Investigating Switzerland

Abstract

The book pertains the coherent integration of the four scientific articles—all published in well-known academic journals in the field. It therefore presents an outstanding empirical analysis of four case studies in Switzerland, including not only a detailed analysis of the selected case studies, but also detailed comparisons carried out according to the specific needs of the different articles. 54 interviews were carried out in total. Article 1 starts with the analysis of the Swiss federal institutional regime in force to understand how the Swiss federal government defines policies for housing (re)development in dense urban environments (sub-question 1). Article 2 discusses the concept of social sustainability in housing from different theoretical perspectives. Article 3 further investigates how densification materializes at the municipal level. It focuses on public policies and policy instruments that guide densification of housing stocks in municipalities. Finally, Article 4 then shifts the focus from the federal to the local level and examines in a single case study how private property owners respond to the Swiss policy shift towards densification.

5.1 Investigating Switzerland: Learning from the Swiss Scarce Land Use Situation

The empirical analyses in the four articles that compose this book focus on social sustainability challenges of housing in a context of densification in Swiss cities. All four articles examine how densification leads to changing housing use situations in the Swiss urban rental sector, and how conflicting use interests between competing actors at different geographical scales evolve, and can potentially be solved. The theoretically determined variables—social sustainability in housing (condition of the housing resource) (Sect. 3.2), institutions (Sect. 3.4), and actors’ strategies (Sect. 3.5)—and the local governance mechanisms that guide their interaction (Sect. 3.5) are at the core of the analysis in each article. A strong theoretical connection therefore exists between the four articles of this book (see Figs. 3.1, 3.2, and Fig. 5.1).

Fig. 5.1

Book structure: actors’ triangle and user appropriation strategies at different geographical scales

In each article, I analyzed housing as a human-made resource that is governed by the regulatory regime (SQ1) and the use strategies (SQ2) applied by different user actors (owners and non-owners). In each paper, my aim was to understand how and why power relations and games among these actors emerge to answer the main research question of how housing under scarce land conditions can be governed socially and sustainably.

Article 1 starts with the analysis of the federal institutional regime in force to understand how the Swiss federal government defines policies for housing (re)development in dense urban environments (sub-question 1). Our goal was to investigate how different actors use their power position to influence rule definition and formulation at the Swiss federal level. In particular, Andreas Hengstermann, Jean-David Gerber, and I investigated the implications of the Swiss federal policy context and the responsibility of national public actors (federal council, legislative parliament, lobby groups, etc.) in urban housing provision. We discussed the role of the federal state in attracting foreign investment for densification projects and in the protection of private property rights. In addition, we analyzed Swiss federal land use and housing policies, which are crucial for enabling access to and distribution of housing as a resource. We examined the institutional challenges and historical context of housing supply in Switzerland with a special focus on the social sustainability aspects of housing.

Thereby, the aim was to understand how the rights of private ownership are protected in the Swiss legal context and how this legal condition influences the use strategies employed by owner and non-owner actors. Finally, the analysis helped me to further elaborate how federal policy measures and instruments introduced trickle down and influence housing development also at the regional and municipal level. Conclusions were drawn regarding the extent to which the Swiss federal institutional regime exerts influence on the behaviors of specific actors, particularly on landowners. The article contributes to the critical examination of power relations in Swiss federal policymaking and in relation to the densification strategies applied by municipalities in an advanced capitalist liberal economy.

Article 2 first discusses the concept of social sustainability in housing from different theoretical perspectives. It then examines why an emic approach towards social sustainability in housing is an added value for urban research. Through a comparative case study design, Arend Jonkman, Jean-David Gerber and I empirically investigated how social sustainability in housing is acknowledged by residents living in two large-scale densification areas in Zurich Brunau and Basel Schoren. We compared the social sustainability performance of these projects by using qualitative research methodology.

In this article, we brought together the different concepts—housing as a resource, institutions, and actors’ strategies—and compared the local governance mechanisms for socially sustainable housing in two large-scale densification projects in the cities of Zurich and Basel. Besides the study of the strategies employed by public administrative actors, we also aimed to understand the resistance strategies of landowners and tenants in this paper. Moreover, we added to the understanding of how different local regulatory regimes contribute to conflicting outcomes in terms of social exclusion. Finally, we drew conclusions regarding the role and responsibility of public and private stakeholders in the local governance process for socially sustainable housing development in densifying urban areas.

Article 3 further investigates how densification materializes at the municipal level. It focuses on public policies and policy instruments that guide densification of housing stocks in municipalities. More precisely, through comparative case study analysis Thomas Hartmann and I analyzed how land policy instruments can strategically be activated by municipal planning authorities to effectively promote socially sustainable housing in dense cities. While much literature so far has focused on the functioning of individual land policy instruments (e.g. land readjustment, growth boundaries, long-term leases), we expanded the existing body of literature in this field. We investigated how different instruments can strategically be combined and activated by local planning administrations.

Empirically, our focus was on the role played by municipal authorities and their applied land use and densification strategies in four Swiss municipalities (Zurich, Basel, Köniz, and Kloten). We concluded that municipal public authorities are indeed crucial for the decision-making process whether consolidation leads to social exclusion or not. They can alleviate rent level increases by strategically activating land policy instruments in favor of social inclusion, but they must therefore know how to densify. To prepare for future housing challenges, a stable “right-to-housing” for all does not necessarily require the mere introduction of new policy instruments, but the strategic activation of available instruments matters. By identifying the local governance mechanisms for social sustainability in housing, this article greatly helps municipal planners, practitioners, and policymakers to prepare for future housing challenges in dense urban environments.

Article 4 shifts the focus from the federal to the local level and examines in a single case study how private property owners respond to the policy shift towards densification. In particular, Jean-David Gerber and I investigated how conflicting housing use interests under scarce urban land conditions enhance the landowners’ interest to stay flexible in order to prevent building delays. We revealed that, when dealing with scarcity of land, landowners agree to enter a particular housing phenomenon. This model has evolved in the city of Zurich during the 2010s—the emergence of a profit-oriented temporary housing model that works under the rules of loaning law rather than rent. In this article, we analyzed an extreme example of precariousness in housing as a results of densification pressure. To cope with planning insecurity and building delays in the context of land scarcity, institutional owners (and the private real-estate industry working on their behalf) drove the emergence of this new business model.

By identifying the involved actors’ objectives and strategies under the given legal frame- work in Zurich, this paper contributes to understanding how densification affects the interests of the lowest income segments. It shows that even in a city like Zurich—one of the richest globally—residents’ social inclusion is not only a matter of affordable housing policy, but effective local governance in general. Finally, this article extends the existing literature on temporary use and housing by shedding light on how specific public and private actors are influenced by densification policies and how they are able to responding to it.

Table 5.1 provides an overview of the content investigated in each of the four research articles.

Table 5.1 Overview of the four research articles composing this book

5.2 Article 1: The Business of Densification—Distribution of Power, Wealth, and Inequality in Swiss Policymaking

Gabriela Debrunner, Andreas Hengstermann & Jean-David Gerber

Journal: Town Planning Review, 2020, Vol. 91, No. 3, 259–281, https://doi.org/10.3828/tpr.2020.15

Impact Factor (2023): 1.8

Status: Published

Abstract: In Switzerland, the fight against uncontrolled urban sprawl and the protection of agricultural land have a long tradition. To reconcile these concerns, the Swiss voting majority agreed to introduce densification as a legally binding policy objective in 2013. Simultaneously, however, densification processes have started to threaten the housing situation of low- and middle-income tenants due to higher rents following redevelopment. In this article, we argue that the Swiss way of implementing densification is characterized by a systematic bypassing of tenants’ needs for social sustainability in housing due to the current political priorities of the Swiss federal government. Using an institutionalist analysis approach and a qualitative case study methodology, we analyze the institutional mechanisms and the actors’ rationale behind this emerging business of densification. Finally, we discuss the role of the nation state in the provision of the “right to housing” for all income segments and its consequences for the country’s long-term sustainability performance.

Keywords: densification, densification policy, housing, social sustainability, social justice

Research Highlights:

The paper…

• … analyzes how the revised Swiss Federal Planning Act (2013) and the introduced obligation to densify for municipalities has affected the housing situation in Switzerland.

• … summarizes the current state of densification policy making at the Swiss federal level.

• … applies an institutional analytical framework to identify intergovernmental elements of policy making in Swiss cantons and municipalities confronted with scarce land conditions.

• … questions the role of the Swiss federal council and the administrative offices working on their behalf in Swiss densification policy making.

• … examines how specific federal policies and instruments are implemented in favor of an “eco-business” of densification at the expense of its social side.

• … argues that a shift towards increased tenants’ inclusion in federal policy-making and plan-ning is needed if public actors aim to support sustainable urban development effectively.

5.2.1 Shift Towards Densification in Swiss Land Use Planning

In Switzerland, the fight against uncontrolled urban sprawl and the protection of agricultural land have a long tradition (Gennaio et al., 2009). To reconcile these concerns, densification has been introduced as legally binding policy objective in the revised Swiss Federal Spatial Planning Act (SPA)¹ in March 2013. Following the revised legislation, the 26 cantons and over 2000 municipalities must promote “inward settlement development, while ensuring an appropriate quality of housing” (Art. 1, para. 2, lit. ^abis SPA). Densification is thereby defined as a process leading to an increase in the number of housing units within existing municipal boundaries (Broitman & Koomen, 2015). It is hence assumed to play a decisive role in the fight against urban sprawl and the overuse of non-renewable resources (Swiss Federal Council, 2016a).

However, in the housing sector, densification arises with social challenges: considering the small size of the country and its constantly growing economy and steady population growth (+22% until 2045 [FSO, 2015]), densification of existing built-up areas has remained the main option to reconcile these concerns as the majority of greenfield and brownfield sites have been densified already (Nebel et al., 2017; Swiss Federal Council, 2017). Densification therefore increasingly materializes via “soft measures”, e.g. in the form of total replacement constructions, modernization, subdivision, or conversion of existing buildings (Bibby et al., 2020). This soft way of implementing densification, in turn, has caused social exclusion and gentrification processes of residents as old housing stocks are being demolished and redeveloped with higher rents after densification (FOH, 2016b; FOSI & FOH, 2015). Low- and middle-income households face difficulties in finding adequate housing as newly modernized apartments are primarily affordable for households with higher incomes and non-profit housing suppliers have long waiting lists (FOH, 2016b). The situation is even more worrying considering that Switzerland has the lowest homeownership rate in Europe and is therefore regarded as a nation of tenants in a liberal housing market (Bourassa et al., 2010; Lawson, 2009). Housing provision traditionally lies in the responsibility of the profit-oriented private rental sector. 58% of Swiss households live in apartments of the for-profit rental sector and remain dependent on the private homeowner’s decisions (FOH, 2017). As a consequence, resistance against densification projects has increased in recent years as tenants do not accept the social consequences caused by densification (Maissen, 2018; Swiss Federal Council, 2017).

In this article, we aim to demonstrate that the Swiss way of implementing densification policy is characterized by a systematic bypassing of tenants’ needs for social sustainability in housing due to the current political priorities of the Swiss federal government. We explain the reasons and key actors’ rationales behind this difference of treatment between tenants’ and homeowners’ rights. Finally, our objective is to discuss the role of the national state in the provision of the “right to housing” for all income segments and its consequences for the state’s sustainability performance as a whole.

To answer these research objectives, we rely on an institutionalist approach. This allows us to analyze densification as a process that emerges within a tight web of diverse and contradictory rights and regulations. Its performance and implementation depend on veto rights controlled by powerful actors as well as intertwined private and public interests. We hence proceed in three steps to analyze these mechanisms between densification policy implementation and housing development at the federal level: (1) Through a broad screening of the institutional regime in force, we examine the policy measures taken in federal legislation promoting the tenants’ housing needs under densification. (2) We reconstruct the rationale behind the policy measures applied through an analysis of actors’ interests, objectives, and policy strategies. (3) We evaluate how housing is being addressed in federal densification policy and draw conclusions on potential repercussions on spatial planning, social justice, and sustainable urban development.

5.2.2 Densification at the Interplay Between Public Policy and Property Rights

For portraying the housing challenges that arise through densification adequately, the article applies an institutionalist approach (Healey, 2007a; Jessop, 2001; Mandelbaum, 1985). In general, this approach assumes that the actual spatial development (e.g. situation on the housing market) is to be seen as results of the institutional setting and vice versa actors pursuit their interests by activating specific formal and informal rules from this institutional regime (Dembski & Salet, 2010; Hall & Taylor, 1996; Hartmann & Gerber, 2018). Specifically, in this article, the intertwined relationship between densification and housing will be explained by an analysis of the Institutional Resource Regime (IRR) in which institutions—defined as a set of rules and regulations—their effectiveness and formulation process also play a central role (Gerber et al., 2009). Without denying the importance of informal rules, focusing on formal rules in particular, the IRR builds on the assumption that—besides public policies—institutions in general (Hardin, 1968, 1991; North, 1994; Williamson, 2000) and property rights in particular (Bromley, 1992; Demsetz, 1967; Ostrom, 1990, 2009) are central for understanding (un)sustainability of resources. It hence postulates a causal relationship between institutions, actors’ behavior, and condition of resource and enables to explain the social consequences of densification as a result of behavioral patterns stemming from incentives of different policy fields—especially in regard to the attenuation of private property rights (Gerber et al., 2009; Knoepfel et al., 2007).

Following the IRR approach, two main categories of formalized rules guide the implementation of densification processes—public policies and property rights—that operate according to a different logic and rely on opposing legitimisations.

• Public policies aim at solving a public problem recognized as such by democratic processes. Through public policies, the state receives the power to regulate the actions of those actors who are thought to be at the source of the problem, in the name of the public interest. Public policies are regularly revised, not only because the problem they are targeting constantly evolves, but also because changing political majorities propose alternative solutions to the problem (Knoepfel et al., 2011).

• Property rights protect individuals from the state (Marx, 1868; Rousseau, 1762). As such, they defend private interests against the (potentially absolutist) action of the state (Locke, 1689). Property rights are grounded in the Civil Code. They are extremely stable over time because their definition hardly changes.

Property rights and public policies interact in a dialectical relationship. Property rights make the private appropriation of goods and services provided by resources possible, as long as public policies do not restrict exclusive appropriation in the name of the public interest(s). By doing so, public policies have a redistributive effect (Knoepfel, 1986).

In the last three decades, densification as a public policy objective has found its way into legally binding regulations (Williams et al., 2000). Densification policies are defined as a set of rules, with the common interest to solve the politically defined problem of urban sprawl through the process of increasing density (number of housing units) within the existing boundaries of built-up areas (Broitman & Koomen, 2015; Knoepfel et al., 2007). Besides “command and control” policies directly addressing the extent, range, or type of uses, such as land use planning, housing, environmental and monument protection laws, also more indirect public interventions based on incentives or information play a role in densification (Hood, 1983).

However, decision-making procedures in densification policy implementation are complex due to intricate small-scale ownership structures, veto rights controlled by landowners who can block (or slow down) implementation processes, and intertwined private and public interests (Dempsey, 2010; Holman et al., 2015). Public authorities may influence the property owner’s decision whether to raise rents after redevelopment or not (e.g. through targeted policy intervention in housing, tax, or energy law) (Slaev, 2016), but it is ultimately on the landowner to decide on the level of profitability to be targeted (Buitelaar & Needham, 2007). Without heavy state intervention such as expropriation, new planning regulations (e.g., new zoning) only get implemented when titleholders agree to undertake new developments, sell their land, or transfer their development rights (Davy, 2005, 2012). Therefore, public policies with a spatial impact often conflict with the landowners’ freedom (Blomquist, 2012; Gerber et al., 2017; Slaev, 2016).

In the formulation process of densification policy objectives, public and private actors strategically use their policy resources (such as knowledge, money, or personnel) to enforce their interests and to achieve their political goals. For instance, actors use their widespread network to achieve consensus in the introduction of a new densification rule. Simultaneously, actors organize and develop political strategies within the given institutional setting to regulate their access to a resource (e.g. affordable housing). To reconstruct the rationale behind the densification policy measures applied, we examine the strategies of public and private stakeholders involved in the densification policy process at the federal level, their contribution to the formulation of institutional rules and policy objectives, as well as their ability to address housing needs in federal policy intervention (Knoepfel et al., 2007).

5.2.3 Housing from a Social Sustainability Perspective

In this article, housing is regarded as a human-constructed resource (Kébir, 2010). According to the Universal Declaration of Human Rights (Art. 25), having a home is a basic human need and an essential good. Its conditions of access, supply, management, distribution, and ownership structure need to be properly thought through to avoid conflicts between competing uses (e.g. affordable housing and lofts for couples with double income), which has consequences for its sustainability (Bathelt & Glückler, 2005). As a key element of the built environment, housing under densification also becomes particularly relevant for sustainable development as a whole (Chiu, 2003).

In recent years, a number of government and academic reports have indicated that the different dimensions of sustainability in housing development have not been equally prioritized by policymakers (Chiu, 2004; IFHP, 2019; Vallance et al., 2011). The International Federation of Housing, for instance, only recently stated that “social sustainability is the most neglected element of the three because it is far more difficult to quantify, contextualize and develop than economic growth or environmental impact” (IFHP, 2019). It hence is an ambiguous and fuzzy concept that comes with a number of ethical, political, and methodological challenges (Weingaertner & Moberg, 2014; Woodcraft, 2012).

Therefore, our objective is not to expand the list of social sustainability definitions (see for a discussion Bramley et al., 2009; Chiu, 2003; Davidson, 2010; Dempsey et al., 2011; Littig & Griessler, 2005; McKenzie, 2004; Polese & Stren, 2000; Vallance et al., 2011). Rather we argue that housing affordability is one of the key elements of urban social sustainability. Particularly, in a context of densification, social displacement of low- and middle-income residents—as central defining trait and primary danger of gentrification—increasingly emerges due to higher rents after densification processes (Lees et al., 2008). Through the affordability of rents, in contrast, residents get a chance to stay in their neighborhood, which is why other social sustainability criteria of housing development such as accessibility, residential stability, tenure security, local identity, or community cohesion also get preserved (Bramley et al., 2009; Chiu, 2003; Vallance et al., 2011). Therefore, housing affordability is a good indicator of social sustainability of housing as a whole. By definition, housing affordability relates to the cost of housing relative to household income and other legitimate expenses (Mulliner et al., 2013: 275). Evidence from Switzerland additionally shows that housing affordability plays a central contribution to the people’s social acceptance of densification and hence to sustainable development as a whole (COSD & CSO Zurich, 2014).

In the end, however, the judgment, evaluation, and reflection on whether social sustainability in densification processes is given or not will be made along broader social (in)justice principles (see also Jehling & Hartmann, this issue). Rawls (1972: 303), for example, states that a socially just city is designed in a way that equally and inclusively distributes the rights, chances, and opportunities among all people of a society. His understanding of social justice refers to the need to improve the life prospects of the least advantaged by fostering affordable and secure housing conditions, their involvement in formal decision-making, and their access to attractive open and public spaces to reduce social inequalities. In the conclusion section of this paper, we reflect on this principle of social justice related to the densification policy measures applied.

5.2.4 Case Study of Densification Policies in Switzerland

Switzerland makes an interesting case study to analyze the relationship between densification policy implementation and housing (re)development, as the challenge of coordinating the two has become critical in the country in recent years. Specifically, issues of housing affordability and gentrification have intensified in almost every Swiss city in recent years due to population growth and national densification objectives (FOH, 2016a, 2016b; Rérat, 2012; Wehrmüller, 2014). At the same time, yield-oriented investments attracted by the country’s economic stability and wealth, reinforced the attractiveness of Swiss real-estate markets. Because of low-interest rates, housing has become the main target of capital investment, especially for pension funds (Theurillat et al., 2014). Consequently, in Swiss cities, the housing situation is characterized by an overheated housing market (vacancy rates below 1% and rising rents) (Balmer & Gerber, 2017). Within the rental market, 28.9% of households suffer from excessive housing costs in relation to income (FOSI & FOH, 2015).

Hence single case study analysis allows to assess and to explain the diverse mechanisms behind densification policy and housing (re)development in detail (Yin, 2018). The federal state plays a crucial role in this matter in the sense that it signals how to deal with this issue also for cantons and municipalities. Switzerland is organized on three executive levels (municipalities, cantons, and the confederation) and characterized by a form of “cooperative federalism”. Legislation in favor of densification goals and/or social sustainability objectives of housing is introduced by the federal state and is to be implemented by cantons and municipalities (Linder, 1994).

We employed qualitative methods to understand the relationship between densification as a core objective of public policy and its consequences for social sustainability in the housing sector. In the first step, about 40 policy documents were analyzed. Legally binding documents (e.g. acts, ordinances, changes in legislations, and vote results) were considered as well as policy documents without a legally binding nature (e.g. strategy papers, government reports, parliamentary debates, and position papers) disclosing the composition of political arenas, leitmotifs, and parliamentary debates. In the second step, the political negotiations behind federal legislation were revealed by conducting nine semi-structured expert interviews with public and private representatives at the federal level from three federal offices, the Swiss homeowners’ association, the Swiss tenants’ association, the Swiss association of the building industry,² as well as the Swiss association of institutional investors. Two members of the national council were additionally interviewed because of their detailed understanding and knowledge of the topic.

5.2.5 Densification Policy Implementation and Social Sustainability in The Swiss Housing Sector

In this section, we analyze the institutional regime (stressing both public policies and property rights) regulating densification processes in Switzerland. Densification is addressed in several public law areas. We start with the Swiss housing policy. Then, we emphasize aspects of planning policy because of their significant impact on housing (re)development. Three additional sectoral policies that influence sub-aspects of housing densification are also explored. Finally, the role of private law will be addressed. Lastly, we reconstruct the rationale behind federal policy measures through an analysis of actors’ interests, objectives, and policy strategies.

