This document has been made available in electronic format by the International Co-operative Alliance (ICA) 

Speaker Jens Heiser (1998)

March, 1998
(Source: Studies and Reports. Thirty-first in the series
The Impact of the European Union’s Enlargement on Co-operatives. Papers presented at a seminar held in Prague 3-4 November 1997,  p. 58-62 )

Housing Co-ops in Eastern Europe

The enlargement of the European Union is one of the most essential tasks in order to peacefully solve any problems which may occur.

The most important future question will be, how big the European Union can become.  “With the NATO and EU enlargement, the Czech Republic, Hungary and Poland are becoming new boom-regions” states a weekly German economic magazine.

But  we must also  turn our attention towards the other eastern European countries to avoid mistakes and to share our experiences. One of our tasks will be  to make the housing co-operatives fit for the European Union.

It is an important fact that housing co-operatives are owners of immobile economic goods.  Therefore this sector is different from the other parts of our co-operative movement.

After the political changes in eastern Europe the challenges became more obvious than ever before as, previously, there had  not been enough information about the situation in the eastern countries of Europe.  First of all I would like to draw your attention to the severe problem of homelessness in eastern Europe and then underline the important role that housing co-operatives play in Central and Eastern European countries.

Possibilities for co-operatives
Let me start with examples from several countries. Russia presents a special situation for the ICA and the development of housing co-operatives.  In Russia 53% of the state-owned housing stock has been transferred to the tenants and, in most cases, there are no legal regulations for the administration of the buildings.

An even more serious situation is to be found in the former Yugoslavia.  Here war damage and post-war conflicts still present problems, and nobody can estimate the number of real homeless that there might be.  The privatisation of 95% of housing in public ownership meant that the residents were asked to buy their homes.  This scheme was only successful in certain areas, such as Slovenia.

The refugees from Ex-Yugoslavia, who are returning from other countries, will have to be re-housed, and this may prove to be a very difficult undertaking.  Even worse is the situation found by ethnic minorities in newly founded states like Bosnia.  These people may well suffer from discrimination.

In Bulgaria there is a lack of social policy concerning the homeless.  There is no integration between governmental organisations and local authorities.  Lack of funds prevents the construction of new housing.  This means that about 30-40% of homes in big cities are overcrowded.

Let us take Romania as the last example.  Here the housing shortage is of a general concern.  Over the last few years there has been a steep decline in housing production and, at the same time, massive rural-urban migration.  The combination of very high rents in the private market and the extremely high costs of building new houses, together with the low purchasing power of the general population, make it impossible for many people to have a decent standard of living.  In my opinion, housing co-operatives would be an effective means of providing suitable housing.

All the above-mentioned countries have very few, or no, housing co-operative movements.  The reasons for this are quite diverse.  In ex - Yugoslavia the co-operative development was broken into pieces, mainly as a result of war and the subsequent separation of the country.  Certain attempts are being made (e.g. in Croatia) to revitalise housing co-operatives with the assistance of western countries who are keen to share their experience and knowledge.  Slovenia will be provided with the same assistance.

Housing co-operatives exist on a micro level in Russia.  For example, in St. Petersburg 8% of the housing stock is managed by them.  However, this percentage is not representative for Russia in general.  Privatisation, in the form of co-operatives, could be an effective alternative but would require good management and solid financing.

We are involved in consultancy in Russia too, sharing our positive experience of co-operative privatisation in eastern Germany, e.g. Maxhütte.

Positive co-operative developments can be observed in Poland, the Czech and the Slovak Republics and in Hungary.  However, it is clear that there are still some urgent problems to be solved in these countries as well.  For example, the introduction of legislation for non-profit-making housing legislation in Hungary and the Czech Republic.

It is important to underline the fact that the tradition of co-operative housing existed in these countries under the communist government and so adapting to the new transition period and the market economy forced them to face new problems.  However, the housing situation in these countries is better than in those without co-operatives, and the buildings are better maintained.

Housing co-operatives will be important for the future development of these countries.  It must be made clear that housing co-operatives are politically important instruments for any government as they are independent organisations.  Therefore, they should be strengthened and used as a co-operative ownership model, if mass privatisation programmes of state owned houses are planned.

Housing policy should support co-operative movements
In most of the Central and Eastern European countries privatisation and transformation have increasingly affected the housing sector.  Housing in these countries needs a well-balanced mix of ownership.  The co-operatives play an important role here.  A rental sector which is run by municipalities, co-operatives and the private sector should not be threatened by a policy of exclusive individual ownership,  which would be prejudicial to the urban poor.  The housing co-operatives can play a vital role in safeguarding the rights of their members and  making sure they are treated fairly.

If not enough attention is given to social development, radical tendencies may be revived. The instruments of social reform should be:  provision of capital for housing; individual state subsidies, where necessary; rent control; and legal rights and duties for land owners as well as for tenants.

From the democratic point of view, co-operative housing is a good alternative.  Consequently, it should have a reasonable share of the market.  Co-operative housing is a long-term investment, creating jobs and self-help at the same time.  Typical features of co-operative housing are a good neighbourhood and a low turnover of tenants.  There is also good co-operation among housing co-operatives in every country.

International solidarity is a very important issue.  Housing co-operatives are engaged in the ICA to overcome any difficulties which might occur.  In Poland the co-operative federation was revitalised, and the housing stock enlarged further, although the central movement was li-quidated by the government in 1989.  Problems caused by transformation laws were also successfully overcome in the Czech Republic, Hungary and the Slovak Republic.

The ICA played an important role in the transformation process.  The legal consultation and political support which the ICA gave was very important at this time.  In the future we have to be very careful as there appears to be a movement in favour of selling out co-operative stocks and a feeling that they should not be mixed up with the so-called social economy.  Both of these tendencies are contrary to the long tradition of the co-operative movement and would pose a threat to the co-operative ethos.  It could also mean the end of co-operative housing if the members could opt for individual ownership of private property without the majority decision of the general assembly, or if no distinction in favour of social organisations were to be put into practice.

However, in general, housing co-operatives do co-operate with welfare organisations and provide a service for the benefit of the members.  These aspects of co-operative housing are important for the integration of central and eastern European co-operatives in the European Region of the ICA.  This is why members of ICA Housing must continue to share their expertise with them.

Jens Heiser
Chairman of the Executive Committee, GdW Germany
Member of ICA Board