans With the increase in inflation the interest rate subsidy on old loans in some East European countries became one of the most important items in the budget (it was 64% of the total budgetary appropriation for housing in Hungary in 1989). The problem to be solved is how to change fixed low interest rates on loans to indexed or at least variable interest rates. Some experiences (e.g. an unsuccessful attempt by the Hungarian government at the end of 1989) have shown that this is not very easy for political reasons. Addressing the problem of inflation in financing new construction. At the beginning of 1989 Hungary introduced a variable interest rate scheme in which the government has the right to adjust the interest rate once a year to the level of inflation. In

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practice, the adjusted interest rate remained lower than the rate of inflation. Recipients of the variable interest rate loan were entitled to an interest rate subsidy, depending on the number of children and diminishing in time. Even with these innovations, however, the basic problems of the finance system have not been solved: on the one hand banks were still not interested in lending (they received negative returns on their money), and on the other hand, a large number of potential borrowers were not able to bear the increased burden: repayments were still very high at the beginning of the repayment period. Both problems are becoming more serious with growing inflation. The proposal of the World Bank experts in this situation is to introduce dual indexed mortgages, a financial product which was worked out especially for countries with high inflation (Buckley et al,. 1990:v). The basic idea of DIM is that the interest rate of the loan is automatically above the level of inflation while repayments should be increased with the average increase in wages. If the inflation rate is permanently higher than the average increase of wages, the repayment period will be extended. In extreme cases, when the extension reaches a given limit, the budget takes over the responsibility of repayment for those years which are above the limit. The proposed new method splits the risks between borrowers and the government and creates a sound financial climate for families whose increase in income matches the average increase in incomes. As part of the new regulation real mortgage regulation must be introduced and families with relatively decreasing incomes will have to leave the owner-occupied sector to find cheaper housing in the rental sector. Taxation and owner-occupied housing According to some ideas it is essential to introduce a property tax in order to involve those population groups who have already paid off their houses in solving the housing problem. Political problems of changing the East European housing model. When introducing new ideas into East European housing systems one has to reckon with an especially strong resistance on the part of those population groups and institutions whose interests are threatened. Despite the fact that the basic ideological statements on equality and state supply of housing have not been fulfilled over the last forty years, these statements have become very deeply embedded in the thinking of the people, making it difficult to get such new methods, for example, eviction, and, foreclosure accepted. Another difficult task is to restructure privileges and disadvantages at a generally lowincome level; to spend the same proportion as in Western systems on housing from the household budget causes much greater problems in Eastern countries because of the low levels of income. In addition, the withdrawal of existing privileges, such as taking away the ownership rights of tenants or terminating the possibility to buy state rental flats with huge subsidies, is also extremely difficult. Another level of political problems is to be found in the conflict of interests between central and local institutions. The poor performance of the state building industry, the central policy-determining and subsidy-allocating offices, and that of the local allocational offices (being also responsible for maintenance) made it quite easy to argue that every aspect of the previous central regulation was bad and must be replaced by total

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local independence. This trend towards decentralization has, however, two potential dangers. Referring to decentralization makes it is very easy for the central government to decrease central budget housing outlays to a minimal level. On the other hand, the immediate short-term interests and financial problems of local governments lead to suboptimal solutions on the local housing markets (see the long-term negative effects of selling off public stock at below market price). The core of the East European crisis is in the economic structure, and housing is a part of the economic structure. Any attempts which try to handle the housing problem separately from the economy are inevitably going to fail. In the early stage of transition, when the new political forces were in opposition, there was a widely accepted view that changes in the political and economic system would lead to a better housing situation—to an increase in output, without a significant increase in the burden of households. (See e.g. the housing programme of Solidarnosc which was full of promises.) Currently, however, such a view would be considered an illusion because it is clear that housing is very dependent on the economy. Because housing is also politically a very sensitive issue, it is important to analyse the effects of changes in the economy and housing on the ‘economic behaviour’ of households. Price modifications, cutting and restructuring the subsidy system are going to force households to alter the structure of their consumption. In the traditional planned economy the shortage was generally in the consumption goods market, and the constraints on the demand of households were not in the form of high prices but in the physical shortage of available units and in the strictly limited incomes of the population. As the system moves towards a market economy the logic of limiting demand is changing. High prices, being mostly influenced by real (subsidy-free) cost factors and special features of the supply-demand mechanisms,1 are replacing the physical shortage and the generally low wages as the main constraint. Households have to face a completely new situation in which: ● prices of basic goods (transportation, heating, basic food, etc.) are increasing dramatically, as is their share of the household budget. To economize in basic goods is crucial, and an important change. Earlier all of these goods were heavily subsidized by the state and the low prices were declared to be one of the advantages of the socialist system. ● services and goods of high standard and quality are available but only for extraordinarily high prices (compared to average incomes). This means that households are facing a changing situation where their limits on demand are no longer due only to shortage, but also to their purchasing power. Housing cost is an important part of this restructuring process. Experiences in the first year of change show that it is politically even more difficult to introduce the economically unavoidable price rises in the housing sector than in food, transport, etc. There are indications that there is a strong population resistance against increasing rents and even if in some countries dramatic rent increases were introduced, in most cases the increase was less than the level of inflation. One of the crucial political problems is bound up with the ‘safety net’ issue. Restructuring the state budget and moving towards a market system in a period of economic crisis raises many questions on social policy in connection with decreasing

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living standards, high inflation, growing gaps among different income groups, unemployment, etc. The state, which was supposed to provide social security for the whole society, is moving away from this task, in some East European countries very quickly. The traditional social security system is going to collapse because of budget cuts; enterprises are less and less able and willing to help their employees and to support local councils. The safety net approach would mean a total restructuring of the system to a new one where only the poor are supported. This change, however, would hurt the middle classes who enjoyed most of the advantages of the old system (besides the elite, which is not threatened in the new system either). Thus the move towards a new system is blocked mostly by the middle class, which does not want to sacrifice its advantages. The different strata of society realized quite quickly that recent years represent a period of redistribution of wealth. During this process (see e.g. privatization) nobody could be generous, because this would cost too much in the long run. Economic reformers nowadays underestimate the role of ideology and the effect of those slogans which emphasized the crucial role of the central state (in the previous political system) in the provision of basic goods for the workers. Even if it is clear that this basic provision was very poor in quality and sometimes also in quantity in the past, this fact in itself does not weaken the resistance of the least well-off to the attempt to declare that the state no longer has a role in this basic supply. According to the market argument (in its extreme form) the level of wages and the standard of living depend on the effectiveness of individual companies, and the state (the central budget) can no longer guarantee the living standard of the population. Such an extreme application of the market principle, however, would cause a lot of problems, as the paternalistic state ideology is very deeply embedded in society and changes in ideology occur more rapidly among the elite than among ordinary people. The illusion of market and democracy as a universal solution for the economic problem is very general. It is, however, questionable whether faster and more radical changes (‘shock therapy’) would bring earlier results. All new ideas must take into account the sociological fact that people need time to change their economic behaviour, to adapt themselves to the new economic realities.

NOTES 1 In most East European countries the supply side of housing was exceptionally concentrated: huge state building enterprises were monopolistic. It takes time to decentralize these giants and create both from above and below middle-sized building companies, the competition among which is necessary to achieve a real decrease in today’s monopoly prices.

