Social Housing in Europe [1 ed.] 9781118412350, 9781118412343

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The Royal Institution of Chartered Surveyors is the mark of property professionalism worldwide, promoting best practice, regulation and consumer protection for business and the community. It is the home of property related knowledge and is an impartial advisor to governments and global organisations. It is committed to the promotion of research in support of the efficient and effective operation of land and property markets worldwide.

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Social Housing in Europe

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Social Housing in Europe

Edited by Kathleen Scanlon Research Fellow LSE London London School of Economics

Christine Whitehead Professor of Housing Economics London School of Economics

Melissa Fernández Arrigoitia Research Officer LSE London London School of Economics

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This edition first published 2014 © 2014 by John Wiley & Sons, Ltd Registered office John Wiley & Sons, Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom. Editorial offices: 9600 Garsington Road, Oxford, OX4 2DQ, United Kingdom. The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom. For details of our global editorial offices, for customer services and for information about how to apply for permission to reuse the copyright material in this book please see our website at www.wiley.com/wiley-blackwell. The right of the author to be identified as the author of this work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by the UK Copyright, Designs and Patents Act 1988, without the prior permission of the publisher. Designations used by companies to distinguish their products are often claimed as trademarks. All brand names and product names used in this book are trade names, service marks, trademarks or registered trademarks of their respective owners. The publisher is not associated with any product or vendor mentioned in this book. Limit of Liability/Disclaimer of Warranty: While the publisher and author(s) have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. It is sold on the understanding that the publisher is not engaged in rendering professional services and neither the publisher nor the author shall be liable for damages arising herefrom. If professional advice or other expert assistance is required, the services of a competent professional should be sought.

Library of Congress Cataloging-in-Publication Data Social housing in Europe / edited by Kathleen Scanlon, Christine Whitehead, Melissa Fernandez Arrigoitia. pages cm Includes bibliographical references and index. ISBN 978-1-118-41234-3 (cloth) 1. Public housing – Europe. 2. Housing policy – Europe. I. Scanlon, Kathleen. II. Whitehead, Christine M. E. III. Arrigoitia, Melissa Fernandez, 1980HD7288.78.E85S647 2014 363.5’85094 – dc23 2013046739 A catalogue record for this book is available from the British Library. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. Cover image: Courtesy of Gábor Csanádi Cover design by Garth Stewart Set in 10/13pt Trump Mediaeval by Laserwords Private Limited, Chennai, India 1 2014

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Contents Notes on Contributors Foreword by Claude Taffin Acknowledgments 1

Introduction Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia National stocks of social housing Ownership Rents Access Housing allowance Demographics of social tenants

xv xxiii xxv 1

3 6 6 10 12 12

SECTION ONE: SOCIAL HOUSING IN 12 EUROPEAN COUNTRIES

21

Part I

Large Social Housing Sectors

23

Social Housing in the Netherlands Marja Elsinga and Frank Wassenberg

25

Position of social housing Historical development The provision of social housing Finance Rents Access and allocation Social housing-tenants Governance and regulation Current debates

25 27 29 30 32 33 34 35 37

Social Housing in Scotland Douglas Robertson and Regina Serpa

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Introduction Historical development of social housing in Scotland Tenure profile and trends Insecure accommodation

43 44 46 47

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Housing allocations Financing of social housing Governance and regulation Capital investment in housing Right to Buy Housing finance New house-building trends Financial innovations Conclusion: Present-day policy environment

47 49 49 50 51 52 54 55 56

Social Housing in Austria Christoph Reinprecht

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Introduction: the current position of social housing Historical development of the sector up to the present Provision of social housing Financing Rents Access Demographics Governance and regulation Current policy environment

61 63 65 66 68 69 70 71 72

Part II 5

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Medium Social Housing Sectors

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Social Housing in Denmark Hedvig Vestergaard and Kathleen Scanlon

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Introduction The current position of social housing Provision of social housing Landsbyggefonden/The National Building Fund Access to social housing/eligibility Demographics of social housing Rent levels Other forms of affordable provision The political debate Recent initiatives Conclusion

77 78 79 80 81 83 85 85 86 87 88

Social Housing in Sweden Hans Lind

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The concept of social housing in the Swedish context Tenure forms and rent setting in Sweden

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Social Housing in England Christine Whitehead

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Social Housing in France Claire Lévy-Vroelant, Jean-Pierre Schaefer and Christian Tutin Introduction: the current position of social housing in France Historical development of social housing Organisation of the social housing sector Financing social housing Rents Access and allocation Tenant demographics Current issues and political debates

Part III 9

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MHCs in Sweden Housing allowances and other economic support How the social authorities work with housing issues Some recent trends Conclusion

The housing stock and the changing importance of tenure structure Structure and ownership in the social sector Investment in new social housing Financing the social sector Rent determination Who lives in the social sector? Looking to the future 8

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Small Social Housing Sectors

105 107 108 110 113 115 117 123

123 127 130 131 133 135 139 140

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Social Housing in the Republic of Ireland Declan Redmond and Michelle Norris

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Introduction The development of the social housing sector Housing need and social housing tenants The local authority sector The housing association sector Planning gain and social housing Social housing support: rent supplement and social housing leasing Future trends and policy

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Social Housing in the Czech Republic Martin Lux

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Introduction The current position of social housing Historical development of the sector to the present day Provision of social housing New municipal construction: policy and financing Rents, access and allocation Conclusion Acknowledgement

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Social Housing in Germany Christiane Droste and Thomas Knorr-Siedow

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Introduction Development of the sector up to the present Provision of social housing Current developments in social housing policy and practice Conclusion

183 184 194 196 199

Social Housing in Hungary József Hegedüs

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Introduction Historical development of the sector up to the present Provision of social housing Financing social housing Rents Access and allocation Housing allowances and ‘low-cost housing’ Homeownership opportunities Effects of the global financial crisis on social housing Conclusion

205 207 210 211 213 215 216 218 219 220

Social Housing in Spain Baralides Alberdi

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Introduction Historical development of the sector Structure of social housing Funding VPO social housing VPO prices and rents Access and allocation Demographics of social housing Current policy environment

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Social Housing in Post-Socialist Countries József Hegedüs, Martin Lux, Petr Sunega and Nóra Teller Introduction: the East European Housing Model and changes to the housing system during transition Rent regulation Housing allowances Social housing management New social housing investment Trends in housing affordability and housing inequality The sustainability and effectiveness of new social housing subsidies Conclusions: prospects for a new social housing regime Acknowledgement

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239 241 243 244 244 246 248 250 251

SECTION TWO: CROSS-CUTTING THEMES

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Part IV

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History

Histories of Social Housing: A Comparative Approach Peter Malpass

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Introduction Perspectives on the history of social housing Comparative housing histories: a new approach Conclusion

259 260 266 272

Learning from History: Path Dependency and Change in the Social Housing Sectors of Austria, France, the Netherlands and Scotland, 1889–2013 Claire Lévy-Vroelant, Christoph Reinprecht, Douglas Robertson and Frank Wassenberg

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Introduction Main historical sequences The metamorphosis of social housing Conclusion

277 279 285 291

Housing the Poor in Paris and Vienna: The Changing Understanding of the ‘Social’ Claire Lévy-Vroelant and Christoph Reinprecht

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Introduction 297 Social and ‘very social’: shifts in contexts, concepts and provision 298 Conditions in and provision of social housing, then and now 300

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From social to very social Historical shifts in meaning of ‘very social’ Conclusion: the paradox of integration

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Financing Social Rented Housing in Europe Christine Whitehead

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Introduction Rent determination An increasing role for private debt finance Equity finance for social housing Subsidies to social housing provision Conclusion

317 318 321 324 326 328

Social Housing and European Community Competition Law Darinka Czischke

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Introduction A typology of approaches to social housing provision in the European Union Services of general interest, state aid and social housing Conclusion

333 334 336 344

Property, Altruism and Welfare: What Social Housing Allocation Tells Us About English and French Legal Differences Jane Ball

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Introduction Social housing allocation in the European context A holistic view Property and altruism in England Property law and altruism in France Changes and Europeanisation Conclusion

349 350 351 352 355 360 362

Part VI 21

Finance and Law

302 306 311

The Social and Private Sectors

Urban Regeneration in Dutch, French and German Social Housing Areas Christiane Droste, Christine Lelévrier and Frank Wassenberg Social housing and urban regeneration in the three countries: a comparative perspective The main periods of urban regeneration in social housing

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Key features of current social housing renewal Conclusion: the playing field is changing

380 384

The Privatisation of Social Housing: Three Different Pathways Marja Elsinga, Mark Stephens and Thomas Knorr-Siedow

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Introduction Privatisation in the UK Privatisation in the Netherlands Privatisation in Germany Conclusion

389 390 396 401 409

Housing and Neighbourhoods: What Happened After the Sale of State Housing to Sitting Tenants in England? Alan Murie

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Introduction Privatising public housing in Europe The Right to Buy in England Social and spatial differences Estate-level analysis Conclusion

415 417 418 419 422 428

Conclusion Kathleen Scanlonn and Christine Whitehead

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Country comparisons Cross-cutting themes A final conclusion

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Glossary of Terms Index

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Notes on Contributors Baralides Alberdi is a specialist in housing finance and financial instruments that develop and complement the mortgage market, and previously worked as head of the research department of the Mortgage Bank of Spain, the largest specialised mortgage institution at the time. She is part of the International Housing Program with the Wharton School at the University of Pennsylvania, and has worked for the World Bank as a financial-sector specialist on housing projects in Mexico, Venezuela, Brazil, Argentine, Peru, Colombia and Costa Rica. Currently, she is director of the consultancy Madrid Puerto Aéreo. Jane Ball is a senior lecturer at Newcastle Law School, where she teaches the law of international credit and security, land law, land use and equity. She worked in English legal practice before embarking on an academic career, researching French social housing in particular using economic theory and empirical study. Her recent projects include an economic analysis of squatting, a project to introduce intermediate tenures in Catalonia, and wider European comparisons of tenures, property and European regulation. Darinka Czischke is the former director of the Building and Social Housing Foundation. She wrote her PhD thesis on social housing organisations in England and the Netherlands at Delft University of Technology, where she is also a guest researcher. Her research focuses on the links between social actors, processes and institutions, and the built environment. She was previously Research Director of the European Social Housing Observatory at CECODHAS Housing Europe in Brussels. She has published extensively on social housing, socio-spatial integration, social enterprise and social innovation in housing. Christiane Droste, a researcher and consultant, leads the urban studies research agency UrbanPlus Droste&Partner in Berlin. She specialises in urban development and housing issues, particularly integrative urban and neighbourhood development policies, social, cooperative and co-housing. She has been involved in various European research initiatives on urban renewal, large housing estates and social housing and is particularly active in German-French knowledge exchange about urban planning and local institution building. She is a gender-diversity consultant and has published widely on social, sustainable and urban regeneration. Prof Marja Elsinga holds a chair in Housing Institutions and Governance at Delft University of Technology. She leads the research programme on housing systems and is interested in comparative research into change

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in housing institutions and governance. She has written many books and journal articles, and was an editor of the Elsevier International Encyclopaedia of Housing and Home. She has worked on several comparative projects for the European Commission on topics such as security of home ownership, housing and exclusion and housing and pensions. She is also active in policy-oriented Dutch projects on social housing, housing affordability and intermediate housing tenures. Melissa Fernández Arrigoitia is an urban sociologist and research officer at LSE London. She has worked on projects ranging from affordable housing trends in London, social housing across Europe and the local economic impact of the 2012 Olympics to the emergence and dynamics of co-housing, the private rented sector in London and housing relocations, social housing demolitions and livelihoods in the urban South. She is a lecturer at Birkbeck University’s Department of Psychosocial Studies and has also worked in the field of human rights in the United Kingdom, the United States and Puerto Rico. József Hegedüs is a founding member of the Metropolitan Research Institute, established in 1989 in Budapest. He has been co-organiser of the East European Working Group of the European Network for Housing Research since 1989 and is a member of Hungary’s Housing Policy Council. Since 1994, he has been a part-time associate professor at Corvinus University Budapest. In the past two decades he has written extensively on housing issues and has co-edited several volumes including The Reform of Housing in Eastern Europe and the Soviet Union; Housing Privatization in Eastern Europe; Housing Finance: New and Old Models in Central Europe, Russia and Kazakhstan; and Social Housing in Transition Countries. Thomas Knorr-Siedow studied sociology and urban and regional planning. After teaching community development at Constance University, he became director of a social planning and urban development agency for Berlin’s city government. In 1993, he moved to the Institute for Regional Research, where his work centred on housing in an international comparative perspective, urban social development and the role of civil society in cities. His research also covers urban regeneration and governance in Sri Lanka and Vietnam. Currently he is a partner at UrbanPlus, a Berlin-based research consultancy, and teaches urban sociology at Cottbus University. Christine Lelévrier is an urban sociologist at the Paris Urban Institute of Planning, Université Paris-Est. Her research interests include segregation and ethnic minorities, urban renewal, housing and urban policies in deprived neighbourhoods, residential mobility and the interactions between public action and social practices. Over the past 10 years, she has carried out research on the trajectories of those who are forcibly relocated and on

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social interaction between different groups in renewed large social housing estates. She is a member of the European Network for Housing Research and carries out comparative European research on social mix and urban restructuring policies. Claire Lévy-Vroelant is a professor of sociology at the University of Paris 8 Saint-Denis and a member of the Centre de la Recherche sur l’Habitat. Her work is at the intersection of urbanism, migration, housing and–more recently–memory studies, reflecting her background as a historian. She focuses on questions of housing policy and social issues in a globalising context. She recently published a book about Parisian furnished hostels as lieux de mémoire for migrants. She sits on the editorial boards of several international journals and directs the Habitat and Sociétés series for L’Harmattan (Paris). She has worked as an expert consultant in the field of urban change, housing and marginalisation and is visiting professor at the University of Vienna (Austria). Hans Lind is professor in real-estate economics at KTH Royal Institute of Technology in Stockholm, and holds a PhD from the Department of Economics at Stockholm University. His research has covered a broad area from housing markets to property valuation and he has participated in a number of government commissions about reforming the Swedish housing market. Martin Lux, sociologist and economist, is senior researcher and head of the Department of Socio-Economics of Housing at the Institute of Sociology, Academy of Sciences of the Czech Republic. He received his PhD from Delft Technical University and the Charles University in Prague. His main research interests are comparative housing policies, social housing, housing finance, housing economics and the evolution of housing systems. He attempts to combine sociological and economic methods and theories in housing studies. He has led several international and national housing research projects and has worked as a consultant for UN-ECE, the Czech government and the banking sector. Peter Malpass is emeritus professor of housing and urban studies at the University of the West of England, Bristol. He joined the staff of Bristol Polytechnic in 1976 as a lecturer in social policy and remained closely identified with the development of housing education until his retirement in 2011. Throughout his career he wrote widely about aspects of housing and housing policy from urban renewal to rents policy, often from a historical perspective. He has written, edited or contributed to more than 40 books. In recent years, he has begun to indulge his interest in urban history and is currently a visiting research fellow of the Regional History Centre at UWE. He is currently working on a long-term project on the development of urban

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Bristol in the 19th century, provisionally titled The Making of Victorian Bristol. Alan Murie is emeritus professor of urban and regional studies at the Centre for Urban and Regional Studies at Birmingham University. He was previously head of the School of Public Policy and director of the Centre for Urban and Regional Studies at the University of Birmingham and professor of planning and housing at Heriot-Watt University, Edinburgh. He has written widely on issues related to the development of housing provision, housing policy, privatisation and issues related to cities and neighbourhoods throughout the United Kingdom and Europe. Michelle Norris is senior lecturer in social policy at the School of Applied Social Science, University College Dublin, Ireland. She has researched and published on a wide range of housing issues including social housing management and finance, urban regeneration and housing inequalities in the European Union. This research has had a significant impact on the development of housing policy in Ireland. In 2010, she was appointed by the Irish prime minister to the National Economic and Social Council, which advises the Irish government on social and economic policy, and in 2011 was appointed chair of the board of the Housing Finance Agency which finances housing for low-income households in Ireland. Declan Redmond has since 2001 lectured in planning and housing in the School of Geography, Planning and Environmental Policy at University College Dublin. His research interests focus on social housing systems, housing regeneration and mixed tenure, housing markets and affordability, public participation and the politics and governance of planning. In addition to his academic research, he is also involved in policy and practice. For many years he was a director on the board of a large housing association and more recently he has advised local communities on regeneration projects. Christoph Reinprecht is professor of sociology at the University of Vienna. He currently heads an interdisciplinary ‘Migration and Integration Research’ platform and the postgraduate master’s programme in European Studies. He is also associate researcher at the Centre de la Recherche sur l’Habitat in Paris. His research interests include issues of migration and urban social dynamics, with special emphasis on the role of social housing in globalising urban contexts, the analysis of social inequalities and political sociology. He has carried out numerous research projects at local, national and European levels as well as in West Africa, and has published 8 books and more than 80 scientific articles. He conducts ongoing research on social housing and the transformation of ‘the social’. Douglas Robertson is professor of housing at the University of Stirling in Scotland. His current research interests focus on neighbourhood identity and

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the significance of class and stigma in the construction of such identities. He has a long-standing interest in comparative housing policy and has worked with colleagues in Austria, Denmark, France, Germany, the Netherlands and Sweden. Previous research has focused on housing renewal, private property management and maintenance systems, housing associations, private renting and owner occupation. In October 2009, he was invited by Alex Neil MSP, the Scottish Government’s Cabinet Secretary for Infrastructure and Investment, to chair the Scottish Private Rented Sector Strategy Group. The group’s work helped inform elements of the Housing (Scotland) Act, 2013. Kathleen Scanlon is a research fellow at LSE London, a research centre in the London School of Economics. She specialises in housing, urban affairs and governance, with a particular interest in international comparative housing studies. She has written extensively about housing systems and financing of both private and social housing in the United Kingdom and across Europe. She has worked on projects for the Council of Europe Development Bank, the Inter-American Development Bank and the Organisation for Economic Cooperation and Development. Her publications cover a range of subjects related to housing, planning and the role of government, including government housing-policy responses to the global financial crisis, the interaction between migration and the housing market and the economics of listed buildings. Jean-Pierre Schaefer is senior adviser at Conseil National des Villes (the National Council for Urban Policies), having previously been in charge of housing economics at the Caisse des Dépôts, the institution in charge of financing social housing financing in France. An expert on housing markets and housing economics, he has worked with a town planning agency and sat on the boards of both private and social housing companies. He is member of the National Committee for Housing Economics and is chairman of the board of PACT Essonne, a non-profit organisation in charge of refurbishment of private housing. He has published books and articles in both French and international housing journals and teaches at various universities, including Paris Panthéon Sorbonne; Paris Ouest Nanterre, Orléans, Ecole Nationale des Ponts and Bordeaux School of Management. Regina Serpa is a visiting researcher with the Housing Policy and Practice Unit at the University of Stirling and is a research and information officer with the Scottish Federation of Housing Associations. Her research interests include comparative housing studies, homelessness, private sector housing quality, and race, class and social inequality within housing planning. Her recent work includes modelling impacts of welfare reform for housing associations, the progress of social landlords towards achieving the Scottish 2012

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homelessness target, and policy addressing the disrepair of owner-occupied housing in Scotland. Mark Stephens is professor of public policy at the Institute for Housing, Urban & Real Estate Research, Heriot-Watt University, Edinburgh. His primary research interests are in housing and poverty and housing markets, both with a strong international comparative element. He has played a leading role in a number of large-scale evaluations, including the EU Study on Housing and Exclusion (European Commission, 2010), the Joseph Rowntree Foundation Housing Market Taskforce (2011) and the Evaluation of English Housing Policy (Office of the Deputy Prime Minister 2005). He is a member of the European Network for Housing Research Coordination Committee, a coordinator of its working group on comparative housing policy and an editor of Urban Studies. He was elected a Fellow of the Royal Society of Arts in 2007 and an Academician of the Academy of Social Sciences in 2011. Petr Sunega, an economist, is one of the founding members of the Department of Socio-Economics of Housing at the Institute of Sociology, Academy of Sciences of the Czech Republic. He has participated in most of the research projects undertaken by the department. He specialises in housing allowances in comparative perspective, housing finance, housing-market risks, housing economics and simulation modelling of housing choice. Claude Taffin is currently the scientific director of DINAMIC, an entity recently created by the French notaries to operate their real-estate database. He worked for the World Bank as a housing finance specialist and co-authored the recent World Bank publication Rental Housing: Lessons from International Experience and Policies for Emerging Markets. Earlier, he headed the housing department of the French Bureau of Statistics (INSEE) before joining Credit Foncier, a mortgage lender, and Union Sociale pour l’Habitat, the union of social rental organisations, as chief economist. Nóra Teller, a sociologist, has conducted research on issues about social housing construction and housing allowances in Hungary and has been involved in the development of both local and national-level housing programmes. She was one of the evaluators of the Roma settlement rehabilitation programme in Hungary in 2005–2007 and 2010, and led the evaluation team assessing the impact of EU funds for Roma integration in Hungary in 2011. She is member of the European Network for Housing Research and the European Observatory on Homelessness of FEANTSA, and is one of the editors of the European Journal of Homelessness. Her ongoing PhD research focuses on Roma housing mobility in Hungary. Christian Tutin is professor of economics at the University of Paris East Créteil and member of the Lab’Urba urban research laboratory. He chaired

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the French housing-research network Réseau socioéconomie de l’habitat from 2004 to 2010. His research interests include housing-market fluctuations in Europe, housing markets and urban structures and social housing. He has carried out several empirical studies of housing markets in the Paris metropolitan area. He is co-author with Benoit Filippi of Marchés du logement et fractures urbaines en Ile-de-France and co-editor with Claire Levy-Vroelant of Le logement social en Europe à début du XXI∘ siècle. Hedvig Vestergaard is a senior researcher at the Danish Building Research Institute in Copenhagen, part of Aalborg University. A specialist in social housing, she has more than 30 years of research experience in housing and related subjects including urban regeneration, neighbourhood governance, social exclusion, the informal economy and everyday life. She has been a leading member of a number of national and international research teams working with troubled housing estates and deprived urban neighbourhoods and has been a member of the Coordination Committee for European Network for Housing Research since 2002. Her current research includes projects on housing market development, residential areas with single-family housing and deprived housing estates in Denmark. Frank Wassenberg works at Nicis Institute in The Hague as programme leader of its research on housing and urban development, trying to bridge the gap between academic knowledge and its application in urban practice. He previously worked for 20 years at OTB Research Institute for the Built Environment at Delft University of Technology, where he is still a guest researcher. His research interests include urban renewal, housing policy, neighbourhood development, mass housing estates, the rehabilitation of deprived areas and resident participation. He has worked at both the neighbourhood and local scale and at international level. Christine Whitehead is an applied economist whose research is wellknown in both academic and policy circles. She directs a multi-disciplinary centre including anthropologists, sociologists and geographers. She has conducted an extensive programme of research on various aspects of the housing market, with special reference to housing finance and subsidies, social housing provision and land-use planning, as well as on urban, industrial policy and privatisation issues. Major themes in her recent research have included analysis of the relationship between planning and housing, notably with respect to the S106 policy; housing needs assessments; the role and financing of social housing in the United Kingdom and Europe; developments in private finance; policy evaluation; and more generally the application of economic concepts and techniques to questions of public resource allocation with respect to housing, education, policing and urban regeneration.

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Foreword Not everyone can buy their own home: the recent subprime crisis sent a cruel reminder of this to governments that prioritise home-ownership. Even for those who can afford it, buying a home may not be wise–early purchase hinders mobility and ties up the household’s wealth. And history has shown that over-reliance on owner-occupation can also exacerbate urban sprawl and price volatility. Even in countries where owner-occupation is the norm, the centres of the largest urban areas are dominated by rented housing–but in spite of this, the social and private rented sectors remain surprisingly neglected by policy makers and are frequently poorly documented. Rapid urbanisation in emerging countries naturally increases rental demand as the population of cities expands. The market produces rental solutions for households at both extremes of the income distribution. Providing slum housing for the poorest is a highly profitable activity, but housing them in decent conditions is a challenge. This reflects the failure of past public housing experiments, and the idea than the creation and upkeep of good-quality social stock is a luxury that belongs to the golden age of the European welfare states. But as housing problems grow in both developed and emerging economies, their policy makers look to where social housing was created and is still alive: Europe. This is far from an easy picture to decode: there are 50 or so countries with nearly as many languages, and great diversity (rooted in history and religion) in the built form of housing and in the tenure distribution. Moreover, housing policy has increasingly been delegated to sub-national levels and housing is not an EU competence, which makes it difficult to find comparable statistics–for example, there is no common definition of social housing. For all these reasons, this publication, which provides a detailed and updated description of the main European models, will be a precious tool for housing researchers and policy makers all over the world: for Europeans in search of greater efficiency, for those in transition countries trying to rebuild and modernise their systems and for those in emerging economies just starting to tackle the issue. Building on an initiative from the French housing research network ‘Socio-économie de l’Habitat’, the London School of Economics has assembled a ‘dream team’ of economists, sociologists, urban planners and other experts from across the continent. Their output, the result of seven years of seminars and publications, has now been updated and brought together under a single cover. Its double focus–country experiences and thematic

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analyses–should enable readers to navigate and make productive use of the information it contains. Of course, the experience of a given country or region at a given time may not work when transposed elsewhere. The devil is in the details, and context and history are fundamental to an understanding of how and why policies work (or do not). This publication provides the detail and historical perspective necessary for that understanding. Claude Taffin Scientific Director, DINAMIC, France

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Acknowledgments The seed of this book was planted more than 10 years ago, in 2006, when a group of French colleagues organised a series of seminars in four European cities (Paris, Brussels, London and Berlin) through the GIS Réseau Socio-Économie de l’Habitat network. Those meetings led to a collection of papers entitled Social Housing in Europe (Whitehead and Scanlon eds 2007) whose publication was supported by a grant from the Higher Education Innovation Fund (HEIF) to the LSE London research centre. Further meetings of the group took place in Paris, Vienna and Dublin. These prompted a second publication (Scanlon and Whitehead eds 2008), also sponsored by HEIF, which covered the broader thematic concerns of the network in relation to social housing’s development. The chapters from those two publications form the basis of this book. Twenty of the original 24 authors have contributed to this volume. We are grateful to them for their continued participation in and commitment to this ongoing (and hopefully, continuing) transnational conversation. We thank all the contributors–current and previous–for their hard work and patience with the process of putting together this book. We also thank the following individuals who contributed to its creation, both in its current form and earlier incarnations, with helpful advice, comments and support: Nathalie Boccadoro, Maxime Chodorge, Benoit Filippi, Laurent Ghékiere, Marietta Haffner, John Hills, Ben Kochan, Lena Magnusson Turner and the late Bengt Turner, Marc Uhry and Gill Wedlake. We also extend our thanks to James Burns (http://jbrawimages.com), a passionate photographer of social housing architecture in the United Kingdom and elsewhere who generously shared many of the striking images featured here. We are very grateful for the support of the Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD) at the London School of Economics, without which this publication would not have been possible. Finally, a heartfelt thank you to Madeleine Metcalfe from Wiley Publishers for her kind and patient encouragement throughout. Kathleen Scanlon Christine Whitehead Melissa Fernández Arrigoitia London School of Economics

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This Habitation à Loyer Modéré (HLM) tower in Les Presles in the Parisian outskirts of Épinay-sur-Seine is one of the many (47%) social-housing buildings in the quarter. The area is also part of the French ‘Sensitive Urban Development Zones’, or ZUS (see Chapter 8 in this book). Photograph: Nicolas Oran.

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1 Introduction Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia LSE London, London School of Economics, UK

For much of the post-war period, the model of social housing was broadly similar across Northern and Eastern Europe: there was a heavy emphasis on state-supported housing construction to overcome the effects of extreme destruction and lack of investment during the war, to accommodate rapidly growing populations, to help bring economies back to some sort of normality and to ensure employment. The mechanisms for achieving this expansion in housing investment differed between countries. In most of them, local authorities (hereafter referred to as LAs) were heavily involved, either building municipal housing themselves or creating the conditions for independent social landlords to do so. However, the forms of central-government subsidy and intervention were specific to each country, and helped mould longer term approaches to ensuring ‘a decent home for every household at a price they could afford’. The extent to which housing was seen as part of the welfare state – and thus part of the contract between citizens and government – also varied. In Eastern Europe, social housing was very much based on state provision of the social wage and in most of Northern Europe, it was seen as an important part of the welfare-state contract, but in Southern Europe, the policy emphasis was more on supporting family provision of housing – and this meant owner occupation. Among what might be called the welfare-state economies, the most important distinction was between countries that saw social housing as a mechanism for providing for all types of household, and those that emphasised provision for lower income households. As numerical housing

Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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shortages began to be overcome, this distinction became more embedded, and was further strengthened by the increasing emphasis on privatisation and private finance during the 1980s and 1990s. By the new century, there was a clear distinction between countries whose governments wanted to withdraw from housing provision (as opposed to support) and those that continued to see an important mainstream role for social housing, particularly in urban renewal. Eastern European countries were in the forefront of withdrawal – and often did so without putting in place other mechanisms for supporting lower income and vulnerable households. At the other extreme was the Netherlands, where social housing providers became increasingly strong in financial terms and took on more and more urban investment opportunities. It was in this context that in 2006, a group of French researchers, supported by some French government funding through the GIS Réseau Socio-Économie de l’Habitat, brought together interested academics from across Europe to gather statistical and qualitative evidence on how social housing was developing across the continent. The patterns observed suggested that there were many similarities across countries – notably with respect to who lived in the sector, how it was organised and how it had traditionally been financed. However, there were also strong differences in scale, ethos and expectations for the future role and funding of social housing. The publication in 2007 of the group’s first collection of papers, Social Housing in Europe (Whitehead and Scanlon 2007), was supported by the Higher Education Innovation Fund and the Department for Communities and Local Government. The text – which was mainly descriptive – was welcomed by a wide range of audiences, including politicians and their advisors in both central and local government, practitioners involved in providing and managing social housing and housing and urban researchers across the world. But there was clearly a need for a more detailed analysis of the different elements of social housing provision and the benefits and costs to tenants, providers and governments alike. As a result, the group got together, again supported by the GIS, to produce Social Housing in Europe II (Scanlon and Whitehead 2008). In this collection, the contributors looked to explain the different models of provision, financing and regeneration that have been developed across Europe, to examine the history and ideologies that lie behind the role of social housing in various countries, and to understand better who benefited and who was excluded from assistance. This text was published in England in 2008; a much-modified and updated version was published in France in 2010 under the title Le logement social en Europe au début du XXIe siècle: La révision générale. Since 2007, Europe has suffered as a result of the credit crunch, the subsequent financial crisis, the continuing debt crisis and recession. Individual

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countries have been affected to different degrees, and their responses have also differed greatly – not only because the depth of the crisis has differed but also because of their institutional structures and past experience. Even so, there has been considerable convergence in certain aspects, notably in terms of the types of household that live in social housing and the perceived need for increased private involvement. In 2012, encouraged by continuing international interest in the work, we decided to update the material reflecting the current European situation. This book provides an overview of the state of social housing in Europe in 2013. It covers 12 countries in detail. While it does not claim to be comprehensive (there are 27 member states of the European Union, plus several non-members), it does cover the continent’s most important housing markets – including more than 80% of all social housing in the EU and all the countries where the proportion of social housing is 18% or greater. The coverage of countries with small stocks of social housing is more selective. The omission of some countries – notably Italy, Greece and some of the former communist states of Eastern Europe – reflects the historic concentration of academic housing scholarship in the countries of Northwest Europe. The book also covers three cross-cutting themes that are a key to the foundations and development of social housing in all the countries: history, legal and financial structures and more recent trajectories of privatisation and urban regeneration. The rest of this chapter provides a comparative review of selected material from the country chapters, beginning with the stock of social housing in each country.

National stocks of social housing It is impossible to provide entirely consistent comparative figures for the stock of social housing, both because different countries define the tenure in different ways and because of the limitations of the data. The definition of the tenure may be based on rent levels (social rents are below market rents), ownership (social dwellings are owned by particular types of landlords), or the existence of a government subsidy or allocation rules (social dwellings are assigned to households via an administrative procedure rather than the market). Most social housing statistics are based on ownership of the dwelling, but Haffner et al. (2009, 2010) concluded that the last definition – social housing is that which is administratively allocated on the basis of need – was the only one that could provide a consistent identification of social housing stocks in cross-national comparisons. ‘The main distinction we identified between (private and social renting) was that market housing is allocated according to effective demand while

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National Stocks of Social Housing

social housing is allocated according to need, the assumption being that the market will not provide according to a socially determined level of need that is different from effective demand’ (Haffner et al. 2009: 235). In order for administrative allocation to work, though, social rents must be lower than market rents – otherwise, households who can pay their own housing costs will simply rent on the open market, leaving vacancies in the social stock. However useful it would be to find a consistent basis for comparison, most of the figures we do have are from each country’s national statistics and are based on ownership. Table 1.1 gives the most recent figures for housing tenure in the 12 countries included in this book. These are for social rented housing only and do not include social owner occupation, which is important in Spain. Table 1.1 classifies the countries into three groups according to the size of the social rented sector. In three countries, social housing makes up over 20% of the overall housing stock. The Netherlands, with nearly one-third of dwellings in social rental, tops the list, and Austria and Scotland also fall into this category. There is a cluster of four countries with social rented sectors of just under 20% of the stock. These countries – Denmark, Sweden, England and France – have had a long-term commitment to significant social housing provision, although the numbers of dwellings have generally fallen since the heyday of social housing in the 1960s. Finally, five countries have less than 10% of housing in this tenure: Ireland, the Czech Republic, Germany, Spain and Hungary. Most of the dozen or so of post-socialist countries, which are treated as a group in the chapter by Hegedüs, Lux, Sunega and Teller, also fall into this category. Spain and Hungary, with only 2 and 4% respectively of the housing stock in social rental, have the smallest proportions of social rented housing – Spain because historically social housing has been provided in the form of owner occupation rather than rental, and Hungary because of the mass privatisation of state-owned housing after the fall of communism. Germany’s figure of 5% also requires some qualification, as this represents only that part of the stock still under legal restrictions with regard to rent and access. A further 5% or so is owned by (mostly public) landlords who operate it as if it were social housing. In general, countries with a medium or high level of social housing belong to the set of relatively wealthy European welfare states. Those in the ‘low’ group have traditionally placed far stronger emphasis on owner occupation (Spain, Ireland) or are former communist countries that privatised or restituted state-owned or social housing after the fall of communism (Hungary, the Czech Republic). Germany is the exception here – in many other contexts, it is seen as one of Northern Europe’s welfare states, but its approach to social housing differs radically from that of its neighbours, as it is provided through time-limited subsidies mainly to private landlords.

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The Netherlands Scotland Austria Denmark Sweden England France Ireland Czech Republic Germany Hungary Spain

High

2010 2011 2012 2011 2008 2011 2011 2011 2011‡ 2010 2011 2011

Year

2300 595 880 541 795 4045 4472 144 312∗∗ 1054 de jure1000 de facto 117 307

Social rented housing Number of dwellings (000s) 32 24 24 19 18∗ 18 16 9 8∗∗ 5 3 2

Percentage of stock

−4 −6 +1 +1 −3 −2 −1 +1 −9 −3 −1 +1

Change in preceding decade (%) 9 12 16 17 19 18 21 19 10∗∗ 49†† 4–8 11

Private rental (Percentage of stock) 59 64 50 49 41 64 58 70 65 46 88–92 85

Owner-occupation (Percentage of stock)

1 2

5 3 18

10 18† 22

Other (Percentage of stock)

Sources: Austria Czech Republic Czech tenure split, Sweden Denmark tenure split, Spain Denmark social stock England France

Germany tenure split Dol and Haffner (2010, Tables 3.5 and 3.6) Germany stock figure Chapter 11, Table 11.2 Statistik Austria Hungary 2001 and 2011 Census, EU-SILC Census data Ireland Central Statistics Office 2011; stock figure from chapter CECODHAS Housing Europe 2012 Netherlands Chapter 2 Realdania 2012 Scotland Scottish Government 2013 Author’s calculations based on Danmarks Statistik data Spain INE; CECODHAS for 2011 tenure split DCLG Tables 100 and 104 (December 2012) Sweden SCB (2012) Stockholm Statistics 2011 from USH Données Statistiques 2012 and INSEE Sweden. [Yearbook of Housing and Building Statistics Enquêtes Logement; and 2001 figures from INSEE 2012] Enquêtes Logement 996 and 2002 Figures based on national definitions of ‘housing stock’, which are not consistent. See Dol and Haffner (2010, Table 3.1). Note: ∗ Owned by municipal housing companies; not synonymous with social housing (see chapter 6). † Cooperative housing. ‡ Preliminary results from Census 2011, Czech Statistical Office. ∗∗ Rough estimates. Total rental housing = 17.6%; breakdown between social and private rental sectors (hereafter PRS) is not known. About 8% is public housing, which is not synonymous with social housing (see chapter 10). †† Legally, all rentals are private rental. This includes social rental by municipal or other companies.

Low

Medium

Country

Housing tenure of dwelling stock: highest to lowest by percentage of social rented housing (most recent year).

Size group

Table 1.1

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Rents

Ownership There are two main types of owners of social rented housing: companies in municipal ownership or municipalities themselves (in the United Kingdom, the term ‘council housing’ was long synonymous with social housing) and non-profit organisations usually known as housing associations (hereafter referred to as HAs). In some countries, such as Denmark, all the social stock is owned by HAs; in others, such as the Czech Republic, all social housing is municipal. Most countries have a mix, although the relative proportions in each type of ownership vary widely. Germany and Spain are exceptions: Germany because much of its social housing is provided by private landlords with state subsidy, and Spain because the bulk of its social provision is in the form of subsidised owner occupation rather than rented housing. In recent years, there has been a trend in many countries for social housing to move out of public ownership, often into the hands of not-for-profit HAs with a social mission. This has been driven partly by a desire to reduce pressure on public budgets, and partly by a neo liberal belief that private providers can be more efficient and responsive to residents.

Rents Rents in social housing are generally lower than rents in the private sector (Table 1.2). In some places, the difference can be very large – particularly in urban areas with high market rents, such as Paris. But in some countries, rent controls or regulations apply equally to the social and private sectors, and rents in the two sectors are similar (Austria, the Netherlands); in others (e.g. Sweden), social housing rents influence private rents through a ‘mirror’ system first introduced in Germany, whereby market rents can only exceed social rents by a certain margin. One of the features of social housing is that in most countries it offers a home for life – that is, once a household has secured a social tenancy, it can remain even if its income increases over the eligibility ceiling or family size changes. Some countries have legal provisions for increasing rents when household income goes up, but they are rarely applied because they are difficult to enforce and tend to push out stable, employed households, who are seen as vital anchors of social housing communities. The UK stands out in this regard, as the government is considering introducing limited-term tenancies for social housing and has made housing-benefit changes that will force some tenants to move if they occupy homes that are ‘too big’.

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England

Denmark

Until 2012, rent restructuring regime based on local earnings and dwelling price; increases RPI plus 0.5/1%. HAs and LAs must cover outgoings. From 2012 for many new HA lettings, rents up to 80% of market

Cost-based in new stock. Part of municipal stock had regulated rents, but rent control recently lifted Cost-based at estate level. Around 3.4% of building cost plus bank charges

Czech Republic

Mirror rents for dwellings constructed before 1991 (about 90%); rents on post-1991 dwellings freely set Market determined for properties let since 1989; rents on earlier leases (less than 2.5% of the current PRS stock) still subject to ‘fair rents’ rules

80 (2005)

(Entire dwelling) Mean: 4889 Median: 4579 (2010–2011)

11 (2004)

Also cost-based; private less than 10% higher (in post-1953 buildings, there is de facto no regulation) Rent control applied until recently; market rents since 2011–2012

68.4 (2011)

Rent determination

Cost-based

Private rented housing

Rent determination

Average annual rent (€/m2 )

Social rented housing

Social and private rent determination and levels.

Austria

Country

Table 1.2

111

227∗

103

206 mean 286 median

25 (2004)

82 (2005)

(Entire dwelling) Market rents: Mean 10 087 Median 8540 (2010–2011)

Private rents as Percentage of social rents %

80.4 (2011)

Average annual rent (€/m2 )

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Ireland

Hungary

Set by LAs on various bases but generally so low that they do not cover running costs. Cost rents required under some funding schemes By law, generally income-related since 1976 for local authority-provided general needs housing although each local authority has own system. Cost rents are used for special-needs housing provided by HAs

Central government decrees maximum rents for new construction (which vary according to four geographical zones). Related to costs of construction Rents vary with building period and funding programme (1st and 2nd strands, other determinants). In some regions rents vary with household income Rents on new leases governed by rents on comparable properties, but close to market. Rises regulated

Market rents.

Rent control abolished 1981, now market determined

9.8 (2012) but with large differences between municipalities

Average monthly rent €46.85/dwelling (2008)

Since 1948 rent on new leases free, but rises regulated

‘Cold’ rent of 66–96 (excluding heating costs) for social dwellings produced or rented after 2000

63 (2011)

28.3 (2012); 46.2 for new contracts signed in 2012

98 (2011)

(continued overleaf)

Private rents about €7.20 to €8.40/m2 above social rents. Utilities and water additional; services (doorman, street-cleaning, insurance) can add up to 18/m2 p.a. and heating a further 15.6/m2 p.a. 289

155% Theoretical average, with correction for quality. Difference in Paris 284%

8

Germany

France

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Set by annual collective bargaining between landlords and Tenants’ Union; vary with age of building

Sweden

105

324∗

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Source: Austria Country chapter/Statistik Austria Rent figures for Czech, France, Hungary, Netherlands, Spain, Sweden Dol and Haffner (2010, Table 4.6) Czech policies Chapter 10. Other Hungary data Chapter 12. Denmark rent figures from chapter 5; other cells: Realdania report England, Germany, Netherlands, Spain Realdania report Sweden Chapter 6 France L’Union Sociale Pour l’Habitat Données Statistiques 2012; CGDD/SOeS Comptes du logement 2012. ∗ This figure is for rented housing, but owner occupation is the standard form of social housing in Spain. The average price/m2 of free-market housing was €1566 in 3Q2012, versus €1142 for social owner-occupied housing, so the free-market price was 137% of the social price Calculations based on Ministry of Public Works (2012).

Market rents since 1965, but increases controlled Related to and slightly higher than social rents

150

(Entire dwelling) 5140 in 2011, but figure derived from data collected for housing allowance purposes, not overall market rents 68 (2008) 92 (2008)

Market rent since 1988, although a small and declining number of administered ‘Fair Rents’ from before that date

(Entire dwelling) All social stock: 3441 (2011); local-authority-owned 2580; housing association-owned 3669 21 (2008) 88 (2008)

Cost-based

Scotland

Spain

158

95 (2009)

Market-determined for dwellings renting for more than €681/month in 2013; others administratively set

Rent based on points system that reflects ‘utility value of dwelling’ and target household income level. Proposal to change to % of market value Locally determined historic cost-based systems for both individual LAs and HAs, so no government control

60 (2009)

Average annual rent (€/m2 )

Rent determination

Average annual rent (€/m2 )

Rent determination

Private rents as Percentage of social rents

Private rented housing

Social rented housing

(continued)

The Netherlands

Country

Table 1.2

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Access

Access Historically, the view in much of Northern Europe was that social housing should accommodate the elderly, the deserving poor and particular groups of employed people (see Chapter 15). In many countries – notably Scandinavia and the Netherlands (and, in the past, the UK) – the social sector housed a range of income groups. Even today in Denmark, Sweden and the Netherlands, in particular, living in social housing is not necessarily regarded as inferior to owner occupation. But even in countries where most people rent their homes, higher income households have always preferred owner occupation to living in rented housing, whether social or private. And there is no country in which the income distribution of households in the social sector is the same as that of the population as a whole. Today, the income divide between households in social housing and those in other tenures is becoming increasingly sharp. Most countries now impose formal income ceilings for access to social housing (Table 1.3) and others, such as England and Scotland, use criteria that, in practice, have the same effect. This reflects a general ideological shift away from the notion of state-subsidised accommodation available to all; pressure on public finances, particularly in the wake of the global financial crisis, and the EU’s position that state subsidies for housing for middle- and upper-income households conflict with EU competition law (see Chapter 19). Most countries now limit access to social housing to households at the lower end of the income distribution. However, the percentage of households eligible is normally far in excess of the proportion of social housing in the overall stock, even in countries with large social stocks. In Austria, for example, social housing makes up 23% of the housing stock, but 80–90% of the population is eligible. At the other end of the spectrum, in Hungary only 3% of the housing stock is social but 15–40% of households are eligible, depending on where they live. Some of this mismatch is more apparent than real, as by no means all eligible households want to live in social housing. However, in almost all countries the demand for social housing exceeds the number of available units. Various rationing methods are employed, including waiting lists, ranking of households (in England, e.g. homeless persons, families with children and disabled people are given priority) or – in some countries – insider information, side payments, and so on. But even in the countries where housing pressure is highest there are areas with low demand, where social housing units are empty and difficult to let. These may be used as a sort of housing of last resort for households who cannot be accommodated elsewhere or, in some areas (e.g. eastern Germany) simply demolished.

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Yes

Varies by municipality

No No

Yes – vary by housing category and zone

Yes – vary by region

Yes – vary by municipalities and programme types Yes

No formal limits; issue is under debate No – not legally allowed to ask about income Yes

No

Austria

Czech Republic

Denmark England

France

Germany

Hungary

The Netherlands

Sweden

Over 80 (for some type of social housing, including VPO) 100

100∗

Very limited; maximum income €35 000 for single-income household About 40

Varies by programme type – 15 to 40

Probably 20, but lower availability

Theoretically, 64% of households, but allocation only available to non-owners, reducing it to 33%

100 100∗

Not available

80–90

Percentage of population eligible for entry

Source: France L’Union Sociale Pour l’Habitat Données Statistiques 2012 Czech and Netherlands CECODHAS 2012 Other countries Country chapters and experts ∗ But access based on legally defined ‘housing need’.

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes, but rather high Yes, very diverse Yes Yes

De facto

Rent unchanged

Can be evicted, but very rarely happens

Nothing

Rent rises

Rent unchanged Rent unchanged if incomes rise – but government is considering ‘pay to stay’ for local-authority tenants with incomes above £60 000 Tenant may have to pay a supplemental rent known as SLS (applies to about 3% of social tenants). Eviction possible if income increases to twice the ceiling – although this is very rare Municipality has the right to raise rents for households with higher incomes, but this is rarely done as it drives people with social capacity out of social housing estates Tenant can stay, there are no income limits for continuation of the tenancy

Municipalities are free to set own policies

Rent unchanged

What happens if income later exceeds limit?

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Scotland

Ireland

Income limits at entry Formal

Access to social-housing: income limits.

Country

Table 1.3

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Demographics of Social Tenants

Housing allowance Even though social rents in most countries are lower than private rents, that does not mean that all low-income households can afford to pay them (except in a small number of countries, like Ireland, where rents are set in relation to tenant incomes). Rent levels normally depend on the cost of provision of the housing or on the relative desirability of the unit – and there may be a large gap between the rents charged and the ability of poorer tenants to pay. Thus, all countries covered in this book provide additional income-related housing cost subsidies for low-income households (Table 1.4). These subsidies, known as housing allowances or housing benefits, are usually provided by national governments but can also (or instead) be given by regional or local ones. These subsidies are normally available to both private and social tenants, and also often to at least some categories of owner occupier. In Denmark, for example, homeowners who are pensioners are eligible, while in England and Scotland, mortgage borrowers who lose their jobs can have their mortgage interest (up to a ceiling) paid for a limited period. Spain is unusual in having abolished its rent-support programme as part of government expenditure cuts in the wake of the recent crisis. Support for housing costs is sometimes targeted at particular types of households – usually pensioners and households with children. There are often limits on eligible rents and/or dwelling size in relation to household size – to ensure that government subsidy does not support overconsumption. The amount of subsidy depends on what households are expected to be able to pay. Subsidy may cover the entire gap between the actual rent and assessed ability to pay (e.g. the Czech Republic expects households to spend 30–35% of their income on housing costs), but more often there are cash ceilings or minimum payment requirements. These mean that subsidies can fall short of actual rents, especially in high-cost areas.

Demographics of social tenants The demographics of social housing tenants (Table 1.5) are strikingly similar across countries. Broadly speaking, the old and the young live in social housing: pensioners and single-parent families are heavily overrepresented in almost all countries, while couples with children are underrepresented. In all countries, social tenants have lower-than-average incomes – often much lower (as one would expect and as the EU now may require – see Chapter 19). This is true even in those countries with universalist social housing traditions such as Sweden and the Netherlands.

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Table 1.4

13

Income-related subsidies for households.

Country

Eligibility

Amount

Austria

There are three types of housing subsidy. Eligibility depends on income, household size and type in relation to dwelling size, rent levels and rent increases

Varies across regions

Czech Republic

Housing benefit: for all households that spend more than 30% of income (35% in Prague) on housing. Floor-area and cost ceilings apply Housing supplement for people in material need

Housing benefit: Housing costs above required household contribution are covered Housing supplement can cover full housing costs with no ceiling applied (varies by municipality)

Denmark

Low-income households with children and pensioners

For pensioners maximum €410/month; others €398 (2013)

England

Housing benefit: For tenants. Based on rent of specific property, household income and characteristics Support for Mortgage Interest: For owner-occupiers with mortgages who become unemployed

Rent: Maximum 100% of rent and eligible service charges for appropriate sized unit – additional limits in the private rented sector Support for Mortgage Interest: Covers interest payments on loans of up to £200 000 for maximum two years Calculated on basis of Bank of England average mortgage rate

France

Aide personalisée au logement (APL) and allocation lodgement (AL). Eligibility depends on income and household size, but available in principle to all tenures. Current recipients include 5 million tenants and 500 000 owner-occupiers.

All households must pay a minimum of about €30/month. Above that, a percentage of ‘eligible rent’ (which varies by area and is lower than actual rents) is covered. This percentage varies and is up to 100% for the very poor. Maximum APL is about 90% of maximum social rent. Average APL/AL in 2010 was €238/month

Germany

1. Wohngeld: federal housing-payment subsidy related to income and rent (excluding utilities) or mortgage payment. For lower income to medium-income group 2. Recipients of social benefits, subject to limits on floor space and rent level

1. Complex formulae apply 2. Rent is paid in full

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Table 1.4

(continued)

Country

Eligibility

Amount

Hungary

There is a national housing-allowance scheme as well as rent subsidies managed by municipalities. Typically only for tenants of public housing, but there are some special programmes for private rentals

Various rates, but generally too low to cover all housing expenses especially when energy use included

Ireland

Private renting tenants in receipt of social-security benefits, or participants on return-to-work or education schemes. Not available to social renters and owner-occupiers. Households that meet income criteria in dwellings whose rent is below €681/month (in 2013). Not available to owner-occupiers. Private renting tenants can receive a rent allowance, based on eligible rent for that area and their household income and characteristics. Social renting tenants get the rent covered depending on household income and characteristics, although property considerations are about to be introduced. Not available to owner-occupiers. National renta básica de emancipación was removed in December 2011, although tenants already in receipt of the allowance can continue to receive it until the end of its four-year term. Not available to social renters or owner occupiers. The elderly and low-income households with children

Tenants must pay a small flat contribution to their rent – currently, €30 per week. The maximum rent subsidy available is subject to a ceiling, which relates to household type and location Maximum €300/month

The Netherlands

Scotland

Spain

Sweden

Source: France

Maximum 100% of rent and eligible service charges, but this rarely covers 100% of the actual as opposed to eligible rent within private sector

Allowances still exist in some regions but are very limited

Maximum amount does not depend on housing cost, and may not cover rent on new apartments

Union Sociale pour l’Habitat Données Statistiques 2012 CGEDD SOeS 2012; Ministry of Housing statistical department Comptes du logement Other countries Chapters 2–7 and 9–14. ∗ Only pensioners. † State covers interest element of mortgage payment for some borrowers who become unemployed for up to 2 years.

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Introduction

Table 1.5

15

Demographics of social housing tenants.

Country

Age/household type

Income

Austria

Young families (on new estates); older people/singles (on older estates)

Municipal housing: working class/low income. HAs more middle income

Czech Republic

Pensioners and unemployed slightly overrepresented

Lower than average

Denmark

Nearly 57% of social tenant households are single persons (most often women), and 68% have only one adult. Children and young people

Average household income 68% of national average

England

Single parents; older and one-person households

Low incomes – on average, 50% of overall average household income

France

Somewhat younger than households nationally, although not as young as in the PRS. Single people and single parents overrepresented

Increasing concentration of low-income households in sector since 1984

Germany

Single parents, single people, childless couples

Increasing concentration of low-income households

Hungary

Single-parent families are overrepresented

Low income and social status

Ireland

Single-parent families and couples with children

Nearly 62% have incomes below 60% of median (vs 22% overall); dependent on state transfers

the Netherlands

Households older and smaller than national average, more likely to be on benefits and to be non-Dutch

Lower than average and falling, but there is still some ‘skewness’ – i.e. occupation by households not in target income groups. Some call this social mix

Scotland

Strong pattern of ‘hollowing out’, leaving young and old; singles and single parents

Low incomes – on average, half the median household income for owner-occupiers (respectively, £13k and £22k per annum in 2011)

Spain

Low-income households, first-time buyers, young or old people, female victims of domestic violence, victims of terrorism, large families, gipsies, one-parent families, and handicapped and dependent people

Lower than average

Sweden

Single parents; elderly single people

Below average

Source: France Other countries

L’Union Sociale Pour l’Habitat Données Statistiques 2012 See individual chapters

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Demographics of Social Tenants

Similarly, ethnic minorities and immigrants tend to be overrepresented in social housing, which reflects the fact that, on average, their incomes are lower than those of indigenous populations and their initial housing conditions are often poor. Useful cross-national comparative data are hard to find, as each country collects statistics on a different basis, but Table 1.6 presents some indicative figures. Rules governing access for recent immigrants, particularly from outside the EU, vary across countries. Some allow migrants to enter social housing almost as soon as they arrive in the country, while others require a minimum residence period or particular legal or employment status. In post-socialist countries, Roma are often excluded (intentionally or not) from social housing. Social housing accommodates households with lower-than-average incomes but is not always where the most vulnerable live (Table 1.7). Some countries provide special dedicated residences for homeless people, asylum seekers, drug addicts or victims of abuse. It is usually a municipal responsibility to ensure adequate accommodation for its population; how and where this is done depends on the pattern of the local housing stock. In some cities, vulnerable households are concentrated in low-demand parts of the social sector where there are more available units, while in others they end up in the lowest quality parts of the private rented sector. This book is divided into two parts. First, there are chapters about social housing in individual countries, which focus on how the system actually works in practice and what the current sociopolitical and economic contexts may mean for the future developments of the sector. There are sections on countries with large, medium and small social housing sectors. As noted earlier, this division sometimes reflects important structural or historical similarities within those groups, but there are also significant differences amongst them. As scholars and housing policy experts, we must always be wary of the tendency to regard the systems in our own countries as benchmarks. A good understanding of national particularities is fundamental to comparisons and policy prescriptions, as the systems are so disparate, and their goals so wide-ranging. The chapters in the second part of the book address some of the most important themes in current social housing research, including history, finance and law, and the relationship between social housing and the private sector. The questions they pose are recurrent ones in the field of housing policy: How do a country’s legal framework and history condition its current housing situation, and shape the future? Who should live in social housing, and how can the tension between social mix and tight targeting be resolved? What is the relationship between social housing, where deprived households are often concentrated, and urban renewal? Finally, at the end of the book, we revisit these questions and offer some tentative conclusions.

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Varies by region

Over 30% in metropolitan areas; 15% elsewhere

Not available

1.4%

31%

Introduction

Vienna 33%. Until 2006, only Austrian citizens had access to municipal housing. Source: Information from country chapters (2, 4–6, and 8–14) and authors except: England EHS 2010/11; 2011 census Scotland http://www.jrf.org.uk/sites/files/jrf/poverty-ethnicity-Scotland-full.pdf

15% of overall population; up to 89% in particular neighbourhoods.

Sweden

Not available

17%

51% of immigrants

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∗ In

All minority ethnic: 2%

Immigrants 11.22% as of end-2011

Spain

23% of housing stock occupied by households with non-Dutch head

The Netherlands

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Scotland

10% born abroad

Ireland

Not available

Ethnic minorities: approximately 600–800,000 Roma (Dupcsik, 2009) and 237 000 other minorities (Census 2001) – altogether, about 8–10% of population. Immigrants: 2.9% of population in 2001 was born abroad, 80% reported they were of Hungarian ethnicity (Gödri 2009)

Hungary

Not available

Particularly high in Berlin and Munich Share of Roma among social tenants is around 25–30%, occupying 20–25% of social dwellings (estimates)

Varies by region and city Data available only for Roma: 12% (UNDP/WB/EC)

9% (immigrants)

Germany

2× share in population

16% (minorities)

27% (minorities)

30% (foreign-born)

10% of heads of household are from an ethnic minority; 7.5% of UK residents were born abroad

England

About 25% (immigrants and their children)

Not available

6%

Percentage of social housing residents who are from a minority or immigrants

60%

Not available

20+%∗

Percentage of all immigrants/ minorities who live in social housing

France

3% (2012)

Immigrants and their children: about 10%

Denmark

11% non-Austrian citizens; 18% with foreign origins (2010)

Austria

Czech Republic

Proportion of ethnic minorities/ immigrants in overall population

Migrants and ethnicity in social housing.

Country

Table 1.6

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17

Yes, but only in low-demand areas. New housing types such as residences socials receive public funding

France

Joint allocation processes between LAs and HAs. In those LAs that still have their own stock, vulnerable are concentrated in municipal housing No, although departments are supposed to facilitate accommodation of excluded households. Provide temporary housing for homeless

Very few independent social landlords (e.g. churches)

Asylum seekers yes, but they are not recognised as residents. There are also institutions for temporarily housing the homeless Special-needs housing and hostels concentrated in independent sector because of history of provision. Homeless and those in priority need allocated by LAs No. Asylum seekers are supposed to be housed in La Commission d’Accès aux Documents Administratifs (CADA) but their numbers are highly limited. Temporary housing of homeless is increasingly provided by charitable associations

By tradition, this sector has had a high concentration of very vulnerable people

Almost entirely made up of very vulnerable, but very limited provision

Yes – the local authority is responsible for housing homeless families and determining priorities

England

Yes, the social rented sector provides more and more housing opportunities for vulnerable groups

Municipality can use its 25% allocation for households in need according to local criteria

Denmark

Some (municipal housing is the only type of social housing)

Hungary

Some (especially lone mothers, pensioners)

Czech Republic

Some (e.g. asylum seekers, homeless people housed by charities) There is none

In housing owned by independent social landlords

Some (Vienna: emergency dwellings in municipal housing)

Yes, where available

No (exceptions at regional level)

Austria

In municipal housing

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(continued overleaf)

Yes, typically in the periphery of urban areas, poor substandard housing where both the rent and the energy cost is affordable

Yes

Yes, but the sector has shrunk. Hotels and private furnished accommodation used

Yes – partly in partnership with HAs and local government, partly just because the sector is easy to access and rent can be paid with housing benefit

Easy access means the PRS functions as acute housing provider more than social renting or owner occupation

Yes (migrants, Roma, homeless, people in acute housing need)

Yes (migrants)

In the private rented sector

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Germany

In the social sector in general

Very social housing: where the vulnerable live.

Country

Table 1.7

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Demographics of Social Tenants Page 18

Most of those housed

65% (HAs own many dwellings that are managed by a special organisation for homeless, etc.)

Yes – the local authority is responsible for housing homeless families and determining priorities

Yes

Ireland

Netherlands

Scotland

Spain

Yes, with some LA involvement especially in determining individual-based subsidies

All tenants have low incomes but the sector also accommodates a large number of formerly homeless people and people with disabilities 30% (with buildings of their own)

Special needs housing and hostels concentrated in independent sector because of history of provision. Homeless and those in priority need allocated by LA Not available

All tenants have very low incomes but the sector also houses many older people, lone parents with low incomes and people with addictions None

Joint allocation processes between LAs and HAs. In those LAs that still have their own stock, vulnerable are concentrated in municipal housing Municipalities use part of their small stock to accommodate households in need Poorest families tend to live in municipal housing

Younger single people

Not available

Yes – partly in partnership with HAs and local government, partly just because the sector is easy to access and rent can be paid with housing benefit

5%

In the private rented sector

In housing owned by independent social landlords

In municipal housing

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Source: Country chapters, country chapter authors.

Sweden

In the social sector in general

(continued)

Country

Table 1.7

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Demographics of Social Tenants

This book is for anyone interested in how well Europe is meeting one of the eternal challenges of social welfare: housing its people.

References Dol K and Haffner M (2010) Housing Statistics in the European Union 2010 Delft University of Technology, Delft. Dupcsik Cs (2009): A magyarországi cigányság története. Történelem a cigánykutatások tükrében, 1890–2008. [The History of Roma in Hungary. History based on Roma research in Hungary, 1890-2008]. Budapest: Osiris. Gödri I (2009): Nemzetközi vándorlás [International Migration], In: Monostori, J., Öri, P., S. Molnár, E. and Spéder, Zs. (eds.): Demográfiai Portré 2009,pp. 119–131. Available in: http://www.demografia.hu/letoltes/kiadvanyok/DemPort/11godri.pdf. Haffner M, Hoekstra J, Oxley M and van der Heijden H (2010) Universalistic, particularistic and middle way approaches to comparing the private rental sector International Journal of Housing Policy, 10, 4, 357–377. Haffner M, Hoekstra J, Oxley M and van der Heijden H (2009) Bridging the Gap between Social and Market Rented Housing in Six European Countries? IOS Press, Amsterdam. Lévy-Vroelant C and Tutin C (2010) Le logement social en Europe au début du XXIe siècle: La révision générale. Presses Universitaires de Rennes, Rennes. Scanlon K and Whitehead CME (2008) Social Housing in Europe II: A review of policies and outcomes. LSE London, London. SCB (2012) Bostads- och byggnadsstatistisk årsbok 2012. Statistiska centralbyrån, Stockholm. Ministry of Public Works (2012) VPO and market house prices [Online], available: http://www .fomento.gob.es/BE2/sedal/35101500.XLS and http://www.fomento.gob.es/BE2/sedal /35102500.XLS VPO and market house prices available: http://www.fomento.gob.es/BE2/sedal/35101500.XLS and http://www.fomento.gob.es/BE2/sedal/35102500.XLS, accessed December 2012. Whitehead C and Scanlon K (2007) Social Housing in Europe. LSE London, London.

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Section One Social Housing in 12 European Countries

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Part I Large Social Housing Sectors

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Social housing in the Netherlands is not stigmatised. Even in the smallest Dutch towns there is more social housing than in most European cities. The image depicts classic single-family row housing, with a little garden (and bicycles) at the front and another small garden at the back. This house is in a pre-World War II neighbourhood in Delft. Photograph: Frank Wassenberg.

2 Social Housing in the Netherlands Marja Elsingaa,b and Frank Wassenbergb a OTB

Research Institute for the Built Environment, Delft University of Technology, the Netherlands b Platform 31, The Hague & OTB Research Institute for Housing and the Built Environment, Delft University of Technology, the Netherlands

Position of social housing The social rented housing stock in the Netherlands is one of the largest in Europe, after France and the United Kingdom. Of a total of 7.2 million dwellings in 2011, some 2.3 million of those were social rented. These are owned mostly by housing associations; municipally owned dwellings account for only a small fraction. Housing associations own 32% of the total housing stock, while 9% is owned by the private rented sector and 59% is owner-occupied (see Table 2.1). These figures mean that over three-quarters of all tenants rent a dwelling from a housing association. The total social housing stock at present (2.3 million) is the same size as it was 20 years ago (the peak was in the late 1990s, when the number hit 2.4 million), but its share in the total housing stock has slowly decreased from 39 to 32% at present. Although social housing is more common in urban areas, all municipalities and provinces in the country contain a significant amount. In cities such as Rotterdam and Amsterdam, about 49% of all dwellings are social rented, while even in remote and less-populated provinces like Drenthe and Zeeland, some 25% of housing is social rented. The peak in Amsterdam and Rotterdam was in 1998, when the percentage of social housing reached 57%. The Netherlands is a country dominated by single-family houses, not only in the countryside but also in medium-sized cities (Table 2.1). Almost half Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

26

Position of Social Housing

Table 2.1 Building type by tenure in the Netherlands, 2009 (numbers; percentages in brackets). Tenure

Building type High-rise flat

Social rented Private rented Owner-occupied Total

295 600 (58.1) 65 700 (12.9) 94 300 (28.9) 508 300 (100)

Low-rise flat (one- to fourstorey building)

Single-family houses

Total

999 700 (59.0) 251 400 (14.8) 331 800 (26.1) 1 694 000 (100)

1 064 000 (22.2) 199 600 (4.2) 3 530 600 (73.6) 4 794 200 (100)

2 359 300 (33.7) 516 800 (7.4) 4 120 400 (58.9) 6 626 900 (100)

Source: Authors’ calculations from WBO/WoON (Housing Demand Survey 2009).

(45%) of the social rented stock is single-family houses, often terraced. The rest are low-rise flats (42%) or high-rise flats (12%). Dutch social housing is not generally built in distinct estates; most neighbourhoods consist of a mix of housing types.

Developments in the social housing sector The construction of social housing was first allowed by the Housing Act of 1901. It was not until the 1920s, however, that municipalities or housing associations built social housing on a relatively large scale. Most social housing was built between 1945 and 1990 (see Figure 2.2). In the period after World War II, housing shortages led the government to take a leading role in the planning and construction of new housing. The peak in housing construction took place in the early 1970s, during the heyday of high-rise housing. Since the late 1990s, the number of dwellings sold and demolished in the social sector has been somewhat larger than those newly built and purchased. However, the difference between the two figures has not been large, and has resulted in only a slight decrease in the number of social dwellings to the present 2.3 million. This same period has seen total annual housing 1947 1956 1967 1975 1985 1993 2005 2010 Owner-occupied Private rent Social rent

Figure 2.1

28 61 11

30 46 24

33 31 36

39 20 41

43 14 43

48 11 41

Tenure type by year built, 1947–2010.

Source: Van der Schaar (1987), WBO/WoON (1981, 1992, 2002, 2010).

53 10 37

59 9 34

Social Housing in the Netherlands

27

40 35 30 25 Other

20

Social sector

15 10 5 0

= €631

Social rental

Private rental

419 Percentage of social rented stock 26 71 4

546 Percentage of private rented stock 23 49 28

Source: Authors’ calculations from WBO/WoON (Housing Demand Survey) (2009).

system. To compare rents properly, one should take into account quality, but such a comparison lies outside the scope of this chapter.

Access and allocation Social housing is intended for people who cannot manage to find a dwelling on their own. This is a wide criterion. People who apply for a vacant dwelling have their incomes and household compositions checked. The maximum qualifying income was €34 085 in 2012 (see ‘Governance and Regulation’), which encompasses about 40% of Dutch households. Until the 1990s, applicants had to register at local housing offices and later at the offices of individual housing associations. This resulted in waiting times that were measured in years. The lists continued to grow longer and also lost credibility, as many people registered not because they needed housing but to build up ‘waiting years’ in case of future need. The year 1991 saw the introduction of choice-based letting (CBL), a system that later spread across the country (Ouwehand & Van Daalen 2002). Through it, people could choose among all vacant houses that were offered, brokers’ style: listings were first published in a newspaper, and later on also via the internet. The idea was that only real seekers would react. At present, most social sector housing is allocated according to this CBL, but new register systems have once again been set up. At present, there is a mix of both tenants’ choice and older style waiting lists. One of the effects of the economic crisis has been a sharp decrease in the turnover rate from an average of about 9.5–7% a year, with a sharper fall in larger cities. There are fewer possibilities for first-time buyers (so they have to stay), urban renewal activities are frozen (so they can stay) and housing associations increase rents by as much as €100 or €200/month when dwellings do become available (so people do not move). Moreover, European rules prohibit the rental of social housing to households on middle incomes (see ‘Governance and Regulation’), so for them the choice is to buy something (but the banks have tightened eligibility requirements for mortgages),

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Social housing-tenants

to rent private housing (which is very scarce) or not to move at all. These coinciding developments mean that, in practice, hardly anybody is moving home any more.

Social housing-tenants Tables 2.3 and 2.4 provide information about social housing tenants. Compared to the average household, those that live in social housing • • • • • •

are older, live in smaller households, have lower incomes, are less likely to be in employment and more likely to be on benefit, are more likely to be of non-Dutch origin and live in smaller houses.

Most neighbourhoods in the country are fairly mixed, although in areas with a lot of social housing the lower middle class often predominates. There is no stigma attached to living in social housing. As mentioned before Table 2.3 Comparison between social rented sector and overall housing stock in the Netherlands, 2009. Social rented housing Number of units (thousands) Average rent (€/month) Mean number of rooms per dwelling Family houses*

Overall housing stock

2359 419 3.49

6996 442 4.27

45%

69%

Figures differ slightly from those in Table 2.2 because of different definitions. ∗ All dwellings that are not multi-storey including row (terraced), detached and semi-detached houses. Source: Authors’ calculations from WBO/WoON (2009).

social housing can be found all across the country. Even in the most remote municipalities there is more social housing than in any other European country. Unlike some other Western countries, many Dutch people live in social housing at some point in their lives. Around 31% of social rented housing is occupied by non-Dutch households,1 compared to 23% of the overall housing stock. Such households, particularly those from non-Western countries, are much more likely to live in social rented housing than non-minority households. The largest groups originate from Turkey, Morocco, Surinam and the Dutch Caribbean, followed by a range of other countries. However, this effect becomes less

Social Housing in the Netherlands

35

Table 2.4 Characteristics of tenants of the social rented sector in the Netherlands, 2009. Social rented housing

Overall housing stock

Mean household size

1.9

2.3

Tenant household characteristics: % Single persons Households with children Two-parent families* Over 65s In employment† With two jobs† On benefit In two lowest income deciles‡ Non-Dutch**

50 25 14 31 49 21 51 40 31

33 36 29 24 66 44 34 20 23

∗ Two

parents with children; the row above also includes single parents. of the household or partner works at least 12 hours per week. ‡ Earning up to about €14 000 per year. ∗∗ According to the broad definition of CBS (Statistics Netherlands): a person is born abroad (first generation) or one or both parents were born abroad (second generation). Source: Authors’ calculations from WBO/WoON (2009). † Head

pronounced after the first generation of residence in the Netherlands. Second-generation immigrants own homes almost as often as native Dutch. Like those in other tenures, most social housing tenants are satisfied with both their dwelling and its surroundings, and are not planning to move. Some 8% of all households and 12% of social tenants are not satisfied with the surroundings; complaints about safety and vandalism are also more common in the social sector (WBO/WoON 2009).

