Debt, Rents and Homelessness: Housing Policies in Postsocialist Romania

protest la evacuareOn September 16, 2014, about 30 people protested in front of the Bucharest City Hall. They demanded to be offered a housing after they had been forcefully evicted a day before from their houses on 50 Vulturilor Street, in the 3rd District of the Romanian capital. They also asked the municipality to stop the speculative and shady real estate developments in the city center, which led to their situation. The demand to see the mayor Sorin Oprescu came no fruition.

The eviction was overseen by court officers and riot police in gear as the tenants, including many children, had to carry their belongings across the narrow inner yard and in front of their former homes. [1] Although the laws concerning social housing and tenant’s protection state that evicted persons get priority for social housing, the residents of Vulturilor 50 were suddenly and violently left homeless. As they were told, there is no available social housing for them.

The eviction from Vulturilor 50 is just the latest example in a string of tenant dispossessions happening in Romania in the last few years. [2] The case represents yet another stamping on the bodies of the poorest and most discriminated people in the city. This is the outcome of the seemingly intractable convergence of several political and market processes which have molded the Romanian housing problem, its structural embedding as well as the discourses which affected its profile. In what follows we will try to succinctly map out some of these developments leading to violent process such as the Vulturilor eviction and which, unfortunately, are still underway in other parts of the country.

The Romanian postsocialist housing policies have been shaped by a redefinition of what constitutes “proper” housing and “proper” living conditions. Already by the end of the 1960s, through various mortgage schemes, the socialist state started to encourage, for a nascent socialist middle class, private home ownership at the expense of other housing models. [3] For instance, tenancy gradually became discredited, being identified with precariousness, lower class and almost social failure, while typical social housing (workers’ dormitories for example) gained the unsavory aura surrounding 19th century proletarian quarters. “Proper” became intimately connected to “property”. This expressed the accumulation of further inequalities within the socialist distribution of housing units as unskilled workers were being allocated, with particular frequency, confiscated interwar buildings for which the state had long stopped investments, as it favored expenditure into “trademark” blocks of flats. Due to persistent racial biases, most of the Romanian Roma, when not totally excluded from the socialist economy, were themselves part of the mass of low-skilled workers and auxiliary personnel. Consequently, they had to make do with the dilapidated houses rented to them by the state. [4]

The first social-democratic governments that followed after the 1989 Revolution speedily resumed the state socialist authorities’ penchant for private home-ownership. At a baffling speed, most of the state-owned housing stock was purchased by the Romanian population. [5] This was possible due to galloping inflation as well as to a decree passed by the Government in 1990 allowing the purchase of state owned apartments. By 1993, a 2-roo flat in Bucharest could be purchased with the equivalent of an average salary – 100 USD.[6] The official discourse underpinning this campaign was that of ensuring proper housing conditions for the bulk of the population while laying the groundwork of a real estate market based on secure property rights. [7] Social concerns and market rationality seemed to wed just fine within the 1990s “end-of-history” enthusiasm. This discourse was paralleled, however, by the gradual rolling back of the state from any house construction projects: if already in the 1980s housing project had dropped, after 1989 most of the construction work was done by private enterprises and was thus sold directly on the market. [8] A direct consequence of this lack of state initiative was the gradual downsizing of social housing units and of social housing as such: social housing became slowly limited to old, derelict buildings from the interwar. These were oftentimes the same buildings allocated before 1989 to the underclasses of the socialist economy. In an all-too-familiar mixture of racism and classism, these buildings were gradually perceived as patrimonial jewels spoiled by a Roma population living on the back of the state through subsidized rents. By now, however, they also had an uncertain legal status, as they were reclaimed by the owners dispossessed through the post-1945 nationalization. As a result, the tenants living there have been, for the last 25 years, under the constant threat of eviction, a threat becoming more and more real as we speak.[9]

This did not create any public outcry, however, as tenancy and its regulation started to disappear from the government’s discourse and policies: after 1996, most of its “social programs” revolved around the legal enactment of property acquisition. Sometimes, at any price. Need-based or emergency housing became unnoticed and unnoticeable on a rough real estate market heartened by the state. The “social programs” aimed at encouraging in this way a Romanian middle-class still leaning on state institution in its quest for financial independence. [10]The small house-stock built by the state after 2000 was, thus, channeled towards young, employed, credit-worthy professionals and their families.  Socially disadvantaged groups and need-based applicants were confined to the old stock of nationalized houses, which they had received from state authorities. Coupled with the dearth of social construction projects, the only form of need-based social housing policy became subsidized rent within the old dilapidated and, by now, disputed houses.

After 2001 the stress put on property acquisition at the expense of tenancy rights triggered the development of an oversized mortgage industry, which encouraged the 2000s housing bubble. The banking sector’s risky credit policies, aided by the state’s direct support for property acquisition, were instrumental in these developments. The deficiencies of the project would be noticed only when it was too late and the global financial crisis already reached the Romanian shores. [11] Nevertheless, as these mortgages were guaranteed by the state, the banking sector remained relatively unscathed after the 2008-2009 crisis. Coupled with the lack of investments in social housing and at the expense of it, this stress on credit policies gave a boost to the real estate companies rather than helping any lower, middle or even upper-middle class families. The effects of the real estate boom and of the crisis that followed can still be felt today: in its wake thousands of debtors were left under the constant threat of evictions and forced sales. In 2011 alone, according to the Romanian Credit Bureau, 2000 foreclosures per month took place under the banks’ supervision, a gigantic blow to the 2000s dream of a Romanian middle-class home. [12]