Screening of Institutional Rules Addressing Social Sustainability of Housing Under Densification in Swiss Legislation

Housing Policy

Unaffordable housing prices are a central problem targeted by housing policies. Swiss housing policy is anchored in two constitutional articles. They prevent abuses in tenancy matters (Art. 109 CSC)³ and regulate the supply of affordable housing (Art. 108), particularly for disadvantaged groups (e.g., elderly, disabled, and low-income households). In 2003, based on the constitutional mandate “to meet the housing needs” (Art. 108), a new Federal Housing Support Act (FHSA) was introduced to support the construction and renewal of affordable housing, as well as the activities of non-profit housing organizations (Art. 2 FHSA)⁴ (Balmer & Gerber, 2017). However, direct loans granted by the federal government were suspended due to the 2003 “federal budget relief program” (Swiss Federal Council, 2014).

Since then, only indirect support mechanisms in favor of non-profit housing organizations (e.g., housing cooperatives) and state guarantees on bonds issued by non-profit housing developers have been implemented. These loans or advantageous mortgages can only be obtained if the non-profit housing organization commits to the cost-rent principle and belongs to an umbrella association that promotes non-profit housing (Lawson, 2009). In total, the share of non-profit housing developers in Switzerland (public and cooperative) reaches 6% of the total housing stock (FOH, 2017). Benefit payments for tenants (demand-side housing subsidies) exist in Switzerland, but only in the context of social assistance and state supplementary benefits to old age and disability insurance. In the absence of additional public subsidies, since construction costs cannot be reduced directly, newly built non-profit housing is only affordable to households with a medium income, not to the poorest segment of the population (Balmer & Gerber, 2017). Due to long waiting lists, the time to get access to a cooperative housing unit usually takes several months or years (Burri, 2015).

Planning Policy

Through land use planning policy, the state aims to promote the sustainable use of land in its economic, social, and ecologic dimensions. In Switzerland, as a reaction to the immense construction activity in the decades following the Second World War, the need for coordinated spatial development became predominant. In 1969, Swiss citizens therefore approved a constitutional amendment adding spatial planning to the list of official state powers. The overarching planning objective and legitimacy is “to ensure the appropriate and economic use of the land and its properly ordered settlement” (Art. 75 CSC). Thereby, planning gained the competence to limit private construction activity. Zoning plans became mandatory throughout the country, separating building from non-building areas. In recent years, political and professional debates questioned whether this approach of outward limitation was sufficiently effective. In March 2013, the Swiss voting majority therefore agreed to a reinforcement of the Federal Spatial Planning Act (SPA) introducing, inter alia, densification as a legally binding policy objective. Following the revised legislation, cantons and municipalities must arrange “settlements according to the needs of their inhabitants and their expansion must be limited” (Art. 3, para. 3 SPA).

Energy Policy

Through its energy policy, the state coordinates the use of energy in settlements and controls forthcoming environmental and socio-economic consequences. Switzerland’s “sustainable use of energy” is anchored in two constitutional articles (Art. 89, 91 CSC). To meet this objective, Switzerland revised its Federal CO₂ Act (2011)⁵ and Energy Act (2016)⁶ promoting the shift towards sustainable energy transition. In total, by 2020, domestic greenhouse gas emissions are to be reduced by a total of 20% as compared to 1990 (Art. 3 CO₂ Act). To achieve this goal the country must renovate its existing building stock as a whole to successfully reduce its energy depletion by 2050. This can either be done through total replacement constructions or energetic renovations (Vonmont, 2016).

This quantitative policy goal directly affects densification processes in the built environment as existing buildings have to be redeveloped to fulfill the emission limit. Therefore, the CO₂ Act was supplemented by two policy programs, namely, the “building programme” (in force since 2010) and the “Federal Energy Strategy 2050” (in force since 2018). The building program is financed via the CO₂-levy on fuels (Art. 34 CO₂ Act) and serves as a public subsidy pool promoting energy efficient building renovations. Private homeowners can submit funding proposals to municipalities and, in return, are directly funded by the federal state (e.g. for the insulation of windows, facades or photovoltaic systems up to 30% of their total investment). Today, Switzerland’s granting of subsidies is explicitly based on criteria improving energy efficiency. The market situation and the different needs of investors or residents are not included in the analysis (FOH, 2016a).

Tax Policy

Equal treatment in the provision of taxes to the community is the core objective of the state’s tax policy. The Swiss federal tax system, characterized by extensive finance and revenue sharing between the confederation, the cantons, and the municipalities, is anchored in several constitutional articles (Art. 3, Art. 126–135 CSC). Based on the Federal Act on Direct Federal Tax⁷, private investments carried out in buildings to improve energy efficiency have been considered equivalent to maintenance costs and are therefore seen as tax-deductible for a long time (FOH, 2016a). With the implementation of the new Energy Act, by the year 2020, it will even be possible to deduct taxes for renovations, redevelopments, and demolitions up to three years after completion. The aim here is to encourage total renovation instead of partial renovation, which until 2018 has been more attractive in fiscal terms (Federal Tax Administration, 2017). Moreover, investors can additionally benefit from so called “deadweight loss effects”, meaning that they declare tax deductions for renovations although their investment would be profitable without public support. According to a federal interdepartmental study of 2009, these deadweight loss effects amount to 70–80% of the total amount of tax reliefs for energy-saving measures in Switzerland (FDF et al., 2009).

Heritage Protection Policy

The heritage protection policy aims to preserve buildings, sites, or landscapes with a specific value for society. These values can be of historic, architectonic, aesthetic, political, ideologic, or economic nature. In Switzerland, “the protection and preservation of historic landscapes and buildings” is anchored in two constitutional articles (Art. 10 & 78 CSC). It is stipulated in the Federal Act on the Protection of Nature and Cultural Heritage (NCHA)⁸ that three federal inventories regulate the fulfilling of this task: the federal inventory of landscapes and natural monuments, the inventory of Swiss cultural heritage sites, and the inventory of historic pathways and transport routes. In recent years, however, the scarcity of land for development, population growth, and increasing mobility have started to threaten the existence of preserved and historic sites in Switzerland. Heritage conservation objectives are increasingly under pressure, both for economic and environmental reasons: protective inventories hinder the full use of economic potentials and energy objectives are more and more aimed at being achieved regardless of the protection status of the area (Swiss Federal Council, 2018). According to a recent study of the Federal Office for Culture (2018), however, heritage protection massively influences the social dimension of urban development. Through the protection of monuments, social livelihoods, the cohesion of neighborhoods and the local identity tend to remain preserved. This, in turn, can also have an influence on housing prices as older buildings are generally more affordable to low-income segments than modernized units (FOC, 2018).

Property Rights

Property owners’ rights are well protected in Switzerland. The Swiss Constitution protects the “right to own” as a fundamental right (Art. 22ter CSC) that can only be restricted if (1) a legal basis and an overweighing public interest exist, (2) the measure is proportional, and (3) a full compensation is paid (Art. 5, Art. 36 para. 1–3 & Art. 26 para. CSC). In practice, the weight of public interest is interpreted narrowly by courts so that property restrictions are limited and expropriations are rare in international comparison (Alterman, 2010).

Swiss tenants’ rights are protected by articles for tenancy matters in the Swiss Constitution (Art. 109 CSC) as well as the Federal Obligations Code¹⁶ of 1911 (Art. 253–274 OC). Swiss tenancy law is acknowledged to be weak in comparison to neighboring states (e.g. Germany) (GFOBRP, 2016). For instance, private landlords are allowed to terminate an open-ended rent contract without any legal restriction at any time. Swiss tenancy law also allows property owners to pass energy-saving investments on to the tenants for up to 50–70% of the total costs. Although it is stipulated in the implementing legislation (Art. 14 OC) that landlords who have received public subsidies for renovations must deduct them from the new rent, in practice, energy-related renovations are considered to be equivalent to maintenance costs and legitimize rent increases (FDF et al., 2009). In addition, besides the investment costs, homeowners can also pass energy costs (e.g., for heating) and the CO₂-levy to the tenants (FDF et al., 2009). Nevertheless, within the existing housing stock, tenancy law does not allow for continuous rent increases. Landlords have to align their existing rents with the current interest rate that corresponds to the average mortgage rates. Interestingly, since the newly introduced densification rule in planning law in 2013 (Art. 1, para. 2, lit. abis SPA), the number of demolitions and replacement buildings has increased significantly as this procedure has remained the only chance for property owners to bring the rent to a higher level within the existing housing stock.

After all, Swiss tenancy regulation works on the basis that tenants have to claim their rights in the cantonal tenancy court. Only if they defend their rights in court, can they make themselves visible to landlords and public authorities. In practice, however, tenants often do not use this option because they need to remain on good terms with their landlord to secure further housing offers or they do not have the resources to do so.

To sum up, the analysis of public policies reveals that so far the social sustainability dimension of housing development has been neglected in Swiss densification policy implementation. While planning and energy policy exclusively pay attention to the ecological dimension of densification, e.g. by introducing new legislation that enshrines energy objectives, legal amendments addressing socially sustainable densification were not made—neither in housing, tax, nor heritage policy. This observation can also be confirmed when looking at private law regulations: property rights remain strongly protected in Switzerland and no changes in tenancy law have been made although the conditions for tenants in the housing segment changed significantly in recent years. Especially since new densification and energy policy objectives have been introduced in 2013. In other words, the legal regime in force does not adequately accredit the housing needs of the people mostly affected by densification—the tenants.

Table 5.2 summarizes the federal policy instruments in force addressing social sustainability of housing in a context of densification. Additionally, Table 5.2 incorporates political arguments and policy initiatives in the national council aiming to introduce instruments in favor of such social sustainability measures. In the subsequent section, we discuss the reasons and actors’ rationales for the rejection of these proposals.

Table 5.2 Formal federal institutions and policy instruments impacting social sustainability of housing under densification. The data analysis is based on an in-depth study of policy papers, legislations, and parliamentary debates (Fluri, 2017; FOC, 2018; FOE & FOH, 2015; FOE, 2018; FOF et al., 2009; FOH, 2012, 2014a, 2014b, 2014c, 2016a, 2016b, 2017; FOSD, 2016, 2018; FOSI & FOH, 2015; FTA, 2017; Hardegger, 2017; Swiss Federal Council, 2014, 2016a, 2016b, 2017, 2018; von Graffenried, 2014)

The Rationale Behind Swiss Densification Policy Measures

In the following section, we reconstruct the rationale behind the Swiss densification policy measures applied. The involved actors’ motivations for the introduction of the policy instruments described above will be explained in detail. Moreover, the actors’ objectives when rejecting proposed initiatives in the national council in favor of social sustainability of housing densification will be made intelligible.

The Private For-Profit Rental Industry

Since 2014, the private for-profit rental industry (including for-profit investors as well as private planning, building, and architecture professionals) has increasingly started to appreciate densification as a profitable investment market. Reasons are that they (1) are publicly subsidized for carrying out renovations, (2) do not face any obligations to pass on received subsidies to the tenants, and (3) simultaneously can take advantage of higher rents after redevelopment. Institutional investors, for example, have intensified their work with professional planning, building, and architectural teams to better exploit the new use potentials and to increase their land rent in the existing housing stock. Through densification, they can enlarge the rentable floor space on a parcel and expand their investment opportunities at central locations. The better they understand how to use and upgrade the existing housing stock through densification, the higher the prices that will be paid.

Extensions to existing buildings, additional floors, or total replacement constructions with double volume. On the same property, owners can suddenly realise a lot more things. In the end, it’s all about the land price and about making money. (Vice-director Swiss Association of the Building Industry, August 2018)⁹

Therefore, densification measures have provided a clear legal and economic incentive for the private for-profit rental industry to increase rents.

Interestingly, private small-scale owners expanding and renting out their owner-occupied properties have recognized their economic advantages too. Before 2013, this share of private homeowners strongly criticized the shift towards densification as they feared the loss of property value, privacy, and autonomy. This skepticism has waned in recent years, mainly due to the mentioned institutional rules and amendments applied in energy, tenancy, and tax law (see §6.5.2). As a result of these legislative changes, property owners of the for-profit rental industry (both institutional and owner-occupied property) assess the economic benefits of densification higher than the risks and costs, which is why they both increasingly agree to densify their parcels. In fact, densification under the new legal framework and in the absence of further restrictions (e.g. in tenancy law) fulfills a specific function on real-estate markets in the sense that it increases planning and economic security through the increased opportunity to invest into real estate. In an environment where land is scarce and competition to use this land is high, property owners reinvest their assets into stable and safe investment markets. In the end, because of the weak protection of tenants, owners enjoy maximal planning flexibility and decision-making power in densification projects.

This economic interest also explains why political efforts to change the institutional rules in force in favor of protective and price-regulating objectives (e.g. in housing or planning policy) have been rejected by the private for-profit rental industry. From a private landowner’s perspective, further regulation would make the planning process too complicated, time-consuming, and costly. This would reduce their investment security and their willingness to densify their parcels.

You cannot have both without restrictions: densification and heritage protection. Thereby, densification will be more difficult to implement because for ¾ of the projects a special legal approval would be needed. Therefore, at the national level, we demand for a weakening of the monument pro-tection regulations. For instance, that buildings from the 1960s no longer need to be preserved. (Head of the legal and planning department of the Swiss Homeowners’ Association, August 2018)

In other words, the private for-profit rental industry tends to support a way of implementing densification that guarantees economic growth and income at the expense of preserving social values (e.g. cultural heritage).

In addition, in recent years, this industry has increasingly realized how to use their legal power position when negotiating with public authorities about densification projects. Due to the strong protection of their property title, they hold the power of disposal and grant the use rights. Therefore, public authorities are increasingly dependent on the private owners’ agreement when aiming to implement densification objectives. Urban planning regulations such as zoning, capturing of planning-related added value, or tax relief suddenly become negotiable for private individuals and do not represent binding rules any longer.

Yes, we [public with private actors] negotiate with each other. […] However, one would first need to think about whether this [the legal obligation to densify] still is a binding rule if the best solution becomes negotiable for both sides. (Vice-director Swiss association of the Building Industry, August 2018)

As a matter of fact, this power position in the negotiation process results in densification measures primarily being implemented along market-oriented principles in Switzerland.

The Swiss Federal Government

After the Swiss voting majority agreed to introduce densification as a legally binding planning objective in 2013, Swiss federal government has become responsible for the fulfilling of this task. Since 2014, the responsible federal offices (mainly the office for spatial planning, but also for housing and energy) have started to convince the private for-profit rental industry to support the implementation of densification as a policy objective through dedicated policy measures. Concretely this means that although several new densification objectives in planning and energy law have been introduced during the 2010s, federal administrative authorities have not obligated the private for-profit rental sector to return any of the received public subsidies to the tenants. For example, private landowners do not have to fulfill a certain quality related to socio-economic living standards (e.g. house prices, social mixing, residential stability) or to pass on tax savings or direct subsidies to the tenants. Social issues such as housing affordability, social mixing or security of tenancy have not gained political attention even though the housing situation for low-income has worsened in recent years. Swiss tenancy law, in addition, has not been revised even though owner-related and tenant-relevant legislative changes have been made in energy and planning law. Furthermore, the private for-profit rental industry has neither been forced to protect tenants from dismissal or rent increase after redevelopment, nor have political efforts in favor of monument conservation policies received support of the political majority (e.g. to preserve architectonic and social qualities within the built environment).

The rejections of such initiatives were justified by the fact that federal authorities feared a decrease in the property owners’ interest to renovate and to carry out energy-saving renovations. It was also argued that private property owners would not have been able to use the existing economic potentials on their parcels the same way anymore. The legal support of residential stability and heritage protection in the built environment would have led to increasing financial expenses, distorted market conditions, and the loss of the country’s position as an attractive real-estate market for international investment. As a result, social sustainability objectives such as housing affordability, residential stability, and neighborhood cohesion have not gained the support of the national council due to the strong liberal interests of the private for-profit rental sector.

For densification you get a political majority anyway. But for social sustainability you get none. […] Because densification brings money and investment opportunities. […] As long as one can make economic profit, densification will be supported by the majority of people. There is a coalition between ecologic Switzerland and the liberal interests, and if both can be combined, a political majority prevails. (Member of National Council and former director of the Swiss Tenants’ Association, August 2018)

The tenants’ needs related to social sustainability have remained bypassed under the new rules of the game (densification). This prioritization in policymaking is also connected to the poor representation and lobbying position of the tenants’ interests in the national council.

The stepchild in the whole debate is the social dimension. From a political point of view also badly organised. People suffering from poverty do not have a political lobby at the federal level […]. Bringing the losers together to defend their political interests is difficult. (Director of the Swiss Federal Office for Housing, August 2018)

In fact, the tenants’ and property owners’ rights are unequally represented in the national council. This imbalance of power distribution due to the tenants’ lack of access to formal decision-making (missing lobbying position) reinforces the trade-off in favor of the economic and ecologic dimensions of sustainability in densification processes at the expense of its social side. As a result, densification policy measures leading to higher income, use potentials, and increased land value for private property owners (through economic and ecologic densification policy measures) remain prioritized.

5.2.6 Towards a Business of Densification

In this article, our aim was to demonstrate that the Swiss way to implement densification is characterized by a systematic bypassing of tenants’ need for social sustainability in housing due to present-day political priorities of the Swiss federal government. Even though the Swiss federal council publicly commits to socially equitable sustainable development (Art. 2, 41, 74 CSC and Art. 1 SPA), in densification measures, it deliberately assists in bypassing the social dimension of sustainability in favor of eco-economic development objectives. This strategy is connected to the fear that densification might not be effective due to the power position of the landowners involved in the for-profit rental industry. For instance, federal administrative authorities have recognized a decline in the private for-profit rental industry’s willingness to invest into (re)development projects, if they would further limit and regulate densification at the federal level. Therefore, they follow a strategy that is profitable enough for the profit-oriented rental sector to get densification implemented. Simultaneously, the landowners’ profit margin in densification projects has increased significantly in recent years due to the economic and legal security, stability, and predictability provided by the national state. It appears that the powerful lobby of property owners was able to promote specific policy measures (e.g. in the domain of environmental sustainability) to reinforce their own benefit and financial returns. Consequently, in comparison to the 1990s and 2000s, the private for-profit rental sector has started to acknowledge densification as a new, safe, and profitable investment market, which is why they represent the winners of the emerging “business of densification”. The tenants, in contrast, remain excluded from the compromise made by powerful actors and embody the losers of the new rules of the game (densification). In particular, low-income tenants such as elderly people, families, and migrants cannot afford higher rents after densification measures and are increasingly being excluded from the housing market. Because only a small share of Swiss tenants gets publicly subsidized through social aid, or benefits of public or cooperative housing supply, a growing percentage of the Swiss population suffers from inadequate housing supply in relation to income.

The emergence of the business of densification is related to a general shift towards the commodification of housing in many Western societies: the value of housing is more and more considered by its financial value at the expense of its use value (Harloe, 1995; Rolnik, 2013). This supports the constant erosion of stability and security in housing. An increasing number of households lack access to adequate housing on the regular rental market. Regarding the future increase of densification projects, these vulnerable groups will be caught in a vicious situation and depend on housing solutions that will inevitably lead to the erosion of their social rights, stability, and protection in housing (Brenner et al., 2012; Harvey, 2012; Marcuse, 2012). The Swiss case additionally shows that the tenants’ lack of access to formal decision-making at the federal level (missing lobbying power) reinforces social inequalities in Swiss housing development: tenants have to live with a double burden as they increasingly pay for environmental costs even though they are not the only producers and suffer the related quality of life burdens such as rising rents, the instability of tenancy, and the potential loss of neighborhood cohesion. In the meantime, the federal state withdraws from its responsibility to cover the housing needs for all income segments and passes the duty to the cantons, the municipalities and, ultimately, to the individual households. As a consequence, municipalities are increasingly responsible for mitigating social risks, challenges, and problems (Heeg, 2013).

Overall, we argue that the Swiss federal government tends to underestimate the potential consequences and challenges for future sustainable development as a constitutional objective resulting from neglected social sustainability—especially in housing as a key component of the built environment. Sustainability only makes sense if its social dimension is taken seriously. Otherwise the sustainability objective as a whole is missed. The way densification is currently being implemented in Switzerland leads to an exacerbation of landlord–tenants relations, but this is seen as the necessary price to be paid for improving energy efficiency and environmental development objectives. The social living quality for all segments of the population, however, can only be maintained if future densification projects are compatible with the interests of culturally and socially diverse groups, and at the same time encourage social integration and more equitable distribution of decision-making power. Otherwise, short-term profitability objectives will take the upper hand and rents will increase in such a way that densification will be rejected by the majority of the population due to the lack of affordability and social acceptance. We identify an evident risk that the implementation of sustainable development objectives through densification initiatives might slow down—or even come to a standstill—because the residents’ housing and social needs are not seriously taken into account. We argue that new legal ways need to be found to better consider the housing needs of those who are the most affected by densification but who are often not in a position to be heard.

