Rising rental cost in Germany causes increase in socio-economic inequality: SoVD

Source: Xinhua| 2018-10-26 01:01:05|Editor: yan
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BERLIN, Oct. 25 (Xinhua) -- Rising rental costs and an inadequate housing supply are leading to an increase in inequality and poverty in Germany, according to a report published by the Social Association of Germany (SoVD) here on Thursday.

According to the social policy advocacy group, rental prices were already making one million households in major cities so poor that their disposable income was below the standard rate of the country's "Hartz IV" welfare benefits. The SoVD criticized German policymakers for being slow to recognize a growing problem of "scarce and expensive living space" in the Eurozone's largest economy.

The report highlighted that average rents had risen faster than average incomes in both east and west Germany during the period under scrutiny between 1993 and 2014. As a consequence, affordable housing was in increasingly high demand among both small and large households.

"Households at risk of poverty and low-income households are heavily burdened by rent, live in smaller apartments and unstable conditions such as subletting arrangements," the authors of the study wrote. The share of income that went towards rent was particularly high in certain subgroups of the population.

Households which did not own property but were about to retire in 2030, for example, would be significantly affected by the issue and were likely to experience a high rate of old age poverty. Aside from less affluent pensioners, single parents, households of people with a migratory background, welfare benefit recipients, and those with little formal education were at risk of being systematically discriminated against in a more expensive rental market. "It must generally be remarked that the discrimination experienced in society is also reflected in the burden imposed by rental cost on the household," the report read.

The SovD estimated that around half of rental households in Germany spent at least 29 percent or more of their net income on rent before factoring in heating costs. For low income earners with less than 1,300 euros (1,485 U.S dollars) in monthly household earnings, that share was put as high as 46 percent, while households with more than 4,500 euros in monthly disposable income only had to put an average of 17 percent of it towards housing.

"The development of rental prices is deepening social divides in our society," SoVD president Adolf Bauer said about the report's findings.

For the SoVD, the escalation of the situation showcased serious neglect on behalf of legislators. Long-standing attempts to deny or downplay the issue meant that policy makers now faced a "massive and complex task to resolve problems of rising rents, overcrowding and social segregation."

The advocacy group urged Berlin to respond by providing more-state funded social housing, rather than allowing rent to be determined by market forces alone.