REFERENCES Buckley, R., et al. (1990), ‘Housing Policy Reform in Hungary’, The World Bank. Hegedüs, J., Struyk, R. and Tosics, I., (1990a), Designing a Housing Allowance System for Hungary, The Urban Institute, Washington (forthcoming). Hegedüs, J., Struyk, R. and Tosics, I., (1990b), Integrating State Rental Housing with the Private Market: Designing Housing Allowances for Hungary, The Urban Institute, Washington.

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Hegedüs, J. and Tosics, I., (1990a), Summary of the international conference on ‘Alternative for the public rental sector’ (Budapest and Noszvai, 7–11 April 1990). Unpublished paper. Hegedüs, J. and Tosics, I., (1990b), ‘Political problems of privatization in Hungary’ (The transition towards a new model in housing). Paper prepared for the conference, Housing Debates and Urban Challenges, Paris, July 1990. Hegedüs, J. and Tosics, I., (1990c), ‘Hungarian Housing Finance, 1983–1990—a failure of housing reform’. Housing Finance International, August 1990, pp. 34–42. Hegedüs, J. and Tosics, I., (1991), ‘The Problem of Property Rights in Transitional Period of the East European Countries (The Case of Hungary)’. Paper presented at the second meeting of the Working Group on East European Housing Policy, January, 18–21, Budapest. Renaud (1990), ‘Framework for Housing Reform in Socialist Economies’. Document based on the proceedings of the Seminar on Housing Reforms in Socialist Economies, The World Bank, June 1990. Szelényi, I., (1989), ‘Housing Policy in the Emergent Socialist Mixed Economy of Eastern Europe’, Housing Studies, Vol. 4, No. 3, July 1989, pp. 167–77. Turner, B., (1990), ‘Housing Market Responses to the New Economic Order in Eastern Europe’. Report to the Working Party on Housing Committee Commission on Europe (ECE), United Nations, Geneva.

Appendix: housing reforms in Eastern Europe and the Soviet Union QUESTIONNAIRE Questions 1. (a) Total number of dwellings, (b) number of individuals, (c) average household size (b+a), (d) average number of rooms per dwelling (including kitchen), (e) rate of families sharing one dwelling. 2. Share of different sectors: public, private rented, cooperative, owner occupation and others (rough percentages). 3. For each sector, legal constraints on selling/buying, price regulation and capital taxation. 4. For each sector, legal constraints on (i) construction, (ii) land owning and (iii) land transactions. 5. The allocation policy for each sector, (qualification criteria to enter the sector). 6. Rents/living costs related to income in different sectors and for different kinds of households. 7. Interest subsidies (rules, interest rates related to the rate of inflation). 8. Housing allowances (qualification criteria, amount of allowances related to housing costs for different households and different sectors). 9. Tax subsidies (permissions to make tax deductions, imputed rents). 10. Other subsidies such as subsidized land costs or construction subsidies. 11. A case study of an ordinary young couple living in a big city, who are about to acquire their first dwelling. Describe their options, and the most likely outcome. 12. The same description applied to a small village.

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Albania 1. (a) 450,000–500,000 (b) 3.2 million (1989) (c) 4.7 (1989) (d) probably around 6–7 persons (e) probably around 25–35%. 2. All flats in multi-family houses are owned by the state—about 40%. All single-family houses are privately owned—about 60%. 3. In principle, all flats are rented flats. But in some of the old houses built before 1944, with 2–4 dwellings, each dwelling is privately owned, and can also be sold. From 1991 it will also be possible to buy state-owned dwellings. Both single-family houses and the old owned dwellings in multi-family houses can be sold without the intervention of the state. But for the present there is no market for selling and buying when most dwellings and houses have been inherited. The price for the few houses that have been sold has varied according to quality and future plans for the land the building is located on. 4. Owning land is at present not possible in Albania. However, the recent changes in Albania making more foreign investment possible have made landowning an important issue. 5. There is a shortage of dwellings in Albania due to a young population and a high birth rate. It is hardly possible for a young person to apply for housing before he or she is married. The highest priority goes to those who move to a city or village because of their job. Other criteria are unsuitable dwellings, social problems and families with many children or members. About 90% of those who apply for a new flat are large families. Up to now most single-family houses have been built in rural areas. The policy has recently changed and in the next five years a masterplan for the cities will include plans for residential areas with single-family houses. For example, in Tirana 600 families are now applying to build a house, and comparatively expensive houses. But it is still a question of shortage of land, when so much land is used for agriculture, and there is a shortage of building material. 6. The building costs for a dwelling with living-room, a kitchenette and one to three bedrooms in 1990 varied between 25,000 and 45,000 leks ($2,500–4,500). Then another 10,000 leks ($1,000) had to be added by the tenant for buying a stove and refrigerator. The building costs in 1990 for a single-family house were from 50,000 up to 100,000 leks. The average income in 1990 was 560 leks/month ($56) and minimum income on 1 November 1990, 450 leks ($45). 7. Families living on state farms can get loans up to 3,500 leks to be paid back over 20– 25 years at a 6% interest rate. Families in cooperatives cannot get credit. Families living in cities can get loans up to 25,000 leks to be paid back over 5 years at a 3% interest rate. 8. No allowances exist. 9. There are for the present no taxes in Albania but with more self-employed persons a discussion about taxes has begun. 10. No.

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11. The only option is to stay with parents. It takes about two years to get the first dwelling. 12. The young couple in a village has better possibilities to build a house of their own, preferably close to their parents. Information given by: Lena Magnusson, The National Swedish Institute for Building Research, Gävle, Sweden. Bulgaria 1. (a) 3,133,260—total number; 2,700,039—occupied dwellings (b) 8,788,596 (c) 2.80 (d) 3.7 (e) 40.3%. 2. % in single-family houses Private rental

2.8

Public rental

15.2

3.1

Cooperative Owner-occupation

80.9

58.5

Others*

1.1

*Owners and tenants.

Source: The data is from the last census of the population and the housing stock in Bulgaria taken in 1985. 3. For each sector prices (rents) and the purchaser (tenant) were controlled by the municipal council. Prices were calculated on the basis of tariffs, approved by the central government. Turnover tax is 1%. From April 1, 1990, all constraints concerning the private sector were lifted: each citizen has the right to posses as unlimited number of dwellings, with no restrictions on floor space, location, etc.; each owner may sell residential property at free market prices, without the involvement and control of the local councils. 4. The allotment of land for public usage, as well as for sale to the citizens, was under control of the municipal councils. Each household can own one residential property and one villa. From 1980 it was permitted to have two dwellings in some cases. From 1990 every household can own an unlimited number of real estate properties. 5. State-built dwellings for rent or for sale and second-hand dwellings are allocated by the municipalities to citizens with so-called ‘proven housing needs’. Registered households are divided into 6 groups, but only people who are registered in the first three groups have a chance to get a dwelling. 6. Prices and rents are not related to the income of the household: Public rental:

about 4.5% of the average household income,

Private rental:

more than 10 times higher,

Appendix

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269

the ratio price/average annual household income is about 10.