5.3 Article 2: Planning for Social Sustainability: Mechanisms of Social Exclusion in Densification Through Large-Scale Redevelopment Projects in Swiss Cities

Gabriela Debrunner, Arend Jonkman & Jean-David Gerber

Journal: Housing Studies, https://doi.org/10.1080/02673037.2022.2033174

Impact Factor (2019): 2.255

Status: Published

Abstract: In many countries of the global North, there has been renewed interest over the last 30 years in urban densification as part of wider efforts to combat urban sprawl and the loss of natural habitats. In daily practice, however, densification is a contested process because of its redistributive effects. Next to potential environmental advantages, it produces both benefits (e.g. increased housing options, business opportunities) and losses (e.g. rising noise, rents) for different individuals and households. The redistributive effects are an expression of conflicts between environmental, economic, and social dimensions. In this article, we show the latter is heavily impacted: if densification projects are not designed to the needs and capabilities of people who are actually supposed to benefit from it—the residents—low-income groups are at risk of discrimination, displacement, and exclusion. A scenario which is highly unsustainable. By using a neoinstitutional approach and comparative case study methodology conducted in Zurich and Basel, Switzerland, we analyze the institutional rules and the involved actors’ strategies (local authorities, investors, tenants, NGOs) when dealing with urban densification projects. We explain the mechanisms at play leading to the loss of a city’s social qualities when competing with short-term economic interests of investors and local authorities.

Keywords: densification; new institutionalism; housing; social sustainability; gentrification

Research Highlights:

The paper…

• …introduces a neoinstitutional analytical framework and explains how this helps to systematically analyze housing challenges in a context of densification.

• …performs a comparative case study approach to compare the land policy strategies of two Swiss cities – Zurich and Basel – both confronted with scarce urban land conditions, affordable housing shortages, and increasing densification pressure.

• …introduces criteria for the evaluation of densification projects from an emic housing sustainability perspective.

• …compares the sustainability performance of two large-scale densification projects in the cities of Basel and Zurich.

• …critically analyzes and reflects on the role of the city government and the landowners when undertaking densification projects.

5.3.1 Implications of Densification on Social Sustainability in Housing

In many cities of the global North, tensions between densification as a policy goal and its social implications on housing affordability, residential stability, or community cohesion have intensified in recent years (UN Habitat, 2016). In Switzerland, for example, municipalities have become obliged to promote densification within existing municipal frontiers to protect agricultural land and to prevent urban sprawl since May 2014 (Art. 1 SPA). Simultaneously, a growing number of tenants living in rental housing stocks is confronted with the situation of being evicted and displaced at short notice as they cannot afford the rents after densification and simultaneous modernization anymore (FOH, 2019: 4).

We identify two lines of research related to the social implications of urban densification in the rental segment: first, a broad body of literature reflecting on the pros and cons of densification, both as a process and policy objective (e.g. Holman et al., 2015; Touati-Morel, 2015). And second, scientific work discussing the role of social sustainability in urban regeneration in general (e.g. Ancell & Thompson-Fawcett, 2008; Arthurson, 2001; Bramley et al., 2009; Bramley & Morgan, 2003; Burton, 2000, 2003; Chiu, 2004; Vallance et al., 2011; Marcuse, 2016). However, a critical analysis which focuses on the socio-political dimensions of densification and its effects on tenants from a social sustainability perspective is largely missing (Pérez, 2020). As we will argue in the following sections, such understanding is crucial so that densification projects are actually designed in a way that takes into account the needs and capabilities of those affected—the residents—and involve them into decision-making. Otherwise, especially low-income groups will not be able to participate in urban development without being vulnerable to discrimination and likely to suffer displacement and exclusion from their communities (Jenks et al., 1996: 84; Scally & Tighe, 2015).

In this article, our goals are twofold: first, we aim to explain how tenants are affected by densification from a social sustainability perspective to understand the social consequences at the households level. Thereby, we are in line with emic research approaches that argue that the principal source of evidence concerning the sustainability of cities should be people themselves, particularly those living in the areas in question (Bramley et al., 2009; Jenks et al., 1996; Vallance et al., 2011; Zukin, 2009). Second, our goal is to detect the reasons for tenants’ social exclusion in densification projects from a neoinstitutional perspective. More precisely, we analyze the local regulatory framework and the strategies of the actors involved (local authorities, investors, tenants, NGOs) to understand the mechanisms at play that potentially hamper a socially-sensitive implementation of densification. Specifically, we ask: 1) How are the impacts of urban densification on tenants to be analyzed from a sustainability perspective? And 2) How do the institutions in force contribute to explain the outcomes of urban densification projects in terms of social exclusion?

These questions require the use of qualitative case study methodology (Yin, 2018). We conducted a comparative analysis of two Swiss cities—Zurich and Basel. Both cities are confronted with increasing densification pressure and tenants exclusion due to rising rents after redevelopment. By analyzing the institutional rules and decision-making behavior of the actors involved in two large-scale densification areas, we explain the reasons for possible trade-offs between economic, environmental, and social goals of densification. We show that preserving the cities’ social qualities is in acute danger when competing with short-term economic interests of investors and local authorities. Finally, we discuss our results in regard to arising repercussions for Swiss urban policymaking and planning.

5.3.2 Planning for Social Sustainability in a Dense City

Densification is defined as a process leading to an increase in the number of households living within existing city boundaries (Broitman & Koomen, 2015: 32). In many cities, the process has been introduced as a legally binding policy objective during the 1990s to effectively steer efficient use of natural resources and “smart growth”. In daily practice, densification within municipal boundaries may materialize in different forms: for example, via infill on empty sites, conversion of buildings used for other functions, or complete demolishment and reconstruction including more housing units of existing housing stocks (Touati-Morel, 2015). In municipalities in which free inner-city parcels are missing and there is a lack of space to relocate other functions, the latter option gains in relevance.

Evaluating the Impacts of Urban Densification on Tenants from a Social Sustainability Perspective

“Sustainability” depends on the interaction of economic changes with social, cultural, and ecological transformations. If one of the dimensions is not adequately secured, the development cannot be considered sustainable (Barbier, 1987: 103).

Vallance et al. (2011: 344) argue that the residents’ interpretation of the local environment is central for measuring sustainable development. They state that if the social preconditions to support densification are not given—resulting in rising housing prices—an urban development scenario is highly unsustainable (Jenks et al., 1996: 84). Densification, in other words, needs to respect the “places” and “spaces” in which tenants live and are socially embedded in to preserve the city’s long-term social stability and capital (Lefebvre, 1991). “[C]ities cannot be considered sustainable if they are not acceptable to people as places in which to live, work, and interact or if their communities are unstable and dysfunctional” (Bramley et al., 2009: 2125). Thus, for densification to be truly sustainable, it has to esteem tenants basic needs and the specific social relations, values, customs, and structures of the place they live in (Chiu, 2004: 66). This residents-oriented sustainability approach (Chiu, 2004; Townroe, 1996) is linked to actual urban development practices at the local level rather than to broad initiatives, policy agendas, or policy objectives. It acknowledges that social sustainability is indeed a community level concern, but depends on the extent to which individuals can contribute to it (Elsinga et al., 2020). The approach is guided by the conviction that the principal source of evidence concerning the social sustainability of cities should be people themselves, particularly those living in the areas in question (Bramley et al., 2009; Zukin, 2009).

Although we agree that it is impossible to provide comprehensive universal sustainability standards given the socio-cultural and geographical diversities of human settlements (Chiu, 2004: 75), we argue that a more detailed understanding of the social side of densification is crucial in reconciling the often competing demands of the society–environment–economy tripartite (Vallance et al., 2011: 342). Although it is more than thirty years since the Brundtland report’s release and extensive academic literature has been published on the concept of sustainable development, its social dimension has only received little attention in policy, academia, and practice (Manzi, 2010; Murphy, 2012). However, social sustainability research is needed to add to existing understanding and perceptions of sustainable development as all three dimensions of sustainability are interlinked. The diminishing of one affects that of the others (Chiu, 2003; Khan, 1995; Mitlin & Satterthwaite, 1996; Williams et al., 2000).

While each of the indicators of social sustainability (Table 3.2 of this book) may be regarded as conceptually distinct it is clear however that there exist various reinforcing relationships between them (Chiu, 2004: 65). The indicators introduced were obtained by synthesizing selected academic and policy literature with the ambition of highlighting key aspects of interest for social sustainability in relation to densification and urban housing development from a tenants perspective. They were supplemented by our own experience working with residents, local authorities, housing suppliers, and community organizations in Switzerland and the Netherlands.

(see Table 3.2 of this book)

The affordability of housing is the key dimension with regard to the social sustainability of housing for households (Jonkman, 2020; Yung & Lee, 2012). A household’s ability to meet the cost of housing is the core limiting factor as to whether they can access adequate housing or not (Ancell & Thompson-Fawcett, 2008: 432). Moreover, the availability and quality of housing are also crucial to assess (Mulliner et al., 2013). For example, in many cases, residents are able to afford housing but they still remain excluded from the housing market, e.g. through the limited availability of housing or discrimination. Housing availability refers to the situation whether apartments in the required price range are also available at the time designated. This issue becomes particularly relevant when many rental contracts have been terminated simultaneously in the same area (IFHP, 2019). In addition, the quality of housing is of central importance when issues of overcrowding, inadequacy, and poor design impact people’s lives (Ancell & Thompson-Fawcett, 2008). It describes whether residents live in housing conditions that fail to meet physical standards of decency or to be situated at unsafe or inaccessible locations (Stone, 2006). Moreover, it expresses an array of attributes (e.g. access to services and facilities), in addition to purely economic factors that can influence a household’s perception of affordability (Mulliner et al., 2013). Finally, community cohesion is used as an indicator to describe the level of residents’ social attachment to the local community. Particularly, a stable community is regarded as a necessary capability of a community to sustain itself (Chiu, 2004; Dempsey et al., 2011). Citizenship describes the residents inclusion to local decision-making which provides information on whether the tenants’ needs and perspectives are integrated also on a formal level (Bramley & Power, 2009; Fainstein, 2010).

Explaining Social Exclusion from a Neoinstitutional Perspective

Supporting tenants’ social inclusion in densification projects has largely been assumed to be the responsibility of the public sector, more specifically of local authorities as they guide, structure or even determine the use of urban space (Holman et al., 2015). As Healey (2007a) highlights, how- ever, the social impacts of densification are to be seen as the results of a complex process of governance which is to be understood as the interplay between the local regulatory framework and the decision- making behavior of the actors involved. Following the neoinstitutional perspective, human actions take place within a tight web of institutional rules which structure humans’ expectations about what others will do (Hall & Taylor, 1996: 956). Institutions are defined as shared social values stipulated in formal laws and ordinances (e.g. in planning law) which guide social interaction and practices (Dembski & Salet, 2010: 612). Within this institutional setting, actors (e.g. local authorities, landowners) develop strategies to defend their own interests in order to meet a particular policy goal (e.g. densification) (Gerber et al., 2018: 11).

Besides public officials, other groups such as lobby parties, landowners, developers, and residents do also play a crucial role in the decision-making process. These actors influence whether gentrification processes after modernization of housing stocks emerge or not. Each of them can support social issues through the strategic activation of specific formal rules. Landowners, for instance, are most often in a position of power due to the protection guaranteed by private property rights. On private plots, public action only gets implemented when titleholders agree to undertake a new development, sell their land, or transfer their development rights (Gerber et al., 2018). Consequently, in many cases, the landowner is free to define the profit margin to be targeted on the parcel and can set the rents according to market-prices. Such commodification strategies (Aalbers, 2017; Marcuse, 2016), however, may hamper tenants’ social inclusion and result in the promotion of housing based on its financial value rather than its use value (Rolnik, 2013).

To sum up, the socially-sensitive implementation of densification is the result of a socio-political negotiation process which is shaped by the local regulatory framework stipulated in formal rules (e.g. legislations, codes, ordinances) and the strategic behavior of the actors involved (Nicol & Knoepfel, 2008). Codominant use interests between residents, investors, and local authorities and their strategic formulation and activation of specific formal rules result in benefits for some (e.g. increased housing options, business opportunities) and losses for others (e.g. displacement, insecure tenure, community disruption) (Brenner et al., 2012; Marcuse, 2016).

5.3.3 Comparative Case Study Analysis in Zurich Brunau and Basel Schorenweg

To analyze a contemporary phenomenon—the challenging implementation of densification objectives in terms of social sustainability—within its real-world context, we conducted in-depth qualitative case studies (Yin, 2018).

Case Selection

In Swiss cities, the tensions between densification objectives and tenants’ interests have become predominant in recent years, especially since the revision of Federal Spatial Planning Act (SPA) in 2013 obliging over 2000 municipalities to densify within city boundaries. An increasing number of people suffer from social displacement after modernization as a consequence of densification (FOH, 2019: 4). As the country is regarded as a nation of tenants with the lowest homeownership rate in Europe (Lawson, 2009), a growing number of inhabitants living in the private rental market is at risk to be evicted at short notice due to decisions taken by the landowner (Rérat, 2012). In Switzerland, the municipality is the actor responsible to coordinate densification. Local planning authorities grant the building permits to private landowners. Building applications need to align with the Local Zoning Plan.

We selected two comparative cases—the Swiss municipalities of Zurich and Basel—to analyze two different governance approaches towards socially-sensitive densification. In both cities, the pressure on housing development under scarce land conditions has risen in recent years: in Zurich, for example, where 28% of the population lives in apartments of the private rental market (Table 5.3), the number of densification projects of private investors has quadrupled since 2006 (from 9 to 36 projects in total). The absolute number of dismissals due to densification measures in the city’s private rental sector has doubled within the period of 2006 to 2017 (Statistics City of Zurich, 2017). As a result of increasing housing prices after modernization and densification, moving to cheaper suburban areas remains the only option for lower-income groups in both municipalities (Balmer & Gerber, 2017).

Table 5.3 Housing market characteristics in Zurich and Basel-City (FOSD, 2017: 25; Statistical Offices Zurich and Basel-City, 2019, 2020)

Project Selection

To evaluate the social sustainability in urban densification from a tenants’ perspective (research question 1), we further selected two large-scale densification areas within Zurich and Basel city area. In this project-based approach, we investigated social sustainability “from the ground up, as it actually exists in local places, and as a set of evolving practices” (Krueger & Agyeman, 2005: 416). Specifically, the densification projects—Zurich Brunaupark and Basel Schorenweg—were selected as they are both owned by the same institutional investor (Credit Suisse bank [CS]). This player is representative for many urban residential areas in Switzerland since the share owned by institutional investors such as CS makes 63% of the total housing property in Swiss cities (FOH, 2017: 14). CS’ projects in Zurich and Basel were both ongoing at the time of investigation (between March and November 2019) which is why the actors involved (local authorities, investors, tenants, NGOs) could be directly confronted with their decisions and actions taken.

Zurich Brunaupark—a settlement built in the 1980/90s—compounds of four buildings with 239 apartments and approximately 400 residents. The investor plans to densify the area through demolishment and total reconstruction of the existing buildings in 2023. The new settlement will count an additional 258 apartments, 497 in total (Schoop et al., 2020: 18). Many households (47%) consist of multiple adults without children. 42% of the households have been living in the project for over 15 years. Basel Schorenweg—built in 1961—counts 196 apartments with around 300 residents in total. CS plans to densify the two existing buildings via total internal reconstruction with smaller housing units in 2021 (Laur, 2019: 21). In March 2019, the approximately 1085 tenants in total were informed of the termination of their rental contract by CS. A high share of the residents can be classified as old-aged and/or as single-households (Table 5.4).

Table 5.4 Socio-economic profile and household types of tenants in Zurich Brunaupark & Basel Schorenweg

Methods

The data of our study was conducted through qualitative methods. We proceeded in two steps: first, we analyzed how tenants living in the areas in question (Brunaupark and Schorenweg) are affected by densification from a social sustainability perspective. We conducted a household survey with 412 households living in the settlements in total to gain a broad understanding of their perspectives. The survey incorporated the social sustainability indicators presented in the previous section and included both open and multiple-choice questions. The open questions were used to gain a rich understanding of the households’ perspective on how tenants are affected by densification plans. The multiple-choice questions were used to further underline household positions, but the analysis remains qualitative in nature. We opted for a self-completion postal and digital survey method (with one reminder) and managed to achieve a respectable 25% response rate (101 responses in total). In designing the questionnaire, we considered the existing body of literature as well as a number of national surveys covering similar topics which helped us to identify whether and how questions have shown to work.

In a second step, we analyzed the reasons for possible trade-offs between the tenants’, landowners’, and local authorities’ interests focusing on institutional rules and actors decision-making behavior (neoinstitutionalist perspective). In this step, we started with a broad screening of local policy documents to analyze the interface between urban densification and social sustainability. We included government reports, legislation, and parliamentary debates primarily being published within the last decade. We also incorporated newspaper articles, project documents, and “grey literature” to understand the actors’ strategies and objectives behind specific formal rules activated. Finally, we employed ten semi-structured expert interviews with representatives from five local public authority departments, three local tenants associations, and two CS portfolio managers. All experts were chosen due to their detailed understanding and knowledge of the topic. The data was evaluated using qualitative analysis methods.

5.3.4 The Tensions Between Densification and Social Exclusion in Swiss Urban Policymaking

In the following section, first, we show how tenants are affected by densification from a social sustainability perspective in Zurich Brunaupark and Basel Schorenweg. Second, to understand the reasons for specific decisions and policy measures taken in each institutional setting, we analyze what strategies local authorities, property owners, and tenants develop to defend their interests in urban densification.

Impacts of Densification on Tenants from a Social Sustainability Perspective

Community Cohesion

In Zurich Brunaupark and Basel Schorenweg, the majority of the residents has lived in the settlement for over 15 years (Table 5.4). Many of them state that they feel strongly socially embedded in the neighborhood as they have spent their everyday life with families, children, and friends together and share a lot of memories. In particular, families with children as well as old-aged fear to lose social support and contacts through dismissal. They perceive a common sense of home, local identity, and embeddedness and are not willing to leave.

We live in a small village here. People know each other. Everyone helps each other, talks together, meets in a coffee shop or in the local grocery store. We have a good social life and connectivity.[…] We live together very peacefully and quietly. (Tenant Zurich Brunaupark, 73 years, June 2019)

Housing Affordability

According to Credit Suisse’ marketing department, the rents after densification and modernization in Brunaupark will increase by 60%. For example, a 3.5 rooms apartment (75 m²) which today costs 1700 CHF per month (gross rent) will be offered for 2720 CHF. In Basel Schorenweg, the rents for the new apartments will rise by +50%. Here, a 3.5 rooms dwelling which costs today 1200 CHF per month (gross rent) will be offered for around 1800 CHF. In both projects, the bank legitimizes the rent increase with the argument that the dwellings are centrally located and substantial modernization resulting in higher living quality for the residents will be obtained (Credit Suisse Zurich & Basel, 2020).

As a consequence, tenants in Brunaupark and Schorenweg state that they will not be able to afford a new apartment in the modernized housing project anymore. Especially low-income and old-aged which have lived in their dwellings for many years indicate that they will have to move to cheaper areas outside city boundaries.

I will lose my center of life. I will not be able to find an affordable apartment at such a central location anymore. (Tenant Basel Schorenweg, 55 years, June 2019)

Housing Availability and Accessibility

In Zurich, evicted tenants which are in need to find something at a low cost within the city (e.g. due to their workplace) rely on the support of non-profit housing associations. Otherwise, rents on the regular housing market are too expensive for them. In the city of Zurich, however, waiting lists for social housing units are long. People sometimes have to wait for several months to years to get access to an available low-cost apartment (Martel, 2020). Even if they are old-aged or in a precarious living situation, available apartments in the social housing sector are not offered to socially evicted tenants immediately or with prior access criteria. Consequently, for the majority of tenants living in Zurich Brunaupark, moving to a cheaper suburban area remains the only option to find housing.

We will not find such an affordable flat in the city center anymore. All cooperative housing associations have long waiting lists and for some it is even not possible to apply anymore. […] We are a community which is now being disrupted. (Tenant Zurich Brunaupark, 42 years, June 2019)

Even tenants with higher incomes who would be able to afford higher rents are not allowed to stay in Brunaupark. They do not receive prior access to the new dwellings even though they have lived in the settlement for many years since CS has decided to start with new residents from anew regardless of the former residents’ family situation, age, gender, income, or workplace (Interviewee 39, CS portfolio manager Zurich, July 8, 2019).

Similarly as in Zurich, in Basel it has become difficult for evicted renters to find something adequate within the city center (Statistics Basel-City, 2019: 13). To find affordable housing at short notice, tenants also rely on the support of Basel’s social housing associations. These social organizations, however, have long waiting lists too and do not prioritize old-aged, families or socially dismissed households (Martel, 2020). Similarly as in Zurich, even tenants who would afford the new rents in the densified settlement will not be able to stay in Basel Schorenweg. Neither they receive an alternative apartment which they could move to during reconstruction nor will they get prior access to a new dwelling. Therefore, regardless of being high- or low-income, moving to retirement homes (which have long waiting lists too) or to cheaper suburban areas remains the only option for tenants living in Basel Schorenweg (Beck & Schulthess, 2019).

Housing Quality in and Around the Building

From a socio-ecological point of view, tenants living in Zurich Brunaupark do not recognize a need for energetic modernization. The buildings have been internally renovated eight years ago. Specifically, in 2012, new sanitary facilities (kitchens, bathrooms) as well as new floors were installed (Schoop et al., 2020: 18). Therefore, tenants perceive the physical condition of their dwellings and the surrounding neighborhood as of high quality. In particular, they are satisfied with the size, the location, and the services within and around Brunaupark.

I totally cannot understand why these buildings which are in a very good physical shape will be demolished. Especially in Zurich municipality which aims to reach the goals of a green and sustainable city. (Tenant Zurich Brunaupark, 78 years, June 2019)

Similarly as in Zurich Brunaupark, residents in Schorenweg do not understand why urban regeneration of their apartments is needed at all. In 2002, the buildings have been fully internally renovated. The modernization included the installations of new bathrooms, kitchens, floors, and windows insulation to improve energy efficiency. In 2010, in addition, the roof and gutters were renewed and in 2015 the eight elevators have been fully refurbished (Laur, 2019). Hence, residents living in Schorenweg perceive the physical condition of their apartments of high construction and housing quality. They also appreciate the access to green and open spaces as well as to services in the surrounding neighborhood. Thus, overall, “no construction measures are effectively needed” (Interviewee 37, Head of Local Tenants Association Basel, February 13, 2019).