Governance and regulation Housing Act 1901 as a legal base The legal basis for social housing is the Housing Act in 1901, which, as noted earlier, laid down the duties and responsibilities of housing associations. The Social Rental Sector Management Order (known by the Dutch abbreviation BBSH), whose most recent version came into force in 2001, states that approved housing associations have the following six duties: • To house those people who are not able to find an appropriate dwelling themselves; • To maintain decent-quality dwellings; • To consult with their tenants; • To run their financial affairs responsibly;

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Governance and Regulation

• To contribute to liveable neighbourhoods (added in 1997); and • To provide housing (but not care) for the elderly and handicapped (added in 2001). The CFV is the government agency that supervises the financial viability of housing associations and can order them to take corrective action if they run into financial difficulties. If necessary, it can provide additional financial support to housing associations while they do so. The financial and operational autonomy of social landlords and the absence of government subsidies imply that the Dutch government has limited power to influence the behaviour of housing associations. Legally, the government is still the official supervisor, but in fact supervision consists mainly of sectoral self-regulation and performance agreements between local government and social housing associations as described in the BBSH. The central government does not want to be a micro-managing regulator for the social housing sector, but wants to operate more like a systems manager making sure that the necessary instruments and checks and balances, such as independent performance audits and internal supervisory boards, are in place. Some self-regulating instruments have been developed by Aedes vereniging van woningcorporaties or simply Aedes, the national umbrella organisation for housing associations, and others by (groups of) housing associations. Members of Aedes agree to abide by a governance code that is based on a corporate code used in the private sector. In addition, members must undergo independent performance assessments every four years. The regulation that governs the activities of housing associations (BBSH) is not very specific on the results expected from social landlords. This reflects the expectation that performance would be negotiated by local performance agreements between housing associations and local authorities. Market discipline and competition between local social landlords were seen as the main performance incentives. Central government mainly focuses on supervising the financial viability of housing associations and only intervenes in cases of gross mismanagement and fraud; performance supervision is almost non-existent. According to European Union rules, housing is a Service of General Economic Interest (SGEI), for which member states are allowed to provide financial support. However, support for social housing should not create unfair competition with commercial providers. In 2005, the Minister for Housing clarified the definition of SGEI for the Netherlands. The target group for social housing is those households with an income of below €33 000 in 2005, which is €34 085 in 2012. Since 2011, housing associations have been obliged to allocate 90% of their social rental dwellings (those with rents below €664.66 per month in 2012) to households in the target group. Moreover, there is a division between social and non-social activities. The latter

Social Housing in the Netherlands

37

includes building homes for owner occupation or letting houses with rents above €664.66 per month. This distinction between social and non-social activities is to be formalised in a new Housing Act.

Current debates What should housing associations do? One ongoing debate is about the tasks and goals of a housing association. There seems to be a tension between enlarging the role of housing associations to take more responsibility for society and focusing on their core business of providing decent homes for low-income people. Until the economic crisis, the prosperity of housing associations had allowed them to take on new roles including caring for the environment around their dwellings, providing houses for groups other than ‘traditional clients’ (ranging from the homeless, handicapped, elderly and students to higher income groups) and providing facilities like schools and shops. Other housing associations offer extra services like insurance or help with removals. At the neighbourhood level, housing associations often provide play facilities for children, neighbourhood wardens, environmental maintenance and neighbourhood centres, particularly where local authorities have not been active. They justify these investments as a way to improve the quality of life in their neighbourhoods and maintain the value of their properties. However, economic circumstances have changed and housing associations are now retreating to their core businesses. They (have to) focus more on yearly revenues, and cut down on ‘soft’ goals such as tenants’ quality of life or well-being.

Urban renewal The vast majority of urban renewal projects are situated in areas where social housing dominates, much of which was built in the post-war period. Depending on the condition and age of the housing, it may be refurbished, enlarged, demolished and replaced, or upgraded. All of these options are expensive, at least in the short run. For the past decade, housing associations have come to initiate and dominate the renewal process as the largest property owners (see Chapter 21 in this book). This reflects both the growing power of the associations and the diminished capacity and financial shortages in local government. Expenditures could be covered by the sale of housing in other parts of town, or by the sale of a part of the newly developed housing. Until the economic crisis, this was a solid financial model. However, the recent poor economic

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Current Debates

prospects mean that people are reluctant to buy houses, including the ones offered by housing associations. The rate of housing sales is much lower than expected and undermines the business model for urban renewal by the housing associations. As a result, renewal activities have been postponed or delayed all across the country. Demolition, refurbishment and new constructions have decreased, as housing associations focus instead on inexpensive, simple maintenance measures. Demand has also changed as turnover rates have dropped and waiting lists for even rather poor apartments have become substantial. In this context, urban renewal seems less urgent.

Social home ownership A key element in housing associations’ revolving fund mechanism has been the sale of part of their social-housing stock, but the economic crisis has undermined that business model. Housing associations are therefore trying to find new ways to sell dwellings to get revenues. Because there is seen to be a market for low-cost, low-risk home ownership, some are attempting to introduce intermediate tenures (with names as Koopgarant, Slimmer Kopen or Te Woon). Dwellings are sold at a discount of 25 or 30%, but in return for these lower prices the new owner has two obligations: first, she/he cannot sell the property on the free market, but rather has to offer it back to the housing association who will pay the future market price; and second, eventual profits or losses are shared with the housing association. These kinds of shared social home ownership are increasingly popular, with the share of dwellings sold increasing from 13% in 2007 to 31% in 2011 (see Chapter 22).

Criticism of housing associations The performance of housing associations has been criticised by politicians, who say they have too much money and are not using it correctly, while the media reports the excesses of the sector. At its core, the debate is about power: Who owns the property? Who decides about refurbishment or new construction? About rent levels or sales? The new government is preparing to increase municipal control over housing associations, but this will not be easy, as most housing associations are much larger and more professional than many municipalities. The liberalisation of rents and the creation of a level playing field with commercial providers are important issues in this ongoing discussion. Housing associations are forced to pay not only for quality of life in their neighbourhoods but are also liable for several other kinds of taxes, unlike their counterparts in other countries. The whole debate about fair competition has been overtaken by the current economic situation and a few scandals in the social rental sector, but there still is much discussion on the positions

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and responsibilities of housing associations in social housing. One point on which all stakeholders agree is that the supervision of housing associations needs to improve.

A debate on the role of social housing in the overall housing market According to some, the respective roles of social housing and owner-occupied housing should be re-thought. During the past couple of governments, there was an unspoken political moratorium on change in the social rented housing sector even though many people paid rents well-below what they could afford, there was a problem of ‘skewness’ and the cost of housing allowance was growing. It was equally unacceptable to talk about change in the owner-occupied sector, despite the huge rise in the tax subsidy for innovative and costly mortgages. Now housing has returned to the political discussion. Some fear that deliberation will continue for many years, while others point to the long and growing list of stakeholders who say that something has to change. The costs are simply too high and among most non-political actors there is consensus about the need for wide-ranging reform of the whole housing market. The near future will demonstrate whether the system of social housing will indeed undergo a dramatic change or whether it will continue to play a central social role as in previous decades.

Notes 1 Non-Dutch is defined as those born abroad, or with one or both parents born abroad. About half of non-Dutch households are ‘Western’ and half ‘non-Western’.

References ABF Research (2011) Vastgoedmonitor [statistics about housing and property] ABF: Delft. Brakkee G (1997) Kroniek der gemeentelijke woningbedrijven [Chronicle of municipal housing companies] Platform voor de Volkshuisvesting: Utrecht. CBS Centraal Bureau voor de Statistiek [Statistics Netherlands] (various dates), [Online], Available: http://statline.cbs.nl. Centraal Fonds voor de Volkshuisvesting [Central Fund for Housing] (2012) Jaarverslag 2011 CFV, Baarn. Gerrichhauzen L G (1990) Het woningcorporatiebestel in beweging [Social housing on the move] DUP, Delft. Ministerie VROM (1989) Nota Heerma, Den Haag. Ouwehand A and van Daalen G (2002) Dutch housing associations, a model for social housing DUP Satellite: Delft.

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References

Priemus H (1997) Growth and stagnation in social housing: what is ‘social’ in the social rented sector? Housing Studies 12, 4, 549–560. Van der Schaar J (1987) Groei en bloei van het Nederlandse volkshuisvestingsbeleid [Development of the Dutch housing system] DUP, Delft. Van der Flier K and Thomsen A (2006) Life cycle of dwellings and demolition by Dutch housing associations. Chapter in V Gruis, H Visscher and R Kleinhans (eds), Sustainable Neighbourhood Transformation 11 IOS Press, Amsterdam. Wassenberg F (2011) Demolition in the Bijlmermeer: lessons from transforming a large housing estate. Building Research & Information, 39, 4, 363-379. WBO/WoON (1981, 1992, 2002 and 2010) WoningbehoefteOnderzoek [Housing Demand Survey] WoOn, The Hague.

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The ‘New’ Gorbals was once Glasgow’s most notorious Victorian slum and was the subject of three separate regeneration initiatives in the twentieth century. This image captures these three periods of Scotland’s social housing history – the 1930s slum-clearance housing, 1960s high-rise and the post-modern social housing of the 1990s. Each sought to address the social problems caused by the original nineteenth-century industrial tenements. Photograph: John Gilbert.

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3 Social Housing in Scotland Douglas Robertson and Regina Serpa School of Applied Social Science, University of Stirling, Scotland

Introduction Scottish social housing is the product of almost a century of dramatic development and change. There are currently two distinct and similarly sized types: social housing owned by local authorities, known as council housing, which was originally provided with the support of government revenue subsidies; and housing owned and managed by housing associations, which are non-profit organisations supported by capital grants from the government. Both these social housing providers are now highly dependent on demand-side subsidies, delivered as a part of the UK government’s welfare system in the form of housing benefit, a rent allowance paid directly to the tenant.1 Council housing has undergone a remarkable decline in the past 30 years, from a position of national tenure dominance to, increasingly, the housing of last resort. At its peak in the mid-1970s, two in every three Scottish households resided in council housing, compared to only one in three households in England and Wales during the same period. But by 2010, two thirds of households were owner-occupiers (1.6 million) with the renters roughly equally split between those living in council housing (323 000 households), private rented housing (287 000) and dwellings owned by housing associations (272 000) (Scottish Government 2011d). The dwindling supply of social housing has become targeted at those most in need of housing, a practice that has had the effect of further residualising this scarce resource. The effective ending of social housing construction combined with the current disinvestment in existing stock will further reinforce Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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Historical Development of Social Housing in Scotland

the stigmatisation of social housing as ‘poor housing for poor people’. Worryingly, this downward cycle of residualisation and disinvestment comes at a time when demand for social housing has never been greater. Our understanding of the contribution made by this century-long social experiment still remains inconclusive (Ravetz 2001). In the years ahead, social housing is likely to undergo a further phase of reinvention, rather than be condemned to history as a failed social policy. The actual shape of this reinvention will be largely determined by the outcome of what is currently a highly politicised debate about what role the state should play in both housing and welfare policy. Standing on one side is the UK Conservative – Liberal Democrat coalition government, which has embarked upon a radical reorganisation and reduction of the welfare state as a core part of its austerity programme. On the other side, the Scottish National Party government holds devolved responsibility for housing policy, but finds its ambitions thwarted by the fact that responsibility for both welfare and taxation policy are currently matters ‘reserved’ to the UK government. These issues will feature prominently in the constitutional debate leading up to the referendum on Scottish independence in October 2014.

Historical development of social housing in Scotland There are four distinct periods in the modern history of Scottish housing: pre-1919, the era of private landlords; 1919–1979, the shift to council housing as the dominant tenure; 1980–2010, the rise of homeownership and housing associations; and 2010 and beyond, the ascendancy of private housing, both owned and rented (Robertson & Smyth 2009). As Scottish social housing is very much a twentieth century phenomenon, this chapter focuses on the last three periods. Some 50 years after World War I, local authorities provided homes for the majority of Scottish households. Between 1919 and 1941, they were responsible for 70% of all new build houses, whereas in England and Wales, the comparable figure was just 28%. This dominance by local authorities continued during two later major development pushes, one immediately after World War II, which produced utilitarian three- and four-bedroom flats in large peripheral estates, and then a short-lived high-rise boom that coincided with the mass slum clearance of the 1960s. These major construction periods produced two thirds of the entire council-housing stock. In fact, between 1920 and 1978, the public sector built a total of 1 062 744 homes in Scotland, compared to just 319 500 built by the private sector during the same period (Rodger 1989). By the end of the 1970s, public provision (consisting of council, new town and Scottish Special Housing Association housing2 ) accounted for almost three-quarters of all Scottish housing. In England, the figure for

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45 70%

1800 Owner-occupied 1600

Local authority

60%

Private rent

1400

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50%

Dwellings (000)

1200 1000

40%

800

30%

600 20% 400 10%

2010

2005

2000

1995

1990

1985

1980

1975

0

1970

200

0%

Year

Figure 3.1 Dwellings by tenure and percentage of total stock in Scotland, 1970–2010. Source: Department of Communities and Local Government (2011), Table 107.

public housing never exceeded one-third. Figure 3.1 demonstrates the scale of local authority housing prior to 1980. This domination was ended by the significant public expenditure cutbacks associated with two financial crises, the Gold Standard Crisis of the late 1960s and the International Monetary Fund (IMF) crisis of the 1970s. Throughout these decades, owner occupation was gaining ground, as building societies and banks offered wider access to mortgage finance. Such products were not just for new-build housing but also encouraged individual purchases of houses previously rented from private and public landlords. Figure 3.1 shows the rapidly accelerating homeownership rate after 1980. It was also during the 1980s that the Conservative government decided to promote housing associations in Scotland as alternative housing providers to local authorities. Rapid growth was supported by generous capital subsidies, allowing gaps in local authority provision to be filled with new accommodation for single people, the disabled and the elderly. Associations also engaged in the refurbishment of pre-1919 tenements, as community-based associations emerged to address the remnants of slum clearance. Growth was further boosted by the large-scale transfer of council housing to housing associations during the early 2000s. The dramatic ownership shift from local authorities to housing associations (Figure 3.1) is largely due to a single

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Tenure profile and trends 160% 140%

132%

120%

Percent change

100% 80% 60% 39%

40%

29%

20% 0% −20% −40% −60%

− 42% Owner-occupied

Social rent

Private rent

Total

Tenure

Figure 3.2

Percentage change in number of dwellings by tenure, 1980–2010.

Source: Department of Communities and Local Government (2011), Table 107.

transfer, that of Glasgow’s local authority stock to the Glasgow Housing Association, which was specially created for that purpose. The government then wrote off the £1 billion in outstanding capital debt for this stock. Despite cyclical property market slumps, rising house prices encouraged more people into owner-occupation right up to the 2008 global financial crisis. Figure 3.2 demonstrates the dramatic tenure shift over the past 30 years. Although it is not clear how the latest financial crisis will affect Scottish housing in the long term, there is a widespread assumption that private renting will become more significant, as funding for both owner occupation and social housing becomes constrained. Intermediate ‘affordable’ housing tenures such as Low Cost Homeownership and Mid-Market Rent are also likely to expand, as increasing numbers of households will be shut out of other tenures. This long-term return to greater private provision of housing has brought with it a marked growth in homelessness and a rise in the use of insecure accommodation.

Tenure profile and trends As shown by Figures 3.1 and 3.2, 1980 marked a ‘tipping point’ in Scottish tenure, with more households turning to the private market for their housing needs. For several years after 1980, Scotland’s housing stock – both private

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and social – grew steadily, but the rate of growth in the private sector outstripped the growth of social housing until with the advent of privatisation the social sector began to shrink. Linear regression of the percentage change of tenure reveals that for every 1% increase in the proportion of private housing in Scotland since 1980, social-sector housing has decreased by one-half percentage – thus, over the past 30 years, homeownership rates have more than doubled while the proportion of households renting from social landlords decreased by nearly half.

Insecure accommodation With greater privatisation of the housing stock came increasing housing insecurity. In response, the Scottish Government passed landmark legislation establishing a right to settled accommodation for every household, establishing a national and international precedent for the rights of homeless persons. The Housing (Scotland) Act, 2001 sought to strengthen the legal safety net for households facing homelessness. It removed the longstanding legal distinction between those deemed to be in ‘priority need’ and those not, a distinction which has its origins in long-held views on who is ‘deserving’ and ‘undeserving’ of welfare relief (Taylor-Gooby 1985). So now for the first time, all homeless households have an established right to settled accommodation. This change also had the unintended consequence of reinforcing the welfare status of social housing. To meet the statutory duty to provide interim housing to homeless households, local authorities have designated a larger proportion of council stock as temporary accommodation, typically hostel or bed-and-breakfast accommodation. The use of such temporary accommodation by local authorities, prior to assessment for permanent accommodation, has tripled since 2001, meaning a greater proportion of local authority stock is now short-term and insecure, rather than permanent lets (see Figure 3.3).

Housing allocations The demand for housing is large and growing, but social providers have fewer resources available. Needs-based allocation procedures emerged late in the 1970s and have developed over time. Social landlords currently allocate all vacant homes to those applicants judged to be in the greatest housing need. In 1982, the introduction of housing benefit, a social-welfare payment that covered rent and local property taxes, allowed low-income households to access rented housing which they previously could not afford. Together, these national social policies – needs-based allocations and housing benefit

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1.1%

4000 3500

0.8%

1.0%

0.5%

0.4%

0.6%

0.4%

0.3%

0.3%

0.3%

2000

1.2%

0.8%

2500 0.3%

No. of social lets

0.8%

% Temporary accommodation

3000

0.8%

Temporary accommodation

1.4%

1500 0.4%

Percentage of total social stock

1.3%

4500

1.3%

Housing Allocations 1.3%

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1000 0.2%

500 0

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

0.0%

Year

Figure 3.3

Households in temporary accommodation, 1998 to 2011.

Source: Scottish Government (2011c), Table 35.

– effectively removed a number of local barriers to accessing social housing. The fact that there is still excess demand means that some households still face barriers, just of a different kind. The move by the sector to provide homes for increasingly economically marginalised households coincided with rapid deindustrialisation, which resulted in the demise of heavy engineering, mining and most traditional manufacturing within 20 years. This structural change dramatically altered the socioeconomic landscape of both Scotland and the United Kingdom (Foster & Woolfson 1986). In 2009, the average social tenant earned less than a third of the income earned by (mortgaged) homeowners, while in 1980 the proportion was nearly half. More striking is the reversal of the relative positions of social and private renters over the past 40 years: the average social tenant earned 110% of the income earned by the average private tenant in 1972, but currently this figure is closer to 50% (Pawson & Wilcox 2012). The drop in the average incomes of social tenants is paralleled by the increasing number of part-time and unemployed household heads compared to other tenures. The employment status of private renters and homeowners remained relatively constant between 1980 and 2010, at roughly 70 and 90%, respectively, in any employment. Yet, for social tenants, this figure

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dropped from nearly half in 1980 to only a third being in employment by 2010 (Pawson & Wilcox 2012). It is clear that housing benefit has been increasingly filling the gap between earnings and income for social renters. As of July 2010, 470 000 households in Scotland claimed housing benefit, of which 82% were social tenants – only 6% of these were considered to be in employment. The employment rates for housing benefit recipients in the private-rented sector were notably higher at around 19% (Scottish Government 2011e).

Financing of social housing Despite increasing demands placed on the sector, there has been an underlying agenda of disinvestment from social programmes and budget cuts for local government because of the post-2008 recession. This section first offers an overview of governance and regulation of social housing in Scotland, before going on to consider both capital and revenue funding. Mention is also made of new funding arrangements emerging in light of the drastic reductions in capital funding for social housing.

Governance and regulation Scotland’s constitutional position evolved throughout the twentieth century under popular pressure for greater self-government. Under the Act of Union in 1707, England and Scotland joined together to create Great Britain, the countries having shared the same monarch since 1603. Scotland retained its legal, religious and educational institutions and thus has sustained legal and administrative distinctiveness and a strong sense of national identity. The Scottish Office was established in 1886, and through the twentieth century more and more administrative powers were devolved to it. Overt political nationalism, as articulated by the Scottish National Party, led the Labour Party to advocate a devolved parliament to govern domestic matters, a position strongly opposed by the Conservatives. Labour’s devolution plans stumbled in 1979. However, following Labour’s re-election in 1997 a Bill for a new parliament was passed, following an overwhelming popular vote in Scotland, and the Scottish Parliament was reconvened in 1998. The outright parliamentary victory by the nationalists in 2011 means a vote for independence will now occur in October 2014. The governance of council housing (which for most of the twentieth century was almost synonymous with social housing) was largely the responsibility of local authority housing committees composed of elected local councillors. Other public bodies that provided housing, the New

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Capital Investment in Housing

Town Corporations and the Scottish Special Housing Association, had boards appointed by the governments of the day, and these included local authority nominees. The housing associations, which emerged from the 1970s onwards, were a quite different animal, being either charities or provident societies that elected or appointed management committees from their membership. In some cases, this also included their tenants. All social landlords are now subject to audit and regulation by the Scottish Housing Regulator, which came into being under the Housing (Scotland) Act, 2011. Previously, regulation of both council and housing-association landlords had been the responsibility of Communities Scotland. Before that, their predecessor agency, Scottish Homes, only had responsibility for regulating associations, not local authorities. It was only in 2002 with the creation of Communities Scotland that council housing became subject to external audit, while housing associations have been regulated since 1964.

Capital investment in housing In 2007, the Scottish National Party (SNP) minority government pledged to make housing a national priority by more than doubling capital investment from £513 million in 2002–2003 to nearly £1.09 billion in 2007–2008. Since then, funding levels have been affected by the global financial crisis, housing market downturn, recession and the latest fiscal retrenchment. In response to the projected loss of capital funding, the Scottish Government brought forward £120 million of the £1.5 billion programmed for affordable housing investment by taking funds from 2010–2011 and reallocating them to 2008–2009 and 2009–2010 (Gibb & Leishman 2011). The current housing budget has since been slashed by more than 21%, from £488 million in 2010–2011 to just £393.8 million in 2011–2012 (Figure 3.4) (Scottish Government 2011b). The comparatively large cut in the housing capital budget needs to be viewed in light of the previous budget acceleration decision. The vast majority of the capital programme is spent on social housing. The UK government finance system does not permit the Scottish authorities to raise revenue through taxation, so Scotland must fund all its ‘devolved’ responsibilities, including housing, out of its block grant from the UK Government. The overall reduction in the housing budget reflects, in part, the tension between ‘devolved’ housing policy on the one side and ‘reserved’ UK Treasury accounting rules and Department for Work and Pensions (DWP) welfare benefits (particularly housing benefit) on the other. In practice, this zero-sum game places housing in direct competition with the other devolved priorities of health, education, social care and transport. In times of plenty, this arrangement has been comparatively favourable to Scotland, particularly when UK public spending grew dramatically

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£800 27.8 10.2

£700

102.6

£600 Housing budget (£million) e

65.9

£500

27.9 5.2 27.4

24.7 18.8 21.7

45.9

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Other Private housing Regeneration Energy efficiency Affordable housing investment programme

60.9

£300 524.9

£200

402.2 351.9

393.8

£100

£0

2008–2009

2009–2010

2010–2011

2011–2012z

Fiscal year

Figure 3.4

Total Scottish housing and regeneration budget (£million)3 , 4

Source: Scottish Government (2011b).

from 1999 to 2007. However, in lean times, this dependent relationship has proved increasingly contentious, particularly when the 2010 UK Comprehensive Spending Review advocated a 35% real cut in capital spending for Scotland over the subsequent four years (Gibb & Leishman 2011). As Figure 3.4 demonstrates, this overall reduction has impacted disproportionately on housing capital spend in Scotland. But it is the revenue funding of Scottish housing, through the DWP’s ‘reserved’ welfare powers, that is even more significant. The scale of housing benefit funding at £674 million in 2011–2012 clearly dwarfs the amount of public expenditure going into housing via the Scottish Government’s block grant (DWP 2012). Thus, planned welfare cuts now illustrate the tensions inherent in Scotland’s current constitutional position, in that the reform of welfare, a Westminster ‘reserved power’, challenges the Scottish Government’s policy ambitions for housing.

Right to Buy The ‘Right to Buy’ greatly altered the tenure profile of Scottish housing, resulting in nearly half a million sales of council and housing association homes to sitting tenants since 1980. These sales were also significant in finance terms given that until 1996 all receipts were added to local

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17 409

20 000

13 556

18 000

13 550

9 397

11 166

12 000

13 541

13 214

10 000

Local authority Housing association

7 359

8 000

5 970

6 000

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4 000

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2 000

1 474

Dwellings sold

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13 841

16 000

11

10 20

10 –

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01

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00 –

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19

98 –

19

00

99

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Figure 3.5

‘Right-to-Buy’ sales of social-sector housing, 1998–1999 to 2010–2011.

Source: Scottish Government (2011a).

authorities’ capital investment program. The annual rate of sales to sitting tenants peaked at just under 40 000 in 1989, at the height of a housing boom, before falling back in early 1990s when the market crashed to settle at around 14 000 sales per annum (Scottish Government 2011a). Figure 3.5 above shows that recent sales peaked in 2002–2003 at nearly 20 000 for both local authorities and housing associations combined, before steadily declining. The Housing (Scotland) Act, 2001 reduced the size of right-to-buy discounts for new tenants, resulting in lower sales throughout the sector. This Act also brought in ‘pressurised area status’, whereby a local authority could apply to restrict all futures sales within a defined locality, but this was not widely applied. By 2010–2011, fewer than 2000 local authority homes were sold and the Scottish Government, at the time of writing, is considering abolishing the right to buy entirely.

Housing finance Local authorities: The Housing Revenue Account (HRA) is an income and expenditure account which tracks the operation of council housing. On the income side are rents, which include those paid by tenants themselves as well as housing benefit contributions, while the expenditure side contains the costs associated with the provision of council housing: staffing, property

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maintenance and debt servicing associated with original construction and subsequent major works to the housing stock. Introduced in 1935, the HRA allowed local authorities to ‘pool’ rents right across their stock so that, over time, older stock cross-subsidised newer developments, providing an effective financial tool against inflation. Although the HRA is a legally separate ring-fenced account, in practice local authorities do use it to fund a proportion of other services, such as cleansing, parks and legal services – for example, it is common practice for homeless services to be charged to housing and not the council’s general fund. There are long-standing concerns about the transparency of such charging. Historically, local authorities were required to secure borrowing consent from government to undertake any capital works. To offset such borrowing, local authorities could use receipts from right-to-buy sales. There were concerns about the increasing indebtedness of local authority HRAs, given that the use of right-to-buy sales receipts in this way meant that the debt for originally constructing these units remained on the HRA’s books. This brought about a change in 1996 whereby these monies were diverted towards reducing such historic debt, rather than offsetting any future borrowing. At the same time, the government began to encourage stock transfers from councils to housing associations, and as a sweetener agreed to extinguish all outstanding HRA debt. The local authorities of Argyll and Bute, Eilean Siar, Glasgow, Inverclyde and Scottish Borders undertook such transfers between 2004 and 2008 and secured debt write-offs amounting to well over £1 billion in total, the vast majority of which was attributable to Glasgow. Edinburgh and Stirling both explored the transfer option, but failed to secure their tenants’ approval. Housing investment rules changed in April 2004 with the introduction of new prudential borrowing regulations after the passage of the Local Government (Scotland) Act, 2003. Now each council’s housing department works out its borrowing requirement for the following year, and following political approval by the councillors this amount is included in a block covering all council-wide capital project. As long as the council’s external auditors are convinced that it can service such future borrowing, the government is satisfied by the auditor’s opinion. As the new capital debt for housing forms part of an overall council block, there has always been a lack of transparency as to actual borrowing costs. That said, the interest rate on loans from the Public Works Loan Board, which services all council borrowing, currently stands at just 3%, or half the commercial rate. In addition, rent pooling still represents a powerful financial mechanism given that a few pounds’ increase on weekly rents generates a significant increase in annual income.

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New house-building trends

Housing associations: The big difference in funding housing associations has been the access to capital grants. From 1974 onwards, the Housing Association Grant (HAG) provided between 85% and 95% of the capital costs associated with building new or renovating old housing. Until 1988, this money (both the capital grant and remainder which required loan funding) came entirely from the public purse. With the introduction of private finance under the Housing (Scotland) Act, 1988 the loan element was now borrowed privately, and with pressure to reduce government funding the loan element increased over time, which had the effect of increasing rents. Now, following the drastic cutback in public expenditure, and with capital expenditure on housing down by a third, the Scottish Government has stopped calculating grant as a percentage of cost and fixed the amount of capital at £75 000 per unit. They have also just introduced a new £20 million Innovation and Investment Fund for which housing associations may bid; the expectation is that they will receive just £40 000 a unit. The limited per-unit subsidy encourages landlords to draw on their reserves to makeup the difference in actual build costs. Local authorities are being offered £20 million on the same terms, with a further £10 million for private developer innovations in the form of a council house-building incentive scheme. Accessing such capital monies is new to local authorities, introducing equity of treatment within social housing for the first time. Local authorities, with their ability to pool rents, may be better placed to access this funding given that housing association reserves are limited and clearly cannot provide a long-term solution to offset the loss of capital subsidy. For the 2012–13 period, there were 4209 completed new build in the social sector (of which 965 were local authority and 3244 were RSL). These numbers falls around 800 short of the expected new house addition target. Such innovations are not sustainable and alone cannot adequately address pent-up demand.

New house-building trends Overall house construction peaked in the early 1950s and late 1960s with between 41 000 and 43 000 completions a year, of which council housing accounted for over 80% (Figure 3.6). New build fell by half during the early 1980s to 20 000 completions per annum, and by contrast with the earlier period, the private sector accounted for more than 70% of this from the 1980s onwards. Within the social sector, housing associations produced twice as much as councils throughout the 1990s, but overall social output was only 1000 units per annum, rising to just over 5000 in 2010 (Scottish Government

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50 000 45 000

Private sector

40 000

Public sector & housing association

Completions

35 000 30 000 25 000 20 000 15 000 10 000 5000 0 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Year

Figure 3.6

New house construction in Scotland, 1920–2007.

Source: Scottish Government (2011d).

2011d). Given the new funding situation, it is unlikely that even this number can be sustained. After 2008, in the wake of the credit crunch, social housing made up all but a small amount of new housing construction (Figure 3.7) (Scottish Government 2011c). Local authorities also started building new houses again, accounting for 10% of social housing output in 2009 and 2010; this was the first time councils had built new social housing for a generation. Many of these new units were bought from private developers unable to sell them to owner-occupiers.

Financial innovations The Scottish Government recently created the National Housing Trust as a way to leverage in private sector funding for 1000 so-called ‘affordable’ new homes. Development guarantees from local authorities cover 75% of the costs, with the developer holding the remaining 25% as an equity stake. The dwellings are rented out at a ‘mid-market rent’ for at least five years, with rental income going to the local authority to cover loan and management costs. After five years, the properties may be sold into the open market and the loan paid off, or if the market has not revived then another development guarantee could be entered into. This is, in essence, a stopgap measure to benefit those unable to secure homeownership given current market conditions.

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Conclusion: Present-day Policy Environment 30000 Public authorities

28000

Housing association

452

4109

195

4034

6 3941

4649

3097

3474

3979

4252

95 3440

1911 139

10000

1999

2002

2003

2004

2005

2008

5149 11171

2007

12000

5809

21674

2006

17712

21324

20 639

2001

20130

2000

19 117

18073

1998

18 187

1997

19 393

18 356

14000

17877

16000

21 876

525

18000

11522

20000

4507

Completions

22000

4009

72

177

51

81

24000

53

0

0

28

Private sector

26000

2009

2010

Year

Figure 3.7

New house building by tenure, 1997–2010.

Source: Scottish Government (2011b).

Conclusion: Present-day policy environment In the past 30 years, Scotland has experienced a dramatic shift in the provision and consumption of housing. At the peak of social housing in the mid-1970s, councils provided over one million homes, and two in three households rented from councils. At present, this figure is closer to 1 in 10 and there are just 323 000 council homes. Since 1980, there has been a marked growth in private sector housing paired with a net decline in social housing. This reflects a dramatic reversal in housing production: between 1919 and 1941, local authorities were fully responsible for 70% of all new-build homes, while after 1980, 70% of new dwellings were provided by the private sector. Councils at present are thus confronted by the challenges of an ageing, and shrinking, housing stock. Only 4% of council homes were built after 1982, which has important implications for the cost of managing and maintaining these homes in the years ahead. The most obvious impact of this tenure change has been the marked residualisation of social housing and the increasing pressure on public bodies to target resources to households in greatest need. Local authorities have seen their available permanent lets fall by half in just 10 years, with nearly half now going to homeless households. As waiting lists grow, more social housing is being used for temporary accommodation rather than permanent lets.

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So at a time of increasing austerity, resources are being diverted away from permanent housing into emergency accommodation, producing increased costs for housing budgets and greater insecurity for households. The Scottish Government is experimenting with schemes to deliver housing that is less reliant on public subsidy by levering in private funding, using small amounts of public ‘seed corn’ money and guarantees. The National Housing Trust, the latest variant, has provided small numbers of ‘intermediate’ dwellings – social housing, yes, but not as we have previously understood it to be. While such ventures demonstrate administrative and financial creativity at a time of great austerity, they are certainly not a long-term solution to the growing-and-growing housing demand. There are many unknowns conditioning the future of Scottish social housing, including the prospect of national independence, the shape of economic recovery and the level of political commitment to the sector. Unprecedented recent budget cuts to housing and the imminent dismantling of current social security arrangements in the name of fiscal austerity and welfare reform increase this uncertainty. Amid all the unknowns, one thing is clear: as the country moves out of recession, the Scottish government – whether independent or devolved – will face a choice. It must decide whether to prioritise general-needs social housing for those on low incomes (which requires deep subsidy) or ‘affordable housing’ for households denied access to owner-occupation (which can be provided with shallow subsidy). Housing was for a long time conceptualised as a public community asset, before being recast in a private individual mould. Scotland now has to consider what shape its housing policy will take in future.

Notes 1 With the implementation of Welfare Reform Act, 2012, the housing cost element of social security will from 2013 be removed and Housing benefit will be replaced with a Universal Credit. This change has serious implications for tenants of social housing given their welfare dependence, and the social housing sector itself given its dependence of Housing benefit for revenue funding. 2 Both the New Town Corporations and the Scottish Special Housing Association were government bodies that provided new housing to support economic development projects, in particular the development of light engineering as a means to diversify the Scottish economy away from its dependence upon heavy engineering. Both organisations also sought improve the quality of publicly funded housing, through constructing exemplars of good and innovative design. They also had a reputation for innovative management practices (Begg 1996).

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3 The following categories used in this chart are combined: Energy efficiency includes Energy Assistance Package and Home Insulation; Regeneration includes regeneration programmes and the Town Centre Regeneration Fund; and Other includes wider role, Communities Analytical Services, Scottish Housing Regulator running costs, Housing Voluntary Sector Grant Scheme, tackling and preventing homelessness, community engagement, and social housing. 4 The budget for 2011–2012 used different categories of funding which are not directly comparable to previous years’ itemisation. For the purposes of this chart, the entire budget for housing and regeneration is included to demonstrate total budget reduction from previous fiscal years.

References Begg T (1996) Housing Policy in Scotland John Donald, Edinburgh. Department of Communities and Local Government (2011) Housing Live Tables on Dwelling Stock (including vacants), Department of Communities and Local Government, London [Online], Available: http://www.communities.gov.uk/housing/housingresearch/ housingstatistics/housingstatisticsby/stockincludingvacants/livetables/. Department for Work and Pensions (2012) Housing benefit and Council Tax benefit Expenditure Time Series by Region DWP, London [Online], Available: http://statistics.dwp.gov.uk /asd/asd4/h_tables_budget_2012_300812.xls Foster J and Woolfson C (1986) The Politics of the UCS Work-In: Class alliances and the Right to Work Lawrence & Wishart, London. Gibb K and Leishman C (2011) Delivering Affordable Housing in Troubled Times: Scotland National Report Joseph Rowntree Foundation, York [Online], Available: http://eprints. gla.ac.uk/60449/1/60449.pdf Pawson H and Wilcox S (2012) UK Housing Review 2011–12 Chartered Institute of Housing, London. Ravetz A (2001) Council Housing and Culture: The History of a Social Experiment Routledge, London. Robertson D and Smyth J (2009) Tackling squalor: Housing’s contribution to the welfare state. Social Policy Review, 21, 87–108. Rodger R (1989) Scottish Housing in the Twentieth Century Leicester University Press, Leicester. Scottish Government (2011a) Housing Statistics for Scotland–Sales of Social Sector Housing 2010–11 Scottish Government, Edinburgh [Online]. Available: http://www.scotland. gov.uk/Topics/Statistics/Browse/Housing-Regeneration/HSfS/SalesApplications Scottish Government (2011b) Key Information and Summary Figures (2010–11) Scottish Government, Edinburgh [Online]. Available: http://www.scotland.gov.uk/Topics/Statistics /Browse/Housing-Regeneration/HSfS/KeyInfo Scottish Government (2011c) Operation of the Homeless Persons Legislation (2010–11) Scottish Government, Edinburgh [Online]. Available: http://www.scotland.gov.uk/Topics /Statistics/Browse/Housing-Regeneration/RefTables Scottish Government (2011d) Housing Statistics for Scotland–Public Sector Housing Stock Scottish Government, Edinburgh [Online]. Available: http://www.scotland.gov.uk/Topics /Statistics/Browse/Housing-Regeneration/HSfS/StockPublicSector

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Scottish Government (2011e) Housing benefit changes: Scottish impact assessment Scottish Government, Edinburgh. Scottish Housing Regulator (2011) Annual Performance Statistical Return Scottish Housing Regulator, Glasgow [Online], Available: http://www.scottishhousingregulator.gov.uk/ stellent/groups/public/documents/webpages/shr_statisticstables-rents.hcsp#TopOfPage Taylor-Gooby P (1985) Attitudes to welfare. Journal of Social Policy, 14, 73–81.

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The Reumannhof, opened in 1926, is one of the emblematic municipal housing estates of Red Vienna (1919–1934). Constructed as a part of the so-called ‘Boulevard of the Proletariat’, an ensemble of municipal housing estates along the former second defence wall, the Reumannhof combines heroic architecture, collective infrastructure facilities (kindergarden, library, laundry, grocery, coffee house, artists’ studios) and 487 apartments. During the 1934 civil war it was one of the main centres of the social-democratic defence against the Austro-fascist armed forces and militia. Photograph: Christoph Reinprecht.

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4 Social Housing in Austria Christoph Reinprecht Department of Sociology, University of Vienna, Austria

Introduction: the current position of social housing Traditionally, Austria has been thought of as a country with a well-controlled and regulated housing system. Historically rooted tenancy laws, a complex financing and subsidy regime and the strong role of limited-profit housing companies are the basic elements of its housing policy, which has successfully helped constrain market forces over a long period. Accordingly, the public debate about social housing is conditioned by the country’s corporatist tradition (known as ‘social partnership’). These ‘social’ elements of housing policy contributed to relatively low rent levels and housing that was affordable for the vast majority of the population. They were also credited with facilitating economic progress and low levels of segregation, and with guaranteeing a good quality of life at the household level. However, for more than two decades, housing policy and, in particular, the politics of social housing have been in transformation. Corporatism has been further weakened by European integration and globalisation, and by its own internal inconsistencies. However, there is still a political consensus that housing is a basic human need that should not be subject to free-market mechanisms and that the society should ensure that a sufficient number of dwellings are available. This chapter reports on the current situation and provides a critical view of recent developments. In Austria, nearly 80% of new residential construction, from single-family homes to multi-storey apartment blocks, benefits from some public (direct or indirect) subsidies. There is no official definition of social housing, but it generally refers to housing operated by the non-profit or limited-profit Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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sector, including public bodies, and the related system of subsidies and rent regulations. Austria is a country that has traditionally had a large rental sector. About 41% of the housing stock is rented, 50% in owner occupation and 9% in other tenures (Statistics Austria 2012). The ratio between renting and owner occupation has remained fairly stable over time – there has been a weak increase in the proportion of owner occupation and a concomitant decline in private renting in recent years. Social housing dominates the rented sector, accounting for 59% of rented housing. It has grown strongly since the early 1980s, when only 40% of the rental sector was social housing. In total, there are about 880 000 social dwellings in Austria (24% of all housing units). Two third of social housing is owned and managed by non-profit and limited-profit housing associations and one third by public authorities, mostly municipalities. Only 4% is in other ownership. The owner-occupied sector is dominated by single-family houses (only about 20% of owner-occupied dwellings are apartments), whereas social housing is primarily situated in multi-storey buildings and consequently in urban areas. Social housing comprises 42% of all housing units in multi-storey buildings versus 26% in the private rented sector. This pattern is particularly true in Vienna, the country’s major city with around 2 million inhabitants. Here, about 46% of dwellings are social housing. Vienna is also the city with the highest proportion of municipal housing at 23%; in Austria as a whole, 10% of the dwelling stock is owned by public authorities (mostly by municipalities). The social sector plays a key role not only in managing the existing housing stock but also in new construction. In Austria, around one third of new construction is carried out by non-profit or limited-profit housing organisations (owner occupation accounts for 50%). Two-thirds of new multi-storey buildings are constructed by social providers. New social dwellings are of similar quality to the rest of the housing stock, or even superior to new flats in the private rental sector (the situation is different in the old stock where, particularly in the municipal sector, small flats often dominated). Rates of construction of new social housing have fluctuated over time. The amount of new construction peaked in the mid-1990s and then again at the end of the first decade of the new millennium. Since then it has been falling, despite increased housing demand owing to demographic processes (population growth, migration, ageing) and changing lifestyles (individualisation, life-cycle mobility). In the social sector, renovation has become increasingly important; about 5–6% of units are refurbished every year. The important position of social housing in the Austrian housing system should not obscure the fact that the sector is undergoing significant structural changes. First, there has been a significant fall in the amount of new state/municipal construction. Between the 1950s and the beginning of the

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twenty-first century, the percentage of new housing construction carried out by states or municipalities fell from 35 to 1%. The retreat of public authorities from their role as builders was also evident in the capital: the municipality of Vienna has stopped all new construction because of financial pressures and a neoliberal turn in housing policy since 2004. Second, for the past two decades the corporatist structure of the Austrian welfare regime – in which Austria’s social housing sector is deeply embedded – has been eroding. The corporatist character of social housing is reflected in the predominance of bricks-and-mortar subsidies, which, since 1996, have shrunk from 72 to 60% of all housing subsidies. These have been partially replaced by personal benefits, which increased from 6 to 14% over the same period (Kunnert & Baumgartner 2012). Despite these and other developments that have transformed the position and function of the social sector (which are dealt with in more detail in the following sections), the social sector occupies a key role with regard to construction standards, a role that is strengthened by the bricks-and-mortar-based subsidy system. In contrast to the periods of post-war reconstruction and city expansion in the 1960s and 1970s, when it followed an industrialised and standardised mass-production system, the social sector currently fulfils a kind of trendsetter role in terms of environmental standards (it has pioneered advanced heating systems and thermal isolation) and social cohesion (it has introduced themed housing developments such as car-free, gender-sensitive, inter-generational and intercultural housing). The social housing sector is thus responding to publicly defined goals and principles such as economic, ecological and social sustainability. Although these terms are not clearly defined, public authorities employ them as targets for real estate developers, or in the context of property developer competitions.

Historical development of the sector up to the present As in other European countries, the history of social housing goes back to the nineteenth century. A genuine housing crisis brought about on one hand the creation of self-organised cooperatives and on the other, top-down housing policy interventions. The first social housing laws were passed in the first decade of the twentieth century. Social housing institutions then went through two main phases: the local welfare state (municipal socialism of Red Vienna) in the First Republic of Austria (1918–1934) and the national welfare state (with the development of a third sector) in the Second Republic after World War II to the present day. After the declaration of the first Austrian republic in 1918, the social democrats won electoral victory in Vienna. They developed a broad housing

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construction programme as a key element of the local welfare system. The aims were to improve the health, education and housing conditions of working-class people, and the new programme partly absorbed the thriving self-organised settlements. Of all the social policy measures developed in this ‘Red Vienna’ period, the construction of municipal housing was the most ambitious and prestigious. The Viennese municipality played a key role as both developer and owner. The programme was financed by a housing tax (which has been imposed on all tenants since 1923; it covered 40% of costs), a luxury tax and some funding by the state. The new social residences were built throughout the city, and thus had a long-term anti-segregation effect. After 1934, during the era of civil war, Austro-fascism and the National Socialist regime, the programme ended. With the declaration of the Second Republic after World War II, social housing came onto the federal agenda as a pillar of the national welfare state. Independent non-profit providers became key actors in the emerging third sector. In 1948 and 1954 new legal frameworks and funding schemes were implemented for housing cooperatives and associations, which were granted tax breaks and privileged access to direct state subsidies. Immediately after the war they focused on reconstruction of war-damaged urban areas, responding to increased housing need during the post-war economic recovery. In 1968, some responsibility for social housing was transferred to the regional level. Today, social housing companies are highly professionalised third-sector bodies, increasingly confronted with new forms of governance and the trend towards marketisation. In 2000–2001, there was a remarkable turning point when the right-wing government of the time, following neoliberal policies, privatised the four federal-state-owned housing companies (jointly responsible for 60 000 dwellings). Funding for social housing began to be channelled not only through housing associations but also through private builders and real estate investors; at the same time, municipalities withdrew from their former leading role. Public–private partnership has since become important, particularly in Vienna. Since the 1980s there have been several important changes in the system, in particular with regard to financing, rent regulation and decentralisation of housing policy. The 1985 Housing Promotion Law gave the nine regional governments new powers to manage subsidies for construction, renovation and housing benefit. This ‘regionalisation of corporatism’ reinforced the fragmentation of the social housing policy. In 2001, new regulations that allowed local governments to use their housing subsidy funds for non-housing investments (e.g. infrastructure and ecological improvements) were passed, and since 2008 the regions have been completely independent in this regard. At the same time, there was a reduction in federal budget contributions to these subsidy funds, which have increasingly been used for purposes other

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than housing including speculation on the financial markets or reduction of budget deficits. Regional and local governments have generally reduced their activity in the field of social housing, particularly in terms of new construction, although there is much variation between areas. Another important change has been the deregulation of rental tenancies. Since the passage of the new Tenancy Act in 1982, Austria’s historic tenant protection has been weakened, in particular by the deregulation of private sector rents and the facilitation of short- and fixed-term tenancies. Rents have increased, in particular for new tenancies and for the rising number of fixed-term tenancies. Rents have also gone up in the social sector owing to increasing construction costs. One effect of this development is that there is an increasing call on personal subsidies (housing benefit and rent allowance). Two other developments are worth noting. The first is the 1980s introduction of housing renovation funding schemes, which stimulated urban renewal activities that reduced the stock of low-cost dwellings in the private rented sector. The second is the opening of access to social housing to non-EU nationals – until 2005–2006, access to social and public housing was limited to Austrian citizens, but European law and directives forced a change in the rules.

Provision of social housing In Austria, social housing is mainly provided by limited-profit housing associations and to a lesser extent by public authorities (non-profit municipal bodies). This distinction is relevant for their regulation (Donner 2011). Municipal housing (the majority of the social stock in Vienna) falls under the general Tenancy Act, which regulates rent levels (permitted rents depend on date of construction and housing quality) and security of tenure. Limitedprofit companies are governed by the Non-Profit Housing Act, which regulates management and financial conduct. The main provisions are that rents should cover costs, profits are limited and the companies have an obligation to reinvest. Their business activities are restricted to new construction, renting, management and renovation, and they are controlled by an independent body. At present, around 200 limited-profit housing companies are active in Austria, managing 840 000 flats. About half of the flats (47%) are managed by housing cooperatives (self-governing ‘solidarity’ organisations with around 440 000 individual members), 23% by firms majority-owned by public authorities, 26% by firms majority-owned by civil society actors (trade unions, churches or private associations) and 4% by firms majority-owned by other companies (company housing). Banks and insurance companies are

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represented in 14% of the firms. This multi-faceted (or fragmented) picture of social housing providers reflects the fact that housing cooperatives, associations and companies are intertwined with the Austrian political landscape. Most are of regional importance and/or represent a particular ideological tradition in line with the political party system and embedded in the main sociocultural cleavages. This explains the stability of the social housing system as well as its corporatist character, reinforced by decentralisation processes but increasing in contradiction to neoliberal tendencies. This contradiction was vividly demonstrated by the 2000 privatisation of state-owned dwellings described earlier. National legislation has opened the possibility for cooperatives (and public bodies) to sell their stock at market value. So far, demand has been quite low. The potential commodification of the public housing stock represents a crucial change in public/urban governance. In 1994, the right to buy was implemented for housing association dwellings; to qualify, residents must have lived in the dwelling for at least ten and not more than fifteen years. There are no overall statistics about the number of transactions. For Vienna, a recent study calculated a sale rate of 8% for one cohort of new construction. The literature estimates that in the longer term, 20–30% of new construction will be sold (Lugger & Amann 2005). Common good providers face a profoundly changing landscape. They confront growing competition with for-profit bodies, the Europeanisation of regulations (e.g. with regard to the EU rules of competition and the definition of social housing as a ‘service of general economic interest’ – see Chapter 19 in this book), increasing standards (e.g with regard to quality) and a changing financial environment.

Financing The housing system in Austria is made up of a complex network of interactions between national, regional and local authorities, building contractors and owners, the construction sector and credit institutions. This is true not only of social housing – there is also a comparatively high level of regulation of owner-occupied and private rented housing. In Austria, of all homes and flats built with public subsidy, only half are social dwellings – the other half are private rental and owner-occupied. Public support is mostly in the form of direct construction subsidies; subsidies to consumers and tax concessions are of less importance. In Austria, some 75% of housing subsidy funds comes from federal transfers to the regions, who handle the implementation and execution of housing policy. These funds are financed by a fixed, earmarked proportion

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of income tax, as well as corporation tax and ‘housing contributions’ paid by all employees. The regions contribute a small amount from their own budgets. Since the mid-1990s, the regions’ ability to finance new housing has become more fragile, for several reasons. First, earmarked government subsidies were not increased between 1996 and 2008, leading to a reduction in real terms of about 15% (Kunnert & Baumgartner 2012). Second, housing costs increased significantly owing to more expensive construction materials, higher energy-efficiency standards, and so on. Third, since the 1980s many regions have stopped making direct public loans for new housing, opting instead to subsidise mortgage payments. The loans had to be repaid, but the mortgage-payment subsidies accumulated over the years until they accounted for a significant proportion of housing budgets (although new forms of reimbursable subsidies have helped address this problem). Fourth, as discussedearlier, legal reforms in 2001 and 2008 allowed the regions to use their subsidy funds for purposes other than housing. Finally, an increasing proportion of the subsidy pot has been dedicated to modernisation (26%) and direct subsidies to consumers (15%) (2011 data; IIBW 2012). To summarise, the Austrian housing subsidy system is apparently quite stable, favouring bricks-and-mortar and direct subsidies (indirect subsidies such as tax incentives make up less than 15%). However, the system is increasingly complex, and the past two decades have seen a shift from direct subsidies for construction and renovation (which have fallen 10%) to subsidies for consumers (up 8%). In 2011, housing subsidies totalled €2.66 billion. This is equivalent to 0.9% of Gross Domestic Product (GDP), slightly less than in earlier years (the figure was 1.3% in 2000). The regionalisation of housing policy has allowed the nine regions to develop a variety of subsidy schemes for new construction of social-rental housing (both municipal and housing association), combining grants and subsidised loans. Public subsidies cover only part of the cost of construction; the rest comes from providers’ equity or from bank loans or other borrowing. The common good providers have suffered severe financial stress in the wake of the global financial crisis. Although bricks-and-mortar subsidies continue to dominate, individual housing or rent allowances have become more important. This reflects changes in both supply and demand: the housing benefit system has been extended, and households have suffered income shocks as a result of the economic crisis. In Austria, there are three major types of housing benefits. Details of who is eligible for them and how much they pay differ by province. Housing allowance targets households in any dwellings that benefited from construction subsidies, so owner-occupiers are also eligible. Rent allowance is granted primarily to low-income tenants in the private rented sector who are faced with large rent increases because of renovation work. Finally, rent benefits are allocated by the social welfare authorities to

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tenants whose rent causes their disposable income to fall below the social welfare threshold. A particular problem results from the fact that the land market is only weakly regulated. The cost of land can make it difficult to build new housing that does not breach rent ceilings, and often is beyond the resources of smaller landlords. To overcome this, some regions and municipalities (including Vienna) support social housing providers in the acquisition of land. Providers also ask new tenants for a down payment as a contribution to the cost of the land price. The deposit is paid back if tenants move out. In Vienna and some other regions, this payment is mandatory; in exchange, social housing providers must offer tenants the right to buy (Deutsch 2009). Income-poor tenants may benefit from low-interest public loans for financing the down payment.

Rents Austria has a strong rent regulation. In principle, both social and private rents are regulated and cost-based. In practice, however, the situation has changed radically since the 1980s. The general rent law distinguishes between rents for buildings built after 1953, which are not regulated, and rents in the older stock, which are regulated on the basis of a benchmarking system. This takes into account the quality of accommodation (there are four categories, from A [dwellings with bathrooms and central heating] to D [dwellings without indoor toilets or even running water]) as well as the location of the apartment, and so on. An increasing number of dwellings have rents that are no longer regulated. From 1970 to 2011 the proportion of rents strictly regulated (mainly because they fall into category D) fell from 41 to 9%, whereas rents without any upper limit (high-standard new construction) increased from 13 to 27%. Rents for the majority of good- and medium-quality dwellings are based on the rent for a normative dwelling and adjusted up or down to reflect the individual characteristics of the property (these adjustments can affect the rent level to an important degree). The general rent law applies to municipal housing as well, but rents in this sector are the lowest in the market. For a long time, rents were moderate in all subsectors of the market and increased in line with incomes. This situation changed rapidly after 2000. Since then, rents have increased by 35% (all rents), but there are important differences between rents in the old stock and those for new-build dwellings, and in the different segments of the rental market. Between 2005 and 2010, private sector rents increased by 22%, rents in the non-profit sector by 12% and by 9% in municipal housing. Table 4.1 shows that private sector rents

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Rents by type of owner, 2011. (Average rent/m2 )

Existing housing New-build (Category A) or new tenancies

Private

Non-profit

Municipal

€6.70 €8.30–8.60

€5.70 €6.40–6.60

€5.50 €6.40–6.60

Source: Kunnert and Baumgartner (2012).

are higher than those in the non-profit and municipal sector, and that rents for new-build housing are higher than for older stock. In 2012, the median household in the social sector spent 29% of its income on rent, versus 31% in the private sector. As in other countries, housing expenditure increases income inequality; this is true in social housing as well, albeit to a lesser extent. Households in the lowest income quartile spend on average 43% of their income in rent in the private sector and 40% in the social sector, while expenditure by households in the highest quartile is only 20 and 17%, respectively. Poor households, young people, immigrants and those looking for inexpensive accommodation find it increasingly difficult to find adequate housing.

Access There are formal income limits for access to social housing, but these are high enough to cover 80–90% of the population, and subsequent salary increases are not taken into account. Details of eligibility vary among the nine regions – Vienna, for example, recently suspended longstanding lower ceilings in its municipal sector with the objective of achieving a better social mix; in 2013, in Vienna, the income ceiling was €42 250 net per annum for one person and €62 960 for a couple. Municipalities or housing providers determine whether households are eligible and assign them to individual units. Traditionally, the Austrian social housing system gives priority to people in employment (key workers), who have sufficient income and job security to pay the rent. The obligation for tenants to contribute to construction and land costs via a down payment on entry creates a barrier for low-income people. Stability of income and residence (two years minimum) are also criteria for immigrants (non-naturalised non-EU-citizens). There are some region-specific programmes to facilitate entry for poorer households. Once tenants are in the social sector, their incomes are not monitored further, which increases the diversity of the tenant structure over time. Even though an increasing number of tenants receive housing allowances and rent benefits, the number of evictions is increasing.

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In Vienna, people in acute housing need have access to emergency dwellings, mostly in the municipal housing stock. There is no central definition of acute need, but the Viennese programme targets households that are in imminent danger of homelessness, whose health is impaired by their current accommodation, and/or who have very low incomes or are on social allowance, that is, they are already in contact with social services. Emergency dwellings are not allocated to people who are already homeless; there are specific programmes and institutions for them. The barriers to access for the poorest households and immigrants force these groups to find accommodation in the mostly very badly equipped units of the private rented sector. Because of urban renewal and modernisation of the old housing stock, the number of such dwellings is shrinking rapidly. There are also problems in this sector with regard to quality standards, rent levels and the security of tenancy.

Demographics In Austria, the different segments of social housing target different groups. Municipal housing focused traditionally on the working class and low-income people, while the non-profit private sector was mainly oriented towards the middle class (a picture confirmed by analyses of the redistributive effects of housing subsidies). Social housing is currently accessible to the majority of the population, and the social structure of tenants is not too different from that of the population as a whole. Very wealthy households are underrepresented and in some sectors, particularly municipal housing, lower social strata are overrepresented. Analyses of data from the European Union’s Statistics on Income and Living Conditions (EU-SILC) paint the following picture: • Household income: The rental segment provided by limited-profit companies is dominated by middle-income tenants (only 11% are low-income), while municipal housing accommodates more people with low incomes (30%). The private rental sector falls between the two, with 23% of private rented sector tenants on low incomes. • Poverty levels follow a similar pattern: 6% of all households can be classified as poor. The proportion is only slightly higher in the social sector as a whole (7%) but much higher in municipal housing (14%) and indeed in private renting (11%). • Social status and education: Common good providers accommodate mostly people with an average status and educational level. In municipal housing, the average levels are lower, and in private renting there are relatively more tenants with a higher social status.

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• Age: The municipal sector accommodates the highest percentage of over-65s (17%), while in private renting the figure is much lower (9%). Analysis of housing careers indicates that poorer people leaving private rented housing (often from immigrant backgrounds) tend to move into the social sector, particularly in Vienna, whereas wealthier people – especially young people with growing incomes – tend to opt for home ownership (Deutsch 2009). There is also an increasing flow of women and single mothers into social housing. These studies point to the risk that social housing, in particular the municipal sector, is becoming much less a tenure for families and key workers and more a tenure for households at risk. Until recently, non-Austrian citizens could access the social sector only in exceptional situations. This changed in 2006. At present, about 21% of non-Austrian citizens live in social housing, which is about the same as the proportion for the native-born population. (The official statistics contain only information about citizenship; there are no data about ethnicity. Most non-citizens come from the former Yugoslavia and Turkey.) There are important differences between the regions: in Vienna, 53% of Austrians and 17% of non-Austrian citizens live in social housing, while in Upper Austria the respective figures are 19 and 37%. Overall, 6% of social housing units are occupied by households with an immigrant background, but in Vienna the figure is one third. In Viennese municipal housing, immigrants are overrepresented in buildings from the inter-war period. Recent research shows a slow ascent towards more comfortable, modernised or newly built social housing estates (Rode et al. 2010). Segregation is generally quite weak, but is more evident in some parts of the city. Social providers, including the municipal sector, are trying to counteract it by setting up mediation processes or promoting inter-ethnic housing, where a mixture of national origins is an explicit goal and a criterion for tenant selection. Social providers are becoming more aware of issues of ethnic and racial diversity, and reacting to social and intercultural quality standards introduced by public authorities.

Governance and regulation There is a complex system of interactions between the federal government (which defines the legal framework for social housing), the nine regional governments (which are responsible for housing policy), municipalities, limited-profit housing companies, banks and special housing financial institutions – and tenants. The configuration and interplay of these actors are changing. There are new protagonists, including for-profit companies and international investors. The federal state has retreated from some areas (including grants) and regional administrations have adopted a neoliberal

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Current Policy Environment

approach to the role of public authorities, who are now meant to focus on urban policy strategies, land-use plans, quality standards, promoting their own cities and sponsoring architectural and real estate competitions – but not on providing housing. All these developments mirror, to a certain degree, the ongoing de-corporatisation and marketisation of housing. The role of the tenants has been weakened, because the old tenant organisations, which were connected with the rent regulation system and the corporatist welfare regime, are becoming irrelevant and the tenant-participation schemes in many new buildings or troubled neighbourhoods have not replaced their function of representing tenants’ collective interests. Common good providers often define themselves as the agents of tenants, but at the same time they are strategic and economic actors in an increasingly competitive environment, and their interests are thus necessarily in tension with those of tenants.

Current policy environment The fundamental principles of Austrian social housing traditionally included a leading role for non-profit developers, direct subsidies from the state, rent control for the old stock and cost rents for new construction. These principles still generally apply, although the system has gradually become more market-oriented. The rent-setting system is now diluted and social rents are closer to market rents, except for older tenancies. Cost renting and cost sale are still the dominant principles for subsidised new construction, but the non-profit sector has lost market share to the for-profit sector, which has access to construction subsidies but does not directly operate social housing. Despite the major changes social housing has undergone – and is still confronted with – the Austrian post-war model of social housing is better preserved than in many other European countries. However, increasing housing costs on one hand and socioeconomic and demographic changes on the other are challenging the social sector. Entry has become more difficult for young and not-so-wealthy households (despite some target-group-specific measures), whereas the ‘standardised’ housing products are poorly suited to changing lifecycles (ageing, single-parent families, intergenerationality) or mobile lifestyles (migration). The current debate about social housing focuses on the following issues: The ongoing liberalisation of the housing market The surface consensus about social housing hides the fact that housing policy has become more neoliberal. As the private sector’s involvement has grown, public sector involvement has shrunk. Concepts of ‘public–private partnership’ and ‘new governance’ have strong resonance and challenge particularly the

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traditional common good providers, whose future is also threatened by the financial crisis and the break-up of corporatist welfare structures. Generalist versus targeted approach There is growing critique of the generalist nature of the Austrian system and the fact that housing subsidies favour the middle classes, particularly given increasing social (and housing) inequalities. Informed observers now expect that the policy will shift from construction subsidies to subsidies for low-income consumers. The increasing gap between supply and demand Demographic changes are affecting the structure of the tenant population and thus of demand. These changes include the rise in single-person households, new family constellations, ageing, flexible labour markets, increasing migration and new types of (transnational) migration. Although demand has changed, supply has, however, not responded. The risk of increasing polarisation and disintegration There is an increasing gap between Austria’s winners and losers in terms of income, employment, access to the labour market and housing. These differences and inequalities are exacerbating distributional conflicts, contributing to the spatial exclusion of marginalised groups, and increasing the risk of a vicious circle of deprivation; the redistributive function of social housing is under pressure. In sum, the social housing debate in Austria is dominated by the themes of market liberalisation, privatisation of public housing, the retreat of corporatist governance traditions, and immigrant and social exclusion issues, all against the backdrop of an economic crisis that itself has implications for the housing subsidy system. Social housing in Austria will continue to play an important role. To what extent and in which direction the current reconfiguration will transform the established system, however, remains uncertain.

References Deutsch E (2009) The Austrian social rented sector at the crossroads for housing choices. International Journal of Housing Policy, 9, 3, 285–311. Donner C (2011) Rental Housing Policy in Europe Vienna Housing Department, Vienna. IIBW (Institut für Immobilien, Bauen und Wohnen) (2012) Wohnbauförderung in Österreich 2011 IIBW, Vienna. Kunnert A and Baumgartner J (2012) Instrumente und Wirkungen der österreichischen Wohnungspolitik, Österreichisches Institut für Wirtschaftsforschung, Vienna. Lugger K and Amann W (2005) Der soziale Wohnbau in Europa Österreich als Vorbild, IIBW, Vienna. Rode P, Schier H, Giffinger R and Reinprecht C (2010) Soziale Veränderungsprozesse im Stadtraum. Wiener Sozialraumanalyse mit Vertiefung in acht ausgewählten Stadtgebieten. Werkstattberichte 104, Stadt Wien, Vienna. Statistics Austria (2012) Wohnen: Ergebnisse der Wohnungserhebung im Mikrozensus, Jahresdurchschnitt 2011. Statistik Austria, Vienna

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Part II Medium Social Housing Sectors

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A house at Tinggården, a pioneering project built in 1978 south of Copenhagen and considered to be the first rental co-housing development. The units are arranged in 12 clusters or family groups around a common house used for dining and meetings. It is managed by DAB, one of the largest Danish housing associations. Photograph: Helga C. Theilgaard.

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5 Social Housing in Denmark Hedvig Vestergaarda and Kathleen Scanlonb a Danish b LSE

Building Research Institute, Aalborg University, Denmark London, London School of Economics, UK

Introduction In Denmark, social housing (or to be more precise, non-profit housing) consists of housing for rent at cost prices provided by non-profit housing associations. Social housing associations are semi-autonomous bodies, economically subsidised and legally regulated by the state, but owned and organised collectively by the association members themselves. Social housing provision in Denmark has never been a task for national or local authorities.1 Rather, the sector is the legacy of the widespread cooperative movement that started in the mid-nineteenth century in Denmark. A key feature of Danish social housing has always been the high degree of tenant involvement, and the legal framework for tenant democracy in the running of estates and associations has its roots in the beginning of the twentieth century. Even now, this is one of the main principles of the Danish social housing model, as set out in the 1984 Law on Tenants Democracy. Social housing became a cornerstone of the welfare state in the 1940s. It used to be considered as a tenure for all, and in general there is still no stigma attached to living in social housing, which can be found all over Denmark. However, it has since 1970 increasingly become a tenure for marginalised groups and those with special needs (Vestergaard 2004). Social housing currently makes up about 20% of the housing stock. 1 Although

since 2005 municipalities have been permitted to provide housing for the elderly under social housing regulations, even if it is not built by non-profit housing associations (Boligselskabernes Landsforening 2005).

Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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The current position of social housing

The current position of social housing The Danish social housing sector comprises housing owned by non-profit housing associations (20% of total housing stock) and a very small amount of public stock (about 2%), which is mostly used for short-term emergency housing. (In Denmark, the term almene boliger, usually translated as ‘social housing’, is used to mean only the housing-association stock). There are about 580 housing associations, which as of January 2012 owned 7700 estates with a total of 544 645 dwellings (mostly family-sized apartments). The housing associations vary enormously in size, ranging from those with over 40 000 units to those with fewer than 10. Owing to recent mergers, the organisations are becoming larger. Municipalities supervise the housing associations and must approve certain of their decisions. In the 1940s and 1950s, social housing consisted of small, centrally located urban housing estates. From the 1960s to the end of the 1970s, larger estates, often with high-rise buildings, were constructed on the outskirts of cities and in suburban municipalities. Many of these estates now have social problems. Since then, most new social housing has been on smaller, low-rise (tæt-lav) estates. As Figure 5.1 shows, owner occupation is the majority tenure in Denmark, accounting for about 50% of dwellings. The importance of private rented housing has fallen markedly since 1960, while the percentage of housing association dwellings has nearly doubled over the same period.

60

Percentage of housing stock

Owner-occupied 50 40

Private rented

30 20

Social rented – owned by housing associations

10 0 1960

Unoccupied, other Owned by public authorities 1970

1980

1990 Year

Figure 5.1

Housing tenure in Denmark, 1960–2010.

Cooperatives

2000

2010

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Provision of social housing Since 1994, decisions about the construction of new social housing have been approved by local authorities.2 Various studies have found that municipalities can be reluctant to permit such construction because they do not want influxes of residents with social problems who will cost them money. Since 2000, they have often been more willing to allow housing associations to build special-needs housing, such as dwellings for the elderly or handicapped – in fact, such special-needs housing currently makes up about 50% of new-build social housing. Most of the cost of building new social housing (currently 88%) is financed by a mortgage. The municipality pays 10% of the cost upfront in the form of an interest-free loan for base capital (grundkapitallån) and the remaining 2% is covered by tenants’ deposits. The municipality guarantees that part of the mortgage that is above 60% of the property value. In the past few years, new social housing has partly been financed by the National Building Fund for Social Housing (see subsequent text). The fund does not yet have large reserves and has taken out loans on the basis of future income forecasts. The minister of housing, urban and rural affairs announces at the end of each year which type of loan will be used the following year. At the moment, they are variable-rate loans with terms of up to 30 years; in the past, index-linked or fixed-rate loans have been used. In recent years, the legislation has been changed to permit the use of covered bonds (Velfærdsministeriet 2009: 69), which are subject to the condition that the value of an individual loan must never exceed 80% of the underlying collateral. This increases the potential call on municipal guarantees, which could theoretically jeopardise the financial positions of municipalities with large guarantees and empty housing. However, the National Building Fund (see subsequent text) functions as a safety net and, in practice, would step in to handle such a situation before a crisis developed. Social housing built in the period 1982–1998 was financed with a form of loan whose term was extended when interest rates increased – so, in effect, future tenants paid the subsidy element. For social housing built from 1975–1982, interest subsidies were linked to wage and price indexes, and as these increased the subsidies fell, thus passing the full cost of the loans on to tenants. Many estates from this period were later allowed to remortgage to index or other loans in connection with refurbishment programmes. 2 Previously

a national quota system, managed by a single civil servant, determined how many new social housing units could be built annually in each municipality. When he retired, an ‘objective’ model was developed. Under the new model-based system, many rural municipalities were for the first time allocated small amounts of social housing (estates with 2–10 units). Housing associations in urban municipalities would often compete with each other for a share of the local quota. In some places, such as Aarhus, the associations would agree between themselves who could build, and then informed the council.

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Landsbyggefonden/The National Building Fund

Social housing is exempt from income tax and real-estate tax. A cap on construction costs was introduced in 2004; in 2012, the average permitted building cost per metre square was DKK 21 696 (€2913). Given the high land prices in the Copenhagen area, this limited where housing associations could build, at least before the financial crisis began in 2008. By law, social housing must be rented at cost rents, which are based on historic costs; rents do not respond to market forces. On average, housingassociation rents are probably below the market-clearing level. This means that older (and often more attractive) housing has very much lower rents than newer housing. Households that will never be in a position to pay their own housing costs can be trapped in the most expensive housing in the social sector. Vulnerable residents who depend on social benefits end up concentrated on unpopular large estates with high rents and low housing quality, because those who could afford to pay those rents on their own prefer to live in owner-occupied housing. Debt repayments (and, by extension, tenants’ rent) on estates that were built after 1999 are, by law, set at 3.4% of initial building costs plus bank charges. This money goes to the government, which services the mortgages. The level of payment is, however, independent of the actual interest rate. Given current low nominal interest rates, the estates/tenants actually pay more than the mortgages cost, so the state is making a profit from social housing built after 1999 (Socialministeriet 2006: 223 and 416; Figure 11.3). Each of the 7700 housing estates (or ‘member sections’, as they are known in Danish) must balance its books – there is no cross-subsidisation between housing associations, or between estates that belong to the same association. The municipalities must approve housing associations’ budgets and accounts. Since 1984, tenants have a right to the majority of seats on housing association and estate boards, and the Danes are proud of this tenant democracy. Some critics say, however, that the multiplicity of boards, combined with the municipalities’ input, makes the decision-making process unwieldy. There was an effort in 2010 to improve the situation by introducing a system of compulsory annual steering dialogues between the municipality and local social housing providers (Socialministeriet 2008).

Landsbyggefonden/The National Building Fund From the late 1940s onwards, there was a boom in social housing construction, financed by 50-year construction loans. Many of these loans are now paid off (or soon will be), but the cost rents are still calculated as if there were a loan to be serviced. Some 50–66% of this surplus has gone since 2000 into the National Fund for Non-Profit Housing Associations (now: National

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Building Fund) or Landsbyggefonden, which was set up in 1967. The rest goes into local funds. The fund’s resources have so far been used for renovation and repairs of existing social housing (particularly of unsatisfactory stock from the 1960s and 1970s), but its income is set to grow greatly in the coming years. The government and the non-profit housing sector have been engaged in a debate about how these funds will be used. The government wanted to allocate more resources for the financing of new building, while the housing associations want to use the money for upgrading and renovation of the older stock. As a reaction to the recent crisis and the consequent low construction and housing-market activity, the decision was made to channel resources back to the social housing sector faster than had originally been envisioned. The fund does this by issuing drawing rights to individual housing associations and estates, which can use the money to fund the refurbishment of existing stock and construction of new dwellings; the emphasis is on energy efficiency, sustainability and adaption to changed local housing market conditions. The demolition of empty housing in low-demand areas is a current issue.

Access to social housing/eligibility The majority of vacant units are assigned by the respective housing associations on the basis of time on the waiting list, household size and the household’s need for this kind of housing. There are no restrictions on who may join a waiting list, apart from a minimum age of 15 years (until 1993, in fact, children could be signed up at birth). In pressure areas such as Copenhagen and Aarhus, waits can be long (10–20 years in the Copenhagen area), but this is not the case everywhere. Those on the waiting list pay a small annual fee, and when tenants move in they have to pay a deposit that corresponds to a percentage of the original construction cost of their unit (currently 2%, although on older estates the deposit can be up to 6%). Housing associations also operate internal waiting lists, so tenants can move up the housing ladder within a housing association from an expensive dwelling to a cheaper and more attractive one. Municipalities have the right to assign tenants to at least 25% of vacant housing-association units. In agreement with the housing associations, they can choose up to 100% of tenants; these households do not have to be on the waiting list. Priority is normally given to families with children, older people, students, divorced people, and so on. Assignments are not necessarily done on the basis of need. Many local authorities and housing associations give priority on troubled estates, for example, to people working in the local area in order to improve their social composition by introducing residents

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Access to social housing/eligibility

Table 5.1 Danish municipalities with highest and lowest percentages of social housing (2012).