7. Loans are granted at 2.0% fixed annual interest with a repayment term up to 30 years (40 years for young families); the rate of inflation is about 15% (not officially reported yet). 8. Until now the system of housing allowances was not well developed. It was possible for low-income families, living in private rented units, to get allowances from the municipality or from their workplace, but the bureaucracy is so great and difficult to overcome that people rarely apply for them. 9. Taxes are paid for building sites and free plots intended for housing. No tax is paid for: houses belonging to the cultural and historical heritage, houses located in the country’s boundary regions, and in some national resorts. Exemption from taxation concerns only the houses but not the land, and the privilege applies only to those who built the house, but not the persons who later purchased it. Houses built by self-help are not liable to taxation for a period of five years after completion. 10. There are construction subsidies concerning state-built units for sale. This subsidy is about 20% of the value of an average unit. Rents only cover maintenance costs up to 60% and this activity is also subsidized. 11. (a) To live in a basement, to rent a private dwelling (or a room), to live with their parents in overcrowded conditions for a certain period in order to be registered on the waiting list, then wait again because the number of registered young families is very big, and then they can buy or rent a state-built unit (usually quite small), (b) To build a house by self-help if the family owns a lot, but this is not typical for big cities, (c) To become a member of a house-building cooperative. 12. Self-help form of housing construction. Information given by: Maya Koleva, National Centre for Regional and Urban Development, Sofia, Bulgaria. Czechoslovakia* 1. (a) 5,667 million (b) 15,608 million (c) 2.75 (d) 3.53 (e) 1.02 * 1988 data. 2. % in single-family houses Private rental

0.3

Public rental

34.1

0.5

Cooperative

18.7

0.7

Owner occupation

46.9

45.8

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Others

270

–

Comment: Nowadays substantial changes in ownership forms are occurring, mainly towards privatization. 3. There are new, generally binding legal regulations and new price rules in preparation. So far it is officially only possible (outside the black market) to buy from the public, private rental and owner-occupied sectors. Cooperative dwellings are at the cooperative’s or company’s disposal. A price regulation was made by the state: taxation was 1% of the price. 4. So far all land is owned by the state. Through national councils the state gives construction permission for all sectors in accordance with an approved territorial plan. Private persons can possess land only for personal use. They can sell this right; prices are state regulated (black market prices are much higher); sale is not taxed. 5. In the state and cooperative sectors an administrative allocation system existed. Priority (social application lists) was given to those families with children which evidently lived under a minimal housing standard (8 square metres per person). Allocation power was (till the end of 1990) also given to organizations; they received quotas of cooperative dwellings for their employees according to the state administration plan. A flat in older housing cooperatives established before the Second World War could be obtained only by inheritance. Free access was possible only to the private sector. For households on an average income, without any other sources of income, access was mostly not realistic. 6. Rents depend on sector and dwelling category. The house and dwelling location are so far not considered. In this field, too, we must expect changes. For a three-room dwelling with kitchen (usable area 68 m2) the rent is (a) 340 csk in the state sector (b) 420 csk in the cooperative sector for a house built in 1967 and 535 csk for one built in 1981. Official average income was about 3,100 csk. That means housing costs (including electricity, gas and telephone) amount to approx. one-quarter of a monthly income. 7. The state fully subsidizes dwellings in the state sector and partly (to 50% of the flat’s price) in the cooperative sector. It further contributes to the construction of a family house with a subsidy of 150,000 csk for marital partners under the age of 35; over this age only a maximum of 45,000 csk. The state also subsidizes the purchase of dwellings from the state sector (mainly of lower category) for personal possession, max. 30% of dwelling price. 8. Housing allowances as a rent reduction are not provided so far; such considerations are being taken in connection with determination of the minimal living standard for socially weak families and individuals. 9. Existing housing forms have excluded the enterprising approach and therefore a system of tax subsidies did not exist. The house tax was paid only by private persons in the private rental (a negligible number) and owner-occupied sectors. Socially weak citizens were able to request the council to reduce house tax. 10. Solutions to the housing problem are supported by preferential loans which are provided by employing organizations (interest free) and the state savings bank, with the following rules: (a) for family house construction up to 250,000 csk (2.7% interest

Appendix

271

rate), (b) for the purchase of a dwelling up to two-thirds of its price (purchase from the state sector the interest rate is 2.7%, from private persons 6%). 11. If neither partner in a young couple has been on a waiting list for many years in some cooperative, the situation in a big city is complicated. There are in practice three ways: (a) to get pregnant and so land on the social waiting list, (b) to try to find an older flat of a lower category for sale for private ownership (a small chance), or (c) to save 50,000 csk, to borrow 120,000 csk from the company and savings bank and to buy a new flat in some new development area (sometimes possible without waiting). 12. In some villages there is a possibility to get a dwelling from an agricultural enterprise. As a preferential solution it is often better to build a new family house or to buy and gradually improve an old house. In view of the high migration to cities this option is relatively accessible in most regions. Information given by: Peter Michailovic, Ústav Ekonomiky a Organizácie Stavebnictva, Bratislava, Czechoslovakia. Hungary 1. (a) 3,951,000 (1989) (b) 10,590,000 of which 10,272,000 inhabit dwellings (1989) (c) 2.70 (1988) (d) 2.96 (with kitchen, 1988) (e) 5.3% (1988, estimate from the National Economic Council). 2. % in single-family houses Private rental

2.0 (estimate)

Public rental

24.0

Cooperative

–

Owner-occupation Others

74.0 –

Comment: All data refer to 1987.

3. Public rental: it is possible to exchange rental units for other rental units or for owneroccupied housing. Local authorities control only the family moving into the rental unit (there is a minimum family size for each unit size category). Side payments between families exchanging flats are not illegal. Public rental units can also be inherited. Private rental: units are mostly ‘old tenancies’ in existence since the nationalization of the housing stock in 1952. Private landlords have control only over the exchange of the tenants; rent is limited and landlords have no right of forfeiture. In recent years a new private rental sector has been formed, mainly for foreigners. This sector is small and rents are not controlled. Owner-occupied: units can be freely sold or exchanged. There is a transaction tax to be paid which is 2% of the value of the property. However, in the case of direct