The building is in a very good condition. Densification will lead to modernization which only rich people can afford. (Tenant Basel Schorenweg, 65 years, June 2019)

Citizenship and Decision-Making

Finally, tenants of Zurich Brunaupark and Basel Schorenweg do not feel being adequately involved in the local decision-making process. Neither have they been informed about the upcoming dismissal in advance, nor have they been involved in the negotiation process between the city government and the investor from the beginning. For example, until contract termination, they have not known about the upcoming densification procedure and rent increase at all. The communication explicitly took place between CS and the city authorities.

The property owner only communicates with the city council. The developer communicates with the tenants but only little and in a non-sympathic way. (Tenant Zurich Brunaupark, June 2019)

Therefore, tenants in both settlements do not feel adequately supported by the city council (executive) and local public administration. They feel to be left alone in finding a new apartment and in coping with their current living situation.

We were surprised when we received the contract termination. Our government just observes and does not intervene. (Tenant of Basel Schorenweg, June 2019)

Overall, the results of the surveys show that the indicators of social sustainability are not met in both densification areas. The tenants are neither able to afford the apartments after densification, nor do they manage to maintain their social networks and acquaintances. They are forced to leave their dwellings even many of them face difficulties to find alternative housing options in the city. The densification procedures strongly disrupt their social stability and cohesion in the neighborhood. Results also show that tenants perspectives have not been formally addressed either. The decision whether, how, and for the benefit of whom densification was actually needed was explicitly made between the investor and the city council. This shows that urban planning in the age of densification does not or only insufficiently take the interests of the residents into account, even though they are very vulnerable to spatial changes.

Institutional Rules and Actors’ Strategies in Zurich and Basel-City

In the following section, we analyze the institutional mechanisms leading to the situation presented in the previous section. To understand the reasons for the social outcomes identified, we analyze the institutional rules and the involved actors decision-making behavior. For each city, first, we emphasize aspects of planning and energy policy because of their significant impact on housing (re-) development. Second, objectives of housing and social welfare policy are also explored. Finally, we address the role of private law (property rights, tenancy matters) (Fig. 5.2).

Fig. 5.2

Overview of the results of the household survey conducted in Zurich Brunaupark and Basel Schorenweg. Results show how tenants are affected by densification from a social sustainability perspective

Zurich City Government

On November 1st 2018, the revision of Zurich’s Local Zoning Plan¹⁸ came into force. Based on the revised legislation, the city council initiated planning measures such as the introduction of densification zones¹⁹ to effectively promote population growth through internal settlement development and the efficient use of energy (Zurich City Council, 2013: 5). In Zurich Brunaupark, for example, the revised zoning plan has led to a situation in which the investor became allowed to double the number of apartments on the same parcel (by +258 additional apartments to 496 in total). The city council legitimized the introduction of these planning measures with the political aims to support future population growth through densification and to meet green policy objectives. In particular, the redevelopment of existing housing stocks is needed since free inner-city brownfield areas are missing in Zurich and new construction on greenfield has become restricted since the introduction of the revised Federal SPA (City of Zurich, 2016, 2019b).

In future terms, and nowadays already, population growth is only possible through demolition and reconstruction of existing housing stocks in the city of Zurich. The municipality has to ensure that sufficient housing units will be provided. (Interviewee 40, City of Zurich, Urban Development Department, July 31, 2019)

Simultaneously, the fulfilling of social policy objectives such as the provision of affordable, stable, and secure housing is guaranteed by the “Housing Article” in the Constitution of the Municipality of Zurich.¹⁰ According to the Municipal Constitution (Art. 2, Para. 4), by 2050, the city council must ensure that a third of the total housing stock will comply in non-profit housing property and align with cost-rent principles to counteract social exclusion processes.

There is a process of social exclusion going on in Zurich. If housing property has been renovated, demolished, and brought to the market again, the price for the same apartment with a higher standard has doubled. […] We have a constant struggle of gentrification in the city. (Interviewee 35, City of Zurich, Housing Department, May 3, 2019)

To achieve this goal, during the last decade, the city government has followed an interventionist housing policy strategy to promote affordable housing e.g. by purchasing private land for public housing or by providing long-term building leases on public land and supply-side subsidies to non-profit cooperatives (Interviewee 40, City of Zurich, Urban Development Department, July 31, 2019). Overall, with these housing and planning policy measures, Zurich’s local government aimed to constantly increase the share of social housing property within city boundaries (Zurich City Council, 2017: 4ff.).

The municipality of Zurich follows an active housing policy approach. We are strongly linked to investors, private homeowners, and housing cooperatives and aim for frequent exchange. (Interviewee 45, Head of Planning Department, October 24, 2019)

As our analysis reveals, however, in daily practice, the promotion of “social sustainability” criteria (e.g. residential stability) does not only rely on local housing and planning policy. In Zurich, the building permit for each private housing project is approved and controlled by the municipal planning department. In case the project is of certain importance (e.g. due to its location) and size, the authority may receive recommendations of the Local Building Committee [LBC] which is part of the planning department (Art. 53 MC). The committee consists of external experts (mainly architects) as well as employees of the local administration. Its role is to advise the city council and the local planning department in questions of urban planning, design, and architecture. In Zurich Brunaupark, for instance, the committee advised the authorities to approve a total area reconstruction rather than partial redevelopment to ensure an improved and uniformed architectural quality of the settlement (Zurich City Council, 2019a). The fulfilling of social (and distributive) tasks e.g. in relation to tenants inclusion, community cohesion, or housing affordability was not part of their project evaluation.

In Zurich, this [the collaboration with the local building committee] is called ‘cooperative planning’. However, in Brunaupark, they only evaluated the projects based on design standards. Social parameters were not included at all. (Interviewee 31, Head of Local Tenants Association Zurich, April 18, 2019)

Moreover, the implementation of social objectives does not rely only on the local government’s own prerogatives. This is because in Switzerland, in general, the rights of private homeowners are strongly protected by law in international comparison (Property Rights Alliance, 2019). At the municipal level, this means that the right to own property is protected as a fundamental right which can only be restricted if an overweighing public interest exists (Art. 22ter CSC¹¹). As a holder of property rights, CS not only has the right to control and to make decisions about the housing stock in Brunaupark. It also has the right to obtain at least a portion of the financial benefits produced by the housing stock. In the rental sector, Swiss courts interpret the weight of public interest narrowly so that property restrictions or expropriations are rare in international comparison (Alterman, 2010). The rights of tenants (Art. 253–274 OC), in contrast, are regarded as weakly protected by law in comparison to neighboring states such as Austria or Germany (GFOBRP, 2016). For example, landowners are allowed to terminate an open-ended rent contract within three months without any specific reason. So regardless of the tenants’ strength of social integration, age, or years of residency in the neighborhood. In Brunaupark, CS does not need to introduce rent levels for the new housing construction and is allowed to set the new rents according to market prices. They also do not need to follow legal restrictions for the dismissal of old-aged or economically weak households.

Swiss tenancy law has one fundamental problem: in case of renewal, there is a divided housing market in Switzerland between tenants which have lived in their apartments for many years and the ones moving into new housing units. The former will not be able to move out of their current apartments since they will not be able to afford the rents offered on the regular housing market anymore. (Interviewee 31, Head of Local Tenants Association Zurich, April 18, 2019)

Finally, these private law restrictions have led to a situation in which the local planning department is only able to guide housing development to a limited degree. To a large extent, it relies on the responsibility of CS to decide on the profit margin and social goals to be targeted on the private parcel.

Normally, the property owner has already decided whether they demolish the housing stock or not. The only thing we can do is to advise them in case the location is sensitive. We cannot do more than this. (Interviewee 45, Head of Planning Department, October 24, 2019)

Based on these legal conditions, on June 12, 2019, Zurich’s executive city council decided not to approve the objections submitted by the municipal parliament and the local tenants association (see following sections). Their decision based on the argument that “the introduction of a special land use plan would be equal to a restriction of private ownership. Such restriction of property rights, however, would be disproportionate and therefore illegal” (Zurich City Council, 2019b: 3). Finally, on March 10, 2020, the city council fully approved CS’s building permit for Brunaupark (Huber, 2020).

Basel-City Government

In the year 2018, Basel-City has started its political debates on the revision of the Local Zoning Act.¹² The city council aimed to introduce “planning measures which lead to a density increase at inner-city locations to promote housing space for additional 5000 residents under the paradigm of green energy consumption” (Basel-City Council, 2018: 1). To meet this goal, the local government has introduced a progressive housing policy strategy. In practice, this means that the city council (executive) tries to purchase land for public housing and has expanded its collaboration with non-profit housing associations to increase the share of affordable housing (Basel-City Council, 2016: 38). Furthermore, the municipal government provides demand-side subsidies to low-income residents (Basel-City Council, 2016: 38).

In addition to demand-side subsidies, the city of Basel has increased its supply-side subsidies to support the city’s non-profit and affordable housing supply. For instance, the city provides long-term building leases on public land to non-profit cooperatives. (Interviewee 41, City of Basel, Head of Housing and Urban Development Department, August 20, 2019)

In Basel Schorenweg, however, the above-mentioned local planning and housing policy measures have not succeeded in preserving the social qualities of the area. Tenants are being dismissed even though the city council has tried to purchase the land in Basel Schorenweg for the provision of social housing units. In fact, they could not accomplish the purchase as CS’s price request was too high for the city government (Interviewee 43, Credit Suisse portfolio manager Basel, September 12, 2019). In spring 2020, the city council granted the building permit and rejected the objections submitted by residents and the local tenants association. The decision was legitimized by the argument that Schorenweg is in private property and the densification measures announced by CS would take place within the regular Local Zoning Act.

Credit Suisse’s Development Strategy

In Zurich Brunaupark and Basel Schorenweg, Credit Suisse has decided to densify the existing housing stock as both areas are centrally located. The possibility to rise density stipulated by the Local Zoning Acts has opened attractive investment conditions in both cities for them (Interviewees 39 and 43, CS portfolio managers in Zurich, July 8, 2019 and Basel, September 12, 2019).

We decided to create more housing units at the same location. For us as pension fund this was all the more interesting. Because: where can one invest money nowadays anymore? We prefer to invest money at central locations which are well connected to transport nodes. (Interviewee 39, Credit Suisse portfolio manager Zurich, July 8, 2019)

In Basel Schorenweg, for instance, by 2040, it is estimated that the area will grow by +1000 new housing units. In 2009, the local planning authority has authorized the construction of two new housing skyscrapers in the area as well as a new school (Basel-City Council, 2009). By the end of 2018, these two high-rise buildings were finished (Oppliger, 2016). In March 2019, CS then decided to densify Schorenweg area as they aimed to benefit from these improved urban development and asset conditions (Interviewee 43, Credit Suisse portfolio manager Basel, September 12, 2019).

Schoren area is an attractive city neighborhood with leisure and green facilities nearby. The area has been strongly developed in recent years. [...] However, even if the area would not have been developed, it would still be Basel center and attractive for investment. The area’s upgrading clearly had a positive effect. (Interviewee 43, Credit Suisse portfolio manager Basel, September 12, 2019).

Even though CS in both settlements was aware that they renovated the buildings only a few years ago and a lot of criticism against the planning procedure was raised, they aimed to modernize the apartments to invest money at central location. The overall aim was to benefit from high return of investment through increasing rents at an attractive urban place.

It is a fact that the rents will increase. [...] In the end, however, the buildings are newly renovated with less financial expenses for maintenance costs. For us, as investors with a long-term perspective, this is important. (Interviewee 43, Credit Suisse portfolio manager Basel, September 12, 2019)

Interestingly, in Zurich Brunaupark, CS states that they initially planned to densify via partial redevelopment rather than total reconstruction to protect social qualities (Interviewee 39, CS portfolio manager Zurich, July 8, 2019). This proposal, however, was disapproved by the Local Building Committee. As a consequence, CS decided to dismiss the residents and to demolish the existing housing stock to be able to build a totally new and architectonically homogenous settlement.

The local building committee told us that Brunaupark settlement is too heterogenous. [...] Therefore, we changed our decision and aimed to perform a more homogenous and uniformed area redevelopment. (Interviewee 39, Credit Suisse portfolio manager Zurich, July 8, 2019)

Tenants’ and Local Ngos Resistance Strategies

As a result of the socio-economic challenges tenants are confronted with due to densification and upgrading, in Zurich Brunaupark, on March 12, 2019, a group of tenants founded a local self-help initiative to make their protest visible. Today, “Brunaupark tenants association [BTA]” counts around 120 members and aims “to secure stable, affordable and socially-mixed housing for all income segments in the settlement” (BTA, 2019a). The association has organized street rallies and initiated a local petition which over 5700 citizens signed within one month (Interviewee 37, Head of Brunaupark Tenants Association, June 13, 2019). Specifically, the local petition called for a legal rejection of the contract terminations (BTA, 2019b). Simultaneously, left-wing parties of the municipal parliament (strongly supported by the local tenants association) initiated a referendum which aimed to introduce a “special land use zone”¹³ for Brunaupark area. Legally, the introduction of such a zone would have put the municipal parliament in charge of approving development projects rather than the city council only (Zurich Municipal Parliament, 2019).

Similarly as in Zurich, in Basel Schorenweg, in March 2019, 96 households submitted a lawsuit against unfair contract dismissal to make their rights visible (Interviewee 38, head of Local Tenants Association, June 26, 2019). Moreover, in June 2019, Leilani Farha, UN housing expert, visited the settlements of Zurich Brunaupark and Basel Schorenweg as part of her Europe tour. To help the residents, she wrote an advisory letter to the Swiss Federal Office for Foreign Affairs on behalf of UN. Main topic of the letter was the unfair treatment of tenants, particularly, in regard to their social eviction at short notice and the precarious housing situation for old-aged and low-income households (Sturzenegger, 2020). As we have described above, however, none of these attempts were supported by the city authorities in Zurich or Basel.

5.3.5 Explaining the Mechanisms at Play Leading to Residents’ Social Exclusion in Zurich Brunaupark and Basel Schorenweg

In this article, first, our goal was to explain how tenants are affected by densification from a social sustainability perspective and to understand how their positions are integrated into local decision-making. Second, we analyzed the strategies developed by local authorities, property owners, and local NGOs to defend their interests in each institutional setting. This allows us to explain how and why trade-offs between environmental, economic, and social goals of densification take place. More specifically, we could highlight the institutional mechanisms at play leading to tenants’ social exclusion in urban densification projects.

Our analysis reveals that in Zurich Brunaupark and Basel Schorenweg, municipal authorities approve CS’ plans since the investor acts within the regular zoning plan. According to the protection guaranteed by the Swiss Constitution, no legitimate reason for private housing property restriction exists. In other words, in both cities, CS acts within the limits of the law—a law that is not targeting the protection of tenants’ interests—and the authorities in charge of granting building permits do not try to interfere. CS hence seeks to benefit of the densification potentials guaranteed by the Local Zoning Act. The bank acknowledges densification as lucrative business as mortgage rates are low at the moment and the pressure to invest capital is increasing. Under the premise that the demand for housing will continue to be high, investment risks are minimal and urban densification is all the more profitable. Investment costs, in turn, can be amortized in very short-term (Aalbers, 2017; Brenner et al., 2012; Harvey, 2012; Marcuse, 2016). As a result, under the “flag” of densification as a public policy goal, CS realizes redevelopment projects with high return of investment. As long as they are not legally restricted to do so, neither in Zurich nor Basel, CS will feel compelled to support tenants’ social inclusion.

To counteract private investors’ development practices, municipal authorities have started to intervene more proactively into housing development in Zurich and Basel. For example, city authorities in both municipalities have introduced new housing policy measures such as increased subsidies for social housing associations. Moreover, local planners have also worked with property rights. In Basel Schorenweg, for example, the planning administration tried to purchase the private plot in Schorenweg but the price requested by CS was deemed too high. To legitimize such acquisition strategy, broad political support is needed which is not always given, even in big and wealthy cities such as Basel or Zurich. As a consequence, city authorities have neglected the social dimension of densification in Zurich Brunau and Basel Schoren.

To be more precise: in contrast to social objectives, which investors and municipal authorities perceive as a barrier to the economic development of cities, ecologic goals of densification bring investment opportunities, which explains why both parties are willing to agree with the new constraints at the expense of its social side. In fact, social inquiries make planning procedures more expensive for investors and public actors and potentially prevent the comprehensive urban renewal projects that planning administrations are supporting (see Brunaupark case). As a result, the Swiss legal context characterized by strongly protected property rights and weak tenancy law has led to a situation where the real-estate industry and municipal authorities work hand in hand to promote densification as “Eco-Business” at the expense of its social dimension.

As a consequence, our results show that long-term residents in Brunaupark and Schorenweg find themselves evicted as they are no longer able to afford the new rents of their modernized and densified dwellings. They are forced to leave urban centers because of the lack of affordable alternatives. This process of social exclusion contributes to the constant erosion of social relations and contacts to family members, neighbors, and friends. In the Brunau and Schoren areas, residents feel that their perspectives as tenants have not been respected by municipal authorities, particularly, since their legal objections (e.g. against unfair dismissal) have been rejected in both cities. Even though they tried to resist through street rallies, formal petitions, or the collaboration with the local tenants association, they did not succeed in defending their interests and faced discrimination because of their low-income status.

5.3.6 The Eco-Business of Densification and the Neglection of Its Social Dimension

Even though densification has become a core objective of urban policy agendas across the globe, critical analysis of its socio-political limitations, challenges, and contradictions, particularly in regard to its effects on tenants from a social sustainability perspective is largely missing (Ancell & Thompson-Fawcett, 2008; Burton, 2003; Pérez, 2020; Scally & Tighe, 2015). This article addresses this gap in the literature and focuses on the social implications of densification, therefore indirectly contributing to understand how the social qualities of a city can be sustained effectively.

Based on two Swiss examples, we show that the current way of implementing densification objectives can be far from socially sustainable. A powerful coalition between private landowners and municipal authorities promote densification as an “Eco-Business” by coupling urban competitiveness with ecologic viability goals, while neglecting social aspects. This coalition tends to jeopardize the very social qualities which are a city’s basis of community-based initiatives and solidarity-creating capacities. Low-income groups, including old-aged, young families, or student households, find themselves in a vicious circle in which they do not have other alternatives than to move to cheaper suburban areas. Hence, those being displaced have become the victims of powerful forces of capitalist urbanization and differential spending power.

Even though our results are limited to two Swiss cities, potential for generalization to other urban contexts results from the identified causal mechanisms which explain why the social dimension of sustainability tends to be bypassed in densification processes. On this basis, we can formulate different strategies to make densification more social (e.g. quota for affordable housing, public subsidies for non-profit housing cooperatives, eviction controls, etc.). An effort can also be made to properly activate existing instruments: making densification more social is not only a matter of political will, but also of the ability of public administration to familiarize with all the range of existing intervention possibilities. Sometimes the implementation of more social measures might have to be done at the expense of architectural quality and homogeneity, but there might be good reasons to do so. Residents could also be involved more actively into decision-making and stricter control mechanisms in relation to occupancy rate rules or income levels in social housing units could be activated. Greater awareness of the detrimental social implications of densification and implementation of proactive measures to counteract them could also improve the acceptance of densification and prevent NIMBY-responses (Scally & Tighe, 2015).

The findings of this article call also for a greater involvement of city governments to counteract trends of increasing commodification of urban housing stocks (Aalbers, 2017; Marcuse, 2016; Rolnik, 2013) by systematically promoting new and/or available policy measures which incorporate how residents interpret the places in which they live and embedded in order to include their perspectives into local decision-making procedures and regulations. Only in doing so, cities will succeed in promoting densification projects that are designed to the needs and capabilities of people who are actually supposed to benefit from them—the residents. Presumably, sustainable urban development calls for economic stability, environmental protection, and social sustainability not just the one or the other.

5.4 Article 3: Strategic Use of Land Policy Instruments for Affordable Housing—Coping with Social Challenges Under Scarce Land Conditions in Swiss Cities

Gabriela Debrunner & Thomas Hartmann

Journal: Land Use Policy, 2020, Vol. 99, https://doi.org/10.1016/j.landusepol.2020.104993

Impact Factor (2019): 3.682

Status: Published

Abstract: For decades, many cities have introduced densification policy objectives to stop urban sprawl or to promote efficient use of natural resources. In the urban housing sector, however, densification projects often intensify social challenges. Due to rising rents after modernization of existing housing stocks as a consequence of densification, low-income tenants are forced to leave their apartments. Risks of social exclusion and segregation increase simultaneously.

In this paper, we analyze how local planning authorities cope with affordable housing shortages in a context of urban densification. Specifically, we ask: How do municipal planning authorities promote affordable housing in densifying cities? To answer this research question, we apply a neoinstitutional analysis approach to better understand (1) the basic mechanisms of how land policy instruments impact affordability, and (2) why specific instruments are activated to defend affordable housing objectives. Through qualitative case study analysis of four Swiss urban municipalities, our results show that the mere availability of land policy instruments is not sufficient but that the strategic activation of specific instruments matters.

Keywords: land policy; affordable housing; densification; gentrification

Research Highlights:

The paper…

• … applies a comparative case study approach to analyze the municipal land policy strategies for affordable housing in four Swiss cities.

• … analyzes how Swiss municipal authorities in charge of land-use planning promote affordable housing in a context of densification.

• … explains what kind of policy instruments they can use to promote affordable housing effectively.