Most

Median Least

Brøndby Albertslund Herlev Ballerup Ishøj Viborg Stevns Samsø Gentofte Vallensbæk Læsø

Total Number of Dwellings

Of Which Social

16,064 12,823 13,006 22,474 9,308 45,114 10,175 2,846 35,198 6,298 1,429

10,362 7,396 7,215 11,722 4,560 7,356 561 133 1,465 82 1

% Social 65 58 55 52 49 16 6 5 4 1 0

Source: Danmarks Statistik Table BOL101.

with jobs; this is also justified as a way to reduce environmentally damaging commuting. In some municipalities, the local authorities have taken over all allocation in an effort to manage the social composition of the stock and prevent the so-called ‘ghettoisation’. In addition, municipalities assign seniors and handicapped tenants who require special-needs housing. Tenancies can be passed on to children when the parents die, if the children lived in the dwelling. Tenants also have the right to exchange dwellings with other tenants in the same housing association, different housing associations and, indeed, in the private sector. Tenants may also sublet their dwellings for a limited period if they work temporarily elsewhere. The highest proportion of social housing is found in suburban areas (Table 5.1, Figure 5.2), especially the municipalities south-west of Copenhagen that were transformed from villages to suburban areas in the 1960s and 1970s. All these municipalities are led by social democrats, which tended to favour social housing as a way to strengthen their voter base; conservative municipal governments are less keen. Copenhagen City was developed before the expansion of social housing. Its housing stock was originally dominated by private rented housing, which has partly been sold off to private cooperative housing societies. In the city of Copenhagen, social housing only makes up about 20% of the housing stock at present, while the cooperatives make up more than 30%. There are currently shortages of social housing in growing cities, particularly Copenhagen and Aarhus, where waiting lists are long. Key workers such as teachers, nurses and firemen have complained that they cannot afford decent housing, and young working households often have housing difficulties. Conversely, in peripheral areas of Denmark demand is falling, but the rigid rules about cost rents make it impossible for housing associations to

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Social Housing in Denmark

Nonprofit proportion

Figure 5.2

0–10%

10–15%

15–21%

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Above 21%

Proportion of social housing in Danish municipalities.

(Source: Danmarks Statistik Table BOL.101.)

reduce rents to market levels. Social housing in these areas has therefore become the housing of last resort, accommodating only people who do not pay their own rents. Private housing is much more competitive, as rents can follow the market down. Housing associations will eventually have to reduce stock in low-demand areas. The National Building Fund can, when necessary, depreciate the capital in these estates. Danes generally prefer owner-occupation to living in private rented or social housing, and access to this tenure became easier from the 1990s onwards because of innovations in the mortgage market (although in some areas, such as Copenhagen, this was outweighed by strong increases in house prices). Owing to the economic recession and the tightening of mortgage credit, access to owner-occupation has been more difficult since 2008, and even in Copenhagen the housing market has been depressed.

Demographics of social housing The average number of residents per household in the social housing sector was 1.8, as compared to 2.2 for all households in the country by

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Demographics of social housing

(Landsbyggefonden 2012; figures for 1 January 2011). Household size varies by region with the largest in the capital region and smallest in North Jutland. The majority of households in the social housing sector consist of only one person. There are far more single men and women in social housing than in the overall housing stock. Some 42% of households are single women, while the proportion of single men is 26%. Together, single women and men constitute 68% of households in the sector against 45% in the total stock. The converse is true in the case of couples, who account for only 27% of social sector households compared to 48% for the entire housing stock. Women made up 53.7% of social housing residents on 1 January 2011, while they represent 50.4% of the overall population. Not surprisingly, there is a particular overrepresentation of single women in senior housing (61% of households). The age distribution of social housing tenants also differs from that of the total population. There is a preponderance of the young and the old, with a higher share of people aged 18–34 and over 64 than in the country as a whole. From 1994 to 2012, the share of non-Western immigrants and their children among social sector residents increased from 12% to over 25%, compared to only about 10% of the population as a whole. These immigrants are not uniformly distributed across housing associations; some estates house only ethnic Danes, while others are occupied by more than 50% non-ethnic Danes. The vast majority of migrant social housing residents come from non-Western countries, particularly Turkey or Iraq. Most of them live in the capital region, while the fewest are located in northern Jutland. In 2010, more than a third of all working-age social housing residents were outside the labour market, and a substantial number were in receipt of disability benefit. There appear to be major regional differences in the proportions of non-economically active residents, with the capital region having the fewest; in particular, they were less likely to have taken early retirement than social housing tenants elsewhere. The labour-market participation rate of immigrants from non-Western countries was generally lower than for other social housing tenants. In 2010, 46.1% of such immigrants were economically inactive, compared to just under 36% of all tenants. Almost 29% of immigrants from non-Western countries were either on welfare or disability benefits. The trend for the children of such migrants is very different – far fewer of them were outside the labour market, or relied on disability and sickness benefits. Most of them were in job training programmes. It should be noted that the age profile of this group is very different from that of social housing tenants or Danish residents overall, as most of the children of immigrants are under 35 years of age. In 2010, there was an in-migration rate of 0.2% into the social housing sector. The entire country saw a net migration to social housing of people

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aged 18–24 and 50+. There was a net out-migration of working-age tenants, as those in the labour market tended to leave the sector, while the economically inactive came in. Social tenants aged 15–64 had in 2009 an average gross household income of DKK 188,284 (about €25,240), against a national average of DKK 275,851 (€36,980) for the entire population. Regionally, there are relatively large differences, with the highest incomes in the capital region and Zealand, with North Jutland, Mid-Jutland and South Denmark at the bottom. Geographically, the vast majority of households are in the capital region and the fewest in North Jutland. In terms of household size, more than half (56%) of all households in the social sector consist of a single person, and only 9% include four or more. This average masks wide variations. In North Jutland, for example, 63% of households in social rental are single persons and only 5% have four or more members, but in the capital region only 50% of households are singles and 11% are made up of four or more individuals. Larger households normally live in dwellings built between 1968 and 1982, while smaller households live in newer properties.

Rent levels Private sector rents are generally regulated, and are, in principle, also cost based, so comparison with them is not a good measure of subsidy. (Some 90% of private rented dwellings are located in municipalities with rent control.) In high-pressure areas such as Copenhagen, housing association rents are below (notional) market rents, while in some rural areas, it is cheaper to buy a house than to rent social housing. However, in the current market, such purchases can be hampered because mortgage lenders refuse to finance them. A rent survey carried out in 2005 showed that social housing was on average about 2% cheaper per square metre than private housing (Table 5.2).

Other forms of affordable provision Paradoxically, social housing in Denmark is not necessarily synonymous with ‘affordable provision’. In 2005, Copenhagen’s mayor was elected on a Table 5.2

Average rents 2005 (DKK and €/m2 /year).

Social housing Private rented

Average Rents

Lowest 10%

595 (€80) 611 (€82)

447 (€60) 415 (€56)

Highest 10% 764 (€103) 838 (€112)

Source: Den almene boligsectors fremtid (The future of social housing), Socialministeriet 2006.

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The political debate

promise of providing 5000 new homes at a rent of DKK 5000 (approximately €670) per month. However, there was no question of housing associations building these homes – the building standards they must comply with are so costly that rents would necessarily have been much higher than that, particularly considering the very high cost of land in Copenhagen. Until 2008, the municipal administration tried to work out whether and how a private organisation could build homes that would rent at the target level, and looked at the use of innovative financial instruments as well as prefab construction. However, the project came to a standstill in November 2008 because of the economic recession (Berlingske 2008). A pilot scheme supported by Fonden for Billige Boliger (The Non-profit Foundation for Affordable Housing) had by 2012 produced just 38 units, of which only 12 units were let out as affordable housing.

The political debate No party that wants to win an election dares to announce any change in housing policy. Politicians’ level of knowledge about social housing is generally low; it is an insiders’ issue. This situation was fostered by many years of close direct cooperation between social democrats, trade unions and the national social housing organisation. However, after the 2001 election, the power of this group dissolved, and social housing advocates had to look for new ways of communicating with and influencing the government and the Folketing (parliament). They found a partner in the right-wing Danish People’s Party (Dansk Folkeparti), which had strong support among residents of social housing and was a key political ally of the liberal-conservative government in office until 2011. They might well have been the strongest political advocates for social housing. More outspoken politicians have demanded reform of social housing and simplification of the very complicated legislative and regulatory structure surrounding it. Some see the 2007 local government reforms (in which the number of local authorities fell from 272 to 98) as an opportunity for reorganising; the National Organisation of Local Authorities (Kommunernes Landsforening) has proposed that the number of housing associations be reduced from 700 to about 250, in order to reduce the number of associations each local authority has to deal with. Others demand speedy deregulation and reform of the housing subsidy system, abolishing the so-called bricks and mortar subsidies in favour of direct subsidies to needy people and a higher degree of self-financing in the social housing sector. A white paper on the future of the social housing sector, including its role and financing, paved the way for an agreement between the government, the Danish People’s Party and Danish Social Liberal Party

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(Socialministeriet 2006). As well as more self-financing, the agreement sets up a structure of negotiations about the future management of the sector (Socialministeriet 2008). One important tool is a move for more transparency in the relationship between local housing organisations and the respective municipalities, including public reports of meetings. Social housing insiders have indicated that they are willing to discuss changing the cost–rent principle to move towards a more market-based system. What should be done in places such as Copenhagen and Aarhus, with very high-pressure housing markets? Here, the housing associations do not have any demand problems and it might be logical to move to more market-based rents for all rented housing, including social housing. Any sudden move could, however, be destabilising for the whole housing market in these pressure areas.

Recent initiatives The concentration of socially deprived and ethnic communities on socialhousing estates has been on the political agenda for over 20 years. Solutions have included • improvement of physical conditions by renovating and modernising buildings, in most, if not all, cases with a subsidy from the Landsbyggefonden; • social initiatives – employment creation, promotion of integration, crime prevention; • subsidies for rent reduction, in order to make high-cost estates more attractive to higher income groups; • sale of dwellings to achieve a better mix of residents – this has only been legal since January 2006; as of end 2010, only 61 units had been sold; • extending the right to demolish buildings to improve the general environment; • letting local businesses rent premises on social housing estates as a way of creating more varied and interesting neighbourhoods. The current recession and high level of unemployment starting in 2008 have challenged the government, and the prime minister has asked her ministers to find solutions to alleviate the situation. One proposal is to boost the use of the National Building Fund resources to finance investment in sustainable new construction and refurbishment of social housing (Bang 2013). This is especially appealing to politicians as it can be done without burdening the state budget.

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Conclusion Rent regulation based on cost implies that rents often deviate from the market-clearing level, depending on the location and quality of housing. The long waiting lists in urban pressure areas attest to the economic attractiveness of social housing, although in newly built projects rents may be less affordable owing to higher production and land costs, and cost recovery depends more on housing allowances. In the period 2001–2011, the social sector changed from providing affordable housing to all groups in society, towards a more selective role of provider of housing for groups with special needs and the elderly. Housing associations lost influence under the right-wing government that took office in late 2001. This situation has changed with the new government elected in 2011, led by a coalition of social democrats, social liberals and socialists; this government intends to use the sector to promote employment and economic activity in a time of prolonged recession. Social housing construction and especially refurbishment of the older stock has gained momentum.

Country Box Social housing is an integral part of Denmark’s welfare state, with roots that go back to 1919 when the first law on non-profit housing associations was passed by the Folketing. At present, it houses one-fifth of Denmark’s population. The economic crisis has inevitably affected the sector, which is coping with a record number of evictions and a problem of vacant dwellings in peripheral Denmark. Social housing must address many of the wider challenges facing the welfare state – some of which could present opportunities to make Danish society even better. The following selection of the sector’s current activities demonstrates the breadth of activity of Danish social housing providers. Housing associations have been responsible for building more than 16,000 homes in 2011; establishing full-time schools for children; running local employment initiatives; making larger investments in renovations than ever before; implementing crime-prevention measures; safeguarding Denmark’s leading role in climate-change policy through energy-saving investments; • creating the highest-ever number of youth housing places; • making accessible housing available for the elderly and disabled. • • • • • •

This list could be very much longer. Denmark’s social housing is not a backwater but a central part of the Danish welfare state, and is regarded as such by the whole society.

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The direct impacts of the economic recession and financial crisis on Danish social housing have not been pronounced. The sector might be protected by funds built up since 1966 from the surplus of rents over cost repayments – funds which are set to accumulate at an increasing rate. This money could be used to stabilise the sector, sustain its position in the Danish housing market and ensure a continued balance between owner occupation and rented housing.

References Bang, M. (2013) LO og BL vil skabe job med almene boliger Altinget By og Bolig 22 [Online], Available: http://www.altinget.dk.zorac.aub.aau.dk/by/artikel/lo-og-bl-vil-skabe-job-med -almene-boliger (accessed 10 March 2014). Berlingske. (2008) Krisen vaelter billige boliger [Online], Available: http://www.business.dk /bolig/krisen-vaelter-billige-boliger (accessed 6 November 2008). Boligministeriet. (1987) Den almennyttige boligsektors rolle på boligmarkedet. Boligministeriet: København. Boligselskabernes Landsforening. (2005) Konsekvensrettelser på boligområdet som følge af kommunalreformen. [Online], Available: http://www.bl.dk/publikationer/bl-informerer /2005/bl-informerer-3605 (accessed 30 January 2014). Landsbyggefonden. (2012) STATISTIK: Beboere i den almene boligsektor 2011. [Statistics. Residents in social housing 2011]. [Online], Available: http://www.lbf.dk/Analyse/∼/media /lbf/Almen%20Analyse/Statistikker%20og%20analyser/Beboerstatistik%202011 %2012062012.ashx (accessed 10 March 2014). Socialministeriet. (2006) Den almene boligsektors fremtid. [Online], Available: http://www .mbbl.dk/sites/mbbl.omega.oitudv.dk/files/dokumenter/publikationer/den_almene_bolig sektors_fremtid.pdf (accessed 10 March 2014). Socialministeriet. (2008) Den almene sektors styring. Socialministeriet: København. Velfærdsministeriet. (2008) Den almene sektors styring. Velfærdsministeriet: København. Velfærdsministeriet. (2009) Den almene boligsektors finansiering. Anden rapport fra udvalget om den fremtidige styring af den almene boligsektor. [Online], Available: http://www.mbbl .dk/sites/mbbl.omega.oitudv.dk/files/dokumenter/publikationer/finansieringsrap.pdf (accessed 10 March 2014). Vestergaard, H. (2004) Boligpolitik i velfærdsstaten. In N. Ploug, I. Henriksen, and N. Kærgaard (eds.) Den danske velfærdsstats historie: Antologi. Socialforskningsinstituttet: København 04, 18, pp. 260–286.

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Nordostpassagen (Vegastaden), Gothenburg, Sweden in 2010. The area was built during Sweden’s ‘Million Homes Programme’ in a modernistic style typical of contemporary suburbs. This project, designed by Lund & Valentin, was constructed between 1967 and 1970 to replace nineteenth-century buildings in a central city district. Photograph: Axel Demker.

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6 Social Housing in Sweden Hans Lind School of Architecture and the Built Environment, KTH Royal Institute of Technology, Stockholm, Sweden

The concept of social housing in the Swedish context Swedish housing policy is at a turning point. The traditional approach, which led to a large increase in ‘affordable’ housing through the Million Homes Programme in the 1960s and early 1970s, was state-subsidised rental housing built primarily by municipal housing companies, widely known as MHCs. The rate of new construction during the period 1955–1975 was such that until the past five years or so there was not really any need to further add to the amount of low-cost rental housing. All Swedish political parties agree that the country should have no social housing. By this they mean that there should be no discrete part of the housing stock that benefits from special subsidies to the builder/owner and is reserved for low-income households. Even more-nuanced policies, such as, for example, providing subsidies to builders who rent part of their stock to low-income households at low rents, are off the agenda. So the chapter could end here: There is no social housing in Sweden! Instead, this chapter employs a broader interpretation of social housing, encompassing policies that focus on households with low incomes or major problems competing on the open market. From this perspective, the population can be divided into four groups: 1. Households that solve their housing situation themselves within any special housing-related subsidies from the public sector (ordinary

Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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pensions and child allowances that go to all households, or unemployment compensation, are not considered to be special subsidies). This group constitutes 80–90% of the population, and can be subdivided into i) those who have purchased a house or apartment, or rent with a first-hand lease contract from a private or municipal landlord and ii) those who sublet from another household, legally or illegally.1 2. Households that solve their housing situation themselves but receive housing allowances or social welfare payments that cover part of their housing cost. Households in receipt of housing allowances can be found in all tenures (ownership, private rental, municipal housing), but only those without substantial assets are eligible for social welfare payments, so they typically live in private- or municipal-rental homes. This group can also be subdivided into i) those who own or have a first-hand contract and ii) those who sublet. 3. Households that live in ‘trial’ or ‘training’ apartments, part of the ordinary housing stock that is owned or rented by the social authorities and sublet to households with social problems. The idea is that during its period of occupation the household can demonstrate that it can manage its housing situation without causing disturbances or other problems and can then get an ordinary rental contract. These apartments are subject to voluntary agreements between the landlords and the social authorities. The organisation of private landlords has encouraged its members to participate in these agreements, fearing that unless they supplied apartments voluntarily the government would introduce laws forcing them to do so. The ordinary stock also contains some long-term and institutional apartments that are rented to persons with mental and physical handicaps who need regular help and observation. 4. Households that live in housing that is outside the ordinary housing stock and more directly controlled by the social authorities. This includes emergency hotel-type accommodation, temporary barracks for people with drug problems and short-term shelters for homeless people. Here, we can also include housing provided by the migration authorities for newly arrived refugees. For the purposes of this chapter, all groups but the first are of interest. They all require some kind of help from the public sector to solve their housing problems in an acceptable way. The next section provides an overview of the tenure forms in Sweden and how these have developed, as well as a description of the Swedish system of rent-setting as this is important for understanding the country’s housing market. ‘MHCs in Sweden’ describes the MHCs and how their role has developed.

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Tenure forms and rent setting in Sweden Tenure forms In 2010, there were around 4.5 million housing units in Sweden. Of these, 37% are rental units, almost all in multifamily buildings. Some 22% are cooperative apartments (bostadsrätt), mostly in blocks of flats, and 41% are owner occupied single-family houses. Around 45% of rental apartments are owned by MHCs, which means they own almost 20% of the housing stock. Over the past 20 years, the share of rental housing (both private and municipal) has been falling, while the share of cooperative apartments is rising. At a national level, however, the changes are not very large. The main driver of this change is the tenure composition of new construction. Cooperative apartments are a higher proportion of new-build than of the overall stock and this share is increasing (see Figure 6.1). The second explanation for the decline in the share of rental housing, both private and municipal, is its conversion to cooperative apartments, especially in central parts of the Stockholm. There is no right to buy in Sweden, so both parties must agree. Sellers have included both private landlords and MHCs; in the latter case, the political leadership of the municipality concerned can decide whether or not to sell. The properties that have been sold are primarily located in attractive areas – in central Stockholm, for example, almost 100 000 apartments were converted during the period 1991–2011. Behind these conversions is a rent-regulation system that keeps rents in the old rental stock low (see ‘Rent setting’) and makes it profitable for both 60

% of all multi-family completions

50 40 30 20 10 0

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Public

Year Cooperatives

Private

Figure 6.1 Dwellings in newly constructed multi-family buildings by type of ownership (1971–2010). Source: Swedish official statistics, Yearbook of Housing and Building Statistics 2012.

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Table 6.1 Year

1960 1965 1970 1975 1980 1985 1990 1998 2000 2005 2010

Housing stock in central Stockholm (% of dwellings).

Multi-family housing Cooperative Municipal housing housing company 2 8 4 9 10 15 17 16 14 10 6

17 17 10 12 21 24 29 37 44 56 64

Other rental

Single-family houses

Total

0.6% 0.5% 0.5% 0.4% 0.5% 0.5% 0.3% 0.3% 0.3% 0.3% 0.3%

100 100 100 100 100 100 100 100 100 100 100

81 75 85 78 68 60 54 47 42 33 30

Source: Statistical Office of the Municipality of Stockholm (USK).

landlords and tenants to convert units to cooperative apartments that can be sold at market value. The value of a building increases if it contains cooperative rather than rented apartments. Table 6.1 shows the dramatic changes in central Stockholm housing stock over the past 50 years. When a building is converted from rental housing to cooperative apartments, the households that do not buy their apartments can continue as tenants with the cooperative as their landlord. But this switch is not without conflict: the cooperative has a strong incentive to try to get rid of such tenants, as the apartments can be sold after they move out. Having your neighbours as your landlords may also be problematic for other reasons.

Rent setting In order to understand how the Swedish rental market works, it is important to understand the basics of the rent-regulation system, a local collective bargaining system initially modelled on the labour market. Until 1 January 2011, negotiations were first carried out between the local Union of Tenants and the local MHC. The Union of Tenants has the right to bargain for all tenants, even if only a minority are members. In most municipalities, the MHC is the largest landlord, often owning more than 50% of the rental stock. To a large extent, rents are based on costs, even if there are no longer formal rules requiring this, and the real issues are (a) the level of general cost increase that should be financed by raising rents and (b) how these rents raise should be allocated between different apartments. At least since the 1990s, the policy of the Union of Tenants has been that new construction should be economically viable from day one, and they therefore

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will not agree to permit MHCs to increase rents in their old stock to finance new construction. Rents agreed on in this negotiation process were also binding on private landlords. Since the beginning of 2011, private landlords have been equal parties to the negotiations and sign their own agreements with the Union of Tenants, but it is too early to identify any subsequent changes in the rent-setting practices. Given the local nature of negotiations, there are differences between cities – location and demand affect rent more in Gothenburg and Malmö than in Stockholm, for example. Because local actors decide, they can come to different conclusions about what is suitable or fair. The market orientation in Malmö started in the early 1990s when the local MHC suffered an economic crisis and had high vacancies in its suburban units. Reducing rents in the suburbs and increasing them in the city centre was seen as the only option to save the company. In practice, age is the second most important determinant of rent levels, with high rents in the new stock and low in the old unrenovated stock. Rents can be increased when a building is renovated, which creates a strong incentive for renovation, especially in central locations where demand is high. The three largest metropolitan areas have all experienced increases in population and incomes and low levels of housing construction during the past 15 years. This has led to a severe shortage of rental apartments on the open market. It is however fairly easy to find a very expensive apartment in newly developed areas, at least outside the most central locations. People access housing through various types of waiting lists, exchanges or contacts, and there is of course also a black market of unknown size. The waiting lists can be specific to individual landlords (e.g. MHCs), but some municipalities operate waiting lists covering both private and public companies, for example, the Stockholm Housing Agency. Typically, the applicant has to meet certain requirements, for example, concerning income, and then the households that have spent most time in the waiting list are permitted to choose first when an apartment is vacant. Company waiting lists also govern allocation of different apartments owned by the same company; some companies credit tenants’ children with this waiting time. In 2012, only 12% of tenants allocated an apartment by the Stockholm Housing Agency waited less than four years. Most of those who waited a shorter period had to choose expensive newly constructed housing (Stockholm Housing Agency 2013). It is usually permissible for a tenant with a first-hand lease to trade it for another lease, even with another landlord. There are no laws governing allocation of private rented apartments, so landlords can do as they please. Private landlords often rent to applicants they know personally and/or from references, for example, from existing tenants. There is rather strict legislation governing the rental of cooperative apartments. Permission of the cooperative board is required, and the rent

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cannot be higher than the regulated rent. This legislation might, however, be changed soon as there is a proposal in parliament to liberalise the market. In conclusion, Sweden’s rental market is large but in the main regions, where demand exceeds supply at regulated rent levels, most of it is closed to ‘outsiders’. This situation has become worse in recent years, with long queues even in less attractive suburban areas. Young households with reasonable incomes are therefore often ‘forced’ into the ownership market, especially if they want to live in more attractive areas where waiting times are longer. Studies have shown that in recent years an increasing proportion of young households have purchased cooperative apartments rather than renting (The Swedish Union of Tenants 2011).

MHCs in Sweden MHCs in Sweden are almost always constituted as joint-stock companies with the municipality as the sole owner. They are not run as municipal departments; rather, they have their own boards and their day-to-day operations are outside direct political control. Even though, as mentioned earlier, some MHCs have sold apartments to private housing companies and bostadsrättsföreningar (housing cooperatives), the change in the overall ownership pattern has been rather small; there are no precise official statistics, but fewer than 10% of units nationally have been sold. As there has also been new construction, the absolute change was even smaller (Boverket 2011). The MHCs’ position in the market has, however, changed over the past twenty years. The first major change came in the early 1990s when, following the serious economic crisis in Sweden, all direct government subsidies to the MHCs were dismantled. The companies began to take a more professional approach to both suppliers and customers, and the dividing line between the MHCs and the municipalities’ social service departments became more clearly demarcated. In a small interview study, Borg and Lind (2007) compared the work of social authorities in municipalities with and without MHCs. They found that they worked in rather similar ways, and many municipal companies argued that because they did not have any economic advantages, they should not be expected to act more ‘socially’ than private landlords. The CEO of one large MHC famously said that he would rather have an empty apartment than a tenant who disturbed other residents. From a company perspective this is logical, as they do not want their best customers to leave. Anyone can live in apartments owned by MHCs, and Bengt Turner noted that the difference between a unitary Swedish model and a social housing model is that the Swedish companies are happy when a tenant’s income increases and their position in the labour

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market improves, while a traditional social housing company throws the tenant out if the income goes up too much (Turner 1997). The second change came with a new law on MHCs, passed in response to a complaint by the Property Owners Federation on 1 January 2011, stated that subsidies to MHCs were in breach of EU competition law (see Chapter 19 in this book). As discussed in Elsinga and Lind (2012), there is controversy about how to define and measure subsidies, but in the end the Swedish government interpreted the situation to mean that there were two alternatives: either the MHCs could be open to anyone and act in a ‘businesslike way’ or they could receive subsidies and in return focus on accommodating households with low incomes. The ‘social housing’ option was rejected by all political parties and the new legislation says that MHCs should act in a businesslike way. This raises a number of questions: what the companies can and cannot do to fulfill this requirement? Why should a municipality have a housing company if the company simply behaves like any long-term private owner? See Elsinga and Lind (2012) for some speculation about the effects of this change. The new law can be seen as the final step in the process of marking a clear division between the responsibilities of housing companies and those of the social authorities. The duty of the housing company is to build and manage housing estates in a professional way and focus on what is best for the company. Households with social problems that cannot find housing of reasonable quality on the market should go to the social authorities, who can negotiate various solutions with either private or municipal landlords, but there is no special or direct relation between the social authorities and the MHC. This will be returned to in How the social authorities work with housing issues.

Housing allowances and other economic support The dominant paradigm for helping low-income households in Sweden is that this should be done through housing allowances and other kinds of direct economic support for targeted household groups. The housing allowance is paid by the central government and administered by the Swedish Social Insurance Agency, which also handles other transfer payments like sickness benefit and benefits for the disabled. The allowance system has two strands, one for older people and one for households with children. The housing situation of the elderly with low pensions is typically rather good, as rent regulation keeps rents down in the older stock where pensioners often live and because their housing allowances are fairly generous. Retired persons are very rarely forced to move for economic reasons.

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The other main group in receipt of housing allowance is households with children, primarily single-parent households. The size of the allowance is determined by three variables: household income, number of children and the cost of the apartment. During the economic crisis in the early 1990s, the income ceilings were reduced and by 2010 only 180 000 households (4% of the total) were receiving housing allowance, compared to 380 000 in 1992 and 570 000 at the bottom of the crisis in 1995. There is a housing allowance ceiling that makes it is very difficult for recipients to rent newly built apartments. There is some debate about how housing allowances should be calculated and paid. Eligibility is based on annual income, but this is not known with certainty until the end of the year. Households with low incomes during the first part of a year may get housing allowances but then be required to repay part of it if their incomes increase later. Some households that forgot to report income increases have been required to pay back large sums. This uncertainty seems to deter some households from applying for housing allowance, even if they are eligible. For those living in cooperative apartments, the rules for calculating the housing allowances are even more complicated. The Swedish Union of Tenants, in a recent report, pointed out a number of weaknesses in the housing allowance system and argued for changes in the calculation of income and housing costs and in eligibility criteria. The last line of support for households is a social welfare payment from the municipality, known as ‘economic support’. The level of support is determined by need and includes actual housing costs for a reasonably priced apartment; what is deemed to be reasonable depends on family size and local rents. Households living in expensive apartments are expected to move to something less expensive, but as rents are typically low in older suburbs, where recipients tend to live, this is seldom required. Those getting support (6% of households in 2011) are either long-term unemployed or persons with more serious social problems. The share of households living on economic support is higher among households with a foreign background. For example, in Stockholm, 2.2% of Swedish-born persons received such support in 2011, as opposed to 9.2% of those born outside Sweden. In some Stockholm suburbs, the share of households dependent on economic support is almost 20% and in areas of Malmö the share reaches around 30% (see Blomé 2011 for a description of the situation in some Malmö suburbs). These are typically large suburban housing estates built in the Million Homes Programme between 1963 and 1972. Housing segregation is strong and increasing in most Swedish cities. An extreme example is the Stockholm suburb of Rinkeby, where the share of persons of foreign origin (defined as those born abroad, or born in Sweden

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of two parents born abroad) increased from 85–89% between 1997 and 2008 (www.dn.se, based on figures from Statistics Sweden).

How the social authorities work with housing issues The social authorities are directly involved in helping find accommodation for some households, including those with serious social problems related to drug use, mental problems or abuse. In extreme cases, they may be housed in an institution treating a single complex problem, like drug addiction, but in the main the social authorities follow what could be described as the ‘housing-ladder’ theory. The person/household is provided with a ‘training’ apartment; the social authority is formally the tenant and the landlord is a private individual or MHC (see, e.g. Sahlin 2004). The tight housing market means that some households have had no alternative but to remain in this type of housing even after their main problems have been solved. Population increases in the metropolitan areas and low housing construction have increased the pressure on social authorities to help households with housing problems. This is not only a matter of money; even for those who can pay, there is nothing available on the open market, especially if they do not have a clean record. The social authorities use all kinds of creative solutions: some rent temporary accommodation, while others have contracts with low-quality hotels or make minor renovations to bring run-down properties into use. This is partly outsourced to private providers, but the cost of these measures is high and increasing. Newspapers have published stories about the involvement of less trustworthy elements of the private sector. The social authorities are in a weak bargaining position: by law, they must help these households but as market pressures increase, their options narrow. If nothing changes in ordinary housing construction trends, we can expect to see continued growth in the ‘social housing sector’ run by municipal social authorities rather than MHCs. There are no official statistics covering this more informal social housing sector, but according to the Stockholm social authorities, during September 2012 there were 1250 trial and training apartments in use and 400 households got housing directly from the authorities. This is equivalent to about 0.4% of the households in the municipality.

Some recent trends During the past 10 years, population in Sweden’s three metropolitan areas (Stockholm, Göteborg and Malmö) has increased rather quickly but housing construction has, for various reasons, been at a low level. This has led

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to increases in the prices of houses and cooperative apartments, and even though interest rates have fallen, it has become difficult for those without family wealth to enter the ownership market. There is anecdotal evidence of the following developments in metropolitan rental markets: • Households with a lease are realising that they have something of value and do not relinquish it if they want to move. Instead, they trade tenancies (which are permitted under Swedish law – see preceding text), sublet (legally or illegally) or sell their contract illegally. • Private landlords, who have fewer vacancies but more applicants, are raising their requirements for incomes and references. Data from the Stockholm Housing Agency indicate that private landlords at present require that prospective tenants have disposable household incomes of four times the rent, compared to three times the rent demanded by MHCs. • The MHCs are following trends similar to that of private landlords, but as more of their apartments are allocated through waiting lists they tend to go to middle-class households that plan ahead and put their names (and those of their children) down long before they need an apartment. Because the MHCs now must act in a businesslike way, they also turn down households that do not have steady incomes or clean records. • Those households that cannot get apartments because of low or irregular incomes have three options, which are not mutually exclusive. They can go to the social authorities and ask for help (see preceding text), look for help from friends and relatives, or sublet legally or illegally. There are, for obvious reasons, no statistics covering this. Illegal subletting and overcrowding have been increasing in less attractive suburban areas, typically built during the Million Homes Programme and dominated by immigrant groups. Areas owned by private slumlords have been deteriorating very quickly and in ways thought impossible by many, given tenants’ strong legal position in Sweden. Blomé and Lind (2012) suggest that municipalities should be more active in supervising the stock, as the Tenants’ Union is weak in these areas, and that the rent-setting system should require larger, faster reductions in rent in cases of mismanagement. On average, the number of persons per housing unit (including kitchen) has been falling, from 1.9 in Stockholm in 1998 to 1.83 in 2010, according to data from the Statistical Office in Sweden. Housing space standards have become increasingly polarised. The reduction in floor space per person is partly the ‘involuntary’ kind observed in the suburbs, and partly ‘voluntary’, as when younger households prefer to live in small but well-located apartments. Wealthy, established households and those with rent-regulated contracts occupy large apartments even after their children move out. And because one tenet of Swedish policy for older people is that they should be helped to stay

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in their homes for as long as possible, they remain in sizeable apartments even if a spouse dies. A recent study found that older people in the city of Gävle had on average 45 m2 of living space per person. As their current housing is inexpensive, they have no incentive to move to something smaller.

Conclusion The debate on housing policy in Sweden is making it increasingly clear that a new model is needed. There is agreement that MHCs should no longer bear any special social responsibility, even though in practice many still do to a lesser degree. There is no new construction of affordable housing, which makes it more and more difficult for outsiders to rent apartments in metropolitan areas. If housing allowances do not go hand-in-hand with new construction, then helping one household leads to problems for another household just above the support line. As house prices and apartment prices have not fallen, access to owner occupation remains difficult. There are indications of increased overcrowding and illegal subletting. It is becoming more and more obvious that a new programme for large-scale production of affordable housing is needed, but how this can be carried out is very much an open question.

Country Box Municipal housing companies (MHCs) play a very large role in the Swedish rental market. The public sector no longer subsidises MHCs; and over recent decades these companies have become more businesslike, while the responsibility for housing weaker households has moved to the social authorities. MHC housing is available to anyone, and they compete with private landlords in an integrated rental market. The rents they charge are set through collective bargaining between property owners and the Union of Tenants, and typically are closely related to the age of the building. Within the municipal housing stock there is, however, considerable segregation. Low-income households, often with foreign backgrounds, dominate in the suburban stock. Low levels of housing construction, together with increasing population in the largest metropolitan areas, have made it more difficult for economically weaker households to find an apartment on the open market. The pressure on the social authorities has been increasing, and there are indications that the amount of illegal subletting is on the increase.

Notes 1 There are rather strict rules against subletting a rented apartment and it is only permitted for short periods, such as, for example, when studying in another city. Similar rules apply to the rental of owner-occupied

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References

apartments in multi-family buildings. In both cases, the rent is regulated in the same way as for first-hand contracts.

References Blomé G (2011) Organizational and economic aspects of housing management in deprived areas Doctoral dissertation, Department of Real Estate and Construction Management, KTH, Stockholm. Blomé G and Lind H (2012) Slumlords in the Swedish welfare state: how is it possible? International Journal of Housing Markets and Analysis, 5, 2, 196 – 210. Borg L and Lind H (2007) Behövs allmännyttan för att lösa bostadsfrågan för hushåll med sociala problem: - en pilotstudie. Department of Real Estate and Construction Management, KTH, Stockholm. Boverket (2011) De allmännyttiga bostadsföretagens utveckling och roll på bostadsmarknaden Boverket, Karlskrona. Elsinga M and Lind H (2012) The effect of EU legislation on rental systems in Sweden and the Netherlands. Working Paper, Department of Real Estate and Construction Management, KTH, Stockholm. Sahlin I (2004) Central state and homelessness policies in Sweden: new ways of governing. European Journal of Housing Policy, 4, 3, 345–367. Stockholm Housing Agency (2013) [Online], Available: http://www.bostad.stockholm.se The Swedish Union of Tenants (2011) Unga vuxnas boende, Stockholm. Turner B (1997) MHCs in Sweden: On or off the market? Housing Studies 12, 4, 477–488.

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The towers of the Brandon Estate, built by London County Council in 1955–61 on a bomb site in Kennington, South London. The estate was designed by E Hollamby and included six 18-storey point blocks and 40 low-rise blocks, a doctor’s surgery, a shopping precinct, a public library and a Henry Moore sculpture which is still in place. The estate is often used as a setting for films. Photograph: James Burns.

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7 Social Housing in England Christine Whitehead LSE London, London School of Economics, UK

The housing stock and the changing importance of tenure structure Social housing in England, as in most Western European countries, was originally provided by charitable non-profit organisations with well-specified objectives looking to address the problems of particular groups, including, for instance, employees, those living in insanitary and unsafe accommodation, and women. Subsidies by local authorities to suppliers of rented housing were first made available in the late nineteenth century, although they were very limited. These were replaced between the wars by tenure-neutral supply-side subsidies (in the form of £X per unit) aimed at expanding the overall supply of housing. After World War II, as part of the development of the welfare state, the emphasis shifted strongly towards subsidising publicly owned supply, with around one-half of all new housing output coming from the local authority sector. At this stage, the role of non-profit providers was very small – and not separately identified in the statistics (Holmans 1987).

Housing stock The size of the local authority (and new town-) rented sector in England reached a peak in 1979 at over 5.5 million social rented units, 31% of the English housing stock of 17.7 million units (Table 7.1). At that time, private renting (including a small proportion of non-profit social housing) accounted for perhaps 12% of the stock. The vast majority of these units had either

Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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Table 7.1

Dwelling stock and tenure, England (1961–2011).

Owner-occupied 000s %

Private-rented 000s %

Rented from housing association 000s

1961 1971 1981 1991 2001 2007 2011

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6068 8334 10653 13397 14838 15070 14693

44 52 59 68 70 68 64

4377 3201 2051 1767 2133 3182 4140

32 20 11 9 10 14 18

410 608 1424 1951 2255

Rented from local authority 000s

%

3382 4530 4798 3899 2812 1987 1726

24 28 27 20 13 9 8

Total millions

%

2 3 7 9 10

13.8 16.1 17.9 19.7 21.2 22.2 22.8

Source: Table 104 Dwelling stock by tenure: DCLG Live Tables.

regulated rents or were rent-free. Owner occupation was running at about 57% of the stock, having become the majority tenure in the late 1960s. Since 1979, the size of the social rented sector housing associations has declined by almost a quarter and it now accounts for only 18% of the total stock. Figure 7.1 plots this decline and reflects the extent to which sales to tenants more than offset new supply. Equally, as is also clear from Figure 7.1, the ownership structure of the social sector housing associations completely changed to the point where non-profit housing associations now own the majority of units. The most important reason for the declining importance of the social sector has been the large and continuing expansion of owner occupation to the mid-2000s. By 2005, when owner occupation reached its peak in numerical terms at over 15 million dwellings, it accounted for more than 69% of the total stock of 21.8 million units. Private renting was measured at 12.5% and

Thousands of dwellings

6000 5000 4000 3000 2000 1000 0

1981

1986

1991

1996 Year

Housing associations

2001

2006

2011

Local authorities

Figure 7.1 Decline in stock of social rented housing: sales and other losses outstrip new building. Source: DCLG Live Table 104.

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was beginning to rise rapidly. Social renting therefore accounted for 18% of the total stock – at just under 4 million units. Since 2005, the size of the social sector has stabilised, while private renting has grown rapidly at the expense of owner-occupation (Holmans 2007). The majority of the units lost to social rented housing have been through the Right to Buy. Around 2 million dwellings have been sold to sitting tenants since 1980. Sales were strongest in the 1980s but were still running at a rate of 30 000–70 000 per annum throughout the 1990s and 2000s. However, sales have since fallen to historic lows, mainly as a result of smaller discounts as well as rapidly rising house prices especially in the south of the country. The current government is attempting to increase sales again, but the latest figures show that only around 3500 units sold in 2012 after the introduction of new higher discount rates in April.

Structure and ownership in the social sector In 1979, 93% of social rented housing was owned by local authorities and new towns. Since then, and especially since 1988, almost all new social rented housing has been provided by housing associations and particularly by registered social landlords (Table 7.2). Housing associations are non-profit independent landlords with the responsibility of providing for particular groups of mainly lower income households. Registered social landlords are registered with the regulatory authority – now the Homes and Communities Agency. In addition to the concentration of new building in the housing-association sector since the mid-1980s, housing associations have a policy of large-scale voluntary transfers, through which all or part of a local authority’s housing

Table 7.2 Housing completions by type of developer, England (1961–2011). Private 000s

1961 1971 1981 1991 2001 2007 2011

163.4 170.8 98.9 131.2 114.9 154.2 86.1

%

64 58 58 85 89 87 75

Housing associations (RSLs) 000s

%

1.6 10.2 16.8 15.3 14.5 22.2 25.9

1 3 10 10 11 13 23

Source: DCLG Live tables Table 244.

Local authorities

Total 000s

000s

%

91.3 113.7 54.9 8.1 0.2 0.3 2.2

36 39 32 5 0 0 2

256.2 294.7 170.6 154.6 129.5 176.7 114.2

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Investment in New Social Housing

stock is transferred through a privately funded management buyout to a newly formed housing association (Monk & Whitehead 2000). As a result of both new construction and transfers, the housing-association sector, which owned only 1% of the total housing stock in 1979, now accounts for 10%. Local authorities, either directly or through Arms Length Management Organisations (ALMOs), own only 8% of the stock. Few if any further transfers are expected, especially because under new legislation local authorities have regained the right to borrow to build or renovate housing, although within quite strict limits. Ownership of social housing is thus now spread among some 2000 housing associations (of which nearly 10% are the result of large-scale voluntary transfers) and around 200 local authorities, which have not transferred all of their stock to housing associations. Local authorities only own property within their own boundaries. The majority of housing associations own only in one or two local areas, but a small proportion hold dwellings across the country. Of the 2000 associations, perhaps 250 build new accommodation. At the other extreme, some only manage stock for other organisations. Housing associations are increasingly organised in group structures, which bring together large-scale voluntary transfers, traditional associations providing for general needs, those providing for special needs, and subsidiaries operating in the intermediate market.

Investment in new social housing During the first three decades after the war, the social sector accounted for almost half of all new building (Department of Environment 1977; Barker 2004). But since 1979, new construction in the social sector has fallen both absolutely and proportionately (Table 7.3). It was at its lowest around 2001 when it accounted for only 11% of 130 000 total new homes. Since then it has risen again, accounting for 13% of 175 000 in 2007 just before the financial crisis and a much higher proportion, 25% (of less than 115 000 total) in the continuing recession that began in 2011. A rather different approach to looking at the nature of social provision is to examine the statistics on additional ‘affordable’ homes, which includes not only new social rental but also new intermediate rental and affordable owner-occupied housing as well as existing buildings that have changed use. These show that the number of affordable homes has increased very much more than the figures on housing completions by tenure (Table 7.3) would suggest. Of these figures, there have been about 55 000 new affordable homes per annum since the mid-2000s, but around 40% of these units are for low-cost shared ownership or, increasingly, for intermediate rental at cost rents of around 80% of market levels.

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0.3 38.1

–

32.9

affordable rent. Source: DCLG Live Table 1000.

∗ Including

22.7 15.1

2003–2004

24 9

2002–2003

37.5

1.5

21.7 14.3

2004–2005

46

1.7

23.6 20.7

2005–2006

53.2

1.2

24.7 18.4

2006–2007

55.5

1.1

29.6 22.4

2007–2008

Additional affordable housing by type: England (2002–2003 to 2011–2012).

Social rent Low-cost home ownership Intermediate rent Total

Table 7.3

58

1.7

30.7 22.9

2008–2009

58

2.6

33.2 22.2

2009–2010

60.4

4.5

38.9 17

2010–2011

38.5∗ 16.2

000s of units 2011–2012

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Financing the Social Sector

Looking to the future, government-subsidised new construction is contracted to provide up to 170 000 units between 2012 and 2015 (Department of Communities and Local Government 2011). Most will be rented under the affordable-rents regime, which means that rents can be set at up to 80% of market levels (see ‘Rent determination’). Thereafter, it is expected there will be no more direct subsidies to new provision – although the government is introducing funding guarantees for housing associations, which will reduce their borrowing costs and can, in principle, allow additional investment.

Financing the social sector Until the 1980s, all funding for social housing came from government or from rents. In the local authority sector, it was mainly in the form of revenue subsidies, while the housing association sector received capital grants. The big change came in 1988 when housing associations, by then the only providers of new social housing, were first permitted to borrow from the market against future rental income (Whitehead 1999). When the system was first put in place, average capital subsidy rates were running at over 90%. However, through both increases in rents and competition between housing associations for subsidy, the proportion of costs paid by subsidy fell to perhaps around 50%. Technically, the subsidy is a loan which is subordinated to the borrowing from financial institutions, repayable only on sale of the property (which requires special permission). This technicality reduces the costs of private borrowing and also, in principle, gives central government the capacity to claw back subsidy (as indeed was done in the 1980s). Funding from the private sector came from a relatively small number of financial institutions involved in the provision of mortgages across the housing sector. The risk premium declined rapidly, to between 30 and 70 basis points over the London Inter Bank offer rate (LIBOR), in part because of the safety net of housing benefit, in part because of the comfort provided by the regulatory regime, and because of continuing capital subsidy and thus rents usually well below market levels, which could be increased in the face of financial problems. Since the credit crunch, housing associations have found it more difficult to obtain funds and there has been some re-pricing. As a result, the associations have moved more to the bond market where they have been able to raise £12 billion on very good terms (out of £55 billion in loans currently outstanding). Subsidies to local authority landlords are revenue based and cover any difference between deemed rental income and deemed expenditure (Murie & Mullins 2006). As new output declined in the 1980s, outstanding debt also fell, and this tendency was reinforced by declining interest rates in the 1990s and 2000s. The vast majority of local authorities have therefore been

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required to use rental income to give rent rebates to lower income tenants. More and more of them moved into a position of ‘negative subsidy’ – that is, they made a contribution to the central government, which reallocated it to areas still eligible for subsidy. To address these issues more structurally, the coalition government has reallocated debt across authorities more to equalise commitments. This has given some authorities headroom to borrow to invest in social housing again. Supply-side subsidies to local authorities rose in the 2000s with the advent of the Decent Homes Programme, a government scheme to improve the condition of the social housing stock enough for the dwellings to meet the Decent Homes Standard. Local authorities or ALMOs that achieved efficiency targets were allowed to borrow to undertake this necessary large-scale investment. The programme was technically completed in 2010, but a backlog still remains and other dwellings have since fallen below standard. As a result, local authorities’ new ability to borrow is likely to be used mainly to improve existing stock unless the caps on borrowing are removed. Large-scale voluntray tranfers (LSVT) of housing associations are funded 100% through the private sector except to the extent that they undertake new investment, when they may bid for capital subsidy. Some 1.3 million units have changed ownership through nearly 300 full and partial transfers — but the process is now seen to be almost at an end as local authorities have regained the power to borrow. The valuation of housing stock at time of sale takes account of the investment necessary to bring it up to the Decent Homes Standard and the expected rental income based on regulated rents. In some cases, the estimated value is negative; if so, a dowry is paid to enable the transfer to take place. Overall supply subsidies measured in terms of financial flows to social housing fell very significantly through the 1980s and 1990s, but rose again because of the Decent Homes Programme. Now they are falling rapidly again. The Affordable Homes Programme for 2011–2015 has a budget of only £1.8 billion, little more than one fifth as much as the programme from 2008 to 2011, which included a kick-start package in response to the financial crisis. The number of units provided is likely to be closer to half as many as a result of the affordable rents regime (see subsequent text). In addition, there will be something over £1.5 billion invested under the Decent Homes Programme in improving existing stock (Department of Communities and Local Government 2011; NHF 2011; House of Commons 2012). Looking to the future, the government’s intention is to work towards making the sector self-sufficient – as in the Netherlands and Sweden (Whitehead 2007). Even so, the 2013 budget made additional funding available to social housing providers as part of the attempt to get the economy moving again. However, social providers will be expected to rely mainly on increased rents,

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Financing the Social Sector

the possibility of public land, contributions from developers and landowners and their own reserves to fund investment. In this context, the government has put forward a £10 billion guarantee scheme to support housing association borrowing on the bond market. Measures of economic subsidy using 2007–2008 data suggested that economic subsidies for social housing in England ran at about £7 billion per annum. This reflected the evidence that social rents on average were around 60% of market values (Wilcox & Pawson 2013). Since then, rents in the private sector, especially in London, have risen more rapidly than social rents, so the scale of subsidy has increased. This is a major reason that the affordable-rents regime forms a core element in the policy of the Conservative-Liberal Democrat coalition government elected in 2010 (NHF 2011; Williams et al. 2012). Subsidies overall are increasingly concentrated on helping lower income tenants through rent rebates and allowances. Income-related rental assistance has been available since the early 1970s and has had basically the same structure since 1988. Social tenants receive up to 100% of rent plus eligible service charges, depending on their incomes and household circumstances. The value of assistance going to social tenants has doubled in money terms since the mid-1990s and is now running at around £14 billion per annum. The outcome of this benefits policy is that the median post-benefit rent paid by the roughly two-thirds of social tenant households eligible for assistance is zero, and the mean rent paid is less than 10% of the average dwelling rent (Table 7.4). However, the coalition government has introduced changes to the welfare system, which will mean that many social tenants of working age who technically have a spare room will have their benefits reduced accordingly – so the numbers paying some rent will increase considerably from 2013. The scheme is technically the same in the private rented sector, but there are additional constraints on payments – in particular, private tenants can Table 7.4

Rents before and after housing benefit by type of landlord (2010–2011). £ per week Percentage of tenants receiving housing benefit

Local authority Housing association Private landlord

Rent before deduction of housing benefit

Rent after deduction of housing benefit

Mean Median

Mean Median

Weekly housing benefit Mean Median

65 60

74 84

69 78

7 8

0 0

67 75

67 73

25

160

137

41

16

107

94

Source: DCLG English Housing Survey: Table No. FA3242 and FA3245.

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only claim for rents in the bottom 30% of market rents in the area. The outcome is that most tenants pay some rent themselves and the average rent paid by those on benefit is around 25% of the dwelling rent (Stephens & Whitehead 2013).

Rent determination Social rents were traditionally based on historic cost. Rental income was expected to cover the provider’s financial outgoings less subsidy. Local authority landlords were also permitted to subsidise rents from the general rate fund. In the housing association sector, rents were directly regulated on the same principles as applied to the private rented sector. During the 1970s, local authority rents were controlled as part of general incomes policies, leading to major difficulties for providers in funding basic repairs and maintenance. In the 1980s, it became illegal to subsidise rents from local taxation and deemed increases in rents, which determined the subsidy provided, were set by the central government. This regime continued throughout the 1990s, with rents rising slightly faster than inflation. The financial framework under which housing associations operated changed dramatically in 1988 when rent control for new lettings was abolished in both the housing association and private rented sectors. The 1988 Act gave associations the power to set their own rents at a level that would cover costs and build reserves to enable them to borrow at relatively low-risk interest rates. This resulted in rent rises significantly above inflation, and indeed above the rate of growth of tenant incomes. By 1997, the vast majority of rental income arising from these increases was being paid for by the central government through housing benefit. Rent rises were then regulated, restricting average rises to inflation plus a small percentage (Whitehead 1999). In the early 2000s, the government decided to introduce a rentrestructuring regime across the whole of the social sector, so that by 2012, individual rents would be determined by a formula based on the nominal earnings of local workers, dwelling size and property values (Department of Environment, Transport and the Regions 2000; Department of Communities and Local Government 2007). For the first time, therefore, at least, in principle, rents would be set coherently across the sector and would not be related to the original construction funding as in the past. However, these new ‘target’ rents still had little direct relationship to market or tenant valuation of the stock because of additional constraints. Those in smaller dwellings pay relatively higher rents, while those in large dwellings and in high-priced areas are disproportionately protected from market pressures.

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Rent Determination

The rent-setting regime changed again in 2012 when the coalition government introduced the Affordable Rents policy. Under this regime, social landlords may set rents on newly built, improved or acquired dwellings at up to 80% of market rents, and may also transfer existing units to the new regime on vacancy to support new investment. Rents in the local authority sector rose from around £40 per week in 1990 to £72 per week in 2011–2012, about in line with inflation. In the housing-association sector, they have risen from £44 per week to £80 per week over the same period — somewhat above inflation but well below average income increases. Rents in London are perhaps 20–25% higher than the national average, as compared to an over-60% differential in the owner-occupied sector (not allowing for differences in size and quality) (Pawson & Wilcox 2013).

Using the social sector stock Within the total stock of social housing, not far short of 60% is in the form of houses and bungalows. This compares with over 90% in the owner-occupied sector and over 80% in the overall housing stock. Over the past 20 years, new construction has been increasingly concentrated in flats – and particularly two-bedroom flats. Since the financial crisis, there has been some move back to provision of family-sized units – but this is likely to be short-lived because of welfare changes. Vacancy rates are relatively low across the social sector (Table 7.5), although they rose significantly in the late 1990s when there were growing problems of low demand, especially in older industrial areas. As housing pressure has increased and policy has concentrated on managing the social stock more effectively, vacancy rates have fallen. They still remain higher in lower demand areas, especially for housing association dwellings. Some 8% of social homes in 2010 did not meet the Decent Homes Standard, an official metric that specifies minimum levels of warmth,

Table 7.5 Vacant social dwellings by landlord type, England and two regions (1996–2011). % Housing association (general needs)

Local authority

1996 2001 2006 2011

England

North West

South West

England

North West

2.3 2.9 2.1 1.6

2.8 4.7 2.8 2.1

1.2 1.4 1.4 1.1

2.5 2.8 2 1.4

2.8 4.9 2.9 1.8

Source: DCLG Live Tables 611 and 613.

South West 1.9 1.7 1.2 1.1

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weatherproofing and facilities – mainly because of deficiencies in insulation and energy conservation. Overcrowding is concentrated in the social sector, with 15% of all social tenants overcrowded according to 2011 census figures as compared to 3% of people in the owner-occupied sector (based on the bedroom standard). Moreover, overcrowding has been increasing in all sectors over the past decade. The annual number of new lettings of local authority housing fell from 415 000 in 1995–1996 – roughly the same rate as for the preceding two decades – to 141 000 in 2010–2011. This is partly a result of lower levels of output together with some increases in demolition associated with regeneration, but it is also because outward mobility has fallen in response to affordability problems. Of the new lettings in 1995–1996, 60% went to new tenants, one-third of whom were homeless families. In 2011–2012, 63% went to new households, of which 18% were homeless. In the housing association sector, lettings rose consistently from around 40 000 per annum to 160 000 in 2002–2003 – roughly in line with growth in the housing association stock. Since then, lettings have fallen to below 160 000 in 2011–2012. Somewhat less than 80% go to new tenants, some of whom are moving from local-authority properties. About 12% of lettings to new tenants go to homeless families, but in London that proportion is about double. Figure 7.2 summarises the evidence with respect to new tenants as well as the relative importance of lettings to homeless households. The numbers of statutory homeless households fell to around 48 000 in 2011–2012 from over 120 000 in 2004. An increasing proportion of households that present as homeless to local authorities are being placed in the private rented sector. At the extreme end of need, some 53 000 homeless households, including 77 000 children, were in temporary accommodation at the end of 2012. Problems of homelessness are particularly concentrated in London, where around 1 in 4 of the households accepted as homeless are located.

Who lives in the social sector? The make-up of households in the social sector in terms of household characteristics is very different from that in other tenures – which is hardly surprising as the emphasis since the 1980s has been on housing those in priority need (Hills 2007). Households in the social sector are disproportionately young and old, lone parents, retired or economically inactive (Table 7.6). In part, this is an outcome of the Right to Buy, which enabled economically active households to buy their own homes, but increasingly it is the result of a system that emphasises homelessness and vulnerability in allocations.

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Who lives in the social sector?

400 350

Thousands

300 250 200 150 100 50 0

1997–98 1998–99 1999–00 2000–01 2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 2009–10 2010–11

Year Lettings to homeless households

Figure 7.2

Other lettings to new tenants

Lettings to new tenants in England.

Source: Table 97, 98, 101 UK Housing Review 2011/12.

Of particular concern at the present time is not just the extent to which unemployment is concentrated in the social sector — in 2011–2012, 9.6% of social tenants were unemployed as compared to 3.4% of all households — but the fact that 61% of social sector households include no working member as compared to 36% of all households. However, it is also important to note that over 40% of social renting households include someone with a serious medical condition or disability, almost double the rate for all tenures taken together. About 15% of all households in England have a household reference person (basically head of household) from a minority ethnic group. In the social sector, that proportion rises to of 17.5%. However, this is still an under-representation once poverty and household structure are taken into account. Proportions vary enormously between ethnic groups – with relatively few Indian and Chinese households and relatively large proportions of Caribbean and Pakistani households in the sector. Minority households are concentrated in urban areas and particularly in London. They also tend to be concentrated in particular localities within these urban areas. Tenants in social housing are significantly poorer than both private tenants and owner occupiers. Their median household income is around 60% of the national average. Two thirds of social renting households have a gross

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Table 7.6 Household characteristics by housing tenure (2010–2011).

Couples with children Couples without children Lone parents One-person households under age of 60 One person households 60+ Economically active Retired Median income

A11 %

Owneroccupation

Social renting

Private renting

21

16

19

21

43

16

25

35

3 10

17 20

12 23

7 14

15

24

6

15

54 32 £31 500

33 31 £14 800

69 8 £23 200

59 28 £25 400

Source: English Housing Survey.

income of less than £300 per week, as compared to about 30% of households in all tenures. In part, this reflects the numbers of older and inactive people in the sector, but it also reflects lower earnings among employed social tenants. Finally, social tenants are generally satisfied with their accommodation, although the sector has the highest proportion dissatisfied at 20% (as compared to 16% in the private rented sector and below 5% in owner occupation). The pattern for satisfaction with the neighbourhood is similar; in both cases, it is younger households that are dissatisfied (Hills 2007).

Looking to the future During the past decade there has been significant investment in the existing stock through the Decent Homes Programme as well as large-scale investment in new investment and regeneration during the last years of the Labour government. The emphasis has now shifted away from supply subsidies, in part because of the need to reduce public debt but also because there has been an ideological shift towards more targeted income-related support. Social housing at its worst is seen as featherbedding tenants who do not taking the opportunity to find work and to move on. General supply subsidies are being phased out and replaced by subsidies in kind, such as public land, and by guarantees that enable housing associations to borrow at lower interest rates. The effect of this will be to increase rents to up to 80% of market levels (although a much lower proportion in London)

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Looking to the Future

and to shift the burden of support on to income-related benefits. Together with a number of other state benefits, these are being subsumed into a new Universal Credit, under which payments to any individual household will be limited to around £500 per week – with the aim of ensuring that ‘work always pays’ . In many ways, these changes are a continuation of longer term trends – but in a period of austerity where cutbacks are the order of the day (Stephens & Whitehead 2013; Williams et al. 2012). The government is committed to the provision of 150 000 additional affordable homes by 2015, but it is not at all clear what the implications of these changes are for levels of social rented investment after that. The borrowing powers of many housing associations will run out even though they can raise rents, and they face higher risks because of cutbacks in income-related benefits – so they are currently being cautious. Local authorities are likely to use their new borrowing powers mainly to improve existing homes, but they might also undertake some new investment. The outlook is probably less bleak than it currently appears, if only because the government sees housing as an important vehicle for improving economic growth – but the future is more uncertain than at any time since the early 1980s. One important shift in policy, particularly since the turn of the century, has been the emphasis on intermediate housing (Monk & Whitehead 2010). This policy, which is likely to continue, aims to assist those unable to afford full owner occupation through the provision of shallow subsidies and access to finance, notably through equity sharing. Associations have also shown growing interest in providing affordable-rent and now market-rent accommodation. Intermediate housing is also part of the mixed-communities agenda, as much of the new housing built by developers under s106 planning obligations goes to employed households. On the other hand, there has been a big shift away from regeneration schemes as, without capital grants, these are seen as simply too expensive. This position has worsened in the wake of the financial crisis, which eradicated much of the land-value uplift that higher density regeneration schemes were able to generate. Nowadays, schemes that do go ahead are likely to require much higher proportions of market housing — and this position is unlikely to be reversed in the next few years. In terms of who is being housed, the biggest shift over the past few years – which was started by the Labour government and has been continued by the coalition — is a significant reduction in the use of social housing to accommodate homeless households, with homelessness prevention and assistance now being concentrated in the private rented sector (Pawson & Wilcox 2013). In the face of actual and potential welfare cuts, housing associations are re-evaluating their allocation systems and may focus more on housing lower income employed households, leaving a gap in provision

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for the least well-off. Finally, security of tenure – historically a given for social tenants – is being eroded both through the use of short provisional tenancies and the introduction of fixed-term tenancies. Many of these changes are still to play out and predictions are currently difficult to make. Current social tenants are still getting a good deal even if the terms and conditions are worsening for new entrants. In the future, it is likely that there will be greater integration of the rented sector overall – with social landlords providing intermediate and market housing on the one hand, and private landlords seeing opportunities to provide affordable homes in certain contexts. But the biggest unresolved issues remain around the increasing costs of housing-related welfare benefits and the low levels of new housing investment across all tenures. One possibility into the medium term is that social housing will again be seen as a cost-effective way of providing adequate housing for all – both through new building and low rents. The more likely scenario is that the next few years will see a continuation of current trends: a shift away from direct support to social housing towards more restrictive demand-side subsidies available in both rented tenures, together with increasing support for new private-sector construction.

References Barker K (2004) Review of Housing Supply: Final Report HM Treasury, London. Department of the Environment (1977) Housing Policy: A Consultation Document Cmnd 6851, HMSO, London. Department of Environment, Transport and the Regions and Department of Social Security (2000) Quality and Choice: A DecentHome for All DETR/DSS, London. Department of Communities and Local Government (2007) More Affordable, More Sustainable Homes for the Future Cm 719, DCLG, London. Department of Communities and Local Government (2011a) Laying the Foundations: a Housing Strategy for England Department for Communities and Local Government, London. Hills J (2007) Ends and Means: the Future Roles of Social Housing in England CASE, LSE, London. Holmans AE (2007) Abstract of Housing Historical Statistics, CCHPR, Cambridge. Holmans AE (1987) Housing Policy in Britain: a History, Croom Helm, London. House of Commons, CLG Select Committee (2012) The financing of new housing supply 11th Report, House of Commons, London [Online], Available: http://www.publications. parliament.uk/pa/cm201012/cmselect/cmcomloc/1652/165202.htm National Housing Federation (NHF) (2011) Radical Reform: Real Flexibility – Delivering the New Investment Framework National Housing Federation, London. Monk S and Whitehead C (2000) Restructuring housing systems from Social to Affordable Housing, York Publishing Services, York. Monk S and Whitehead C (2010) Making Housing More Affordable Wiley Blackwell, Oxford. Murie A and Mullins D (2006) Housing Policy and Practice Macmillan, London.

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Stephens M and Whitehead C (2013) Rental Housing Policy in England: post crisis adjustment or long term trend? Journal of housing and the built environment [Online], Available: http://eprints.lse.ac.uk/55138/. Whitehead C (1999) The Provision of Finance for Social Housing. Urban Studies, 36, 4, 657–672. Wilcox S and Pawson H (2013) UK Housing Review 2013 Chartered Institute of Housing, Coventry [Online], Available: http://www.york.ac.uk/res/ukhr/ukhr13/index.htm Williams P, Whitehead C, Clarke A and Jones M (2012) Freedom to Succeed: Liberating the Potential of Housing Associations CCHPR, Cambridge.

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This image of the graffitti wall within the Cité ‘Jean Moulin’ in Gagny, Ile de France, represents the multi-ethnic character of many Habitation à Loyer Modéré (HLM) housing around the country and, particularly, in the outskirts of Paris. It is currently managed by ICF Habitat La Sablière. Photograph: Nicolas Oran.

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8 Social Housing in France Claire Lévy-Vroelanta , Jean-Pierre Schaeferb and Christian Tutinc a Department

of Sociology, University of Paris 8, Vincennes – Saint-Denis, France b Conseil National des Villes, Saint-Denis, France c Lab’Urba, University of Paris-East Créteil, France

Introduction: the current position of social housing in France France’s housing stock consists of 33 million dwellings overall, of which 27.8 million are principal dwellings. Social housing, known as habitation à loyer modéré (HLM), accounts for 4.5 million of these, and accommodates 16% of households. Figure 8.1a and b show the tenure structure of French housing. The numbers of owner occupied and social homes have both roughly tripled since the 1960s. The number of private rented dwellings has remained almost constant, and private renting has fallen as a proportion of the stock.

Stock and structural characteristics Since the 1960s, three distinct types of social housing have been produced, targeted at households of different income levels. There have been various programmes, each with its own acronym; the current ones are standard social housing (PLUS) ‘very social’ housing for lower income households (PLAI), and upper income social housing (PLS). Half of the social housing stock was built before 1976 and one fourth (1.12 million units) between 1966 and 1975, a decade which saw the construction of more than 110 000 units per year, many on large estates on the peripheries of urban areas. By the 1990s, production had fallen to Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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(a) Thousand of households (or dwellings)

Housing tenures in France 1963 –2006 16 000 14 000 12 000 10 000 8 000 6 000 4 000 2 000 0

1963 1967 1970 1973 1978 1984 1988 1992 1996 2002 2006 rental (private) owner occupiers

(b)

rental (social) miscelleanous tenures

Housing tenures in France 1963 –2006

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

1963 1967 1970 1973 1978 1984 1988 1992 1996 2002 2006 rental (private)

Figure 8.1

rental (social)

owner occupiers

other tenures

(a and b) Housing tenures in France 1963–2006.

Source: INSEE ENL 1963–2006.

56 000 units per year, and dropped further to fewer than 40 000 per year in 2000–2004. But since 2005 production has increased, reaching nearly 100 000 dwellings in 2011 (Table 8.1). The net balance (construction minus demolition for urban renewal and 5000 sales to tenants/year) was above 50 000 in 2011, which makes France one of the only European countries (together with Denmark) where the social rental stock is increasing both in absolute and relative terms. About 85% of social housing units are flats. The share of individual houses is increasing slightly and is now almost one fourth of new production. Buildings or estates with more than 100 units make up one third of the stock, but 56% of these are in the Paris metropolitan area. Large estates of more than 500 dwellings represent less than 6% of the stock nationally, and 12% in the Paris metropolitan area. New developments in the past 20 years have averaged around 23 dwellings per building.

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Table 8.1

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Social housing stock.

HLM production per year Total HLM stock

1990

2000

2005

2010

2011

47 000

38 000

54 400

98 000

105 000

3 226 000

4 180 000

4 347 000

4 524 000

4 576 000

Source: Ministère de l’Écologie, du Développement durable, des Transports et du Logement EPLS 2011.

Location The history of social housing has paralleled the country’s industrial and economic development, and the social stock is concentrated in large cities. Two thirds of it is located in towns with more than 100 000 inhabitants. There are concentrations in old industrialised areas, notably around Paris and in the Seine and Rhône Valleys in the north and east, but less in the south-eastern and western parts of the country. While 16% of the overall stock is social, the percentages in each urban area vary according to their size, level of economic development and location. French metropolitan areas encompass many individual municipalities. Some 90% of the HLM stock is concentrated in fewer than 2100 municipalities, which together house 60% of the population. The remaining 10% of the stock is scattered among 14 000 municipalities, where 28% of the population lives. Finally, 20 465 municipalities – containing 12% of the population – have no social housing at all. This spatial polarisation is particularly strong in very large urban areas like Paris, Lyon and Marseille, but less evident in cities like Lille, Grenoble or Rennes. We estimate that 40% of the population has a restricted choice of housing tenure, owner occupation being by and large the only choice in their local areas, especially if the private rental supply is not consistent. Within individual cities, there are less attractive peripheral estates, and more desirable central ones. France’s 752 most deprived neighbourhoods, or ‘Sensitive Urban Zones’ (ZUS), contain nearly 1 million HLM dwellings (about one-fourth of all social rental). On average, 60% of households in these areas are social tenants, compared to 21% overall in urban areas.

Management and standards In France, the minimum size of housing units is defined by law.1 The social housing sector is more regulated and floor areas are larger than in the private rented sector (Table 8.2). Overall, the quality of dwellings is fairly decent; the older stock, built between 1960 and 1980, is of lower quality in terms of technical performance and urban facilities. Dilapidated estates are currently being demolished or refurbished under urban renewal programmes.

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Table 8.2 Average floor area by tenure (m/person).

Owned outright Owned with a mortgage Social rented Private rented

1984

1996

2010

40 29

47 32

55 36

28 24

31 27

34 31

Source: INSEE ENL 1984,1996, 2010.

Table 8.3

Household views of dwelling quality by tenure.

Tenure type

Good quality

1 or 2 faults

3 faults

64.8 74.4

33.2 24.5

2.1 1.1

0.3 0.8

63.7 55.1

34.6 40.0

1.7 4.9

2.0 5.4

Owned outright Owned with a mortgage Social rented Private rented

Overcrowded

Source: INSEE SRCV 2010.

Altogether, with the exception of the ZUS residents (one-fourth of social housing stock), more social tenants than private tenants are satisfied with their housing conditions (64% vs 55%) (Table 8.3). In recent years, the focus on standards within the social rented sector has shifted towards sustainability and in particular on energy and water consumption. Under a plan for thermal renovation launched in 2009, 800 000 social housing units will be improved by 2019. Nevertheless, fuel poverty is a growing concern. In spite of this broad programme (financed with off-market loans from Caisse des Dépôts, CDC), higher contributions might be required from HLM organisations and tenants (through rent supplements). The commitment of the government to renovate more units per year might be a difficult challenge.

Recent trends: social mix and urban renewal The State has used two principal mechanisms in the past 12 years to try to achieve tenure mix. Section 55 of the 2000 law of Solidarité et renouvellement urbain (SRU) stipulates that HLM dwellings should by 2020 account for at least 20% of the total housing stock in all municipalities with more than 3500 inhabitants (1500 inhabitants in the Paris region). This requirement applied to 1770 municipalities, which account for 56% of the country’s population. While nearly 60% of the concerned municipalities already reach this figure, the remaining 40% (731 municipalities) still have to fulfil it into 2020. The present government intends to impose higher fines on

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Table 8.4 Social housing financed since 2003 under various schemes (housing units including home for elderly, hostel).

PLA-I /PLUS (general) PLS (intermediate) Total new social housing units

2003

2004

2005

2006

2007

43 700

52 100

58 400

65 500

69 900

14 300

22 800

27 900

37 600

58 000

74 900

86 300

103 100

2008

2009

2010

79 000

106 900

102 000

38 100

38 400

40 400

45 700

108 000

117 400

147 300

147 700

Source: Ministère de l’Écologie, du Développement durable, des Transports et du Logement.

municipalities reluctant to take serious steps towards the 20% targeted, which might become 25% in some areas. Fines, which totalled a modest €12 million in 2011 and are used for financing social housing, will also be augmented. The second mechanism for the promotion of social mix was through the National Urban Renewal Programme (PNRU) launched in 2004. The aim is to insert owner occupied and middle-class households into neighbourhoods with strong concentrations of social dwellings, in order to favour both social and tenure mix. This comprehensive programme, which includes heavy renovation of existing stock, should be operational at least until 2018. So far there has been no comprehensive or consensual assessment of the effects of these two policies. Diversity is improving, as shown by owner occupier programmes developed in areas where they were scarce. There is no doubt that the achievement of a truly balanced, sufficiently diversified and affordable supply of social housing everywhere is highly challenging. French HLMs include standard, lower (or very social) and upper (or intermediate) social housing, defined by the level of rent and level of income for allocation. The loan types for these programmes are known respectively as PLUS, PLAI, and PLS loans (see ‘Introduction: the current position of social housing in France’). In recent years total production has increased, but the percentage of social housing for higher-income groups (PLS) rose from 25% in 2003 to 31% in 2010 (Table 8.4). A single building might contain dwellings from more than one category.

