Land Use Policy 60 (2017) 281–286 Contents lists available at ScienceDirect Land Use Policy j o ur na l ho me page: www.elsevier.com/locate/landusepol Sustainable housing: A ground lease partnership model Dirk Löhr Trier University of Applied Sciences, Environmental Campus Birkenfeld, P.O. Box 1380, 55761 Birkenfeld, Germany a r t i c l e i n f o Article history: Received 15 May 2016 Received in revised form 15 September 2016 Accepted 25 October 2016 Available online 9 November 2016 Keywords: Ground lease Tinbergen rule Affordable housing Public budget Land markets a b s t r a c t Against the background of strained housing markets, economic, social and ecological targets (e.g. energy-based modernization) may conflict with each other. Against this backdrop, municipal leasehold approaches appear to be interesting. Considering the case of Germany, the legislator designed lease- hold rights as an instrument to tackle a variety of targets. However, compliance with the Tinbergen rule suggests that municipalities should focus on economic targets while using leasehold approaches. Nonetheless, they should waive any exploitation of their monopolistic position in the local land market in favor of ground leases that are in line with the capital market. In doing so, public leasehold approaches may create an added value which may help to ease the conflicts between social and ecological targets. In this context, social and ecological targets shouldn’t be pursued by the municipality itself, but in coopera- tion with suitable partners not looking to maximize their risk/return requirements. However, a number of obstacles have to be removed before leasehold rights can be used in this way. © 2016 Elsevier Ltd. All rights reserved. 1. Introduction Particularly in the agglomerations of booming countries, afford- able housing is becoming a growing problem. Moreover, a rising number of governments recognize that successful tackling of climate change isn’t possible without energy-efficient housing. However, energy-based modernization often leads to significant rental increases, which often purposely result in a change of ten- ants, as the area gentrifies. Thus a conflict between ecological and social targets emerges. Although measures such as caps on rents can contribute to achieving the social targets, such governmental intervention in market mechanisms may have a boomerang effect and increase the scarcity problems in the housing markets, at least in the long run. Another way to push social and ecological targets is public housing programs or subsidies. However, this is expensive, and the public budget is limited. This article intends to demonstrate that public ground leases may contribute to a resolution of such or similar conflicts. In gen- eral, ground leases (or: heritable building leases) allow the land of other persons to be used in order to erect a building. This way the ownership of land and buildings are separated. To use the land, the owner of the building normally has to pay an annual leasehold fee to the owner of the site. As an equivalent to full real property, the leasehold right can be sold or inherited. E-mail address: d.loehr@umwelt-campus.de This article mainly refers to Germany. Legal details are regulated in the German Law on Ground Leases (Erbbaurechtsgesetz – Erb- bauRG) dated January 15, 1919 and last amended October 1, 2013. Although, except for some limiting legal restrictions, the basic fea- tures of the German ground lease right are similar to those in other countries. Since municipalities are one of the most important pub- lic issuers of ground leases, the subsequent text only refers to the municipal level. 2. The concept: a ground lease partnership model (GLP) The successful use of public ground leases for tackling social and ecological targets hinges on having an elaborated concept. So far, there is broad agreement that public ground leases may serve as instruments to tackle several targets at the same time. For instance, the German Law on Ground Leases intends to con- tribute to affordable housing and to tackle land speculation (von Oefele and Winkler, 2012, p. 15), as well as generating public funds. Tackling land speculation requires a leasehold fee which is high enough to divert the ground rent to the lessor. Affordable hous- ing in agglomerations, however, is only possible if the leasehold fee is significantly below the ground rents. In which case, the pub- lic budget would suffer an opportunity cost. These examples show that using ground leases for the pursuit of a variety of independent goals violates the Tinbergen rule (Tinbergen, 1952). According to this rule, a certain number of independent goals cannot be achieved if policy makers use fewer instruments than independent targets. Successful policy needs at least as many instruments as indepen- http://dx.doi.org/10.1016/j.landusepol.2016.10.037 0264-8377/© 2016 Elsevier Ltd. All rights reserved.