Appendix

272

exchange of property or if the buyer sold his or her previous flat within one year of transaction or sells the flat within one year after the transaction (quasiexchange) transaction tax must only be paid on the difference in value of the two properties. Capital gains tax must be paid when selling a house/flat within five years of its purchase (ten years for vacant plots). 4. Before 1989 one household could legally have only one house/flat and one weekend house or plot for recreational purposes. After that date every restriction on property ownership has been abolished. 5. Each settlement with a considerable number of housing applicants has to prepare a ‘yearly housing allocation plan’ with the list of families who are considered most in need of a flat. In most cases point systems exist to measure the need. In the last one or two years, however, so little remained for allocation (because of the almost total drop in new state building) that some vacated flats which were not occupied by relatives of the previous tenant. New cooperative and NSB (National Savings Bank) housing contained huge subsidies up to the middle of the 1980s. Thus it was a mixture of solvent demand, political connections and social neediness which made access to owner-occupied units possible. Around the end of the 1980s the role of solvent demand was much greater than before. A rapid increase in plot prices and the elimination of fixed rates on long-term NSB loans made private construction extremely expensive— perhaps only self-help would offer some protection against these increases if the family were able to work a lot on the house. 6. In 1980 non-pensioner households spent the following share of their income on housing expenses: 6.6% in state rental flats; 10.4% in owner-occupied housing; 15.1% in the case of homeless families (subtenancies). Rents, utilities not calculated, amounted to 3–4% of household income; loan repayments up to 6–8%. It is worth noting that the average income per capita was less in the case of owners than renters (Dániel-Temesi ‘The effect of housing allocation on social inequalities’ Statisztikai Szemle, 1984 Julius). Rents have been increased gradually since 1983 but are still very low compared to incomes. Loan repayments, however, increased dramatically at the end of the 1980s as a result of replacing the fixed interest rates with variable rates. The total price of new dwelling is on average 14–15 times higher than the average income. (Here, however, only first economy incomes are taken into account; this ratio would be lower if the unknown secondary incomes were calculated.) Among all households the homeless families must bear the greatest burdens when subletting flats or renting them on the private rental market where rents are extraordinarily high (10–15 times higher than fixed state rents). 7. Up to 1989 the rate of interest for loans for new owner-occupied housing was fixed, 3% per year (loans were issued normally for 35 years). Inflation increased by the middle of the 1980s above 10% and reached 20% in 1989. In this situation new loans became extraordinarily cheap for families but very expensive for the state budget. Changes were introduced in 1989 (the 3% interest rate was increased in one step to 19.5%) and since then the interest rate on new loans has been made adjustable once a year and is not much less than the officially calculated rate of inflation. The latest idea is to introduce DIM but this is still heavily debated.

Appendix

273

8. At this moment there is only a narrow system of housing allowances existing (introduced in 1990) where the qualification criterion has more of a demographic character (number of children, age, composition of family) than one depending on household income. There is discussion of a much broader housing allowance system (Hegedüs et al. 1990) depending on household income, and more and more experts think this is a prerequisite for replacing the very strict rent control in the public rental sector. 9. There are no tax subsidies and imputed rents. Only savings for housing purposes can be deducted from personal income tax to a limited degree. 10. Almost all centrally established and financed subsidies for land costs and construction have been abolished in the last few years. Local authorities received the right to issue such subsidies, but they rarely have any resources for doing so. The only one remaining subsidy form is the ‘construction period loan’, issued to builders who are prepared to finish the construction within a short period of time. There are also some other subsidy forms, such as social-political support (given to families acquiring new owner-occupied housing, on the basis of the number of children and other dependent people in the family); employers’ financed support (employers are entitled to give any kind of financial support to their employees, including allowances, loans, etc.). We shall not discuss the details of these subsidies here (see more on this topic in ‘Distributional aspects of housing and taxation policies in Hungary’ Hungarian National Monograph prepared for ECE, 1989), but it is worth mentioning that the relative importance of these subsidies is decreasing with the increase of house price inflation. 11. The main possibilities for a young couple in a big city are as follows: ● to stay at home with the parents for a longer period, sometimes in very overcrowded conditions; ● to sublet a flat or a room in a dwelling with an extraordinarily high rent (compared to fixed state rents); ● to rent a flat on the market through real estate companies (prices are even higher; this option is mainly for foreigners or families whose costs are paid by their employer or their well-off parents); ● to find an old person and sign a special contract: under the obligation to pay alimony the young family can live together with the old person and wait until he/she dies in which case they get the lease or ownership of the dwelling; ● to occupy illegally one of the many empty flats/basement units etc. in tenement houses; ● to ‘buy’ a small state rental unit in the form of ‘apparent exchange’: the young couple must register as resident in an owner-occupied flat and exchange this residency for the tenancy of a state rental unit; the exchange partner then leaves the owner occupation immediately (there are lawyers specializing in this type of business); ● to buy a plot in one of the smaller villages close to the city and start building with the help of relatives, friends, neighbours. As future alternatives the young couple can buy a smaller flat on the free market (expensive solution) or apply for a state rental flat if they have at least two

Appendix

274

children (this option is less and less available because of the drop in new state construction). 12. In villages the main option is self-help. Intellectuals, however, can in many cases get tied accommodation from their employers (agricultural cooperatives, schools, local governments, health institutions) who are eager to attract highly educated persons to their village. Information given by: József Hegedüs and Iván Tosics, Institute for Sociology, Hungarian Academy of Sciences and Metropolitan Research Institute, Budapest, Hungary. Poland, February 1990 1. (a) 10,738,000* (b) 37,010,000* (c) 3.5 (d) 3.41* (e) 1.10** * Preliminary data of the 1988 National Census. ** World Bank estimate for 1988. 2. % in single-family houses Private rental

4.1

100.0

Public rental

27.2

0.0

Cooperative

35.4

0.0

Owner occupation

21.4

100.0

Others*

11.9

0.0

*State firms.

Share of different sectors: Data for cities in 1988 according to the World Bank estimate: the total number of dwellings in cities was 7,255,100. In villages 84% of the flats were private, single-family houses, the others, of different physical type, were owned mainly by state farms and other enterprises (1978 National Census). % in single-family houses: World Bank estimate of the physical type of the existing stock in cities in 1988. Private and public rental—An historical sector in the sense that smaller private houses were not nationalized after the Second World War but the dwellings were distributed and let by the local authority. The owner was/is happy to have one of these flats at his or her disposal. Now the legal rules have changed, the owner can have his or her property back when the tenants move out. The basis for the real private rental sector was introduced in 1989: although there is no information on its growth, it is probably near to 0.

Appendix

275

16.2% of the cooperative stock in 1988 was bought by the dwellers who have ownership status (World Bank estimate). Recent estimates, made by some professionals, show that in February 1990 50–80% of the whole cooperative and communal stock was bought by the dwellers. The reasons for this include: inflation and the announcement and initiation of a hard credit rate policy. 3. Private—free market—the sellers and the buyers are taxed; if the capital from the sale is not used for new housing investments the tax is very high. Cooperative—the price of cooperative flats is equal to the construction costs. Ownership is available after repayment of the construction costs and all credits are taken by the cooperative. Public sector—(it is state owned, governed and maintained by the local authority (local state administration). By law there is so far no communal property.) The price per square metre is evaluated by the local government housing departments according to their use value and market prices, but practically the prices are much lower than the free market price of a given standard. The current price of a communal flat in Warsaw is about 270,000 zloties per 1 m2; only the dwellers can buy but the amount is still much smaller than free market prices. 4. (i) The construction rules and law operate without any preference to the different sectors, (ii) Land in the biggest cities was nationalized after the Second World War. The property rights, as far as the land is concerned, are slightly limited by the rules protecting land of high agricultural quality and—in the built environment—by spatial development plans, (iii) In some cases the state/local authority has the pre-emptive right in accordance with the spatial development plans. The recent regulations aim at market solutions for land transactions. 5. Cooperative—membership of a given housing cooperative and a place in the queue for the flat. Till the end of the 1970s there were many exceptions to this criterion benefiting some political and professional groups and also special preferences were given to members living in extremely bad housing conditions. Communal ● very low income per capita; less than the average income per capita in the state economy in a previous year; ● living in substandard housing conditions; ● living in stock designated for demolition. (After 1976 new investments in this sector practically stopped. In 1987 there were 6,000 new dwellings built in Poland.) State enterprises: being a required and good worker if the firm builds or has dwellings at its disposal. Private: no criteria other than good economic conditions. The size of construction costs, for example, successfully eliminates the majority of the population from this sector.