Historical development of social housing The mainstream image of large estates as pervaded by management, social and environmental problems is somewhat paradoxical given the fact that the social housing sector was a pioneer in architectural design, standards and maintenance. The innovators of the social sector (Jules Siegfried, Laurent Bonnevay, Henri Sellier), acting a century ago as ministers, mayors

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Historical Development of Social Housing

and regional counsellors were guided by hygienist and moralistic norms and views. The earliest social housing was built before World War I by philanthropists and more ‘enlightened’ entrepreneurs to house their workers (SA Habitations Bon Marché (HBM)2 1894). The government then enacted legislation aimed at providing housing for waged workers and employees ‘unable to find accommodation by their own means on the free market’. The Bonnevay Act (1912) created the HBM Public Offices. The HLM Act (1949) was enacted to ensure ‘decent housing conditions’. In 1953, a 1% tax on wages was brought in to provide ring-fenced funds for housing investment, involving employers in the social housing effort. Yet while the legal and political framework was created in the early twentieth century, the stock grew significantly only after World War II. The HLMs’ mission was then to provide decent homes for the whole range of salaried workers in a context where rental housing was the normal tenure. But the tremendous shortage of housing endured because financial efforts during the reconstruction decade (1945–1955) were primarily oriented towards the reconstruction of industry, public utilities, and military expenditure. Yearly production of housing was below 100 000 dwellings, of which only 10% were HLM at the beginning of the 1950s. The rate of construction of social housing rose exponentially from the end of the 1950s until 1972, the year with the highest number of total housing starts ever (550 000). From 1980 to 2010, average housing starts were 320 000 per year of which 50 000 were social housing. The beginning of the 1980s was marked by protests and riots that emerged from deprived social housing areas. In 1988, the so-called politique de la ville was introduced to address this crisis of the suburbs by tackling exclusion in socially deprived areas. The upheavals of the period led to lower levels of demand and higher vacancy rates and turnover, at least in those localities, which in turn negatively influenced the production of social housing. This fell to below 50 000 dwellings a year from 1992–1997 and remained at historically low levels until 2004, when the PNRU planned 200 000 demolitions, 200 000 new buildings and 200 000 refurbishments in ZUS’s with controversial outcomes3 (Tutin 2008; Lelévrier 2010; ONZUS 2011). The early phases of this programme were marked by the urban riots in late 2005. Recently, social housing production has increased, reaching over 100 000 units in 2011 (Table 8.5). Over the past 20 years, the HLMs’ share of total housing construction has ranged from as little as one-eighth up to one quarter when private production went into crisis (1993, 2008). In the 1960s, the social sector became a normal step in the middle-class residential career, reflecting over-occupation in the private rental sector and quantitative shortage of housing. Since then, selective mobility, combined with the overall growth of home ownership, has meant that social housing has become increasingly (although not exclusively) a tenure of poorer

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Table 8.5

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Housing starts 1990–2011.

Total housing starts Of which social rental Private rental Owner occupation

1990

2000

2005

2009

2010

2011

316 000 47 000 43 000 226 000

311 000 38 000 39 000 234 000

440 000 54 000 74 000 312 000

330 000 80 000 48 000 213 000

374 000 98 000 56 000 223 000

420 000 105 000 66 000 254 000

Source: Ministère de l’Écologie, du Développement durable, des Transports et du Logement 2011.

households. The current long-lasting economic crisis has contributed to the in situ impoverishment of social housing tenants. The HLM sector faces new demands, both with regard to aspirations to individual houses (over 80% of the social stock is made of multi-family dwellings) and with regard to physical and environment quality (Box 8.1). Box 8.1 Recent milestones in social housing. 1977

1981 1982 1990

1991

1995

2000 2005

2007 2009

2011

The Barre Reform reduced construction subsidies and increased personal allowances, which were granted to all low-income households regardless of tenure. The goal was to create a unified market with loans for the social rental sector (PLA) and for subsidised ownership (Prêt d’Aide à l’Accession à la Propriété – PAP). The first urban riots occurred in Lyon’s suburbs, leading eventually to the Politique de la Ville (the creation of a Ministère de la Ville followed in 1990). Mayors got the right to issue building licences, starting a decentralisation process that is still unfolding. The Besson Act tried to address the growing problem of homelessness and inadequate housing by requiring local authorities to develop new schemes and tools for helping households facing rent arrears or increasing fuel charges. It mentions the need to ‘guarantee the right to housing’. Local housing programmes (PLH) were introduced and urban planning became increasingly a local rather than a central responsibility. ‘Sensitive neighbourhoods’ (1991) were identified as a way to target urban renewal programmes for large housing estates more efficiently. Designation of ‘Sensitive Urban Zones’ (752 ZUS in 2012), areas defined by socioeconomic indicators, including household incomes, unemployment rates and percentage of social housing, to receive special attention and support from national and local authorities. The concept of appropriate zoning and the goal of ‘social mix’ are debated. Section 55 of the SRU Act required towns with more than 3500 inhabitants to have 20% social housing in order to tackle spatial segregation through social and tenure mix. National Agency for Urban Renewal (ANRU) is created to develop a national plan for urban renewal, and the Social Cohesion Plan (PCS) promises an increase in social housing production. Law n∘ 2007-290 creates a legally enforceable ‘right to housing’, and sets out which types of households should be given priority for social housing. The Solidarity and Urban Development Law confirms a trend for increased social housing construction. The State takes control of the money raised by the 1% social housing levy on large employers, formerly under a collaborative management between employers’ and employees’ representative organisations. Some 100 employers’ fund organisations, which together manage €3.5 billion, merge to form 25 new organisations. More than 100 000 social housing units were started.

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Organisation of the social housing sector

Organisation of the social housing sector Providers, owners and managers Social rental housing programmes are owned and managed by two main kinds of providers: Public agencies (offices publics) chaired by local authority representatives; Social housing companies (SA HLM, limited liability companies) and, private, non-profit social providers called Entreprises sociales pour l’habitat (ESH). Rules for financing and managing are similar for both. Public agencies may choose to follow either public or private accountancy rules and private companies must include representatives of local authorities and tenants’ associations on their board of trustees. Offices and SA HLM both fall under the remit of the umbrella organisation L’Union sociale pour l’habitat (USH). At present, some 551 social landlords (HLM) manage 4.2 million dwellings. Other organisations involved in social housing are semi-public companies (SEM) with the local authorities as shareholders, which manage around 0.3 million social dwellings. A small amount of social housing, accommodating very poor households requiring additional social support, is owned and managed by non-profit associations. All social housing is managed on a professional basis. Social landlords are their own developers, but in recent years some new dwellings were sold to HLM bodies by private developers. Some organisations might merge with others or create larger associations as a way of sharing technical departments and expertise in land, building and commercial action. The organisations vary in size depending on the size of municipalities: those in small towns may manage around 2000 dwellings, whereas Paris Habitat (the municipality’s social landlord) deals with 115 000 units and a turnover of €800 million.

How social housing is managed and regulated The monitoring of social housing is shared between central government and local authorities. The latter are also responsible for urban planning. They provide collateral for social housing (HLM have €110 billion in outstanding loans). The decentralisation process initiated in the past 20 years has increased local authorities’ powers in the field of housing. Approximately half of the production of new social housing is a direct result of local authority decisions. While central government still defines housing needs, approves projects and decides on the amount of subsidy (and the number of long-term loans) to social housing, local authorities supervise social landlords, co-finance social housing programmes and are in charge of urban planning. Since the 2004 Decentralisation Law, groups of local authorities

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(EPCI4 ) may be responsible for approving and distributing grants for social housing. These grants represent less than 5% of the construction cost, but can leverage in other financing. Local authorities fear, however, that government will also transfer the financial burden of social housing to them, as the level of national budget subsidies is steadily decreasing and the cost of building increases. Development of nation-wide HLM organisations is sometimes suggested as a way of better monitoring the supply. A single group may own more than 200 000 social dwellings. This process, which is criticised by the locally based HLM organisation, could lead to a polarisation between large SA HLM as ‘global’ market operators and small organisations dedicated to the local management of social needs. Residents’ involvement in this process, either locally or through their national unions, has been minimal. The social landlords’ commitment to maintenance of the built environment remains a rather sensitive question, as maintenance expenditure is often cut when budgets are tight.

Financing social housing In 2011, the average construction cost of an average social rented dwelling was €140,000.5 Of this, 75% was financed by off-market loans, 15% by grants from the state and local authorities and the remaining 10% by equity from the HLM organisations themselves. The proportion of equity needed is higher (up to 25%) for ‘very social’ housing (PLA-I) targeted at lower income households, with rents under €6/m2 /month. Collateral for the loans is provided by the local authority concerned or by a special Guarantee Fund for Social Housing (financed through contributions paid by all social housing organisations). Social housing is financed at submarket interest rates and is not subject to the vagaries of world financial markets. The off-market loans are financed by funds deposited by private individuals in so-called Livret A accounts, a tax-free savings account6 available in all banks. Some 65% of these deposits are centralised in CDC, a special financial institution which has €220 billion under management and lends €6–12 billion annually for social housing and urban renewal. The loans are granted at cost (Livret A interest rate + 0.6%) and the terms and conditions are the same for all housing organisations. Construction loans are granted for 40 years (20% financed on a 50-year basis), and 15–30 years for refurbishment and modernisation. The interest rate may be changed twice a year. In mid-2012 the rate was 2.85% (2.25 + 0.6%). This rate is below most commercial loan rates (roughly 1% below market rate), but its most important feature is the duration (40 years), which has no equivalent on the commercial market.

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HLMs pay a reduced rate of VAT (7% instead of 20%) on construction and benefit from a 25-year property tax exemption, provided they have contracted with the government and abide by conditions regarding rent levels and tenant eligibility. Unless the dwellings are sold to tenants or demolished, HLM housing remains under social regulation forever.

Taxes and subsidies As a result of the move from bricks-and-mortar subsidies to demand-side policies initiated in 1977, direct grants to social housing from the state budget are now limited, and have been fairly so for the past 10 years, with roughly €518 million granted for social housing in 2011 (Table 8.6). The low-interest off-market loans provided to the social housing sector are not counted as state subsidies, as they are funded by private savings. A programme of near-free (or far under market price) transfer of public land to social landlords is under discussion. The main form of official housing expenditure (for social and private housing) is tax breaks, which do not appear in the housing budget (Table 8.7). The special low rate of VAT, a powerful tool (7% instead of standard 20%), applies to refurbishment and repairs of any housing (private or social) and is basically a form of support for the construction industry.7 From August 2007, first-time buyers could deduct the interest on mortgage loans from their taxable income; there was no income ceiling. This very costly policy, which had little impact on the supply, was cancelled in the 2012 budget. Since 1984, various fiscal incentives have been offered in an effort to increase the supply of private rental housing. Investors had to accept rent ceilings and minimum rental periods. These programmes have contributed to the provision of 40 000–70 000 new units a year, (1.2 million dwellings in 25 years8 ). But they did not meet social needs: rents on these dwellings are close to market rents and the constraints on access (tenant income ceilings) were enforced weakly or not at all. A new fiscal scheme for 2013–2014 might target incentives more tightly, both socially and geographically. Direct local authority subsidies to the social sector (for new construction and/or refurbishments) are difficult to compute as they can be in the form Table 8.6

Government housing budget 2011 (€m).

Personal allowances (housing benefit)∗ Housing shelter/ Homeless Urban renewal Housing policies (including social housing) Total ∗ This

5285 1185 618 518 7607

proportion is imputed to the housing budget; the balance is charged to the social security budget. Source: Ministry of Finance 2011.

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Table 8.7

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Tax incentives related to housing 2011 (€m).

For all housing Lower VAT on home repairs/ refurbishment Fiscal rebate on energy saving and home refurbishment Miscelleanous For owner occupied housing Fiscal rebate on interest for first time home buyers (deleted in 2012) Lower VAT for owner occupation in Urban renewal areas Grant for low-income home buyers (financed through a fiscal rebate to bankers) For private rented housing Fiscal rebate for investor in private rental housing For social housing Lower VAT for social housing Fiscal exemption (notably on property tax) for social housing companies Total

5050 850 949 1900 100 1060

930 1000 700 12 539

Source: National Budget in USH Mémento statistique 2011.

of direct subsidies or provision of cheap land; it is estimated that they total around €1.4 billion per year. Personal subsidies for housing rose from under €5 billion in 1984 to more than €15 billion in 2009 (Table 8.8), and now represent the main budget heading for the Ministry of Housing. Housing benefits are paid to 6 million low-income households (85% of which are tenants, 8% mortgage borrowers and 7% others). Half of social tenants received housing benefit at an estimated €5.7 billion in 2009. One-third of housing allowances go to social housing tenants.

Rents Rents in the social rental sector are determined by formulas linked to the original cost of construction and the way the building was then financed. Older buildings may have cheaper rents, reflecting the fact that before 1977 higher bricks-and-mortar subsidies were available. In 2011, the median rent Table 8.8

Personal allowances by tenure, 2009 (€b).

Tenure Personal allowances

Owner occupier

Social housing

Private rental

Total

1.0

5.5

8.5

15.0

Source: Comptes du Logement Edition 2010, p. 261.

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Rents

Table 8.9 (€/m2 ).

Maximum rents 2012 by location and housing type, for new construction

Location

Paris metro area

Paris region

Large cities

Middle-sized cities

Other areas

Very social housing PLA-I

5.7 €

5.4 €

4.7 €

4.4 €

4.4 €

Standard social housing PLUS

6.4 €

6.1 €

5.3 €

4.9 €

4.9 €

Intermediate social housing PLS

12.6 €

9.7 €

8.3 €

8.0 €

7.4 €

Private rental with tax incentives (Scellier scheme)

21.7 €

16.1 €

13.0 €

10.6 €

6.1 €

Intermediate private rental (with tax incentive Scellier scheme)

17.4 €

12.9 €

10.4 €

8.5 €

4.9 €

20–30 €

15–20 €

12–15 €

10–15 €

7–14 €

Free market (estimation according to CLAMEUR-rent observatory and FNAIM Real Estate federation)

Source: Free market (estimation according to CLAMEUR-rent observatory and FNAIM Real Estate federation).

(of the existing stock) was €318/month; the maximum rent in 2011 for new dwellings is given in Table 8.9. The gap between social and private rents helps explain why the mobility rate is lower in the social sector; other factors include better management and quality standards in the social housing and the larger average dwelling size. The mobility rate in the social sector averages 10% per annum, and ranges from about 6% in tight markets (Paris and south-east France) to 12% in regions where owner occupation is more developed and prices are more moderate (East, Centre West).

Social versus private rents Rents vary much less in the social than in the private sector. This reflects the regulation of HLM rents, the period of construction, and the relative homogeneity of the stock. Rent variations have little to do with location, the only significant geographical difference being between Paris and other cities. Rents in the social sector are much lower than in the private sector, especially in large cities. The difference is 30–40% on average, but can be much higher in bigger towns (notably in Paris, where the ratio of social to private rents is 1:3 or 1:4) and areas with bullish housing markets. Just as house prices have increased since 2003, so has the discrepancy between private and social rents. This has made it more difficult for better-off tenants to leave the social sector and enter the private market, especially owner occupation, thereby reducing mobility in the social sector. The gap between social and

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Income ceilings by category of HLM, household type and location (2012)

Household type

Single 3 Persons or single parent with child

Lower social (PLAI) Ile de Rest of France France 1140 2430

990 1730

Standard social (PLUS) Ile de France

Intermediate (PLS) Rest of France

2075 3715

1800 2890

Lower social (PLAI) Ile de Rest of France France 2690 4830

2340 3750

Source: Ministry of Housing 2012 ceiling based on fiscal income of year 2010.

private rental can be narrower in more relaxed markets, where an old private rental dwelling might rent for the same as a brand-new social home. Such competition opens debates about the right level of social housing supply in low-demand markets. The private rental sector accommodates about 1 million poor households (those with incomes below 30% of HLM ceilings, see Table 8.10), including a large number of mobile households, non-citizens and young people in their first independent homes. The extent to which it houses lower income groups depends on the pressure in the local housing markets, which in turn is linked to the size of the social housing stock. In the Paris metropolitan area and in the Mediterranean region, less well-off households are often tenants in the private sector, while in rural areas similar households are more often owners. Where social housing is less developed, poor households and migrants have to find accommodation in the least desirable part of the private rented sector, where rents can be high even for low-quality flats. At the same time, an important segment of the private rental sector, made of large and high-quality old flats – notably in Paris – is devoted to upper middle-class households.

Access and allocation Eligibility The French system of social housing aims to accommodate a mix of low-income and lower middle-class tenants and belongs to the ‘generalist’ family (Ghékière 2011), as opposed to residual or targeted systems. Nevertheless, new tendencies have appeared over the past two decades, and new tenants are overwhelmingly poor. The total number of applicants for social housing is around 1.4 million households nationwide. To qualify, a household must have an income below the relevant ceiling and not be owner occupiers. The income ceilings vary by region and the type of housing product (standard, upper or lower), which

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Table 8.11 Income distribution of HLM tenants, 1973–2006 (%). Year

Lowest quartile

2nd quartile

3rd quartile

Top quartile

1973 1984 1992 2006

12 26 32 36

29 33 33 32

35 28 24 23

24 13 11 9

Source: INSEE ENL National Housing Survey 1973–2006.

is determined by the funding regime under which the housing was built (Table 8.10). The highest income ceilings would admit 80% of tenants (who make up 46% of households in France), so one third of households in France are technically eligible for social housing. In practice, though, almost 70% of applicants are from the poorest 30% of households. The income ceilings are increasingly irrelevant as so much demand comes from households with incomes well below these levels, so while the French social housing sector is still theoretically generalist, it is de facto more and more targeted (Table 8.11). Each year an income enquiry is carried out among all social tenants. If a household’s income exceeds the eligibility ceiling, local authorities may apply an additional rental charge, the Supplément de Loyer de Solidarité. This is not compulsory in urban renewal areas, where social mix is a major concern. Under certain conditions it is even possible, under a 2009 law, to evict tenants whose incomes exceed the ceiling, although this has not happened much in practice. More broadly, there is a tension between two objectives: achieving social mix (and not discouraging middle-income households from remaining in social housing), and housing the poorest households. In the Paris region, 6–8% of sitting tenants might be affected by the additional rental charge, but given conditions in the Paris rental market, the surcharge is not high enough to induce tenants to move.

Proportion of income devoted to housing by tenure The rent-to-income ratio (Table 8.12) shows two different trends. Poorer families pay more of their income for housing than wealthier ones no matter what their tenure is; but housing benefit reduces the burden on the lowest-decile households from 33% of gross income to 10% of net income. For all social tenants, the rent-to-income ratio is 17.7% without housing allowances, and 13.3% with them. HLM providers are keen to protect their low-income tenants, but, generally speaking, the amount of low-rent HLM housing has decreased relative to other types. Owing to the continuous

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Table 8.12 Housing expenditure by social tenants and all households, by income (% of income). Household income levels

Poorest (decile 1) Low-income (deciles 2 & 3) Others (deciles 4-10) All tenants

Gross expenditure All households

Social tenants

40.1 24.9 16.9 19.7

33.4 21.2 14.4 17.7

Net expenditure (after benefits) All households

Social tenants

16.1 16.7 16.1 16.2

10.0 13.1 13.4 13.0

Source: INSEE ENL National Housing Survey 2006.

impoverishment of tenants, more than 13% of households in the social sector might be in rent arrears, a rise of 57% in the past 4 years. Losses for HLM organisations on account of rent arrears are estimated at 1% of total rents (€161 million in 2009).9 Prevention of rent arrears is an important task of social housing managers in a context of increasing precariousness.

Allocation procedures Social housing units are allocated through a complex system involving various actors: social landlords, municipalities, associations and the government’s local representatives (préfets). By law, the State is responsible for 30% of the allocations, the municipalities 20%.10 In practice, when a unit becomes vacant, a local commission decides who should fill it. A 2005 law aimed to simplify the allocation procedure by giving each applicant an individual number and monitoring demand centrally. However, it is at the local level that supply and demand are important, and lack of supply requires negotiation among various actors, who have different amounts of power. Most admit that ‘allocation has become a very delicate exercise, very technical, requiring strong partnership and highly challenging from a political point of view’ (according to the USH chairman in his 2009 address to the USH Congress in Toulouse). Some priorities are set nationally (e.g. in the so-called droit au logement opposable (DALO) law,11 which identifies households in poor or temporary housing, the homeless, long-term unemployed or recently re-employed, differently abled people and victims of family violence), but these priorities may be interpreted very differently in individual localities. Vacancies in social housing are filled from waiting lists. The law stipulates that applicants must not be required to wait an ‘abnormally long time’, and each council defines for itself how long that is. The number of applicants facing ‘abnormally long’ waiting times (which can range from two months to four years) provides an indication of the level of excess demand. This shows large geographical variations in local housing markets. Vacancy

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rates in the social stock are generally lower than the average for all housing (around 4.1% vs 6.7%). The vacancy rate (less than three months) in the private rental sector is 2.8%, and ranges from less than 2% in the Paris region to 5% in lower demand areas. The structural vacancy rate in social housing (above three months) is on average 2.9%, including vacancy before demolition in urban renewal programmes (nationwide vacancy rate is 9% in private rental sector). In terms of tenure security, the 1948 Act gives HLM tenants the right to stay as long as they pay the rent, while the standard contract in the private rented sector lasts three years.

Recent changes in eligibility rules In 1989, the ‘right to housing’ was enshrined in law, and in 2007 this was given force by the establishment of an enforceable right to housing (DALO). Since 1 January 2012, every applicant whose demand has been recognised as a priority by the DALO local commission has been allowed to make a formal claim against the government in court in order to be proposed a house (or a shelter). The root of the problem is in the shortage of affordable or social housing – but social housing is the main tool for implementing the right to housing. Since January 2008, 40 000 households have been sheltered or re-housed through the DALO procedure, but 27 500 applicants recognised as qualifying for DALO protection have received no offer of a home. It is unclear to what extent the new legal framework will guarantee housing to people in need. This is particularly true in the Paris region, where 62% of DALO cases are registered (Comité de suivi de la mise en oeuvre du DALO 2012).

National rules versus European regulation To date, the government has largely agreed with European competition regulations and the idea that social housing should be more tightly targeted at low-income households. Nevertheless, any targeting towards more disadvantaged groups raises the issue of how to address the needs of middle-income households for intermediate renting. The 1953 employers’ special tax on wages12 can help here; it is geared towards helping employers and employee unions finance viable housing solutions for low- to middle-income workers. European single-market regulations have until recently had no effect on housing rules in France. Very few French interest groups have used European mechanisms to change national rules. In September 2012 the UNPI, an association of private landlords, complained to the European Commission that French social housing policy effectively distorted competition with the market sector (see Chapter 19 in this book).

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On the other hand, social housing providers are increasingly taking advantage of European Union funding such as the European Regional Development Fund (ERDF) for the energy efficiency of housing, and infrastructure renewal support. Given national budget restrictions, qualitative improvements in social housing may depend increasingly on this type of funding.

Tenant demographics Incomes Social sector tenants have lower incomes than tenants as a whole, and than owner occupiers. New tenants have lower incomes than sitting tenants, who in turn are less well-off than leavers. Social housing is no longer a temporary tenure because of the wide price gap between the private and public sectors. The concentration of impoverished households in the social sector has been growing over the past three decades: 60% of existing social tenants have monthly household incomes below €1129, while the proportion for new tenants is 73% (USH 2011). In 2006, the average income of HLM tenants was one-third less than the national average, and the gap is increasing (Chodorge 2010).

Household types Large families and single-parent families are over-represented in the HLM sector, and consequently so are young people and children: 28% of social tenants are under 18 (vs 22% of the population overall). The proportion of household heads who are immigrants increased from 15% in 1996 to 17% in 2006, a faster increase than in the population overall (8.4–9.6% over the same period). Families from Turkey, Maghreb and sub-Saharan Africa are most likely to live in social housing. Almost 70% of immigrants in the social sector (vs only 55% of the whole population of sector) are housed in large housing estates built between 1949 and 1974. Very few live in the oldest (pre-1949) and newest (post-1990) housing. This suggests that there is increasing socio-spatial segregation within social housing, with the poorest households living more often in disadvantaged neighbourhoods, while higher income social tenants live in neighbourhoods with more middle-class tenants. Finally, the proportion of household heads under 30 is now only half what it was 10 years ago, while the over-60s make up 25% of tenants. Young adults are therefore less likely to find a place in the sector (CGDD 2011). While USH points out that one-third of low-income households are housed in the social

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sector (Chodorge 2010), it is worth noting that a large proportion of ageing and low-income households are owner occupiers, and students and young low-income households tend to live in small private rented flats instead.

Current issues and political debates There is a contrast between the way foreign experts see housing in France and the discussion in France. Compared to other European countries, the outlook for France is positive. Many housing indicators have never been so high: housing supply, new construction, the owner occupation rate, the supply of rental housing (both private and social), quality and level of comfort and, despite the financial crisis, the relative availability of credit. Thanks to strong regulation, the high proportion of fixed interest rates and the incompleteness of the mortgage market, there has been very little repossession. France is one of the very few countries where the social housing stock is still growing, in absolute and relative terms. The global financial crisis has also impeded any significant change in housing policy. Social housing has fulfilled its counter-cyclical role, as it did in previous episodes, such as the crisis of the 1990s. The sharp drop in private construction has been partly offset by the rise of new social building, and total construction regained its pre-crisis peak in 2011, with more than 400 000 housing starts.13 Nevertheless, there are some stains on this positive image. First, the persistence of homelessness, despite annual expenditure of nearly €1 billion; second, the unprecedentedly high levels of rents and prices, which make housing less and less affordable; and third, the ongoing economic crisis and the rise of unemployment, which increase housing poverty and vulnerability and have led to a growing number of rental evictions (12 000 in 2011). Homelessness has not been effectively tackled (Briant & Donzeau 2011), about 133 000 persons are homeless; 5000 of those are in Paris and continue to sleep rough despite the existence of shelters and temporary accommodation. The affordability problem is even more difficult to resolve. Social housing alone cannot provide the solution, and regulation of private rents would not be sufficient either. As in other European countries, the dynamic of buoyant housing markets is deeply rooted in economic and spatial inequalities and their reinforcement in the past decade. Given that the social homogeneity of well-off neighbourhoods is (together with distance from the centre) the main cause of price discrepancies, the only way social housing could contribute to reducing price volatility is through a more homogeneous distribution of tenures through and between urban spaces, and even then only if social provision is not too narrowly targeted. This could be the main challenge facing proponents of increased social mix.

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The next phase of the crisis could be more harmful than its first iteration. Budget cuts have led to the withdrawal of fiscal incentives, both for first-time buyers and buy-to-let investors, which will negatively affect construction. European management of the debt crisis may also have serious impacts. A stagnant economy would make it more difficult to increase or even maintain the rate of new construction. For social landlords, the problem is to bridge the gap between the total cost of construction and the part funded by off-market, long-term loans. Previous governments discouraged the increase in public financial support to HLMs; rather, their policy was that funding should come from massive sales of HLM units in areas of relatively low demand, in order to construct more dwellings in areas of high demand. The question of whether social housing should follow a residual or a generalist model has been at the core of the political debate. Only recently have issues of quality (energy standards, facilities and transport), entered the discussion, moving it beyond the quantitative focus. The main challenges for the French housing system in coming years will be to preserve the current diversity of tenures and to avoid social polarisation. The governance issue is to be put on the agenda. Maintaining intermediate housing and keeping middle-class households in the social rental sector is vital, and this in turn requires that the diversity and affordability of the private rental sector be preserved nationally and locally. Both rental sectors must compete for the intermediate housing market. Otherwise, households that want or need to move (whether for family or professional reasons) will not be able to do so.

Notes 1 2 3

4

5 6

7

Act n∘ 87-149, standard of comfort Act n∘ 2002-120, rules for decent housing. HBM Habitations Bon marché (Affordable Housing) became HLM Habitation à loyer modéré in 1948. There have been many protests by local residents, who have objected, among other things, to the fact that not enough new homes are built to replace those demolished. Etablissements Publics de Coopération Intercommunale, of which there are 2500 throughout France, are groupings of the 36,000 local authorities. In 2011, the total cost (building and land) of a new 64m2 flat in the Paris region was €180 000; elsewhere, it was €128 000 (CDC 2012). Livret A is a tax-free demand savings scheme. The maximum deposit is €200 00 and individuals may have only one account. There are some 55 million accounts, which contain nearly €330 billion. The rate changes in 2013 in order to reduce the public deficit.

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8

9 10

11 12

13

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Seven different schemes with tax incentives were developed since 1984 for building private rental housing, some with social constraints, some without according to the choices of the various governments, but all aimed to increase supply in order to slow down the rate of increase in market rents. From Annuaire HLM 2011 Losses were €161 million and total rent income €154 63 million. For more details see http://www.anil.org/analyses-et-commentaires/ analyses-juridiques/analyses-juridiques-2011/logements-sociauxprocedure-dattribution-et-dalo/ DALO, or Droit au logement opposable (2007, see recent milestones in social housing) The so-called 1% is not considered a tax, but rather seen to be a private scheme organised by employers and employees – even though all governments aspire to exercise some control over it. As yet, it is not considered a state aid. Figures might be lower in 2012 and 2013, social housing cannot entirely compensate the decrease of private sector production

References Briant P and Donzeau N (2011) Etre sans domicile. Insee Première, n∘ 1330, 01-2011. Caisse des Dépôts (2012) Les coûts de production des logements locatifs sociaux depuis 2005. Eclairage, DFE n∘ 1 11-2012. CGDD (2011) Logement HLM : les nouvelles générations moins présentes. Observation et statistiques, 94, 08-2011. Chodorge M (2010) Qui Habite en HLM. Habitat et Société, 58, 6-10. Comité de suivi de la mise en oeuvre du DALO (2012) 6éme rapport. HCLPD, novembre 2012 Paris. Ghékière L (2011) How social housing has shifted its purpose, weathered the crisis and accommodated European Community competition law. Chapter in N Houard (ed) Social Housing across Europe La Documentation Française, Paris. INSEE (2006) Enquêtes Nationales Logement: Les logements en 2006. INSEE Première, 1202, 07-08. INSEE (various dates) National Institute of Statistics and Economic Studies [Online], Available: http://www.insee.fr/en/ Lelévrier C (2010) La mixité dans la rénovation urbaine : dispersion ou re-concentration? Espaces et sociétés, 140/141, 59-74. ONZUS (2011) Rapport 2011. SGCIV, Saint-Denis. Tutin C (2008) Social housing and private markets – from public economics to local housing markets. Chapter in K Scanlon and C Whitehead (eds) Social Housing in Europe II: A Review of Policies and Outcomes, LSE London, London. USH (2011) Aide mémoire statistique. Rapports au Congrès, USH, Paris.

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Thorncastle Street Ringsend, in inner Dublin, was completed in 1936 as part of Dublin City Council’s first and largest drive to clear the inner-city slums in the 1930s. It was designed by Herbert Simms, the council’s chief architect, who designed the vast majority of slum clearance dwellings. As an apartment (flats) complex built by the local authority, it is typical of the period. Photograph: Colm O’Shea.

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9 Social Housing in the Republic of Ireland Declan Redmonda and Michelle Norrisb a School

of Geography, Planning and Environmental Policy, University College Dublin, Ireland b School of Applied Social Science, University College Dublin, Ireland

Introduction This chapter focuses on how social housing is provided in Ireland. It first presents a general overview of the housing system in order to place social housing in context. It then looks at how social housing is provided directly by local authorities and housing associations and indirectly through rent supplements or housing allowances and, in more recent years, by what have been termed social housing leasing schemes, whereby social landlords rent housing for tenants from private landlords. Over the past 30–40 years, housing policy in Ireland has favoured the promotion of home ownership as the tenure of choice. For many years, it has been treated favourably in tax terms, with generous tax treatment of mortgage interest, grants for home buyers l, and no capital gains tax on the sale of the primary household residence (Downey 2005; O’Connell 2005; Redmond & Norris 2005). Furthermore, owner occupation has been promoted via right-to-buy policies in social housing, shared ownership schemes and, during the property boom, subsidised affordable-purchase schemes. It has been argued that owner occupation has been pushed to its limits in Ireland and, given the crash in the property market and the attendant problems of price falls, mortgage arrears and negative equity that have emerged since 2007, this position is hard to refute (Norris, Coates & Kane 2007; Norris & Winston 2011).

Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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Table 9.1 Year

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

New housing completions by type of owner 1993–2009. Social housing Local authority∗

Housing associations∗

2676 2632 2771 2909 2204 3622 4403 4516 3539 4209 3968 4986 4905 3362

917 756 485 579 951 1253 1360 1617 1607 1350 1240 1685 1896 2011

Private

Total

30 132 35 454 39 093 43 024 46 657 47 727 51 932 62 686 71 808 75 398 88 211 71 356 44 923 21 076

33 725 38 842 42 349 46 512 49 812 52 602 57 695 68 819 76 954 80 957 93 419 78 027 51 724 26 420

Social as percentage of total %

10.7 8.7 7.7 7.5 6.3 9.3 10.0 8.9 6.7 6.9 5.6 8.5 13.1 20.3

∗ Includes

units constructed directly by local authorities/housing associations and units acquired under planning gain legislation (see ‘Social Housing Support: Rent Supplement and Social Housing Leasing’). Source: Department of Environment, Community and Local Government (various years).

Indeed, Ireland has become famous, or perhaps infamous, for one of the most pronounced property booms and busts in recent European history, with the market peaking in 2007 and declining precipitously since then. We can see from Table 9.1 trends in new housing development by sector. One of the most obvious is the rapid rise in new private housing built during the years of the Celtic Tiger,1 with production increasing from 30 000 units in 1996 to 88 000 in 2006, a rise of almost 300% that resulted in one of the highest rates of house building in Europe. A large proportion of these units were bought by private landlords rather than home owners, and as a result the proportion of households accommodated in the private rented sector rose from 7% in 1991 to 18.5% in 2011 (Central Statistics Office 2011). By contrast, production of social housing only increased by 144% between 1996 and 2006, with social housing development accounting for an average of 7% of total housing production during these years.

The development of the social housing sector In contrast to the owner occupied sector, social housing has been seen, in policy and political terms, as a safety net and not as a sector catering to general needs (Norris 2005). The purchase of social housing has been long established in Ireland as one route to homeownership. Rural local authority tenants (tenants of county councils) have enjoyed the right to buy their homes since the 1930s, and this right was extended to their urban counterparts (tenants of

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Housing tenure, 1946–2011 (%).

Rented from local authority Rented from housing association Rented from private landlord Owner occupied Other

1961

1971

1981

1991

2002

2011

18.4 NA 17.2 53.6 10.8

15.9 NA 10.9 60.7 12.5

12.7 NA 8.1 67.9 11.2

9.7 NA 7.0 80.2 3.0

6.9 1 11.1 77.4 4.6

7.8 1 18.5 69.8 2.9

Source: Central Statistics Office (2011).

borough, city and town councils) by the Housing Act of 1966 (Fahey 2002). Indeed, Fahey (1999) estimated that over two thirds of the social rented stock constructed by local authorities as of the end of the last century had been sold to tenants. It is not surprising, therefore, to see that social housing – that is, housing rented out by local authorities and housing associations – accounted for just under 10% of the overall stock in 2011, a low proportion in European terms. As Table 9.2 demonstrates, the social rented sector provided by local authorities has contracted in relative terms from 18% in 1961 to 10% in 2011. Census data do not distinguish between tenants in the private rented sector who receive some form of housing allowance (called rent supplement in Ireland) and those who receive no subsidy towards the market rent, but rent-supplement data shows that there were 96 800 recipients in 2011, alongside a further 18 000 who were in social housing leasing schemes. If we define social housing broadly and include both housing that is provided directly (by social landlords) and indirectly (private rented dwellings subsidised by rent supplement), we could argue that social housing accounts for approximately 18% of tenure nationally. Social housing in the Republic of Ireland has mainly been provided by local authorities (borough, city, county and town councils) and non-profit housing associations. The central government has generally provided 100% finance for the construction of this housing and social landlords have charged an income-related rent to tenants (Norris 2006). Local authorities have been the main direct providers of social housing since the late nineteenth century and the most recent 2011 Census data shows that local authorities rented 129 033 dwellings or 8% of the total stock. For property law and other legal reasons, tenants have not had the right to buy apartments. While housing associations have supplied social housing for many decades, it is only since the mid-1990s that they have been promoted by government as a significant provider of social housing. The recent Census shows that they rent 14 942 dwellings or 1% of the stock, although their representative body estimates that landlords of this type let approximately 28 000 homes. Tenants of housing associations do not have the right to buy their dwellings.

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Although social housing has traditionally been defined as housing directly provided by the state, that line has become blurred in Ireland over the past decade or so. Tenants in the private rented sector can claim a rent supplement, in effect, a form of housing benefit or allowance. Originally seen as a short-term support, the recent revision of government housing policy states that rent supplement has ‘become a de facto social housing support with many thousands of households reliant on the supplement to support accommodation costs for longer periods’ (Department of Environment, Community and Local Government 2011a: 4). As the demand for rent supplement escalated, government sought to streamline it by making local authorities responsible for housing tenants ‘in long-term housing need’ in private rented housing Under the Rental Accommodation Scheme (RAS – described in more detail in ‘Social Housing Support: Rent Supplement and Social Housing Leasing’). In response to the recent economic crisis in Ireland, capital spending has been drastically cut, and government has said that most social housing should be provided through what they term long-term leases. Under this scheme, somewhat similar to the RAS one, local authorities and housing associations are encouraged to enter into 10- to 20-year leases with private owners; the housing, funded through current government revenues, will then be used as social housing.

Housing need and social housing tenants Given the predominance of home ownership, it is no surprise that social housing in Ireland is targeted directly at the poorest households. Only households with incomes below a specified level can apply (currently about €35 000 per annum for a single-income household) and the 1988 Housing Act specifies that local authorities must decide the order in which applicants gain access to social housing using a ‘scheme of letting priorities’, which must give priority to certain groups. Each local authority can determine its own rank order of priority, but waiting lists are so long in high-demand areas that the priorities are meaningless in practice and waiting time is the key factor. Depending on the scheme used to fund construction of their dwellings, housing associations are required to allocate most or all units to households on local authorities’ housing lists. The priority groups are • • • • •

persons who are homeless; persons living in accommodation that is unfit or materially unsuitable; persons involuntarily sharing accommodation; persons living in overcrowded accommodation; young persons leaving institutional care or without family accommodation;

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persons in need of accommodation for medical or compassionate reasons; persons who are elderly; persons with a disability; persons leaving residential care; Irish Travellers (indigenous nomadic minority) and persons unable to afford suitable accommodation.

The 1988 Housing Act also requires local authorities to conduct an assessment of housing needs every three years. The results of these assessments indicate that need grew by 75% from 2008 to 2011 (see Table 9.3). When conducting these assessments local authorities assign households into the categories set out earlier. The data in Table 9.3 show that between 2008 and 2011 the fastest growing category of housing need was ‘households unable to afford accommodation’, which had increased 121% from 30 000 households to just over 65 000. Households in this category accounted for over two thirds of those deemed to be in housing need. This large increase is principally attributable to the 2007 collapse of the Irish housing market. House prices have since fallen by over 50%, negative equity is widespread and mortgage arrears are high. Given this situation, households are reluctant to enter the housing market. More importantly, as households have suffered significant income decreases since the advent of the economic recession, they cannot afford market housing. Moreover, given the failure of the Irish banks, mortgage finance is very difficult to obtain. Together, these factors have led to a very large increase in housing need.

Table 9.3

Households in housing need by category, 2002–2011.

Category of need

2002

2005

2008

2011

Homeless Travellers Unfit accommodation Overcrowded accommodation Involuntary sharing Leaving institutional care Medical or compassionate reasons Older persons Person with a disability Not reasonably able to meet the cost of accommodation

2468 1583 4065 8513 4421 82 3400 2006 423 21 452

2399 1012 1725 4112 3375 262 3547 1727 480 25 045

1394 1317 1757 4805 4965 715 8059 2499 1155 29 583

2348 1824 1708 4594 8534 538 9548 2266 1315 65 643

68.4 38.5 −2.8 −4.4 71.9 −24.8 18.5 −9.3 13.9 121.9

Total

48 413

43 684

56 249

98 318

74.8

Source: Department of the Environment, Community and Local Government (2011b).

Percentage change 2008–2011

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Table 9.4

Average gross weekly household income by tenure.

Tenure

1999–2000 €

Owned outright Owned with mortgage Rented from a local authority Rented from a private landlord Occupied free of rent Nationwide

563.13 884.94 328.41 675.22 494.31 666.72

2004–2005 €

2009–2010 €

801.81 1,413.51 453.57 908.48 634.14 987.96

897.56 1444.87 516.07 808.73 698.73 1,026.77

Percentage change 2005–2005 to 2009–2010 +11.9 +2.2 +13.8 −11.0 +10.2 +3.9

Source: Central Statistics Office (various years) – Household Budget Survey, available at www.cso.ie.

Waiting lists for social housing are currently relatively long, so only the neediest households gain access. Consequently, the tenant profile is extremely residualised, particularly in urban areas (Norris & Murray 2004). Around 62% of social renting households had incomes below 60% of median in 2000, compared to 22.1% of all households (Fahey, Nolan & Mâitre 2004). Table 9.4 examines trends in gross income by housing tenure, and what stands out is that households that rented from a local authority in 2009–2010 had incomes that were only 50% of average gross income nationally. This situation was broadly replicated in 1999–2000 and 2004–2005, confirming the long-term residual nature of local authority housing. Given that housing association tenants are taken from local authority waiting lists, their income profile is likely to be similar. Table 9.5 confirms that local authority tenants are heavily dependent on payments from the state when compared with households in other tenures. In 2004–2005, just over half of the income of local authority tenants came from state transfers, whereas the overall figure was 13%. By 2009–2010, this reliance on state transfers as a source of income had increased to 70%.

Table 9.5 (%).

Sources of household gross income by tenure, 2004–2005 and 2009–2010

Tenure

Direct income

State transfer payments

Direct income

2004–2005 Owned outright Owned with mortgage Rented from a local authority Rented from a private landlord Occupied free of rent State

82.2 94.5 48.9 86.5 81.1 87.3

Source: Central Statistics Office (various years).

17.8 5.5 51.1 13.5 18.9 12.7

State transfer payments 2009–2010

74.6 88.8 29.3 72.6 77.8 78.9

25.4 11.2 70.7 27.4 22.2 21.1

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The local authority sector In the local authority sector, construction costs are met mainly by central government grants. Although local authorities can and do contribute to costs from their own resources, these resources are limited owing to the lack of a system of local taxation in Ireland. The maximum grant per dwelling varies regionally and grants are allocated on a three-year basis to enable each local authority to construct a specified number of dwellings. Land acquisition is financed via low-interest loans from the Housing Finance Agency, a statutory intermediary lender. Interest charges on these loans are financed by the central government and loans are repaid by the central government once housing construction has commenced on site. Table 9.6 examines recent trends in the provision of dwellings by local authorities. New construction has dominated as the main method of provision but some local authorities, particularly in the main urban areas, also bought housing on the second-hand market. Some 90% of social housing in Ireland is provided and managed directly by local authorities. Currently, 102 local authorities are social landlords, but three city councils account for just over a third of the local authority stock. Dublin City Council, which owns approximately 25 000 dwellings, is by far the largest social landlord (see Table 9.7). Local authorities must set an affordable rent, which is related to tenant incomes rather than to the costs of managing and maintaining the property. Thus, local authorities have a housing function but also a social welfare one, and there is pressure on authorities to keep rents low (Coates & Norris 2006) to respond to the reality of the tenants who are mainly dependent on welfare payments. The system of rent setting used by local authorities is termed the ‘differential rents’ system, and while all local authorities Table 9.6 Dwellings constructed and purchased by local authority social landlords, 2000–2008. Year

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Constructed

Bought

Number

Percentage

Number

Percentage

2204 3622 4403 4516 3539 4209 3968 4986 4905 3362

69 72 87 91 78 82 77 71 86 82

1003 1400 671 456 971 918 1153 2002 787 727

31 28 13 9 22 18 23 29 13 18

Source: Department of the Environment, Community and Local Government (various years).

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Table 9.7

Ownership structure of the local authority rented housing, 2006 and 2008.

Ownership structure

2006

2008

Number Percentage Number Percentage of dwellings of dwellings Type of local authority City council County council Town council Size of landlord > 1,000 dwellings 1,001–2000 dwellings 2,001–3,000 dwellings 3,001–4,000 dwellings 4,001 dwellings+ Location Dublin Other cities Rest of Ireland

39 005 53 609 18 335 59∗ 16∗ 4∗ 4∗ 3∗ 39 872 14 925 56 553

35.0 48.5 16.6 19.9 21.9 9.0 13.7 35.6 35.8 13.4 50.7

39 810 59 372 19 214 Nav Nav Nav Nav Nav Nav Nav Nav

33.6 50.1 16.2 Nav Nav Nav Nav Nav Nav Nav Nav

Note: Dublin includes Dublin City and County. Other cities are Cork, Limerick, Galway and Waterford. ∗ refers to landlords. Source: Department of the Environment, Community and Local Government (various years).

must set their rents in relation to tenant incomes, each local authority has discretion as to how they achieve this. In practice, therefore, there are 76 separate rent-setting systems, although they share basic similarities (Coates & Norris 2006). Table 9.8 shows trends in local authority rents. The majority of local authorities do not levy a separate service charge. Housing revenue accounts, which are only available up to 2004, show that between 1998 and 2004 rental income across all local authorities covered only two thirds of expenditure on management and maintenance. This deficit can be cross-subsidised by other local authority revenue; even so, this rental system has a number of drawbacks. The main one is that the inability to set any form of economic rent leads to serious problems with management and maintenance of the stock, whether Table 9.8 Average local authority rents, 2001–2008 (€/week). Year

Rent

2001 2002 2003 2004 2005 2006 2007 2008

26.33 29.62 32.10 35.75 38.29 42.14 45.45 46.85

Source: Department of the Environment, Community and Local Government (various years)

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that is short-term (response) maintenance or the provision of sinking funds for long-term maintenance. Treadwell, Shine and Norris (2006) argue that this revenue/expenditure imbalance had led to underinvestment in housing maintenance in the local authority sector and overuse of refurbishment schemes. Since the mid-1980s, local authorities have had to rely on central government funding via what is termed the Remedial Works Scheme for major maintenance and refurbishment of their stock (Norris 2005). The development of this scheme was, in effect, an acknowledgment by the central government of the inadequacies of the differential rents system (Norris & O’Connell 2010). Differential rents were made a nationwide requirement by legislation introduced in 1976, and underinvestment in management has been a widespread problem ever since. The problem was evident even earlier in some local authorities, as differential rents were first introduced in the 1930s by the local authority in Cork. The system spread to the rest of the country in later decades, mainly as a result of agitation by tenants’ representatives. In addition to refurbishment, a substantial number of social housing neighbourhoods have been demolished and regenerated since the late 1990s. Much of Ballymun, Ireland’s largest high-rise development, was demolished over the past decade and is still undergoing regeneration. A number of old social rented flat complexes in need of demolition and regeneration are to be redeveloped as mixed-tenure estates. The government has opted for a public–private partnership approach, in which private developers are given some of the sites to develop private dwellings for sale on the open market. In return for receiving the land for free, the developer delivers social rented and affordable-purchase units. While innovative, this measure has been controversial, engendering debates about the appropriate tenure mix and the transfer of public land to developers (Redmond & Russell 2008; Russell & Redmond 2009). Since the collapse of the property market in 2007–2008, the logic of these schemes, which was based on high property prices in the private market, also crumbled and the programme came to a halt.

The housing association sector Mullins, Rhodes and Williamson (2003) estimate that the housing- association stock is distributed among 470 organisations, although only 330 of these are currently actively developing new housing schemes. The bulk of the general-needs housing provided by this sector is owned by six large organisations, whilst the majority of housing associations manage fewer than 10 dwellings; these smaller bodies usually cater for special-needs

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The Housing Association Sector

groups alone. Although the details of arrangements for funding local authority and housing-association social housing vary, the mechanisms are broadly similar. They are relatively unusual in the Western European context. The capital costs of the construction and acquisition of land for social housing are almost 100% funded by the central government, in the following ways. Housing associations were promoted in the early 1990s as a new arm of social housing and the 2011 Census showed that they currently manage 14 942 units, or just under 1% of the national housing stock. Like local authorities, housing associations develop social housing using central government capital funding (Brooke 2001). Housing associations that wish to access government funding must be granted ‘approved status’ by the housing ministry; this requires that they be limited companies registered as charities, and agree to let their dwellings as social housing. Most land for housing association construction is provided by local authorities, who also administer government loans to housing associations. The central government funds housing associations through two schemes. The first, termed the capital loan and subsidy scheme, is aimed at providing general-needs housing for families and receives 100% capital funding from government. The second, termed the capital assistance scheme, is aimed at catering for specialised housing needs such as housing for the elderly, the disabled and the homeless, and receives 95% capital funding, with the 5% difference being met by the housing association providing the land or site. Each scheme has its own rent system. The first scheme sets rents using a differential rent system very similar to the one used by local authorities, which is based on tenant incomes. The second scheme, in theory, sets rents based on the economic costs of running the accommodation, which produces higher rents than the differential rent system. However, most housing associations claim that even these higher rents do not, in fact, cover costs and

Table 9.9 Average weekly housing association rents by funding type, 2008–2011 (€/week).

2008 2009 2010 2011

Capital loan and subsidy scheme (General-needs housing)

Capital assistance scheme (Special-needs housing)

43 47 47 48

62 65 63 64

Note: Figures are for rent only and exclude service charges. Source: Irish Council for Social Housing (2011, www.icsg.ie).

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are not therefore true economic rents. Table 9.9 shows the most recently available rental data from the sector. There are some fundamental differences between housing associations and local authorities. The main one is that housing associations are independent specialist housing organisations and must balance their books. In other words, they do not have the ability to cross-subsidise any rent shortfalls. The differential rent scheme operated by housing associations for the provision of general-needs housing is broadly similar to local authorities in that rent setting is income based, thus leading to a gap between rental income and expenditure on management and maintenance. This gap is partially filled by the central government which, in recognition of the inadequacy of income-based rents, allocates housing associations a ‘management and maintenance allowance’. This allowance is based on the value of dwellings and is currently set at €543 for properties in Dublin and the larger conurbations and €436 for the remaining areas of the country. These allowances are in lieu of a proper economic rent, although housing association officials argue they are inadequate and indeed, they were reduced by approximately 25% in 2009. Given their inability to cross-subsidise, housing associations must focus on rent collection and minimising rent arrears.

Planning gain and social housing In 2000, the government introduced what has turned out to be a controversial and complex piece of planning legislation, which imposes on private developers an obligation to subsidise social and affordable housing on sites they wish to develop. Part V of the Planning and Development Act 2000 has been one of the most interesting and innovative new developments in Irish social housing (Focus Ireland 2006; Norris 2006). Developers are now required, as a condition of planning permission, to transfer to local authorities up to 20% of their sites for use as social and/or affordable housing and, crucially, to transfer the site to the state at existing use value. There are a number of ways that developers can comply with this requirement. They can transfer: • up to 20% of the land to the local authority at existing use value, or • 20% of the completed dwellings to the local authority in exchange for construction costs, builder’s profit and the existing use value of the land, or • up to 20% of developed sites to the local authority, or • the financial equivalent of the land value (market value minus existing use value), or • an alternative site to the local planning authority. Developers can also offer a mix of these measures.

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Table 9.10 Provision of social and affordable housing through planning gain, 2002–2009 (number of dwellings). Year

Affordable purchase

Local authority

Housing association

Total

2002 2003 2004 2005 2006 2007 2008 2009

46 88 374 962 1600 2063 3081 827

0 75 135 203 508 790 1075 535

0 0 82 206 90 393 362 552

46 163 591 1371 2198 3246 4518 1914

Total

9041

3321

1685

14 047

Source: Department of Environment, Community and Local Government (various years).

The rationale for this legislation was twofold. First, it was aimed at allowing local authorities to get development land cheaply, thereby enabling them to build either social and/or affordable housing at below market cost. Local authorities and other social housing providers have had serious problems acquiring land in urban areas, especially when competing with private developers. While developers have the option to pay the local authority the financial equivalent of the land cost, many local authorities, especially in urban areas, prefer to obtain completed and subsidised dwellings from developers. Typically, in Dublin City Council for example, for every 100 apartments a developer builds, 20 will be transferred to the local authority for use as social and affordable housing (normally 10 for social renting and 10 for discounted affordable purchase). The planning legislation has another, more social aim: in ensuring that social housing is built alongside or integrated with private market housing, it aims to reduce levels of what is termed ‘undue segregation’, and increase social mix and social interaction. Table 9.10 shows progress in this scheme from inception until 2009. A total of just over 5000 social housing units have been provided under this scheme, which is a fairly modest result.

Social housing support: rent supplement and social housing leasing Rent supplement as a social housing support Alongside the direct provision of social housing by local authorities and housing associations, there has developed a de facto housing benefit or allowance scheme over the past decade or so. Whether this is technically considered social housing is perhaps debateable; however, central

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Trends in rent supplement, 2000–2011.

Number of recipients

Total cost (€000)

Average rent supplement per recipient per annum €

Average rent supplement per recipient per week €

42 683 45 028 54 213 59 976 57 874 60 176 59 861 59 726 74 038 93 030 97 260 96 800

150 590 179 438 252 203 331 471 353 762 368 705 388 339 391 466 440 548 510 751 516 861 503 000

3528.10 3985.03 4652.08 5526.73 6112.62 6127.11 6487.35 6554.36 5950.30 5490.18 5314.22 5196.28

67.85 76.64 89.46 106.28 117.55 117.83 124.76 126.05 114.43 105.58 102.20 99.93

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011∗ ∗ Provisional

figures. Source: Department of Social Protection (2011a,b).

government has argued that it is in fact a form of social housing support. Low-income tenants in the private rented sector who are not in full-time employment can rent from private landlords and claim ‘rent supplement’ for a portion of their rent (Norris & Coates 2010). Tenants apply to their local social welfare office; they must, in all circumstances, pay €30 per week themselves in the case of single-person households and €35 a week in the case of other households. As Table 9.11 shows, this scheme has grown significantly in the past decade both in terms of number of recipient households and total cost. The proportion of the rent covered is determined by a local social welfare officer and the central government’s Department of Social Protection sets maximum allowable rents. These are based on analysis of rents in local housing markets (Department of Social Protection 2011a). Because of the downward pressure exercised on private rents by the economic recession, in late 2011 the government reviewed these maxima and reduced the maximum rent payable by an average of 13%, although there are wide variations across local markets. It should be noted that these rents are set with regard to household type rather than dwelling type and size.

Social housing leasing schemes In recent years, the central government developed two leasing schemes, where local authorities lease residential properties from private individuals or landlords to house social tenants. The first, the RAS, was a reaction to the rapid increases in demand and cost of rent supplement. The second, known as longer term leasing options, was a response to the cuts in capital

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budgets for new social house building as well as a way of using unsold private housing. In both these schemes, the agreed rent is paid directly to the landlord and tenants pay a differential or income-based rent. The RAS, introduced in 2005, is intended to move households in long-term housing need (defined as being on rent supplement for over 18 months) into private rented accommodation rented on long leases (normally four years). Rent-supplement tenants are transferred to the local authority from the Department of Social Protection. The latest figures for transfers are for the year ending 2008 and show that 18 000 rent-supplement recipients were transferred to the RAS scheme. Local authorities guarantee that the dwelling will be occupied for four years and continue to pay rent even during void periods. Because the rent is guaranteed, government guidance suggests that local authorities should obtain an 8% discount on market rents; in any case, the rent payable must not exceed the maximum rent allowable under rent supplement. The scheme is administered by local authorities and tenants pay a differential rent. While rent-supplement tenants must find their own accommodation, in the case of RAS the accommodation is sourced by the local authority and is inspected to ensure it complies with regulations on minimum standards, fire safety, and so on. The severe economic recession in Ireland, with very high levels of government debt, has led to a dramatic reduction in capital funding generally and funding for social housing in particular. This dearth of public capital funding, alongside a large amount of unsold private speculative housing, led the government to introduce long-term leasing schemes in early 2009 for local authorities and housing associations. The scheme would be revenue funded and thus not part of the public sector borrowing requirement and would also, it was hoped, absorb some of the unsold private housing. These longer term programmes are similar to the RAS, but differ in that the contract between the housing organisation and the private owner of the housing must be for a minimum of 10 years (with no break clause) and a maximum of 20 years. At the end of the lease the dwellings revert to the owner. Under these contracts the housing in effect becomes, at least for the duration of the lease, part of the social housing stock and is managed by the social housing organisation, which can use it to house anybody in housing need. Given the long-term nature of these contracts, the guaranteed rent, and the fact that social landlords manage and maintain the properties, the government suggests that a 20% rent discount is appropriate. Like the RAS scheme, tenants pay a differential rent to the social landlord. The rent paid by the social landlord to the private owner comes from central government revenue funding. Data on the progress of this scheme are not published, but a report by the Comptroller and Auditor General (2011) suggested that as of

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mid-2010, 643 units had been approved for leasing. Coates and Silke (2011) undertook a preliminary analysis of rents paid for these leasehold properties in 2010; it was based on a small sample but showed that rents were at least 20% below local market values.

Future trends and policy A 2004 report by the National Economic and Social Council recommended a major expansion of social housing output in the years 2005–2012. It argued that, given the increasing demand for social housing, for a net additional 73 000 social rented dwellings over the period leading to a total social rented housing stock of approximately 200 000 units. While significant resources were invested in social rented housing in recent years, it was not enough to deliver this amount. Given the dramatic collapse in the Irish economy since 2007–2008, capital investment in social housing is going to be very limited for the foreseeable future. Instead, investment in social housing will take the form of current revenue being spent to lease private housing for social tenants. A major change in the administration of rent supplement was planned for 2013 when the central government Department of Social Protection would transfer responsibility for rent supplement to local authorities but this has yet to take place. The precise nature of this transfer is not yet known but it may have implications for how local authorities can rationalise their spending on rents supplement, the RAS and social housing. In any event, it is a signal that the government sees rent supplement as part of its social housing options into the future and, as Norris and Fahey (2011) argue, as a way to develop social housing from an asset-based regime to a welfare one. Key milestones in the development of social housing in Ireland since 2006–2007 • 2006: the RAS is introduced on a nationwide basis. • 2008: radical cuts in the capital budget for social house building are introduced as part of the government’s response to a severe fiscal crisis. • 2009: the Social Housing Leasing Initiative is established. The Irish government cannot access funding on international markets and negotiates an emergency loan from the International Monetary Fund and the European Union. Capital budget for social house building is further cut; most of what is left is targeted at special-needs housing and regeneration of declining local authority estates. • 2010: housing associations begin to fund new social housing development by borrowing, although local authorities cannot.

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Country Box Social housing in Ireland has a number of features that distinguish it from other European countries. For the past 30 years, it has been a minor tenure, accounting on average for just 8% of the nation’s housing. As such, the sector has become increasingly residualised and caters for a predominantly welfare-dependent population. One of the main reasons for its minority status is the long-standing policy of sales to tenants, which was introduced in rural areas in the mid-1930s and extended nationwide in 1966 – much earlier than other European Union (EU) countries. Indeed, over two thirds of all social housing built by the state have been sold to tenants. For most of the twentieth century, local authorities were the main developers of social housing, and they remain the dominant providers. However, from the 1990s, government policy encouraged housing associations to get involved in this sector, and they now provide some 25% of units. With regard to urban form, social housing has traditionally been provided in low-density suburban estates of standard family houses, with only one high-rise modernist development built in the 1960s. Rent setting is another very distinctive feature of social housing in Ireland. Social landlords must set rents with reference to tenants’ incomes rather than the costs of managing and maintaining the dwelling, thus combining a housing function with a social welfare function. The inability of social landlords to set economic rents has led to problems of maintaining housing estates, to such a degree that many estates have been subject to comprehensive regeneration programmes. The final and more recent development has been the rapid growth of rent supplement, a form of housing benefit or allowance, which is payable to tenants in the private rented sector who are not in full-time employment. The government now considers this a de facto form of social housing support and has recently sought to formalise this arrangement by entering into leasing agreements with private landlords, thereby using the private sector to deliver social housing.

Note 1 Ireland was referred to as the Celtic Tiger because of very strong economic growth between the late 1990s and 2007.

References Brooke S (2001) Social Housing for the Future: Can Housing Associations Meet the Challenge? Policy Studies Institute, Dublin. Central Statistics Office (2011) Census of Population [Online], Available: http://www.cso .ie/en/census/index.html Central Statistics Office (various years) Household Budget Survey Stationery Office, Dublin. Coates D and Norris M (2006) Local authority housing rents: equity, affordability and effectiveness. Administration, 54, 3–26.

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Coates D and Silke D (2011) Comparative Financial Appraisal of the Projected Long-Term Costs of Social Housing Delivery Mechanisms The Housing Agency: Dublin. [Online], Available: http://www.housing.ie/our-publications/social-housing-delivery.aspx Comptroller and Auditor General (2011) Report of the Comptroller and Auditor General. 2. [Online], Available: http://audgen.gov.ie/documents/annualreports/2009/ReportVol2_09 _rev2.pdf Department of the Environment, Community and Local Government (2011a) Housing Policy Statement [Online], Available: http://www.environ.ie/en/DevelopmentHousing/Housing/ Department of the Environment, Community and Local Government (2011b) Housing Needs Assessment Report 2011 [Online], Available: http://www.environ.ie/en/Publications/ StatisticsandRegularPublications/HousingStatistics/ Department of Social Protection (2011a) Statistical Information on Social Welfare Services 2010 [Online], Available: http://www.welfare.ie/EN/Policy/ResearchSurveysAndStatistics/ Pages/2010stats.aspx Department of Social Protection (2011b) Rent Limits Review Report 2011 [Online], Available: http://www.welfare.ie/EN/Policy/ResearchSurveysAndStatistics/Pages/rentreview2011 .aspx Department of the Environment, Community and Local Government (various years) Annual Bulletin of Housing Statistics Department of the Environment and Local Government, Dublin. [Online], Available: http://www.environ.ie/en/Publications/Statistics andRegularPublications/HousingStatistics/ Downey D (2005) Access denied? The challenge of affordability for sustainable access to housing. Chapter in M Norris and D Redmond (eds), Housing Contemporary Ireland: Policy, Society and Shelter Institute of Public Administration, Dublin. Fahey T (1999) Introduction. Chapter in T Fahey (ed), Social Housing in Ireland: A Study of Success, Failure and Lessons Learned Oak Tree Press, Dublin. Fahey T (2002) The family economy in the development of welfare regimes: a case study. European Sociological Review, 18, 51–64. Fahey T, Nolan B and Mâitre B (2004) Housing, Poverty and Wealth in Ireland Institute for Public Administration and Combat Poverty Agency, Dublin. Focus Ireland (2006) Building for Inclusion: Housing Output and Part V of the Planning and Development System Focus Ireland: Dublin. [Online], Available: www.focusireland .ie/htm/housing_homelessness/fi_research/ Irish Council for Social Housing (winter 2011) Social Housing Newsletter. ICSH: Dublin. [Online], Available: http://www.icsh.ie/eng/publications/icsh_newsletters. Mullins D, Rhodes M and Williamson A (2003) Non-Profit Housing Organizations in Ireland, North and South: Changing Forms and Challenging Futures Northern Ireland Housing Executive, Belfast. National Economic and Social Council (2004) Housing in Ireland: Policy and Performance National Economic and Social Council, Dublin. Norris M (2005) Social housing. Chapter in M Norris and D Redmond (eds), Housing Contemporary Ireland: Policy, Society and Shelter Institute of Public Administration, Dublin. Norris M (2006) Developing, designing and managing mixed tenure housing estates: implementing planning gain legislation in the Republic of Ireland. European Planning Studies, 14, 199–218. Norris M, Coates D and Kane F (2007) Breaching the limits of owner occupation? Supporting low-income buyers in the inflated Irish housing market. European Journal of Housing Policy, 7, 337–356.

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Norris M and Coates M (2010) Private sector provision of social housing: an assessment of recent Irish experiments. Public Money & Management, 30, 19–26. Norris M and Fahey T (2011) From asset based welfare to welfare housing: the changing meaning of social housing in Ireland. Housing Studies, 26, 459–469. Norris M and Murray K (2004) National, local and regional patterns of residualisation of the social rented tenure: the case of Dublin and Ireland. Housing Studies, 19, 85–105. Norris M and O’Connell C (2010) Social housing management, governance and delivery in Ireland: ten years of reform on seven estates. Housing Studies, 25, 317–334. Norris M and Winston N (2004) Housing Policy Review, 1990–2001 Stationery Office, Dublin. Norris M and Winston N (2011) Transforming Irish home ownership through credit deregulation, boom and crunch. International Journal of Housing Policy, 11, 1–21. O’Connell C (2005) The housing market and owner occupation in Ireland. Chapter in M Norris and D Redmond (eds), Housing Contemporary Ireland: Policy, Society and Shelter Institute of Public Administration, Dublin. Redmond D and Norris M (2005) Setting the scene: recent transformations in Irish housing. Chapter in M Norris and D Redmond (eds) Housing Contemporary Ireland: Policy, Society and Shelter Institute of Public Administration, Dublin. Redmond D and Russell P (2008) Social housing regeneration and the creation of sustainable communities in Dublin. Local Economy, 23, 168–179. Russell P and Redmond D (2009) Social housing regeneration in Dublin: market-based regeneration and the creation of sustainable communities. Local Environment, 14, 635–650. Treadwell Shine S and Norris M (2006) Housing Policy Discussion Series: Regenerating Local Authority Estates – Review of Policy and Practice. [Online], Available: http://www.housing .ie/our-publications/archive/regeneration.aspx.

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The large-scale housing estate Jizni Mesto II was built between 1979 and 1985 on the south-eastern outskirts of Prague. This kind of pre-fabricated housing estates represents a typical socialist public housing construction in the Czech Republic. Photograph: Irena Boumová.

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10 Social Housing in the Czech Republic Martin Lux Department of Socioeconomics of Housing, Institute of Sociology, Academy of Sciences of the Czech Republic, Prague

Introduction The Czech Republic is a country with extremely fragmented social housing policies and no de facto central coordination or regulation. There is no state regulatory framework for public housing management and no regulations on the scale or form of public housing privatisation or allocation. Moreover, municipal housing is not synonymous with social housing in the Czech Republic. There are three specific features of the Czech housing system worth mentioning in the context of social housing. The first is the extensive decentralisation of housing policy. There is no central right-to-buy policy – municipalities can decide about the privatisation of their own public housing, and the pace of public housing privatisation has been much slower than in most other post-socialist states. Second, between 1995 and 2003 the relatively extensive supply-side subsidies were refined and state-subsidised housing construction made up an important part of new housing output in this period, in contrast to other post-socialist states where such subsidies were limited. Finally, a large amount of urban housing confiscated under the previous regime was returned (‘restituted’) to previous owners or their heirs, and this quickly gave rise to a relatively substantial private rental sector. Property restitution applied to that part of the housing stock expropriated by the communists between February 1948 and January 1990 (approximately 6 to 7% of

Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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The Current Position of Social Housing

the housing stock). However, the quick increase in the supply of private renting was accompanied by structural changes in the demand for rental housing generally. The private rental sector is now seen as a residual and transitional form of housing (Lux & Sunega 2011).

The current position of social housing There is no legal definition of social housing in the Czech Republic except in the Act on Value Added Tax No. 235/2004, Section 48a, which sets out which housing is eligible for a reduced VAT rate on new construction (limited by EU regulations to social housing). This law classifies almost all new construction as ‘social housing’, although it is not necessarily intended for households with low incomes or for other priority groups. There is also no special legislation on not-for-profit housing or housing associations. Non-profit organisations (charities) own/manage only some temporary ‘crisis’ housing (shelters, hostels, halfway houses, etc.) for those in acute housing need such as homeless people, victims of domestic violence, refugees, Roma households, and so on. Their activities are regulated by the Act on Social Services No. 108/2006, which strictly defines what types of social services can be funded from the state budget. The provision of permanent social housing is not one of them. On the contrary, if a not-for-profit organisation were to provide rented housing, this would be treated legally as a commercial activity, making it difficult for the provider to justify its non-profit status. Only a few non-profit organisations own flats for the purpose of social skills training. Such flats, however, are again only a temporary type of accommodation closely connected with those organisations’ social work. Thus, municipalities are the only owners of long-term rental housing provided at below-market rents and without special social services to tenants. The obligations of the municipalities, including their responsibility for preparing and implementing local housing policy, are set out in the Act on Municipalities No. 128/2000. However, their obligations are only vaguely defined, and the Act does not explicitly require the municipalities to ensure the provision of housing to poor or vulnerable citizens. Consequently, in the Czech Republic public housing is not synonymous with social housing: an estimated 5% of the municipal housing stock is rented out at market rents (i.e. to the highest bidder) and most of the municipally owned stock was privatised at give-away (or below-market) prices to sitting tenants after 1991. Public tenants do not have a legal right to buy in the Czech Republic. However, the pre-1990 system of non-targeted rent regulation remained in place after the change of regime, with only small and gradual rent increases permitted until 2007.1 Municipalities were not obliged to sell their housing, but

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Table 10.1

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167

Housing tenure in the Czech Republic, 1991–2011. 1991 Number

2001

Percentage Number 36.9

2011

Percentage

Number

Percentage

1 371 684

35.8

1 453 228

37.3

Owner-occupied houses Owner-occupied flats

1 367 027 31 164

0.8

421 654

11.0

1 057 452

27.2

Rental housing Owned by municipalities Privately owned∗

1 465 231 1 242 664

39.5 33.5

1 092 950 649 656

28.6 17.0

685 661 n.a.

17.6

222 567

6.0

443 294

11.6

n.a.

Cooperative housing

697 829

18.8

548 812

14.3

432 291

11.1

Member of a tenant cooperative†

–

–

103 216

2.7

–

–

144 430

3.9

289 362

7.6

265 578

6.8

3 705 681

100.0

3 827 678

100.0

3 894 210

100.0

Others (free use, caretaker and staff flats, other and undetermined) Total ∗ Estimates.

† Member of a legal entity founded by tenants for the purpose of the privatisation of their tenement building. Source: Census 1991, Census 2001, Census 2011 (preliminary results), Czech Statistical Office.

were unable to effectively manage it. With their hands tied by rent control, they began to privatise their stock. Flats were mostly sold to sitting tenants at low prices, although pricing policies and the scale and speed of sales varied from one municipality to the next. It is estimated that by the end of 2010, 80% of the housing stock transferred into municipal ownership at the beginning of the transition had already been sold to sitting tenants, suggesting that the share of public housing fell from 39.5% of the total housing stock in 1991 to about 6–8% in 2010. Table 10.1 shows a marked increase (more than 10%) in the home ownership rate between 1991 and 2001 and conversely an 11% reduction in the share of rental flats. The preliminary results from the 2011 census do not distinguish between private and municipal renting. However, the total shows that in the most recent decade, as in the preceding one, the share of rental housing fell by about 11% and now stands at 17.6% of the housing stock. It is very likely that the amount of private rental housing now exceeds the amount of municipal housing. Privatisation also had a significant effect on cooperative housing (19% of the housing stock in 1991), which may under certain conditions be categorised as social housing (as e.g. in Sweden or Germany). The basic objective of the Transformation Act No. 42/1992 was to increase the ownership rights of cooperative members living in their flats. Unlike the occupants of municipal flats, cooperative members occupying cooperative

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Historical Development of the Sector to the Present Day

flats acquired the right to ‘sell’ their flats (formally, to transfer their cooperative ownership share) on the free market and, in particular, the right to transfer their shares free of charge into full ownership. In practice, this turned cooperative housing into a type of home ownership, although it formally remains part of the rental sector.

