Against privatization of LEG NRW
By privatization of the country owned social landlord Landesentwicklungsgesellschaft (LEG) the government of North-Rhine-Westphalia (Germany) intends to give up public control to over 100.000 flats, many of them in larger scale social housing schemes.
LEG today it is the largest landlord in NRW. Directly, it owns 60.000 housing units. Via holding shares of other housing companies it controls another 40.000 units. More than 1000 employees care for the housing management and maintenance. LEG also is an important developer in the field of urban renewal and re-use of wasted industrial land. 70 % of LEG shares are directly owned by the countries’ holding, the rest are owned by the countries’ bank.
By merging a couple other public housing companies LEG was founded in 1970. During its first decade LEG focused on city renewal, urban development and housing. In 1980 LEG defined one of their primal tasks to be development and marketing of vacant industrial land. During the following years the housing stock of LEG continuously increased, because of their increasing number of new constructions and by the taking over of other social housing companies (in particular those which fell in crisis). Perhaps one of the most extreme examples to portray LEG as a “crisis solver” was when it owned “Neue Heimat”. This stangs out since LEG was seen as the “savior” of 38.000 housing units from the bankrupt housing company of the trade-unions. In 1987 LEG took over these housing stocks, many of them large scale social housing schemes, for a symbolic prize of 1 Mark.
Because LEG took over many critical acquisitions the company since a couple of years is facing some economic problems. The country did not increase the capital stock to an efficient level. Many of the housing complexes need high investment in renewal and maintenance. The concentration of many migrants and poorer people require special attention on social neighborhood management. LEG is active in many neighborhood management projects.
Because of the somewhat critical economic situation that LEG has been facing during the past years, it sold thousands of housing units to tenants and investors. Different to other landlords, LEG reinvests the returns directly into the improvement of the actual buildings. The legal protection standards for the units on sale are comparably high. Nevertheless LEG was heavily criticized for making these sales.
In some of the larger neighborhoods the LEG guarantees participative instruments which are unique for Germany. “Tenants councils” are elected by all the tenants and enjoy specific rights for negotiating renewal plans and other problems. They can use companies’ facilities and spaces. This attitude encouraged tenants to engage for their neighborhoods.
LEG complexes are characterized by a lot of innovative projects and programs, both regarding the built environment and social cohesion. Examples of such projects are ecological insulation improvements, upgrading of green public spaces together with the tenants, youth clubs, support for migrants’ children, free supper and new forms of managing of social mixture. Example: The neighborhood “Klausen” in the city of Remscheid enjoys having 45 social institutions and associations which coordinate themselves in a “neighborhood conference”.
Continuity of mobilization
In 2002 the federated state government (red-green at that time) negotiated plans to sell its shares of LEG. Against these plans Tenants Associations, Local Tenants Councils, Tenants Initiatives and the Trade Union of the employees organized protests in April 2002. The protesters built a network called “Future of LEG Action Coalition” which was able to continue the protests and criticisms to the federated state government. These critics proposed that instead of selling the public housing company the participation rights should be improved and the LEG management should stop massive privatizations in some neighborhoods.
Parallel to these negotiations it became obvious that selling this company would become very difficult, because of the heavy mortgages and the small expected returns for the sale. Thus the government decided to sell LEG-shares to a newly organized federated bank. In 2004 the government decided to stop the plans on privatization.
After conservatives and liberals won the country’s parliament elections in 2005 the new government parties agreed to sell LEG by whatever means possible. They did not argue about the heavy deficit in the budget; they only argued about their ideological standpoint that argues that provision of housing should not be a public task. It was impossible to get them to understand any other possible argument.
In spring 2006 the government confirmed their plans for privatization -either of the whole company, the shares or of the housing stocks-. However, because of very complex structure of LEG, it is not easy to implement these plans. Various options had to be discussed. Thus they decided an external examination on “how” to privatize the LEG. This examination is coordinated by an international bank. Results are expected for October.
Being aware of the danger for LEG the action coalition gathered again and discussed the start of a country wide campaign which also should include other dangers for secure and affordable housing in NRW.
LEG is an indispensable partner in participative neighbourhood management and sustainable renewal. Its model for tenants participation is unique to the whole country. Cutting the LEG into pieces and/or selling it to private equity investors will endanger thousands of jobs within the company and in local services. Private investors will orient the company on high profit rates and therefore cut investments in maintenance and social renewal, increase rents, transform large parts of the rental housing into privately owned condominiums, build private houses at green spaces and sell parts of the stock to other speculators.
Against abolishing of countries’ regulation on security of tenure
Parallel to the decision of selling LEG, after the 2005 elections conservatives and liberals agreed to abolish the country regulation on legal protection of tenants after condo-conversion. According to national law a landlord can quit a rental contract if s/he has an interest to occupy the house by him/herself or her/his relatives. In connection with the mass-conversion of rental housing into owner-occupied condominiums, after privatisations the right to fire a tenant causes a specific mass problem for the security of tenure. This problem is that the buyers of the flats often want to use them for themselves and, thus, have the right to evict.