Appendix

276

6. Housing expenses as a percentage of household income in 1986: Cooperative stock ownership tenants

Tenants of communal stock

Rents blue-collar workers

4. 0

3.4

1.6

white-collar workers

3.9

3.5

2.1

retired

5.3

5.3

3.3

blue-collar workers

2.2

2.1

2.6

white-collar workers

3.4

3.3

2.6

retired

3.4

3.3

4.2

Energy and heating

Source: Statistical Office representative inquiry form 1986.

The reforms of rents and other housing expenses have now been introduced; no information available on the share of housing costs in the household income. Differentiation will occur in different sectors (the communal sector is still subsidized and serious changes in rents are expected this autumn) and in housing of various ages. 7. Until 1989 the interest rate was stable, 3% for reconstruction purposes in every housing sector and for investment in tenants’ housing cooperatives, and 6% for private housing and owners’ cooperatives. There was no relation to the inflation rate. In January 1990 the inflation rate was 40% (monthly!) and in February 23%; the interest rate is now almost equal to the rate of inflation. Housing credits have some preferences in the conditions of repayment; this means that they are slightly subsidized although the new financial conditions cause serious changes in housing investment. 8. ● In the communal and generally non-owner-occupied sector there is the possibility for low-income families to obtain a reduction in monthly rents of 40% (singleperson households) and 30% (other households). About 18% of the households used to profit from various forms of allowances. ● The owner can apply for a non-repayable, but still very small maintenance subsidy once every 3 years, (it is now 0.7 million zloties, i.e. the average monthly salary) 9. There are no—till now—tax deductions for citizens in Poland depending on the kind and form of their outlay (only very high personal incomes are taxed). Tax deductions are available for enterprises just beginning the production of building materials and for the new construction firms (for a few years) and for a longer time for those firms utilizing modern and cheap technology, producing scarce materials. 10. A very common form is hereditary tenure (for 99 years). The land users pay (till now a rather symbolic sum) only for utilization rights. Cooperatives of different kinds,

Appendix

277

communal housing and people buying the dwellings from the cooperatives or local authority can exercise this advantage. 11 (a) To inherit the flat from their grandparents (or other single relatives) if they had one. (b) To go abroad and earn ‘big money’ and then enter the free housing market. (c) To live together with his/her family and wait patientfully for his/her first dwelling in a housing cooperative—the most popular option. 12 (a) To construct a private house. (b) To look for a job giving the chance to qualify for an enterprise-owned tied flat—the option for educated people. Information given by: Alina Muziol-Weclawowicz and Edward Kozlowski, Warsaw, Poland. Romania 1. (a) 7,982,700 (December 31, 1989) (b) 23,151,564 (July 1, 1989) (c) 2.91 (d) 2.24 (e) Not known. 2. % of which in single-family houses Private rental

–

Public rental

33.0

0.0

Cooperative

–

–

67.0

79.0

–

–

Owner occupation Others

3. Not known. 4. The primary laws governing urban and regional planning were abolished after the Romanian Revolution. Here are some of the original provisions which have affected the housing sector: ● the conversion of agricultural land to other purposes was forbidden in most cases, ● the buying and selling of vacant land (that is not built upon) by private owners was also forbidden in most cases, ● since 1981, buying or erecting a secondary residence was no longer allowed. The abrogation of these laws after the revolution has resulted in phenomena unknown to Romania for more than 40 years, such as a rapid increase in land value, the necessity for a certain control of land prices, etc. 5. People are not free to choose the dwellings they rent from the state, since the demand is higher than the supply. Priority lists are established in every institution and people are granted flats with rent according to these lists.

Appendix

278

6. See the table below on net house expenditure as compared to the average income of a household in one month. This net expenditure comprises: ● For tenants: the rent and the cost of minor repairs (major repairs are undertaken by the state). ● For owners: house and land taxes; compulsory house insurance; the cost of all repairs. ● Low rents: they are calculated according to a system which takes into account the monthly income per capita in the household and the total area of the rented dwelling. Since the size of the rented dwelling is established according to the size of the household, an approximate proportionality between total income and rent results. Households with very low total income, such as retired households, sometimes pay rents lower than 100 lei. Households Average number of persons/ household

Average monthly income/household

Average monthly net expenditure on housing per household.

1985 (Lei) 1989 (Lei) Percentage of the abovementioned income Tenants % 1985

Owners %

1989

1985

1989

Employee

3.4

5,145

5,762

5.25

4.95

3.73

4.4

Peasant

2.9

1,843*

2,036*

−

−

3.80

4.3

Retired

1.7

2,111

2,356

6.15

5.94

3.38

4.2

*Peasants achieve part of their income in goods, which represent approximately 35–40% of the total. Average monthly incomes shown above are for money incomes only.

Expenditure on heating, electricity, cold and hot water, telephone, radio and TV, etc., is much higher than the net expenditure: ● tenants: 2–3 times ● owners: 3–4 times (These expenditures are roughly the same for both categories, but net expenditures differ.) Net expenditures on housing are generally lower for owners than for tenants. However, the difference is not very important, especially if compared to the total income. Besides, many owners still have monthly mortgage shares to pay, which are higher than the net expenditure (2–3 times). If these owners also have monthly payments on state loans to fulfil, the total expenditure on newly acquired houses may reach 40% of the total household income. This is why households in Romania generally prefer to be tenants. Although the prices of newly built dwellings are low compared to world standards (statebuilt apartments sold to private owners– prices are subsidized), acquisition of these dwellings is unfortunately not encouraged. Here are the main reasons:

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279

● low rents: national monthly average rents were: 1985–198 lei, 1988–209 lei, 1989–215 lei; ● comparatively high prices for food and clothing; they exceeded 65% of the average monthly income of households in the last five years (families with mortgage and loan repayments are forced to spend less than average on food and clothing). ● existing prices for newly built flats in the state sector. They vary between 100,000 lei and 300,000 lei. The average price is 2,500 lei per square metre of utilitarian area, which represents the production costs. (The utilitarian area is the sum of the areas of all usable spaces.) 7. Low interest rates on mortgage loans. Since 1950, they evolved from 1% to 3% and 5% (since 1972). The mortgage loans were to be repaid by monthly payments over a period of roughly 15 years. These payments were limited to a certain percentage of total income. Low interest rates on loans granted in order to pay the advance on cash required to purchase a flat (this advance represented one-third to one-half of the total price). The interest rates (6%) and the monthly repayments were higher for these loans. 8. There are no special housing subsidies in Romania. The only major direct subsidy addressed to households is the ‘allowance for children’ (66.4% of all direct means of state assistance to households in 1989). Its contribution to the total income is important: 4.8% in 1985 and 5.6% in 1989 for employees’ households. It increases with the number of children and decreases with a rise in wages. 9. Private purchasers of newly built flats from the state were exempt from house taxes for the first five years. 10. Not known. 11. Not known. 12. Not known. Stefan Alexandra Grecianu, Romania. Yugoslavia* 1. (a) 6,130,000 (population census in 1981) (b) 22,424,711 (c) 3.62 (household is defined by common financial resources) (d) 2.8 (not including kitchen; 1971 Juginus, Stambena Situacija, Table 30) (e) 10.0 (Savezni zavod za statistiku (SZS) 1981, Table 187). *End of 1989 2. Percentage of housing units: population census 1981: % of housing units: population census 1981 % in single-family houses Private rental

5.4

–

Public rental

20.5

–

Cooperative

–

–

Appendix

280

Owner-occupation Others

69.4

–

4.6

–

Source: SZS (1984), Table 192, Beograd.