Historical development of the sector to the present day Supply-side subsidies for the construction of rental housing designed for low-income households have a long tradition in the Czech Republic, going back to 1918 when the independent Czechoslovak Republic was established. The housing policy of the newly created state addressed the post–World War I housing shortage by introducing measures to increase housing output for low-income households, most notably by using private renting and cooperative housing tenures. After 1948, Czechoslovakia’s economy shifted to central planning and housing construction began to be fully and centrally controlled by the state. The change of regime was accompanied by strong central state interventions directed at decommodifying housing–interventions that influenced the scope of housing production through extensive state subsidies, the tenure structure through property expropriation and housing consumption through rent and price regulations. These interventions created a mass state-rental housing stock, which in 1989 accounted for 39.5% of the total housing stock. Rents and utility prices in this housing were kept at very low levels. The official landlord of public housing was the state, but owing to strong tenure security (which allowed tenants to pass on the right of occupancy to relatives and descendants) and bureaucratic and ineffective housing management, tenants in fact enjoyed, formally or informally, many of the rights of ownership. As Marcuse (1996) has shown, the tenancy title that existed under socialism was very close to the ownership title known in the West. This specific housing tenure came later to be called quasi-home ownership. During socialism, the state was responsible for providing housing for all its citizens and not just for those who were financially weak. And because state housing was for everyone, the people who obtained it fastest (or obtained the best quality housing) were mainly members of the regime’s nomenklatura or people who used clientele networks or even outright corruption to get it – that is, people who did not usually fall into the category of the neediest (Lux 2009). These two distinctive contextual features – the quasi-home ownership status of tenants and the allocation procedure, particularly the incongruity between the principle of universality in housing allocation and the reality of the allocation of social privileges according to the applicant’s degree of loyalty to the regime, meant that public housing in the Czech Republic was not really comparable to social housing schemes in Western

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65000 60000

36 442 2010

38 380 2009

2008

2007

32 863

30 190

2005

2006

32 268

27 127

2004

27 292

2003

24 759

2002

25 207

2001

41 649 Completed dwellings

2000

22 183

16 757

23 734 1999

1998

1994

1993

1992

1991

1990

0

14 482

5000

1997

10000

12 662

18 162

15000

1996

20000

1995

25000

31 509

30000

41 719

35000

36 397

40000

44 594

45000

2011

38 473

50000

28 628

55000

Started dwellings

Figure 10.1 Housing construction 1990–2011 (completed dwellings). Source: Czech Statistical Office.

countries. However, through massive state subsidies and widespread use of pre-fab housing construction techniques, the post-war housing shortage was basically overcome before the collapse of socialism in 1989. After 1990 and the change of regime, the principal subsidies for the construction of state-rental housing disappeared and housing construction output decreased rapidly (Figure 10.1). At the same time, the prices of construction materials were liberalised and quickly increased. These factors led to the near-disappearance of multi-dwelling building construction. In 1995, thanks in part to new state subsidies (see subsequent text), apartment housing construction began to pick up. Afterwards, the new supply became gradually dominated by private capital, and public housing’s share of completed dwellings steadily decreased from more than 16 000 units in 1989 to just 757 in 2009 (Figure 10.2). As a result of the privatisation of the existing public stock (about 80% of the public stock that existed in 1991 was privatised by 2010) and the decreasing share of public housing in total housing output (it represented only 2–3% of total output in 2008–2009), the significance of public housing diminished substantially. The change of regime in 1990 was not only an important political milestone; it was the radical break point after which public housing, largely as a result of its privatisation to sitting tenants, quickly disappeared from the Czech housing system. Give-away privatisation formalised the existing quasi-home ownership entitlements of public tenants and acted as an economic subsidy to sitting public tenants. This subsidy served as a political ‘shock absorber’ and allowed the country’s leaders to effectively manage fundamental economic and political change. It also had serious and irrevocable consequences for citizens’ attitudes to housing, as home

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Provision of Social Housing

50 000 40 000 30 000 20 000 10 000

Municipalities

Co-operative housing

Individuals

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

0

Others (e.g. developers)

Figure 10.2 Housing construction by type of investor. Source: Czech Statistical Office. Note: Data on housing construction by type of investor between 1996 and 1998 are not available.

ownership became the social norm and rental accommodation became socially undesirable, especially for long-term housing. Even in the Czech Republic, which did not apply a right-to-buy policy, attitude surveys showed that people’s tenure preferences became strongly skewed in favour of owner occupation (Lux & Sunega 2010).

Provision of social housing Recent estimates indicate that municipal housing now makes up less than 10% of the housing stock. It comprises both pre-war brick buildings and post-war pre-fab buildings. Information about the quality and characteristics of this housing stock will eventually be available from the 2011 census.2 However, we can glean some information from the European Union’s Statistics on Income and Living Conditions (EU-SILC). In 1998, the data distinguished housing by type of landlord, and Tables 10.2 and 10.3 compare the characteristics of municipal and owner-occupied housing, and of public tenants and home owners. Although the differences are not great and may be the product of sampling error, municipal housing is probably more overcrowded and of lower quality than owner-occupied apartment housing. In recent years, since the large-scale privatisation, public housing has been characterised by an overrepresentation of lower-income households, pensioners and the unemployed – that is, households that have problems accessing affordable housing. Czech municipalities are free to manage and allocate public housing as they wish, as long as they respect rent regulation on existing tenancies. There is no state or regional regulatory framework for public housing management, nor any regulations governing the permitted scale or form of public housing privatisation or housing allocation. Some municipal flats

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1.19 1.40

57.0 64.3

30.0 33.0

30.1 20.8

17.4 9.7

2.1 0.0

22.9 6.6

20.3 18.4

is defined as housing units with fewer rooms (not counting the kitchen) than household members. own perception about shortage of space in the dwelling (‘subjective overcrowding’). Home ownership category includes cooperative housing. Source: EU-SILC 2008.

† Respondents’

∗ Overcrowding

2.28 2.76

24.3 16.6

Average Households Households Households Households Households Households Average Average Average perceiving perceiving total perceiving number number of total living in perceiving without a problems problems problems dwelling overcrowded shortage of of rooms rooms per dwelling separate person area area per dwellings space bathroom with humidity with noise with pollution (%) (%) (%) (%)∗ in a dwelling (%) (m2 ) person (m2 ) (%)†

Selected characteristics of public housing and owner-occupied flats.

Public housing Owner-occupied flats

Table 10.2

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Selected characteristics of public tenants and homeowners.

Table 10.3

Problems Average Pensioners Unemployed Average RentShare of Arrears with age (%) (%) number of tohouseholds on mortgage housing (years) children income with or rent‡ ratio (%)∗ equivalised expenditures incomes in (%)† first-third deciles (%) Public tenants Home owners

51.2 51.7

31.2 28.8

8.0 3.2

0.61 0.52

27.6 17.7

39.3 26.4

28.1 17.6

1.8 0.5

∗ Rent-to-income

ratio for homeowners was calculated using imputed rent. on respondents’ own assessment of whether housing costs represented a heavy financial burden. the household was in arrears with mortgage or rent at the time of the survey. Home owners include cooperative members. Source: EU-SILC 2008. † Based

‡ Whether

have been privatised, some are rented out at market rents and some are rented at below-market rent to people in housing need. For this last category, each municipality applies its own social housing policies and scoring systems to assess housing need. It is, however, impossible to estimate the number of such flats or to make any overall assessment of allocation schemes. Each municipality incorporates its own interests and needs into its strategy. The decentralisation of power in this field is truly substantial. For example, the capital city of Prague, with a population of approximately 1.2 million, is divided into 22 administrative districts and 57 independent ‘municipalities’. Each of these 57 ‘municipalities’ (actually neighbourhoods) has its own elected council, board and mayor who have parliamentary, governmental and premier functions. This means that there are 57 independent housing (social housing, privatisation) policies within the capital city. The same applies across the territory of the Czech Republic, which is divided into more than 6000 independent municipalities. Given its population of about 10 million inhabitants, the Czech Republic is one of the most decentralised countries in Europe. Such unprecedented fragmentation makes generalisation or evaluation almost impossible. This high level of decentralisation may be one of the factors explaining the lack of a central social-housing strategy. Many municipalities actively resist any kind of central government intervention, usually by citing local budget constraints. All attempts to draw up a central social-housing strategy or to strengthen the municipalities’ legal responsibility for providing housing to their poor citizens have been unsuccessful because they did not include sufficiently strong financial incentives. Despite the many positive aspects of decentralisation, such as bringing decision-making closer to local people, when it comes to new social housing strategies it has proved to be more of an obstacle to than an impetus for

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sustainable policies. This is what behavioural economics calls the ‘paradox of decentralisation’: decision-making has been decentralised to a large number of small entities that are financially and politically so weak that they refuse to make financially (costly) and politically (unpopular) risky decisions. Social housing strategy is a good example of a costly and risky decision: it is not politically popular to help the poor; it is an expensive activity (as housing is an expensive good generally); and there is a danger that those who do take action will be punished for their efforts if other entities can freeload. In other words, the establishment of an effective social housing strategy in one small municipality might lead to an influx of poor people from neighbouring small municipalities, which could exacerbate rather than solve the local area’s housing problem.

New municipal construction: policy and financing Insufficient fiscal decentralisation and the financial weakness of municipalities have left new municipal housing output dependent on the availability of state subsidies. Even though housing policy and public housing management were decentralised to the local level, new municipal/social housing output is critically dependent on funds from the state budget. Responsibility for the drafting and implementation of central housing policy is divided among three ministries in the Czech Republic: the Ministry for Regional Development (MRD), the Ministry of Finance and the Ministry for Labour and Social Affairs (MLSA), while the State Fund for Housing Development (SFHD) executes programmes prepared by the MRD. Housing allowances come under the MLSA as a part of its general social policy, while the most important programmes supporting owner-occupied housing, the state premium to housing savings and mortgage tax relief, are the responsibility of the Ministry of Finance. Although officially the MRD is responsible for state housing policy, its room for manoeuvre is substantially limited by the interests of the other two ministries. Other factors behind the lack of any central (legal) social housing strategy in the Czech Republic are the weakness of MRD and a political preference for owner-occupied housing. If we compare the levels of state subsidies according to their target housing tenure, public expenditure in support of owner-occupied housing clearly dominates Czech housing policy. In 2005, public support for owner-occupied housing in the form of down-payment subsidies, interest subsidies, tax subsidies and state premiums to housing savings was almost five times more than public expenditures supporting rental housing (Lux, Sunega & Boelhouwer 2009). The state maintains only an indirect influence on local social housing strategies through the allocation of specific housing subsidies. Over the past

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New Municipal Construction: Policy and Financing

10 years, several supply-side subsidies have been developed. These instruments are listed here in chronological order.

Municipal rental housing construction subsidy (1995–2007) In 1995, the government started supporting new ‘municipal’ rental housing construction through grants that, between 1999 and 2002, amounted to €16 0003 per new dwelling (which covered about one-third to one-quarter of the average cost of construction). Until 2002, the Czech output of municipal rental housing was relatively large when compared to other post-socialist states: there were 62 000 municipal housing starts between 1995 and 2002. However, most new public-housing output had de facto quasi-home ownership status because the original state support for municipal housing was converted into support for cooperative housing. ‘Tenants’ paid large contributions out of their own pockets and became co-op members rather than pure tenants, which gave them relatively extensive disposal rights similar to those of home owners. Moreover, the programme ended up with the state also subsidising the construction of luxury dwellings, second homes or flats acquired purely for speculation. The allocation of housing was not means-tested and, in fact, it was mostly high- and middle-income households that participated in the programme (Lux, Sunega & Boelhouwer 2009). When the programme was amended in 2003 to rectify its deficiencies, the scale of output decreased substantially. Only 10 654 flats were built between 2003 and 2007, and in 2007 the programme was abolished.

Subsidies for construction of ‘supported’ flats (since 2003) The aim of this programme is to provide new social housing for people who have difficulty obtaining housing because of some (social) disadvantage. It targets people who cannot access housing through other housing policy measures by providing them with ‘start-up’ flats, and those in need of social care because of their age (over 70) or poor health are provided with flats with in-house care services.4 The grant is equal to €24 000 per dwelling for those with care services, while start-up flats get €22 000. For the first 20 years no change in the tenure status or tenancy conditions of a supported flat is permitted, its ownership cannot be transferred to a third party, and it cannot be mortgaged (except to obtain funds to construct the dwelling itself). The maximum rent is €2.18/m2 (30–60% of market rent).5 The maximum lease period is two years, except for tenants over 70, who get lifetime leases. Until 2010 the subsidy was open only to municipalities, and 3319 flats were built between 2003 and 2010. Since 2011, the subsidy has been open to any legal entity registered in the European Union (EU), but due to public spending cuts only 228 supported flats were built in 2011.

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Social rental housing construction subsidy (2009–2010) In 2009, a new social rental housing subsidy was introduced. Any legal entity (including municipalities) registered in the EU could apply for this subsidy of up to €20 000 per dwelling unit (with a possible additional €4000 for energy-saving flats or €2000 for barrier-free flats); the maximum subsidy was one-third of the dwelling construction costs. Subsidised flats had to be allocated to households with low incomes or those who had problems obtaining housing because of a disability. The maximum rent was €1.70/m2 in 2010. The programme permitted no change of tenure status for a 10-year period. In 2010, only 241 of these social dwellings were built and in 2011, following the Czech government’s adoption of austerity measures, the SFHD eliminated this subsidy entirely.

State-backed guarantees for loans to developers of rental housing Since 2010, the SFHD has offered guarantees on loans to housing developers of rental housing. The aim of the programme is to motivate private capital to invest in rental housing for low-income tenants, although there is no explicit targeting. The SFHD offers to guarantee up to 70% of the loan; the maximum loan amount guaranteed is €60 000 per new housing unit. The allocation of dwellings is not means-tested. For the term of the guarantee (at least 10 years), the programme prohibits the transfer of ownership to a third party, and the flats must be used as rental housing. The cost of the guarantee is 0.6% per annum of the outstanding amount of the loan. So far, housing developers have shown almost no interest in this kind of guarantee.

Loans for rental housing construction Since 2011, the SFHD has also offered low-interest loans to complement the guarantees described earlier, for the construction of new rental housing. The interest rate is determined by the target group. The lowest interest rates are available for construction of housing for people over 70, those with disabilities and people whose housing was destroyed by floods. Somewhat higher interest rates are applied to loans for non-targeted housing. The maximum loan is 70% of the cost of the housing’s construction. The loan maturity is up to 30 years. The flat must be rented for the whole term of the loan; the minimum term is 10 years. In 2011, only one project received this preferential loan financing because of lack of interest. The main demand-side subsidies in the Czech Republic are housing allowances and a housing supplement.

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Rents, Access and Allocation

Housing allowance Both home owners and tenants are entitled to a housing allowance if housing costs are more than 30% of household income and this 30% is lower than the local reference rent (in Prague, the percentage is 35). This reference rent represents an average housing cost and varies by size of municipality and household size; lately, reference rents have been close to free-market rent levels. Households may claim the benefit for a maximum of 84 months over 10 calendar years, except for households exclusively consisting of people over 70 years and the disabled.

Housing supplement This benefit addresses cases where household income, including the housing allowance, is insufficient to cover justified housing costs. Recipients must also be receiving a ‘living minimum’, a benefit guaranteed by the welfare system to people with no or very low income. Like housing allowance, the payment is limited to 84 months in 10 years. The supplement is calculated so as to ensure that the recipient has enough to cover minimum living costs after paying for housing, including energy costs. Consequently, for families with no income it may actually cover total housing costs (including the full market rent and associated housing costs in private tenancies). The combination of a housing allowance (with reference costs at near-market levels) and an additional housing supplement makes demand-side subsidies very generous and an essential tool for tackling the housing affordability problems of vulnerable and poor households.

Rents, access and allocation In the Czech Republic, reform of the economic and political systems took precedence over social policy reform (Krebs et al. 2005). Social policy remained highly redistributive, and placed an especially high redistributive ˇ ˇ u˚ 1998) – as evidenced by burden on the middle classes (Vecerník & Matej the generosity of the housing allowance and housing supplement schemes. This fact made it easier to implement the necessary economic reforms. Moreover, the Czech Republic has the lowest at-risk-of-poverty rate in the EU-25 and the problem of social segregation and exclusion still remains ˇ more of a threat than a reality (Vecerník 2009). However, housing inequalities have grown since the transition, although more as a result of state interventions and state housing policy than of the free operation of the market. A prime example of such intervention is

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rent control. While many ‘rich’ households profited from rent regulation or give-away public housing privatisation (Lux & Sunega 2004), many young and vulnerable households had to pay much higher rents or prices for housing of comparable quality because there was almost no new social housing output and a low turnover in public housing. Demand-side housing subsidies were implemented to slightly mitigate the effects of this problem, but for those who face discrimination on the housing market (the homeless, jobless, immigrants, ethnic minorities and large families) this help proved to be insufficient, as obtaining a permanent lease is very difficult, if not impossible, for them. As stated, for a long time the Czech housing system maintained a very conservative rent-control regime, which applied to existing tenancies in both municipal and private (restituted) ownership. Between 1999 and 2007, with the exception of inflation increases allowed between 1999 and 2002, the rents for existing tenancies (contracts concluded before 1992) remained frozen. This exacerbated tensions between insiders (old tenants) and outsiders (new tenants). In 2000, the constitutional court ruled that legislation regulating rent levels violated the Charter of Basic Human Rights and Freedoms and Article 1 of the Constitution of the Czech Republic. The court ruled that it should become null and void by the end of 2002 and that a new system should come into force in the beginning of 2002. However, by end-2001, parliament had not adopted it and a new edict introduced by the Ministry of Finance was again declared null and void by the constitutional court in November 2002. The Ministry of Finance attempted to circumvent this ban by issuing a new edict that was an exact copy of the original, in the hope that the constitutional court’s ruling would apply only to the first version, but the court quashed both. Rent control was therefore high in the political agenda but had little in common with social housing principles: it was not targeted, was irrespective of tenure, was not justified on affordability grounds and was designed to maintain the status quo regardless of tenants’ social needs. It also failed to help those (poor) households whose housing situations placed them outside the rent-regulation system. In 2006, the situation suddenly changed when Polish private landlord Hutten-Czapska won a case against the Polish state before the European Court for Human Rights. The court ruled that the strong rent control applied in Poland denied private landlords their right to profit, and said that housing affordability should be assured by state benefits and not by such rent control (Ball 2012: 45). The Czech government quickly prepared a plan to deregulate all rents by 2011 (later extended to 2012 in big cities). State regulation of rents on all existing tenancies had therefore ceased by the end of 2012.

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Conclusion

It is now up to municipalities to set rents and determine rent differentiation for the housing they own. This removes the final barrier to the complete liberalisation and decentralisation of public housing management and allocation. While private landlords have already increased (or will soon increase) rents to market levels, the majority of municipalities have kept (or will keep) rents below the market price. However, as in the case of public housing allocation or privatisation, there are huge differences among municipalities and it is not possible to present an overall picture and assessment of how these will be put into local practice.

Czech social housing in brief In the Czech Republic, municipalities are the only owners of long-term rental housing provided at below-market rents, but the status of public housing and the way it was allocated during communism mean that municipal housing was never synonymous with social housing in the Czech Republic. This important contextual fact is often overlooked in international comparative studies. The overwhelming majority of municipal housing consists of former state housing transferred to municipal ownership after the collapse of communism in the early 1990s. Most public housing was privatised at give-away prices to sitting tenants and of what remains, part is rented out at market rents. The second important feature of the Czech system is almost complete decentralisation and fragmentation of housing policy, with no de facto central co-ordination or regulation. There are more than 6000 independent municipalities in a country of 10 million inhabitants, but there is no state regulatory framework for public housing management nor are there regulations governing the scale or form of public housing privatisation or targeting. In addition, since the beginning of 2013 rents for both public and private housing have been deregulated and municipalities are free to devise their own individual rental schemes. Consequently, the current already high variation in municipal authorities’ social housing strategies is likely to further increase in the future.

Conclusion The municipalities are the only owners of long-term rental housing provided at below-market rents in the Czech Republic. However, municipal housing is not synonymous with social housing: most was privatised at give-away prices to sitting tenants, and of what remains, part is rented out at market rents. There is no official definition of social housing in the Czech Republic. The restitution of housing stock also created a private rented sector but the particular state regulations substantially constrained the long-term demand for this type of housing. In the Czech Republic, rental housing quickly became a temporary and residual form of housing.

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The future of a highly decentralised and fully deregulated public housing sector in the Czech Republic remains open. The most recent housing policy strategy, adopted in 2011, sets out to prepare a central concept (definition) for social housing. However, the recent discourse around social housing in the Czech Republic is different from the post-war discourse in Western democracies. In the Czech Republic, social housing is no longer perceived as one specific form of subsidy nor is it perceived as a strictly supply-side instrument. Instead of providing massive long-term capital subsidies to public housing, the state and local governments will adopt smaller programmes aimed at different target groups. These new social/public housing strategies will be characterised by decentralisation, flexibility (allowing for easy changes in subsidy rules and targeting) and an emphasis on social integration (to prevent the spatial segregation of specific housing stock). It is therefore unlikely that many of the social housing ideas and practices that emerged in the West during the post-war era, such as building, maintaining and managing large stocks with some form of central rule or co-ordination, will be imported into the Czech Republic. The variation currently evident in municipal authorities’ approaches to social housing strategies is likely to increase. In practice, this multi-channelled approach will be reflected in mechanisms such as targeted public projects, providing incentives for private developers, and employing different forms of co-operation with private capital (public–private partnerships). In addition, there are likely to be innovative models that will attempt to use private renting for social purposes. These novel strategies reflect the institutional context of post-socialist societies more accurately than the historical models of social housing found in Western European countries.

Acknowledgement Research for this chapter was made possible with support from the Czech Science Foundation, grant No. P404/12/1446.

Notes 1 Deregulation of controlled rents started in 1992 by allowing landlords to introduce a one-time, 100% rent increase. In the years that followed, the maximum regulated rent was set out in government decrees. However, after 1999, the maximum ceased to rise in real terms and after 2002 was frozen in nominal terms (real regulated rents decreased). The process of rent deregulation was not restarted until 2007. In 2006, the Czech parliament passed a law on deregulation of all rents by 2011 (later extended

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to 2012 in big cities). State regulation of all rents thus ceased as of 2012. See further details in ‘Rents, access and allocation’. Because of the dynamic effects of privatisation after 2001, the 2001 census is not suitable for a qualitative description of the housing stock and up-to-date information will only be available once the final results from the 2011 census are released. Exchange rate as of May 2012. Until 2007, the programme included support for construction of ‘half-way flats’ for vulnerable people such as young adults leaving care, people released from prison, single parents or victims of domestic violence. The percentage here varies according to region (i.e. Prague vs poorer regions’ market rents) and dwelling size, because market rent/m2 decreases as dwelling size increases.

References Ball J (2012) Housing Disadvantaged People? Routledge, London and New York. ˇ Krebs V, Durdisová J, Kotynková M, Mertl J, Poláková O, Žižková J, Vlcek M and Vychová M ´ (2005) Sociální politika (Social Policy) ASPI, Prague. Lux M (2009) Housing policy and Housing Finance in the Czech Republic during Transition Delft University Press, Amsterdam. ˚ Lux M and Sunega P (2004) Modelování rovnovážné úrovneˇ nájemného a dusledk u˚ aplikace vybranych nástroju˚ bytové politiky (Modelling of equilibrium market rents and impact of ´ selected housing policy tools). The Czech Journal of Economics and Finance, 53, 31-59. Lux M and Sunega P (2010) The future of housing systems after the transition: the case of the Czech Republic. Communist and Post-Communist Studies, 43, 2, 221-231. Lux M and Sunega P (2011) Private rental housing in the Czech Republic: growth and … ? Sociˇ ologicky´ casopis/Czech Sociological Review, 46, 3, 349-373. Lux M, Sunega P and Boelhouwer P (2009) The effectiveness of selected housing subsidies in the Czech Republic. Journal of Housing and the Built Environment, 24, 3, 249-269. Marcuse P (1996) Privatization and its discontents: property rights in land and housing in the transition in Eastern Europe chapter in G Andrusz, M Harloe and I Szelenyi Cities after Socialism (eds), Blackwell, Cambridge. ˇ Vecerník J (2009) Czech Society in the 2000s: A Report on Socio-Economic Policies and Structures Academia, Prague. ˇ ˇ u˚ P (eds) (1998) Zpráva o vyvoji ´ ˇ ˇ Vecerník J and Matej ceské spolecnosti 1989–1998 (Report on development of Czech society 1989–1998) Academia, Prague.

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In constant limbo—artist Hubert v. d. Goltz’ two figures, placed on the roofs of Berlin-Hellersdorf high rises after unification, symbolise the often precarious balance of German social housing development over the last decades. Photograph: Thomas Knorr-Siedow.

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11 Social Housing in Germany Christiane Droste and Thomas Knorr-Siedow UrbanPlus, Berlin, Germany

Introduction The concept of social housing (Sozialer Wohnungsbau) has undergone dramatic changes over the past two-and-a-half decades in Germany. Originally conceived as a federally funded building programme ‘for a broad spectrum of society’ (IInd WohBauG of 1956), it has shifted towards a much smaller, more needs-oriented and differentiated support for those ‘who are unable to provide for themselves on the housing markets’ (Section 1 WoFG of 2001). Social housing lost much of its quantitative impact and qualitative meaning after the late 1980s shift towards a neoliberal re-interpretation of the welfare state. The marketisation of housing in general and social housing in particular was precipitated by the abolition of non-profit housing legislation in 1989, the far-reaching privatisation of publicly owned housing1 and the devolution of social housing to the regions (Länder)2 in 2006. Sixteen regional housing policies have since been elaborated, which respond to the variety of regional contexts and demands. While some regions have adapted former federal policies, others have completely abandoned the funding and construction of social homes. However, with the recent re-emergence of a house-price and availability crisis in many growth areas, politicians and the housing sector are under considerable public pressure. Social housing is back on the political agenda – but increasingly is uncoupled from its former narrow legal definition and statist connotations and incorporates innovative models. The new wider definition of social housing still includes traditionally funded (de jure) social housing, albeit at a decreasing scale, while the number of other Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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access- and rent-regulated units (de facto social housing) has fallen because of privatisation between the mid-1980s and 2006. The amount of market housing paid for with housing benefit by households with limited incomes or special housing needs has grown considerably. This can be termed virtual social housing. It is providing safe and affordable housing without the negative spatially accumulative factors that are often associated with estates of de jure and de facto social housing. Innovative forms of public support have also been increasingly emerging since the mid-1990s to at least partly compensate for the loss of de jure and de facto social housing and to help reduce housing costs for specific groups. New cooperatives and other forms of co-housing, for example, are being supported by a growing number of regions and municipalities.

Development of the sector up to the present Social housing in Germany developed out of the affordable housing built during the late nineteenth century period of housing reform and the experiences of the Weimar Republic, which from 1919 produced garden cities and modernist estates with a human dimension. These represented a collaborative effort by political and cooperative activists and cities, with the Reich as a major funder. Exemplary in architecture and urban form, this type of housing has proved to be highly sustainable (Kähler 1985; Häussermann & Siebel 1996; Freytag 2000) and some of it has been given World Heritage status (Haspel & Jaeggi 2007). Dedicated to the needs of the educated and active working classes rather than the lowest income groups, the 1.7 million dwellings built between 1919 and 1929 hardly affected the deplorable housing conditions of the poor. After the devastations of World War II and the influx of millions of refugees, East and West Germany each pursued its own strand of development. Western Germany initiated a massive programme of social housing, of which the current system is a continuation (see Table 11.1). East Germany embarked on a programme of mass housing designed, in principle, to provide for all citizens; this special regime ended in 1990 and has left few traces.

Sozialer Wohnungsbau (de jure social housing) Overall, about 5 million social homes were constructed in West Germany between the early 1950s and 2000. In 1970, almost a quarter of all post-war housing in Germany was social housing. Owing to the temporary nature of the tenure, which is inherent in the system, this number had declined to 3.9 million by 1987, 1.7 million by 2002 and 1.5 million currently (Pestel Institut

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Table 11.1 Construction of de jure and de facto social housing in West Germany by members of GdW∗,†, 1950–2002. Period

1950–1959 1960–1969 1970–1979 1980–1989 1990–2002 Total ∗A

Units built (thousands)

1800 1300 600 300 300 4300

Units still within lock-in period Percent

Number (thousands)

3 21 83 100 100

50 270 500 300 300 1420

further 200 000 social dwellings are owned by non-members of GdW.

† GdW: Bundesverband deutscher Wohnungs- und Immobilienunternehmen e.V. (Association of German Housing

and Real-Estate Companies). The former federal association of the non-profit and cooperative housing sector, now a lobbying organisation representing the non-profit, cooperative and a large number of privatised former public companies. Source: GdW (2005).

2012). This housing consists of rental or owner-occupied housing whose construction was (part-)financed under contracts (Förderverträge) between the respective regions and the owners. Under these contracts, the owners receive subsidies towards building and management in exchange for • imposition of a maximum rent (Kostenmiete or cost rent), which was subsidised down to an affordable level, and • limiting access to lower income groups. These conditions apply during a lock-in period of, on average, 30 years,3 after which the housing can be rented or sold on the open market. Various strands can be identified in the development of de jure social housing. The first strand (Erster Förderweg) was the standard form until the mid-1980s. Subsidised rents were and still are generally equivalent to low market rents (currently about €0.70/m2 below the regional average) but higher than rents for older units, including former social housing that has come out of lock-in. There are caps on useable floor space and room sizes. The second (Zweiter Förderweg) and third strands (Dritter Förderweg) encompass higher priced social housing for residents with incomes between 40 and 60% above the ceiling for first-strand housing. While the second strand was a speciality of the 1970s and 1980s, the third strand (after 1989) has become mainstream in those areas where new social housing is still being built (e.g. North-Rhine-Westphalia, Hamburg, Bavaria). In many regions, much of the third-strand social housing consists of owner-occupied single-family homes. Room and flat sizes only marginally exceed those of the first strand.

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Quality and characteristics: German housing reached a high standard during the second half of the twentieth century; the average floor space per capita is over 40 m2 , or more than two rooms (Walberg 2011). Within Europe, Germany belongs to the top group of north-western countries in terms of housing provision, according to data from the EU’s Statistics on Income and Living Conditions (EU-SILC). Whether living in the west or east, as owners or renters, a large majority of the German population has experienced improvements during their lifetimes. Social housing in all its forms (and mass housing in the east) has significantly contributed to these improvements in quality (Eichner 2012). Compared to market housing of the same period, the quality of social housing has always been relatively high. It was a political goal to use social housing to incentivise better housing across the market. In addition, the mechanics of the funding system encouraged the production of quality housing, as the agreed cost rent before subsidies often exceeded average market rents. Social housing investors thus had the freedom to follow fashions in architectural and urban design. Advanced technologies allowed mass production, but often led to technical failures that necessitated a series of follow-up rehabilitation programmes; these ‘after-care’ schemes began in the mid-1980s, only a decade after the completion of the large social housing estates. Yet floor plans were well designed and provided liveable space for working-class families. Post-war construction started by filling in gaps in bomb-damaged cities and continued with decent medium-sized and medium-height estates during the 1950s – a model that continues to be well accepted. In the 1960s, large peripheral ‘satellite towns’ were built to relieve run-down nineteenth century working class neighbourhoods, followed in the 1970s by large high-rise developments that were part of inner-city clearance programmes. These massive projects were followed by another round of intelligent gap filling and smaller projects as part of a more careful urban renewal programme (Behutsame Stadterneuerung), which was highlighted at the 1987 Berlin International Building Exhibition (IBA 1987). Since then, small and medium-sized social-housing projects have contributed to making cities liveable and more sustainable. The best examples of the relationship between social housing concepts and societal development include the 1957 modernist Berlin INTERBAU, the post-modernist IBA 1984/87, and the 1990 IBA Emscher Park in the former industrial heartland of the Ruhr District. The great majority of social housing has always been well accepted. Exceptions include some post-1965 estates, whose early attraction disappeared as their excessive height and bulk became a locus of socioeconomic deprivation after the mid-1980s (Droste & Knorr-Siedow 2004a,b). High vacancy rates

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(up to 15%) and social conflict led to the introduction after the mid-1990s of compensatory policies for the Socially Integrated City4 (Soziale Stadt) and programmes for urban regeneration.5 Social housing construction centred on those agglomerations where market pressure was already high or where there was a desire to attract labour. A prominent role was always given to rental social housing, which was not perceived as inferior in a country where even now most of the population lives in rental dwellings. Post-1990s programmes also included owner-occupied social housing schemes, which can be found across rural and urban regions, north and south. ’Melting away’ and the decline in new production: The decrease in the amount of de jure social housing will continue, as access and rent limitations are lifted when lock-in periods end. Over the past two decades, 100 000 dwellings have left the system annually, while much smaller numbers (between 20 000 and 30 000 annually) have been produced. This decline was intentional and inherent in the design of the system. However, the funding structures developed in the 1970s were based on assumptions that did not materialise – in particular: • Social housing was seen by federal governments as an interim step on the way towards an affluent middle-class society, ‘promoting free initiative and combining it with social progress based upon economic performance’ (Müller-Armack 1976). • High inflation of the 1970s and 1980s was expected to continue, which would have rendered rents of about DM24 (€12)/m2 affordable towards the end of the lock-in period. However, the rate of inflation fell and since the 1980s a wide gap has emerged between the permissible rents for social housing and realisable market rents. Market rents for similar units are only about €4.20/m2 in the Ruhr district, and even in Hamburg and Frankfurt are generally well below €12/m2 . This has led to residents fleeing former social housing, as landlords were permitted at the end of the lock-in period to raise rents to the ‘real’ cost level. • The federal government was expected to continue to invest large amounts in the sector. In fact, however, from 1990 onwards the production of new social homes fell, while eligibility rates rose (BMAS 2012). Especially in growth regions, key workers and families with children are finding it increasingly hard to obtain social housing for which they would be legally eligible.

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Kotti & Co. protest camp Kottbusser Tor, in the centre of Berlin Kreuzberg, is one of a number of very large 1970s inner city social housing blocks that were privatised by a municipal company at the end of the lock-in period. Since then, the new private landlord has raised rents to the upper margins of market rents hoping for a gentrification of former social housing. Residents have protested; one leaflet explained their position as follows: ‘Since the end of May (2012) we have been protesting around the clock in our Post-Gececondu camp at Kottbusser Tor against rent rises of up to €18 after the termination of the social housing lock-in. We are experiencing solidarity from many, because everybody knows that affordable housing is not only a matter of rents, but of the future of the city. The rent rises are affecting us, but also increasingly the middle classes. After privatisation and the end of lock-in, the rents for 28,000 flats (in Berlin) rose by more than 20 per cent.’ (Kott & Co Initiative 2012).

The government justified the reduction in funds for new social housing after 1990 by pointing to a persistent public deficit and, with some justification, a fall in demand for housing in shrinking regions. However, this can be interpreted differently. The downward trend in political support for large-scale social housing in Germany has been described as mainly ideologically grounded (Holm 2005). While governments, landlords and the financial sector increasingly viewed social housing for a large part of society as alien to market principles, they still generally accepted that there was a rationale for a small, targeted and needs-oriented social housing sector. The negative effects of the residualisation of traditional social housing, including the clustering of the most problematic households, were cited almost without debate, especially as the alternative (private rented housing supported by housing benefit, or ‘virtual’ social housing) seemed to conform to market principles and at the same time promised social inclusion (see Table 11.2). Financing social housing: Originally, large direct state and regional grants were supplied to landlords in order to reduce cost rents. In the 1970s, publicly guaranteed and subsidised mortgages were introduced; these were distributed to landlords via regional investment banks and private banks. The repayment lengths of these mortgages defined the lock-in periods for the housing they funded. In addition to these low-interest mortgages, generous tax benefits made private investment in social rented housing attractive for the middle classes and institutional investors.

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Table 11.2 Stock of social housing within lock-in period by region (owned by GdW members) (new eastern regions). Region Baden-Württemberg Bavaria Bremen Hamburg Hesse Lower Saxony North Rhine-Westphalia Rhineland-Palatinate Saarland Schleswig-Holstein Berlin Brandenburg Mecklenburg- Western Pomerania Saxony Saxony-Anhalt Thuringia

Number of units 70 000 152 000 3500 93 000 79 000 49 000 267 000 22 000 2200 29 000 138 000 58 000 16 977 15 000 20 000 39 000

Source: GdW 2011.

The gradual shift from grants to interest subsidies was primarily due to reduced federal housing budgets. The change relieved the state from high upfront costs, but interest subsidies and other expense allowances for landlords were stretched over lock-in periods of up to 40 years, adding a considerable burden to future state expenditure. Until 2006, de jure social housing was jointly funded by the federal state and the regions. Billions were invested in the form of federal financial aid to the regions, with peak payments during the 1970s and again for a short period after reunification. In more recent decades, federal payments required a contribution from regional budgets of at least 50%. Between 2006, when social housing was devolved to the regions, and 2013 the federal budget continued to support the regions with about €0.5 billion annually earmarked for social housing. These payments may continue until 2019, but after 2013 the regions are not obliged to use them to build social housing, as they are expected to have developed varying individual funding schemes. Figures for 2012 show that some regions do not even spend enough on new social housing to activate federal subsidies. Federal funds are often used by the regions to pay the long-term debt built up by older social housing programmes. Rents and eligibility: Rents and construction costs for de jure social housing were set politically to serve builders and investors and to provide

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affordable rents for eligible tenants. Although working households were the main target group until the 1990s, rents for newer de jure social housing were never at the bottom of the market scale; usually, average rents for older market housing were lower. Because of this rent differential, low-income working households (with incomes too high for housing allowance or social benefit but who qualify for de jure social housing) often perceive social housing to be unaffordable, choosing instead to live in market housing at lower rents. Social housing thus generally houses two distinct groups: first, higher income, well-qualified working households and (increasingly) pensioners who pay the rent from income, possibly with the assistance of housing allowance (Wohngeld). Second, tenants whose rent is fully covered by social benefits (unemployment or disability benefits6 ), as the rent on de jure social housing of the first strand qualifies automatically under the welfare code. On average, post-1990 rents for de jure social housing have been about €0.60–€0.70/m2 below those of comparable market dwellings of the same building type and age. At present, annual rents/m2 range from €6 to €8 (net, without services or heating) for newer dwellings. Generally, social housing leases provided for automatic rent rises of, for example, €0.20 annually, which were designed to allow the rents to converge with full cost rent by the end of the lock-in period. Especially after 2005, these rent increases would have lifted social rents well above market levels, and would be more than the rises permitted under the civil code (see subsequent text). They were therefore often not administered, which is one of the many absurdities and inconsistencies of the rent and funding system. Rent regulations under the civil code (Section 155 BGB): German leases for both market and social housing are, in principle, of unlimited duration. Market rents may be raised by up to 15%7 within three years, if the resulting rent does not exceed the average local rent for comparable dwellings. Landlords may also increase rents if they modernise the building, for example, in order to reduce CO2 emissions or conserve energy. The ‘pre-set’ development of social-housing rents is exempt from these regulations and can lead to steeper rises. In such cases, regions and municipalities may limit the increases, often by increasing public subsidies. Social rents may also be increased by more than the stipulated amounts if residents’ incomes exceed certain levels. This added levy is known as Fehlbelegungsabgabe. Demographics of de jure social housing and housing outcomes: Eligibility for de jure social housing depends on income and household size. Income ceilings vary according to region and city, and reflect local incomes and housing markets. These income ceilings apply to both rented and

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owner-occupied de jure social housing (see Table 11.3), while third-strand housing has ceilings up to 60% higher. Some regions have additional eligibility regulations, for example, limiting the eligibility of single-person households to those over a certain age, and increasingly there is a tendency towards limiting access to first-strand social housing to those threatened by homelessness. Most of the time, the type of social housing built (in terms of room sizes and number of units) was linked to eligibility rules and the demographics of eligible households. After the 1970s, allocation rules generally provided for one more room than there were persons in the household, and in principle over-crowding was prevented as no more than 1.5 persons per bedroom were allowed. These rules, however, were too blunt to optimise occupancy rates, as over time more children could be born into households (leading to overcrowding) or leave as adults (leading to under-occupation). Large migrant families, in particular, have tended to live at high densities. In contrast, older (German) persons who would prefer to move to smaller flats after their children left have often chosen to stay in the family flat owing to the high cost of newer dwellings. The resulting ‘gridlock’, with older residents blocking larger family-sized homes for the next generation, poses a grave problem for matching availability and demand that has yet to be overcome. Access is regulated via an entry certificate (Wohnberechtigungsschein) issued by the municipality. With this certificate, households apply to public or private landlords, who can chose amongst all eligible applicants.8 This gives landlords the opportunity to discriminate in their choice, disadvantaging minorities and those considered to be problem cases. There are no statistics on the percentage of social-renting households that are migrants, but it is clear that these groups are under-represented in cooperative social housing and over-represented in the large housing estates of the 1960s and 1970s.

Table 11.3 size (€).

Household income ceilings for de jure social housing by household

Source of support

Housing support law Schleswig-Holstein Hamburg (Region) Berlin (Region) North Rhine-Westphalia Stuttgart (City)

Number of persons in household 1

2

Each additional

12 000 14 400 15 600 16 800 17 000 21 600

18 000 21 600 23 400 25 200 20 500 25 200

4100 5000 4100 5740 4700 5740

Deduction for each child

Source: Unpublished reports by public housing support authorities of respective regions, 2012.

500 600 1000 700 600 700

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According to EU-SILC statistics, single parents form the largest proportion of residents of housing at ‘below-market rent’9 , followed by single working persons and working couples without dependent children. Pensioners are under-represented, but their number is quickly rising. With the residualisation of de jure social housing, the concentration of poor households (unemployed benefit recipients) is rising. Floor space and the risk of poverty are similar for tenants in market and social housing, with only owner-occupiers faring considerably better. The proportion of income spent on housing varies little between social housing and market rental after housing benefits, at 22% (gross housing cost excluding heating, water and energy) for both, but rose by three percentage points between 2003 and 2010. However, over 40% of all social-housing tenants are spending more than 40% of their incomes on housing, with a strong representation of single parents in this group.

De facto social housing De facto social housing also has a considerable tradition in Germany. The term describes a variety of lower priced housing. Non-profit housing cooperatives, trade-union-owned housing companies and municipal landlords dominated the period before the 1970s, but at present the largest proportion is made up of former de jure social housing owned by municipal housing companies. They often continue to rent their units for less than de jure social housing rents, as their municipal shareholders try to balance their interest in profitability – to support the public budget – against the municipal obligation to provide dwellings according to the welfare legislation. There are no reliable figures about the amount of de facto social housing of this type, but estimates are that between 30 and 50% of former de jure social housing is treated as if it remained in that status, which would amount to about 1 million dwellings.10 In the ‘new’ eastern regions, de facto social housing was constituted with the 1990 unification contract. Housing produced as ‘peoples’ property’ between 1948 and 1990 was handed over to newly founded municipal companies. In return for releasing the companies from ‘old’ German Democratic Republic (GDR) mortgages that had been turned over to private Western banks, it was agreed that 50% of the dwellings, estimated at well over 1.5 million units in 1990 (BMRBS 1992), should be rented out as de facto social housing (Altschuldenhilfegesetz). This federal law was connected to the new companies’ duty to privatise a minimum of 15% of their stock. In comparison to the western regions, the eastern regions have a limited amount of de jure and de facto social housing. The de facto stock, estimated at over 750 000 dwellings in the mid-1990s, was considerably diminished by privatisation and the publicly funded demolition of more

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than 250 000 dwellings (Stadtumbau-Ost/’Eastern urban regeneration’), after demand for the ‘new homes’ of the GDR fell because of migration and demographic change.

Virtual social housing With the introduction in 1970 of the Housing Allowance Act (Wohngeldgesetz, last updated in 2009) and the payment of housing cost for social benefit recipients, a ’virtualisation’ of social housing was introduced. This system was expected to be cheaper than de jure social housing and to overcome some deficits of the physical housing model. Housing allowance that covers part of the rent (paid from federal funds) or rent-substitute payments that generally cover the full rent (paid from municipal funds11 ) would allow tenants to rent market housing. These subsidies, which can both also be paid for small owner-occupied family homes, were designed to allow households to remain in familiar neighbourhoods despite (short-lived or long-term) financial problems, to prevent ghettoisation, and at the same time to relieve the pressure on shrinking social-housing stocks in a society where poverty has been rising in recent decades (BMAS 2012). Eligibility and financing: The housing allowance currently averages €120/month per household. The number of eligible households rose from 640 000 in 2008 (at a cost of €750 million) to over 1 million in 2010 (€1.8 billion) as a result of a reform of the eligibility regulations. The housing allowance is generally accepted as a non-discriminatory rent support. The landlord is usually unaware that the tenant is receiving the benefit, but the complexity of application procedures deters a proportion of eligible citizens. So-called rent-substitute payments for recipients of long-term unemployment benefit or social assistance constitute the second strand of virtual social housing. Four million households (Bedarfsgemeinschaften) currently receive rent-substitute payments under the welfare code (SGB II and XII), which cover the full rent plus heating costs subject to limits on rent level and size of dwelling. These payments were budgeted at €15 billion in 2009, dwarfing the investment in de jure social housing.

Evidence of the change in social-housing provision In 2009, there were more than twice as many virtual social homes (paid for by housing allowance and welfare) as de jure and de facto physical ones, reflecting the shift in subsidy from construction to support for households in the market (Figure 11.1). Although there is strong evidence of the socio-spatial benefits of helping to house people in ‘normal’ market homes, the administration of virtual social housing is often criticised as

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Provision of Social Housing

3 500 000 3 000 000 2 500 000 2 000 000 1 500 000 1 000 000 500 000 I) XI (S G B

D

is

ab ilit

y

be ne f

it

(S G B

II)

an ce

en ef it

en tb

U

ne

m

pl oy m

H

ou si

ng

al lo w

e D

D

e

fa ct o

ju re

0

Figure 11.1 Physical versus virtual social housing (number of dwellings, 2009). Source: authors’ calculations based on data from BMVBS 2011.

over-bureaucratic and too slow in adapting to market volatility, which means benefit recipients bear the brunt of market changes (Droste et al. 2010). Especially in the growth regions, housing benefit and welfare payments for rent have often lagged well behind price developments. Furthermore, the eligibility rules with regard to size of dwelling and rent often do not reflect what is available on the market. New entrants to the housing market in particular, such as young single persons, divorcees and those moving between regions, do not benefit from these forms of support in pressured markets but must rely on the shrinking amount of low-priced housing. After 2009, the federal government itself recognised that subsidies for eligible claimants were well below market levels (BMVBS 2011) and introduced some improvements, but these have had little effect given the general shortage of housing.

Provision of social housing Social housing in Germany had always been a multifunctional public investment. While it provided affordable homes for a limited time, public funding was also intended as a way to support the private rental market on a permanent basis. Until the late 1970s and again after unification from 1990 to around 2000, the public funding for social housing construction and urban renewal was used to steer the macro economy, as investment in construction has a direct influence on labour markets and boosts business. Public

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Housing stock in Germany 39617 000 dwellings

− Professional-entrepreneurial landlords 9217000

Small private landlords, amateur landlords 14507000

Owner-occupiers

−

−

−

Housing cooperatives 2217000 Municipal housing companies 2 434000

One and two family homes 5421000 Dwellings in multi-family homes 9089000

15893 000 One and two family homes 12812000 Dwellings in multi-family homes 3081000

Public housing companies 206000 Private professional letting of dwellings 4059000 Religious institutions and other housing enterprises 301000

Figure 11.2 Ownership structure of housing in Germany. Source: GdW 2012.

investment programmes generate a considerable private contribution, estimated at €6–7 for each €1 invested by the state (Franke 2011). Given these diverse goals, there has always been a wide spectrum of owners involved in the provision of social dwellings (Figure 11.2), reflecting the overall ownership structure of German housing. All of the ownership types seen in Figure 11.2 are to be found in de jure social housing. The amateur landlords who have in return for subsidies and generous tax benefits accepted temporary constraints on rents and eligible tenants are a peculiarity of the German system. For most of them, renting out social housing means accumulating (moderate) wealth. These dwellings, often intended as a provision for the landlords’ old age, are usually in long-term owner-management, not exposed to market volatility. Most are regarded as assets to be held and maintained rather than traded. As for the other ownership types, there are no exact statistics on the amount of de jure social housing units owned by amateurs, but it will be shrinking

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faster than average as post-1990 social housing has been increasingly taken over by larger professional landlords. In contrast, the professional landlords managing 1.6 million de jure and de facto social homes (GdW 2012) have drastically changed their strategies over the past 25 years. Most of this group consists of medium-sized municipal companies, cooperatives and private companies with up to 10 000 units. As a result of privatisation, a small number of very big companies with up to 100 000 dwellings have developed. With their stronger profit orientation, the professional landlords generally employ a much more return-oriented style of real-estate management. During the lock-in period, the differences in management style between owner types may not be large, as income margins are secure and access regulations do not permit much differentiation in the selection of tenants. But when the dwellings lose their status as de jure social housing, private companies often follow a cherry-picking strategy that separates highly profitable former social housing (which is cultivated as a good asset) from that part of the stock that is disadvantaged because of structure, residents’ potential or image (which is in danger of neglect). Even in the areas covered by the Socially Integrative Cities programme, private companies often fail to participate in neighbourhood social projects. Many municipal companies, on the other hand, balance professionalism and income orientation with a more active role in neighbourhood management and supporting social development. They are increasingly taking seriously their responsibility for de facto social housing and the benefits it confers on the city (Stadtrendite) even after the lock-in period. In the majority of German towns and cities, the recent professionalisation of municipal housing companies has allowed them to move from making losses to making decent returns for the municipality while still preserving lower- and medium-cost homes and providing a tool for the social management of neighbourhoods.

Current developments in social housing policy and practice Despite fundamental changes to the legal and cultural framework of housing, the German federal government claims that the favourable housing situation is built on a ‘proven legal framework, targeted subsidies and effective instruments of social welfare’ and at the same time is ‘significantly the result of investment by private landlords, who provide more than 60% of rental dwellings’ (BMVBS 2011). Social housing, in its traditional forms, has played an increasingly smaller role in this system, and the notion of accelerated social housing decline over the past three decades has become widely recognised. The marginalisation of de jure social housing has been accepted and, to some extent, driven by federal and regional governments, municipal housing companies and private landlords of social housing who saw the

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building of social homes as a failure that was ‘overpriced, without lasting effect’ (Holm 2005). For more than a decade now, housing innovations have focused on other sectors, most strikingly on continued marketisation, home ownership for the middle classes and support for improved privately funded housing for special needs or demand groups. Demand for new housing has been building to crisis levels, especially in the urban growth regions, at the same time as federal support for all housing has continued to decline (Eichner 2012; Pestel Institut 2012). A number of compensatory policies have emerged over the past decade, driven by a variety of protagonists and increasingly supported by public administrators, policy makers and civil society. There has been considerable growth in co-housing initiatives, usually in the form of small to medium-sized self-organised building projects. To some degree, they can be understood as a response to market failure and the decline of innovative social housing. Both market and social housing providers continued to build homes for traditional family households, but the growing variety of lifestyles has increasingly led to a demand for collaborative housing models. These can provide better quality homes for single parents, older persons and those who want their housing to encompass self-organised social infrastructures as well as space for communication, social activities and, not least, work. Over the past three decades, a wide variety of co-housing projects that often reflect the objectives of early-twentieth-century social housing activists have emerged. There are now hundreds of these projects across rural and urban Germany, which have accumulated a stock of knowledge and infrastructure, including banks, cooperatives and support and advice groups (e.g. the Mietshäusersyndikat). While it is still often restricted to middle-class households, co-housing has recently been opening up to collaboration with municipalities and municipal housing companies (ID22 2012).

Mühlenviertel Tübingen (Tübingen Mill Quarter) • • • •

Housing floor area: 30 000 m2 Number of flats: 250 in 52 buildings (new and converted military barracks) Overall cost: €80 million Energy standard from low- to zero-energy buildings

Municipal support in the form of concessionary land prices and consultation. The emergence of the Mühlenviertel is the outcome of a deliberate policy of the city of Tübingen to support the development of lively and ecologically sound neighbourhoods in places that are not easy to market. The task was to develop a former military area. A concept-oriented differentiated-price land sale was chosen to allow for different price levels in the finished housing. Land for socially attractive user concepts such as multi-generational housing, co-housing

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and special-needs housing was sold at a special cheap price. This made possible a wide variety of lower-priced tenancies, including some access- and rent-regulated social dwellings supported by regional funds. By 2007, demonstration projects had been built, and by 2010 most of the construction was finished. The integration of planning expertise, social and real-estate skills has become central to the city’s housing policies. In 2003, the city set up an urban land agency to buy brownfield sites and develop them to meet public targets. While some older social-housing estates have become problematic, the new neighbourhoods, which incorporate a strong element of self-management, are seen as examples of integration across social strata and lifestyles. Through these new neighbourhoods the number of low-priced homes, including social housing, has increased for the city over the past years despite the melt-off in other areas.

It has taken some time for regional governments and municipalities to understand that they will bear the brunt of the decline of social housing at a time when throughout the country the number of households with a legal right to claim support for adequate, affordable and most of all available housing has been growing (see Figure 11.3). Although some 3 to 4 million households are eligible for social housing, there are only about 1.5 million de jure and an estimated 1 million de facto social homes, and the federal state is in the final stages of relinquishing responsibility for social housing. Creative solutions are needed, ranging from contracting with landlords to include social housing in market projects (which brings the problems of managing the end of the lock-in), 1 800 000 1 600 000 1 400 000 1 200 000 1 000 000 800 000 600 000 400 000 200 000 0 Thuringia

Saxony

Saxony-Anhalt

M'burg - W. Pomerania

Berlin

Brandenburg

Saarland

Bavaria

Baden-Württemberg

Hesse

Rhineland-Palatine

Bremen

North-Rhine-Westphalia

Hamburg

Lower Saxony

Schleswig-Holstein

Stock Demand

Figure 11.3 Number of de jure social housing units and eligible households by region (2012). Source: BMVBS estimate 2012.

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to developing complex models such as Munich’s for socially responsible ground management (Sozial-Gerechte Bodennutzung) or Hamburg’s rent agreement (Mietenbündnis). Both cities give in-kind support for models that mix market and new de jure housing, for example, by selling public land at sub-market prices in exchange for reduced rent and regulated access, or making the construction of social dwellings a condition of planning permission for new high-rent market units. In some regions, cities can buy into market projects with regional social housing funds that have survived the federal opt-out (e.g. North Rhine-Westphalia). In others, the provision of land at a reduced price – allowed by EU law under certain social inclusion criteria – or use of long leases instead of selling at market price, have helped reduce rents (or final sales prices) for social housing residents. At present, North Rhine-Westphalia tops the list of new rent- and access-regulated rental homes per year (4775), followed by Hamburg (2253) and Bavaria (1617), while other regions are still holding back from subsidising new building or providing it in amounts well below demand (e.g. Berlin). In order to compete with the new professional landlords of market and de facto social housing, many municipal housing companies have developed strategies to work more actively to improve the socioeconomic situations of their tenants. In 2010, the umbrella organisation of the former social housing and cooperative sector said such activities were necessary for the economic and political sustainability of their members (GdW 2010): they needed to ‘manage housing under the conditions of change’ in a society that was ‘shrinking, getting older and more colourful’ through migration. Even though demand is rising, only 8% of the companies surveyed in the GdW’s 2011 housing trend analysis (Figure 11.4) are prioritising new construction of market and social homes. Most focus on managing the existing stock well, while a growing minority of municipal companies is producing new forms of social housing through innovative partnerships with the welfare departments of their cities and with civil society.

Conclusion Traditional social housing is definitely on the way out in Germany, as more dwellings are leaving than entering the sector and new construction of access- and rent- (or price-)controlled dwellings is nowhere near the level it was during the first four decades after the war. There are several reasons for this decline. The high price of new construction makes it difficult to provide new low-cost housing, or results in excessive subsidies to builders when traditional mechanisms are used. As a consequence of the budget restrictions resulting from the global financial crisis, new public funding for housing has almost evaporated, but there has so far been no fundamental

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Conclusion 30 25 20 15 10 5 0

k on on t) s ly ion ion i i t oc hy ent ren er t p st isat olit ld ven nta , a m e r g g e m n g e e n n i e r i o ov ti pr or de th is de m pr ea s, ncy er f ex mo tial de im , h p r m l s in ou aca sto nt o ng, pa ta e , i gr v cu e ge en rvic s n t, m uild tion d m tter lop e ha onm (se b a g e r c t r e n e r vi os t m Be ev New en fo al en g c g D g ci sse , e e ir n r n n p a a io iti an r s ble ct im ep fo rb a Pr edu L U n g i n r a si st O2 ou Su C H

Figure 11.4 Social housing providers’ future priorities (%). Source: GdW Company trends 2020.

rethinking of the traditional financial arrangements, which benefit investors rather than residents. On the other hand, the past decade has shown that new forms of social housing can emerge from partnerships not so far removed from those that were the basis for the original social housing strategies. Built upon innovative municipal companies, self-organisation and civil society, small-scale projects have entered regional and municipal policies and moved beyond the experimental or pilot phases to shape a new perspective on social housing.

Notes 1 See Chapter 22 in this book. 2 We use the term ‘region’ for the German word Länd (often translated as ‘state’), in order to prevent confusion with federal state (Bund). 3 The range is from 15 to more than 50 years, depending on the type of funding. 4 Die Soziale Stadt was inaugurated in 1998 as a joint programme of the regions and the federal state. It was a response to the relative failure of

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6 7 8 9 10

11

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urban renewal (Stadterneuerung) to solve sociocultural neighbourhood problems, and includes social as well as physical improvements. The post-2005 urban regeneration programmes focus on demolition of superfluous housing and upgrading the quality of disadvantaged neighbourhoods, targeting post-war housing. Under sections II and XII, respectively, of the German social code (SGB). As of 2013. Many municipalities have contracts with their housing companies that commit them to giving preference to ‘housing emergency cases’. The housing data from EU-SILC are often criticised; in particular, the category of ‘below market rent’ is not synonymous with social housing. Since the devolution of social housing to the regions, reliable data on the federal level are not available. Both researchers and the federal statistical office have deplored the fact that the regions do not employ consistent statistical methodologies. Kosten der Unterkunft – SGB II and XII. In 2010, the federal government took over rent payment for older welfare recipients.

References BMAS (2012) [Federal Ministry for Labour and Social Affairs]: Lebenslagen in Deutschland – Entwurf des 4. Armuts- und Reichtumsberichtes der Bundesregierung, Berlin [Living in Germany – Draft of the 4th report on poverty and wealth in Germany] Bundesministerium für Arbeit und Soziales, Berlin. BMVBS (2011) Wohngeld- und Mietenbericht 2010 (Report on housing allowance and rent development) Bundesministerium für Verkehr, Bau und Stadtentwicklung, Berlin. BMRBS (1992) Internationales Forschungsseminar Grosse Neubaugebiete (International research seminar large housing areas) Bundesministerium für Raumordnung, Bauwesen und Städtebau, Bonn. Droste C, Berndt P and Knorr-Siedow T (2010) Country report for Germany. Contribution to the Study on Housing Exclusion: Welfare Policies, Housing Provision and Labour Markets for the European Commission. University of Glasgow, Glasgow. Droste C and Knorr-Siedow T (2004a) Large housing Estates in Germany – Development and problems Utrecht University, Utrecht. Droste C and Knorr-Siedow T (2004b) Large housing Estates in Germany – Policies and practices Utrecht University, Utrecht. Eichner V (2012) Wohnungsbau in Deutschland – Zuständigkeiten von Bund, Ländern, Kommunen und der Europäischen Union? [Housing construction in Germany – Responsibilities of the federal state, the regions, the municipalities and the EU?]. Universität Bochum, Bochum. Haspel J and Jaeggi A (2007) Siedlungen der Berliner Moderne [Estates of the Berlin moderne] Deutscher Kunstverlag Munich/Berlin. Franke T (2011) Auswirkungen der Mittelkürzungen im Programm Soziale Stadt [Consequences of cuts in the Programme The Socially Integrative City] Friedrich Ebert Foundation, Berlin. Freytag A (2000) Politische Intention und städtebauliche Entwicklung – Städtische Wohnungspolitik in der Weimarer Republik [Political intention and urbanistic

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intention – urban housing policies in the Weimar Republic] [Online], Available: http://www. k-faktor.com/files/wohnen.pdf GdW (Bundesverband deutscher Wohnungsunternehmen) (2003) Wohnungswirtschaftliche Daten und Trends 2002/03 [Housing economics data and trends 2002/03], Berlin GdW (Bundesverband deutscher Wohnungsunternehmen) (2005) Wohnungswirtschaftliche Daten und Trends 2004/05 [Housing economics data and trends 2004/05], Berlin GdW (Bundesverband deutscher Wohnungsunternehmen) (2010) Wohnungswirtschaftliche Daten und Trends 2009/10 [Housing economics data and trends 2009/10], Berlin GdW (Bundesverband deutscher Wohnungsunternehmen) (2011) Wohnungswirtschaftliche Daten und Trends 2011/12 [Housing economics data and trends 2011/12], Berlin. GdW (Bundesverband deutscher Wohnungsunternehmen) (2012) Wohnungswirtschaftliche Daten und Trends 2012/13 [Housing economics data and trends 2012/13], Berlin. Häussermann H, Siebel W (1996) Soziologie des Wohnens [Sociology of Housing] Belz-Juventa, Weinheim. Holm A (2005) Nur eine Zwischennutzung – Sozialer Wohnungsbau in der Bundesrepublik Deutschland bedeutet eine zeitlich begrenzte Eigenschaft [Only an interim use – Social housing in Germany is only a limited property]. MieterEcho, 312, October. IBA (1987) Internationale Bauausstellung 1987 – Projektreport [International Building Exhibition 1987 – Project Report] Berlin. Id22 (2012) CoHousing Cultures – Handbuch für selbstorganisiertes, gemeinschaftliches und nachhaltiges Wohnen [Handbook for self’ organised, joint and sustainable housing] von id22, Institute for Creative Sustainability, experimentcity, Berlin. Kähler G (1985) Wohnung und Stadt, Hamburg, Frankfurt, Wien, Modelle sozialen Wohnens in den zwanziger Jahren [Housing and the city – Hamburg, Frankfurt, Vienna, Models of social housing during the 1920s] Vieweg, Braunschweig/Wiesbaden. Kott & Co Initiative (2012) ‘Call for Solidarity’ leaflet. November. Müller-Armack A (1976) Wirtschaftsordnung und Wirtschaftpolitik [Economic order and economic policy] Haupt, Bern/Stuttgart. Pestel Institut (2012) Bedarf an Sozialwohnungen in Deutschland [Social Housing Demand in Germany] Wohnungsbau Initiative, Hannover. Walberg D (ed) (2011) Wohnungsbau in Deutschland – 2011 – Modernisierung oder Bestandsersatz [Housing in Germany – 2011- Modernisation or stock-replacement]. Arbeitsgemeinschaft für zeitgemässes Bauen, Kiel.

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This is a characteristic late nineteenth century apartment building of central Budapest, when social segregation was ‘built into’ the structure itself: in the street-front you find relatively spacious (3–5 rooms, bathroom, toilet and a small place for servant) residences, while around the closed yard were featured small, one room-and-kitchen apartments – generally without bathroom. This type of internal segregation (differing social status of the inhabitants based on street-front versus yard-side apartments) is still visible a century later. The house pictured is special in that it is a ‘medium-status’ building with relatively low internal segregation. It is located in a previously State-owned area that is currently being gentrified. Photograph: Gábor Csanádi.

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12 Social Housing in Hungary József Hegedüs Metropolitan Research Institute, Budapest, Hungary

Introduction Internationally, mainstream approaches generally define social housing as that which is provided on a not-for-profit basis and managed either by the state or by agencies such as housing associations or cooperatives. This definition excludes benefit and grant programmes that enable low-income households to find housing in the private sector, both of which are addressed in this chapter. In terms of building type, the urban social-housing stock in Hungary can be divided into three categories: • Tenement houses built in the early 1900s in larger urban areas, including housing units originally built as social housing and characterised by small floor areas and a lack of basic amenities. These units are typically in the worst condition, because the better quality ones were purchased by sitting tenants or returned to former owners in the privatisation and restitution process. • Units in housing estates built from the 1950s until the end of the 1980s. These are of better quality (good location and floor area, with central heating and bathroom) but have relatively high maintenance costs. • Individual apartments in better locations that have not been privatised. There are fewer of these. There is a considerable shortage of social rental housing. This is mainly the result of the large-scale housing privatisation that began in the early

Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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Table 12.1 Changes in municipally owned housing stock, 1990–2007 (000s). Total municipal stock, early 1990s Changes 1990–2007 Reduction Increase

Sales Demolitions Construction Purchases

Total municipal stock, end-2007

721.3* −605.6† −10.8† +12.7† +23.8‡ 140.9**

Figures do not add due to rounding. Source: Central Statistical Office 2008 (*2001 census; † regular housing statistics; ‡ expert estimate; **municipal real estate asset statistics)

1990s after the change in regime, when 85% of the 721 000 municipally owned housing units (or 20% of the total stock) were sold at 15% of market price to sitting tenants (a process often termed give-away privatisation) (see Table 12.1). Over the next 17 years, municipalities bought or built only 36 000 housing units, and by the end of 2007, taking housing demolition and purchases into account, there were only 140 000 dwellings (3% of the total stock) in public rental. The trend continued (see Table 12.1) and by 2011 the municipal housing stock had fallen to 110 000 (Central Statistical Office 2012). Still, the need for social housing is high. According to a needs assessment study based on 2001 census data, the potential unmet demand for rental housing was around 750 000 units, including about 300 000 social units – which was approximately 2.5 times the stock available at the time (Hegedüs, Eszenyi & Teller 2009). The spatial distribution of social housing is unequal. It is concentrated in cities, with 69% of the stock found in Budapest and other cities with county rights1 (see Table 12.2). There are almost no rental housing units in villages and only 1% of the stock is owned by municipalities. The variation within areas is as marked as the differences between regions or counties. The privatisation process left municipalities with low-quality housing stock in need of major rehabilitation and with tenant households generally characterised by multiple social problems. The remaining social rental units were often concentrated in the worst parts of the city, and the Table 12.2

Municipal housing stock by settlement type, 1 January 2009. All housing units

1 Budapest 2 Cities with county rights 3 Cities 4 Villages Total

881 000 881 345 1 237 807 1 302 675 4 302 827

Source: Central Statistical Office (2010).

Municipal apartments Number

% of total stock

51 284 44 577 27 573 13 346 138 451

5.8 5.1 2.2 1.0 3.2

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allocation system for vacated and newly built units, which targeted the most vulnerable groups, contributed to further residential segregation of disadvantaged households. In the past two decades, investment levels and new construction in social housing stock remained low.

Historical development of the sector up to the present After the political changes that took place at the end of the 1980s, housing policy went through four stages, more or less following the macro housing trends (see Figures 12.1 to 12.4). While most housing policy initiatives 60000 50000 40000 30000 20000 10000

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

0

Figure 12.1 Number of new dwellings constructed, 1989–2011. Source: Central Statistical Office.

30% 25% 20% 15% 10%

0%

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

5%

Figure 12.2 Outstanding mortgages as percentage of GDP, 1989–2011. Source: Hungarian National Bank.

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Historical Development of the Sector up to the Present 130 120 110 100 90 80 70

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

60

Figure 12.3 Index of Real GDP, 1989–2011 (1989 = 100). Source: Hungarian National Bank.

35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0%

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

0.0%

Figure 12.4 Mortgage interest rate (December), 1989–2011. Source: Central Statistical Office.

were addressed to the owner-occupied market, in this section we focus particularly on changes affecting the social-rented sector. In the first period (1989–1994), the government tried to manage a housing crisis related to economic decline and to dismantle the unsustainable subsidy system of the socialist period. It withdrew from the housing sector by decreasing subsidies and assigning to local governments the responsibility of managing and (partly) financing the housing allowance programme. The Law on Rent (1993) and the Social Law (1993) made it clear that the government would not take responsibility for housing, yet left the door open for future intervention.

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This ‘crisis management’ approach to housing policy included two major programmes: the privatisation of the state rental sector and the consolidation of the so-called old loans (long-term, government-guaranteed low-interest loans issued for households buying or building new privately owned homes between 1982 and 1988, which become unmanageable in the time of high inflation after 1988). Both measures had a regressive social effect: because the financial gains from privatisation and early repayment of loans were proportional to household wealth, low-income households were either trapped in the residualised social rental sector or unable to repay their mortgages at a discount price. In the second period (1995–2000), there were few real changes in the subsidy system and housing programmes, but new institutions were set up and the legal framework improved. As housing outputs decreased, so did subsidy levels. Two basic housing finance institutions were established: contract savings banks and mortgage banks. The law on contract savings banks was controversial as it provided for regressive subsidies to savers, with no direct relationship between the subsidies granted and increased housing investment. The third period started after 2000 when the government, helped by positive macroeconomic changes, began an active housing programme targeting three areas: (i) development of the mortgage market; (ii) expansion of local government social housing and (iii) renewal of the housing stock (especially the urban housing estates built in the 1970s and 1980s). A grant programme was set up to cover 75% of local governments’ costs for social housing investment, and preferential loans were offered for renovation of housing estates. In 2002, the new socialist-liberal government tried to slow these programmes because of their cost, but it took almost three years to make any radical changes in the subsidy schemes. From 2005, the housing estate renovation programme was expanded and was seen to be very successful; in the following three years, 15% of the stock was renovated. Grants for social housing stopped, replaced by an ineffective rent allowance programme. A fourth period started in 2008 with the global economic crises. The financial crisis hit Hungary at the end of that year and the government responded with orthodox methods. Following the requirements of International Monetary Fund’s emergency loan and its fiscal adjustment programme, the government drastically cut housing subsidies, suspending both the interest subsidy and the home ownership down-payment grant. The housing market collapsed: house prices decreased, new construction plummeted and mortgage arrears increased. The government introduced a number of programmes to help owner-occupier households hit by the economic recession (ban on evictions, introduction of a crisis fund to convert foreign-currency-denominated loans into loans in Hungarian forints [HUF], etc.) without much success. In 2010, the new government refused to cooperate with the IMF and introduced

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Provision of Social Housing

‘unorthodox’ economic measures which aimed to restore economic growth by reforming the tax system; levying a ‘crisis tax’ on banks, the energy sector and large retail companies; and nationalising private pension funds. In 2011, despite vigorous protests by banks and experts, the government introduced a scheme to allow borrowers with foreign-currency-denominated loans to repay them at a discounted exchange rate, forcing the banks to pay the difference between that rate and the market rate. By late 2008, this economic policy had failed and the government restarted negotiations with the IMF.