Through its 1990s active encouragement of family based home ownership and its post-2001 support of a shaky mortgage market, the post-socialist state became a central class actor directing both the creation of a real estate market fraught with inequalities while actively supporting a risky banking sector. What enabled this, however, was a ubiquitous discourse emphasizing the value and prestige of family-based home ownership at the expense of other housing models. The consequences are as strange as they are dire. Romania has the highest homeownership rate in Europe.  The homes are also, however, the most overcrowded in the EU. [13] In most Romanian towns, market rent prices exceed 80% of the medium income: it is thus untenable to live on the rental market not only for the poor, but also for most Romanians with the sole exception of a thin powerful upper class. [14]At the same time, after the 2008-2009 debacle of the credit market, the conditions for obtaining a mortgage loan have become more and more stringent, excluding from housing even those whom in the 2000s could still afford a house.[15] Similarly, the lack of any regulations concerning renting contracts (such as a cap on rent, or increasing the pool of possible beneficiaries of subsidized rents instead of subsidizing credit schemes) left the rental market in a total wilderness, with steep prices compared to real income. This directed possible tenants towards the banks in desperate attempts to secure a loan while excluding those who cannot even afford being in debt. This is a mass of people that is increasing daily.

In this context, the Romanian middle-class, lacking both mortgage opportunities, [16]as well as the possibility of sustainable living on the rental market, finds itself in a similar situation with the evicted people on Vulturilor. The same structural conditions which made the state a handmaid of the real estate market and of the banking sector, block any opportunity to get out of the housing crisis for both Romanian Roma on the brink of poverty as well as for the indebted middle class (ethnically) Romanians who find it impossible to obtain a house of their own. Racist and classist biases prevent, however, any sort of coalition between the urban poor and the Romanian middle class: living as state tenants, a condition which was derided ever since the 1960s, the people on Vulturilor 50 are perceived not as possible allies, but solely as Gypsies trying to scrounge something from an impoverished state held together only through the industriousness of the sacrificially employed (ethnically) Romanians. For some, it is still an outrage to put in the same pot the conscientious debt-ridden Romanian with the poor Romanian Roma whom, to start with, cannot even afford being in debt. Contrary to the scandalized liberal uproar, in contexts such as Bucharest, racism is not a prejudice, it is a useful tool which has efficiently prevented any inter-class solidarity. However, it is only by opening up the possibility of an inter-class alliance that one can hope for creating a social pressure powerful enough to induce social changes both in housing and credit policies. At the moment, after the flagging last years, the real estate market is witnessing a resumption[17] which, by fueling the gentrification process in cities such as Bucharest or Cluj, will greatly increase the pressure on marginal groups, like the people from Vulturilor 50. In the current context, alliances are a must.



[1] For a detailed account of the case see http://fcdl.ro/category/en/info-in-english/ .

[2]FCDL(the Front for Housing Rights) has been trying to document the more recent cases: http://fcdl.ro/category/istorii/.

[3] By the beginning of the 1980s, these programs had been curtailed due to the ongoing economic crisis, while new apartment constructions declined. For further information see  Turnock, David. “Housing Policy in Romania.” Housing Policies in Eastern Europe and the Soviet Union. Ed. J Sillince (Routledge, New York) Pp, 1990, 135–65.

[4] Vincze, E. and Rat, C. (2013). Spatialization and Racialization of Social Exclusion. The Social and the Cultural Formation of ‘Gypsy Ghettos in Romania in a European Contex. Studia UBB Sociologia, 58(2): 5–21

[5] Chelcea, L. (2000). Marginal Groups in Central Places: Gentrification, Property Rights and Post-Socialist Primitive Accumulation. Sociologie Românească, Vol. 3-4: 51–68.

[6] See “România, țara proprietarilor de apartamente” in Adevarul, 22 Nov. 2010.

[7] Zerilli, F. M. (2006). Sentiments And/as Property Rights: Restitution and Conflict in Post-Socialist Romania. In M.Svasek (ed.): Postsocialism: Politics and Emotions in Central and Eastern Europe, New York: Berghahn Books, pp. 74–94.

[8] See the Romanian National Institute for Satistics’s figures: https://statistici.insse.ro/shop/?page=tempo2&lang=ro&context=53 .

[9] Zerilli manages, in his article, to evoke the turbulent atmosphere created by the restitution process.

[10] See for instance the program Our First Home (Prima Casă) which, while encouraging young couples to purchase their homes, also represented a windfall for Romanian Banks and their mortgage portfolios, as the state took upon itself default risks. This issue has constantly been the bone of contention between the Central Bank and the commercial banking sector. See Claudiu Medrega’s “Isărescu, guvernatorul BNR: Bancherii să facă banking adevărat. Noi nu ne transformăm în societate de administrare a imobiliarelor”. Ziarul Financiar, 16 Feb. 2012.

[11] For the effects of the economic crisis on the housing market see Kıyılar, Murat and Ali Hepşen, “Analysing the Housing Market Structure in Romania and Turkey under the Global Financial Crisis Effect” in Annales Universitatis Apulensis Series Oeconomica, 1.2 (2010).

[12] Ciprian Botea, “Două mii de credite ipotecare ajung în executare silită în fiecare lunăZiarul Financiar, 12 Aug. 2012.

[13] According to the Eurostat figures.

[14] According to an investigation organized by the Romanian newspaper Gandul.

[15] Romania has an outstanding record of ownership with no mortgages attached (0,6% according to Eurostat)

[16] Marius Radu, “BNR sugrumă creditul de consum şi cel imobiliar. Bancherii nu sunt de acord. Cum comentaţi ?”, Ziarul Financiar 17 Iun. 2011.

[17] Cristi Moga, Ciprian Botea, “Piaţa locuinţelor din Bucureşti se dezgheaţă: preţuri mari şi credite mai multe în leiZiarul Financiar, 1 Iul. 2014.

 

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