3. After 1989 no restrictions on private ownership of dwelling units (before that: restricted to two). Prices are regulated—however inefficiently—only in the social housing sector. Transactions on housing are taxed, unless the money is reinvested in new housing. 4. Cooperatives are legally restricted to building processes only. Construction in the private sector has been subject to the same restraints as ownership. 5. ● Private rental and owner-occupation: depends on the purchasing power. ● Public rental: inadequate housing standard, average income and some other criteria. 6. Percentage of household spending, used for rents, varies from 2 to 7%. (Juginus, Yslovi Stranovanja i Izdatici, Table 4, Beograd 1987). 7. Interests rates remain much below inflation rate: in enterprise loans, interest rates have remained at 4–10%; bank loan rates differ—from above inflation rate to below it. 8. The only allowance is a rent subsidy related to the level of household income. The subsidy is provided only for rents in the social rental sector, not in the private. 9. So far no tax subsidies. Only a rudimentary personal income tax system, affecting only a small minority of the population, has been established. 10. Inflation does it all. 11. Very little chance to acquire a rental dwelling or sufficient loans to buy a dwelling. Most probably they move to parents’ or other relatives’ dwelling or become private subtenants. 12. They build their own house and their relatives and friends help them with materials, skills, labour, etc. Information given by: Srna Mandic, Institute for Sociology, Ljubljana, Yugoslavia. The Soviet Union 1. a) At the beginning of 1989, 78.2 million dwelling units were occupied, including those in blocks of flats (both separated and communal) as well as in detached and semi-detached individual houses (Source: Census 1989). Taking into account some unoccupied dwellings, hostels and some other special types of accommodation, housing stock consisted of 83.6 million dwelling units. b) Number of individuals: 286.7 million (Source: Census January 1989). c) Average number of individuals per dwelling (b/a): 3.43. We consider those living in a communal flat or in a hostel as one (common) household. Compare: average (consisting of relatives) household size is 3.04. (Source: Census 1989.)

Appendix

281

d) Average number of room units per dwelling including kitchen =3 (Estimate based on approximate size/number of rooms ratio). e) According to the official, oversimplified definition of a household, only 13% of total households have no separate dwelling. Taking into account separating intentions in multiple-generation families, this amounts to 35% (estimate). 2. Please see Table 19.4, Housing Stock by Types of Tenure, page 254. 3. One cannot have more than one dwelling. Until recently a co-op member could dispose of (e.g., bequeath or give as a present) only his share of a flat. According to the Law of Proprietorship (which came into effect 1 July 1990) co-op members’ rights, if their loans have been paid, were formally equated with those of individual homeowners. The household can buy as personal property the formerly state-owned flat it occupies. The price is set by local council executives. Further taxation of such a flat is uncertain at present. The main constraint on selling/buying such a dwelling is the ‘propiska system’—to buy a dwelling one should get a residential permit. So local authorities control transaction prices. Published prices are much lower than real (black market) prices in order to decrease the transaction duty/fee. For instance, in Moscow in July 1990, a 2-room co-op flat officially cost 5,000 roubles but was sold for $3,000. Concerning formerly public-rental flats, this difference between officially fixed value and undeclared market price is huge as well—and being increased: in October a flat bought for 4,000 roubles was sold for $17,000. One can lease/sublet the public rental flat one is occupying practically at any rent. It is precisely the state-owned housing stock that is most sublet. Market rentas are 25–50–100 times as much as legal highly subsidized rents. So, rather rigid legal regulations exist hand-in-hand with broadly spread informal relations. 4. Until recently it was forbidden to build single-family houses in cities with a population of more than 100,000. In fact, individual housing construction was not supported even in small towns. There were centrally adjusted upper limits for the size of an individual house. These constraints were disqualified by the 1988 Decree of Support for individual housing construction. Land is owned by the state. The new (1990) Law of Land in the USSR legitimizes the life-long and inherited right of ownership for both urban and rural households. However, the more progressive Law of Land in Russia legitimizes the selling/buying of land, although during the next 10 years, plots may be sold only to local authorities. 5. Residential permit rules regulate access to individual houses as well as to privatelyowned flats. To get access to both public rental and cooperative housing one should be recognized as in need. The main criterion is living-space provision. To be put onto a waiting list for a state rental flat one should have no more than, as a rule, 5– 6 square metres per person. Actually, this norm varies from city to city and from employer to employer. It is different/higher for some groups in the population such as invalids, 2nd World War veterans, and other privileged categories.

Appendix

282

Sometimes other characteristics of housing conditions (such as availability either of conveniences or of a separate room for the couple or for older children of different sex) are also taken into account when considering ‘extent of need’. These qualitative factors are a little more important in cases of cooperative and public housing. Thus, qualification criteria for buying a co-op flat are almost the same as for other types of housing, although living-space standards can be higher: in Moscow it is 8 square metres to enter a co-op queue, 5 square metres to join municipal queue and 7 square metres for the housing queue at a working unit. Plots of land for individual construction are being allocated in urban areas as well to those recognised as in need according to a broadened criteria, but priority is given to the households from waiting lists. 6. Public rental sector. The rent system was established more than 60 years ago. Originally rent rates were differentiated depending on the characteristics of the dwelling, its location and the kind of household (social position, income). Later, due to the income increases and the 1961 monetary reform, all these differences were abolished; an overwhelming majority of households now pay rent at the maximum rate, as a rule, 13.2 or 16.5 kopecks per metre of living space monthly. (In some republics and cities the maximum rent rate is even lower, 7.2 kopecks. In addition, some groups of the population, such as party nomenklatura, the military, some skilled workers, still enjoy privileged rents.) According to estimates by Dr B.Kolotilkin [Voprosy Ekonomiki (Economic Issues) 1990 No. 8] direct annual costs for the public rental sector may reach 10.5 roubles per square metre of living space (including rent, facilities payments, current repair expenditures). The average renter’s expenses for a typical flat (33 square metres of living space) were about 29 roubles monthly (1987), which was about 9% of the average household’s monthly expenditure. For households with monthly budgets of around 200 roubles (i.e. for almost 50% of all households) this figure accounted for 14%. As far as pensioners are concerned, an average monthly pension for industrial and office workers at the end of 1988 was 93.9 roubles. Living costs for a single pensioner renting a standard one-room flat (12–18 square metres) or a room in a communal flat are about 15 roubles monthly, i.e. 16% of an average pension (for those with a pension of 70 roubles, 22%). Well-provided households (with monthly incomes of 800–1,000 roubles) pay no more than 10.2% of their budget even for, according to our standards, rather spacious apartments of 80–100 square metres of living space. Private rental sector. Information about informal rents is hardly available. Private sources have revealed that in Moscow a single-room flat could cost from 200–500 roubles a month. Using mediators and official channels in contrast to private communications one might pay 50–60 roubles per day. It is obvious that subletting is now available only for rather well-off households. Cooperative sector. Union construction costs for co-op housing were 255 roubles per square metre of useable space (as distinct from living space). The average size of a completed co-op flat is 58 square metres of useful space (2room flat); its price is about 15,000 roubles (Source: ‘National Economy of the