• … argues that effective municipal land policy in favor of housing affordability (as key element of urban social sustainability) does not only involve the mere introduction of new instrument.

• …but the strategic activation of available instruments matters.

5.4.1 The Role of Municipal Planning Authorities in Affordable Housing Provision

For decades, many cities have introduced densification policy objectives to stop urban sprawl or to promote efficient use of natural resources (Daneshpour & Shakibamanesh, 2011; Touati-Morel, 2015). Densification is defined as a process leading to higher exploitation (number of households) within existing city boundaries (Boyko & Cooper, 2011: 47). The implementation of this process, however, is a contested procedure as it requires to deal with the already built environment (Gerber et al., 2018). In the urban housing sector, for example, the compact city may improve public transport use, while at the same time it is likely to mean less domestic living space and a lack of affordable housing. A rising number of tenants suffer from social eviction, contract termination and dismissal due rent increase after modernization as a direct consequence of urban densification (Bramley et al., 2009; Burton, 2003; Chiu, 2003).

In Switzerland, for instance, a legally binding densification policy objective has been introduced in the revised Federal Spatial Planning Act (SPA) in 2013. Swiss municipalities are obliged to densify through inward settlement development to protect agricultural land and to preserve natural habitats (Art. 1 SPA). However, since the majority of Swiss cities lacks of free inner-city plots, the process is primarily being implemented through redevelopment of existing housing stocks e.g. in the form of total replacement construction, renovation, or compaction of existing buildings (Nebel et al., 2017). Simultaneously, affordable housing shortages for low- and middle-income households have intensified in almost every Swiss city in recent years (FOH, 2016a). The current housing situation in urban areas is charaterized by an overheated housing market with vacancy rates below 1% and rising rents (Balmer & Gerber, 2017). Consequently, municipal authorities are increasingly confronted to deal with tenants suffering from social exclusion due to rising rents after modernization and densification. Particularly, low-income old-aged, migrant and family households are affected from social displacement as newly renovated buildings are only affordable for middle and high-income groups and non-profit housing suppliers have long waiting lists (FOH, 2016a). The current situation is even more worrying considering that Switzerland is regarded as a nation of tenants with having the lowest homeownership rate in Europe (Lawson, 2009). Housing provision traditionally lies in the responsibility of the profit-oriented private rental sector (Bourassa et al., 2010). In Swiss cities (where over 70% of the population lives), 63% of households live in apartments of private investors and are strongly dependent on the housing stock owners’ decisions (FOH, 2017).

In this article, we analyze how municipal planning administrations cope with affordable housing shortages in a context of urban densification. Specifically, we explain the strategies implemented by municipal authorities in order to deal with affordable housing provision when confronted with scarcity of land. We ask: How do municipal planning authorities promote affordable housing in densifying cities? To answer this research question, we apply a neoinstitutionalist analysis approach and proceed in two steps to better understand (1) the basic mechanisms of how policy instruments impact affordability, and (2) why local planners activate specific instruments to defend housing affordability objectives. These questions require the use of qualitative case study methodology (Yin, 2018) employed in four Swiss municipalities which are all confronted with rising affordable housing scarcity and densification pressure. This article brings together examples of local practices to raise awareness how planners can strategically activate different policy instruments to promote affordable housing in urban areas.

5.4.2 Affordable Housing Provision at the Interface Between Public Policy Intervention and Property Rights

Housing affordability refers to a situation in which households are able to pay a certain percentage of their income for housing costs so that they will have enough left for other necessities of life (Stone, 2006). In Switzerland, for instance, it is generally assumed that a quarter (25%) of the monthly net household income can be spent on the monthly gross rent without negatively impacting other dimensions of life (FOH, 2014c).¹⁴

To understand the diverse mechanisms that influence the status of housing affordability, we apply a neoinstitutionalist analysis approach (Gerber et al., 2009; Mandelbaum, 1985; Ostrom, 2007; Williamson, 2000). In general, this approach focuses on the relationship between institutions and actors’ decisions observing that human actions take place within a tight web of formal rules which structure individuals’ expectations about what others will do (Hall & Taylor, 1996: 956). Institutions are thereby understood as shared social values stipulated in formal laws and ordinances which guide social interaction and practices (Dembski & Salet, 2010: 612). Following the neoinstitutional perspective, housing affordability is hence regarded as the result of human actions. The key attributes of individuals’ behavior—both the institutional setting and the actors’ self-interestedness and strategies of action—need to be addressed for understanding the (un)sustainable use of urban housing stocks (Williamson, 2000: 600).

Strategic Activation of Land Policy Instruments for Affordable Housing Provision

Housing is a resource that is economically significant. Traded on the free market, housing is a commodity with enormous economic potential which is why it is often treated as a highly valued collateral. Especially in cities, where demand for housing is high and the potential for capital accumulation is lucrative, the competition between actors interested in using urban land for housing is rising and rents constantly increase (Aalbers, 2017: 543–544). In addition, in many cities, the prohibition to build outside municipal boundaries and the obligation to densify within the built environment has even reinforced this competition. Due to scarce land resources, the prices for land and the housing stocks which are built on intensively increase (Burton, 2000: 1976).

Consequently, the provision of affordable housing in dense city areas is to be regarded as a land policy issue since owners can ask for higher land prices due to increased proximity within the financial center, centrality to transport nodes, or accessibility to services which directly influences the rental cost level (Theurillat et al., 2014: 1426). In this context, “land policy” encompasses all the political-legal measures implemented by the municipality to deal with the issue of land use regulation (Hartmann & Spit, 2015). More precisely, land policy “is defined as all those state decisions and measures that have an influence on the way land is used, distributed and valued to implement the politically defined spatial development goal” (Hengstermann & Gerber, 2015: 246). This active definition of land policy (see for discussion, Hartmann & Spit, 2015; Healey & Barrett, 1985; Knoepfel et al., 2012; Needham & Verhage, 1998; van der Krabben & Jacobs, 2013) differs from a passive land policy understanding (e.g. Davy, 2005: 117) that focuses not only whether land is changed (passive) but also in regard to achieve a specific spatial development goal (e.g. affordable housing provision) (active) (Hengstermann, 2019).

In practice, such state interventions appear in the form of public and private law instruments that operate according to a different logic and rely on different forms of legitimacy (Hood & Margetts, 2007; Needham et al., 2018). In general, policy instruments are defined as intervention ways or measures that are needed to achieve a certain public policy goal (Knoepfel et al., 2007: 156–157). To provide affordable housing, for instance, different intervention ways for municipalities exist including the increase of social housing (public ownership) or a shift towards project-based subsidies that may stimulate the affordability of rents (Kadi & Ronald, 2014: 271).

• Public law instruments derive from public policy including regulatory statues, penal laws, and other laws of public order. They aim to solve a political problem that was defined as such by the voting majority e.g. urban sprawl. Public law instruments such as subsidies or zoning measures are regularly revised, not only because the problem they are targeting constantly evolves, but also because changing political majorities propose alternative solutions to the problem (Knoepfel et al., 2012).

• Private law instruments derive from private law including property law, the law of contracts, torts and obligations. Their aim is to defend private interests against the (potentially absolutist) power of the state (Locke, 1689). Property rights are grounded in the Civil Code (or similar in common law contexts) and are extremely stable over time because their definition hardly changes (Bromley, 1992; Savini et al., 2015). Without heavy state intervention such as expropriation, therefore, new planning regulations only get implemented when titleholders agree to undertake new development, sell their land, or transfer their development rights (Gerber et al., 2017).

Under scarce land conditions, city authorities frequently fail to cope with complex property-right arrangements as most instruments were crafted to deal with use situations on unbuilt greenfield. Densification, in contrast, implies to deal with the already built environment and with complex property situations (e.g. small-scale ownership, veto rights controlled by power actors). Therefore, in a densifying city, planning for affordable housing requires a keen understanding of the instruments available to govern the close interactions between land use planning (public policy) and property rights (Blomquist, 2012; Dawkins & Nelson, 2002). Planners have to understand that the selection and combination of policy instruments is never neutral. Rather the choice corresponds to a specific interpretation of the role played by the state and/or its private partners (Salamon, 2000). An active land policy strategy, in other words, requires planning administrations, which are capable to develop intervention ways to reinforce their position in front of powerful landowners or economic interests to address complex and rivalrous land use situations (Alterman, 1990). These strategies are deliberate and goal-oriented applications of certain instruments or the combination thereof (Gerber et al., 2018). For example, as densification implies a form of planning that goes beyond zoning in order to deal with complex property rights situations, strategic competencies of municipal authorities include e.g. amicable purchase, building leases, public–private-contracts, and so on. Moreover, because property titles give additional power to their holders to shape housing development, public actors too can use them to reinforce their position (Gerber et al., 2017: 1687).

5.4.3 Comparative Case Study Analysis of Four Swiss Cities

To investigate a contemporary phenomenon in-depth—the provision of affordable housing in densifying urban areas—and as a results of human action, the empirical material of this study is conducted through qualitative case study methodology (Yin, 2018).

Case Selection and Methods

The study is conducted in two steps: in a first step, we investigate the wide range of available policy instruments to promote affordable housing in cities under densification pressure (sub-question 1). Following this objective, Switzerland makes an interesting case study to analyze the relationship between land use regulation, densification, and housing affordability as the challenge of coordinating the three has become predominant in the country in recent years (Gennaio et al., 2009; Rérat, 2012; FOH, 2016, 2016a). Especially since the approved revision of the Federal Planning Act in 2013 which enforces the 26 cantons and over 2000 municipalities to promote “inward settlement development, while ensuring an appropriate quality of housing” (Art. 1, para. 2, lit. abis SPA). Simultaneously, population growth coupled with yield-oriented investments attracted by the state’s economic stability and wealth reinforced the attractiveness of Swiss real-estate markets. Triggered by low-interest rates, urban housing has become the main target of capital investment, especially for pension funds. As a result of increased commodification, modernization, and densification of housing stocks, the provision of affordable housing has increasingly become difficult for Swiss planning authorities in recent years (Balmer & Gerber, 2017).

The country is organized on three executive levels—municipalities, cantons, and the confederation—and is characterized by a form of “cooperative federalism”. Local zoning plans are prepared by municipal authorities but must comply with cantonal and federal plans (Linder, 1994). In any case, local zoning regulation is binding to private property owners. Investors and developers can be asked to prepare and to fund specific plans, however, the final validation of the local plan and the provision of building permits always relies in the responsibility of the municipal planning authority (Gerber et al., 2017: 1690). Methodologically, in this step, we performed a broad screening and analysis of policy documents at the national and local level. We analyzed articles published within the last decade, including government reports, vote results, legal documents, parliamentary debates, newspaper articles, and “grey” literature which documented the use and range of available policy instruments for affordable housing provision. Our goal was to detect the wide range of policy instruments available for Swiss municipalities.

In a second step, we analyzed the municipal authorities’ strategies when activating specific policy instruments for affordable housing provision (sub-question 2). Therefore, we selected two cases in urban core areas—the cities of Zurich and Basel—and two cases in suburban areas—the cities of Köniz and Kloten—to gain a broad understanding of the strategies applied in different urban contexts. Whereas the cities of Zurich and Basel face a period of severe urban housing shortage, in the cities of Köniz and Kloten the pressure on affordable housing provision is not as profound but is constantly rising. In Zurich, for instance, rental costs on the private rental market have increased by +75% since 2000 (Balmer & Gerber, 2017: 8). On average, a 90m² apartment offered on the rental market costs more than 2000 Swiss francs net-rent per month which is only affordable for middle and high-income households (Schmid, 2020). Hence, moving to cheaper suburban areas has remained the only option for many vulnerable and lower-income groups in Zurich.

The four cases were selected as they all show similar socio-economic characteristics (population growth, vacancy rate, land scarcity, densification pressure, affordable housing shortage) and, at the time of investigation, had to deal with ongoing densification projects in the urban housing sector (Table 4.1). Thereby, we were able to directly confront the actors involved with the decisions taken in relation to affordable housing provision and densification. To achieve this goal, we conducted ten semi-structured interviews with eight experts from the public sector (local planning, housing, and social welfare departments) and two local tenants associations. In addition, we analyzed each case 20–30 policy and project documents to gain a detailed understanding of the applied municipal authorities’ interests and strategies.

(see Table 4.1 of this book)

5.4.4 Strategic Use of Land Policy Instruments for Affordable Housing

As mentioned before, municipal authorities may activate different policy instruments to alter land parcels in size and shape in order to promote affordable housing. In doing so, they aim to change the use conditions for specific groups. In the following section, we present four strategies which Swiss municipal authorities follow to promote affordable housing (Fig. 5.3). These intervention ways derive from the neoinstitutional analysis approach (Gerber et al., 2018) and structure both the empirical analysis and the discussion section of this paper. The four strategies were selected along their characteristics (either deriving from public or private law), and their potential to defend municipal interests in front of powerful landowners. In particular, we distinguish between, first, instruments that regulate land uses by using public policy with no direct impact on the use rights of land such as economic incentives for landowners (see [1] supply-subsidies). Second, instruments using public policy leading to a regulation of use rights on formal ownership ([2] zoning). Third, instruments leading to a legal redefinition of property rights in the Civil Code ([3] contracts). And forth, instruments that redistribute property rights such as expropriation or targeted purchase of land ([4] property rights).

Fig. 5.3

Municipal land policy instruments for affordable housing in Swiss municipalities (analysis based on e.g. FOE & FOH, 2015; FOE, 2015, 2018; FOF et al., 2009; FOH 2012, 2014, 2014a, 2014b, 2016, 2016a, 2017, 2018b, 2019; FOSD, 2016; FOSI & FOH, 2015; Swiss Federal Council, 2014, 2016a, 2017)

For each policy instrument, we briefly explain how they work in the Swiss context. Then, based on our qualitative case study analysis, we investigate how the policy instruments are used for affordable housing provision in the four cities. Third, we explain why local planners activate specific policy instruments to promote affordable housing in order to understand the strategy behind the policy measures applied. As the process is ongoing, the list is neither to be evaluated as complete nor exhaustive.

The Basic Mechanisms How Policy Instruments Work in the Swiss Context

(1) Supply-Side Subsidies

In general, the granting of supply-side subsidies does not target the individual tenants, rather individual buildings. In the housing sector, Swiss municipalities provide supply-side subsidies in the format of economic incentives such as direct loans, tax relief, bank guarantees, or advantageous mortgages to private third parties e.g. to non-profit associations or private individuals.

For non-profit housing associations: Private homeowners have to belong to a federal umbrella organization to benefit from public supply-side subsidies for housing purposes. The organization controls that its members (mainly non-profit cooperatives and foundations) provide affordable housing according to the cost-rent principle and based on non-profit objectives only (Balmer & Gerber, 2017).

For private individuals: Moreover, each Swiss city (based on the Federal Energy Act) does not only provide supply-side subsidies to the non-profit housing sector. They are also obliged to grant subsidies in the form of direct grants, financial incentives, tax relief, and free consulting to private individuals (including institutional investors) to improve energy efficiency standards e.g. for insulation, windows, or heating. So far, the granting of energy subsidies for private individuals has only been determined by technical criteria and has not been attached to the fulfilling of social objectives. However, in recent years, the federal government has started to investigate whether such granting of subsidies could be coupled to social tasks too e.g. to the requirement to provide affordable housing if one aims to benefit of subsidies (FOH, 2016).

(2) Zoning

In Swiss municipalities, zoning is a relatively new land policy instrument for the provision of affordable housing. However, zoning measures have gained in strategic relevance to steer affordable housing development in recent years since urban land has become scarce and increased flexibility is needed (FOH, 2012). The policy instrument allows municipal authorities to directly intervene into private development plans because zoning regulations are binding to landowners.

Zones for affordable housing: In these zones, the municipality can oblige private landowners to provide a minimum share of affordable housing (e.g. 50%). Thereby, the amount of affordable housing can be raised effectively since all private landowners are legally obliged to follow this objective in these zones.

Zones for the protection from redevelopment: Landowners only receive a building permit to (re-) develop, renovate, modernize, or replace existing housing stocks in these zones if tenants will have the opportunity to stay in their apartments afterwards. For example, property owners must approve that the rents will not exceed a certain level up to three years after the renovation task is finished. The primary political objective behind this measure is to keep the rents low when demand is high and to prevent luxury renovations.

Special land use zones: The introduction of special land use zones is designated to areas of increased public interest in which municipal planning authorities can encourage spatial development outside the regular zoning plan. These zones are legally binding for public authorities and landowners but the private parcel’s development terms and conditions are still negotiable for both sides e.g. regarding use density requirements, energy efficiency standards, urban design or housing affordability objectives. So far, in many Swiss cities the instrument has primarily been used for unbuilt industrial zones (e.g. for the transformation of former train station areas) as well as for greenery and infrastructure projects (e.g. lake shores, hospital areas, education facilities). In the housing sector, however, the instrument has gained new strategic relevance too since local planners are obliged to increase density within municipal boundaries and increased flexibility is needed (Knoepfel et al., 2012: 423). Particularly, through the use of this instrument, city governments try to couple density goals with housing affordability objectives. For example, in these zones, the municipality can oblige the private investor to provide at least 40% affordable apartments, and in turn, landowners can benefit of a density increase of +10% outside the regular zoning plan.

Quotas: The introduction of quotas for affordable housing is a quantitative zoning mechanism which assures municipalities that the ratio between low-cost housing supply and demand does not exceed a certain level. Through the use of quotas, planning authorities can steer affordable housing provision effectively as the output is regularly controlled and monitored by quantitative guidelines. In particular, quotas help planners to have a clear vision and goal what type and size of housing units need to be built within a specific timeframe e.g. by 2050. The instrument also helps city authorities to legitimize the use and introduction of additional policy instruments (e.g. the purchase of private land) which also support the increase of affordable housing in the long term.

Added land value capturing: The policy instrument of added land value capturing is a zoning mechanism with which municipal governments reap some of the increment in land value attributable to planning decisions (Alterman, 2012). According to the revised Federal SPA, Swiss municipalities are obliged to capture a minimal taxation rate of 20% of the added land value for new-built housing on unbuilt land. The tax is due when the land is developed or sold (Art. 5, par. 1 SPA). Optionally, municipalities can also capture added land values that occur through densification measures on already built land (up-zoning) (Viallon, 2018). The funds collected by the instrument grant municipal authorities the possibility to distribute, remove, and relocate private development rights according to societal needs. For example, municipalities can capture a minimum share (e.g. 40%) of added land values that evoke through planning measures for affordable housing provision.

Pre-emption rights: A public pre-emption right (stipulated in the Local Zoning Act) assures the municipality the right of first refusal when private property is sold. Planners apply the instrument for the construction of, among other purposes, social housing units. In planning practice, the municipality makes use of a pre-emption-right if a private parcel has strategic relevance for the city’s urban development as a whole e.g. for the construction of schools or to intervene into socially segregated areas. It also provides municipalities the capacity to prevent land speculation which could hamper affordable housing provision in general (Nahrath, 2018).

(3) Contracts

According to Swiss private law (see Swiss Civil Code and Federal Obligations Code), a contract is defined as a legal agreement between two or more parties, enforceable by law, to perform a specified act. In case one of the two is a public actor, the contract is to be considered as “public–private-partnership” (Nicol & Knoepfel, 2008: 172).

Long-term ground leases: Ground leases grant the landowner the right to retain legal ownership while transferring the right to use his/her land to a private third party (Gerber, 2018). In Switzerland, ground leases are granted for up to 100 years in exchange for annual rent payment. At the end of the lease period, all improvements made to the land by the owner of the building revert back to the landowner, according to the terms of the initial contract (Gerber et al., 2017: 1690). With regard to affordable housing provision, Swiss cities often use the instrument for collaboration with non-profit housing associations (Balmer & Gerber, 2017). In practice, the municipality remains the landowner while the ownership of the building is transferred to a private third party such as a non-profit housing cooperative. The municipality as landowner benefits from a stable source of income over time through lease revenue but does not bear the financial risks to manage the use of the building. The municipality remains in charge to determine special use requirements on their plots e.g. related to social mix rules, income levels, or housing affordability objectives.

Urban development contracts: In urban development contracts, another form of “planning by contract”, a private landowner aims to improve the use requirements that are set on his/her private parcel in the regular zoning plan through a renegotiation of the terms and conditions with the municipal planning authority. Planners may agree to such (re)negotiations with the private investor, for instance, to promote affordable housing. Under scarce land conditions, in particular, the municipality prefers to influence the development terms on private land on soft scale rather than not having an impact on private land at all. Through development contracts, planners can change the “rule of the game” quickly, flexibly, and for specific private locations only (Feldges, 2019).

Tenancy matters: Ultimately, the support of affordable housing can also be promoted via tenancy law. Swiss tenants’ rights are protected by the articles for tenancy matters in the Federal Obligations Code (Art. 253–274 OC) as fifth part of the Swiss Civil Code. In international comparison, tenants in Switzerland are considered to be weakly protected by law in relation to neighboring states (e.g. Austria, Germany) (GFOBRP, 2016). For instance, landowners are allowed to terminate an open-ended rent contract within three months without any specific reason. So regardless of the tenants’ strength of social integration, age, or years of residency in the neighborhood. Residents do also not need to be informed about upcoming densification tasks before receiving the contract termination which leads to social eviction at short notice. Tenants may counteract in court, however, in most cases they do not use this option as they neither have the financial means nor the expert knowledge to do so. Therefore, some Swiss cantons (e.g. Zurich, Fribourg, Basel-City, Geneva) have revised its Cantonal Tenancy Act to better protect tenants from rent increase and dismissal (FOH, 2018a).