Provision of social housing During the socialist period, both rent and utility costs in public (state-owned) housing were deeply subsidised and unrelated to actual economic costs, resulting in permanent excess demand and long waiting lists. Allocation was based on positional advantages and need factors (Hegedüs & Tosics 1996). Housing providers’ revenues did not cover maintenance and operation costs, and as housing was not an economic priority, the sector was under-financed, leading to a degradation of the stock. The management companies paid very little attention to tenants’ complaints regarding the physical condition of the stock, which led to high levels of dissatisfaction with public rental housing. After the transition, as a consequence of the general trend towards decentralisation, the management of the remaining public-housing stock was transferred to municipal governments. In this decentralised system, the municipality (in the shape of a council committee or department) makes all decisions concerning property rights, including around privatisation, investment, allocation of vacant units, rent levels and rent allowances. Although it is formally the municipality’s task to set local social-housing strategy, management companies can acquire de facto decision-making power through their administrative functions; they may prepare proposals for rent structures and rent allowances or even bid for national grants. This is for technical rather than political reasons: municipalities simply do not have the capacity to carry out all the administrative and management tasks delegated to the local level. Privatisation also led to a dramatic decrease in the number of housing units owned by local governments, making it economically sensible for small municipalities to merge their housing-management companies with other local service providers to form ‘joint stock companies’. These might combine management of real estate with management of markets, cemeteries, district heating and trash collection (Hegedüs, Mark & Tosics 1996: 123–24). Because the social-rental sector is not financially self-sufficient,

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these companies typically cross-subsidise the public rental sector with revenues from non-residential units and other profitable activities. The management companies are under pressure from local governments to improve the financial performance of the public sector, although they are formally responsible only for managing the stock. The incentive is to improve rent collection levels and decrease rent arrears – and therefore to get rid of ‘problem tenants’. Non-paying tenants are typically the poorest households and have accumulated unmanageable debts; they have very few possibilities of improving their financial situation. They can only scale down their consumption of housing, which means moving to worse housing conditions in poorly served areas, or to poor settlements. However, there are political constraints on the ‘rationalisation’ of public housing, and local governments try to avoid evictions because they are politically unpopular. Some pass the conflict on to private companies: housing units may be sold (with sitting tenants) to a private developer, who can evict the tenants without political consequences or any responsibility to find them new housing. Owing to financial disincentives and their own limited resources, local governments have under-invested in the maintenance of their housing stock, which continues to deteriorate. The public housing sector requires an estimated HUF 300 billion (€1 billion) for renewal and rehabilitation – 30 times the rent revenue in 2004.

Financing social housing In Hungary, the typical social landlord is a public management company owned by the municipality. The municipalities generally have little incentive to expand social/public housing, as the fiscal burden of new units competes with other municipal responsibilities such as education, health or infrastructure. Social/public rents are often not sufficient to cover management and maintenance costs. The difference has to be covered by the municipalities from their general revenues. This negative cash flow makes it almost impossible to secure capital financing for new construction. Moreover, the social housing sector typically generates other real or perceived social and political problems. For instance, small municipalities fear that their social housing programmes could lead to an influx of poor people from other municipalities, which would in turn increase rather than reduce social tensions. Small local governments therefore tend to export problems to other places rather than effectively solve them. This paradox of decentralisation has negatively affected those in acute housing need, such as homeless or Roma households. In Hungary, as in other countries in the region, earmarked national funds became the most important source for new social housing construction;

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Table 12.3

Outputs and costs of rental programmes, 2000–2004.

Programme type Social rental Cost rental Homes for young couples Elderly homes Total

Number of tenders from local governments

Units created

Total subsidies (HUF million)

313 228 44 127 712

5729 3188 909 2997 12 823

26 093 16 386 3639 17 210 63 329

Source: Housing Office (2006).

the grants were typically accompanied by conditions on rent setting, allocation and construction. Most municipalities were only too happy to agree to investments in their areas if they were not funded out of their own budgets. In some cases, the financial burden of new social housing was lower than that of the existing stock. The housing policy launched in 2000 included a grant programme for local authorities supporting five housing areas: the rental sector, energy-saving renewal, rehabilitation, land development and renovation of housing owned by churches (see Table 12.3). The most important element was support for the public rental sector. Local authorities were eligible for a grant of up to 75% of the cost of new housing including social rental, cost-based rental, housing for young families and retirement homes. Between 2000 and 2004, several hundred local governments took part in the programme. The total investment amounted to HUF 60 billion (€200 million) and close to 12 800 units were built, refurbished or purchased, including 8900 rental units and 3900 special accommodation units in retirement homes, assisted living homes and temporary homes for young couples. In 2004, the government stopped this programme, citing the high unit cost, and proposed to substitute a rent allowance that would allow local governments to enter into long-term contracts with private investors to use newly built rental units for social purposes. The cost-based option was introduced to ensure long-term cost recovery in the sector, with rent levels higher than existing social rents but only about 40 to 60% of market rents. The regulations set a minimum annual rent of 2% of the construction cost. Although this cost-rent approach did not guarantee long-term cost recovery, in the first years the actual operational and maintenance cost of the units was considered to be lower than the rent. The high level of interest in the rental sector programme is an indication of the commitment of local authorities to solving the housing problem. Before the launch of the programme, the Hungarian Government’s Housing Policy Committee was concerned that local authorities would not be able to participate because most of them would not be able to afford the 25% contribution required by them, but demand for the fund actually exceeded

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budget resources (and expectations) and only 45% of the amount requested by local authorities could be funded. Although demand from local authorities was strong, the programme had several weaknesses. Costs were considered to be very high, although one of the most important selection criteria was the average cost per square metre. The cost rent was also thought to be too expensive for poor people, but not enough for long-term cost recovery. Allocation criteria for new tenancies were not regulated, and local politics played a role in discretionary allocation. Moreover, during the same period that local authorities were building, buying or renovating these 8900 relatively low-rent homes, they privatised a total of 25 000 units. Another new loan programme was launched in 2006, giving local governments access to subsidised loans from the Hungarian Development Bank for investment in the public rental sector, but local authority interest proved to be very limited. According to conservative estimates, demand for social-rental housing stands at around 300 000–400 000 apartments (8–10% of the housing stock). The current social housing stock is less than half this amount, and neither municipalities nor central government have a policy of expansion, even though many households face problems with high social costs (mortgage arrears, debt, lack of mobility and segregation) that could be countered or at least alleviated by the development of a modern rental sector. Since 2001, municipalities have been able to decide when and whether to sell dwellings, and most municipalities would like to get rid of their social rented units and the social problems typically associated with their poor tenants. This housing is costly for municipalities, as rents do not cover expenses and there is no central government support for maintenance costs. But there are some municipalities that are trying to address social problems by, for example, introducing specific local rental subsidy systems.

Rents There is no rent control in Hungary. The owner of the property (in the case of social housing, the municipality) has the right to set rent. Most municipalities determine the rent separately for each apartment according to local ordinances, which generally take into account the apartment’s condition, location within the building, the building’s facilities, and so on. Rent increases in the public rental sector were lower than the consumer price index until 2007 (see Figure 12.5). Local authorities can choose which type of lease to use – fixed or open-ended, social, cost-rent or market rent. Because of differences in local rental policies and the existence of municipal rent allowance schemes,2 public rents vary widely from settlement to settlement (see Figure 12.6).

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Rents 1400 1200 1000 800

Average rent in public sector

600

Consumer price index

400 200 0 90 92 94 96 98 00 02 04 06 08 10 19 19 19 19 19 20 20 20 20 20 20

Figure 12.5 Development of average rent and consumer price index, 1990–2010 (1990 = 100). Source: Central Statistical Office (2011).

Social housing rents are about 20 to 40% lower than private rents. In 2010, the average private rent in Budapest was around HUF 1000 (€3.40)/m2 /month, while in the counties it was around HUF 600–800 (€2.00–€2.75)/m2 /month. High housing costs and increased energy prices have led to growing affordability problems for the poor. The problem of arrears is an issue for social housing providers in most transition countries, as rents may reach 50% of tenant incomes in certain cities; low-income households cannot afford even 800 700 600 500 400 300 200 100

Figure 12.6 Public rents by settlement (HUF/m2 /month). Source: Central Statistical Office (2011).

Szombathely

Debrecen

Salgótarján

Eger

Gyƅr

Kecskemét

Budapest

Zalaegerszeg

Tatabánya

Békéscsaba

Nyíregyháza

Miskolc

Veszprém

Szolnok

Székesfehérvár

Szeged

Kaposvár

Pécs

Szekszárd

0

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the lowest rents. Although public sector rents are very low and cover only about 30 to 40% of actual costs, the vast majority of tenants have difficulty paying even these amounts. According to a 2003 Hungarian housing survey, 22% of households in the public sector and 5% in the private sector were in arrears (Central Statistical Office 2003).

Access and allocation Local authorities can only allocate vacated and newly built rental units, which represent no more than 4 to 5% of all housing market transactions including sales and rental. The Housing Law allows local authorities to devise their own allocation procedures and determine the organisational form of the housing maintenance company. The basic question for social landlords is how to allocate scarce vacant units so as to satisfy social needs, market mechanisms and fiscal constraints. They generally use one of two allocation procedures. The municipality or management company may maintain a waiting list and allocate new or vacant units according to a points system, or they may invite applications from potential tenants who fulfil specific eligibility criteria. The use of waiting lists is decreasing because they have become so long that the allocation process is very complicated. However, the selection of the beneficiaries on an ad hoc basis is unpredictable and open to corruption or undue political influence. Irregularities in the allocation process can allow households with positional advantages to gain access to better quality accommodation. Because municipalities prefer to have solvent tenants from the lower middle class who do not create the additional financial burdens associated with the neediest families, they sometimes design tender procedures that give priority to those tenants who can pay higher rents or contribute to the renovation of typically run-down housing units. In practice, this means that high priority is often given to better off key workers. The ineffectiveness of the housing allowance systems creates a kind of paradox: low-income households cannot afford the cost of apartments with district heating, bathrooms, and so on, but the municipalities’ hands are tied by national regulations that prohibit them from allocating ‘substandard’ apartments to these neediest of beneficiaries. This means that households allocated homes under need criteria such as household size, income, housing conditions, and so on, are often unable to pay the costs of better quality apartments and rapidly accumulate debt (see below). Furthermore, because the costs associated with social housing are never fully covered by central government transfers, municipalities (which are responsible for social programmes such as income supplement schemes and housing the poorest) are adversely incentivised to ‘export’ the poor. Some

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Housing Allowances and ‘Low-Cost Housing’

offer special grants to vulnerable households that move away from their territory, and richer districts of Budapest are acquiring housing for their poor in other parts of the city. Beyond the local impacts of intergovernmental fiscal relations on allocation policies, urban reconstruction and rehabilitation programmes (based on various forms of gentrification) have contributed to a shift in the composition of the urban population towards the middle class.

Housing allowances and ‘low-cost housing’ Housing-related spending increased from 9 to 20% of all household expenditure in the first 10 years of the transition, at the same time as income inequality increased (Central Statistical Office 2007). Paying for housing poses a serious problem for 14 to 18% of households, and this has led to a growing number of arrears (see Table 12.4). In 2007, around 10% of households said they were unable to pay their housing costs and a further 10% were unable to enter the housing market (Central Statistical Office 2007). The Social Law of 1993 introduced a housing allowance scheme financed through local governments’ discretionary budgets. Municipalities were free to set the eligibility rules and the amount of the allowance. However, they only used this programme on a limited scale because unlike other benefit programmes (e.g. support for permanently unemployed persons or low-income households with children), the cost of which was shared between central and local governments, this one was financed exclusively out of local budgets. In 2004, the government introduced a new centrally directed housing allowance programme which was managed by local governments. Central government covered 90% of the cost and set eligibility rules; the income ceiling was 1.5 times the minimum pension. Local governments were then managing two schemes: the one financed from their own budgets and the central government one. The incentive was to increase the use of the centrally financed housing allowance programmes. The total cost of the two programmes grew from HUF 3.5 billion (€14 million) in 2003 to HUF 17.5 billion (€61 million) in 2009. But while the

Table 12.4

Housing costs and utility arrears by tenure, 2007.

Tenure Owner-occupied Social rental Private rental Overall

Percentage of all households

Average housing cost as % of household income

Households with utility arrears (%)

90 4 7 100

28 20 33 28

15 32 17 16

Source: SILC 2007 (not including owners’ relatives [2.7% of households]).

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centralised housing allowance was meant to reach the lowest income groups (and, indeed, from 2003 to 2005 support increased from 4% to 8% of households), only a narrow group of eligible people received support. Analyses have shown that the scheme had two basic deficiencies: 1. The proportion of individuals whose housing expenses exceeded 25% of their income was higher among those who earned slightly more than the ceiling than among lower-income groups that received the allowance. If incomes were adjusted for household composition and size the difference was even greater. 2. The scheme did not take into account actual costs but employed a formula which multiplied notional floor area (based on household size) by cost/m2 . The results differed significantly from actual housing costs for several reasons: (i) the formula used a fixed cost/m2 , but in fact the actual cost/m2 in a housing unit of less than 40 m2 is twice as high as in a larger (70 m2 ) unit; (ii) costs differed by housing type (which also explains differences between settlement types), and (iii) no account was taken of the type of heating, although the cost of district heating (at around HUF 500 [€1.70]/m2 /month) is nearly twice that of heating a traditional family house or row house. In 2005, a new rent allowance programme that aimed to use the private rental sector for social purposes was finally introduced. Local governments could apply for rent allowance for low-income families with children who were renting privately. The central government would pay a maximum of 30% of the rent or €28 per month,3 and the local government would contribute at least as much. But very few local authorities put forward proposals: the programme required that landlords be registered with the tax authority and the majority of private landlords, who do not pay tax, did not want to register; and the income limit, less than about €180 per capita per month, was so low that eligible households could not afford the rent. The accumulation of housing-related debts since the beginning of the 1990s has also posed serious problems for a significant proportion of households. Debts are related to utility costs and mortgages (particularly pre-1989 loans and those from between 1989 and 1993). Some 500 000 households (13% of the total) have over three months’ unpaid utility bills and another 300 000 households owe one to two months’ worth. In 2003, the government introduced a debt management service to help households deal systematically with debt but only 15 000–20 000 families, very few of which were in arrears, made use of it. Households on very low incomes continually accumulate new debt, so any debt management system would only have a real effect in conjunction with an effective housing allowance system which, as noted, has not been achieved.

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Homeownership Opportunities

Energy-related expenditures represent the biggest element of housing costs; in 2007, they constituted almost 70% of housing-related expenditures. In January 2007, a household energy consumption subsidy was introduced, which replaced a market-wide energy-price subsidy. In 2007, the energy consumption subsidy cost HUF 110 billion (€435 million), accounting for 83% of all housing support that year; over time, it has been gradually reduced. In 2011, the total cost of housing support was HUF 45 billion (€167 million), of which the energy consumption subsidy accounted for HUF 29 billion (€108 million) and the housing allowance HUF 16 billion (€60 million). In September 2011, despite continued rises in energy costs, the two schemes were merged into a general housing allowance programme.

Homeownership opportunities Housing construction From 1990 to 1998, housing construction dropped to 20 000 units/year (25% of the rate that prevailed in the 1980s) and house prices fell in real terms by 40%. State subsidies were cut; the only exception was a cash grant called the housing construction allowance. The function of this grant, which was introduced in 1971, has changed over time. Designed to help home buyers with down payments, this subsidy is not means-tested and its size depends on the number of children in the household. Only buyers of new homes or self-builders are eligible. In 1995, the grant size was increased for families with two and three children, which made it possible for low-income households without substantial savings or loans to build new ‘low-cost’ housing. The scheme was widely used by large poor families with the help of intermediaries (builders, lawyers, contractors and Roma NGOs). According to some estimates, 10 000 homes were built between 1995 and 1997 using this allowance, meaning that it was the largest (albeit unintentional) Roma housing programme after 1990 (Hegedüs 2009). Private developers specialising in this scheme emerged (Zolnay 2002). It was particularly strong in less-developed regions where it covered almost the total cost of construction. The programme had several negative effects including the low construction quality and the concentration of grant-funded housing in less-developed regions with higher unemployment.

Housing rehabilitation Housing rehabilitation became important after 2004, especially the ‘panel programme’ to rehabilitate buildings constructed with cheap prefabricated technology. This politically popular programme, which reaches a

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wide spectrum of society, has been expanding since 2004. By 2009, 25% of pre-fabricated multi-unit buildings (190 000 housing units) had been renovated to some degree. Other urban rehabilitation programmes were gradually instituted since 1990 by local governments to deal with serious social problem areas. These tended to focus on segregated housing estates and run-down urban areas with high proportions of Roma, who require more attention and resources. In most cases, the urban poor were forced to move out of the renewed neighbourhoods (see Access and Allocation); only in 2006 did the first urban rehabilitation programme aimed at improving the living conditions of the ‘sitting poor’ begin.

Effects of the global financial crisis on social housing The economic crises in late 2008 hit the Hungarian mortgage market hard, as increased unemployment led to mortgage defaults. From 2009 onwards, the government introduced several measures to help households with mortgage payment difficulties. For the purposes of this chapter the most interesting element was directed at the poorest borrowers with mortgage arrears of more than 90 days. A new institution (the National Asset Management Company) was set up to buy the non-performing loans; the owners were allowed to continue as tenants in the properties, which would pass into municipal ownership. When the programme began in mid-2012, it was expected to impact 25 000 units, or 25% of the municipal stock, by 2014 (Hegedüs 2012). Hungarian social housing in brief The Hungarian public rental sector represents a temporary stage of the social rental sector. Local governments and their housing companies are the major social landlords. The privatisation drive seems to be over, but even today some local governments see it as the most preferable option. Owing to financial disincentives and their own limited resources, local governments have underinvested in the maintenance of their housing stock, which continues to deteriorate. Local governments have broad autonomy in the management of social housing. They employ a variety of methods to allocate social housing (two main techniques: waiting lists and special bidding system). They can choose which type of rental contract to use – fixed or open-ended; social or cost-rent or market rent. The lack of proper legal regulations makes the tenant’s and the landlord’s situation unpredictable. The security of social tenants is a critical question because rents and housing-related costs may change without predictable income benefit programmes. The social rental sector has become residualised, as the better off households have moved into the owner-occupied sector, and the typical social tenants have difficulty paying their housing cost. Rent and utility fee arrears are a huge social problem, which remains the responsibility of local governments without proper state support.

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References

Conclusion The social housing sector is formed by the interaction between household strategies and behaviour and (i) the social rented sector, (ii) housing allowances and income benefit programmes and (iii) low-cost housing opportunities. The chapter analysed the dynamics of housing affordability, the public rental sector and support for home ownership. It concluded that consistent strategies for social-housing policy after 1989 were absent, as policies were set by fragmented public and private institutions in different sectors (energy, water, construction, social care, etc.) and newly decentralised local governments. As a consequence of the global financial crisis of 2008, a great many new home owners lost (or will lose) their homes and will be forced into the rented sector, which provides an opportunity to create a new model of social housing. Development of the social rented sector is one possible policy response to housing poverty in Hungary, but political support for this is very weak. An additional factor is a lack of demographic pressure and the increasing number of vacant housing units (12.5% in 2012). One possibility is for specialised rental agencies to let these empty homes as social housing – it was recently announced that the Hungarian Asset Managmenet Company will buy 25 000 foreclosed properties and turn them into a rented scheme. The government’s proposal for new construction of social rental housing, which is supported by the construction industry, does not offer a real alternative because the expansion of the stock is constrained not only by scarce public financial resources but also by the lack of interest (and incentives) in municipalities.

Notes 1 2

3

Cities with a population exceeding 50 000 and county capitals enjoy a special legal status in Hungary. Rent revenues represent income for municipalities, and costs are paid out of municipal budgets. Municipalities that increase rents overall but use part of the increased income to provide a housing allowance for needy households can usually improve their overall financial position. A proposal for Nyiregyháza was devised by the Metropolitan Research Institute (described in Erdösi & Hegedüs 2003). In 2005, 1 EUR was equal to 248 HUF.

References Central Statistical Office (2003) Housing Survey database CSO, Budapest. Central Statistical Office (2007) Household Budget Survey CSO, Budapest.

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Central Statistical Office (2010) Yearbook of Housing Statistics, 2009 CSO, Budapest. Central Statistical Office (2011) Yearbook of Housing Statistics, 2010 CSO, Budapest. Central Statistical Office (2012) Yearbook of Housing Statistics, 2011 CSO, Budapest. Erdösi S and Hegedüs J (2003) Bérlakáskoncepció – készült Nyíregyháza város számára (A concept for Rental Policy for the Municipality of Nyíregyháza) MRI, Budapest. Hegedüs J (2009) Towards a new housing system in transitional countries: the case of Hungary. Chapter in P Arestis, P Mooslechner and K Wagner (eds) Housing Market Challenges in Europe and the United States: Any Solutions Available? Palgrave Macmillan, New York. Hegedüs J (2012) “Unorthodox” housing policy in Hungary – is there a way back to public housing? Paper presented in The Second International Symposium on “Public Housing Futures” August 29–30, 2012 Fudan University, Shanghai, China. Hegedüs J, Eszenyi O and Teller N (2009) Housing Needs in Hungary. [Online], Available: http://www.habitat.org/eurasia/pdf/MRI_housing_needs_hungary_study.pdf Hegedüs J, Mark K and Tosics I (1996) Hungarian housing in transition. Chapter in R Struyk (ed) Economic Restructuring in the Former Soviet Block: The Case of Housing The Urban Institute Press, Washington DC. Hegedüs J and Tosics I (1996) Disintegration of East-European Housing Model. Chapter in D Clapham, J Hegedüs, K Kintrea and I Tosics (eds) Housing Privatisation in Eastern Europe Greenwood Press, Westport, Connecticut. Housing Office (2006) Report on Social Rental Program Housing Office of the Government, Budapest. Zolnay J (2002) A Housing Program of the Social Housing PBC set up by the Nation-Wide Roma Self Government. [Online], Available: http://www.romaweb.hu/romaweb/cikk.jsp?p=7

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This Vivienda de Protección Oficial (officially protected housing, or VPO) housing, built between 2002 and 2008, is located in the Las Tablas neighbourhood of Madrid. The typical apartment is between 50 and 90 square metres, with individual garages and an optional storage room. Photograph: Mar´ıa Alberdi

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13 Social Housing in Spain Baralides Alberdi Madrid Puerto Aéreo, Spain

Introduction The current position of social housing and comparison with other tenures Housing policy in Spain fundamentally emphasises home ownership. According to the 2001 census (the most recent available), 82% of all main residences are owner-occupied. Rented accommodation accounts for 11% of dwellings, while the remainder are in other minor forms of tenure (borrowed, used for free, etc.). There are two kinds of social housing in Spain. The most important is the so-called Vivienda de Protección Oficial (literally ‘officially protected housing’ – hereafter VPO). Compared to social housing models in most EU countries, VPO is peculiar in that it is housing provided almost entirely for owner occupation; only a small proportion is built and offered for rent. The main characteristic of VPO is that its construction and renovation is subsidised by the state through low-interest loans to private developers. Homes built with these loans must comply with certain conditions in terms of size and quality, and are sold or let at below-market prices to individuals with incomes below certain ceilings (CECODHAS 2007). The second type of social housing is social rented housing, which is comparable to what is normally called social housing elsewhere in Europe. It accounts for only between 1 and 2% of the total stock of principal residences (Table 13.1). The total number of social rented houses in 2001 was just 142 000 units, but by 2007 that number had more than doubled (CECODHAS 2007) thanks to more favourable housing policies (Housing Plan Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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(%) 51 64 73 78 82 85

(000s)

3570 5440 7592 9204 11 644 15 371

Owner occupation

3150 2720 2392 1888 1562 2351

All (000s) 45 32 23 16 11 13

All (%) 43 30 21 15 10 11

Private (%)

Rental

2 2 2 1 1 2

Social (%) 280 340 416 708 994 362

(000s)

4 4 4 6 7 2

Percentage %

Other

Source: INE Census 1960-2011 except for 2011 figures for individual tenures, which are based on CECODHAS, Housing Europe Review, 2008

1960 1970 1981 1991 2001 2011*

Year

Principal residences by tenure, 1960–2008.

7.0 8.5 10.4 11.8 14.2 18.1

Total (000s)

224

Table 13.1

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2005–2008) including fiscal incentives and increased funding. In terms of location, the rental sector as a whole is concentrated in major cities such as Barcelona and Madrid and in the island regions of the Canaries and Balearics.

New construction: market and social housing Housing-start statistics published by the Ministry of Public Works (Ministerio de Fomento) differentiate between social VPO and market housing. From 1978 to 1986, VPO starts made up at least half of total housing starts (Fig. 13.1, Table 13.2). But after 1987, high demand for housing and an increase in prices pushed developers towards private housing. During this time, VPO construction decreased significantly, leading to shortages. An added problem for VPO construction was that whole areas of Spain saw marked increases in the cost of building land between the late 1980s and the end of 2007. These increases could not be passed on because of the maximum prices set for this type of housing. Between 1992 and 1996, after the Barcelona Olympic Games and the Seville Expo, construction activity and house prices went down and new construction of VPO units rose slightly. After the 1997 economic recovery, however, VPO building dropped sharply again, leading to a serious affordability crisis for those with lower incomes (Alberdi & San Martín 2004). When market housing construction fell in 2008, the trend changed yet again; since 2009, VPO has represented a larger percentage of the total market, although it is now decreasing. Table 13.2 shows the number of VPO starts divided into dwellings for owner-occupation and for rent; the former clearly predominates. 700000 600000 500000 400000 300000 200000 100000

Market housing

VPO social housing

Figure 13.1 Total VPO and market housing construction, 1972–2011. Source: Ministry of Public Works 2012.

2012

2010

2008

2006

2004

2002

2000

=

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

0

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Historical development of the sector

Historical development of the sector Spanish housing policy since the Franco era aimed at providing social housing via the owner-occupied sector instead of developing a social rented housing sector. From the 1960s onwards, policy was oriented more towards stimulating economic activity and favouring developers than towards social goals. The first state housing plans implemented between 1956 and 1976 explicitly aimed to eliminate the housing deficit and ‘to turn each worker into an owner’ (Sánchez García & Plandiura 2003). The amount built during that period surpassed the target, although the quality of those houses varied greatly; among VPO houses, those created for lower-income households were small, inexpensive and very low quality, whereas those created for households with middle and higher incomes were not only of better quality but also located in city centres. Despite the widespread home-ownership goal, the allocation process at the time was discretionary, and often depended on allegiance to the political regime. An important development that coincided with the end of the Franco regime in 1975 was the emergence of the ‘neighbourhood movement’, based on the defense of local areas and the struggle for collective use and provision of services in large cities (Blanco et al. 2011). Madrid’s Plan de Remodelación de Barrios (Neighborhood Remodeling Plan), put in place towards the end of the 1970s, was a key milestone in the history of social housing and evidence of the positive results of these social movements (Castells 1983). The city council of Madrid and the central government, in partnership with emerging local community movements, put forward a unique plan for the construction of 40 000 social homes in 10 years. One of its greatest achievements was that instead of building new houses for shanty settlers in peripheral neighbourhoods, it allowed residents to stay in central city areas. The 1978 post-Franco constitution divided Spain into 17 regions, each with its own legislative body and autonomous government. These governments control most of their own housing policies. Central government only retains control over some of the design of fiscal and social housing policy through a series of national housing plans. Given the multiple and decentralised decision-making processes, the implementation of housing policy in Spain Table 13.2

VPO social housing starts by tenure, 2005–2011.

Owner-occupied VPO Rented VPO Total

2005

2006

2007

2008

2009

2010

2011

62 201 18 226 80 427

76 607 18 648 95 255

64 491 19 368 83 859

74 222 16 309 90 531

63 776 15 280 79 056

53 129 7397 60 526

24 453 9843 34 296

Source: Ministry of Public Works (ibid.)

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New types of social housing created, aiming to provide cheaper housing for lower-income households. High levels of construction and mortgage lending Easy access to credit but rocketing house prices. High construction and land prices made VPO unprofitable. Lock-in period before market-price resale permitted was reduced from 30 years to 20. If the dwelling is sold before then, all subsidies must be repaid

Target of 500 000 homes now included renovations as well as new construction 284 000

400 000

Continuation of previous trend

Interest-rate subsidies eliminated; VPO purchasers instead received subsidies for loan repayments. Down-payment grant introduced for certain low-income households

Down-payment grant as in previous plan

1996–1999 (truncated)

1998–2001

2002–2005

Source: Derived from Perez Barrasa et al. (2011).

Greater understanding of autonomous/central government relationships. Only Mortgage Bank of Spain offered VPO loans. All pre-1978 social housing units retroactively deregulated. Public bodies offered cheap or free land for VPO housing

400 000

Greater customisation of subsidies to income and household composition. New subsidies for first-time buyers and creation of housing savings accounts

1992–1995

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Simplification to a single VPO typology with two criteria: price and size. Increased involvement of autonomous governments and municipalities in the development of housing policy.

Goal was to promote access to home ownership for lower-income households. Autonomous governments had a prominent role in social housing. Price increases led to calls to declassify VPO

Achievements and limitations

Targets reduced dramatically during these years

Target for new VPO provision

Interest-rate subsidies. Monetary restrictions meant that market interest rates were much higher than those on VPO loans

Type of subsidies for VPO

Main social housing elements of housing plans, 1988–2005.

1988–1991

Period

Table 13.3

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Structure of Social Housing

is not always coherent or straightforward; indeed, results are often at odds with stated policies (Alberdi & Levenfeld 1996). Since the arrival of democracy, the successive housing plans have been rooted in two principles. One is public financing for VPO social housing built by private developers and sold to lower-income households. The other is the temporary nature of the protection regime for such dwellings, which allows them to eventually move into the free housing market (Sánchez García & Plandiura 2003). Table 13.3 presents the main characteristics of Spanish housing plans since the end of the 1980s.

Structure of social housing The development, construction and rehabilitation of VPO housing is open to a wide spectrum of providers including the state, regional governments, municipalities, public developers, mixed public–private companies, commercial developers, associations, cooperatives, not-for profit organisations and private individuals, provided they fulfill certain legal criteria (CECODHAS 2012). Once VPO houses are built or rehabilitated, they are sold, making the property and its management the private responsibility of the owners. Dwellings maintain their social character for a limited period of time (20 years), after which they can be traded at market prices. Within the 20-year period, resale prices are controlled and owners who sell must repay subsidies. Despite this requirement, owners can make substantial capital gains in the long run.

VPO rented housing Only a small percentage of the social VPO houses built are rented, and those are owned and managed by specialised institutions. Since the 1980s, most regional governments and municipalities have created public housing corporations to deal with this stock. In 1985, the Asociación Española de Promotores Públicos de Vivienda y Suelo (AVS) was formed as a lobby to organise and coordinate social housing developers. The association represents owners of more than 50% of the total social rented housing stock. Another association, the Confederación de Cooperativas de Viviendas de España (CONCOVI), lobbies for the cooperative social housing sector. The professionalism of the different regional and municipal companies varies greatly, particularly in terms of management and the supervision and rotation of tenants. In some territories, the regional companies carry out these functions competently, while in others they find it almost impossible to rotate the stock even if tenant households no longer meet eligibility

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criteria. Some regions carry out eviction orders immediately, while in others tenants can remain in a dwelling even without paying rent. Most providers of VPO social housing administer, maintain and repair existing rented stock; select the beneficiaries; enforce eligibility conditions and deal with new developments of social rented housing. Most companies are fully or partially responsible for the entire chain: developing the land (normally supplied free by the municipality), engaging a private contractor to construct the dwellings, allocating households and managing the units, including the possible rotation of tenants. Spain’s strong legal protection for tenants, however, makes this difficult; tenancies last at least five years, and at the end of the lease term it is difficult to remove tenants even if conditions have changed.

Funding VPO social housing The main form of subsidy to VPO housing is through the provision of free or cheap land for construction (the cost of land cannot make up more than 15% of the final price of the unit) by municipal landowners. The additional costs of VPO social housing are financed through one of two avenues: the public budget and the banking system. These operate in very different ways. Some of the VPO social housing built in the 1960s–1980s was partially funded through the national budget. The ministry in charge of housing policy allocated credit to private developers to fund construction of houses that were sold or rented. Developers sold the houses prior to completion and buyers made monthly payments towards their future homes. The government also provided upfront subsidies to lower-income households. When autonomous governments were created at the beginning of the 1980s, central government transferred the responsibility for managing these loans and for future VPO construction in their territories to them. Most autonomous governments created a specialised company to handle this. Public funding for construction of VPO housing has dwindled and is almost non-existent at present. The national budget also funded the interest-rate subsidies embedded in VPO loans. The fall in interest rates has reduced the importance of such subsidies, and the amount devoted to them has fallen accordingly. State funds for housing now go mainly to demand-side subsidies such as direct grants to buyers of VPO housing, down-payment assistance, allowances for young people and large households, and so on. Such subsidies have increasingly been eliminated since January 2010. The other major source of funding is the banking system. Until the mid-1970s, mortgage funding was the responsibility of the specialised mortgage bank (Banco Hipotecario) and the savings banks (cajas de

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ahorro). These were the only institutions that offered mortgages for VPO to developers and consumers until the mid-1980s when housing finance was deregulated. After that, commercial and saving banks became the principal institutions offering mortgages, including mortgages for VPO dwellings. The state contracts with these private credit institutions, which in turn provide loans on favourable conditions to developers and final purchasers. The state budget has always contained some funding for the construction of social housing for rent, but the amount was insignificant until 2002. In that year, the government offered developers a 20% upfront subsidy and a 50% interest-rate subsidy for building rental dwellings, on the condition that rents were kept low. The maximum annual rent was 4% of the cost of construction in the case of a 25-year loan, or 7% if the loan term was 10 years. Finally, the 2005–2008 and 2009–2012 housing plans formally included social rented housing as part of the target for new housing construction. The 2009–2012 plan includes provision for a subsidy of €6000 for refurbishment to landlords willing to let a vacant dwelling at below-market rent for at least five years.

Taxes and subsidies Since the 1970s, owner-occupiers (including owners of VPO social housing) have been able to deduct a proportion of mortgage loan payments from income for tax purposes. Over the years, there were various changes to the details of this scheme and in January 2011 it was almost eliminated, with only the poorest households remaining eligible. In 2012, the new conservative government announced that the pre-2011 system would be readopted with retroactive effect for those who had bought during the previous year but in July, after Spanish finance experts agreed that the tax deduction contributed directly to an increase in house prices, the government rescinded this decision and announced its intention to remove mortgage tax relief entirely. VPO social housing also benefits from a range of upfront subsidies and grants. These vary by region but are minor compared to the mortgage tax deduction. Since 1995, VPO social housing has been eligible for a reduced rate of VAT (4% as opposed to 8% for other housing); this reduced rate was extended to all housing in 2011 but from January 2013 will again only apply to VPO housing, while VAT on market housing will rise to 10%.

Nature and scope of rental assistance In 2008, a housing allowance known as the renta básica de emancipacion (basic emancipation rent) was introduced for tenants aged between 22 and 30 with a maximum income of €22 000 (Borgia Sorrosal 2008). It was revoked

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in December 2011 by the new government, although those tenants already in receipt of the allowance can continue to receive it until the end of its four-year term. Many autonomous governments have their own tax deductions for tenants, which have created inequalities between people living in different parts of Spain.

VPO prices and rents Figure 13.2 compares VPO and market house prices. They have been converging since the global financial crisis hit. VPO prices went from 50% of the market price in the first quarter of 2007 to 72% in the second quarter of 2012. The most recent available data show that VPO social housing is more expensive than market housing in 11 provinces. There are no statistics available for social rents. However, the legal maximum for annual rent on a social dwelling is 4 to 7% of the cost of construction of the unit. These maxima, and the resulting rents, differ by autonomous regions. In the Basque country, for instance, from 2008 the average rent for a 75m2 social rented unit was €313 including taxes and other expenses, as compared to a private rent of about €700 for a similar unit. The 2006 survey of rental housing provided data on private sector rents for that year, which averaged €5/m2 per month. For units of a similar size and quality, social rents are estimated to be around 50% of private rents.

2150 1950 1750 1550 Market

1350

VPO

1150 950 750 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2005 2006 2007 2008 2009 2010 2011 2012

Figure 13.2 VPO and market house prices in €/m2 . Source: Ministry of Public Works 2012.

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Access and allocation

Access and allocation Eligibility criteria vary somewhat by autonomous government, but in general require that the purchaser: • not own or have a permanent right to use another dwelling; • not have obtained financing under the Housing Plan over the previous 10 years; • have an income below €45 427 (in 2009); and • have lived in the area for at least two years. Disabled people and their dependents have priority and autonomous governments can establish other types of requirements (CECODHAS 2012). Broadly speaking, some 80% of households have an income below the ceiling for access to some form of VPO housing. Although VPO social housing continues to be built, its effectiveness has been extensively questioned. During the past 40 years, more than 4 million VPO units have been produced. This significant amount of stock has not been reusable as a buffer to resolve the new problems of accessibility as most was sold to owner-occupiers. Owners can then easily ‘reclassify’ these VPO dwellings and sell them at market prices, producing considerable transfers of income for themselves. These houses also pose a problem of equality in their distribution. Although eligibility criteria are applied, there is no legally required ranking procedure, meaning that developers themselves can select buyers from among eligible households. It is in the developer’s interest to sell to creditworthy buyers because the buyer assumes a proportion of the developer’s loan and the lending bank must agree to accept the transfer. Also, dwellings are often sold ‘off-plan’ (before completion) while still under construction. These factors mean that households with low incomes or more precarious economic situations are vulnerable and systematically disadvantaged (Alberdi & San Martín 2004). Some VPO social housing is developed by unions and cooperatives, which tend to favour their own members in allocation procedures. There is an implicit tension between Spain’s social housing policies, which grant access to employed households on reasonable incomes, and wider European Union policy against subsidising the undeserving (see Chapter 19 in this book). The EU considers only housing for the poor to be a service of general economic interest. This ethos is opposed to current Spanish practice in which, as noted about 80% of households are eligible for some kind of VPO.

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Demographics of social housing There are no data available about the demographics of VPO social housing, whether owner-occupied or rented. The 2009–2012 Housing Plan states that priority should be given to households with low incomes, first-time buyers, young or old people, female victims of domestic violence, victims of terrorism, large families, gypsies, one-parent families, and handicapped and dependent people. It is generally acknowledged that some VPO social housing is purchased by middle-income households, particularly when the difference between VPO and market prices is large. Successive governments have avoided tackling this problem, or even releasing the relevant data, meaning that researchers cannot identify the beneficiaries of this large investment of public money. Since the financial crisis hit, the housing situation at the bottom of the market has become worse. There is an increasing incidence of overcrowding (more than three adults per bedroom), substandard housing (both in shanty towns and in deteriorated housing), foreclosures and more people at risk of social exclusion among migrants, minorities, and the poor and vulnerable.

Current policy environment Recent issues and initiatives In 2004, the socialist party came into power and demonstrated its commitment to housing policy by creating a new Housing Ministry. At the time, there was widespread opposition to the subsidised owner-occupation sector. Youth associations began to demand a decent home without the lifelong burden of a high mortgage. They also considered it unfair that while some experienced great difficulties in finding an affordable dwelling, others who had bought a subsidised unit 10 or 20 years earlier could now make large profits from it. Policy makers thus decided to change the regulations so that owners of subsidised VPO housing had to wait longer before selling at a profit (Hoekstra & Heras Saizarbitoria 2007). For traditional VPO housing, the 2005–2008 Housing Plan established a minimum lock-in period of 30 years, which could be changed at the discretion of the autonomous government. This has led to regional differences in terms of the period of time that the dwelling retains its social character. Some regions opted for a permanent or nearly permanent lock-in, which can have the negative effect of further reducing the already relatively low labour mobility rate. Others have reduced it below the 30-year benchmark. The Basque government was a pioneer, introducing a permanent lock-in period in 2002. It also introduced a version of a right-to-buy system which

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gives the government, rather than the tenant, the right to purchase any VPO dwelling that comes on the free market; the policy has now been adopted in other regions. Another recent feature was the limited 75-year leasehold arrangement on the sale of VPO social housing that was removed in 2010 by the new Basque government. Since 2008, the Basque government has regularly reviewed the socioeconomic circumstances of the occupants of owner-occupied VPO dwellings. If they no longer meet eligibility requirements, they can, in principle, be forced to move, although there is little evidence to date that the policy is being put into practice. The 2005–2008 Housing Plan required each autonomous government to set up a register of VPO houses and another register of potential VPO buyers to avoid fraud. Moreover, second and subsequent sales of subsidised owner-occupancy dwellings were only possible after 10 years, for a maximum capped price. This measure was criticised by some for leaving considerable room for profit-making (Hoekstra & Heras Saizarbitoria 2007). The plan also reflected a philosophical shift towards the support of the rental sector, demonstrated in an increase in the percentage of social rented housing in new VPO construction and an improvement in the housing allowance for tenants.

Social owner-occupation It is deeply rooted in the Spanish mentality that to rent housing is to throw away money, while buying represents a lifetime investment. Since its inception, social housing in Spain has been dominated by owner-occupation. This VPO housing is highly valued and not stigmatised for being different from market housing. On the contrary, those who own VPO feel fortunate that their homes will have the same value as those bought outside the social housing structure. Attitudes have only recently begun to shift as a result of the financial and housing-market crisis and the lessons it is beginning to teach regarding mortgages. Rented social housing, on the other hand, is seen to be inferior to VPO social owner-occupation. Social renting does provide housing at very low prices; it also offers security, as tenants are seldom evicted even if their economic circumstances change. However, the lack of turnover, which stems from a shortage of stock, means that it cannot act as a buffer to deal with immediate needs. Moreover, because of the crisis, some regional and municipal social housing developers are now beginning to sell their limited rented housing stock at very low prices to private companies that want to replace existing tenants. This heralds dramatic changes in the sector. It is important to highlight the large number of second and empty homes in the total stock. According to estimates by the National Statistical Institute (INE) , as of end-2011 there were about 16 million occupied main dwellings (both owner-occupied and rented), and a further 8 million – half as many again – that were either second homes or standing empty. This makes Spain one of the countries, or possible the country, with the highest number of dwellings per inhabitant.

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Some experts believe that the solution to Spain’s housing problems will be found in a better match between the dwelling stock on the one hand and the demand of households on the other (Hoekstra & Heras Saizarbitoria 2007). They suggest that policy makers find a way to utilise the vast numbers of empty dwellings, which represented 14% of the total stock according to the 2011 census (INE 2011). Theoretically, at least, if a percentage of the vacant stock were made available, the supply would increase and house prices would fall further. The government took some initiatives to add vacant dwellings to the rental sector in 2006. It also established the so-called public rental fund (Sociedad Pública de Alquiler, or SPA) to act as an intermediary between owners of vacant dwellings and households needing housing, with the stipulation that landlords must charge ‘social’ rents – that is, well below market levels. This initiative was a failure because the SPAs lacked understanding of the rental market. Some autonomous governments also created similar Sociedades de Alquiler with only slightly greater success.

Effects of the global financial crisis The specific housing circumstances of the country at present are the result of a combination of the financial crisis, tightened mortgage regulations, increased unemployment and years of oversupply. When the crisis hit, credit dried up, the massive housing boom ended abruptly, the amount of vacant stock increased dramatically and it was estimated that an additional 1 million empty houses were added to the stock. At the same time, the financial crisis in other parts of Europe reduced sales to foreign buyers. Developers were left with blocks of unsold properties and massive debts. For the past four years, the government has been attempting to promote the sale of this vacant stock. The crisis has also resulted in a rapid increase in the number of bad loans and repossessions, making Spanish banks the largest property owners in the country. At the moment, the biggest ones are trying to sell as many houses as they can, as well as to rent below market prices. In 2009, a group of university researchers set out a proposal for structural reform of housing policy, one of whose main elements was the abolition of owner-occupied VPO social housing and the reorientation of housing policy towards the rental market (Andrés et al. 2009). However, the official 2009–2012 Housing Plan did not adopt this bold vision but rather followed the lines of previous plans with relatively limited revisions. It required that 40% of new VPO social homes be for rental rather than sale and allowed the conversion of empty houses into VPO social dwellings (which would consequently fetch lower prices). This plan also incorporated a government commitment to purchase land for the construction of up to 1.5 million mainly small (from 30m2 up) VPO units.

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References

Also in 2009, the government announced that it would provide 50% loan guarantees to 100 000 households to enable them to purchase VPO social homes. The loans, provided by the banking system, will be guaranteed by the Housing Ministry through the Instituto de Crédito Oficial (ICO), a public credit institution. The guarantee will last from 4 to 6 years and will amount to €6 billion, enabling a total purchase amount of €12 billion.

The future of the sector The policy of the government that took office in December 2011 was to bring back fiscal support for new houses, and to remove support from rentals. However, in July 2012, mortgage tax relief was removed entirely due to pressure from the European Union and demand-side subsidies were dramatically reduced. In September 2012, proposals were brought forward to address the problems of the rental market by reducing security of tenure for tenants, increasing rental contract flexibility and speeding up eviction procedures. In terms of owner-occupied housing, the policy goal is to coordinate and reduce the amount of taxes on the transfer of houses and to speed up the legal procedures associated with transactions. At the same time, the government has pledged to improve the administrative framework, eliminating barriers currently blocking the effective operations of the market. There is also a big push to encourage the sale of the many empty houses currently in the hands of banks and developers. Mortgage credit has dried up except for the purchase of such dwellings. The future of social housing is bleak. After the crisis hit, most demand-side subsidies were reduced and many have now disappeared entirely. The number of new VPO social units in 2011 was a third of the 2008 figure, and estimates for 2012 are even lower. Social housing, both VPO and rented, is increasingly disappearing as social housing developers try to sell their already small stocks to get cash to maintain their administrative structures; some will probably soon close. Some banks with large stocks of empty houses have started to rent them at low rents, thus meeting the housing needs of some. But the overall shape of the puzzle remains unclear: there are many actors with vested interests involved in the social housing sector, but it lacks a leading voice or clear-cut policy direction.

References Alberdi B and San Martín I (2004) Policy and market responses to affordability in Spain. Housing Finance International, June, 18–25. Alberdi B and Levenfeld G (1996) Housing Policy in Spain, in P Balchin (ed.) Housing Policy in Europe Routledge, London and New York.

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Andrés J and signatories (2009) Making the housing market work: A proposal for structural reform Fedea [Online], Available: www.crisis09.es Blanco I, Bonet J and Wallicer A (2011) Urban governance and regeneration policies in historic city centers: Madrid and Barcelona. Urban Research and Practice 4, 3, [Online], Available: http://www.tandfonline.com/doi/abs/10.1080/17535069.2011.616749 Borgia Sorrosal S (2008) Nuevas ayudas y ventajas fiscales destinadas a incentivar el mercado de alquiler. Crónica Tributaria, 129/2008, 9–34. Castells M (1983) The City and the Grassroots: A cross-cultural theory of urban social movements Edward Arnold, London. CECODHAS (2012) Housing Europe Review [Online], Available: http://www.housingeurope. eu/www.housingeurope.eu/uploads/file_/HER%202012%20EN%20web2_1.pdf CECODHAS (2007) Housing Europe Review [Online], Available: http://www.bshf.org/ published-information/publication.cfm?lang=00&thePubID=CE5EBB45-15C5-F4C0992A576CD5800BEB Housing Plan 2005–2008, Real Decreto 801/2005, of 1st of July (BOE 13/7/2005) [Online], Available: http://www.boe.es/boe/dias/2005/07/13/pdfs/A24941-24968.pdf Housing Plan 2009–2012, Real Decreto 2066/2008, of 12th December (BOE 24/12/2008) [Online], Available: http://www.boe.es/boe/dias/2008/12/24/pdfs/A51909-51937.pdf Hoekstra J and Heras Saizarbitoria I (2007) Recent changes in Spanish housing policies: subsidized owner-occupancy dwellings as a new tenure sector? Paper for the ENHR conference, Rotterdam [Online], Available: http://www.iut.nu/Facts%20and%20figures/Europe/2007/ Spanish%20housing%20policies_2007.pdf INE (2001) Censo de Viviendas 2001 [Online], Available: http://www.ine.es/censo_accesible/es /inicio.jsp Ministry of Public Works (2012) VPO and market house prices [Online], Available: http://www. fomento.gob.es/BE2/sedal/35101500.XLS & http://www.fomento.gob.es/BE2/sedal/ 35102500.XLS Pérez Barrasa T, Rodríguez Coma M and Blanco Moreno A (2011) Política de gasto en vivienda: España. 2010, Papeles de Trabajo n∘ /2011, Instituto de Estudios Fiscales, Madrid. [Online], Available: http://www.ief.es/documentos/recursos/publicaciones/papeles_trabajo/ 2011_01.pdf Sánchez García A and Plandiura R (2003) La provisionalidad del régimen de protección de la vivienda pública en España Universidad de Barcelona [Online], Available: http://www. ub.edu/geocrit/sn/sn-146%28090%29.htm#a2

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Constructed between 2005 and 2007 by the Budapest Józsefváros Municipality, the Práter street project was designed by Kis Péter Építészmüterme to be in proportion with surrounding structures. The buildings are integrated through an inner garden that is connected to the public space of the street as well. The project focused on the sustainability of the building by using durable, permanent materials, mainly concrete structures with ceramic facades. Photograph: Sándor Szabó.

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14 Social Housing in Post-Socialist Countries† József Hegedüsa , Martin Luxb , Petr Sunegab and Nóra Tellera a Metropolitan b Institute

Research Institute, Budapest, Hungary of Sociology, Academy of Sciences of the Czech Republic,

Prague

Introduction: the East European Housing Model and changes to the housing system during transition The main characteristics of the East European Housing Model in socialist countries before 1989 were single-party political control over the housing sector, a subordinate role for market mechanisms, a lack of market competition among housing agencies (bureaucratic coordination) and broad state control over the allocation of housing services (Hegedüs & Tosics 1996). However, several versions of this model emerged as individual countries responded differently to problems within the socialist economy (Turner, Hegadüs & Tosics 1992). In economic terms, the housing system was part of a shortage economy (Kornai 1992) in which the various elements are linked by bureaucratic coordination rather than market mechanisms. The allocation of resources to the housing sector (e.g. investments and loans) was controlled by the state1 and decoupled from the interaction of supply and demand. The vast majority of services were provided in kind or at below-market prices and allocated on the basis of ‘merit’ rather than need.2 Artificially low and subsidised housing prices resulted in a constant shortage of housing. Moreover, rapid industrialisation and urbanisation after World War II presented the socialist housing system with insurmountable † The

chapter draws on Hegedüs, Lux and Teller (2012).

Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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Introduction: The East European Housing Model and How It Changed

difficulties that produced ‘cracks’: demand based on incomes from the informal economy and intergenerational transfers, uncontrolled construction capacities (informal labour, use of unofficial building materials), private transactions, and so on (Hegedüs 1992). Countries responded in different ways to the appearance of these cracks: they either implemented strict control mechanisms (Bulgaria, Russia and East Germany) or allowed quasi-market processes to emerge, creating dual housing markets (former Yugoslavia, Hungary). In the informal sector, people built their own homes, real estate was privately sold and informal sub-tenancy markets operated; this existed side by side with the state-controlled housing sector (Alexeev 1988, 1990; Hegedüs & Tosics 1996). In the post-communist region, the events of 1989–1990 brought about a democratic political system which allowed market mechanisms to enter the economy. This transition from a planned to a market economy was characterised by the introduction of a multi-party political system, extensive privatisation and rapid decentralisation. However, new welfare and housing policies did not evolve out of a consistent ideological model. In other words, policy makers had no grand plan to follow; instead, policies evolved in response to specific societal problems. The various areas of welfare policy (e.g. income-benefit programmes, education, housing and the pension system) were modified only in a loosely coordinated way (Hegedüs & Szemzö 2010; Lux 2009). This type of trial-and-error or ‘scrambling’ approach was observed across the whole region (Tsenkova 2009). The new systems of social housing in Central and Eastern European countries followed similar trial-and-error transition processes. State-owned construction industries and the banking sectors were privatised, public housing management was decentralised and public housing itself began to be privatised to sitting tenants. In almost all countries, the first step was the transfer of state-owned residential property to municipalities, followed by legislation to regulate the conditions of public housing privatisation. The scope and form of this privatisation varied among the transition countries – most countries introduced right-to-buy policies, although there were several exceptions including the Czech Republic and Poland. Most countries implemented some form of ‘give-away’ privatisation. Sitting tenants typically paid less than 15% of the market price, and in some cases acquired property rights free of charge (e.g. in Russia, Georgia and Albania). Countries introduced different schemes to help tenants finance housing purchases, including issuing vouchers (Estonia and Latvia), compensation for nationalised properties, known as compensation shares (Hungary), special loans or advance payment schemes. While most countries imposed a time limit on privatisation, the pace of implementation varied widely. The deadline was extended in a number of countries

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including Hungary, Romania, Latvia and Slovenia, and Russia extended ‘unconditional’ privatisation – a version of right to buy – to 2013. Even 20 years after the beginning of the transition, privatisation of public housing is still underway in countries like Romania, Russia and the Czech Republic. To date, some 75–95% of national public housing stocks have been sold to sitting tenants at give-away financial terms. After the collapse of the socialist system, former private landlords and their descendants received compensation for the confiscation of their property by previous regimes. The principle of restitution was adopted in every post-socialist country, but its implementation differed. Restituted apartments generally became private rentals, but countries like Croatia, the Czech Republic, Romania and Slovenia drew up strong new tenant-protection laws to guarantee security of tenure and cap rent increases by the new landlords. Housing privatisation and restitution had both short- and long-term effects on the housing tenure structures of post-socialist countries (Table 14.1). It reduced the share of social housing, making it difficult for governments to implement social welfare policies with a strong housing element. To replace the privatised stock would require huge investment, for which the resources are not available. Moreover, many low-income individuals became home owners but did not have the means to maintain or renovate their typically obsolete homes. In addition, because of its regressive effect, privatisation has contributed to growing social tensions. Restitution, which followed a different logic, contributed to the creation of a new private rental sector that had its own political and economic contradictions, such as rent regulation and verbal leases that enabled landlords to avoid tax (Lux & Mikeszová 2012).

Rent regulation Rent control in Western countries can be divided into two categories: that which covers social housing and that which regulates the private rental sector. After World War II, there were few differences between the two. However, in the 1970s there was a gradual shift away from first-generation rent regulation (basically rent freezes) towards more market-friendly second-generation rent regulation (which allowed for periodic rent rises within a tenancy) or towards deregulation and liberalisation of private rents (Lind 2001; Donner 2000). The different rent control systems applied by Western governments to social and private tenancies only gradually entered the housing policy discourse in post-socialist states. The most common hybrid introduced during the early 1990s combined complete liberalisation of rents for new private tenancies with preservation of a conservative type of rent regulation and socialist tenant protection for existing tenancies – including private

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Table 14.1 Change in tenure structure in selected transition countries, 1990, 2001 and 2009 (%). Year

Public rental

1990 2001

35.5 1

Bulgaria

1990 2001

6.6 3

Croatia

1990 2001

24 2.9

Czech Republic

1990 2001 2008

39.1 29 14

20.4 17.4 12.4

Estonia

1990 2001

61 5.2

4

Hungary

1990 2001

23 4

Latvia

1990 2001

59 16

Lithuania

1990 2001

60.8 2.4

1990 2001 2009

31.6 16.1 10

1990 2001

32.7 2.7

Russian Federation

1990 2001

67 29

Serbia

1990 2002

23 2.6

Slovakia

1990 2001

27.7 6.5

1990 2001

31 3

1991 2001

47.3 20

Albania

Poland

Romania

Slovenia Ukraine

Source: Hegedüs, Lux and Teller (2012).

Cooperative

Private rental

Owneroccupied

5

64.5 94

1.5

91.7 96.5

0.2 0.5

3.5 10.8

67.5 82.9

5 3.4

6.7 13

40.5 46.9 60.6 35 94.8

3 4 5 2

74 91

1

36 82

25.4 28.6 19.4 1.1 4

22.1 15.6

Other

39.2 94.5

3.1

43.0 55.3 70.4

0.2

67.3 96.2 26 66

3 4.4

64 81.6

4.1

50.2 73.8

1 7

68 82 52.7 80

3 5 10 11.4

8

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tenancies in restituted housing (Lux 2003). This form of first-generation rent control has sometimes also been extended to new tenancies in public housing (Russia and Romania). In the early 1990s, further rent reform went hand in hand with introduction of right-to-buy policies – that is, rent deregulation was passed only if sitting tenants were also given the right to buy the housing they occupied and thus avoid rent increases. In 2010, there were only a few countries without a public rent control regime, including Estonia and Hungary. Public rents in other states were regulated either on the basis of strict tariffs (e.g. Russia, Serbia or Ukraine), rent ceilings computed from the appraised property value (Croatia or Slovenia) or tenant incomes (Romania). Second-generation rent control regimes were established in Poland in 2009 (much like the German model of comparable rents) and in the Czech Republic in 2012. In Estonia and Hungary and to a lesser extent also in Poland and the Czech Republic, both private and public landlords have recently been granted freedom to set their own rental policies for both new and running tenancies.

Housing allowances Many post-socialist countries established their first housing allowance schemes relatively soon after the regime change, but they generally were subject to various later amendments, especially after 2000. In most countries, housing allowances are paid directly to tenants (although in Slovenia and Poland they are paid to landlords) and are tenure neutral. Allowances are usually paid entirely or mainly out of state budgets (e.g. in the Czech Republic, Estonia, Ukraine, Slovakia and Hungary) or regional ones (Russia), but in some countries they come from municipal budgets with some co-financing from the state (e.g. in Poland, Slovenia or Croatia). The housing allowance schemes in most post-socialist countries have one feature in common: they are of marginal significance. Their role is limited to income maintenance for the lowest income families and they have never become effective demand-side housing policy instruments. They are auxiliary tools to help low-income families cover the costs of rising utility prices rather than substitutes for rent regulation or public housing privatisation (Hegedüs & Teller 2005: 189). Furthermore, almost all housing allowance schemes are aimed at tenants who already enjoy tenure protection and at home owners – that is, those who acquired their housing through give-away privatisation. Tenants paying market rents in the private sector are often excluded, explicitly or implicitly, from receiving housing allowance. The lack of efficient housing-allowance systems has led to affordability problems and to insecurity caused by high utility costs and rent arrears in both the public and private sectors. In Hungary, for example, mortgage

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New Social Housing Investment

arrears after the 2008 global financial crisis caused far-reaching social problems, which, together with utility arrears, affected close to 15% of the population (see Chapter 10 in this book).

Social housing management As part of the general trend towards decentralisation, the responsibility for managing the public housing stock that remained after the give-away privatisation of the 1990s was typically transferred to municipal housing companies. Most of the stock was of low quality and in need of major rehabilitation. But following privatisation, the new owners often had the right to select among different forms of property management. Condominium boards in privatised buildings could either choose to manage the buildings themselves or hire specialised management companies to do so. In this new open market, state-owned management companies lost their monopoly to operate and maintain the stock. However, in some countries, the new owners were not given the right to change management companies, so privatisation did not lead to the collapse of these state companies; this was the case, for example, in Russia, Armenia and the Ukraine. Privatisation meant that the number of housing units owned by local governments decreased drastically, so it began to make economic sense for small municipalities to merge their social housing management companies with other local service providers (such as the real estate managers of food markets, cemeteries and district heating). After management by municipal housing companies, the second major form of social housing management is the non-profit model. This model is widespread in Western Europe, where it has had a long history of government support. Although these new, ‘quasi-independent’ non-profit organisations have always been highly rated in evaluations of Eastern European housing policy programmes by international experts and donor agencies, the factors guaranteeing the autonomy and sustainability of this form of housing management are missing. That is, these organisations have not succeeded in establishing themselves as independent social landlords, capable of promoting their own political and financial interests (see details below). Thus, the municipalities have remained the dominant social landlords in the region.

New social housing investment New investment in social housing in transition states after 1990 was made either by municipalities or non-profit organisations. Despite the extensive decentralisation of power in the field of housing policy, new social housing

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construction would have been impossible without state (central) subsidies. The state administration therefore retained the power to decide which model of social housing provision it preferred. While municipalities were the preferred social housing investors in the region, in a few countries like Poland or Slovenia the state opted for non-profit organisations. However, the difference was more formal than real, because most non-profit organisations in post-socialist states were in fact municipally owned. One country that chose the municipal model for new social housing, with relatively large-scale municipal housing investments in the post-1990 period (Table 14.2), was the Czech Republic. Here, the government backed the construction of new public rental housing between 1995 and 2002 through grants amounting to around one-third of the construction cost. However, the programme was tarnished by speculation and abuse: dwelling allocation was not means-tested, and cooperatives gradually took the place of the public rental tenure. Many co-op flats constructed under this programme were soon sold or rented out by the beneficiaries of the state subsidies that went into this housing. Moreover, some flats built under the programme were actually second homes, and some were luxury dwellings. Hungary experienced similar contradictory effects. For example, in the 2000–2004 social rental building programme, which was based on central government grant support of up to 75% of the investment cost, municipalities sold more homes than they built or bought, and the allocation of the newly acquired homes was not monitored (see Chapter 10 in this book). There are only two post-socialist countries where non-profit housing has made up a substantial share of the housing stock in recent years: Poland and Slovenia (2% in each). Poland explicitly retained its supply-side subsidies at the beginning of the transition, continued them in the form of generous support for cooperative housing until the mid-1990s and later transformed these subsidies into support for a new type of non-profit housing association called Towaryszystwa Budownictwa Spolecznego (TBS). Table 14.2 Share of newly built public housing in total housing output in selected countries, 2000, 2005 and 2009 (%).

Czech Republic Estonia Hungary Latvia Poland Romania Slovak Republic Slovenia

2000

2005

2009

11.5 0.1 1.0 0.0 6.8 n.a. 11.6 8.6

8.4 0.0 1.7 0.0 8.3 8.9 14.2 7.0

2.0 4.5 0.6 0.9 6.5 3.9 12.5 4.7

Sources: EU Housing Statistics (2010), national statistical offices.

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A TBS can be started by a municipality, and in fact more than 90% of the associations currently operating were started in this way. The rents cannot exceed 4% of the replacement value of a dwelling, and the sum of the rental income from all dwellings owned by a TBS must cover all the maintenance and repair costs, as well as the repayment of the qualified loan from the National Housing Fund. The allocation of TBS dwellings is means tested, but the income ceilings are relatively high. Construction of TBS housing has been going on since 1996. As yet, evaluations of how the system has functioned are not conclusive. While there have clearly been positive results in that the number of new dwellings that can be leased for an affordable rent has grown, the generous targeting and in particular the high public expenditure are grounds for criticism. The Housing Fund received heavy support from the state budget and, additionally, from the special bank (Bank Gospodarstwa Krajowego or BGK) that serviced debts incurred from loans from the EBRD, the IMF and the EIB. The indebtedness of the bank and of some TBSs has become a serious financial problem. Moreover, according to a critical study by the World Bank, the TBS model constitutes a form of quasi-home ownership intervention rather than a long-term social-rental development scheme; a conclusion supported by a recent change in the legal framework that has made it possible to privatise TBS units (Muziol-Weclawowicz 2012). In consequence, the subsidisation of new social housing has been stopped, and flats built during the programme’s existence will probably be privatised to sitting tenants. In Slovenia, a new non-profit form of housing provision subsidised through the Housing Fund was introduced in 2003. However, Slovenian housing associations are strongly controlled by municipalities and cannot be regarded as independent institutions (Cirman & Mandicˇ 2012). Moreover, public support for new non-profit construction in recent years has faded and the state has redirected subsidies into housing allowances. Recently, the privatisation of social dwellings is also being discussed.

Trends in housing affordability and housing inequality As home ownership became the dominant tenure form in the region, the affordability of private homes became an important housing policy question. After more than 20 years of transition, Eastern and Central European societies are experiencing increased income inequality, high unemployment (including hidden unemployment) and greater insecurity in everyday life – all of which may cause people to default on rent, end up in arrears and potentially wind up homeless. The largest increase in income inequality took place in the 1990s as average incomes decreased during the first half of the decade and then stagnated. Real incomes finally started to

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increase in 2000, and continued to grow until the economic crisis in 2008. Poverty has become a grave problem especially in the new EU member states, where 10% of households earn less than 60% of average income (Leitner & Holzner 2008). Other factors influencing housing inequalities include income from the informal sector and intergenerational transfers. Between 1990 and 1999, the informal economy in new EU member states was estimated to be as large as 25–33% of GDP, and as late as 2007 still accounted for as much as 20% (Glovackas 2007). Informal economic activity by consumers (evasion of VAT), employees (25% of all employees are paid in cash), service providers (tax evasion) and so on is still widely accepted (Schneider 2002; Buehn & Schneider 2009). The informal economy has influenced inequality in two ways: first, the existence of undocumented income made it very difficult to target income benefit and housing allowance programmes to the poorest. Second, it weakened the equalisation effect of the progressive tax system. Intergenerational transfers of family savings and inheritance also affect access to the owner-occupied market in a high house-price-to-income environment. Through this mechanism, the financial and social position of the parents influences the housing position of the next generation, and therefore social inequalities tended to be inherited through the housing system. Costs associated with housing (especially utility costs such as water and sewage fees or heating costs) increased throughout the region at such a rapid pace that household incomes were unable to keep up. By 1994, average utility costs as a proportion of incomes had risen from 5.8% to 11.4% in 10 post-socialist countries (Hegedüs, Mayo & Tosics 1996). The share of utility costs in household budgets again increased significantly in the middle of the 2000s. Fankhauser and Tepic’s (2005) study shows variations among the different countries, with household electricity costs varying between 1.6% of household income in Russia and 5.5% in Serbia, while water fees ranged from 0.7% in Serbia to 4.1% in Hungary. Buzar (2007) has referred to the situation where households cannot afford to heat their homes adequately using a reasonable share of their incomes as ‘energy poverty’, and says the phenomenon ‘arises out of the inadequate co-ordination of energy, social welfare and housing policies’ (Buzar 2007: 224). Accumulated arrears can force households to move to cheaper homes and use their equity to repay debts to utility companies. Struggling households can reduce housing costs through ‘social migration’ – moving to a smaller housing unit with lower expenses. This can have unintended negative consequences if the household ends up in an underdeveloped region and its members cannot enter the labour market, or lose access to education, health systems or other welfare benefits. This new type of ‘downward mobility’ has contributed to the development of slums in remote villages and urban areas in transition countries. The accumulation of disadvantages can lead

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to extreme forms of housing exclusion, where people have to live in very dilapidated dwellings on insecure tenancies. Rough sleeping and the various stages of homelessness represent the most extreme form of individual housing exclusion. In East European countries, the lack of integration between social and housing services and the dearth of preventative programmes seriously impede efforts to deal with housing disadvantage. Social housing allocation is highly decentralised, and the availability of support services to help people with difficulties (such as divorce, illness, addiction, etc.) to remain in their housing varies widely. It is therefore impossible to identify a general pattern of exclusion across East European countries. In some areas, rough sleepers can only access social housing once they have climbed the ladder of homelessness services, from low-threshold services to transitional homes, while ‘housing first’ programmes are still rare. The other extreme form of housing exclusion is that faced by poor Roma populations living in spatial concentrations in underdeveloped areas of Central and East Europe. Over the past century, the integration (and assimilation) of Roma has been an issue, particularly in Romania, Bulgaria, Slovakia and Hungary, where the largest East European populations live. Roma make up between 1% of the population in Poland and 10% in Slovakia (EU 2012). The economic changes during the transition and the job losses and impoverishment that ensued contributed to a severe worsening of their housing conditions. Increased housing insecurity is, however, not only a result of the affordability problems that have affected many social strata in transition societies but also a consequence of the frequently informal and spatially segregated housing arrangements of many Roma households. For example, according to recent estimates, in Bulgaria about 70% of Roma housing is illegal, and in Slovakia the figure is around 30% (Somogyi & Teller 2011). The segregation level in Serbia for all Roma is 70%; in Romania and Hungary, approximately 60% of them live in neighbourhoods that are made up almost exclusively of Roma inhabitants (Berescu, Petrovic´ and Teller 2012); and in Slovakia around 30% of Roma live in spatially segregated communities (UNDP 2006).

The sustainability and effectiveness of new social housing subsidies There are some countries where new social-housing output between 1995 and 2010 can be considered significant (in relation to the size of the country’s housing stock and to other post-socialist countries). They include the Czech Republic, Slovakia, Slovenia, Serbia and Poland. However, as

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mentioned earlier, in the Czech Republic most new public housing had the status of de facto quasi-owner-occupied housing, and recent output has been low. In Slovenia, formerly generous social-housing programmes were recently scrapped and replaced by a housing allowance. This led to a discussion about selling newly built non-profit dwellings to sitting tenants. The Serbian programme ended up offering tenants the right to buy, and what was initially social housing became part of the owner-occupied stock. In Poland, as noted, the non-profit programme was recently stopped and the stock will probably be privatised to sitting tenants. Almost all the new social/public housing programmes have thus proved to be unsustainable, with a few exceptions such as Slovakia. There are also doubts about the effectiveness/equity of the new programmes. Welfare economics distinguishes between ‘vertical’ and ‘horizontal’ effectiveness/equity (Barr 1993). Vertical effectiveness measures the degree of redistribution of income, consumption and wealth from the affluent to the disadvantaged. In the case of a particular housing subsidy, it measures the extent to which such a subsidy is actually allocated to those who really need help. Horizontal effectiveness is achieved when all poor households have equal and unrestricted access to subsidies. In the case of housing subsidies, the question is whether there are any poor households that are ineligible to apply for particular subsidies or programmes and are thus implicitly or explicitly excluded from state assistance. New social-housing programmes in post-socialist states have exhibited very little horizontal or vertical effectiveness. Long waiting lists based on universal housing rights (with no means test) characterise the conservative social-housing allocation systems (e.g. in Ukraine and Russia), while there is a preference for middle-class households and key workers in more advanced social-housing allocation schemes. The targeting of households that have low incomes, are homeless or Roma, or are otherwise vulnerable is either not done under existing housing allocation rules (e.g. in the Czech Republic, Hungary, Serbia, Ukraine and Russia) or appears in the regulations but does not function in practice (e.g. in Estonia and Slovakia). The latter policy failure was due to a number of factors such as: (i) income caps being set too high or (ii) key workers, tenants in restituted housing and young home-seekers, regardless of income, receiving preferential treatment. A third problem is that the tenure status of social housing remains uncertain. New public housing in the Czech Republic ultimately acquired the status of co-op housing, and in Slovenia and Poland recent plans have emerged to privatise newly built non-profit housing to sitting tenants. So, despite the different strategies used in distinct countries, attempts to reinvent social housing have proved to be unsustainable and ineffective in the long term.

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Conclusions: Prospects for a New Social-housing Regime

Conclusions: prospects for a new social housing regime Housing policy is the product of interaction between stakeholders who each have a distinct set of political and economic interests. Governments have frequently made changes to housing policy over the past 20 years, but these changes were generally guided by short-term political and economic interests rather than by political (socialist vs conservative) ideology. There has always been a large gap between the rhetoric and the actual effects of a programme. While post-socialist countries underwent very similar structural changes in the 1990s, their policy responses showed major variations. Some trends hold true across all of the housing systems in the region, which tends to support the convergence theory (see Chapter 15 in this book). The social rental sector was largely privatised and became a residual sector in which the most vulnerable social groups are concentrated. Although there have been a number of attempts to modernise the sector, powerful new social landlords have yet to emerge. Two factors hinder the active participation of local governments in such programmes: high costs and the social conflicts generated by the social rental sector. The region is characterised by ‘weak government’, a factor that helps explain the absence of efficient social housing policy. This means, first, that governments are under the influence of the private interests of banks and entrepreneurs and have little capacity to balance the interests of the different social groups. Second, trade unions are somewhat powerless in the private sector; they have more power in the public sector and tend to protest against reforms. Third, the capacity of governments to introduce and monitor reforms is limited because of budget constraints and competition with the private sector. Fourth, decentralisation has led to the creation of public administrations that are quite responsive to local interests, but this has made the public sector as a whole fragmented and inefficient. Finally, the integrity of the public sector has been damaged; corruption – especially those cases that have been swept under the rug or where perpetrators have been pardoned – has made governments too weak to champion reforms. At the same time, the development of the private rental sector has introduced a new tenure form to the region. However, in most countries, private rentals are often part of the informal economy, which makes it difficult to integrate this sector with social housing. The social and economic problems caused by the transition forced governments to change their welfare systems. However, it is unclear what kind of welfare regime transition countries are moving towards and whether a new model that combines the elements of modern European welfare regimes with the socialist tradition will emerge. One clear trend is that states are

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playing ever-smaller roles in housing and welfare systems. Consequently, the main challenge for housing policy in transition countries is to provide institutional assistance to groups that are vulnerable as a result of structural changes – in particular, privatisation and the commodification of public services.