Appendix

283

USSR in 1989’, Statistical Yearbook, Moscow, 1990). An average urban household consisting of 3 members can buy a 3-room co-op flat according to the rules. Its price, about 18,000, is equal to the aggregate average income (477 roubles) over a bit more than 3 years. Individual houses. Average construction-by-contract costs of 1 square metre of useful space is 289 roubles. The average size of an individual house is 51 square metres (National Economy 1989); its price is about 15,000 roubles. (These data based on official statistics seem to be underestimated: to build a house one should have no less than 30–40,000 roubles.) Average rural households have average monthly incomes of around 38 roubles. Thus on the statistical average, the price of an individual house is equal to 3.3 annual incomes of rural households. 7. Terms of credit vary from 3 to 50 years, as does the interest—from 0.5% to 3%— depending on the kind of housing (co-op-individual; rural-urban), purposes for the credit (purchase, construction, rehabilitation) and the characteristics of the household (some have privileges in their access to loans: invalids, young couples). Although interest on deposits was raised in November 1990 from 2–3% to 5–9% per year, housing loan interest was not brought up to date as declared it would be increased to 11%. Estimates of the rate of inflation in 1990 vary from 4–5% (official version by the government) to 18–20%. 11–12% seems likely, in our opinion. 8. According to the 1926–8 rent policy which is in force now, there are few households getting rent deductions on grounds of income: those with monthly incomes of less than 14 roubles as well as big families with more than 4 dependants per one employee. Compared with present-day monthly incomes and costs these ‘allowances’ seem trivial and can be ignored. 9. No tax subsidies. 10. In general, land is allocated free of charge—one should pay only for allocating services. However, in recent decrees by the government, the necessity to pay for natural resources including land was proclaimed. The prices of construction work and construction materials are set ‘from the top’. Whether such a rigid inefficient price regulation could be considered as a subsidy is the question. 11. As regards improving housing conditions, a young couple has the following choices: a) to get a public rental flat. If the parents’ flat where the young couple is living is small enough to comply with the official criteria for recognized need, then a few years later they get a flat (although couples younger than 30 have some privileges concerning waiting time, in fact, allocation opens up 8–10 years after marriage). Before they are provided with a flat they could be given a room in a communal flat, if neither his nor her parents can single out a room for them. b) to buy a co-op flat. In this case they should go onto the waiting list and after 1–8 years of waiting they can join a co-op, if they are able to pay. c) to get a plot and build a house—quite new and still not realistic for urban areas.

Appendix

284

d) to exchange the parents’ flat—to get some dwelling separated from the parents—sometimes this is hardly possible because of the parents’ resistance. Sometimes it is not easy because of the low quality of the flat. e) to sublet a dwelling. f) to stay with parents. In any case, the most likely outcome is to have no dwelling of their own until 8–10 years after marriage. 12. A young couple in a small village has a better chance to build a house when they are supported by kolkhoz/sovkhoz which can pay up to 50% of the costs or provide cheap materials, etc. They can also rebuild their parents’ house to make it semidetached. Rather typical is obtaining a rental flat in their employer’s housing stock. Information given by: Natalia Kalinina and Nadezhda B.Kosareva, Institute of Economic Forecasting of the Academy of Sciences of the USSR, Moscow, Soviet Union.

Index Note: The notes at the end of chapters, and the final appendix, are not indexed. The following abbreviations are used in the sub-headings: Alb.

Albania

Bulg.

Bulgaria

Czech.

Czechoslovakia

GDR

East Germany

Hung.

Hungary

Pol.

Poland

Rom.

Romania

USSR

Soviet Union

Yugo.

Yugoslavia

administrative-rationing housing system: Czech., 63, 65 agricultural collectivization: Rom., 221, 224–5 Albania, 6–10, 12–21 allocation of housing: Czech., 63, 65; GDR, 92–3, 110–12, 115–19, 121–2; Hung., 152, 169, 176; Pol., 186, 189, 190; Rom., 227; USSR, 237–8, 242, 250, 251–2, 256–8, 279, 282; Yugo., 292 Bauhaus concept, 47, 56, 109 black market see second economy Bucharest, 229, 232 Budapest, 148, 171–2 building see construction building enterprises, 321; GDR, 97, 130; Yugo., 298 building materials:

Index Bulg., 37; GDR, 86, 106; Pol., 191 Bulgaria, 23–7, 28–40 Communist Party (CPSU): USSR, 263–4 compensation: for land in GDR, 88–9 construction: Alb., 9, 17–19; Bulg., 26, 36–7; Czech., 53–4, 55–8, 66, 69; GDR, 85–6, 93–105; Hung., 169, 174–5; mass, 320–1; Pol., 187, 191, 200–1, 205–6; Rom., 226, 233–4; USSR, 246–8, 278, 280–2; Yugo., 302, 308–15, see also private house construction; self-help building construction technology: GDR, 107–10 constructivism: Czech., 47, 56 cooperative housing, 323; Czech., 51; GDR, 82, 83, 97–101, 114; Hung., 169; Pol., 187–8, 189, 192, 195, 207; USSR, 252–3, 276–7, 278, 287 corruption: USSR, 237, 238–9, 279, 282–3 credit(s): for building, USSR, 253; cooperative housing, Pol., 196, 202; state loans, GDR, 104 Czechoslovakia, 41–5, 46–60, 62–9 decentralization, 331; GDR, 107, 130; USSR, 239–40, 287; Yugo., 297–8 demolition: Czech., 52; Rom., 224–5, 227, 229, 235 Department of Housing Engineering (DHE):

286

Index Yugo., 309–11, 313–15 East Germany (GDR), 71–2, 74–134 economic reform, 331–2; Hung., 324; USSR, 258–9; Yugo., 297 energy saving: Czech., 60 estate agencies: Warsaw, 211–12 finance for construction, 329; Czech., 54, 60, 64; Hung., 152, 159–61, 169, 175–6; USSR, 247, 248–9 finance for housing: Czech., 43, 53; GDR, 103–5; Hung., 149–50, 155, 175–6, 330; owner-occupied, 329; Pol., 192, 197–9; USSR, 285, see also subsidies foreign debt: Bulg., 29 foreign investment: Hung., 166 free housing theory: USSR, 284, 286 garden cities: Czech., 47 Germany see East Germany (GDR); West Germany (FRG) historic houses, 129–30 houses see single family houses Housing Acts: Hung., 155, 158, 159, 160 housing costs: GDR, 114–15; Pol., 192; USSR, 278 housing development phases, 322–3; Bulg., 35–8; Czech., 46–9, 49–55;

