State intervention in the real estate market - or how nothing is learned from experience.
In Geneva, there is the controversial compulsory social housing. In Berlin, an attempt was made to influence the market with a rent cap, but this was retroactively banned by the Federal Constitutional Court.  And what is Zurich doing? Unfortunately, it is exerting more and more influence on the real estate market. And it is doing so in such a way that the largest city in Switzerland is moving itself into a housing shortage for its citizens and especially the middle class. The latter are being pushed out of the city. The important basis for long-term tax security, balance and attractiveness of the city is in danger. Time, then, to take a look at the mosaic stones of this ominous development.

Impact 1: One is making it more difficult to create new housing.
Even though residential space has increased by 23% since 2000, the trend has already reversed. While 3,380 apartments were built in 2018, only 1,772 were built in 2020. One reason for this is that large projects are now only approved by the city if they include a proportion of social housing. What the investors call "blackmail", the city council calls "deliberate examination and promotion of new building projects".

No matter what you want to call it, building is not an easy matter in Zurich. For another limiting factor for healthy building activity is the fact that in the building zone regulations, greater importance is to be attached to the ISOS protection register. This register lists not only individual buildings, but also entire Swiss sites deemed worthy of protection, of which there are many in Zurich. This makes the renovation of existing buildings more difficult and can block or even prevent planned and urgently needed rezonings. The Heimatschutz has even blackmailed the city of Zurich into enacting the current BZO by blocking it: While ISOS had to be considered for federal buildings until now, this protection register is to be given much more importance or consideration in planning in every new BZO. The courts are also increasingly taking ISOS into account, although there has never been a referendum on this ISOS or it would have been enshrined in law. ISOS comes from Bern and no owner has been able to defend himself against an entry so far.

If you decide to submit a building application despite these adversities, you need a lot of patience and a thick skin. The city delays the approval of building projects and many permits are currently under review for much longer. It can take nine months for an application to be answered instead of the usual three. If there are problems or an appeal, two more years may be needed and if the city again rejects the building owner with questionable building decisions, one is sent to the next closed session after another 3-8 months of waiting time. Where other cities, such as Uster, maintain a "New Public Management" and call the builders in advance and quickly to point out possible problems before the building decision is made, Zurich prefers to make a questionable decision. Moreover, Corona is put forward as a reason for delays. 

If one thinks to be one step further, then comes the question of noise protection. Or as the NZZ 2020 aptly put it: "In the way noise protection is regulated by law today and recently interpreted by the courts, it merely serves as an instrument to prevent residential buildings in urban areas. This also makes sensible solutions virtually impossible." It comes as little surprise that the number of urgently needed new apartments has dropped by almost half in just two years.

Impact 2: Winning votes is more important than housing for the middle class.
Today, 27% of the city's rental housing is already not rented for profit. The City Council plans to increase that rate to one-third. This will make housing scarce for the middle class, which will not be able to benefit from reductions and will have to look for an apartment on the open market. Furthermore, large projects will only be approved with social housing. The plan of the social government is clear: to win the favor of the voters who will continue to support this policy. Every tenant who is allowed to live in a cheap apartment helps in this. In addition to the planned social housing of 33%, about 10% is currently still available as condominium units or owner-occupied single-family homes in the city. In other words, the middle class has access to only 57% of the housing units in the city. And for these vacant properties, the market plays, making them visibly unaffordable for the middle class. With the city-imposed shortage, you don't have to be a clairvoyant to guess what the future price trend will be.

In other words, a development that does not bode well and will lead to a social change in the city that is not welcome from any point of view. Thus, the master plan of the current social government, which sees in every tenant of a cheap apartment also a voter, must be critically questioned. For in the long run, it will lead to a peculiar distortion in the population mix and to tax losses. If the chance of getting a cheap apartment increases by reducing one's economic capacity, this is a questionable incentive for the city of Zurich.

Impact 3: Politicians are going one step further in the wrong direction.
The systematic interventions from the city side in the real estate market will go much further. A decision is also planned as to whether the city council's request to include a minimum proportion of affordable housing in new buildings should be granted. For example, in the case of a rezoning or a site redevelopment with additional use, this will become a mandatory requirement and only low-cost apartments can be built there. The specifications for the allocation of these apartments are then the rule "room - 1 = minimum number of residents" and also the income and assets of the applicants must be carefully examined. This turns the city into Big Brother and anyone who is promoted as a young person, for example in their job, must expect to have to move out of their apartment.

Another proposal of the municipal council, which was discussed a few weeks ago regarding the city's guideline plan and which would make building even more difficult, seems creative and almost dictatorial: in the future, private courtyards, gardens and roof landscapes would be made publicly accessible. A piquant encroachment on property rights, which will probably occupy the courts and will also certainly not lead to brisk construction activity of attractive apartments in the city of Zurich. The current summer closures of some neighborhood streets are intended to free them from traffic, even if the surrounding streets are burdened with more noise and traffic as a result. This is because increasing noise pollution has been identified as a construction-reducing constant, and 30-speed zones are also to be introduced on main traffic axes. The fact that the car is to be banned from the city in planning terms is also shown by the increasing number of residential buildings, which are no longer allowed to have even one parking space per apartment.

Impact 4: Let's make it a little harder for investors, please.
The law on the value-added levy for rezoning and upzoning is currently being drafted and provides that in the city of Zurich, contrary to the cantonal minimum rate of 20%, twice that amount, i.e. a whopping 40%, will be due as a levy. This will be applied if the additional utilization is realized after a site redevelopment or a rezoning.

The big problem will certainly be the calculation of the added value. As is already the case with the real estate gains tax, this new tax will also lead to all kinds of inconsistencies and unfair treatment. Real estate developers will think more than once whether they want to build their next investment property in the city or rather somewhere else. What can be said for certain is that this provision will not contribute to attractive rents for the middle class. Also to come to this conclusion, according to does not have to have studied. In addition, the situation is unclear as to how it will behave if condominiums are built instead of rental apartments.

The gloomy conclusion
The upward price spiral is preprogrammed with all these decided and planned measures for rental and owner-occupied apartments in the city of Zurich. The middle class will no longer be able to afford home ownership, leaving the low-income earners with the state-subsidized apartments with the rich privileged in the city. A public discourse on this issue is urgently needed. Because actually an outcry should go through the middle class.

Finally, the good news: Even if many things are already going in the wrong direction, it is not entirely too late to turn the tide and ensure that Zurich remains a city for everyone by intervening and making the appropriate decisions at the ballot box.