Acknowledgement Research for this chapter was made possible also with support from the Czech Science Foundation, grant No. P404/12/1446.

Notes 1 The state here refers not just to central government and local authorities but also to state-owned enterprises, which made up most of the economy and which were integrated into the economy through the communist party. 2 The individual’s degree of influence or power, based on their position in the state hierarchy, was interpreted as ‘merit’.

References Alexeev M (1988) The effect of housing allocation on social inequality: a soviet perspective. Journal of Comparative Economics, 12, 228–234. Alexeev M (1990) Distribution of housing subsidies in the USSR, with some soviet-hungarian, comparisons. Comparative Economic Studies, 32, 3, 138–157. Barr N (1993) The Economics of the Welfare State Oxford University Press, Oxford. Buehn A and Schneider F (2009) Corruption and the Shadow Economy: A Structural Equation Model Approach, IZA Discussion Papers, 4182. Institute for the Study of Labor (IZA) [Online], Available: http://ftp.iza.org/dp4182.pdf. Buzar S (2007) The ‘hidden’ geographies of energy poverty in post-socialism: between institutions and households. Geoforum, 38, 224–240. Berescu C, Petrovic´ M and Teller N (2012) Housing exclusion of the Roma: living on the edge, chapter in J Hegedüs, M Lux and N Teller (eds), Social Housing in Transition Countries, Routledge, New York/London. Cirman A and Mandicˇ S (2012) Slovenia: the social housing sector in search of an identity, chapter in J Hegedüs, M Lux and N Teller (eds), Social Housing in Transition Countries, Routledge, New York/London. Donner C (2000) Housing Policies in the European Union, Vienna. EU Housing Statistics (2010) Housing Statistics in the European Union, The Hague: Ministry of the Interior and Kingdom Relations, D Kees and M Haffner (eds) OTB Research Institute for the Built Environment, Delft University of Technology.

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EU (2012) European Commission calls on Member States to implement national plans for Roma integration [Online], Available: http://ec.europa.eu/justice/newsroom/discrimination/news/120523_en.htm Accessed 12 June 2012. European Commission (2011) Fact sheets of the National Roma Inclusion Strategies [Online], Available: http://ec.europa.eu/justice/newsroom/discrimination/news/120523_en.htm Fankhauser S and Tepic S (2005) Can Poor Consumers Pay for Energy and Water? An Affordability Analysis for Transition Countries, Working Paper No. 92, European Bank Reconstruction and Development [Online], Available: http://www.ebrd.com/downloads/research/ economics/workingpapers/wp0092.pdf Glovackas S (2007) The Informal Economy in Central and Eastern Europe [Online], Available: www.wiego.org/papers/2005/Glovackas.doc Hegedüs J, Lux M and Teller N (eds) (2012) Social Housing in Transition Countries Routledge, New York/London. Hegedüs J (1992) Self help housing in Hungary, chapter in K Matey (ed), Beyond Self-Help Housing, Profil Verlag, München. Hegedüs J and Szemzö H (2010) Shaping the New Welfare Regime in Transition Countries: The Interplay of Public Policies and Households’ Strategies (Case of Hungary) Paper prepared for conference on Comparative Housing Research: Approaches and Policy Challenges in a New International Era, OTB Research Institute and the Faculty of Architecture, Delft University of Technology, Delft. Hegedüs J and Teller N (2005) Development of the Housing Allowance Programmes in Hungary in the Context of CEE Transitional Countries. European Journal of Housing Policy, 5, 187–209. Hegedüs J and Tosics I (1996) Disintegration of East-European housing model, chapter in D Clapham, J Hegedüs, K Kintrea and I Tosics (eds), Housing Privatization in Eastern Europe, Greenwood, Connecticut. Hegedüs J, Mayo E.S. and Tosics I (1996) Transition of the housing sector in the east central European countries. Review of Urban and Regional Development Studies, 8, 101–136. Kornai J (1992) The Socialist System: The Political Economy of Communism, Clarendon Press, Oxford. Leitner S and Holzner M (2008) Economic Inequality in Central, East and Southeast Europe The Balkan Observatory Working Papers, Vienna Institute for International Economic Studies, Vienna [Online], Available: http://ideas.repec.org/p/wii/bpaper/bowp074.html Lind H (2001) Rent Regulation: A Conceptual and Comparative Analysis. European Journal of Housing Policy, 1, 41–57. Lux M (ed) (2003) Housing Policy: An End or a New Beginning LGI-OSI, Budapest. Lux M (2009) Housing Policy and Housing Finance in the Czech Republic during Transition, IOS Press, Amsterdam. Lux M and Mikeszová M (2012) Property restitution and private rental housing in transition: the case of the Czech Republic. Housing Studies, 27, 1, 77-96. Muziol-Weclawowicz A (2012) Poland: old problems and new dilemmas, chapter in J Hegedüs, M Lux and N Teller (eds), Social Housing in Transition Countries, Routledge, New York/London. Schneider F (2002) Size and Measurement of the Informal Economy in 110 Countries around the World, Paper presented at the Workshop of Australian National Tax Centre, ANU, Australia [Online], Available: http://www.amnet.co.il/attachments/informal_economy110.pdf Somogyi E and Teller N (2011) Improving housing conditions for marginalized communities, including Roma in Bulgaria, Czech Republic, Hungary, Romania and Slovakia through the absorption of ERDF, Soros/MtM, Budapest [Online], Available: http://www.soros.org/sites/ default/files/vademecum-housing-20120522.pdf

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Tsenkova S (2009) Housing Reforms in Post-Socialist Europe: Lost In Transition SpringerVerlag, Heidelberg. Turner B, Hegedüs J and Tosics I (1992) The Reform of Housing in Eastern Europe and the Soviet Union Routledge, London. UNDP (2006) Report on the Living Conditions of Roma in Slovakia (report compiled by J Filadelfiová, D Gerbery and D Škobla) [Online], Available: http://issuu.com/undp_in_ europe_cis/docs/report_on_the_living_conditions_of_roma_households#download

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The Red Road housing estate in north-east Glasgow, Scotland (two slabs of twenty-six and twenty-eight storeys, four point blocks and two tower blocks of thirty-one storeys) were designed in 1962 by Sam Bunton & Associates as an inexpensive modernist provision of social housing homes to almost 5,000 people. At one point, they were the tallest residential blocks in Europe and have been the focus of a film, a novel and many photographic and artistic works. In 2005, the Glasgow Housing Association (GHA) and Glasgow City Council announced a major redevelopment plan for the Red Road/Balornock which involved the demolition of the entire estate within a time frame of ten years. The first demolition of a triple tower block took place in 2012. Photograph: James Burns.

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15 Histories of Social Housing: A Comparative Approach Peter Malpass School of Housing and Urban Studies, University of the West of England, Bristol, UK

Introduction The aim of this chapter is to concentrate on conceptual and analytical frameworks for comparative research on the histories of social housing. Across the European Union, social housing accounts for no more than 32% of all housing in any one country, while in every country owner-occupation accounts for a larger share of total supply than does the social housing sector. This has led to the claim that Europe is now a ‘union of home owners’ (Doling & Ford 2007: 113). … anywhere we look at the dynamics of the housing market, we see the share of owner occupation on the rise. Everywhere, the (social) rented sector is on the defensive (Priemus & Dieleman 2002: 191) The fact that the average level of home ownership in Europe is now in excess of 60% highlights the subordinate position of social housing in the present period and strengthens the view that it must be understood in the context of housing systems dominated by home ownership. Nevertheless, the majority of countries in the European Union retain some sort of social housing provision, ranging from less than 2% of the total stock in Spain, Greece and Estonia to 32% in the Netherlands (CECODHAS 2011: Table 4). The housing system in each country has developed its own distinctive Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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character, reflecting local historical circumstances. Thus, there are many different histories of social housing in Europe, and in some cases particular cities (e.g. Vienna) or sub-national components of countries (e.g. Scotland) stand out from the national narrative. Even if we confine ourselves to the affluent democracies of northwest Europe, those countries with a relatively long and similar history of industrialisation and urbanisation, they still have quite diverse social housing. The starting point for this paper, therefore, is recognition of the observable differences in social housing provision across Europe at present, in terms of the size of the social sector, its trajectory of change (growth or decline), organisational forms, methods of financing and role in the housing system as a whole. The key questions, therefore, are how can history help to explain these current differences (and similarities), and what can history tell us about the direction of travel in the future?

Perspectives on the history of social housing One of the problems for comparative analysis is whether to place the emphasis on difference or similarity. In general, it can be said that the more detailed the analysis, the more likely it is that difference will emerge as the dominant feature. And the further away you stand, the more the small-scale differences fade away and the larger-scale similarities emerge into view. So, in a sense, the distinction between difference and similarity is methodological. But it is also theoretical, reflecting deep differences in perceptions of what forces shape society and drive (or suppress) change. A key debate in the context of research on comparative social housing concerns not just difference and similarity but the direction of travel: are we looking at convergence or divergence? Different analyses reflect different perceptions of underlying causality, and this is a topic to be considered in a moment. First, though, we need to consider what it means to refer to differences between social housing systems. If we say that social housing systems are different, are we referring to mere variations on a theme, or do we mean categorical differences? That is, are there different types of social housing systems or just different versions? This becomes important in relation to the debate about convergence or divergence, which are also terms that demand some thought. A strong convergence approach would suggest that there is a tendency in the present period for social housing systems in broadly similar affluent democracies with market-based economies to move towards a residual, safety-net role, underpinning the dominant owner-occupier market. This goes beyond saying that different countries will find their own ways of coping with the pressures of globalisation, suggesting that the power of footloose and highly mobile capital controlled by multi-national corporations is such that national governments will be

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constrained to follow increasingly similar policies. Divergence approaches, on the other hand, also go beyond saying that each country will find its own way forward: theorised divergence is not a vision of a starburst pattern. Instead, the weight of explanation lies not with the local impact of global capitalism but with deeply embedded cultural structures and practices. A key feature of divergence approaches is the claim that there are different ‘families of nations’ (Castles 1998) or different ‘worlds of welfare capitalism’ (Esping-Andersen 1990). For present purposes, an important distinction in this literature is between the so-called Anglo-Saxon, or English-speaking, nations and continental Europe. According to at least some writers in this school, the differences between countries are sufficient to produce categorically different, and theoretically predictable, social housing systems that will become more different over time.

The convergence school Perhaps the most coherent and clearly structured contribution to the convergence school is Michael Harloe’s book The People’s Home? (1995), in which he develops an account based on a political-economy approach, emphasising the politically influenced character of national responses to the long-term dynamics of capitalism. Harloe builds his analysis around earlier work (Block 1987), which argued that each phase of capitalist expansion creates a particular set of social arrangements (social structures of accumulation), including provision for social housing. According to this view, there have been three phases of expansion, the first two of which ended in crisis: • Liberal capitalism, from the emergence of industrialism through to the world economic recession of the early 1930s. This period was characterised by limited state intervention in the economy and low levels of public provision for individual well-being. • Welfare capitalism (sometimes referred to as Fordism), which became more dominant after 1945 but which went into a period of decay in the 1960s and ended in another global economic crisis in the mid-1970s. In this period, although there were variations between countries, there was generally more intervention in managing national and international economies, and considerably more development of public services and social protection. • Post-industrialism, or post-Fordism, the current phase, which emerged out of the crisis of the 1970s. Now governments are less confident of their ability to manage national economies in the face of globalisation, and are inclined to cut back and modify welfare state arrangements developed in the previous era, hence references to ‘post-welfare states’.

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Harloe also draws on the long-established debate about what social housing is for: is it primarily to accommodate the least well off in society, those for whom the market never provides decent affordable housing? Or is it to provide subsidised homes for the rather better off, whether they are the skilled working class of the past or people now described as key workers? This leads him to adopt the idea of two predominant models of social housing, the mass and the residual. The residual model implies a focus on minimalist provision for the least well off as a safety-net service. The mass model, on the other hand, implies a better standard of provision embracing ‘a range of lower- and middle-income groups, not just or even mainly the poor’ (Harloe 1995: 72). Using the rise and fall of structures of accumulation as a backdrop, Harloe builds his account of the history of social housing around the notion of an early phase up to 1914, followed by four phases of development since 1919: • Before 1914, when social housing began in a number of European countries, primarily as a form of voluntary, philanthropic activity targeted at helping the least well off. • The period immediately after 1918, during which, according to Harloe’s analysis, the mass model of social housing dominated for a short while during the post-war recovery. • From the later 1920s to 1939, when the residual model was reasserted. • 1945 to mid-1970s, the period of post-war reconstruction, the golden age for social housing, when output levels were high and the mass model dominated, alongside attempts to tackle ‘slum’ housing. • Since the mid-1970s, the mass model has been challenged and has retreated as residualism has advanced. A key part of Harloe’s argument is that the residual form is the standard form of social housing in normal times, and that the mass model only emerges in abnormal times: … housing will normally be provided in capitalist societies in commodified rather than decommodified forms and … it is only when adequate provision in commodified form is not possible (even with state support) and when this situation has some broader significance for the dominant social and economic order, that recourse is made to large-scale, partially decommodified, state subsidised and politically controlled mass social rented housing (Harloe 1995: 6). Harloe’s approach has a number of attractive features: it is coherent and has a long historical sweep, reaching back into the nineteenth century to offer an account of the origins of social housing. His approach to periodisation is also useful: most writers agree on the importance of the 30 years after 1945

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in terms of post-war reconstruction, economic growth and a ‘golden age’ for European welfare states, including social housing. There is also a good deal of consensus around the significance of the mid-1970s as a turning point, after which growth rates declined, unemployment and inflation increased and ‘big’ government came under sustained criticism (Castles 1998: 7). Others may argue that for the countries of Central and Eastern Europe, 1989 was a more important turning point, but for most countries in Western Europe the mid-1970s crisis retains its salience and utility in the analysis of the history of welfare states and social housing in particular. Harloe’s approach also purports to offer an explanation for the development of social housing in capitalist countries in general: To understand the development of social housing in the six countries with which we have been concerned [the USA, the UK, France, Germany, Denmark and the Netherlands], it was as important to identify and trace the significance of some general political and economic changes in all advanced capitalist societies as it was to grasp the nationally specific circumstances in which these changes were experienced and which shaped the responses to them (Harloe 1995: 528). However, it suffers from a number of problems, the most obvious of which is that the attempt to link trends in social housing policy to phases of capitalist development is not fully explicated. Harloe’s reading of events links the emergence of the mass model of social housing to post-war reconstruction and the associated political settlements, rather than to the economic crises of the 1930s and mid-1970s, which marked the transition from one phase to another. Indeed, according to Harloe, in Europe these economic crises were associated with retreat from mass social housing. As a theory of housing under capitalism, Harloe’s approach has a real problem of explaining the US, where the mass model hardly made an appearance and where it is admitted that the residualised form has predominated almost throughout. Nor, according to critics such as Kemeny (1995), does its emphasis on the emergence of a residual role for social housing apply to most countries in continental Europe. It is possible, therefore, to argue that Harloe’s attempt to produce a general statement about the development of housing in capitalist countries turns out to apply only to the UK. A further criticism is that the two ‘models’, mass and residual, are not really models at all (Malpass 2001). Nevertheless, Harloe’s conclusions are shared by a number of other writers who have adopted a similar convergence orientation, without necessarily adopting the same analytical framework. For example, Edgar et al. (2002), Whitehead (2003) and Whitehead and Scanlon (2007) have reached conclusions that are broadly consistent with the view expressed by Harloe about the trend of the past 30 years:

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Since the mid-1970s the shift back towards a contemporary version of the restricted, residual model of social housing provision, targeted on the poor, has become evident in [the USA, the UK, France, Germany, Denmark and the Netherlands] … in country after country the period was marked by a common pattern – deep cuts in new investment; moves, on the one hand, to privatise sections of the stock and, on the other hand, to narrow the socio-economic profile of those whom the sector accommodated; policies of decentralisation and attempts by government to reduce its political and financial responsibility for the sector (Harloe 1995: 498).

The divergence school An important feature of Harloe’s book is that although he discusses the differences between the social housing systems and policies in his chosen countries, his approach is not well equipped to explain those differences. He neither recognises the existence of distinct categories or groups of countries nor does he fully engage with those who do, such as Esping-Andersen (1990), whose notion of three worlds of welfare capitalism has become very widely referenced. Esping-Andersen has also been widely criticised, not least for his lack of consideration of housing (Matznetter 2002; Groves et al. 2007). Within housing studies, the divergence approach is most closely identified with the work of Jim Kemeny (1981, 1995, 2005, 2006; Kemeny & Lowe 1998; Kemeny et al. 2005). To some extent, Kemeny’s work may be said to compensate for Esping-Andersen’s failure to pay attention to housing. Before outlining the main elements of the divergence thesis, it is worth noting Kemeny’s critique of convergence thinking, which he sees as the product of an Anglo-Saxon bias in housing research. In particular, he attacks the notion that there is an inevitability about the rise of owner occupation and the corresponding decline of renting. Moreover, he argues that even if it can be shown that there are similar empirical tendencies, for instance, in relation to the decline of rental housing, it does not follow that the causality is the same everywhere. Over many years, Kemeny has argued for the divergence position on the basis of social and cultural heritage, contrasting the housing systems of what he calls the home-owning Anglo-Saxon countries with countries on mainland Europe. [He also acknowledges that some non-English-speaking nations have dual rental markets: Iceland, Norway and Finland (Kemeny 2006)]. He has sought to explain the apparent preference for owner-occupation in the English-speaking nations and to contrast it with persistently higher levels of renting in Europe. In Kemeny’s explanatory framework, there is no room for the dynamics of international capitalism; instead, he places his emphasis on two main factors shaping rental housing: policy and financial maturity. In contrast to the implicit fatalism (structural determinism) of

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convergence writers, who tend to see economic forces as beyond control, Kemeny stresses the idea that markets are social constructs, subject to political influence; this leads to the view that countries can choose (and have in the past chosen) different policy strategies. According to Kemeny, a number of continental European countries have been influenced by the idea of the social market that emerged in Germany in the 1930s. His thesis is that whereas in Anglo-Saxon countries the pursuit of a profit-driven private rental market has condemned social housing to a residual role, this is not the case in countries that have adopted a unitary rental housing strategy based on the social-market approach, in which social housing competes directly with a more regulated, and supported, private rental sector (Kemeny 1995). The Anglo-Saxon countries have chosen to promote an unhindered for-profit rental market, which, he argues, inevitably leads to growth in owner-occupation and the need for a residual public rental sector (Kemeny 1995: 18). At the heart of Kemeny’s work is the contrast between the dual rental market and the unitary rental market. In a dual rental market, quite different rent policies are adopted in the social and private, profit-seeking sectors. In contrast, most continental European countries have adopted unitary rental markets, in which governments have, in various ways, sought to minimise differences in rents, quality and social attractiveness between the social and private parts of the rental sector. This means forms of rent regulation but also a degree of subsidy for private landlords. In more recent work, Kemeny has distinguished between unitary and integrated rental markets. An integrated rental market is seen as a development from a unitary market and exists when ‘the non-profit rental stock mirrors that of the profit rental stock with which it competes’ (Kemeny et al. 2005; Kemeny 2006). The next aspect of Kemeny’s thesis is the importance attached to the notion of financial maturity. This refers to ‘the growing gap between the per-dwelling outstanding debt on existing stock and the average new debt per dwelling that is either built, acquired, or renovated’ (Kemeny 1995: 41). The importance of maturation is that at some point (depending chiefly on rates of inflation and levels of investment) the rents necessary to cover costs will begin to fall, making cost renting (social renting) competitive with profit renting and owner-occupation. Kemeny argues that maturation demands a policy response, and that countries with different rental systems make different strategic choices. Dual rental countries opt for policies to reduce the competitiveness and attractiveness of social renting, boosting instead the rhetoric around the advantages of owner occupation. In contrast, unitary rental countries adopt what Kemeny calls a process of rent harmonisation, in which rent controls are gradually relaxed in a context where it is the cost-rent levels set by the large and attractive social sector that predominate and act as a brake on what profit-seeking landlords can charge. The further the harmonisation process develops, the more the rental market moves from unitary to integrated.

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This, then, is at the heart of the notion of divergence: Kemeny is offering an explanation for the continuing differences between the housing systems in different European countries, and providing reasons for predicting that dual rental countries will diverge further from unitary rental countries in the years to come. However, he also hints at the vulnerability of unitarist policies: ‘The hegemonic position of such market based unitary rental strategies in countries like Sweden, the Netherlands, Germany and Switzerland is much less strongly entrenched than the command economy model is in the English speaking countries’ (Kemeny 1995: 145). One final point to make about Kemeny’s work is that he argues for the importance of research to drill down to underlying causes, accusing convergence theorists of drawing false conclusions from superficial evidence. He admits that: A rising rate of owner occupation and tendencies towards increasing concentrations of low income earners and social security recipients in public or cost renting can be identified in many, if not most, countries including at least some of those with unitary rental markets (Kemeny 1995: 138). However, he goes on to stress that although such appearances may persist for ‘even the medium term’, the causes will be different underlying processes (Kemeny 1995: 141). As with the convergence thesis, there are also difficulties with Kemeny’s divergence perspective. First, the idea that there is a family of Anglo-Saxon countries glosses over the very real differences between the housing systems and welfare states of the UK and the US. In terms of the size of its social rented sector, Britain is much more like its continental European neighbours. Second, as mentioned earlier, Kemeny does not give much attention to the impact of external forces, such as globalisation. Third, nor does he offer the sort of structured view of history that is apparent in Harloe’s book. Kemeny has little to say about the early development of social housing in different countries, which is understandable given his interest in how policy makers respond to the process of financial maturation. However, he hints that there must have been some background to those key decisions, and there is plenty of scope to fill in the historical detail. Fourth, although Kemeny confidently categorises Austria, the Netherlands and the UK, he is clearly uncertain about where to place France (Kemeny 2006).

Comparative housing histories: a new approach Having reviewed these two approaches to comparative housing analysis, it is apparent that each has strengths and weaknesses. Is it possible to move towards some kind of synthesis? It is common ground that social housing

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across Europe had diverse origins in the late nineteenth century and that little progress was made anywhere in terms of the scale of provision. Nevertheless, it was then or in the early part of the twentieth century that some fateful decisions were made, for example, about the kinds of organisations that would provide social rented housing. These decisions had significant but unforeseen implications for the future. In the period between the two world wars, levels of investment tended to be higher, but it was only after 1945 that large-scale provision of social housing was achieved. The sheer scale of investment in the construction of social housing in the 30 years after 1945 is one very good reason for a focus on this period. Another is that there appears to be much that is common to both Harloe’s mass model and Kemeny’s unitary rental market. Even in dualist Great Britain, in the period 1945–1965, when half of all council houses were built, the social rented sector was competitive in terms of price, supply, quality and social appeal. There were even measures that attempted to establish uniform criteria for rent setting across rental housing as a whole [the ‘fair’ rents policy of the early 1970s (Malpass 1990)]. There is clearly scope for detailed empirical research to establish the extent to which the mass model and unitary rental markets coincide in this period. The two approaches also appear to agree about the importance of the mid-1970s, although for rather different, but not necessarily incompatible, reasons. Harloe tends to see the mid-1970s’ economic crisis as a turning point in global capitalism, whereas Kemeny sees it as the point when financial maturation began to demand a policy response. Financial maturation was hastened, at least in some countries, by the way in which the economic crisis led to cuts in new investment, while high inflation (also a feature of the economic crisis) helped reduce the burden of debt. This suggests a focus on comparative research into different responses to the circumstances of the 1970s. When did financial maturation become apparent, if indeed it did, and how did governments respond? A provisional hypothesis would be that there were indeed categorically different (rather than merely diverse) responses to the situation that emerged at that time, but that over time there has been a tendency for global economic forces to override national policy and to establish a general tendency towards a more residual role for renting as a whole. In this context, it is necessary to acknowledge the importance of the secular trend towards higher levels of owner occupation and private renting across Europe as a whole. The appeal of home ownership to a growing proportion of the population as living standards rise is undeniable (and is not denied by either Harloe or Kemeny). The effect of increasing levels of home ownership will be both to reduce the share of rental markets and to narrow the social mix within renting as a whole. To this can be added the argument that governments in many countries are increasingly attracted to strategies that place greater reliance on individuals

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to provide for themselves services that were previously the responsibility of the state, and in this connection ownership of housing wealth assumes considerable significance (Malpass 2008; Groves et al. 2007). To the extent that this becomes more widespread and entrenched then it implies a more residual role for social housing. Turning from the theoretical to the empirical, a way forward is to recognise that Kemeny and Harloe effectively agree about the UK. We can, therefore, use the UK experience as a kind of template against which to interrogate and interpret developments in the other countries. The justification for this approach is that according to Harloe we would expect all advanced capitalist countries to be experiencing the same sorts of pressures and to be responding in similar ways. And according to Kemeny, too, we might expect to find superficial evidence of similarity and a vulnerability to the advancing hegemony of the neo-liberal economic model. In terms of what history can tell us about the future of social housing, it is appropriate to concentrate on the more recent past, essentially the period since the 1970s crisis of welfare capitalism. In that context, it is possible to identify in the UK six important transformations within social housing, which can then be used to examine the experience of the other countries. First, the transition from growth to decline. The social rented sector as a whole grew every year from 1919 to 1980, and has shrunk every year since then. The social rented stock in Great Britain has fallen from 6.5 million dwellings (over 31% of the total) in 1979 to 4.8 million (18.5%) in 2006 (Wilcox & Pawson 2012: 116). There are two main reasons for the decline of social housing in both numerical and proportionate terms. First, as shown in Figure 15.1, new building by local authorities slowed from the late 1960s, and had effectively stopped by the mid-1990s. Housing associations, as the non-municipal part of the wider social rented sector, were unable to compensate for the huge loss of investment in new construction by local authorities, and although they continue to build, it is at levels below those achieved by local authorities as recently as 1985. Second, as Figure 15.2, illustrates, the introduction of a statutory right for tenants to buy their council houses meant that the municipal sector lost over 1 million dwellings during the 1980s, and although rates of sales have fallen in more recent years the right to buy continues to have an impact. The upshot of the right to buy is that it is no longer appropriate to talk of ‘council estates’, for they have all become mixed-tenure neighbourhoods, some of which now include former council houses that have gone through a period in owner-occupation and are now let by private landlords. Second, social housing has changed from a broadly based tenure, accommodating a range of income groups, to an increasingly residual sector for the poor. This process has been under way for at least 30 years, but it reflects a debate that is as old as social housing itself: who is this housing for? For at

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450 000 400 000 350 000 300 000 250 000 200 000 150 000 100 000 50 000 1949 1952 1955 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

0

Private enterprise

Housing associations

Local authorities

Figure 15.1 Permanent dwelling completions by tenure, UK 1949–2011. Source: DCLG Live Table 241 (https://www.gov.uk/government/statistical-data-sets/live-tables-on -house-building)

180000 160000 140000 120000 100000 80000 60000 40000 20000 0

81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 0– 82– 84– 86– 88– 90– 92– 94– 96– 98– 00– 02– 04– 06– 08– 10– 8 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20

Figure 15.2 Local authority stock sold under Right to Buy 1980–1981 to 2010–2011 (England). Source: Department for Communites and Local Government (DCLG) live table 670, final version.

least 50 years after 1919 the question was generally resolved in favour of the better off working class. The politics of housing then were such that it was the better off, skilled workers who were able to secure for themselves a supply of affordable rented housing provided by local authorities, leaving the less well off to make do with the declining and generally poorer quality private rented sector. As the politics of housing shifted to home ownership as the tenure of aspiration, so social housing turned towards a safety net role. More recently, the trend towards a residual sector has become more entrenched as

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a decade of rising house prices have made home ownership irresistible for those who can afford it. In 1970, only 11% of social rented sector tenants had no paid work, but by 2006 the figure was 68% (Hills 2007: 45) and the rise in unemployment since then is likely to have pushed up the rate still further. Social tenants are more likely to be disabled, lone parents or members of minority ethnic groups. Social sector tenants in 1980 had average incomes approximately equal to 47% of the incomes of home owners with mortgages; by 2009, the figure had fallen to 31% (Wilcox & Pawson 2012: Table 36). After at least 30 years of residualisation, there are questions about how much further the process can go, with one commentator suggesting that ‘ … the UK housing system has moved beyond an active residualisation phase into a phase in which the trend associated with residualisation is no longer progressing rapidly … In the next phase of development, the demographic profile is likely to change as the older cohort of tenants departs and the new tenant population are younger and less likely to remain as tenants. This change in demography may mean a more transient role but not a more residual role in terms of income or economic status’ (Murie 2006: 29). Nevertheless, whatever view is taken about the possible slowing down of residualisation in British social housing, no one argues that the process is likely to be reversed. British government policy seems to accept a residualised social rented sector as permanent. By 2006, ministers were talking of social housing as a ‘springboard into ownership’, which revealed that they wanted to encourage those who could leave it to do so, but of course this also implied that social housing would continue to have a safety net role for those unable to survive in the open market. The terminology has changed since the election of 2010, but the policy remains the same. Third, the pattern of ownership of social housing has changed. As mentioned earlier, British social housing used to be overwhelmingly owned (and directly managed) by local authorities, but differential rates of new building, the sale of council houses under the right to buy since 1980, and the transfer of council housing to housing associations since 1988 have transformed the pattern of ownership. In 1981, local authorities in Great Britain owned 6 million dwellings, compared with just 470 000 in the housing-association sub-sector. Thus, the municipal stock amounted to about 93% of the social rented sector as a whole. By 2006, the local authorities owned just 2.6 million properties, while the housing associations had 2.2 million, giving them 46% of the total social rented sector, and their share seems certain to go on rising. The main reason for the relative growth and decline of the two sub-sectors is the transfer by local authorities in England of 1.1 million council-built homes to housing associations. Activity in Scotland and Wales has been on a much smaller scale so far, and in Northern Ireland

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there are no local authority homes. The transfer of local-authority housing to housing associations began as a local response to policy initiatives by the central government, but was soon taken over as mainstream policy and local authorities have been under considerable pressure, both financial and rhetorical, from the central government to give up their landlord role (Malpass & Mullins 2002). Fourth, social housing providers, both municipal and non-municipal, enjoyed considerable autonomy of action for most of the twentieth century, but in the past 30 years there has been a transition to a situation in which they are more tightly constrained by the central government. For example, until the late 1970s, local authorities had effective control over most aspects of their housing activities, including capital expenditure, rent setting and allocations. Each of these has become much more regulated by the central government. In the case of housing associations, the key was the introduction of the Housing Association Grant in 1974. In return for a generous level of subsidy, associations had to submit to ever-closer supervision and regulation. In recent years, the Housing Corporation began to refer to its responsibility for managing the ‘national affordable housing programme’, a clear sign of centralisation. Under the Housing and Regeneration Act, 2008, the Corporation was replaced by a new housing and regeneration body, the Homes and Communities Agency, and a social housing regulator, the Tenant Services Authority. This restructuring was justified on the grounds that best practice in regulation required its separation from funding. However, a change of government and the adoption of severe austerity meant that by 2012 the two functions were recombined. A fifth transition can be identified, linked to the decline in new building and to residualisation. This is the change from general supply-side subsidies to personal, income-related, forms of assistance. Associated with changes in subsidy systems, there have been changes in rent-setting policies, abandoning the cost of provision as the basis of rent setting in favour of rents based on the current value of the property. Since 1972, governments have favoured forms of current-value pricing, but in most parts of the country, especially high demand areas, rents remain significantly below open market levels. The government’s aim is to keep rents moving in line with prices, incomes and property values. Kemeny was quite correct to identify a maturation crisis in British council housing in the 1970s, and it is clear that successive governments have moved in the direction of preventing social housing competing with the private market, both by insisting that rents rise beyond levels necessary to cover outgoings and by limiting the sector’s ability to compete by constraining supply and denigrating social housing as a less desirable tenure than home ownership. Finally, the sixth transformation is that for most of the twentieth century social housing was seen as part of the solution to problems with private

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housing; now it is seen as part of the problem – to be solved by resort to the private sector. The majority of these transitions are about adjusting social housing to its residual safety-net role, as predicted by both Harloe and Kemeny. However, it has been suggested (Malpass & Victory 2010) that it is necessary to look beyond residualisation to embrace not only the role played by social housing within the wider housing system but also changes to both the supply side (in terms of the nature of the organisations procuring, owning and managing social housing) and the consumption side (the tenure and other terms and conditions offered to occupiers of social housing). In this context, they suggest that it is appropriate to think in terms of a long-term transition from the public-housing model of the mid-twentieth century to the social housing model of the present period.

Conclusion The best way to pull this discussion to a close is to cite the observation made by Peter Gourevitch (1986: 217, quoted by Harloe 1995: 528): ‘each country is affected by these twin factors: the force of epochs, which cuts across the particularities of circumstance, and the force of national trajectories, which expresses the features specific to each nation’s history’. In the early twentieth century, policies responded to the impact of industrial capitalism, while after 1945, the period when so much social housing was built across Europe, they should be seen in the context of prolonged post-war reconstruction. Since the 1970s, the rise of neo-liberalism and a return to faith in the market mechanism have been the dominant discourse shaping policies, to a greater or lesser extent. Now the severity of the current crisis of Western capitalism means that individual governments have even less freedom to pursue the policies that they might choose in other circumstances. Austerity strongly implies an intensification of established trends in social housing and it may be that in future the provision of publicly funded social housing will come to be seen as a peculiarly twentieth-century response to a particular set of social, political and economic circumstances. Then collectivism was at its peak, but now the hegemony of individualism is buttressed by the apparent inability of its opponents to mount an effective intellectual challenge. Historians are well aware of the pitfalls awaiting those who seek to predict the future, but the prospects for social housing do not look good. The transformation of a private-sector banking crisis into a problem of public-sector debt has been disastrous for public services, especially those requiring heavy capital investment. Different countries will respond to changing circumstances in their own way, within the constraints of the broader economic context, with implications for the way their social housing systems

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develop, but it is difficult to envisage a return to large-scale investment in good quality, affordable housing for a broad cross-section of the population.

References Block F (1987) Social policy and accumulation: a critique of the new consensus chapter in M Rein, G Esping-Andersen and L Rainwater (eds) Stagnation and Renewal in Social Policy M E Sharpe, London. Castles F (1998) Comparative Public Policy: patterns of post-war transformation Edward Elgar, Cheltenham. CECODHAS (2011) Housing Europe Review 2012 CECODHAS, Brussels. Doling J and Ford J (2007) A union of home owners. European Journal of Housing Policy, 7, 2, 113–127. Edgar B, Doherty J and Meert H (2002) Access to Housing: Homelessness and Vulnerability in Europe Policy Press, Bristol. Esping-Andersen G (1990) The Three Worlds of Welfare Capitalism Polity Press, Cambridge. Gourevitch P (1986) Politics in Hard Times: Comparative Responses to International Economic Crisis Cornell University Press, Ithaca and London. Groves R, Murie A and Watson C (eds) (2007) Housing and the New Welfare State: perspectives from East Asia and Europe Ashgate, Aldershot. Harloe M (1995) The People’s Home? Social Rented Housing in Europe and America Blackwell, Oxford. Hills J (2007) Ends and Means: The Future of Social Housing in England London School of Economics, London. Kemeny J (1981) The Myth of Home Ownership Routledge and Kegan Paul, London. Kemeny J (1995) From Public Housing to the Social Market Routledge, London. Kemeny J (2005) ‘The really big trade-off’ between home ownership and welfare: castles’ evaluation of the 1980 thesis and a reformulation 25 years on. Housing, Theory and Society, 22, 2, 59–75. Kemeny J (2006) Corporatism and housing regimes. Housing, Theory and Society, 23, 1, 1–18. Kemeny J and Lowe S (1998) Schools of comparative housing research: from convergence to divergence. Housing Studies, 13, 2, 161–76. Kemeny J, Kersloot J and Thalmann P (2005) Non-profit housing influencing, leading and dominating the unitary rental market: three case studies. Housing Studies, 20, 6, 855–72. Malpass P (1990) Reshaping Housing Policy: subsidies, rents and residualisation, Routledge, London. Malpass P (2001) The uneven development of social rented housing: explaining the historically marginal position of housing associations in Britain. Housing Studies, 16, 2, 225–242. Malpass P (2008) Housing and the new welfare state: wobbly pillar or cornerstone? Housing Studies, 23, 1, 1–19. Malpass P and Mullins D (2002) Local authority housing stock transfer in the UK: from local initiative to national policy. Housing Studies, 17, 4, 673–86. Malpass P and Victory C (2010) The modernisation of social housing in England. International Journal of Housing Policy, 10, 1, 3–18. Matznetter W (2002) Social housing policy in a conservative welfare state: Austria as an example. Urban Studies, 39, 2, 265–82. Murie A (2006) ‘Moving with the times’ in P Malpass and L Cairncross (eds) Building on the Past: Visions of Housing Futures Policy Press, Bristol. Priemus H and Dieleman F (2002) Social housing policy in the European Union: past, present and perspectives. Urban Studies, 39, 2, 191–200.

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Whitehead C (2003) Restructuring social housing systems in R Forrest and J Lee (eds) Housing and Social change: East-West Perspectives Routledge, London. Whitehead C and Scanlon K (eds) (2007) Social Housing in Europe London School of Economics, London. Wilcox S and Pawson H (eds) (2012) UK Housing Review 2011–12 CIH, Coventry.

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The 1920s were a decade of municipal welfare regimes which focused on the construction of social housing. This Red Vienna municipal housing estate, the Zürcher-Hof, opened in 1929 in the 10th district, a traditional working class area. The inscription says that the estate was built by the city of Vienna. Photograph: Christoph Reinprecht.

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16 Learning from History: Path Dependency and Change in the Social Housing Sectors of Austria, France, the Netherlands and Scotland, 1889–2013 Claire Lévy-Vroelanta , Christoph Reinprechtb , Douglas Robertsonc and Frank Wassenbergd a Department

of Sociology, University of Paris 8 Saint-Denis Centre de Recherche l’Habitat, UMR-LAVUE (CNRS), France b Department of Sociology, University of Vienna, Austria c School of Applied Social Science, University of Stirling, Scotland d Platform 31, The Hague & OTB Research Institute for Housing and the Built Environment, Delft University of Technology, the Netherlands

Introduction The history of social housing in Europe began more than a century ago. Following the brutal ‘social warfare’ that marked the first stages of industrialisation (Engels 1845), philanthropic and industrial interests began tentatively to develop social dwellings. The sector grew between the two world wars and then more strongly after World War II. Its stakeholders (banks, local and national governments, employers, unions, architects and planners) variously envisioned social housing as a key component of welfare policies and/or an important tool in the political local power balance (Houard 2011). But while the main outlines of the history of social housing are broadly similar across Europe, the details of its development in individual countries vary greatly. The common European heritage now finds itself challenged by fundamental

Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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questions about the future role and purpose of a social sector within limited national housing supplies, and about the relationship of housing to welfare, protection and rights. The recent financial crisis and the trend to cutting public spending have amplified this discussion, while demographic and environmental issues have gained ground. Despite the grand narrative surrounding and supporting it, the evolution of European social housing is not linear. The thesis presented in this chapter is that the history of European social housing can be interpreted through continuity (or path dependency) and change (crystallised in disruptive turning points or ‘critical junctures’) (Sewell 2005). We argue that sociopolitical experiences and practices are powerful determinants of historical longue durée developments, constituting the path dependency of societal and institutional change. But while a particular ‘tradition’ or ‘path’ may be set in motion by these conditions, this does not prevent unexpected and rapid transformations – critical junctures – which can dramatically alter its path or disarticulate the different elements of the previous sequence. Some elements may be conserved while others are passed over or rejected, and in that sense the current situation is a result of both continuity and change. It is worth trying to disentangle the two. ‘Learning from history’ is not meant to suggest that we can learn about the future solely through studying history.1 Instead, we present a descriptive and analytical overview of the main historical sequences within which the fundamental ideas about social housing were developed and implemented. Each of these periods was characterised by a set of norms and beliefs, which were then questioned, modified and partly replaced by others (part 1). The contemporary situation of social housing is a contradictory one: on the one hand, it still professes the ideas and goals of the industrial period, while the new context has led to fragmentation and reconfiguration. Far from disappearing, social housing is undergoing a process of metamorphosis. What this means for the goal of ‘housing for all’ is uncertain (part 2). In order to make meaningful comparisons, we examine four countries where the social-housing sector has traditionally been large: France has the largest stock in absolute numbers (4.2 million units); the Netherlands has the highest proportion of social housing (35% of dwellings); Austria has the largest rental sector (45%, of which 55% are social rented), while Scotland has undergone the most marked transformation (with social rental declining from two-thirds of all housing in the mid-1970s to 20% now). All four countries also share a strong tradition of municipal power in their biggest cities, where social housing makes up a very large percentage of the total housing stock (43% in Vienna, 52% in Amsterdam, 37% in Glasgow and more than 60% in certain municipalities in Paris region).

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Main historical sequences The origins: housing shaped by utopian ideals, philanthropy and industry Industrialisation in the nineteenth century attracted masses of people seeking employment to the expanding urban areas and locations where new industries were concentrated. The emerging cities were not equipped for such large migrant inflows, which produced poverty, overcrowding, poor hygienic conditions and diseases such as the 1832 cholera epidemic. Speculators, factory owners and investors responded by building high-density housing with poor heating and limited or no sanitary provision. Startling demographic change and housing provision issues became inseparable: in Vienna, where the population quintupled from 400 000 to 2 million over the second half of the nineteenth century, the masses were housed in badly equipped blocks known as Mietskasernen or barracks. According to the Census of 1869, between 10 and 20% of the population (depending on the district) could be classified as Aftermieter or Bettgeher – sub-tenants who only had access to a bed for a few hours. By 1910, one quarter of Viennese households accommodated at least one sub-tenant. Identical situations were to be found in most European cities. In Paris, the population reached 1 million by the middle of the nineteenth century and more than 2.9 million by the eve of World War I, with poor and overcrowded housing conditions for the masses. Glasgow saw its demographic base increase between 1801 and 1861 from 77 000 to almost 400 000, before exceeding 1 million by 1911 (Mather 2000). The failure of housing construction to keep up with demand at affordable prices, and the consequent subdivision of existing property, led to a state of deterioration and overcrowding in the second half of the century. The 1921 Royal Commission on housing in Scotland found the city to be the most overcrowded in Europe, with 39% of households having more than two people to a room. In 1911, almost 48% of Scots lived in houses of two rooms or less, with the kitchen counting as a room. In the Netherlands, the 1899 census showed that 30% of dwellings had one room and another 30% only two rooms (where dark store rooms and small kitchens counted as rooms). Over half of the Dutch population lived in such dwellings. In 1910, 80% of the population lived in dwellings with one or two rooms (Van der Woud 2010). Before the twentieth century, housing initiatives had come mainly from companies, factory owners or philanthropists. Jakob Fugger, a rich Dutch merchant who founded the Augsburg Fuggerei in 1516 to house the deserving

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poor, was one such. Private foundations funded by the aristocracy and bourgeoisie emerged in the nineteenth century. Those of Rothschild, Peabody, Lever and Rowston were active in countries with strong traditions of (especially Protestant) religious social commitment, like Britain and the Netherlands. To the industrialists who founded them, housing was core to the organisation of residents’ lives; their aim was always to organise the relationship between workforce and capital in the most profitable way for the latter. The industrial estates provided not only housing but also schools, shops, sports, recreation, and so on. The most ambitious projects supported and controlled residents ‘from cradle to grave’. Examples of philanthropic or industrial housing can be found right across Europe including Dale and Owen’s world-renowned development in New Lanark, Scotland, or Titus Salt’s development in Saltaire, near Bradford. Early French mine and factory owners such as Schneider at Le Creusot, Menier at Noisiel, Godin at Guise and Dolfus in Mulhouse are among the most famous. In Austria, working-class housing such as the Krupp estate in Berndorf was built by factory owners from the middle of the nineteenth century onwards. Dutch examples of housing developments created by enlightened industrialists include Agneta Park in Delft, Stork-Lansink in Hengelo and Philipsdorp in Eindhoven.

Housing acts: the state intervenes The exposure of bad housing conditions in national statistics (above) helped open the door to state intervention. Housing acts were passed in all European countries by the end of the nineteenth century. Their aim was to strengthen public action against private interests, for instance, making expropriation in the name of ‘general interest’ easier, regulating relations between tenants and landlords and improving health conditions. The creation of social housing was one element in the programme. Belgium’s 1889 Act was the first in the world; Britain came second with the passage of the Housing of the Working Class Act in 1890. France followed suit with the Loi Siegfried (1894). The Loi Bonnevay (1912), considered fundamental to the idea of public redistribution of wealth, allowed municipalities to collect money, build, own and manage social housing estates, and allowed the creation of the Offices Publics de Habitation à Loyer Modéré. In Austria, the 1910 Act created a public housing fund that channelled money from the state budget into housing construction, thus allowing the state to support local municipalities as well as non-profit associations and self-organised cooperatives. In the Netherlands, the 1901 Woningwet implemented ‘social municipalism’ by laying the foundations for an organisation of land that subordinated private owners’ interests to those of the community.

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The genesis of regulated social housing was similar in many countries. There was a gradually increasing consensus across the political spectrum that it was necessary to implement changes in taxes and social insurance, to channel savings towards housing construction, to protect tenants, to support workers’ home ownership, to create municipal housing, housing associations or cooperative settlements and to adopt local public health instruments to address housing misery. A fundamental element of this consensus was that working-class people needed to be educated through better housing conditions (e.g. with regard to housekeeping and sanitation practices, food hygiene and moralistic sexual education). By the end of the nineteenth century, the established legislative framework had recognised social housing, but it was only after the trauma of World War I that social dwellings were built in significant numbers. With the defeat of long-established European empires, newly created nations aspired to mass education and socioeconomic and cultural progress. The Socialist Revolution in 1917 forced Western countries to respond, and the war produced serious infrastructural damage, leading governments to adopt a more interventionist attitude. These factors combined to lead political parties, trade unions, municipalities, housing associations and cooperatives to advocate the creation of social housing systems by public authorities, mainly municipal.

Municipal commitment to social housing after World War I: the strategic selection of tenants In Austria, the declaration of the First Republic in 1918, the social democratic election success in Vienna and the establishment of Vienna as a proper province in 1922 laid the ground for Red Vienna’s housing policy. Between 1919 and 1934 the municipal authorities built 61 175 dwellings in 348 housing estates, with a further 5257 units in 42 settlements. By 1934, 10% of the Viennese population lived in municipal housing estates, most of which were built to high architectural standards and incorporated facilities such as shower baths, washhouses, kindergartens, services for youth and children and libraries, as well as innovative internal equipment such as modern functional kitchen systems (Blau 1999). Housing was thus key to creating this city’s original local welfare state – for the happy few. In the Netherlands, neutral throughout the war, the national government intervened heavily from 1916 onwards by providing large subsidies to stimulate home construction. In Amsterdam, many dwellings were built under the influence of Florentinus Wibaut, an important social entrepreneur and member of the municipal board of social democratic Amsterdam during the two decades following World War I. The years up to 1930 saw new estates characterised by high architectural quality and spacious internal layouts set

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in Garden City environments. In total, more than 30 000 housing units were built under Wibaut between 1915 and 1921, and the ‘Amsterdam School’ gained international recognition. The underlying principle was to improve both the material and moral conditions of the population. In contrast to Austria, social housing was not limited to major cities but was also built in towns throughout the country. In Scotland, like in England, the famous 1919 Town Planning and Housing Act passed at the end of the war led to the construction of 15 000 ‘Homes fit for heroes’. With government subsidies and overt political pressure, local authorities became the prime agents of this programme. A Housing Act introduced in 1924 increased the subsidy level, leading to what many considered the high point of Scottish council house production: the construction of 75 000 houses between 1924 and 1930. As in the other countries, the building specifications were high and the houses were set in attractive Garden City layouts, ensuring their long-lasting popularity (Smyth & Robertson 2013). But rents were also high, making this housing accessible only to white-collar workers and skilled artisans. During the same period, French companies still provided the bulk of housing for their workers. At the municipal level, Habitation à Bon Marché (HBM), the predecessors of HLM, started to develop.2 By 1920, France had 38 public offices, 452 private societies and 82 societies for real-estate loans. In Paris and Lyon, pioneers such as Henri Sellier (the French ’Garden City’ promoter) and Lazare Goujon were fighting to enlarge the social-housing stock while tackling the slums: 50 000 dwellings were constructed on the ‘zone’, the former defensive ring around Paris, and another 1500 in Lyon’s Villeurbane centre. Given this increase in municipal involvement, social housing became a core instrument to promote moral and political values: hygiene, hard work, local community responsibility and a stable family life. Newly established systems of social housing were strongly selective. Under Dutch municipal initiatives such as Woonscholen, people were taught how to use a dwelling properly. Others, like Control-Woningen, gave extra supervision to those engaged in what was considered to be anti-social behaviour. In Glasgow, the so-called ‘Green Ladies’ – female public health workers – operated a similar system of social and moral control through regular unannounced house visits, backed up by male wardens who were also often housed on the newly constructed estates (Damer 2000). Some of their functions mirrored those of French housing inspectors or visiteuses à domicile, whose role was both to collect rents and inspect the properties. Similar controls were implemented in Austria, where the social reformism of Red Vienna focused particularly on the links between housing, mass education, social hygiene and public health. Municipal authorities in these four countries employed different mechanisms to select social-housing residents. In some places, membership of

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unions or socialist or communist parties was the guiding principle. In others, it was based on differing notions of ‘respectability’. Vienna, for instance, opted for a mixture of political distinctions (privileging working-class interests) and social need criteria, while practice in the Netherlands reflected the national tradition of verzuiling (pillarisation) and the compartmentalisation of society along religious or sociopolitical lines. Housing associations were created for Catholics, Protestants, socialists, liberals or others, producing streets or neighbourhoods of like-minded people. This compartmentalisation was also evident in the organisation of unions, schools and neighbourhood centres, which lasted until at least the 1970s and whose effects are still visible in Dutch society. Scotland’s selection criteria, on the other hand, were very much based on class or ‘respectability’ lines: artisans, skilled workers and clerks could afford good quality council housing, while labourers were confined to the more basic social housing that began to replace the slums of the mid-1920s. This led to lasting social polarisation and the long-term stigmatisation of particular neighbourhoods. More broadly, the municipal authorities tried to use social housing to consolidate the formation of an active, healthy and skilled working class and its municipal supporters. In all four countries, the purpose was ‘to give the proletarians dignity and turn workers into citizens as a result of the creation of a local welfare state’ (Novy 2011: 214). The world economic crisis of 1929 caused huge disruption everywhere, but the effects on social-housing policy differed by country. In the Netherlands, government subsidies for housing were frozen from the mid-1920s onwards, leaving the private sector to build mostly private rented housing. Meanwhile, high and increasing unemployment rates made it hard for tenants to pay their rent, leading to mass evictions and vacancies. In Austria, the crisis provoked a drop in all construction activity, and after 1929 Vienna lost its local autonomy. In 1934, the Civil War ended with the defeat of ‘Red Vienna’ along with its local welfare regime. This was followed by a period of Austro-fascism and the subsequent incorporation into Germany’s Nazi regime, under which only few social housing activities, mostly strongly ideologically coloured, continued. In Scotland, government subsidy levels fell dramatically, leading to far poorer housing standards and the replacement of spacious ‘Garden City’ suburbs with small compact three- and four-storey estates which immediately took on the stigmatised identity of the slum districts they replaced. Between 1919 and 1941, Scottish local authorities were responsible for 70% of all new-build housing.3 Over this period, some 60% of the housing built was of the poorer ‘slum clearance’ type owing partially to the pursuit of Keynesian labour market interventions promoted during the Depression, implicating government investments in housing.

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France differed, as employers still played the major role there. With the exception of major cities such as Paris and Lyon, public involvement just before World War II was still very modest: the number of houses provided by employers was double that built with the help of public funding.

Towards housing for all? ‘Massification’ after World War II The three decades following World War II are considered to be the golden age of social housing – ‘les trentes glorieuses’, as the French call them. This mainstreaming of social housing was tied to functionalist notions of what constituted a modern society: accessibility, functionality and uniformity were the key principles in the provision of affordable housing for workers and their families. Millions of households thus secured a much-appreciated improvement in their housing situation. Social housing was attractive not only to skilled working-class people but also to middle-class employees, key workers and civil servants. In both the Netherlands and France, about 20% of all housing was destroyed or damaged in World War II; in Vienna, 13% of housing was destroyed. By contrast, with the exception of Clydebank, Scotland sustained little damage although there was a major backlog in property maintenance. By the 1950s, the post-war baby boom turned housing provision into a top political priority, but the scale and timing of this provision varied by country. In France, colonial wars and industrial growth made military expenditure come first on the agenda. However, the formation of a ‘techno structure’ aligned to the Modern Movement provided the impetus for construction of big estates encompassing more than 1000 dwellings. There was also a consensus about the need to build collective accommodation (foyers) specifically for internal and external migrants. Government and industry agreed on the ‘1% Law’ of 1953; this law stipulated that companies with more than 50 employees should invest in social-housing construction. This ensured that companies continued to play an active role in housing provision. In Austria, social housing appeared on the national agenda of the post-war corporatist welfare regime following the historic compromise between Conservatives and Social Democrats. While the municipality of Vienna again increased its construction activities, the milestone in the country’s social housing history was the Subsidised Housing Act of 1954, which led to the construction of hundreds of thousands of dwellings nationwide and vastly strengthened the role of non-profit housing companies (cooperatives and associations). In the Netherlands, housing production gradually increased, peaking in the early 1970s at over 150 000 dwellings per year, about half of which were in the social rented sector. Scotland also underwent a massive boom in social-housing construction. By the end of the

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1970s, social provision (by local authorities, new-town corporations and the Scottish Special Housing Association) accounted for almost three-quarters of all Scottish housing. This domination was achieved via two substantial development pushes: one in the 1950s which produced utilitarian threeand four-bedroom flats in large peripheral housing estates, and a second short-lived boom in high rises during the late 1960s, which was part of the long-awaited mass slum clearance programme. All four countries achieved high production through a combination of technological improvements, standardised production and uniform designs. Governments expanded direct bricks-and-mortar subsidies. And, in addition to municipal landlords, large cooperatives or non-profit housing associations emerged. The three decades following 1950 witnessed two complementary trends: on the one hand, social housing fostered upward mobility for the working classes and, on the other hand, it consolidated the position of the middle class. Broad access to social housing contributed to the ‘elevator effect’ that allowed the majority of the population to share the wealth of the unprecedented economic boom. The corresponding policies were primarily family-oriented and mainly targeted at national citizens,4 and were key to establishing and consolidating the welfare state.

The metamorphosis of social housing Fragmentation and restructuring This model reached its limits by the end of the 1970s when the idea that social housing should be accessible to all citizens (the universalist understanding) was challenged by the labour market crisis, while the ‘productivist’ approach continued to be dominant (Zittoun 2000). By the mid-1970s, the greatest shortages had been solved and housing was no longer a top political priority. Like other ‘pillars’ of the welfare state, housing was to become more individualised and (more accurately) marketised. Policy makers began to support market segmentation, with different types of housing to meet the needs of working- and middle-class people. Owner occupation was encouraged through tax incentives and the easing of access to mortgage finance. In almost all European countries, with the exception of the Austrian and Scandinavian welfare regimes, bricks-and-mortar subsidies were progressively reduced in favour of personal ones. Central government agencies lessened their direct engagement with housing, which strengthened the position of the non-profit sector (associations and cooperatives) and private actors. In the Netherlands, this retreat of the central government led both to higher levels of owner-occupation and more powerful social-housing organisations, with increasingly professionalised management. When the

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government withdrew all future financial support from them, in exchange it cancelled their debts to the state.5 While this left associations with a major asset base, they no longer had any future access to subsidy apart from the personal housing allowances their tenants received. The associations, with their strong financial position, now have a direct say not only in the provision of housing for the poor but also in the design of local environments, neighbourhood quality and the social well-being of their tenants. As they own most of the housing stock in urban renewal areas, they also play a powerful role in those processes, acting as policy makers, funders, implementers and social engineers, although the recent financial crisis has undermined their economic and political capacities.6 In Austria, the weakening of the post-war corporatist system contributed to a fragmentation and marketisation of (social) housing. On the one hand, social-housing policy, after a reorganisation of funding at the end of the 1960s, increasingly addressed the needs and interests of the middle classes by offering higher architectural and construction quality (which also responded to growing ecological requirements); this led inevitably to higher rents. On the other hand, policy reforms in the 1980s (deregulation of rents in 1981 and a general decentralisation of the social-housing system in 1988) led not only to a diversification of regulations and norms in social housing but also to growing inequalities in the housing market in general. Particular social groups such as immigrants or the newly impoverished classes were marginalised in both the private rental market and the social sector. Furthermore, at the beginning of the new century, a significant amount of public (federally owned) housing was sold by the federal government, and the municipality of Vienna decided to shut down its construction activity. The last municipal housing estate opened in 2004 and since then the city has promoted social housing through public–private partnerships and competitions between developers, and defines itself as ‘the world’s biggest property manager’. In recent years, the rise of household rent expenditure, which traditionally has been lower in Austria than in other countries, is also evident in the social sector, of which Viennese municipal housing is still the most favoured part. Despite all these changes, social housing retains its central role in Austria: The share of social tenants as a proportion of all tenant households is still increasing (from 55 to 65% since 1990), and unlike in most other countries the bricks-and-mortar subsidy system remains dominant, even if growing poverty has increased the call on personal allowances – in Austria, 75% of public expenditure on housing is in the form of supply-side or producer subsidies.7 Scotland witnessed the most dramatic tenure transformations with the rapid switch away from bricks-and-mortar to personal housing subsidies. This coincided with the active promotion of privatisation: in 1980, the Conservative government introduced its ‘Right to Buy’ policy of selling

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council houses to sitting tenants at deep discounts based on tenancy length. For those tenants in employment, it became cheaper to make repayments on a mortgage than to rent. Easing the access of low-income households to mortgage credit was made part of bank and building society deregulation, the so-called ‘Big Bang’ of 1986, which produced a highly competitive mortgage credit system. Access to such credit also contributed to sustained house-price inflation, which further encouraged property speculation. Sixty years of rent control ended in 1988 with deregulation of private rents. Stock transfers from the public sector to housing associations also occurred at this time, the largest being in Glasgow where the entire municipal portfolio of 80 000 units was passed to a newly created housing association and, in an act that mirrored Dutch practice, the outstanding £1 billion of capital debt was written off by the government. The consequence of all these changes is a social-housing stock amounting to just 20% of the country’s entire housing stock, with ownership evenly split between local authorities and housing associations. Private renting now accounts for a further 10%, which represents a doubling in size over the past 10 years. Previously, the minority tenure, owner occupation now dominates with 70% of the stock.8 In France, following a peak in construction in 1971, social housing stagnated as a result of similar policy changes. The type of product also changed: less was built for lower income groups, more for medium- and upper-income households. Different forms of ‘very social’ housing (which had very low standards and was supposed to be temporary) were now targeted at the most ‘disadvantaged’ and expected to fill the growing gap. State intervention, which arrived late in France compared to other countries, came in the form of major urban renewal projects based on the demolition of big 1960s social-housing estates. Such programmes were highly centralised and provided little opportunity to incorporate bottom-up initiatives. By the end of the 1990s, the problem of ‘sensitive urban areas’9 emerged as the new symbol of social disintegration and social mix was actively promoted as a solution to the ‘social question’ – most notably in Article 55 of the 2000 Solidarity and Urban Renewal Act, which made it compulsory for social housing to comprise 20% of the overall housing stock of urban municipalities.10 For various reasons, attempts to introduce a right to buy have not been successful. In all four countries, the recent global crisis has weakened the financial capacity of regional bodies and municipalities, while private actors and non-profit landlords are finding it increasingly difficult to obtain financing. For similar reasons, first-time buyers face constraints on access to home ownership. The cheap credit that funded consumer consumption, and especially housing, eventually brought about the collapse of the entire system from 2008 onwards. In Scotland, bank recapitalisation and fiscal austerity have produced drastic cuts in public finances, decimating new

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social-housing construction. In the Netherlands, the first reaction to the crisis was to increase and accelerate public spending on infrastructure, public services, sustainable environments and improvement in social housing. From 2011, as the crisis proved to be persistent, budget cuts became more serious, resulting in lower expenditure, less new construction and fewer refurbishments. In France, drastic cuts are occurring under the new socialist government, and social landlords have complained that they must fund new construction and maintenance on their own, leading to higher rents and reducing access for the poor. In Austria, regional bodies and municipalities increasingly used housing money for other purposes, encouraged by the 2008 policy reforms. They also came to rely on other sources of funds, including financial market speculation – a widespread, mostly unsuccessful, and probably illegal practice. In the four countries, the huge competition between housing companies has led to increased concentration. Bankruptcies of building companies and evictions of impoverished tenants are two faces of the same coin. Urban areas have seen a growth in income differentials, and the shift from collective to individual housing solutions is evident in the fencing off of neighbourhood public spaces in order to satisfy the needs and interests of particular (and privileged) residents. In short, deregulation, individualisation and marketisation have undermined the ideal of social housing for all. This substantial deregulation and decentralisation and the shift away from direct subsidies towards personal allowances (except in Austria) from the 1970s onwards can be seen as a crucial policy reconfiguration. This was underpinned by the mainstream belief that prosperity would make social housing marginal as most households would be able to afford home ownership. However, it is crucial to note that there has been no general decline of social housing except in Scotland – the other countries have preserved or even enhanced their social-housing sectors during the past decades. Instead, expectations about the role and mission of social housing have changed. It seems that advocacy coalitions (Sabatier & Jenkins-Smith 1993) are reconfiguring around a basic question: Who is social housing for? This is tightly linked to the trivialisation and spreading of social insecurity, a consequence of de-standardised and flexibilised labour, and the renewed concern: ‘What does it mean to be protected?’ (Castel 2003). Are those targeted by social housing policies the happy few, or the supernumeraries?

The changing mandate for social housing Emerging from the antagonistic relationship between labour and capital, social housing reflected a surprisingly long-lasting societal consensus that housing was an issue of general interest, even a common good. How is this collective project faring now?

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The implementation of individual state housing policies was conditioned by specific national contexts and cultural traditions. But despite their heterogeneity, Europe’s patchwork systems of social housing originally shared a common ambition: to provide good quality housing for the families of waged workers. Housing this emerging class became one answer to the social question posed by industrial modernity. Initially utopian, the project was reinvigorated by the sociopolitical consequences of World War I, and became a core collectivist project for modern European industrial nation-states. Given this heritage, social housing was never solely about housing the proletarian or pauperised classes; it was also expected to address specific economic, political, social, cultural, moral and integrative concerns confronting modern capitalist and industrial mass societies: ensuring the reproduction of the labour force as well as quality of life and life chances; fostering class consciousness and national cohesion, in which social and political participation became anchored; producing shared norms and values, not least as a basis of legitimacy for the different worlds of welfare capitalism. The ongoing shift in public policies, framed by post-industrialisation and global financial capitalism, sociodemographic trends (migration, ageing, changes in household composition, depopulation of former industrial regions) and a process of de-nationalisation, is challenging the missions, roles and alliances of traditional social housing. The particular pathways of social-housing history and its country-specific contexts shape the changing mandate of the sector in each country, and the related public debate. These can be analysed through two lenses: (i) the features of the target population and (ii) the shift from government steering towards individual responsibility, and the uncertainty that results from it. i. EU policy (in particular, recent interpretations of the EU directive on Social Services of General Interest – see Chapter 19 in this book) is challenging the generalist approach of ‘social housing for all’ in these four countries. In the emblematic Dutch case, the Netherlands – which has Europe’s highest proportion of social housing – has set an income ceiling for access to social housing of €33 000 in 2005 or with inflation €34 085 in 2012. This ‘mediumisation’ (as opposed to universalism) means that about 40% of all households are now eligible.11 It is interesting to note that as early as 1889, the Paris Congress decided to renounce the old name of Habitations Ouvrières (‘housing for working-class people’) in order to target a wider range of social classes: hence, the term Habitations à bon marché (‘affordable housing’). The same occurred in Austria 100 years later, in a context of de-ideologisation, when the Viennese government changed the name from ‘municipal housing’ (Gemeindebau, referring to the social democrat clientele) to ‘social subsidised housing’ (sozial geförderter Wohnbau, a less political term). The countries’ respective

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associations of social-housing providers, France’s USH federation12 and Austria’s GBV,13 continue to defend the generalist principle. The tension between offering the impoverished a chance to be housed and housing mainstream households is at the core of the current debate in all four countries. The targeting of vulnerable groups has brought renewed attention to the sociospatial dimension of poverty and social exclusion in urban space: the new geography of poverty appears to coincide with the geography of social housing. The social consequences of the spatial concentration of so-called disadvantaged populations and the rhetoric of the ghetto and its stigmatising effects have been adduced as evidence both for and against social housing. In all four countries, social landlords are key actors in the field of neighbourhood management, including poverty prevention and the accommodation of marginalised groups. This increases the likelihood of preserving the social-housing sector in the long term, particularly as it is considered as an urban-policy tool to combat ethnic segregation. ii. Social housing was never dominated by a single actor for a long period. The balance of power has shifted between private and public interests, central governments and local authorities, which in turn may promote individualism or collectivism, big estates or single-family units, renting or ownership. The heterogeneous (patchwork) character of the systems may help explain their exceptional capacity for adaptation and innovation. It is also the source of their remarkable pluralism: the actors are continuously reconfiguring, against an increasingly international background, establishing new alliances to adapt to new needs and circumstances. In the past two decades, there have been significant changes in goals, architectural styles, target populations, funding structures and management. The rearrangement of advocacy coalitions is embedded in national pathways and welfare models. In France, the principle of solidarity underpins the alliance of economic stakeholders (including employers, trade unions and housing federations) with the State; this has recently been strengthened under the socialist government of Francois Hollande. In Scotland, the principle of social protection in case of insecurity favours the use of social housing as a safety net and as the residual category of housing market. In the Netherlands, the pillarisation of society feeds the (often latent) competition between old and new emerging societal segments, groups and milieus. In Austria, the concordance system, a post-war response to historically rooted political-ideological cleavage, dilutes the general neoliberal policy tendencies.

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The classification of housing as a social and universal resource is linked to the emergence of the modern nation-state, where civil, political and social rights came eventually to be awarded not on the basis of class or need but rather on the basis of citizenship (Marshall 1950). Departing from that, recent debate and policy measures tend to focus on ‘vulnerable groups’ (Lévy-Vroelant 2010), as the Council of Europe (2008) expresses it. The increasing emphasis on ‘the vulnerable’ has highlighted new issues of poverty and weak citizenship ties (in the case of migrants) in these four countries. Social housing is increasingly called on to contribute to ‘social cohesion’, as social integration based on traditional labour-market ties and national citizenship erodes. There is a general sense that people should do more for their own well-being, which the crisis has exacerbated. This implies that governments should control and steer less, concentrating instead on facilitating and stimulating private housing initiatives of various sorts: refurbishment, maintenance, improvement of the living environment and even new construction. In this sense, housing could be considered a pioneering sector for the changes of the twenty-first century.

Conclusion Ongoing long-term social, demographic and cultural changes, nourished by local, national and global dynamics, will have far-reaching impacts on the increasingly diversified, polarised and hybridised landscapes of social housing. The dynamics of change reflect the core issues of particular periods and the advocacy coalitions they engendered. Municipal socialism combined (or concurrent) with philanthropic and entrepreneurial engagement aimed to ensure collective progress and mass education, while during the post-World War II period emancipation, equality and upward social mobility were the leitmotivs. The current post-welfare period has been characterised by the transfer of risk from governments to individuals, and by the retreat from social housing of governments and housing associations – formerly the lead actors – leaving the floor to private initiatives. This poses obvious dangers for the most vulnerable, and threatens to exacerbate social fragmentation and social exclusion. The terms used for social housing are cyclical and tend to reappear. Path dependency is manifest in the entanglement of concepts and actors that determines the role and function of social housing. For example, Abbé Pierre’s 1954 plea for the poor and excluded is still frequently mentioned on the public stage.14 The educational paradigm of the first period, and the

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emancipatory expectations and aspirations for collective well-being and individual autonomy of the second, have helped determine the shape of the sector today. Path dependency can be seen in the ‘social’ element of social housing. This refers not only to public intervention and control, long-term financing, or the participation of relevant societal actors but also to the collective added value, for example, in terms of sanitary standards, collective facilities (lavatories, playgrounds, gardens and libraries) or architectural innovations. In the Netherlands, Austria and also in France, social-housing providers draw on these traditions by taking a leading role in applying ecological construction techniques, or by developing gender-sensitive, intercultural housing for the elderly. Moreover, the apparent (neo-)liberal shift since the late 1970s has not led to the disappearance of the social-housing sector. Instead, its construction, management and real-estate activity have been marketised, and policy has encouraged the individualisation of social practices and needs, for instance, through the promotion of home ownership. Social housing has officially been redefined by the European Union as a social service playing ‘a crucial role in improving quality of life and providing social protection’ (DG for Employment, Social Affairs and Inclusion 2011), although the directive has been interpreted differently in the four countries. Although governments are now required to define social housing with regard to the vulnerable and very poor, the generalist – or at least very broad – mission has not been entirely abandoned, at least in Austria, France and the Netherlands. Housing associations are still powerful economic and political actors in each of the four countries, but they are struggling to balance the ‘profit or die’ ethos of marketisation and competition with their ‘general interest’ mission. There is an increasing mismatch between their output and housing need/demand, which is becoming much more differentiated. Social housing has not been sufficiently responsive to the individualisation of housing arrangements and lifestyles that is evident in most cities. And the sector itself has become inflexible – the stock is being marginalised even as the GFC has increased demand. Tenants remain in social homes with low and controlled rents even after their incomes rise because alternative mid-rent dwellings simply do not exist. At the same time, owner-occupied housing is too expensive for newly formed households to consider, and access to credit has been curtailed as a result of the economic crisis. Few households are moving, turnover has slowed and newcomers to the housing market can rarely get access to the social-housing sector. In each of the four countries, the decisive question for the future of social housing is how the sector will respond to increasing social inequalities and the growing insecurity of household resources. A situation in which social-housing providers are less able to borrow capital, municipalities are in debt and households have few resources of their own favours particular

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interests, deepens fragmentation, undermines the normative consensus and widens the gap between public discourse (about quality of life and sustainability) and social reality. In this chapter, we have argued that despite structural changes, the adjective ‘social’ remains meaningful. Social housing continues to be – at least in part – publicly controlled and financed, and is still, if not a common good, at least a social service of general interest. Social housing remains a consistent part of national housing systems: consistent, but fragmented and under pressure. The future of social housing may depend on its capacity to deal with the current uncertainty while remaining ‘social’. A new advocacy coalition is required to campaign for a revitalised approach to social housing, and for the redefinition of housing in general as a common good.

Notes 1

2

3 4

5 6 7 8 9

10 11 12 13 14

This nineteenth-century approach, famously expressed by Auguste Comte as ‘Savoir pour prévoir, afin de pouvoir’, was a key ideology of industrial modernity. Habitations à bon marché, or low-cost homes (HBM) later became known as HLM or Habitations à loyer modéré (homes at moderated rents). A 1950 law made the name change official. The comparable figure for England and Wales was just 28%. In Austria, the law kept foreign citizens out of social housing until 2006; in France, the Netherlands and Scotland, immigrants were formally permitted to access social housing but had difficulty doing so in practice. See Chapter 2 in this book. See Chapter 22 in this book. See Chapter 17 in this book. See Chapter 3 in this book. Known in France by their acronym of ZUS. There are currently about 750 ZUS neighbourhoods eligible for public funding for urban renewal. The proportion of social housing is much higher in ZUS than in the country as a whole. See Chapters 8 and 21 in this book. See Chapter 2 in this book. The national federation of HLM became Union sociale pour l’habitat (USH) in 2002. Austrian Federation of Limited-Profit Housing Associations. A 1954 radio speech by Abbé Pierre, following the deaths of children living in a shanty town on the periphery of Paris, is considered to have pushed the government to improve housing provision.