(4) Property Rights

Expropriation: In Switzerland, the “right to own” property is protected as a fundamental right by the Swiss Constitution (Art. 22ter CSC). As such it can only be restricted if (1) a legal basis and an overweighting public interest exist; (2) the measure is proportional; and (3) a full compensation is paid (Art. 5, Art. 36 para. 1–3 & Art. 26 para. CSC). Especially in the housing sector, Swiss courts interpret the weight of public interest narrowly so that property restrictions are limited and expropriations are rare in international comparison (Alterman, 2010). As a consequence of this legal situation, the political legitimacy to make use of expropriation for affordable housing provision is low as expropriation is politically contested, long, and expensive.

Targeted purchase of land: The targeted purchase of land guarantees the municipality the full right of disposal and the power to grant the land use rights on their plots. Through public ownership, the city as landowner is in charge to develop housing according to public preferences e.g. to fulfill social objectives such as the provision of affordable housing, the protection of tenants’ rights or to ensure residential stability of old-aged. However, in daily planning practice, the purchase of urban land is expensive and political majorities for the support of such acquisition strategy is not always given. Therefore, many Swiss municipalities have started to intervene into private developers rights in other ways, especially through zoning measures.

The Use of the Policy Instruments for Affordable Housing Provision in Each City

In the following section, we explain how municipal planning authorities in the four cases investigated used which land policy instruments for affordable housing provision. Thereby, we identify differences but also similarities in Swiss local affordable housing practice. The data of the table (Table 5.5) derive from intensive literature and policy documents review and was supplemented by qualitative interview data.

Table 5.5 Use of the land policy instruments for affordable housing provision in each city

Strategic Activation of Specific Policy Instruments to Defend Housing Affordability Objectives in Each City

In the following section, we explain why municipal planning authorities in the four cities activate specific policy instruments to defend affordable housing objectives.

The Case of Zurich

To reach the Constitutional mandate of 33.3% social housing property by 2050, Zurich’s municipal planning authority makes not only use of public law instruments (e.g. supply-side subsidies, zoning). But the city council also commits to find other ways to increase the share of affordable housing effectively, particularly, by activating private law instruments too (e.g. land acquisition, long-term ground leases, changes in tenancy matters). Overall, the quota introduced in the Local Constitution helps the city government to legitimize the activation of additional policy measures such as the purchase of private land even though such acquisition strategy is expensive and politically contested in the local legislative parliament.

The city of Zurich is committed to promote affordable housing in all its neighborhoods through zoning measures, supply-side subsidies for non-profit cooperatives, and the purchase of land for public housing to reach the constitutional mandate of 33.3% non-profit housing property by 2050. (Zurich City Council in Regional Zoning Act¹⁵ 2019: 109)

Moreover, to effectively control the quantitative output and the affordability performance of each publicly subsidized housing association, the municipality initiated the founding of municipal foundations (e.g. “Stiftung Einfach Wohnen” in 2014). Thereby, the municipality seeks to raise awareness for social interests such as the introduction of social mix, income, and occupancy rate rules (Interviewee 40, City of Zurich, Urban Development Department, Expert in housing issues, July 31st 2019). The municipal authority has also intensified the use of “special land use zones” in recent years to provoke “room for negotiation” within building zones. In particular, to force private investors to promote social objectives. For instance, in relation to construction quality, urban design, and affordable housing goals if investors aim to benefit of a density increase outside the regular zoning plan (Interviewee 45, City of Zurich, Head of Planning Department, October 24th 2019).

The Case of Basel-City

To boost business and urban growth, so far, the city of Basel has primarily activated policy instruments which do not hamper private developers’ interests to invest.

So far, we have not had the same densification pressure as Zurich. We had the possibility to redevelop many unbuilt industrial zones. In fact, after the 80s and 90s - a period of structural decline - we have promoted population growth to promote employment increase in the city. (Interviewee 41, City of Basel, Head of Housing Department, August 20th 2019)

However, as tenants’ social exclusion processes have increased in the last decade, Basel’s local tenants association has initiated two local referendums to revise the Local Constitution in order to promote affordable housing (Interviewee 38, Head of Basel Tenants Association, June 26th 2019). Both initiatives aim to improve the living conditions for low-income and vulnerable groups such as old-aged and young families. Following the revised Constitution which was approved by 62% of the voting majority on June 10th 2018, the following changes must be incorporated in the Local Planning and Housing Act:

• Increase in the provision of supply-side subsidies to non-profit housing associations through the initiation of a municipal foundation for affordable housing.

• Introduction of a min. quota of 25% non-profit housing property by 2050 in the Local Constitution.

• Introduction of a more progressive land acquisition strategy for affordable housing.

• Stronger protection of tenants in case of rent increase after modernization through the introduction of rent levels which landowners must follow up to five years after the densification task is finished.

Through obtaining these measures, the city government promotes a more active land policy strategy in order to increase the share of affordable housing in the long run.

In Basel-City, the political intention with the two constitutional initiatives is to introduce higher legal requirements for private homeowners for modernization and to hinder social exclusion of tenants that have lived in their dwellings for many years. (Interviewee 44, City of Basel, Planning Department, September 20th 2019)

In addition to the introduction of new instruments, the municipal planning authority uses available zoning measures (e.g. urban development contracts) in a more strategic way for effective affordable housing provision.

In future terms, we will use urban development contracts more frequently to remain flexible and because we do not need a parliamentary decision to change something all the time. We do not want to dependent on the ideas of current political majorities in every project. (Interviewee 44, City of Basel, Planning Department, September 20th 2019)

The Case of Köniz

To promote affordable housing, on February 12th 2017, Köniz’ voting majority agreed to revise the Local Zoning Act by adding two mandates. First, the city council must ensure that long-term ground leases on public land are provided to non-profit coops and that subsidized associations approve to the cost-rent principle. Second, on private plots larger than 4000m² floor area, the city can oblige the investor to provide min. 20–40% of the newly built apartments created through densification measures for affordable housing. Otherwise, a density increase outside the regular zoning plan is not being approved.

For us, socially-sustainable densification does not only mean higher quantity but also higher social quality. (Interviewee 42, City of Köniz, Local Planner, August 20th 2019)

Moreover, to effectively steer local housing development, the city of Köniz has strategically purchased centrally located parcels.

We perform an active land policy strategy. We discuss where the key parcels are to support urban development. [...] We purchase and sell land, but mainly we purchase. We do have a lot of public land reserves on which we can determine the use conditions. (Interviewee 42, City of Köniz, Local Planner, August 20th 2019)

In summary, Köniz’ local planning authority combines public and private law instruments and is aware of how to use available policy instruments effectively to promote affordable housing.

The Case of Kloten

Same as Basel, so far, the city of Kloten has activated policy instruments which do not forcefully intervene into private investors investment interests (e.g. supply-side subsidies) in order to stay competitive and to attract business.

In case we have public land, we collaborate with non-profit cooperatives. However, this is not the normal case. (Interviewee 29, City of Kloten, Head of Local Planning Department, August 2019)

Moreover, available zoning instruments such as “special land use zones” have been used without determining social restrictions for private investors to promote private investment. For example, in the “Waldeggweg” project, the landowner was allowed to triple the number of apartments on the same parcel without any obligation to fulfill social tasks e.g. related to affordable housing, the prevention of social exclusion or secure tenancy.

With the initiation of special land use plans, we buy the right to participate and to have a say. […] With this instrument, we can increase density and oblige the landowner to follow certain requirements related to architecture, urban design or energy goals. (Interviewee 29, City of Kloten, Head of Local Planning Department, August 2019)

The municipal planning authority legitimizes this strategy by the argument that the municipality seeks to attract business in order to compete with other suburban municipalities, and to become a regional center next to Zurich airport on its own.

We support densification and modernization through raising incentives for landowners. For instance, investors are allowed to double or even triple the number of apartments on the same parcel. Thereby, we promote demolishment and rent increase of affordable apartments. [...] This procedure is politically and economically promoted by the local government. (Interviewee 29, City of Kloten, Head of Local Planning Department, August 2019)

In summary, Kloten municipality follows a land policy strategy for affordable housing which is indeed one-sided: under scarce land conditions and the parallel prediction of population growth (+50% by 2030), the rights of tenants are neglected while the power and wealth of the local growth coalition between the city government, private landowners and the local building industry increases even further.

5.4.5 Four Legal Intervention Ways to Generate Affordable Housing Outcomes

The main question introduced in this article addresses the link between planning and affordable housing provision as follows: How do municipal planning authorities promote affordable housing in densifying cities? In the previous chapter, we show how institutions in general, and the strategic use of specific land policy instruments in particular, are at core for answering this research question. Not only does the article reveal how an instrument’s effect on affordable housing provision is indeed very different between the four municipalities. Moreover, our results show that the mere availability of land policy instruments is not sufficient for the effective provision of affordable housing but that the municipal planning authorities’ strategic activation of specific instruments matters.

• 1. Policy Instruments That Regulate Land Uses Using Public Policy with No Direct Impact on The Use Rights of Land (Supply-Side Subsidies)

  Our analysis in four Swiss municipalities reveals that, so far, public policy instruments with no direct impact on the content of land use rights have proved to be the preferred support mechanism for the provision of affordable housing. This is because supply-side subsidies do not have a direct impact on the private property owner’s freedom or investment interests. As a consequence, public subsidies are easier to implement for municipal authorities than tools which intend to change property rights. City governments do not need to gather the political majorities to oppose private development rights which is why the whole political spectrum (from left-wing to conservative parties) is more willing to agree on. As our analysis reveals, however, these rather weak instruments are not sufficient to provide affordable housing under scarce land conditions. They need to be supplemented by more interventionist land policy instruments to provide housing for all income groups (see next paragraphs).

• 2. Policy Instruments Using Public Policy Leading to A Regulation of Use Rights on Formal Ownership (Zoning)

  In the municipalities investigated (two core cities and two suburban municipalities), zoning mechanisms are acknowledged to be very effective in steering land use for affordable housing. This is because, when land gets scarce, planners are in need to actually intervene into private property owners rights to have a say how, for the benefit of whom, and for what existing housing stocks should be (re)developed. For example, a popular zoning mechanism which seems to succeed in promoting affordability objectives effectively is the use of quotas. Although quotas do not lead to a direct intervention into private ownership, they help local authorities to communicate long-term planning goals and to legitimize the reinforcement of new planning measures. However, at the municipal level, there occur differences how such additional zoning instruments are strategically implemented. In Zurich, for example, where the political majority for more proactive ways of land policy exists, zoning instruments which provoke “room for maneuvering” on private property have more intensively been used in recent years. Specifically, the zoning instrument of special land use plans as it effectively intervenes into market forces. These zones grant municipal authorities the right to distribute, remove, and relocate private development rights according to social and affordable housing needs. In contrast, in the suburban municipality of Kloten, where political majorities follow a more liberal tradition of state intervention and the share of public ownership is low, our analysis shows that special land use zones are used in a different way. Here, “special land use plans” are used to promote modernization of existing housing stocks but at the expense of its social side (e.g. affordable housing) in order to attract business and to stay competitive.

• 3. Policy Instruments Leading to A Legal Redefinition of Property Rights (Contracts)

  In the four municipalities analyzed, the use of policy instruments which lead to a legal redefinition of property rights have gained in strategic relevance in recent years: when urban land becomes scarce, the inertia of private landownership might be too strong which is why increased flexibility but also planning security and predictability is needed. As a consequence, all forms of “planning by contract” such as ground leases, urban development contracts, and changes in tenancy matters help planners to effectively integrate their visions and housing policy objectives into private development plans. Results show that especially in cities which do not have much public land reserves such as Kloten, this flexible type of planning has gained in importance. Through the possibility to strategically negotiate the terms and conditions, public–private-partnerships help planners to increase their power in front of landowners.

• 4. Policy Instruments That Redistribute Property Rights (Public Ownership)

  Landowning municipalities such as Zurich, Basel, or Köniz succeed in effectively promoting affordable housing because they benefit from the power granted by property rights. As landowners they are able to steer land use according to their socio-economic interests and visions. However, such active land policy strategy comes with a number of problems too (Gerber et al., 2017): first, a municipality needs to be able to finance such acquisition strategy, which is difficult to manage especially for smaller suburban cities such as Köniz or Kloten. For them, the challenge with high land prices and austerity imposed on public actors is even harder to handle than for core cities such as Zurich and Basel. Land deals might also be financially risky for the public sector. Therefore, the question arises whether municipalities should take these risks or better transfer them to the private sector. Second, the city government needs to convince the parliament and the population of the benefits that emerge through a public authority managing assets. This mission is especially difficult for more liberal municipalities in which the political spectrum is more likely to agree on less state intervention (e.g. in Kloten). Our results show, however, that once the city government agrees on a more proactive intervention strategy for affordable housing provision such as in Köniz, the spatial development opportunities that arise through it are quickly recognized by politicians and residents. In the city of Zurich, for example, the purchase of public land has enabled municipal authorities to provide affordable housing through various ways such as the construction of public housing or the provision of long-term ground leases to non-profit coops. As a result, the share of social housing constantly increases and the financial expenses for the support of social welfare recipients decreases simultaneously.

In summary, results show that Swiss municipalities do not follow a “one-solution-fits-it-all” land policy strategy for affordable housing. Depending on the socio-political context (e.g. district characteristics, financial capacity, political majorities, or the cultural conditions related to urban regeneration goals), planners follow heterogenous policy goals and try to promote housing affordability by implementing different policy instruments. However, we summarize that an active municipal land policy strategy for effective affordable housing provision requires both—the combination of public and private law instruments and the strategic activation of them: since private property rights are strongly protected by the Swiss Constitution and very inflexible, Swiss municipal land use planning seems to experience difficulty in implementing democratically accepted spatial development plans on titleholders due to conflicting interests. As a consequence, the real housing challenge is not so much plan making, but rather plan implementation. Without heavy state intervention such as expropriation, new housing regulation in favor of housing affordability (e.g. new zoning) only gets implemented when titleholders agree to undertake new developments, sell their stock or the land, or transfer their housing development rights.

The shift towards densification in land use planning makes this conflicting relationship between policy intervention and property rights even more difficult in the four cities investigated since densification implies to deal with the already built environment. Planning therefore takes place within a tight web of existing rights and duties engraved in complex institutional norms and regulations. Potential for redevelopment is often given, but the land is frequently not accessible due to the land rights secured by strongly protected property titles. Under these circumstances, planners often fail to deal with complex private property rights arrangements as most public intervention ways were crafted to handle simpler property rights situations on unbuilt agricultural or industrial land. Therefore, to cope with complex property rights situations on already built land such as intermixed parcels of different sizes, co-ownership constellations, rights to object granted to neighbors, rights of way, or mosaic of easements, more than ever, planners need a keen understanding of the close interactions between public policy and property rights to effectively steer affordable housing development. Our analysis reveals that it needs all the finesse and competencies (e.g. knowledge, financial resources, networks, personnel) of municipal planning administrations to implement affordable housing objectives in dense cities, because landowners have the power to defend the status quo through veto rights.

In core cities like Zurich, for example, public officials succeed in increasing the share of affordable housing units as they rely not only on zoning but also municipal ownership, long-term ground leases, and tenancy law. In smaller municipalities such as Kloten, however, expert knowledge as well as personnel and financial resources for strategic activation of these policy instruments is not as pronounced. Also, the political acceptance and majorities for more proactive forms of planning is not always given—especially in more suburban areas. Local politicians often regard offending private investors’ plans as a too risky business for the municipality’s financial situation. This leads to the conclusion that even though no general local intervention strategy for affordable housing provision exists, this study has indicated how municipalities might coordinate and strategically activate different policy instruments to deal with the scarcity of land and to satisfy affordable housing needs more effectively in the long run. Indeed, we showed that the introduction of new policy instruments is not always necessary but that the strategic activation and combination of available instruments is becoming more relevant.

5.4.6 Towards an Active Municipal Land Policy with Property Rights

While there is a growing body of literature focusing on the social impacts of densification on households (Bramley et al., 2009; Burton, 2000, 2003; Chiu, 2003), and another extensive body of research looking at land policy issues for the management of natural resources (Gerber et al., 2018; Hartmann & Spit, 2015; Ostrom, 2007), research on how to combine the two concepts to housing inquiries is still thin (Balmer & Gerber, 2017; Nicol & Knoepfel, 2008). More qualitative and quantitative research is still needed on whether or not specific policy instruments such as changes in tenancy matters or the property rights logic can effectively steer affordable housing, and why some municipal authorities decide to activate specific instruments while others do not.

In this article, we introduced a neoinstitutional analysis framework which postulates a causal relationship between (1) the affordable condition of the housing resource, (2) the institutions in force and corresponding policy instruments, and (3) the involved actors and their appropriation strategies. We analyzed the mechanisms at play between these three variables that explain why some groups or interests experience disproportionate access to the decision-making process on housing use and tend to lose while others win. An active land policy strategy which aims to promote affordable housing through the activation of both new and available instruments proofed to be become particularly relevant in this matter. In particular, we showed how different land policy instruments function and are strategically activated by municipal planning authorities to provide affordable housing. Even though our results are limited to four Swiss cities, potential for generalization results from the following identified causal mechanisms which are expected to have broader significance in other urban contexts too: affordable housing provision results from the intertwined relationship between land use planning (public policy) and property rights—the two main sources of formal constraints. Planners can influence the private property owners’ behavior in favor of increased housing affordability if they are able to find ways which reinforce their position in front of powerful landowners. To do so, they need to activate public and private law instruments which do not always need to limit property owners’ rights but also work with property rights.

This study addresses a gap in housing study literature (Aalbers, 2017; Bramley et al., 2009; Burton, 2000, 2003; Chiu, 2004; Kadi & Ronald, 2014) as it analyzes the cities lack of affordable housing as a land policy issue, and in relation to the formal institutions and the municipal authorities’ decision-making strategies involved. Taking into account future challenges of land scarcity that currently evolve in many cities (Gennaio et al., 2009; Touati-Morel, 2015), the findings of this study may help municipalities to counteract trends of rising commodification and financialization of urban housing stocks. If city authorities do not succeed in providing affordable housing in densifying cities, the preservation of urban social qualities such as social mixing, tenure security, or community cohesion is in acute danger since more and more tenants are forced to leave due to rising rents after densification. This scenario is highly unsustainable. This article helps municipal planners, practitioners, and policymakers to prepare for future housing challenges: a stable “right-to-housing” for all does not necessarily require the mere introduction of new policy instruments but the strategic activation of available instruments matters.

5.5 Article 4: The Commodification of Temporary Housing in Zurich

Gabriela Debrunner & Jean-David Gerber

Journal: Cities, Vol. 108, https://doi.org/10.1016/j.cities.2020.102998

Impact Factor (2019): 4.802

Status: Published

Abstract: Since the 1970s, temporary uses of vacant spaces have become a preferred urban development strategy to revitalize centrally located neighborhoods. In the housing sector, however, temporary uses are barely registered as they provide only short-term shelter in buildings shortly before demolition. Therefore, they do not secure a stable right to housing. In Switzerland, nevertheless, temporary uses are increasingly gaining momentum in the housing segment. Since the 2010s, besides institutionalized but non-profit temporary housing, a for-profit model has emerged. This commodified model is managed on the owners’ behalf and is based on loaning law contracts that require payment for operating costs, but not rent. Consequently, the legal protection of the temporary users’ rights, namely low-income families, single parents, people with social aid, and students remains weak. This article detects the mechanisms at play explaining the reasons for the shift towards profit-seeking in temporary housing by using an institutionalist and actor-centered analysis approach. Through a qualitative single case study analysis of Zurich, Switzerland, the phenomenon will be analyzed in a city confronted with increasing affordable housing shortage and densification pressure.

Keywords: Temporary use; housing affordability; housing policy; commodification; urban social movements; densification

Research Highlights:

The paper…

• …examines an extreme case of affordable housing scarcity in a context of densification – the emergence of a for-profit temporary housing model in the city of Zurich, Switzerland.

• … explains in detail why and how the actors involved – in particular, landowners, public authorities, mediators, NGOs, and residents – benefit from the emergence of such new housing model.

• …shows that not only young and flexible people live in temporary housing locations shortly before demolition, but also young families, single parents, and low-income migrants.

• …questions the role of property owners, mediators, and the city government in promoting for-profit temporary housing and explains how they are able to defend their interests.

5.5.1 Temporary Housing in Densifying Cities

Since the 1970s, temporary uses of vacant spaces have become a preferred urban development strategy to preserve and to revitalize centrally located neighborhoods, to express political claims, and to boost economic and social innovation in cities (Castells, 1983; Florida, 2002; Galdini, 2019; Oswalt et al., 2003). Whether used for illegal or publicly subsidized temporary use, urban scholars have recognized the significant role of temporary urbanism for the dynamic (re)production, transformation, and distribution of space in order to support self-determination, diversity, and flexibility of today’s urban society (Amin & Thrift, 2002; Bishop & Williams, 2012; Colomb, 2012; Smith, 2017).

Temporary use, however, is neither clearly defined in its form of activity nor in its duration or legal dimensions. The only common characteristic is temporariness, which means that temporary uses are “explicitly” and “intentionally” time limited in nature (Lara-Hernandez et al., 2020: 1; Németh & Langhorst, 2014: 144). Unlike short-term rentals or Airbnb-arrangements (van Holm, 2020), “temporary housing” as defined in this study takes place in vacant buildings shortly before demolition or reconstruction. It refers to an undefined temporary gap between the former residents’ moving out and the demolition and/or renovation of the building. Unexpected events such as the delayed approval of the building permit or changing investment conditions may lead to an expansion of the temporary housing period which are not previously foreseen (Angst et al., 2008).