In case of a condo conversion, national law regulates rights that permits the tenant to be protected against an eviction for a period of three years after the first sale of the transformed flat. National law even allows the federated states to define longer protection periods for cities with special housing problems. The red-green government after long debates decided to set up a specific regulation for rental protection for most of the larger towns and cities. The period of protection after sale in in urbanized areas of NRW is 6 or 8 years.
If the new government would implement the abolishment-plans, which again are not backed by any arguments, this would cause an intensification of the expulsion of tenants from their homes and another loss of affordable housing in NRW. As we speak, many thousands of tenants who live in converted condos could loose their right to stay immediately Landlords even would feel motivated to increase the number of new condo-conversions and the financial sector would even get more interested to take over housing after it became so easy to put pressure on the tenants.
In the summer of 2005, tenants in Ruhr District organized protests against the abolishing of the regulation. Within a short period of time 5000 signatures of protestors were collected and handed over to the housing ministers. In September 2005, tenants organized a protest-line around an affected neighbourhood in Gelsenkirchen.
The mass petition continues the same struggle.
Other plans of NRW government
By cutting social and ecological regulations within social housing support and misusing the countries’ social housing fund for private ownership support and demolishing of empty houses, the government further destroys the public capacities to meet future challenges in the social housing sector.
While the former red-green government always tried to keep main elements of the traditional line on social housing support and improved ecological and construction standards, the new government is totally orientated on free market and homeownership.
Against the sell-out of public housing
According to German Tenants Federation data, over 1 million housing units in Germany have been sold to speculative financial funds during the past decade. About 3 million remaining public housing units in Germany are still on the focus of international investment trusts such as Terra Company, Fortress, Cerberus and Morgan Stanley.
The housing markets in Germany are one of the principal targets of international investment trusts, which collect world-wide capital from private pension funds in order to receive maximum returns by speculative investments into public goods.
As experiences particularly from North America show, tenants and inhabitants pay the price for this development by being forced to pay rising rents, by displacement through transformation of rental housing to free-hold condominiums and by the neglect of maintenances. Municipalities and public authorities at the same time loose their capacities to invest in social building for persons with low incomes and they are rapidly loosing their influence on urban development.
International financial investors like Annington/TerraFirma are extremely interested in taking over LEG. Tenants organisations and trade unions fear, that they will cut LEG into pieces, worsen the maintenance and reinvestment, destroy the culture of participation and social management, use green space for new constructions and convert rental housing into condos.
By using the possibilities of the NRW constitution for a formal mass petition, the organizers hope to change the public opinion and force the government to rethink its plans. If 56.000 citizens sign the petition the government is obliged to discuss the case in parliament.
This initiative from the very beginning was supported by the LEG tenant’s councils, Mieter Forum Ruhr and the housing branch of the service workers-trade union Ver.di. Social Democrats and Greens in NRW guaranteed full support. Later even the German Federation of Tenants in NRW, the extra-parliamentarian left parties, the German Trade Union federation DGB, the alter-globalization movement Attac and others joined the club of supporters.
The campaign for collecting signatures started in June 2006. Meanwhile there are campaigns in over 30 cities. Numerous events, street collections of signatures, public debates and demonstrations have been taken place. Media is reporting permanently. Further more a bog portion of the main affected tenants in the LEG complexes are migrants and do not enjoy à big portion. However, the collection of signatures outside well organized LEG neighborhoods is not so easy. Tenants of other landlords often do not know LEG and not all are actually in danger to get sold. In difference to plebiscites at municipal level the case seems more abstract and less rooted. Further more a bog portion of the main affected tenants in the LEG complexes are migrants and do not enjoy citizen rights to vote and sign the petition.
The organizers nevertheless are sure to collect enough signatures and increase pressure on the government when they start the discussion on the implementation of their plans.
Although the government since months knows the results of the external examination on the measures on HOW to privatise LEG they did not publish it so far. The opposition strictly criticizes this clandestine behaviour. Obviously the government is following tactics to publish concrete plans not before a final decision. At least two international private equity fonds (Fortress and Terra Firma) are very keen to get control over this huge platform. In October the debates are getting hotter and hotter with press coverage every day.
Proposal for a global strategy
The initiative for Germany is innovative regarding several aspects: It is the first to try to organize an anti-privatisation campaign at more than a local level, not only regarding the privatisation of housing but regarding privatisations in general. Secondly, it is based on stabilized cooperation between different organisations of tenants and the trade unions and shop stewards of the affected housing companies, thus uniting the struggle for labour and housing rights in one campaign. Thirdly, it managed to get the support from the whole political opposition in the country.
Consequently, the political impact is comparable strong, not only in respect to the actual case (sale of LEG). More than that, the campaign managed to build a public critical focus on the whole neo-liberal frame, the daily news on speculative globalisation of housing in Germany, the ongoing privatisation in general. It already strengthened the political awareness about the consequences of privatisation at those political levels where decisions are made. At least this may lead to a less brutal privatisation of LEG.
However, at the moment we have to be very sceptical if the initiative will win the concrete case. The government so far did not change it’s plans, large investors are offering good prizes. The government even does not publish the results of the external evaluation. There are news every day, the campaign gets more and more visible in media and in the streets. The struggle is going on.