Inspiration and Embarrassment in Vienna

Subsidized housing building in Vienna

My visit to Vienna was inspiring . . . and embarrassing.

The inspiration came from witnessing first-hand what the New York Times has called a “renter’s utopia.” I toured the legendary Karl-Marx-Hof, a municipal housing complex that spans more than a kilometer and includes 1200-plus apartments. The residents of those apartments pay a maximum of 25% of their income to live in flats that can be as large as four bedrooms. Many of them feature expansive balconies with colorful geraniums cascading down their front, looking out over courtyards graced with towering chestnut trees and modern playgrounds.

At Karl-Marx-Hof’s official opening on October 12, 1930, Vienna mayor Karl Seitz said, “When we are no longer here, these stones will speak for us.” And they do, along with the 380 other municipal “estates” built in Vienna during the 1920’s and 1930’s that ultimately housed a quarter-million people. I toured several of them, along with decommodified housing built by limited-profit associations, organizations that often receive government subsidies in return for tight restrictions on revenue, top executive salaries, and rent charged.

A hallmark is the range of household incomes of people living in these communities. Persons with incomes as high as US $77,000 annually, well above the city’s average, can qualify for subsidized housing. And even if their household income increases substantially after they move in, residents are allowed to stay. One member of Parliament who lives in municipal housing makes more than $105,000 per year.

Social housing communities in Vienna are not only diverse, they are quite stable. Tenants’ long-term tenure in their apartments is guaranteed under the law and rent control prevents cost spikes. The tying of rent to household income means that renters in Vienna are also protected from losing their home when illness or job loss occurs.

These guarantees and the housing’s high quality make renting so attractive that half of the city’s 1.8 million residents live in subsidized housing. The city has virtually no visible homeless population and no “slum” areas of concentrated poverty and low-quality housing.

The sheer volume of Viennese social housing, along with its mixed-income nature, also has a price-dampening effect on the for-profit housing that is forced to compete with high-quality subsidized housing. That competitive pressure and vigorous rent control together makes Vienna one of the cheapest renting cities in all of Europe, even on the private market.  Given the fact that good housing is central to both a household’s and a city’s well-being, it is no surprise that Vienna is ranked virtually every year as the most livable city in the world.

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So that was the inspiring part. The problem was that I did not take in these marvels alone. My Viennese companions, experts on the local housing situation, were polite enough to ask about housing in my own community and country. That was when the embarrassment came in.

Armin Puller, a Vienna city councilor and political science professor at the University of Vienna, showed me several social housing complexes, explaining that anyone with an urgent housing need can be placed in a municipal housing unit immediately. How was I supposed to tell him that we have an official U.S. homeless population of nearly 600,000—widely acknowledged to be a significant undercount—and three of every four households eligible for a federal housing subsidy don’t get it due to underfunding?

Puller told me that tenant protections under Viennese and Austrian law are so strong that “evictions are really not a thing here  . . . . after all, people need to live someplace, right?” I could not argue with his rhetorical question, but I felt compelled to admit that in my city alone, thousands of people are forcibly removed from their rented homes every week.

Unlimited renting tenure in Vienna social housing means people tend to move into their flats in their 20’s or 30’s and never leave, Puller explains. If the residents wish, they can pass apartments to their family members on the original terms the parents signed on to.  

In response, I have to confess that most of our eviction clients are living on the edge with year-to-year leases and thus are always at risk that their landlord will choose not to renew. I left out the fact that many of our clients are even on month-to-month lease terms.

Living in a well-designed, well-maintained, and attractively-located municipal or limited-profit housing apartment causes no stigma in Vienna. Puller illustrates the point by noting that his mother lived out her final years in a municipal apartment that had been in the family for over six decades. She paid the equivalent of about $300 in U.S. dollars per month. I nodded, deciding not to respond that the underfunded neglect of public housing here often leaves buildings so dilapidated and dangerous that my clients dream of leaving if they could just afford to do so.

I did not feel any better about my community and country when I talked with Maria Maltschnig and Sebastian Schublach of the Renner Institute, the political academy of the Austrian Social Democratic Party. Matschnig and Schublach walk me through the political and financial foundation for creating this renters’ utopia.

The origin story for Vienna becoming the world’s most celebrated example of social housing began after World War I. In the post-war elections, the Social Democratic Workers’ party gained power, ushering in an era known as “Red Vienna.” The new government leaders inherited a housing crisis so dire that overcrowding forced 170,000 Vienna residents to become what were called “bed-goers,” leasing just bed space to sleep in shifts, while still paying extremely high rents. A single sink and toilet would be shared by dozens of strangers.

So the new Viennese government devoted its resources to building municipal housing complexes named after figures like Karl Marx and George Washington, demonstrating the ruling party’s commitment to both its “social” and “democratic” missions. Nazi occupation stalled the progress, but after World War II the Social Democratic party regained power and Vienna renewed its dedication to ensuring housing is a fully-realized human right. “The fundamental need that is housing and the possibility for all income groups to live in our city are more important than the financial gain achieved by just a few,” the City of Vienna’s website states. 

The original municipal housing building boom was funded by “Breitner Taxes.” The system created by city finance councilor and former banker Hugo Breitner featured aggressive luxury taxes on items like champagne, horseracing, and domestic servants. The Karl-Marx-Hof onsite museum displays a Breitner Tax poster of the time that depicts a frightened tycoon recoiling in horror as a muscular red arm grabbed bottles of the tycoon’s chilling champagne.

Apartment-dwellers helped finance the construction, too, but the vast majority of that revenue was collected from the highest-income residents. Unused land was aggressively taxed, often motivating private owners to sell to the government, which repurposed it for municipal housing.

Eighty per cent of Viennese residents are renters, and it appears by all accounts they are quite content to stay that way. Coming from the U.S. homeowner culture, I could not help but ask why. The answer, Maltschnig says, is stability, pointing to rent control, unlimited tenure of leases, tenant rights, and the ability to pass apartments down among generations, not to mention the absence of U.S.-style tax rewards for homeownership. “Broad acceptance by people for long-term renting instead of buying only comes with long-term stability,” she says. Maintaining excellent condition of social housing is a must, too. “The big thing about social housing here is that it’s not just for poor people. It is for the broad, middle class.”

As a final demonstration of this, Schublach take me on a tour of the Sonnwendviertel, where he and his wife and two daughters live. Nearly 14,000 people live in this area developed over the past 10 years on the site of a former massive railyard. A true “15-minute city” where everything needed can be reached within a few minutes’ walk, there are four separate grocery stores Schublach and his family can easily access. Last year, when Schublach helped host a U.S. delegation, he was stunned by how surprised they were about this feature. “The idea of a food desert is inconceivable here,” he says.

The Sonnwendviertel is a car-free area, featuring the Bloch-Bauer Promenade, where children ride scooters and bikes and adults sit at cafes or walk through ground-level retail stores in buildings where the upper floors are dedicated to apartments. On the west side of the park, we can see a gleaming black and silver building, eight stories stacked on top of a ground-floor restaurant featuring floor-to-ceiling mirrored windows. This is limited-profit housing, Vienna style.

I could not help but reflect on the fact that the rent paid by the building’s residents is comparatively cheaper than the rent paid by our clients living in roach-infested, crumbling for-profit housing.

But I decided not to spoil our tour by voicing that observation. For the moment, I wanted to hold on instead to the hope that the U.S. could someday follow Vienna’s lead and start building a renter’s utopia of our own.