287

Index

288

GDR, 76–80; Hung., 145–6, 153–7, 159–61, 324; Pol., 181–2, 183–4, 185–90; USSR, 240–3, 256–63, 263–8, 276–7; Yugo., 292–4, 296–9 housing exchanges: GDR, 118–19 housing maintenance organizations (HMO) USSR, 255 housing markets, 2–3, 325–6; Hung., 151, 152–3, 154, 156, 160; Rom., 228; USSR, 253, 258, 265–6, 277–8, 286–7, 288 housing model: and ideology, 320, 331–3; international differences, 323 housing reforms, 324, 326, 328; Alb., 9–10, 21; Czech., 43–5, 58–60, 66–9; GDR, 126–31; Pol., 201–3; USSR, 282–7; Yugo., 299–305 housing shortage, 321; Bulg., 31; Pol., 208; USSR, 237, 238, 251–2, 261, 262, 263, 279 housing standards: Alb., 7–8, 19–20; Bulg., 26; Czech., 51; Hung., 155–6, 158; Pol., 188, 189, 194, 197; Rom., 225–6, see also living space; sanitary/technical standards housing stock: Alb., 18; Bulg., 30–2; Czech., 42, 50, 51, 52, 53; GDR, 83–4, 93–4, 123–4; Hung., 172–5; Pol., 190–1, 204–6; USSR, 250–1, 254, 280–1 Hungary, 145–50, 151–76, 323 ideology: and GDR housing policy, 75–6, 122–3, 131–4; and housing model, 320, 331, 333; in Soviet housing model, 276–7, 278, 288

Index industrialization: Czech., 50; GDR, 120–2; Rom., 220–1 inflation: and housing finance, 330; Hung., 149, 159, 160 informal housing production: Yugo., 308–15, 316–17 labour: in Alb., 18; GDR, 106; USSR, 281; Yugo., 301 land: in labour theory of value, 105; nationalization, 88–9, 323; sale of GDR, 127–88 Leipzig, 117–18, 120, 121, 127, 128 living space (size): Alb., 7–8, 16, 17; Bulg., 31, 32; GDR, 117, 125, 126–7; Hung., 172–3, 174; USSR, 237, 238, 250–2, 280; in Warsaw, 214–15 local authorities: GDR, 106–7, 111–12, 116, 117; Hung., 158, 162, 164, 169; (soviets), USSR, 238, 266–7, 268, 281–2 maintenance costs: Pol., 201–2 maintenance standards: Bulg., 31; GDR, 119–20; Hung., 148; Pol., 191; Rom., 235; Slovakia, 52; USSR, 254–6 marketization, 1, 3–4, 328, 333; Bulg., 27, 38; USSR, 286–7, see also privatization Marzahn, Berlin, 92, 96, 125 media influence:

289

Index in Yugo., 293, 310, 311 modernization see renovation mortgages: dual indexed, 330 municipal housing see state housing National Savings Bank, Hung., 152, 165, 169 non-profit cooperatives: GDR, 98–9 overcrowding see housing shortage; living space owner-occupation see private housing ownership of property: GDR, 82–93; USSR, 252–3 personal ownership: GDR, 82–3, 84–6 planning, 320–1; GDR, 105–7; USSR, 248 Poland, 14, 179–84, 185–206; Warsaw, 183–4, 207–16 population mobility: Czech., 49; Hung., 148, 172; Pol., 208 population statistics: Alb., 13–15; Hung., 171–2; Pol., 14, 180, 187 prefabricated construction: GDR, 97, 108, 127; Pol., 189; Rom., 235–6 prices: and economic reform, 332; of Warsaw flats, 212; of Yugoslav apartments (case study), 309–15 private house construction: Alb., 9; Bulg., 34; GDR, 102; Hung., 152–3, 169, 171–2; Pol., 188; Rom., 221, 226;

290

Index USSR, 247, 276–8; Yugo., 299–303, see also self-help building private housing, 208–9, 319, 329; Alb., 12, 13; Bulg., 26, 34–5, 36, 323; Czech., 52; Hung., 145, 169; Pol., 183, 192, 197; Rom., 228; USSR, 278; in Warsaw 209–10; Yugo., 292, 293 private ownership: GDR, 83–4, 88–90 private rental sector, 153, 327–8; Bulg., 34–5; GDR, 112, 130; Pol., 185–6; USSR, 237, see also rental sector privatization, 322–3, 325; Hung., 161–6, 167; Pol., 207–8; in rental sector, 327–8; USSR, 241, 286–7 property rights, 319–20, 325; Hung., 162–4; USSR, 240, 252 public housing see state housing public opinion: USSR, 67–8, 259–62; in Yugo., 312, 315–16 redistribution of housing (peredel): USSR, 283–6 renovation: GDR, 102–3; in Rom., 227 rent controls: GDR, 89–90, 112–15; Pol., 186, 189 rent levels: in Alb., 18; Czech., 57, 65; GDR, 126; Hung., 147, 148; and marketization, 328;

291

Index Pol., 193–5, 201, 203; USSR, 255–6, 278, 282, 284–5; Yugo., 292 rent reform: GDR, 128–31 rental sector: Bulg., 33–4; Hung., 152, 169; marketization in, 328; and privatization, 327–8; property rights in, 326–7; state control, 319; Yugo., 303, see also private rental sector; state housing Romania, 218–29, 230–6 rural housing: Rom., 223–5, 226–7 sanitary/technical standards: Alb., 7, 19–20; Bulg., 31; Czech., 46–9, 56; GDR, 125; Hung., 173; Rom., 232; USSR, 255 second economy, 1, 320, 322; Bulg., 34–5, 37; Czech., 66; Hung., 153, 154, 159; USSR, 279 second homes: Czech., 55, 57 self-help building, 322; Bulg., 34, 36–7; Hung., 145, 151, 152, 154, 155–6, 169, 171; Yugo., 301, 308, see also construction; private house construction self-managing housing communities (SHC): Yugo., 298, 299, 311, 312–13 single family houses: Alb., 12, 19; Bulg., 26; GDR, 83, 127; Hung., 169 Slovakia, 43–5, 51–2 social assistance:

292

Index Pol., 199–200 social class and housing: Hung., 147–8, 156–8; in Pol., 193; in Warsaw, 215–16; Yugo., 292–3 social housing see state housing, Yugo. Sofia, 33 Soviet Union, 14, 237–43, 245–68, 276–88 speculative building: Hung., 153, 161, 171 state housing: GDR, 82, 90–3, 97; Hung., 145, 151, 152, 154, 155–8, 171–2; Pol., 193–5, 207; Rom., 221, 227; USSR, 256, 264, 277–8; Yugo., 292–3, 297, 299–300, 308 state management companies: Hung., 162, 164 subsidies: Bulg., 33; Czech., 44, 66; GDR, 90–3, 114–15, 126–7, 129; Hung., 145, 147, 148, 149, 166; Hung. (private housing), 154–5, 159–60; Pol., 187, 188, 192, 198; in rental sector, 326, 328; USSR, 255, 285 systematization programme: Rom., 223–7 tenants’ rights and associations: Hung., 162–4 tenure see cooperative housing: owner-occupied housing; private housing: private rental sector tenure see rental sector; state housing Tirana, 8–9 Tver, USSR, 251–2 urbanization: Alb., 8, 17, 20; Bulg., 25, 31, 35; Rom., 219, 220–1, 227–9 USSR see Soviet Union

293

Index

waiting lists see housing shortage Warsaw, 183–4, 207–11, 211–16 West Germany (FRG), 14, 81, 123–4 women and housing: GDR, 123 Workers’ Cooperatives: GDR, 98–101f World Bank, 146, 147, 330 Yugoslavia, 290–4, 296–305, 308–17, 323

294