In the Swiss context, which will be presented in greater detail in the following sections, we observe the situation that temporary solutions have increasingly gained momentum in the housing sector. For low-income residents, temporary housing offers the possibility of living centrally and at low cost. Particularly in cities, we observe that the dynamics of temporary housing have changed since the revision of the Federal Spatial Planning Act (Art. 1, SPA) in 2013. Following the revised Act, Swiss municipalities have become obliged to promote inward settlement development to curb urban sprawl. Through a process of densification (also termed “intensification” or “consolidation”) leading to an increase in the number of households within existing municipal boundaries, urban land gets increasingly scarce and the competition to use this land is rising. Confronted with such tight market conditions, we identify a housing situation in which a new, profit-oriented temporary housing model that is managed on the owners’ behalf has emerged. As our analysis reveals, this new model of temporary housing is based on loaning contracts that require payment for operating costs, but not rent. Despite this legal shift leading to the erosion of the protection of tenants’ rights in the name of increased flexibility for landowners and developers, this new business model proves to be favored by a coalition of all major actors involved—temporary users, property owners, mediators, and municipal authorities. This article interrogates this puzzling situation and aims to explain the reasons behind.

To capture this phenomenon, we ask: What are the institutional arrangements making for-profit temporary housing possible? Which rationales of the different actors involved in this system explain its expansion? And what are the consequences on the different categories of actors? We identify the mechanisms at play explaining how the shift towards profit orientation in temporary housing took place and discuss how the results are to be interpreted from a critical urban development and social justice perspective. To answer the research questions, we apply an institutionalist and actor-centered analysis approach and qualitative single case study methodology.

5.5.2 Development Stages of Temporary Housing

To explain the emergence of a for-profit temporary housing model, the article applies an institutionalist and actor-centered analytical approach (Healey, 2007a; Nicol & Knoepfel, 2008): following this approach, housing is regarded as a resource, the affordable status of which is seen as the result of a complex interplay between the local regulatory framework and the decision-making behavior of the actors involved (municipal authorities, landowners, etc.). We distinguish two main sources of institutional rules: public policies and property rights. Institutions are defined as a set of norms and values—formalized in legal rules or not— that structure humans’ expectations about what others will do (Hall & Taylor, 1996: 956). Within an institutional setting, actors develop strategies to defend their own interests in order to meet a particular goal (e.g. affordable housing provision) (Gerber et al., 2018).

More precisely, through public policies (stipulated in public law), public actors are granted democratic legitimacy and material power to solve a public problem in the name of a public interest, thereby confronting existing property rights (stipulated in private law), which follow an opposite logic—the protection of private interests against the state (Knoepfel et al., 2011). For example, municipal authorities provide the local policy framework regulating temporary housing, e.g. through zoning or the authorization to use the premises, as well as through specific measures designed to promote affordability. However, property owners are in a position to decide on temporary uses of their site. Their property titles, which grant them the power to define use or transfer rights, can oppose the interests defended by public actors. Hence, even though potential for affordable housing provisions is often given, apartments are often not accessible due to powerful landowners’ interests (Gerber et al., 2018).

While temporary housing organized through public support has been known for several years (e.g., in the form of temporary student or refugee accommodations), a new trend towards commodification of temporary housing is gaining momentum. We will explain this shift by analyzing the underlying institutional rules as well as the rationales of the actors involved.

Legal Security Through Institutionalization

Historically, temporary housing has its roots in illegal and informal squatting. During the 1980s in many Western European cities such as Berlin, Amsterdam, or Brussels, illegal squatting of vacant residential buildings became an eloquent symbol for social protests against the scarcity of affordable urban housing and rising unemployment (Holm & Kuhn, 2011; Pruijt, 2013). Because of the failure of city councils to respond to the lack of affordable housing, non-profit grassroots organizations were founded out of the illegal squatting scene to provide an alternative to market-oriented housing (De Decker, 2009).

In the following decade, however, many urban governments started to support these grassroots organizations and to publicly finance alternatives to squatting themselves. They aimed to calm down the protests and decided to integrate these self-help initiatives into their social housing policy strategies. In other words, out of the informal, urban squatting movement an increasing number of activists’ groups were clearly channeled into more stable and formalized patterns to keep a clean, safe, and respectable image of the city (Martínez, 2013; Mayer, 2007; Özdemirli, 2014; Priemus, 2011; Pruijt, 2003).

The first legal temporary housing agencies working on a non-profit basis were founded in this context. These mediator agencies are acknowledged as a primary institutionalized form of temporary housing in the sense that they started to connect vacancies and potential temporary users with each other on a professional basis. They also began to provide knowledge on the local legal framework for political, organisation, technical, administrative, and contractual constraints. Contrary to illegal squatting, they benefited from legal security, stability, and financial support as they operated under legal norms and political-administrative procedures. The city council used its authoritative power, including regulatory statues, penal law, or social housing policy regulations to promote non-profit temporary housing. This procedure served as a favorable public coping strategy to deal with the urban affordable housing shortages during the 1980s and 90s in many Western European states (Colomb, 2012).

In Belgium, for instance, so called “social rental agencies” have started to integrate temporary housing as a widespread means to support vulnerable households covering a large part of the affordable housing demand in the country during the 1990s and 2000s (De Decker, 2009). In the Netherlands, “anti-squat” organizations have been created to temporarily manage buildings and to protect them from vandalism (Priemus, 2011; Pruijt, 2013). In Eastern Germany, the model of “safeguard houses” (in German: “Wächterhäuser”) was successfully implemented at the beginning of the 2000s to offer affordable housing options to temporary users who, in return, protect the abandoned properties from decay (Dubeaux & Sabot, 2018). In summary, these temporary housing agencies all work on a non-profit basis to meet the needs of specific categories of tenants. As social organizations, they are integrated into the municipal housing policy system and not only provide accommodation to low-income groups (students, young adults, social welfare recipients, etc.), in most cases, they also help them to manage their daily life in a broader sense (budgeting, household organization, etc.).

Economic Profitability Through Commodification

As described in the previous section, the integration of non-profit temporary housing into urban housing policy systems has become a favored strategy to deal with affordable housing shortages and short-term vacancies for the past three decades (Cardullo et al., 2018; Vallance et al., 2017). Simultaneously, urban housing stocks have become the main target of capital investment and a safe source of revenue, especially for landowners. Such commodification strategies, however, potentially hamper affordable housing provision (Aalbers, 2017; Harvey, 2012; Marcuse, 1985): the concept of “commodification” is a very old one and acquired its meaning with the writing of Karl Marx (1859). It describes the process of how housing is influenced by market and profitability objectives which not only determine what type of housing is built but also how it is used, managed, and distributed (Harloe, 1982: 40). Commodification of housing relies on the assumption that the market, including the profit-maximizing rationality of investors, is the most efficient solution to guarantee the provision of housing for all income segments (Kadi & Ronald, 2014; Rolnik, 2013). Housing is no longer considered a basic human need and essential good, but rather more a commodity that must be traded or paid for in a globalized financial market (Harvey, 2005).

Critics point out that commodification objectives in the housing sector have profoundly affected the acknowledgment of the “right to housing” (Brenner et al., 2012; Harvey, 2012). While the process might be advantageous for those select few who reap the disproportionate benefits of the capital gain, the vast majority—and particularly those of lower income—would have little ability to capture value from this process (Harvey, 2005: 166). Moreover, the investors’ profit-seeking behavior and urban (re)development objectives foster gentrification processes as they lead to higher rents and to risks of social exclusion, tenure insecurity, and segregation in cities (Chiu, 2004; Korthals Altes, 2016; Lees, 2008). The role played by private landowners becomes particularly relevant in this matter. Due to the protection guaranteed by private property titles, landowners are free to define the profit margin to be targeted on their parcels and to set the rents according to market prices (Marcuse, 1985). Real estate property is hence acknowledged as a foundational element to both power and wealth (Aalbers & Christophers, 2014) as it shapes the level of social inequality and exclusion in cities (Galdini, 2019; Lai et al., 2018).

Commodification processes often lead to counter-strategies that aim towards decommodification. The concept of “decommodification” stands for the strength of social entitlements and for the citizens’ degree of immunization from market dependencies (Kadi & Ronald, 2014: 270). It also aims to overcome the incapacity of generalized commodities to meet basic human needs for all as the process aims to reduce the control of the market laws on goods and thereby diminishes the pressure to generate financial profit (Lees, 2008). Consequently, decommodification of housing stands for a move away from the value of housing considered by its financial value to a focus on its use value in order “to provide every person with housing that is affordable, adequate in size and of decent quality, secure in tenure, and located in a supportive neighborhood of choice, with recognition of the special housing problems confronting oppressed groups” (Achtenberg & Marcuse, 1986: 476). In temporary housing, the shift towards profit-orientation has not taken place. There are only a few for-profit temporary housing models and detailed analyses are missing, although this housing type seems to be expanding. In the Netherlands, for example, for-profit private “anti-squat-agencies” manage buildings on the owners’ behalf and enter contracts with residents following an “anti-squatter-attitude” (Priemus, 2011). The city of London is familiar with so called “safeguard houses”, meaning that a private agency organizes temporary housing in vacant buildings before demolition (liveinguardians.com, 2020). It is unclear, however, why the involved actors participate in for-profit temporary housing, to what extent they only follow capitalist motives, and how these models have evolved. In addition, our study reveals that temporary users of for-profit temporary housing have a different profile and follow principles other than those of commercial or creative temporary users (e.g., such as artists, bohemians or start-up groups). They neither follow interests of creating an alternative lifestyle nor do they identify as members of the creative scene (Blumner, 2006). Because this turn towards profit-seeking in temporary housing is under researched, this article aims to analyze the institutional mechanisms and actors’ rationales driving this shift.

To fill this gap, we focus the rest of the article on the Swiss housing situation. Switzerland makes an interesting study for the analysis of temporary uses in housing since the pressure on land and housing markets has increased in recent years, especially in cities. Swiss cities are characterized by extremely strained relations (vacancy rates below 1%) and rising rents (Balmer & Gerber, 2017: 8). People with lower incomes as well as the middle class are negatively affected by inadequate affordable housing supply (FOSI & FOH, 2015). As a consequence, temporary housing solutions as a flexible model to handle population and economic growth have gained momentum in recent years (Bürgin, 2017). The state is organized on three executive levels—the confederation, the cantons, and the municipalities. The municipalities hold the greatest decision-making power regarding spatial development: they grant building permits according to the stipulations of zoning regulations, which is binding to private landowners (Gerber et al., 2017: 1690).

5.5.3 Temporary Housing in the City of Zurich

This study relies on a qualitative research approach. Through an embedded single case study analysis, the mechanisms at play explaining the emergence of a for-profit temporary housing model will be assessed. This approach makes a detailed and differentiated understanding of the studied phenomenon possible (Yin, 2018: 15).

Case Selection

The city of Zurich is a German-speaking city and the largest urban center in Switzerland (Statistics City of Zurich, 2020). The municipality of Zurich represents both the core center of Zurich agglomeration and the capital of the canton of Zurich. Zurich makes an interesting case study for the analysis of temporary housing as temporary uses of all kinds (e.g., commercial, office, or residential) have increased in recent years (Bürgin, 2017). In 2016/2017, Zurich was identified as a hub of temporary uses within Switzerland. In total, 417 temporary use projects were set up in Zurich¹⁶ whereas in the same period, only 61 temporary uses were registered in Basel, 37 in Berne, and 6 in Geneva (Wüest & Partner, 2017).

This predominance of Zurich in the temporary use scene is connected to the city’s steady population and economic growth, but also to its function as an international investment center (Theurillat & Crevoisier, 2013). Since 1980, Zurich’s population has increased by +17% and investment into real estate has constantly risen (Statistics City of Zurich, 2020). During the 1980s, Zurich has started to deindustrialize and some of the abandoned industrial land was redeveloped or taken over for cultural and temporary activities. Many investors and developers started to recognize the city’s economic potential and began to reclaim the buildings they owned (Rérat & Lees, 2011: 131).

Since the year 2000, however, the (re)development of existing buildings or vacant plots has become increasingly challenging for investors since inner-city greenfield and brownfield sites are missing. Only 10% of all newly built apartments have been built on unbuilt parcels during the last two decades. Most of the newly built dwellings have been created through reconstruction and densification of existing housing stocks on already built land (Statistics City of Zurich, 2020). As a consequence, the tensions between densification, modernization, and social exclusion mechanisms have increased significantly in recent years since redevelopment initiatives have led to higher rents and new (temporary) housing forms (Rérat, 2012). In fact, the absolute number of social evictions due to redevelopment in the city’s private rental sector doubled within the period of 2006–2017 (Statistics City of Zurich, 2017). Between 2000 and 2013, rental prices in the housing stock increased by 37%, while rental prices on the free market rose by 75% (Balmer & Gerber, 2017: 8). Hence, moving to cheaper suburban areas or new forms of temporary housing have remained the only option for many vulnerable and lower-income groups in Zurich.

Case Study: Historical Background of Temporary Housing in Zurich

Temporary housing has a long tradition in Zurich. This housing type first appeared during the “1980-opera-riots”, an urban social movement triggered by the tense situation on the housing market and unfulfilled expectations about urban cultural life and open spaces (Kriesi et al., 1995). On 30 May 1980, more than 200 young people (most of them under the age of 25 years), demonstrated against unequal policy investments in front of the Zurich opera house. The protest ended in a riot between the police and activists, and a two year political struggle about the support of alternative living forms and cultural activities. As a consequence, temporary squats of vacant houses became an eloquent symbol for the youths’ protest against Zurich’s Fordist model of economic growth, the lack of urban affordable housing, and rising unemployment. Aiming for progressive political change, Zurich’s youth squatted buildings in order to protest against the predominance of economic interests, the growing gentrification of inner-city neighborhoods, and the privatization of urban housing stocks (Holm & Kuhn, 2011).

The city government, however, publicly criticized the political attitude of the growing squatting scene. In most cases, it did not tolerate the status of illegality in housing and used police force and violence against illegal housing squats (Stahel, 2006). The civil society reacted strongly against this procedure and forced the political elites to undertake policy changes, particularly regarding the expansion of social housing as well as the introduction of new security policies. In the following section, we will explain how these policy changes during the 1980s and 1990s still affect Zurich’s temporary housing practice today.

Methods

We conducted multiple methods to understand the mechanisms at play explaining the emergence of for-profit temporary housing in Zurich. The methods used enabled us to grasp a largely unknown and still barely quantifiable phenomenon (George & Bennett, 2005). The empirical data was collected in three steps (Table 5.6).

Table 5.6 Steps, aims, and methods employed in this study

As a first step, we analyzed the public regulatory response to Zurich’s temporary housing situation. We strived to explain what public policy interventions (e.g., planning, housing, security, and social welfare policies) are involved in temporary housing as well as what private law institutions (e.g., property rights, tenancy matters) guide and shape the emergence of this housing type. We started with the analysis of socio-economic statistical data to explain the city’s housing situation over time (development of rents, vacancy rates, housing prices). In addition, we analyzed the local institutional rules involved in regulating temporary housing through an in-depth qualitative analysis of policy documents (parliamentary debates, legislations, government reports). These methods were applied to capture the institutional origin and functioning of temporary housing within its real-life socio-economic and -political context (George & Bennett, 2005).

In our second step, we aimed to understand the objectives and strategies of the actors involved in temporary housing (public authorities, property owners, mediators, temporary users) to explain the emergence of for-profit temporary housing from an actor-centered perspective. Therefore, within the timeframe of January 2015 to June 2019, we conducted 25 semi-structured interviews with experts and residents to understand their interests and perspectives. We performed interviews to gain information about “how” and “why” these actors defend their goals in temporary housing to get to know their motives (Yin, 2018: 118). More precisely, we conducted interviews with seven temporary users, six property owners, six mediator agencies (non- and for-profit), and one representative of the city department for housing. In addition, we interviewed one expert from the local tenants’ association, one from the local homeowners’ association, one expert from a private local real-estate management agency as well as two politicians of the local legislative parliament. All interviewees were chosen due to their detailed understanding and knowledge of the topic as well as based on their practical expertise related to the position they occupied within certain professional structures (Yin, 2018: 118). For instance, the actors representing the temporary users, the property owners, and the mediator agencies were chosen as they were part of seven ongoing temporary housing projects in Zurich city region (Table 5.7). In doing so, we aimed to gain knowledge from participants directly involved in—or affected by—temporary housing. We stopped interviewing people when no new insights from data gathering were collected because the answers of the respondents coincided (Yin, 2018: 118). In a third step, we focused on the temporary users’ socio-economic housing situation to draw conclusions on the beneficiaries of for-profit temporary housing strategies. To do so, we carried out “unstructured field observations” (Althaus et al., 2009: 24) of the seven temporary housing sites to systematically document impressions related to the quality, size, and location of home and to provide material for the formulation of detailed questions during interviews. We noted all our observations in a field book to constantly improve our knowledge and to tailor questions prior to new interviews (Yin, 2018: 132). Moreover, we conducted a questionnaire with the temporary users, including specific questions capturing their socio-economic profile (age, gender, education/employment, income in relation to rent, household size, duration). The data collected makes it possible to compare the users’ situation with each other (Table 5.7) and to reflect on potential repercussions for municipal policymaking. All temporary users interviewed signed a document for ethical approval to ensure that the data collected in their home can—in an anonymous way—be used for publication.

Table 5.7 Characteristics of the seven investigated temporary housing projects in Zurich in the year 2015

5.5.4 The Commodification of Temporary Housing in Zurich

The emergence of a for-profit temporary housing model in Zurich took place in two stages (Fig. 5.4). First, through a process of institutionalization, which demarcated it from squatting, temporary housing was no longer considered illegal. Temporary housing became regulated through formal rules and procedures, but with non-profit objectives. Actors involved in institutionalized temporary housing benefit not only from higher legal protection, but also from the ability to sanction abuses.

Fig. 5.4

The emergence of for-profit temporary housing in Zurich can be explained by the twofold process of institutionalization and commodification

At the beginning of the 2010s, out of institutionalized non-profit temporary housing, an additional step took place towards the emergence of a commodified model. This step was connected to the legal obligation to densify within municipal boundaries in Swiss cities which has led to increasingly tight urban housing markets. Under scarce land conditions legal security becomes relevant for landowners, as well as planning predictability, flexibility, and economic security. To cope with building delays, temporary housing offers them a leeway to bypass tenant protection in housing and to realize profitable housing projects at central locations without substantial investment risks. In this model, private mediator agencies provide their services and knowledge to their clients (property owners) with profit-oriented motives and get paid for their mediation work.

In the following section, we explain in detail these two mechanisms at play that lead to the shift towards profit-seeking in temporary housing by analyzing the local regulatory framework and the involved actors’ rationale.

Local Regulatory Framework

In this section, we analyze the local regulatory framework (stressing both public policies and property rights) regulating temporary housing in Zurich. Temporary housing is addressed in several public law areas. We start with the city’s police power. Then, we emphasize aspects of housing and planning policy because of their significant impact on housing (re)development. Finally, the role of private law will also be addressed as it has an impact on the property owner’s decisions regarding the use of urban vacancies (Table 5.8).

Table 5.8 Main dimensions of the regulatory framework influencing temporary housing practice in Zurich

Public Policies Regulating Temporary Housing in Zurich

The “1980-opera-riots” have marked a significant change in Zurich’s police practice, particularly in regard to the clearance of housing squats. Following the claims of the activist groups, in the year 1989, the municipal parliament agreed to introduce a legally binding temporary housing clause in police law in order to calm down the youth protests of that time (Interview 20, member of municipal legislative parliament, 06.05.2015). Following the new legislation, the city police were only allowed to clear housing squats if the property owners could provide an approved building permit (Municipal Housing Squat Regulation¹⁷). Otherwise, the owners had to pay for the evacuation costs themselves (Interview 34, CEO of a for-profit mediator agency, 26.04.2019). In the following years, this legal change has led to increased public and political openness towards squatting and temporary use in Zurich (Stahel, 2006).

In housing policy, the opera riot led to several changes too. During the 1990s and 2000s, public subsidies for non-profit housing organizations increased with the primary aim to support vulnerable groups who struggle to find adequate housing (Municipal Housing Policy Act,¹⁸ Art. 1–6). Many of these social housing organizations are still tightly connected to the municipality and considered a political response to the demands formulated during the “1980-opera-riot”. Furthermore, on November 27, 2011, following a popular municipal initiative, 75.9% of Zurich’s voting majority agreed to raise the share of social housing property (public and non-profit cooperative) to at least a third (33.3%) of the total housing stock by 2050 (Municipal Constitution,¹⁹ Art. 2). In 2019, the property share of non-profit housing amounted to 24.6% (City of Zurich, 2019a). To meet this policy objective, the city of Zurich builds on an active land acquisition strategy in favor of public housing and non-profit housing cooperatives (Balmer & Gerber, 2017).

Temporary housing, moreover, is influenced by planning law. As already mentioned in the introductory section, in March 2013, the Swiss voting majority approved the revision of the Federal Spatial Planning Act (SPA) which, among other purposes, aims to increase density within municipal boundaries. Following the revised SPA, the city of Zurich has updated its planning legislation in 2018. Particularly, the city council initiated planning measures such as the introduction of densification zones²⁰ to effectively promote population growth through internal settlement development and the efficient use of energy (Zurich City Council, 2013: 5). As a consequence, urban densification projects leading to redevelopment of existing stocks have intensified in the last five years (Interview 35, City Department for Housing, 03.05.2019). Under these circumstances, temporary uses of vacant residential properties shortly before demolition or reconstruction have become a favored coping strategy for landowners. Temporary uses help them to flexibly deal with short-term vacancies and potential planning delays in this context of densification (Bürgin, 2017). Simultaneously, however, residents’ social resistance strategies and NIMBY-syndromes against densification projects have increased too as modernization often leads to higher rents and to social exclusion processes of lower-income groups (COSD Zurich, 2014).

Private Law Configurations: Institutional Differences Between Letting Vs. Loaning

The temporary use of housing stocks is not only influenced by public regulations. Private law also impacts urban housing development. Swiss landowners are in a power position to decide on the use and disposal of their housing premises due to the constitutional guarantee of property (Art. 26, SC). Property rights can only be restricted if strict conditions are met. In any case, full compensation is to be paid (Art. 5, 26, 36 SC).

In contrast, the rights of temporary users are protected by the articles for tenancy matters in the Swiss Constitution (Art. 109 SC) as well as in the Federal Obligations Code of 1911 (Art. 253274 OC). Under the rules of Swiss tenancy, private landlords, temporary users, and mediators agree to sign a terminable rent contract. What we observe in temporary housing practice is that the mediators are renting the whole building from the property owner with a regular rental contract that is time limited. The mediators sublet the individual apartments to the final temporary users (sub-tenants). Through this institutional set up, the landlord has the guarantee to have his facilities empty at the date initially planned because the options granted by the law to object to any decision of the landlord are weakened due to the limitations of the subletting contract. Theoretically, the mediators as legal tenants are still able to have recourse against the owner in the cantonal tenancy court but in practice they do not because they need to maintain a good relationship with the owners for further housing options.

Strategic weakening of the tenants’ position takes place above all through another institutional mechanism. In Zurich, besides tenancy law, loaning law regulation is also accepted to regulate temporary uses in the housing sector (Federal Obligations Code, Art. 305–311). Historically, loaning law was introduced in 1911 as part of the Federal Obligations Code to arrange temporary uses of all kinds in vacant places (e.g., in garages or tool rooms). In contrast to short-term rent or lease, loaning regulation allows flexible use of vacant sites at low cost without being obliged to follow the rules of tenancy (e.g., three month contract termination deadline, rent deposit payment, etc.). This also means that the user—legally the “borrower”—does not have to pay a fixed rent but rather a fee for monthly maintenance and operation costs such as water, heating, and electricity. The owner—legally the “lender”—has no restriction to keep the three month contract termination deadline, as is mandatory in Swiss tenancy law. This legal framing gives property owners the ability to force users to leave the property at any moment and at short notice as they do not have a legal standing to claim their rights in court. Additionally, lenders have no duty to provide maintenance, such as insulation, heating, or covering any damages in the apartment as would be mandatory under tenancy law. It is therefore possible that lenders use this legal discretion to evict borrowers on short notice. The temporary user, in addition, does not have the right to appeal against contract termination, unfair treatment, or other abuses in the cantonal arbitration board as legally, they are not identified as “tenants” (Büchi & Gehrig, 2014). In Zurich, loaning law was first used for the regulation of temporary housing projects in 2013. In contrast to other Swiss cities, there exists no legal restriction which forbids the use of loaning law for housing premises (see discussion for details).

Ironically, in practice, our case study reveals that temporary users develop resistance strategies against loaning practice since they do not have to pay a rent but instead a monthly fixed fee for additional operation costs. For example, one temporary user installed a whirlpool in his backyard as he could not be charged for additional water consumption. Consequently, mediators developed legal strategies to counteract these abuses and raised the maintenance costs at the beginning (Interview 17, CEO of a for-profit mediator agency, 20.02.2015). Lastly, loaning contracts can easily and quickly be signed electronically, which reduces the administrative costs and optimizes the work efficiency of the mediator agencies in that model (Büchi & Gehrig, 2014).

Stage 1: The Emergence of Institutionalized but Non-Commodified Temporary Housing in Zurich During the 1980s

In Zurich, temporary housing agencies working on a non-profit basis (stage 1) are organized under the tenancy law regime (Table 5.9). Typically, the mediators rent an apartment or a whole building from the property owner through a temporary rental contract and sublet the apartments to specific target groups. These social organizations were founded more than 30 years ago and appeared as a political response to the demands of the “1980-opera-riot”. They are therefore still strongly connected to the municipal government.

Table 5.9 The two stages towards the commodification of temporary housing in Zurich

The investigated non-profit housing organizations “Woko” (in German: “Studentische Wohngenossenschaft”), “Juwo” (in German: “Jugendwohnnetz”), and “Domicil foundation” receive public financial support for their services and thus represent an integrated part of Zurich’s social housing policy system. In other words, these social institutions are part of an approach to ensure adequate and affordable housing provisions for vulnerable and low-income households (e.g., young adults, families, and social welfare recipients) in the city. By helping them to manage their daily life (budget, housing rules, household work), they act mostly as social workers and take responsibility for the tenants’ social integration and security within urban neighborhoods. The main motivation of these social organizations is to widen the housing possibilities for the specific needs of their social target groups. They select beneficiaries according to set criteria (age, income, degree of education) and provide apartments exclusively for persons in difficult living situations. As a result, the agencies identify themselves as an integrated part of the tenants’ community and do not provide affordable housing to generate monetary returns (Interview 11, Director of Domicil foundation, 21.01.2015).

Woko, for example, was founded as a self-help association in 1956 and was later transformed into a housing cooperative in the 1970s. Its core business lies in renting affordable housing units to students. Additionally, Woko has always been a mediator between students looking for accommodation and property owners. In 1987 (after the 1980s social protests in Zurich), a public foundation for student housing SSWZ (in German: “Stiftung für Studentisches Wohnen Zürich”) was created next to Woko. Thanks to SSWZ, it became possible to build new apartments for students for the first time in Zurich. While Woko focused on administration and facility management of student housing, the buildings were mainly owned by the foundation SSWZ, the municipalities of Zurich and Winterthur, the Canton of Zurich, and the Swiss Federal Institute of Technology (Interview 7, Director of Woko, 12.01.2015).

Juwo—the housing network for young people—is legally organized as an association and was founded as a direct response to the “1980s-social-movements” and the affordable housing crises in Zurich of that time. Juwo mainly arranges temporary housing options for a young and low-income segment of the population (Interview 4, Director of Juwo, 08.01.2015).

The private foundation Domicil was founded in 1994 and, as the others, follows a clear social objective. Its core interest is providing—wherever possible—long-term affordable housing. Particularly, Domicil works together with low-income people, families, single parents or people who experienced discrimination in the housing market. Many of them receive social welfare contributions. Temporary housing is only used as alternative strategy because it is very hard to find long-term affordable rental options that they can mediate to their clients in Zurich (Interview 11, Director of Domicil foundation, 21.01.2015).

We show people how to clean a cooker, where ‘Migros’ [the local grocery store] is and what type of cleaning equipment they need to clean with. We also provide information about ventilation or mold prevention in the apartment or how to deal with the neighbour. We explain how to cooperate with the housekeeper and the property administration. All these different levels when it comes to housing (…). (Interview 11, director of Domicil foundation, 21.01.2015)

Since the 1980s, the affordable housing shortage has become a very strong driving force for the institutionalization of temporary housing in Zurich. It serves as a flexible and individualized approach to address specific housing needs. Hence, the non-profit agencies started to expand their regular housing portfolio with temporary apartments. In a context of land scarcity and increasing redevelopment of existing buildings, this housing type has become practiced more intensively since the beginning of the 2010s (Interview 7, Director of Woko, 12.01.2015).

We arrange temporary housing if people are totally in emergency. If we can simply not find any other solution. [...] In Zurich, there exists a clear housing shortage for this group of people we care about. [...] It is precarious. [...] Therefore, we started to add temporary housing to our portfolio. (Interview 11, director of Domicil foundation, 21.01.2015)

Property owners who allow temporary housing mediated by the non-profit sector in their premises recognize this model either as a time and money-saving opportunity in the phase that precedes redevelopment or as an effective protection against squatting and vandalism (or both). In their view, they benefit from higher predictability, secure economic profit, and lower maintenance costs than when leaving the property empty. Interestingly, they gain higher financial income due to the rent than property owners who rely on for-profit temporary housing (see next section). Some property owners also emphasize the moral satisfaction when enabling affordable housing options for users in need and when working together with non-profit mediators (Interview 8, private property owner, 16.01.2015).

For the whole house, which is divided into two apartments, I get a rent of 3300 francs plus 700 francs maintenance costs for water and electricity supply per month. [...] I wanted to have about the same income as if the apartments were rented long-term. [...] Because of financial reasons. I needed the income. I do not have a house in Zurich only because it is nice. (Interview 8, 69-years old private owner, 16.01.2015)

Stage 2: The Emergence of Temporary Housing as a Business Model in the 2010s

Commodified temporary housing is regulated under the loaning law regime. The investigated mediator agencies (two private limited companies and one joint-stock company) organize temporary housing under loaning law to earn a living out of the vacancy business. Since the year 2010, three companies positioned themselves in the profit-oriented vacancy business in Zurich (Projekt Interim GmbH, Intermezzo AG, and novac solutions GmbH). Their core business activity is managing real-estate vacancies in a profit-oriented manner on the owners’ behalf and using them for temporary uses of all kind (e.g., creative economy, shared office spaces, or housing units).

We organise temporary uses. Normally before conversion or demolition of buildings. [...] We started in 2011 and professionalised in 2013. [...] This was because we received requests. (Interview 17, CEO Projekt Interim, 20.02.2015)

The most successful firm in the vacancy business we investigated is the private firm Projekt Interim GmbH (limited company). Originally, this firm was organized as a non-profit organisation until its shareholders changed the business structure to a private profit-oriented limited company in 2013. According to the founders, they changed their business structure to for-profit as they acknowledged an increasing demand from the owners’ side. In recent years, complex densification projects within the urban built environment have required longer waiting times for building permits which is why the number of property vacancies has started to escalate. This means that many property owners terminate rent contracts even though they do not already have a building permit or know the date on which they can start reconstructing. In case the rent contracts expire but no approved building permit can be demonstrated, a potential vacancy period between dismissal and demolition/renovation emerges. As a consequence, temporary use suddenly becomes all the more profitable for the initiators of Projekt Interim GmbH since owners demand professional services to manage these vacancies. The firm brings together people with a wide range of expertise such as technical skills in real-estate management, a good network in Zurich’s creative scene, and legal knowledge about local and national regulations regarding temporary use (Interview 17, CEO Projekt Interim, 20.02.2015).

Property owners who choose working together with profit-oriented companies follow the clear objective to minimize risks of development delays in a city under densification pressure and a tight urban housing market. They are under high economic investment pressure and fear losing money due to building delays, which is why they need to be sure to start with the new construction on time. Their main objective is to increase predictability and flexibility in a period of economic uncertainty (Interview 34, CEO Intermezzo AG, 26.04.2019). Therefore, they willingly pay for the mediator’s services to benefit from the legal possibility of evicting the temporary users at short notice. From a financial point of view, temporary housing under loaning law mainly affects the property owners because they agree to pay for the mediators’ management skills and the legal security to expel occupants (Interview 33, CEO Novac Solutions AG, 24.04.2019).

After legal advice, we [institutional property owners] recognised that if someone with a loaning contract applies for a contract extension, the person does not have any legal possibility to extend. [...] This way, potential objections are directly off the table. At the same time, we can get temporary users out of the house within a short time. They can do nothing about it. [...] It is primarily about planning security. (Interview 14, institutional property owner, 30.01.2015)

Effects of Letting Vs. Loaning on Temporary Users’ Housing Situation

According to a study on residents’ income in the city of Zurich (Martinovits, 2014), the majority of the occupants living in the investigated temporary apartments can be identified as low-income, with a monthly net-income per person of 1000–3500 Swiss francs (Table 5.9). As a rule of thumb, in Switzerland, it is generally assumed that a quarter of the household net-income can be spent on housing costs without negatively impacting other dimensions of life (FOSI & FOH, 2015).

Under loaning law, the temporary housing prices are much cheaper than under tenancy. For instance, when renting a 4.5 room temporary apartment in Zurich (see investigated project Nr. 3: 2260 CHF for 4.5 rooms), the price is more than three times as expensive as when loaning temporary housing (see project 5: 740 CHF for 4.5 rooms) (Table 5.10). Due to these massively cheaper offers under loaning law, the socio-economic profile of temporary users changed significantly in the 2010s. Nowadays, besides the temporary users of the creative scene (e.g., students, young urban creatives) more and more working-poor families, young families, people with social aid, and low-income immigrants decide to benefit from low-cost and centrally located dwellings. In comparison to options on the regular housing market, temporary housing is offered below market rates (in letting and loaning), although in substandard conditions (e.g., with bad sanitary, insulation, and heating facilities).

It is a very special house. The ceilings are very low. Everything is crooked. You cannot find any right angle here. If you look at this wall, you surely have 5 to 10% inclination. It has no heating. [...] It is very rudimentary. It has a shower cabin downstairs but up here it has no shower. [...] Nobody would invest money to renovate something because it is a temporary use. (Interview 2, 26-year-old male, temporary user and student at Zurich University, 06.01.2015)

Table 5.10 Comparable example of a 4.5 room temporary housing apartment under letting and loaning (Wüest & Partner, 2017, and questionnaire with temporary users)

In addition to affordability, some temporary users—namely students and young professionals—appreciate the flexibility provided by temporary housing. As they have not settled down yet, they acknowledge temporary living as a unique opportunity to explore the city (Interview 9, 27-years-old architect, 17.01.2015).

However, out of the seven temporary user parties investigated (three students, two young urban professionals, one working-poor family, and one low-income immigrant family) all of them stated that they would not decide to live in a temporary apartment if they could have a long-term, stable, and similarly cheap alternative on the regular housing market. It is especially difficult with children to live in temporary housing because of the frequent changes of backgrounds and friends. Temporary users living with their family also stated that they had to live in temporary apartments due to their work during night shifts. They were dependent on living at a low cost but also close to their workplace in the city center so temporary housing remained the only option (Interview 10, single mother with two children, working as cleaning assistant, 17.01.2015).

At this moment, it is financially ideal. Also in Zurich, where it is almost impossible to find something for a good price at a good location. [...] But for a family, it is hard. A little tough. We are now looking for a long-term apartment because of our child. It would be nice if we could have a little rest. (Interview 13, 32-year-old male temporary user, working as cook and freelancer, living together with his wife and his one-year old boy, 28.01.2015)

Astonishingly, temporary users are financially more affected in the non-profit model than they are in the commodified model. From a purely economic perspective, this is legitimized by the fact that paying for the rent ensures that their housing rights remain protected in court.

5.5.5 Discussion: All in Favor of Commodified Temporary Housing?

The main research questions of this article address the tension between housing provision, temporary use, and tight urban housing markets as follows: What are the institutional arrangements that make for-profit temporary housing possible? Which rationales of the different actors involved in this system explain its expansion? And what are the consequences on the different categories of actors? Then, we show how institutional arrangements and the strategic behavior of different actors involved in temporary housing are at the core for answering these research questions. Not only do our results reveal how the municipal regulatory framework affects the temporary use of urban housing stocks. They also show how different actors involved in temporary use respond to and are impacted by new legal practices such as the shift towards loaning law in temporary housing.

We show that a commodified temporary housing model that is managed on the owners’ behalf has emerged in Zurich. In this new business model, temporary housing is favored by a coalition of all major actors involved—property owners, mediators, temporary users, and municipal authorities. Despite the apparent agreement, however, this does not remain without consequences for those in need of affordable housing. We reveal that the short-term interests of the property owners and the for-profit mediators get the upper hand over the long-term and stable housing needs of low-income households.

For-profit mediator agencies take advantage of the gaps in Swiss tenancy law to offer short-term housing solutions based on loan use regulation. Individual knowledge from the non-profit temporary use sector and a strong business intuition were the drivers to institutionalize temporary housing through these new rules of the game (loaning law) and with for-profit objectives. Although for-profit mediators insist that they are aware of their social responsibility to organize temporary housing, they contribute to the weakening of tenants’ security through the promotion of a housing model outside of tenancy law.

Property owners in the commodified model do require payment for operation costs but not rent. Due to increasingly complex inner-city redevelopment procedures and corresponding planning delays (e.g., due to objections by neighbors), the financial investment risks for owners increased in recent years. In this situation, temporary housing under loaning law fulfills a specific niche function on real-estate markets in the sense that it increases planning predictability, legal security, flexibility, and economic security for the owners. More specifically, in an environment where land is scarce and competition to use this land is increasing, property owners can no longer afford to leave their properties empty for an unpredictable duration. Inevitably, they are interested in a time and money-saving solution to remain flexible and economically competitive. In the end, because of the almost repealed protection of tenants’ rights and the absence of any legal tenancy obligation to provide maintenance services, owners enjoy maximal economic security and full decision-making power.

The need for better predictability might even be reinforced by the municipal police regulation on housing squats which accepts squatting as long as landowners cannot demonstrate a formal building permit. Paradoxically, this attitude might create additional pressure on the owners as their property is no longer protected by the state in the period of vacancy and planning uncertainty. Hence, the owners are in need of finding a short-term solution which helps them to manage their vacant properties. Although the municipality of Zurich does not directly financially support the for-profit model, they contribute to its economic success by tolerating the loaning law regime in housing. Even though this model frames housing in a completely different way, it seems that the city government has not yet realized potential detrimental consequences. To counterpoise this decision, politicians and NGOs in other Swiss cities have started to call for legal prohibition of loaning law practice in housing, for instance in the city of Basel. Here, a temporary user is legally allowed to claim that the costs paid by the users for maintenance are too high for its acceptance as a loan. Instead, it can be classified as rent which makes eviction at short notice illegal (City of Basel, 2018).

Finally, the temporary users—namely low-income families, single parents, people receiving social aid, young urban professionals, and students—appreciate the ability to live centrally and at a low cost in Zurich. However, these vulnerable groups are caught in a vicious circle leading to dependence on precarious housing solutions and the erosion of their social rights and protection in housing. By signing loaning law contracts, temporary users abandon their legal protection as they do not have the ability to extend contracts or to claim their rights in court. Under this legal framing, they remain totally dependent on the conditions offered by the owners and mediators. In the investigated non-profit model, in contrast, temporary housing can still be interpreted as a part of the existing social housing policy system as the provision of housing is organized for the users’—not the owners’—benefit. Nevertheless, even if non-profit temporary housing follows clear social objectives, it still needs to be critically questioned whether the requested rent prices are justified for temporary apartments that are mostly substandard and designated to be demolished.

5.5.6 Housing Is a Matter of Tenancy Law, Not Loaning Law!

While there is a growing body of literature critically discussing how temporary urbanism affects urban social life (Galdini, 2019; Lai et al., 2018; Vallance et al., 2017), and another line of research focusing on the potentials of temporary use for the flexible development of urban spaces in general (Cardullo et al., 2018; Dubeaux & Sabot, 2018; Németh & Langhorst, 2014; Özdemirli, 2014), research on how different forms of temporary use affect the housing situation in cities is still thin (Lara-Hernandez et al., 2020; van Holm, 2020). More qualitative and quantitative research is therefore needed to understand how temporary housing changes everyday life in cities and potentially leads to precarious living situations for lower-income groups. Future research should focus more intensively on the social dimension of sustainability in cities (affordability, tenure security, stability, etc.) to understand how to cope with tight urban housing markets and intensifying scarcity of land.

In this article, we explained the emergence of a commodified temporary model in the Swiss urban context. Even though our results are limited to the city of Zurich, potential for generalization results from the following identified causal mechanisms which are expected to have broader significance in other urban contexts too: our analysis reveals that even though the city council publicly commits to affordable and socially equitable housing development (Municipal Constitution, Art. 2, Para. 5), in temporary housing, it assists in bypassing tenancy law by accepting the loaning law regime in housing. This, in turn, assures increased flexibility and predictability for the owners (no contract termination deadline and no corresponding judicial uncertainty). The municipal government might be reluctant to prohibit the loaning law regime for temporary housing as it might hinder property owners from densifying their parcels as investment risks increase. Simultaneously, property owners benefit from an economic incentive to raise the profit margin when obtaining densification measures due to smaller transaction costs. For temporary users, however, we see that loaning regulation leads to the erosion of their social rights, stability, and protection in housing as it promotes a precarious standard and short-term perspective of living. This model stands for a more general shift towards the acknowledgment of housing as a commodity and investment asset rather than as a basic human need and unique kind of good (Harvey, 2005, 2012; Marcuse, 1985; Rolnik, 2013). We finally identify a risk that low-income residents become increasingly excluded from inner-city housing as the supply of new housing—in particular through support measures for housing cooperatives—targets the middle class instead of the lower socio-economic segments of the population—a highly unsustainable urban development scenario! If the for-profit temporary housing model becomes more mainstream and competes even more directly with non-profit firms, it may reinforce the residents’ dependence on the owners’ short-term decisions and increasingly become a social challenge for the city government. In the long run, public expenses for social aid might rise as the number of residents suffering from unstable housing conditions increases and more people potentially become dependent on social welfare contributions.

Let’s not open Pandora’s box—housing is a matter for tenancy law, not loaning law, to protect the users’ stability, security, and long-term right to housing. We are convinced that Zurich’s municipal government is in the power position to change the legal setting to prohibit temporary housing under loaning law and to minimize further flexibilisation of the housing sector. As demonstrated in other Swiss cities (e.g. Basel), legal changes in tenancy law neither lead to an increase of urban vacancies nor to a prohibition of non-residential temporary uses. Instead, temporary housing vacancies are managed under non-profit objectives and with predictable tenure conditions for the users. Simultaneously, Zurich’s city government should point particular attention to housing provisions for those with the lowest incomes. To look more closely at those who pay the social price of densification and corresponding urban upgrading measures is essential if urban quality and viability is to be retained for all, including more vulnerable socio-economic groups.