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References Blau E (1999) The Architecture of Red Vienna, 1919–1934 MIT Press, Cambridge/Mass. Castel R (2003) L’insécurité sociale. Qu’est-ce qu’être protégé? Seuil, Paris. Council of Europe (2008) Housing Policy and Vulnerable Social Groups Éditions du Conseil de l’Europe, Strasbourg. Damer S (2000) Engineers of the Human Machine: the social practice of council housing management in Glasgow, 1895–1939. Urban Studies, 37, 11, 2007-2016. DG for Employment, Social Affairs and Inclusion (2011) Study on social services of general interest. Final report, October 2011. European Commission, Brussels. Engels F (1845) Die Lage der arbeitenden Klasse in England [The Condition of the Working Class in England] Otto Wigand, Leipzig. Houard N (ed) (2011) Social Housing across Europe La documentation française, Paris. Lévy-Vroelant C (2010) Housing vulnerable groups: the development of a new public action sector. International Journal of Housing Policy, 10, 4, 443-456. Marshall T (1950) Citizenship and Social Class and Other Essays Cambridge University Press, Cambridge. Mather I (2000) Glasgow Edinburgh University Press, Edinburgh. Novy A (2011) Unequal diversity: On the political economy of social cohesion in Vienna. European Urban and Regional Studies, 18, 3, 239-253. Sabatier P.A and Jenkins-Smith H.C (1993) Policy Change and Learning: An Advocacy Coalition Approach Westview Press, Boulder, Colorado. Sewell W (2005) Logics of History: Social Theory and Social Transformation University of Chicago Press, Chicago. Smyth J and Robertson D (2013) Local elites and social control: Building council houses in Stirling between the wars. Urban History, 40, 2. Van der Woud A (2010) Koninkrijk vol sloppen Bert Bakker, Amsterdam. Zittoun P (2000) Quand la permanence fait le changement. Coalitions et transformations de la politique du logement. Politiques et Management Public, 18, 2, 123-147.

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The nine buildings and 1520 housing units of cité Chêne-Pointu in the Parisian suburb of Clichy-sous-Bois were built between 1961 and 1966 and designed by Bernard Zehrfuss, a student of Le Corbusier. The social, economic and physical problems that came to face its approximately 6000 residents (mainly immigrants) sparked nationwide riots in 2005. These led to major government commitments to urban renovation and redevelopment programmes, which, in the case of these symbolic towers, are still being pursued by resident activist groups. Photograph: Nicolas Oran.

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17 Housing the Poor in Paris and Vienna: The Changing Understanding of the ‘Social’ Claire Lévy-Vroelanta and Christoph Reinprechtb a Department

of Sociology, University of Paris 8 Saint-Denis; Centre de Recherche l’Habitat, UMR-LAVUE (CNRS), France b Department of Sociology, University of Vienna, Austria

Introduction ‘Housing the poor’ has become an important public policy issue in both Paris and Vienna over the past few decades. Both cities have faced increasing housing shortages, which have moved ‘very social’ housing policies, principles and objectives from the margin to the mainstream. Our hypothesis is that the paradigm of social intervention has changed from one in which the state takes a decisive role to one where new actors – using new moral and political principles as well as new tools – play an important part. Three interlinked processes can be identified: traditional welfare-based options have been replaced, interventions in working-class housing conditions have undergone fundamental changes and the working classes have become more fragmented and vulnerable. Social programmes now aim to link ‘insertion’ (entry or re-entry to the labour market) to housing under the motto of ‘housing is not enough’. The ‘insertion’ work is done by a variety of associations and civic organisations belonging to a vast and emerging third sector. Social workers are meant to introduce applicants to the norms of the world of employment, to encourage them to be more responsible, to support them in their ‘insertion career’ and most recently Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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to link to ‘housing first’ initiatives. The number of interventions in favour of the poor is far from declining, yet actual housing supply remains insufficient. The first part of the chapter describes and analyses the ‘very social’ housing sector – that which is involved in ‘loger le peuple’ (housing the people), as Flamand put it in the title of his book (1989). The second examines the roles of the various actors in it, and the social impacts of new principles and measures. We ask where and how poor or ‘disadvantaged’ people are accommodated now in the two capitals; whether these accommodation forms have changed over time and who the landlords or, more broadly, the new actors are. Finally, we ask whether these changes in social housing policy reflect a shift in the notion of the ‘social’.

Social and ‘very social’: shifts in contexts, concepts and provision Social housing was originally devised to house the working class and key workers’ families. The very poor were only marginally addressed. Policy was traditionally devised to serve the needs of industrial societies that required a solid labour force that could be reproduced in stable private conditions. The first reference point for social-housing policy was therefore the blue-collar worker, and subsequently the key worker or salaried employee (and family). Historically, the poorest were housed by private landlords and charities, including those receiving public finding. The structure of the labour force has changed profoundly over the past century. The poor are increasingly outside the labour force completely, and have moved from marginalisation to social exclusion. Very social housing was designed to accommodate such households. The guiding policy question changed from ‘How shall we house the poor?’ to ‘How shall we house the disaffiliated?’ (Castel 2003). This important shift in the conceptualisation of the ‘social’ in social housing is inextricably linked to the global tendency towards more unstable and insecure labour conditions, and to the concomitant withdrawal of social protection that has led to serious situations like homelessness (Pleace Teller & Quilgars 2011). Price liberalisation, higher building standards and rising rents (including in the social sector) have contributed to a dramatic increase in the number of households in need of affordable housing. Measures leading to a reduction in the use of inpatient psychiatric treatment and more restrictive immigration policies have also contributed to an increased number of mental health patients and undocumented migrants in need of housing. These conditions have also affected residential mobility. In Paris and Vienna, the turnover rate in social housing is very low. Although new

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social estates are being built, they are out of reach for the poorest. They find accommodation in other sub-segments of the housing market, whereas young people, lacking financial resources and stable employment, increasingly continue or return to live with their parents, and various kinds of squatting and alternative living arrangements are developing to fill the gap.

Funding and organisation In these two countries, very social housing is financed by special funding streams separate from those for regular social housing. In France, funding comes from a mix of private and public money: the public comes from a loan scheme known as Prêts Locatifs Aidés d’Intégration (PLAI), which subsidises low-cost housing alongside social service programmes (accompagnement social) aimed at integrating those who are living through difficulties and need support. It also comes from designated funds held by municipalities and provinces (departements). In Austria, it is mainly funded through regional social assistance budgets, supplemented by some private money. Regional disparities in the social assistance system have led to differences between and even within regions in terms of financial standards, allocation regimes and administrative practices. Of the nine Austrian regions, Vienna has the most developed social services for people in housing need. In addition to its particular funding structures, very social housing in both Austria and France is characterised by the following factors. • Construction standards in terms of amenities and finishes are low. • There is less security of tenure than in normal social housing, as temporary contracts are used instead of normal leases. • Social workers and ad hoc commissions control access. • It is hard for residents to leave and join the ‘normal’ social sector. • The dwellings are often located in disadvantaged areas. In general, the sector has a negative image that stigmatises those who live in it. Very social housing often takes the form of ‘social residences’ or ‘social hostels’. In Austria, these residences may be operated by public, non-profit or private agencies. Since the 1980s, attempts have been made to coordinate and professionalise these bodies (e.g. by creation of the Bundesarbeitsgemeinschaft Wohnungslosenhilfe [BAWO], a national organisation). An increasing number of social services and institutions have become involved, many of them oriented to particular target groups (e.g. minors, single mothers and asylum seekers). In France, social residences were only legally instituted in 1996 with the proviso that residents stay for no more than two years and agree from the outset to participate in their own ‘integration process’. In 1999, former socialist French housing minister Louis Besson

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said that very social housing aimed to provide a ‘housing solution’ for the vulnerable, easing the social integration process through housing. He described his vision as follows: ‘If in each big city, in each district of Paris, there were at least one social residence, well located within the urban fabric, a lot of housing problems would be solved. And people’s housing careers would be much more fluid – shelter, social residence, ordinary housing – thanks to the good relations local authorities can often develop with social landlords. ( … ) But let’s not kid ourselves! Production of this specific type of housing is only a small part of the whole supply needed to meet current needs. It cannot be a substitute for necessary HLM housing construction (emphasis added).’1 Fifteen years later it is difficult to maintain that this sector has not become a substitute for standard social housing. It has grown steadily, and the boundaries between ordinary and extraordinary (temporary, transitional, etc.) housing have become blurred. In other words, even if most new construction continues to be in the form of standard social housing, people are increasingly accommodated in the very social sector owing to a lack of ‘normal’ supply. But there is also a shortage of very social housing, so squatting, informal subletting and similar types of informal housing – which provide less secure and comfortable accommodation – continue to grow.

Conditions in and provision of social housing, then and now Urban housing is obviously spatially and temporally differentiated. At the end of the nineteenth and in the early twentieth century, housing conditions were extremely uncomfortable for workers, especially new arrivals to the cities. Slowly, governments and parliaments began to respond to these problems – to loger le peuple. In Paris, there were, and still are, two categories of rental dwelling: furnished and unfurnished. To rent an unfurnished dwelling, households needed to have furniture and be able to pay three months’ rent in advance. Historically, poor people and recent arrivals were housed in the private-rental sector in maisons de rapport (tenement houses) or garnis (boarding houses, pensions or furnished hostels); charities took care of the poorest. There were many one-room units available but these were rarely shared by more than one household (Bertillon 1891). In the early twentieth century, the social sector was more comfortable but was still small. At the end of the 1920s, about 400 000 households were living in single rooms – most of them in the garnis – while only 60 000 social-housing units had been built, mainly in the former zone of fortifications around Paris. It is not surprising, then, that shanty-town settlements sprang up on the

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outskirts of Paris, creating precisely the environment that politicians such as Henri Sellier, the French garden-cities promoter and mayor of Suresnes, wanted to eliminate. In Vienna, the mainstream was different: sub-letting part of a dwelling or even a single bed was common practice. In the late nineteenth and early twentieth centuries, the high population density pushed people to invent housing arrangements: a single bed in Vienna could successively be occupied by several Bettgänger. In 1910, according to the census, one-quarter of Viennese households accommodated sub-tenants. However, the situation changed after World War I and particularly after the early 1920s with the emergence of a local welfare state, known as ‘Red Vienna’, which instituted housing policy measures and absorbed the long-established grassroots settlement movement (Novy 1993). For both cities, then, the 1920s were a turning point. Social housing was mainly provided by local authorities, with about 120 000 habitations bon marché (low-cost housing units) built in Paris between 1928 and 1939 and about 65 000 council homes in Vienna between 1923 and 1933. However, following the original conception of social housing, local authorities intended to provide housing not for the poorest but for the working class: skilled workers, municipal servants, low-skilled employees and their families. Ever since, the pauperised have been systematically disadvantaged in accessing the social sector and even at present, the poorest sections of the population are concentrated in substandard dwellings in the old private rental sectors of both cities, where they have little security of tenure. Known in France as logement social de fait (de facto social housing), this sector has shrunk, largely because of urban renewal programmes. Paris had more than 150 000 furnished rooms in 1950, slightly more than 80 000 in 1970, and there are perhaps 20 000 left at present (Lévy-Vroelant & Faure 2007). This phenomenon is not limited to Paris: from 1985 to 1995, more than 1 million units from the lowest part of the private-rental sector disappeared across France. The supply of alternative housing was drastically reduced, while the poor and newcomers were not welcome in official social dwellings; instead, they had to settle in the less habitable stock left by employees and skilled workers who were able to access social housing. The demolition of poorly built social-housing buildings began in the 1980s and 1990s, increasing pressure on the sector and further reducing accessibility for the poorest. The housing trajectory of migrants in Paris is worth mentioning. Most workers and families coming to the city after World War II settled first in slums and shanty towns, mainly on the outskirts of Paris in an area called la zone – from which ‘the red banlieue’ later started to extend. They rarely entered social housing and if they managed, it was only after a long stay in so-called cités de transit (temporary housing). Working men living alone

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were housed in dedicated residences called foyers, which were provided by organisations like Sonacotral (SOciété NAtionale de COnstruction pour les TRavailleurs ALgériens), which was founded in 1956 to tackle the expansion of the slums. It was only during the 1970s that immigrants made their way formally into social housing. In Vienna, urban renewal programmes have reduced the proportion of substandard flats (those without bath or toilet) from 25% of the housing stock to 5% over the past 30 years. This shrinking sector of low-rent but badly equipped private-rented dwellings, most of which date from the late nineteenth century, continues nonetheless to serve as shelter. Those living in such housing include newcomers and immigrant workers, who are still not treated completely equally in terms of access to social housing (which until 2006 was available exclusively to Austrian citizens; since then, access requires at least two years permanent and regular residency) as well as very poor people who cannot fulfil the financial requirements and income criteria for access to social housing. So, despite differences in law and practice, social housing in both Paris and Vienna was mainly reserved for citizens and ‘salariés vivant de leur travail’, with a particular preference for ‘locals’ in Vienna.

From social to very social Post-war social housing and unmet needs After World War II, reconstruction of war damage and construction of mass housing estates were on the agenda in both Vienna and Paris. In both cities, national or local post-war housing policy was designed to encourage social integration and facilitate social advancement. Nevertheless, the situation differed in the two cities owing to their geopolitical positioning and diverging economic and demographic developments. In Vienna, the post-war dynamic was less pronounced than in Paris. The city found itself in a more peripheral situation, close to the Iron Curtain, with lower economic growth and demographic stagnation from the 1970s onwards. The important social-housing sector, in which non-profit housing associations played an increasing role, was large and dispersed enough to house a wide social mix. At the same time, affordable housing for the middle class became an explicit objective of social-housing policy. As certain minimum income levels were required to enter social housing (beginning in 1968, tenants in new-build social housing, including the municipal sector, are requested to pay a deposit as a contribution to the costs of construction and land), the poorest parts of the population remained excluded, as were non-nationals. Given the legacy of pre-war housing policy (Red Vienna housing estates were dispersed all over the urban area), spatial concentration

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was not very pronounced. Instead, there was an under-segmentation of the residential market insofar as the poor (and immigrants) were concentrated, not in particular neighbourhoods but in dilapidated nineteenth-century houses in the private rental sector. Vienna’s economic and demographic dynamics changed, in particular with the fall of the Iron Curtain. Since then, the city has experienced increasing geostrategic and economic relevance, an important influx of immigration, and a readjustment of urban and housing policy. At present, Vienna’s municipal sector, with more than 220 000 units, represents a quarter of the city’s total housing stock. Including dwellings owned by the housing associations, social housing makes up more than 40% of the city’s housing. Officially, social housing is open to non-nationals, who must be permanently resident. The social sector also has some responsibility for dealing with the increasing problem of housing precariousness – for example, by providing dwellings for those in urgent need (albeit a limited number and with strict eligibility criteria). At the same time, the barriers and difficulties for poor people (and more broadly for groups with weak social status) to enter the housing market, including the social sector, have significantly grown because of the increasing gap between housing costs and financial resources. Statistics demonstrate a lengthening waiting list for municipal dwellings (now around 20 000), an increasing number of applications for rent allowance (social aid financed service for low-income tenants), and growth in both evictions (around 3000 per year, one-quarter in social housing) and homelessness (estimated at almost 9000 individuals; there are no statistics on informal, improvised or other forms of irregular housing). The offer of very social and emergency housing is developing, and they are becoming more differentiated. The official Viennese catalogue for urgent housing services lists around 5000 dwelling places, run by 90 mostly non-profit and publicly financed welfare organisations, in more than 400 locations. More than 8200 people per year benefit from this spectrum of measures and activities. In post-World War II Paris, large estates were also built with the expectation that class differences would vanish through spatial proximity. They were generally built far from the centre, making their legacy problematic in a context where good connections are vital. At present, the stock of social housing is increasing but is still only around 170 000 units, or about 15% of all dwellings in Paris intra muros. There are more than 110 000 on the waiting list for social housing, of which about 14 000 (or 13%) are housed every year. More than 15 000 people live on the streets and there is an unknown but increasing number of people who are housed in informal and invisible ways – living in temporary and improvised dwellings, staying with someone else, subletting in furnished rooms or squats or living in caravans or shanties (Lévy-Vroelant 2012). The support of families (by housing adult

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children or providing solidarity and support for temporary solutions) cannot fill the housing-need gap, even if around half of France’s temporary accommodation is located in the (desirable) Paris region. Within the short-term rental sector, more than 3000 evictions have been carried out annually over the past few years, and there has been an increase in the number of ‘clients’ for charities that offer services to the homeless such as showers, hot meals and clothes – and these charities in turn are asking for more funding. The inner city, which offers strong social networks, better transportation and public facilities, a larger labour market and a wide range of services, typically attracts both the wealthy (owing to the symbolic capital, investment and second homes they can afford) and the poor (and often undocumented), who serve as key workers and need to be housed relatively close to their places of work. The fragmentation of housing provision is extreme and the two groups do not actually compete on the same market, but exercise ‘the right to the city’ in different ways.

New norms and actors in very social housing Traditional social housing is being partially transformed into new very social forms2 by bringing together the original principles of social housing with new private actors (including for-profit and non-profit organisations) and other forms of public funding. This very social housing, which occupies an intermediate area between traditional social housing and emergency shelters, has three main characteristics: • mediation (a third person or body between the landlord and the tenant or resident); • dependence (with different degrees of autonomy and control); and • access via social-service prescription (Ballain & Maurel 2002) or negotiation. A third sector has emerged, positioned between traditional public and private spheres at the junction of social action (promoting integration and working against poverty) and housing (from construction to management). New logics and modalities of governance are being applied, favouring personal responsibility and merit versus collective solidarity and rights. This is evident in the contract residents have to sign when entering a social residence, in which they agree to search for a job or risk losing their place. Access to these new ‘halfway’ emergency homes, shelters, social residences, foyers, and so on, is controlled by social services; the right to stay is conditional; and mediators such as associations, NGOs and charities are financially responsible for the tenant. They can decide whether the option of transferring the lease to the tenant is suitable or not. Such social support policies could be

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viewed as constructive or, alternatively, as highly intrusive – but, in any case, they accentuate inequality between tenant and provider. In both cities, social programmes prioritise certain populations for ‘ordinary’ social housing (single mothers, economically weak young families, tenants in dilapidated housing, etc.). In Vienna, low-income tenants in newly constructed social-housing estates may benefit from low-interest public loans to cover their construction-contribution payments (however, the number of ‘super-funded’ apartments is very limited). In the early 1990s, the so-called social track programme was created to target people already in contact with social services and at risk of becoming homeless, and since then the system for urgent housing allocation has been further developed and professionalised. In 2000, an urgent accommodation scheme was established targeting non-Austrian citizens, who at the time had no access to social services, very social housing or social housing generally. Since then, some 1000 ‘emergency flats’, mainly in the municipal-housing sector, have been provided for people in acute need and allocated in accordance with strict criteria set by a board composed of private social landlords and social-service representatives. In Paris, there is a similar programme known as accords collectifs,3 which is managed by social workers and provides housing only for those who already participate in a social programme and commit themselves to professional and social integration (parcours d’insertion). Like the Viennese programmes, this one is characterised by intensive local networking between key private organisations (charities, NGOs, etc.) and public actors (municipality, region, State). Additional attempts have been made to involve private property owners in the provision of homes for people in housing need through programmes such as ‘Solibail’ (Lanzaro 2011). Furthermore, new social residences and shelters (known as Centres d’hébergement et de réinsertion sociale [CHRS], or Centres for social housing and inclusion) have been established as a response to the shortage of private and public affordable housing. There are probably about 2000–3000 units of this very social accommodation in Paris, but it is difficult to be precise because even though they benefit from public subsidies, they are privately owned and managed. For example, the private firm EFIDIS owns 11 social residences that house persons in a state of ‘social emergency’ but capable of undergoing the so-called parcours d’insertion. These establishments are managed in partnership with associations that specialise in insertion and employ social workers to assist and monitor the residents. Residents are offered or required to accept counselling (accompagnement social) from associations like Emmaüs, the Association for Young Workers Housing (ALJT) or communitarian and/or religious organisations such as the Centre for Protestant Social Action (CASP), Secours Catholique, and so on. Although these programmes place the onus on the individual, it could

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be argued that the need for ‘social integration’ reflects chronic shortages of housing and employment more than personal failings (Bouillon et al. 2011). In both cities, these new housing ‘products’ are designed to help residents move step by step from the street to normal housing. The idea is that (i) at the very beginning, emergency shelter will be provided from a few hours to a few days at most; (ii) the individual will take up a more stable place in a foyer or CHRS; (iii) with the help of a social worker and his/her own efforts, the person will enter a social residence and (iv) will eventually gain access to social housing – or, sometimes, the private-rented sector. This housing career, however, is mostly theoretical as the shortage of ‘normal’ social or affordable dwellings (and the fact that residents’ incomes are often judged to be insufficient) means they do not in fact progress in this way. More recently, local authorities and social services in both cities have started to apply a ‘Housing First’ approach that complements the stepwise integration programmes that include various forms of temporary and long-term accommodation for the most vulnerable (homeless people, the mentally ill, etc.), as well as improved access to better housing for those in urgent need, particularly in the municipal sector. Local authorities and social-service administrations, cognisant of growing employment instability, support ‘Housing First’ as a way to facilitate the social integration of those who are outside the labour market. But this change in emphasis of very social housing is far from complete – there are still insufficient financial resources and administrative structures, as well as a lack of (or inconsistency among) formal legal norms. Funding for very social housing comes from social budgets rather than housing allocations. Although the amount of public subsidy is growing, small and medium-sized associations are financially insecure, as they do not receive long-term funding like large associations still do. Very social housing is run as a highly integrated collaboration between private and public entities, where (mostly social) landlords of all types sub-contract with private social-service associations, and while it certainly continues to be a public service, it can no longer be considered a public enterprise – if it ever was one. In the context of high unemployment rates and fragile labour relations, there is an argument that access to housing should depend less on insertion in the labour market. This would mean that labour-market exclusion would not be compounded by exclusion from housing.

Historical shifts in meaning of ‘very social’ Tables 17.1, 17.2 and 17.3 present the transformation from social to very social housing, set it in political and economic context and describe its social effects. The tables describe an ideal/typical historical process, and thus cannot be strictly delimited by dates.

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Pauperisation

Nineteenth century: benefaction, dependency and social utopia

Demonisation of the ‘lumpenproletariat’ as dangerous classes Twentieth century: mass emancipation, Charity mobilisation, and socio-moral education of the working class

Notion of very social

Notion of the social

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Formation of social classes

Conflict between wage labour and capital

High population mobility and population growth

Recently hired labourers: Private entrepreneurs, philanthropists, hostels, subletting, foundations furnished rooms, boarding houses Cooperatives and Overcrowded settlement movements working-class districts, The poor: spontaneous shanty towns housing shortage and National governments, epidemics local authorities and Stable working class: in municipalities nineteenth century, Public space as arena factory housing for class struggle Political actors (parties, estates; in early (‘dramatic cities’) trade unions, etc.) twentieth century, social housing with collectivistic pedagogical approach, high architectural and construction quality; social control and family orientation

High density and socio-spatial divisions along class cleavages

Housing actors

Industrial production, ‘wild capitalism’

Residents by housing type

Structure of cities

Social housing during the period of philanthropy and municipal socialism (pre-welfare state and industrialisation).

Characteristics of social change

Table 17.1

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Functionalist paradigm: big estates, standardised, high-speed construction, often to a low standard

Gentrification and socio-spatial differentiation

Immigrant and poor households: substandard rental sector

Municipalities and provinces

Paternalist clientelism

Inclusion and redistribution

Assistance

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Population stagnation, labour migration and post-colonial migration

Institutionalisation of class struggle (corporatist regime, social partnership)

Urban reconstruction and renovation

Functionalism

Establishment of national welfare regime

The poor as a ‘social problem’

Marginalisation and stigmatisation

Collective social upward mobility towards middle-class position

Central government

Key workers, state employees and their families, (mostly) nationals and locals: target groups for social housing

Extension of urban sprawl, sub-urbanisation

Fordist mass production and economic prosperity Limited-profit housing associations and corporatist organisations

Notion of ‘very social’

Notion of the social

Actors

Residents by housing type

Structure of cities

Characteristics of social change

Social housing during the (national) welfare state.

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Gated and hybrid; post-modern eclecticism and pluralism in planning and architecture (including new forms of housing for the mobile/flexible workforce)

Privatisation of part of social sector; diversification and fragmentation

Growth of urban agglomerations

Increasing sociocultural heterogeneity and diversification of lifestyles

Accentuation of socio-spatial fragmentation ‘Social residences’ for the very poor

Insertion through housing

From welfare to workfare; key role of social work

Poverty as delinquency; prevention, control and punishment

Vulnerable, dispensable, invisible

Notion of ‘very social’

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Source: Authors.

Ageing and increasing migration and mobility

Weakening of collective and corporative actors

Structural change in labour markets (more flexible, atypical and precarious jobs; working poor)

Individualisation and taking responsibility for one’s self

Notion of the social

Emergence and strengthening of Movement away from private actors risk pooling towards individual (builders, investors) responsibility and of the Third Sector (charities, voluntary Struggle against non-profit downward social organisations, NGOs) mobility New strategic role of local authorities

Retreat of state and public authorities

Immigrants and vulnerable groups: informal sector, parts of the ‘old’ social stock, suburban estates

Increasing socioeconomic polarisation and intensifying social inequalities

Tertiarisation and post-Fordism, flexible capitalism

Globalisation of economy

Actors

Residents by housing type

Structure of cities

Social housing during the post-welfare state.

Characteristics of social change

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In the industrialisation phase (Table 17.1), the first social housing was provided for working-class people by the pre-welfare state, represented by philanthropic actors and (mainly local) governments. The high labour mobility caused by the industrialisation process saw the poor housed in the most deprived parts of the private rental sector, including in temporary housing such as hostels, furnished rooms and charity asylums for the poorest. During the second phase (Table 17.2), social housing was further developed by the nation-state–based welfare state and social protection and social mobility increased. The poor (and immigrants) were housed in deprived (urban) areas and affected by the dominant processes of social integration. Finally (Table 17.3), housing policy became fragmented between privatisation and social-services policy in the ‘post-welfare governance’ phase. Structurally excluded from the production system (and from legal status, in the case of some foreigners), the poor have become ‘truly and fully useless and redundant’ (Bauman 1997); they are housed in small segments or in specific very social elements of the stigmatised social or private sectors; some have become squatters. The responsibility for looking after their housing and social needs is shared between different organisational networks dominated by NGOs and local authorities, and practices of surveillance, prevention and punishment become widespread. The three tables show how the meanings of ‘social’ and ‘very social’ have changed, and set out the complex interpenetration of general social change in the structure of the cities. This socioeconomic and historical contextualisation illuminates the profound shift in the notion of the social, as a norm in the public arena, from a collective to an individualistic content; from class mobilisation to taking responsiblity for one’s self; from redistribution to individual safeguarding and from collective advancement to individualist fortune seeking. But the notion of the very social has also changed: from the pauper to the dispensable, from assistance to insertion, from charity to institutionalised social work and from empowerment to the new control regime. This socio-historical comparison illustrates the variety of ways in which society deals with housing needs. These are always related to specific regulatory regimes and welfare arrangements and manifest themselves in the forms of governance, institutional settings and the interplay of societal actors. The shift towards a post-welfare state has important consequences, particularly for large cities and municipalities that confront increases in poverty. One might argue that in all three phases shown in the tables, the very poor remain excluded from the (mainstream) social sector. But perceptions about the very poor have also shifted: in the nineteenth century, the view was that certain classes were dangerous because they were poor and consequently irresponsible and deviant. During the ‘post-welfare’ stage, the mainstream understanding is that policy should monitor and control individuals who are potentially dangerous, not only because they are poor but because

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there is no way for them to participate in the labour market. There is then an ongoing fragmentation of the social sector in general, with new regulatory practices and management structures to meet the housing needs of specified target groups. At the same time, the landscape of interventions and social inclusion programmes has become increasingly diversified and professionalised.

Conclusion: the paradox of integration In an era characterised by housing and employment insecurity and increasing mobility and migration, housing has become a key issue for both collective existence and individuals’ social status. The fragmentation of cities and their increasing socio-spatial inequality cannot be solved just by providing housing. Although individuals need housing to achieve social integration, housing alone is not sufficient. At present, the concept of the ‘very social’ links housing provision tightly to social work through the concept of insertion – that is, ‘workfare instead of welfare’. The claim is that individuals in target groups can be taught ‘self-activation’, and the goal of social work and public policy is to enable vulnerable groups (the so-called dispensable) to become empowered and integrated in the labour market. But far from facilitating integration, these programmes often hamper autonomy. This is partly because in practice, marginalisation leads to stigmatisation, stigmatisation to vulnerability and vulnerability to dependency and a loss of self-confidence. Moreover, poverty is regarded as an individual form of delinquency that has to be repaired by demonstrating a capacity to work, even if that work takes place in deregulated or irregular conditions. This goes beyond the French or Austrian situation: ‘The structure of available shelter and housing for the homeless in Sweden resembles a staircase. The higher an individual climbs, the more privacy and freedom he/she is awarded and the more “normal” that individual’s housing becomes, a regular rental flat typifying the ultimate goal. Despite growing evidence that this approach to housing, training and reintegrating the homeless fails to reduce homelessness, it is in fact expanding’ (Sahlin 2005). There seems to be no exit from this spiral of dependency. Housing First approaches, as promoted in Vienna and under discussion in Paris, reflect a break from illusory stepwise integration (the ‘continuum of care’) by making housing alone the main goal of inclusion. Besides reaching only small parts of the potential target population, these reveal the paradox of integration: focusing on housing as the key to social inclusion does not address the fact that deprived individuals face shrinking or even non-existent chances of participating in the labour market and other key societal systems.

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Conclusion: The Paradox of Integration

Another growing structural problem of large cities at present is the increasing gap between the normal housing market (including large parts of the social sector) and the differentiated landscape of very social housing services on the other. Only wealthy and well-integrated people (in the traditional sense) have access to and choice within the normal housing market and may even draw profit from its marketisation, whereas those with restricted means or insecure residential or employment status – young people, migrants, one-parent families, part-time or employees or those without contracts – face enormous barriers to access. Few of them are offered very social housing as a pathway to standard housing. The majority are forced to look for alternatives and to improvise temporary solutions. Instead of solving the housing problem or adequately addressing its deficiencies, the system has produced further vulnerabilities and widened the gap in opportunities between the wealthy and the poor. It is therefore time to remember the historic foundations of social housing and its most critical mission: to serve an integrative tool for the whole spectrum of society.

Notes 1 ‘Si chaque grande ville, chaque arrondissement de Paris disposait d’au moins une résidence sociale, bien située dans le tissu urbain, beaucoup de problèmes de mal logement seraient résolus et la fluidité de l’itinéraire – hébergement, résidence sociale, logement ordinaire – serait mieux assurée grâce aux liens privilégiés que les communes entretiennent souvent avec les bailleurs sociaux. ( … ) Mais ne nous trompons pas! la production de ce type de logements particuliers ne constitue qu’une petite partie de l’offre de logements qu’exigent les besoins connus. Elle ne se substitue en rien à la nécessaire production de logements HLM, - aujourd’hui facilitée par le PLUS - et encore moins à la production de PLA I qui reste la priorité.’ (statement at a press conference, 28 October 1999) http://www2.equipement.gouv.fr/archivesdusite/actu/jcg1997-2002/dossiers/1999/ressociales.htm#3, Intervention de Monsieur Louis BESSON, Secrétaire d’Etat au Logement, Plans "d’accueil d’urgence" et "résidences sociales" mis en place en Ile de France, Conférence de presse de jeudi 28 octobre 1999, Préfecture de la région d’Ile de France 2 This is not to deny the historic role of social housing organisations in providing low-standard housing for the poorest. But as a more detailed historical review would show, this role was not consensual and was the subject of important debate within the sector itself. 3 Part of a national policy: Plans départementaux pour le logement des personnes défavorisées.

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References Ballain R and Maurel E (2002) Le logement très social, extension ou fragilisation du droit au logement Éditions de l’Aube, La Tour d’Aigues. Bauman Z (1997) Postmodernity and its Discontents New York University Press, New York. Bertillon J (1891) Essai de statistique comparée du Surpeuplement des Habitations à Paris et dans les grandes capitales européennes Chaix, Paris. Bouillon F, Girola C, Kassa S and Vallet A.C (2011) Paris refuge. Habiter les interstices Editions du Croquant, Paris. Castel R (2003) L’insecurité sociale: Qu’est-ce qu’être protégé ? Seuil, Paris. Flamand J.P (1989) Loger le peuple. Essai sur l’histoire du logement social en France La Découverte, Paris. Lanzaro M (2011) Access to housing for homeless people in region Ile de France in 2010 – Current trends in housing and policies. Paper presented at the 2011 ENHR Conference, Toulouse, France. Lévy-Vroelant C (2012) Temporary housing. Chapter in S.J Smith, M Elsiga, L.F O’Mahony, O.S Eng, S Wachter and M Pareja Eastaway (eds) International Encyclopedia of Housing and Home, Vol. 7 Elsevier, Oxford. Lévy-Vroelant C and Faure A (2007) Une chambre en ville. Hôtels meublés et garnis à Paris, 1860-1990 Creaphis, Paris. Novy K (1993) Beiträge zum Planungs- und Wohnwesen Magistrat der Stadt Wien, Vienna. Pleace N, Teller N and Quilgars D (2011) Social Housing Allocation and Homelessness European Observatory of Homelessness, Brussels. Sahlin I (2005) The staircase of transition. Innovation: The European Journal of Social Sciences, 18, 2, 115–136.

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Financed by the largest social housing association in the south-west of France, Habitat Sud Atlantic, the new eco-quarter of Iguskitan and Lorategi is located in Saint Jean-de-Luz. It was designed by Leibar-Seigneurin and Baggio-Piéchaud. There were three objectives for the mixed development (121 out of 248 units are social housing): that it fit in to the natural topography, that it offer quality energy-efficient housing and that it generate spaces to residents to ‘live together’ (vivre ensemble), particularly in external public spaces. Photograph: Martin y Zentol.

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18 Financing Social Rented Housing in Europe Christine Whitehead LSE London, London School of Economics, London, UK

Introduction Objectives The methods by which social housing is provided vary by country, but normally involve subsidies to landlords from national governments (and often local ones) in order to ensure affordable rents. In most countries, the earliest systems involved grants or interest-rate subsidies paid to developers, municipal and sometimes non-profit landlords, together with the use of government-sponsored debt. Over the past few decades, particularly as financial markets have opened up, more complex instruments have been introduced with the aim of reducing public expenditure, using existing social housing assets more effectively, incentivising efficient provision and, increasingly, targeting assistance to those most in need. In order to understand the nature of these changes and to compare approaches across countries, this chapter covers five themes. It looks first at the mechanisms by which social housing can be funded. It then examines the core role of rent determination and rental revenue streams in determining both the need for and the cost of funds. Next, developments in the use of debt and equity finance are discussed before turning to the changing role of subsidy and its sources. The chapter concludes with an assessment of future trends.

Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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Principles There are three ways of funding social rented housing – or indeed any rented housing: 1. using rental income from current tenants; 2. borrowing, which both incurs current interest costs and has to be repaid in the future; and 3. using payments from others – including other tenants past, present and future; owners of housing and land; employers; and particularly government. The relative importance of these three elements depends on the interaction of several factors, including how rents are determined; the legal ownership of the housing equity; the capacity of owners to borrow on the market; the extent of past capital gains embedded in the housing stock; regulatory structures; instruments to ensure contributions from others, particularly landowners and local taxpayers and the extent of government commitment to social housing. Probably the most important issue determining the cost and availability of finance is the relationship between financing and subsidy. Subsidies include cash payments to social-sector landlords and tenants, as well as implicit subsidies in the form of lower rents and in-kind contributions. Direct payments to social landlords can be either revenue subsidies (i.e. annual payments) or capital grants from central and local governments. But subsidies also include reductions in interest rates and other costs of production as well as access to public-sector borrowing at submarket interest rates. Government guarantees also reduce the costs of finance. In addition, cash and contributions, particularly in the form of support for new building and regeneration, may come from landowners and developers, further reducing the direct cost of production. The effect of these direct and indirect subsidies for the production, maintenance and improvement of the stock is to reduce the costs that have to be covered by rents and borrowing. The difference between actual rents and the rents the same dwellings would attract on the private market measures the extent to which tenant households benefit from financial subsidies. Income-related subsidies to tenants help support the flow of rental income and thus maintain the financial viability of social landlords and enable additional investment.

Rent determination The vast majority of social housing in Europe takes the form of dwellings rented from municipal and non-profit landlords whose mission is to charge

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rents affordable to lower-income households. In some countries, notably Germany and to a lesser extent France and England, private landlords may also be subsidised to provide social housing.1 Rents in social housing in Europe are set according to a wide variety of principles. They can be based on the cost of construction, on the value of the dwelling (in terms of consumer demand and/or values in other sectors of the housing market) or on the incomes of tenant households. Moreover rents may be set in relation to the dwelling, the estate, the area and/or the owner. All of these different methods can be found somewhere in Europe. Central governments generally determine the basic principles by which rents in the social sector are set, in order to provide an adequate rental stream. Governments generally want to ensure that the financial framework provides incentives for owners and managers of the social rented stock to operate efficiently and provide effectively for target groups. The most usual approach is to require providers to break even or achieve a target rate of return on assets (whether valued at historic or current cost). These financial constraints may operate at the level of the social sector as a whole (the Netherlands), the provider (England) or the estate (Denmark). Each approach generates its own tensions, notably with respect to whether social providers are able to cross-subsidise between areas and cohorts of investment. It is important to recognise the distinction between rent levels and rent structures. The majority of government regulation across Europe concentrates on rent levels and the extent to which rental incomes must meet specified prudential requirements. The determination of rent structures given these constraints is often left to the owners or managers, and may be based on values, needs or other criteria. This is particularly true for cost-based rents, where the freedom to set the rent for individual units depends on the extent of pooling allowed – that is, the size of the financial unit across which rents are aggregated. Where rents are related to market values, there is less freedom for managers to determine relativities, while in income-based systems, relative rents depend on allocation processes. Thus, in France, for example, housing associations have the freedom to determine relative rents across all their properties, while in Denmark rents are set site by site; in England, rents on individual properties must not exceed 80% of the market but will normally be held below this level, especially for larger family units; and in Ireland rents depend on incomes, so will generally be lower for family housing allocated to larger, lower-income households. From the point of view of financing, these constraints matter in two distinct ways: they affect the likelihood that the social landlord will achieve the expected total revenue stream and they affect their ability to raise rents were costs to increase or the economic environment change.

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How are rents set? There are four basic principles by which social-sector rents can be set: in relation to costs, to value or market rent, to controlled rents in other sectors or to tenant incomes. The major benefit of cost-based rents is that they have a direct relationship with the subsidy provided – because the cost of producing and running the stock, less subsidy, equals rental income required. The most obvious problem is inefficiency, as there is nothing to ensure that costs are held to their minimum; there have been many instances, notably in Denmark, Germany and Austria, where costs have clearly been inflated. More complex issues arise when historic costs become disconnected from housing values, as happens in periods of rapid inflation. This disjunction increases the demand for social housing and the true economic subsidy to those able to obtain it, but makes no contribution to new investment. In these cases, governments may look to change the basis for rent determination, as has happened in England and the Netherlands. The benefit of value-based systems, as seen in England and the Netherlands, is that they relate to what consumers in general regard as important. However, there are no direct links either to the subsidy that government has provided or to the actual cost of maintaining the social stock. Most importantly, governments generally require that social rents be held below market levels and be affordable for target groups, given that subsidy has been provided to help poorer households. But this has costs in that there is inherently excess demand (as is the case under other rent-determination methods) and few of the allocation benefits that flow from relating rents to value can readily be realised. There are also examples where rents are not directly related to either capital values or market rents but to controlled rents in the private rented sector. The most important example of this approach has been Sweden; it is also found to a lesser extent in the Netherlands and Germany. There is often an understanding among those who set social and private rents about the expected relationship between the two, but exact levels are usually a matter for negotiation rather than the outcome of specific formulae. For instance, in Sweden, the unions have a continuing role at the heart of the negotiation process. Finally, income-related rents can threaten the financial viability of landlords, especially if the households accommodated are concentrated among lower-income groups, and if their incomes are rising more slowly than the costs of managing and maintaining the stock. Within Europe, Ireland provides a particular example of these issues, as do parts of Germany. There are many other examples across the world – notably in Australia and New Zealand.

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Table 18.1 (drawn from Chapter 1) outlines how rents are set in both the social and the private sectors. The 14 European countries listed employ all four approaches to rent setting as well as different ways of addressing historic versus current cost. In some countries, rents plus subsidies provide social-sector revenues that are more than adequate to enable owners to build reserves and contribute to additional provision. This is particularly true of the Netherlands, where housing associations now are expected to be self-sustaining; but it is also the case in parts of the HLM sector in France and the housing-association sector in England. In other countries, the revenues are inadequate effectively to maintain the stock, let alone support new investment; this is notably the case in Eastern Europe and Ireland but also in parts of Germany. In cost-based systems, the intention is often that developments should be able to pay their way rather than depend upon cross-subsidy from earlier investments. In such systems, new or improved dwellings may have very much higher rents than older units, even though their value to tenants (often because of their location) may actually be lower. The final column of Table 18.1 gives estimates of how far removed social rents are from market rents. It suggests that the countries fall into three categories: those where social rents are close to private rents (which may or may not be market clearing), those where social rents are around or somewhat above 50% of market rents and those where social rents are even lower. In these last countries, rents are unlikely to cover basic repairs and maintenance. In all countries, rents tend to vary considerably between areas, with generally lower relative rents in high-demand areas and rents much closer to market in areas of low demand. However, they also differ greatly depending on when investment took place and subsequent innovations with respect to sources of finance. What is perhaps most obvious from this quick review is that there is no convergence between countries in the ways that rents are set. Each depends on a long history of financing and regulation, which help determine both feasibility and viability. History also often affects the role that rental income plays in determining levels of new provision and in allocation, as well as the rents that are regarded as acceptable by tenants and governments alike.

An increasing role for private debt finance The assumption that housing revenue accounts should balance – that is, that rent and subsidy inflows should cover interest payments, repairs and maintenance – implies that new debt finance will normally be raised to pay for new dwellings and major refurbishment. Over the past 30 years, as financial markets have been deregulated and opportunities for borrowing

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Cost-based in new stock. Part of municipal stock had regulated rents, but rent control recently lifted Set by local authorities on various bases but generally so low that they do not cover running costs. Cost rents required under some funding schemes By law, generally income-related since 1976 for local-authority-provided general-needs housing although each local authority has own system. Cost rents in special-needs housing provided by housing associations Cost-based

Hungary

Ireland

Spain

Central government decrees maximum rents for new construction (which vary according to the four geographical zones). Related to costs of construction Rent based on points system that reflects ‘utility value of dwelling’ and target household income level. Proposal to change to percentage of market value. Properties with rents above €681/month in 2013 not subject to controls in social or private rented sector Locally determined historic cost-based systems for both individual local authorities and housing associations, so no government control Until 2012, rent-restructuring regime based on local earnings and dwelling price; rents increased by RPI plus 0.5/1%. Housing associations and local authorities must cover outgoings. From 2012, for new building and most new lettings, rents up to 80% of market

Czech Republic

England

Scotland

Netherlands

France

Cost-based Cost-based at estate level; 3.4% of building cost plus bank charges Rents vary with building period and funding programme. In some regions, rents vary with household income Set by annual collective bargaining between landlords and Tenants’ Union; rents vary with age of building

Rent determination in social rented housing

Less than one-third of market

Very much below market

Around one-third of market

Less than half of market

A little more than half of market – less than 40% in London

Around two-thirds of market

Around two-thirds of market but less than 40% in Paris Around two-thirds of market

Near market

Near market Near market Near market

Social in relation to market rents (Average estimates)

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Source: Authors.

Social rents less than 50% of market rents

Social rents 50–66% of market rents

Sweden

Austria Denmark Germany

Country

Social rent determination and the relation of social to private rents. 322

Social rents close to market rents

Table 18.1

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have increased, there have also been moves to privatise the existing stock in order to use the equity capital as collateral for further borrowing, either for housing purposes or to reduce public borrowing elsewhere (Turner & Whitehead 1993; Urban Studies 1999; see Chapter 22 in this book). Traditionally, in most European countries, debt funding for social housing came from special circuits of finance where costs were significantly below market levels. Mechanisms included public-sector borrowing, which meant ‘risk-free’ interest rates, interest-rate subsidies to municipalities or independent social landlords and additional guarantees from either local or central government (Whitehead 2003; Turner & Whitehead 2002). Interest-rate subsidies with guarantees were particularly prevalent in Scandinavian countries, the Netherlands and France. Over the past few decades, this special treatment has been much reduced. Interest-rate subsidies have been removed and providers have increasingly been expected to borrow on the private market. In return, governments have permitted landlords to exercise greater discretion in settings rents, provided explicit or implicit guarantees and devised income-support systems that make rental streams more secure. The market for large-scale borrowing by social landlords investing in new stock or housing improvements has been most developed in the Netherlands and England (Boelhouwer 2007; Gibb & Whitehead 2007). Before the financial crisis, risk premiums in both countries had declined so much that social landlords were paying rates not far above those for risk-free public borrowing, and there was strong competition among banks and other retail providers to lend. This reflected the fact that the value of assets held by social landlords was more than enough to cover the borrowing required, rental revenues were relatively secure, and regulation in England and guarantees in the Netherlands limited potential defaults. Immediately after the financial crisis, retail funding became more difficult to access and more expensive, especially as lenders moved to re-price back books. As a result, independent social landlords in Britain successfully looked to raise funds on the bond market, either individually, by grouping together to gain economies of scale or through the Housing Finance Corporation, which was set up in 1987 to facilitate such bond issues. A number of associations can borrow at very low rates, as their credit ratings are better than those of many European countries (CECODHAS 2009). In Britain, a small number of potential defaults have been managed by merger. In the Netherlands, one major housing association defaulted after becoming involved in the derivatives market, but housing associations have generally built very large reserves and remain one of the most secure sectors operating in the finance market. There are other examples of countries where social landlords can go directly to the market for funds, such as Finland, but perhaps the more

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Equity Finance for Social Housing

usual approach has been to involve intermediaries of one form or another which can access private debt finance with the benefit of risk pooling. Two of the oldest are the Norwegian Housing Bank, which is wholly government owned, and France’s Caisse d’Epargne system of protected savings, which continues to provide a special circuit of housing finance. Newer approaches can be found, for instance, in Austria, which introduced specialist housing banks in the 1990s, and Italy where national and local funds are being developed (CECODHAS 2009). One of the biggest differences between countries such as Britain and the Netherlands on the one hand and more traditional government-supported systems on the other lies in the way the former permit the use of social housing capital assets as collateral. The capital value of a housing asset depends on predicted rental streams. In Britain, much former local-authority stock passed into housing-association ownership under large-scale voluntary transfers since the 1980s. Together with the affordable rents regime, which has since 2012 permitted rents of up to 80% of market levels, this has increased the value of housing-association assets and allowed them to borrow more for new development. More generally, social landlords’ ability to raise debt finance depends heavily on the certainty of their rental stream on the one hand and their ability to realise capital values, if necessary, on the other. Where these rights are restricted – if, for example, social landlords are not permitted to sell their dwellings – it may be difficult or impossible for them to raise debt on the private market. Social landlords then must depend on government for investment finance, which may well not be forthcoming. This has been a particular issue in many Eastern European countries, where there are few social housing assets available to support new investment through borrowing.

Equity finance for social housing The other major source of funding for social housing comes from the equity tied up in the existing stock, in reserves and in other assets owned by social housing providers. Large parts of the social housing sector hold unencumbered capital assets on which no return is required. They also own land and other assets which could, at least in principle, be used to increase provision. The use of such existing assets is often a core element in regeneration projects, especially those that enable increased housing density. Finally, many social-sector providers have significant reserves built up from past subsidies and from rental income. These assets enable rents to be held down. They also present opportunities to support additional investment, particularly by providing internal subsidies in the early years, which can be reimbursed as rents rise into the longer term and surpluses are

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made. However, there are often issues around whether the associations with reserves are those that wish to develop, notably in France, the Netherlands and England. One response to this has been the Danish initiative to recycle housing association surpluses which aims to reallocate funds to associations with investment programmes (Gibb, Maclennan & Stephens 2013). The most usual approach to increasing the use of equity finance, however, has been through the sale of homes to sitting tenants, often at a discount. The objective is usually to enable tenants to achieve owner occupation, while, at the same time gaining funds that can be recycled to extend social provision (although they may also be used elsewhere). The ‘Right to Buy’ in England has been the largest such programme, involving the transfer of over 1.9 million units to tenants. These transfers involve a proportion of equity and debt finance put in by the tenant as well as subsidy from government. Other countries have similar programmes, although the extent of subsidy is usually less than was originally involved in the Right to Buy. Ireland has had a long-standing programme that has enabled large-scale sales. The Netherlands has had a significant programme for a decade or more and is looking to extend it. Both France and Sweden are also putting in place policies to make sales more attractive to tenants. More generally, supporting owner occupation is seen as a cost-effective way for government to subsidise provision of housing for those able to make a larger contribution to their housing costs than the majority of those in social housing. Linked to this has been a growth in interest in programmes to support low-cost home ownership, where purchasers are able to purchase part of their homes under a wide range of specific schemes that fit the legal and institutional arrangements of individual countries. The cooperative home ownership schemes that are prevalent in Scandinavia are perhaps the best established. Community Land Trusts are also important in a number of countries, notably Germany. A wide range of new approaches are being developed in many Northern European countries with the objective of limiting and recycling subsidies more effectively and increasing individual households’ equity stakes (Lawson, Gilmour & Milligan 2010). Arguably the most dramatic initiatives involve bringing private equity into the ownership of the existing stock of social rented housing. Up to the present, Germany provides the only working example of large-scale private equity involvement in the existing stock (Kofner, Unger & Schwenk 2012; Chapter 22 in this volume). There have been two main approaches: the sale of the whole municipal stock in a small number of large cities, notably Dresden and Kiel in eastern Germany; and far more limited sales of parts of the stock across a range of smaller municipalities, mainly in what was West Germany. The principles involved are straightforward. A license is specified, setting out the conditions under which tenancies are to be provided, including

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Subsidies to Social Housing Provision

how rents may be set, when evictions may take place, and so on. It also determines the rights of the new owner to sell, demolish and redevelop properties and their responsibilities with respect to management, maintenance and improvement. These conditions help determine the price at which the properties are sold – so there are difficult incentives/disincentives when determining the license. A second issue is whether this is simply a way to enable municipalities to get out of direct housing management and to realise assets (although their responsibility to house the vulnerable remains). More positively, it can be a way of increasing the efficiency of social housing provision and the better use of public resources. The evidence so far, however, is not particularly positive, particularly because the refinancing regime for private equity has been adversely affected by the financial crisis (Kofner, Unger & Schwenk 2012). Other initiatives are emerging because of the financial crisis and the lack of easily accessible debt finance. Ireland, for instance, is looking at a range of leasing arrangements, most of which continue to involve government ownership. France, on the other hand, has a system by which private investors lease back properties to HLMs to be let as social housing (CECODHAS 2009). In both England and the Netherlands, there are public–private partnership initiatives for development and regeneration, which could include both developer and institutional equity finance. More generally, landlords are looking at the potential for institutional investors (such as pension funds) to take a stake in social housing, perhaps in the form of social housing REITs (real estate investment trusts) – although the mechanisms are not yet fully developed (House of Commons Communities and Local Government Committee 2012).

Subsidies to social housing provision The incentives and capacities for social providers to expand supply must ultimately depend on the extent of subsidy. This is because regulated rents do not cover the current costs of adding to the stock and, therefore, without subsidy, providers must reduce their reserves or increase rents to existing tenants to pay for that investment. Social housing has traditionally involved large-scale government subsidy in the form of capital grants, revenue subsides or interest-rate reductions. However, particularly since the 1970s, when most post-war numerical housing shortages had been addressed and there was increasing pressure on public finances, the aim has been to reduce direct subsidies. This has generally been achieved first by moving away from revenue and interest subsidies, (particularly because these tend to be open-ended) towards capital grants that can both be cash limited and targeted more effectively, then towards

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cutting assistance to suppliers altogether – notably in the Netherlands, Sweden and after 2015 in England (Turner & Whitehead 1993, 2002; Williams et al. 2012). Germany has no formal social sector and government contributions to social housing in Eastern Europe are generally very limited. The countries that have most obviously bucked this trend are France and Austria, both of which have maintained a range of supply subsidy instruments (see the country chapters in this book for details). The general trend at the local level is similarly towards reduced municipal involvement, in part because of the growth of independent social landlords but mainly because of financial constraints and limited borrowing powers. In many European countries, the cutbacks in supply subsidies have at least in part been offset by increases in income-related benefits for those unable to afford even social-sector rents. As Table 1.5 in Chapter 1 notes, these payments to individuals are available to a greater or lesser degree in all the countries included in this volume except for Ireland (where rents are themselves income related) and Spain. These payments become increasingly important as rents go up to support additional borrowing. The revenue from these demand-side subsidies provides a relatively secure income stream, which helps increase the availability of funds and reduce their cost. Social landlords that want to increase investment must now recycle past subsidies by increasing rents, runing down their reserves and/or in some countries diversifying into profit-making activities such as market rent and low-cost home ownership products. Again, the Netherlands and Britain are in the forefront of such activities. In the Netherlands in particular, social landlords have considerable capacity to increase investment without recourse to subsidy but the incentives for them to do so are limited, especially given their increasing responsibilities with respect to regeneration and local area management. In Britain, some social landlords have developed large numbers of shared ownership units which generate sales income and recycle subsidy to allow further investment – but this is a model that does not work so effectively in recession (Whitehead & Monk 2011). The most important alternative source of potential supply subsidy comes from land values – in the forms of public land for social housing at below-opportunity cost and of contributions by landowners and developers to social and affordable housing. The very large post-war growth in social-sector supply across Northern Europe was often supported by the provision of free or inexpensive public-sector land (Whitehead 2003). Over the past few years, there has again been increasing emphasis on this source of funding, especially because the transactions may not appear on public-sector borrowing accounts if ownership is not transferred and the land does not have to be valued at current opportunity cost. Initiatives using publicly owned land are in place in most Western European countries, including, in particular, Denmark, the Netherlands, some parts of

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Conclusion

Germany, France, England, Italy and Spain (CECODHAS 2009). Their use is often complemented by other means of reducing costs, such as subsidised mortgages in Spain and special financing arrangements in Italy. A rather different approach is to require contributions to affordable housing from developers, usually through ensuring that they include proportion of affordable housing at least in major developments. England’s Section 106 policy is probably the most developed, currently supporting well over 50% of new affordable-housing provision (Crook & Monk 2011). Similar initiatives and related public–private partnerships to ensure mixed communities are in place in Ireland, the Netherlands, some parts of Germany and Spain (Calavita & Mallach 2010).

Conclusion Overall, social-sector housing is becoming more self-sufficient. This situation is most transparent in the Netherlands, where the housing associations have received no direct supply-side subsidies for almost 20 years. In Sweden, housing makes a net contribution to the public purse. In England, the realisation of social housing assets helped contain overall public expenditure and borrowing. More generally, increasing capital values and deregulated private finance markets have enabled lower government subsidies and the restructuring of housing finance away from public to private debt. Rents have been increased and initiatives have been introduced to provide incentives to better-off tenants to transfer to other tenures. There are exceptions, notably Austria and France, where supply subsidies and special circuits of housing finance continue. Similarly, there are countries, among them Germany and Eastern Europe but also, for instance, Norway, where little or no social housing remains. As part of this transition, there are also trends towards declining municipal involvement and increasing reliance on not-for-profit and even private landlords. Other general trends include (i) significant shifts from supply-side to income-related subsidies; (ii) the substitution of debt finance for subsidy; (iii) increasing emphasis on payments in kind, mostly in the form of public land which is made available at below-market prices; (iv) the substitution of contributions by other actors, notably landowners both private and public, for government subsidy and (v) growing interest in the introduction of private equity into social housing, both through public–private partnerships and direct private purchase of existing stock. Although one can identify certain trends, the picture is not straightforward. There are many differences in the ways that countries are responding to basically similar pressures. Often these differences reflect distinct institutional frameworks and opportunities. In particular, many of the countries studied

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continue to have strong regulatory frameworks impacting on both the social and the private rented sectors. Similarly, in many countries, the government is still regarded as the main source of funding, with private finance seen as something of a threat to the nature of social housing. Experience in some countries, notably the Netherlands, England and now Germany, however, shows that private funding without direct subsidy, although usually (and increasingly) with some form of explicit or implicit government guarantee, can be employed both to fund the existing stock and to some extent enable new investment. Over the next few years, especially if the financial crisis and recession are overcome, private finance is likely to grow in importance – through increasing use of tenants’ own equity as they purchase or part-purchase their homes, through public–private partnerships implementing regeneration and new investment programmes, and through the introduction of private-equity involvement in the ownership of the existing stock. Currently, there is considerable political interest in expanding output, as a means of supporting economic growth as much as helping those on low incomes access well-managed affordable homes. However, much of the immediate interest lies in developing new ways of providing housing which involve at best only shallow subsidy – and therefore require significant proportions of private debt or equity finance (Cambridge Centre for Housing and Planning Research 2012; Williams et al. 2012). Support for increasing investment in more traditional forms of social rented housing, which require far higher levels of direct government subsidy, is much less clear-cut.

Note 1 In some countries, notably Spain, social housing can also take the form of low-cost home ownership, but this chapter concentrates mainly on the financing of rented housing.

References Boelhouwer P. (2007) The future of Dutch housing associations. Journal of Housing and the Built Environment 22, 383–391. Cambridge Centre for Housing and Planning Research (2012) Funding Future Homes: An Evidence Base NHF, London. Calavita N and Mallach A (2010) Inclusionary Housing in International Perspective: Affordable Housing, Social Inclusion, and Land Value Recapture Lincoln Institute, Washington. CECODHAS (2009) Financing Social Housing after the Economic Crisis, Proceedings of the CECODHAS Seminar, CECODHAS, Brussels.

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Crook A and Monk S (2011) Planning gains, providing homes. Housing Studies 26, 7–8, 997–1018. Gibb K and Whitehead C (2007) Towards the more effective use of housing finance and subsidy. Housing Studies, 22, 2. Gibb K, Maclennan D and Stephens M (2013) A Review of Innovative Financing of Affordable Housing: International and UK Perspectives Joseph Rowntree Foundation, York. House of Commons Communities and Local Government Committee (2012) Financing of New Housing Supply (11th Report of Session 2011–12) [Online], Available: www.parliament .uk/clgcom Kofner S, Unger K and Schwenk H (2012) New financial investors at the German housing market: Business models and financial strategies. Paper presented at the ENHR International Conference, June, Lillehammer, Norway. Lawson J, Gilmour T and Milligan V (2010) International Measures to Channel Investment towards Affordable Rental Housing AHURI, Melbourne. Turner B and Whitehead C (1993) Housing Finance in the 1990s National Swedish Building Institute, Gavle. Turner B and Whitehead C (2002) Reducing housing subsidy: Swedish housing policy in an international context. Urban Studies, 39, 201–217. Urban Studies (1999) Special Issue on Financing Social Housing. Urban Studies, 36, 4. Whitehead C (2003) Restructuring social housing systems, chapter in R Forrest and J Lee (eds) Housing and Social Change. Routledge, London. Whitehead C and Monk S (2011) Affordable home ownership after the crisis. International Journal of Housing Markets and Analysis, 4, 4. Williams P, Whitehead C, Clarke A and Jones M (2012) Freedom to Succeed: Liberating the Potential of Housing Associations CCHPR, Cambridge.

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Social housing can be found in all Dutch municipalities, both large and small. The woman cleaning her windows lives in Waddinxveen, a city of 25,000 where 32% of all dwellings are social rented – exactly the national average. Most Dutch people will have lived in social housing at some time during their lives, but European Union competition rules may change this pattern. Photograph: Frank Wassenberg.

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19 Social Housing and European Community Competition Law Darinka Czischke Department of Real Estate and Housing, Delft University of Technology, the Netherlands

Introduction Housing is not a competence of the European Union – none of the treaties make reference to it. However, in recent years, there has been debate about the extent to which government support for social housing is compatible with EU competition law. One of the most important fields of competition policy in this regard is state aid for ‘services of general economic interest’ (commonly known as SGEI), a legal category that provides an exception to competition rules for the proportionate pursuit by private actors of legitimate public-interest goals. As Meyer explains, ‘( … ) unlike other social SGEIs, social housing is deeply embedded in the economic fabric and, as a result, is often in competition, if not conflict, with the interests of the private real estate sector’ (2011). The application of this aspect of Community law can have significant financial implications for providers and also may require important changes to the role and size of the sector. From 2005 a number of developments have begun to sketch the outlines of a new framework for social housing at the EU level, under which the sector would be classified as an SGEI and therefore subject to EU competition law. The conception of social housing implied in this new framework, however, seems to be in contradiction with certain national models of social housing provision. This chapter briefly classifies the different approaches to social housing. It then discusses the development of the concept of ‘services of

Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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general economic interest’ and its relevance for state aid and social housing, illustrated by an account of the three cases in which national conceptions of social housing have been challenged under EU law. The concluding section reflects on the possible implications of these decisions for social housing sectors in other EU member states.

A typology of approaches to social housing provision in the European Union A classification developed by Czischke (2009) illustrates the main commonalities and differences between approaches to social housing in EU member states (Figure 19.1). It employs two axes, which are central to discussions about EU competition law: size of the social housing stock and allocation criteria. The size1 of the social rental stock in each country gives an indication of the relative weight of the sector in national housing markets and policies; it is evident that the proportion of social rental housing in EU member states varies greatly. In terms of allocation criteria, there are two main approaches, generally known as universalistic and targeted.2 The universalistic model (also called housing of public utility) stems from a particular conception of social welfare and aims to provide the whole population with housing of decent quality at an affordable price. Housing is considered a public responsibility and is delivered either through municipal housing companies (e.g. in Sweden) or non-profit organisations (the Netherlands, Denmark). Social housing also may serve a market-regulating function, influencing rents in the private sector. Countries that fall into this category generally have more rented housing than those with a targeted approach, and thus a considerably smaller proportion of home ownership. In countries with universalistic systems, social housing is allocated through waiting lists (with or without priority criteria) and local authorities reserve a number of vacancies for households in urgent housing need. Rents are cost-based; there is a rent guarantee for disadvantaged households and housing allowances are provided. One of the key objectives of universalistic systems is to ensure a social mix, that is, to avoid the formation of ghettoes of lower income groups or ethnic minorities, prevent spatial segregation and foster social cohesion. Even so, most large-scale social housing neighbourhoods built in the 1960s and 1970s at present show patterns consistent with socio-spatial segregation, regardless of whether the initial approach was universalistic or targeted. The targeted approach, on the other hand, is based on the assumption that housing needs will be met predominantly by the market and that only households for whom the market is unable to deliver housing of decent quality at

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The Netherlands

23 % of social rental housing in total dwelling stock

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Austria

20 19 18 United Kingdom 17 France 16

10 9 Ireland 8 7

Belgium

5

Germany

2

Denmark Sweden Finland

Luxemburg Residual

Generalist-residual TARGETED

Generalist

Allocation criteria UNIVERSALISTIC

Figure 19.1 A classification of social rental housing approaches in EU member states (selected countries of northwest Europe). Source: Author

an affordable price should benefit from social housing. Within this approach, there is wide variation in terms of the type and size of the social housing sector, as well as in allocation criteria. In some countries, housing is allocated to households with incomes below a certain ceiling; in others, housing is provided for the most vulnerable. Following Ghekière (2007), we call these two sub-types ‘generalist’ and ‘residual’, respectively. Generalist systems follow the original tradition of social housing in Western Europe (i.e. housing for workers or middle-income groups, possibly provided with the help of contributions from their employers), while residual systems have much more restricted categories of beneficiaries, usually very vulnerable households that are heavily dependent on state benefits (e.g. the unemployed, disabled, elderly, single parents, etc.). Countries with targeted systems – both generalist and residual – have higher rates of home ownership than countries with universalistic systems. Except in Eastern Europe, countries with generalist systems have rather small private rental sectors, while those with residual systems have larger private than social rental sectors. In residual systems, housing is usually

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allocated directly by the local authorities on the basis of need, while generalist social housing is allocated by providers according to certain rules and procedures, and income-based priority criteria. In residual systems, social rents are either cost-based or related to household income, while in generalist systems either social rents are capped or income-based housing allowances cover part of the rent.

Services of general interest, state aid and social housing The EU internal market and state aid The Treaty on European Union (or ‘Maastricht Treaty’) came into force in 1993 and fulfilled one of the European Union’s original goals of creating a single internal market in which the free movement of goods, services, capital and persons was ensured. While housing is not a direct competence of the EU, national housing policies do have to be compatible with the general principles of the treaty. The basic principles of the single internal market have led to regulations that have a significant impact on housing, including fiscal, competition and state aid rules. Social housing is particularly affected, as this part of the housing sector receives so-called state aids, which are a priori forbidden by the Treaty. State aid is defined as any form of assistance from the public or a publicly funded body to selected undertakings (entities that supply goods or services in a given market), which has the potential to distort competition and affect trade between EU member states. There are three related legal concepts that are key to understanding the EU debate: services of general interest (SGI), social services of general interest (SSGI) and services of general economic interest (SGEI) (Figure 19.2). The notion of SGI is a relatively new one (Huber et al. 2009). In 2003, the Green Paper on SGI was published (EC 2003), followed by a White Paper in 2004 (EC 2004). Public authorities may classify certain services as being of ‘general interest’ and thus may impose ‘public service obligations’ (PSO) – that is, specific requirements on the service provider to ensure that certain public-interest objectives are met. In 2006, the Communication on SSGI was published (EC 2006), followed by further official texts later in 2006 and in 2007. These define SSGI as legal or complementary social protection regimes plus services considered essential to fostering and maintaining social cohesion (Petitjean 2011). SGI can be economic or non-economic in nature. If they are not economic, they are not subject to EU rules. SGI that consist of economic activity are known as services of general economic interest (SGEI). Provision of goods and/or services in a given market is an economic activity; the fact that the activity may be considered ‘social’ is not relevant.

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Services of general interest (SGI)

Social services of general interest (SSGI)

Non-social SGI

Services of general economic interest (SGEI) Includes social housing subject to EU competition rules

Non-economic SGI NOT subject to EU competition rules

Figure 19.2 Services of general interest and related concepts.

Article 86(2) of the Treaty exempts certain services from EU law, and, in particular, from competition rules, if they are recognised by public authorities as fulfilling a task or mission of ‘general interest’ (Huber et al. 2009: 26). As explained earlier, providers of services of general interest must fulfil public service obligations. In the case of the general-interest mission of provision of social housing, the PSO involve the affordability of housing, rules and allocation procedures in terms of priority of access and security of tenure (Polacek 2011).

Social housing as a service of general economic interest In order to perform their mission of general interest, social housing providers focus on housing for disadvantaged households. They have obligations in terms of charging social prices (rent ceiling) and allocating housing units following specific arrangements in each member state. These obligations entail costs (e.g. lower revenues and management costs related to unpaid bills). Public aid compensates for these PSO and specific costs. The aid may

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take a variety of forms, such as reductions on the price of public land, fiscal exemptions, guarantees, subsidies, and so on (Mosca 2011). State aid gives an economic advantage to the beneficiary and thus generally contradicts the principle of ‘undistorted competition’ in the single market. Normally, member states must notify the Commission about any state aids they provide, but the EU legislative framework exempts players in the social housing sector from this requirement, as access to housing is enshrined in the Charter of Fundamental Rights, and social housing therefore belongs to the category of SGEI. However, state aids might be judged compatible with EU law if they are necessary and proportionate to the accomplishment of the general-interest mission of social housing. A set of legal texts elaborated in 2005 and known as the Monti-Kroes or Altmark package [after the Court of Justice Altmark ruling (Case C-280/00)] set out the conditions under which state aids to public service providers can be considered compatible and do not have to be reported (or ‘notified’) to the Commission. Because social housing providers operate in defined territories and reinvest profits from rents and sales in new housing, the risk that state aids will distort competition is limited. The Monti-Kroes package, therefore, relieves them from the notification obligation provided they are supplying housing for disadvantaged groups which due to income constraints are unable to obtain market housing. The restrictive definition of social housing adopted by the European Commission does not correspond to that used in countries with universalist approaches to social housing provision. Using this narrow conception of social housing, the Commission sees a ‘manifest error’ in giving SGEI status to social housing in countries where it has no direct link with disadvantaged groups. EU practice in this area is still evolving. In the draft decision on notification of SGEI, Competition Commissioner Almunia abandoned the restrictive 2005 definition of social housing and integrated it in a broader category of services that satisfy ‘essential social needs’ (Mosca 2011). In the next section, we focus on the two emblematic cases that have contributed to set a precedent on this issue (the Swedish and the Dutch), and briefly discuss recent developments in France. Table 19.1 lists key milestones in the development of SGI and state-aid legislation at EU level and in three countries where the Commission has been asked to monitor the compliance of national social housing sectors with internal market regulations.

The Swedish case As explained in the chapter by Lind in this book, there is no special subsidised housing stock in Sweden at present. The country follows a

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Table 19.1 Timeline: social services of general interest and complaints involving social housing in selected countries Year

2002 2003 2004 2005 2006 2007

EU ruling/ publication on SSGI

Country Sweden

France

EPF lodges complaint Green Paper on SGI White Paper on SGI EC SGEI decision Communication on SSGI SPC enquiry into SSGI

Swedish government abolishes public service compensation for MHCs

2009

2011

2012

The Netherlands

01/01/11: law enters into force to liberalise public housing sector EC proposal revises state aid rules on SSGI

IVBN lodges complaint

EC decides on revised system in line with state aid rules 01/01/11: new income ceiling comes into force 07/12: UNPI lodges complaint

EPF, European Property Federation; SPC, Social Protection Committee; MHCs, Municipal Housing Companies; IVBN, Vereniging van Institutionele Beleggers in Vastgoed [Association of Institutional Property Investors]; UNPI, Union National des Propriétaires Immobiliers [National Union of Property Owners]. Source: Author.

universalistic approach to housing provision, and some 22% of dwellings are ‘public utility’ housing or ‘for the benefit of all’ (allmännyttan in Swedish). This housing is provided by local-authority-owned municipal housing companies, whose goal is to provide housing for all regardless of gender, age, origin or income. Dwellings are usually allocated on the basis of a waiting list. Tenants have to pay for their rent, often with the help of housing allowance. In order to avoid the stigmatisation of the sector, there is no income ceiling, but in practice, well-off people do not choose to live in these dwellings. Nonetheless, many middle-income households do live in public housing. As Kurt Eliasson of the Swedish Association of Public Housing Companies points out: ‘For the Swedish population, there is no strongly pronounced separation between private and public rental housing, all the more so since rents do not differ a lot. This is because dwellings of equal “utility value” should have about the same rent, according to the “utility value” principle’ (Eliasson, quoted in Martin 2011).

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In July 2002, the European Property Federation (EPF) lodged a complaint with the European Commission, objecting to the Swedish practice of allocating state aid to house well-off people. After a state inquiry and much debate, the Swedish parliament in 2007 abolished public service compensation for municipal housing companies in order to maintain the principle of universal access (although the phasing out of state subsidies for housing construction had begun in the early 1990s [Martin 2011]). The Municipal Housing Companies Act, which entered into force on 1 January 2011, liberalised the sector and set out the objectives and ground rules for public housing companies. Their aim is to promote public benefit and the supply of housing for all kinds of people, and they must operate under ‘business-like principles’. As Eliasson points out, this is a new concept in Swedish law, and its exact meaning is still under debate (Eliasson, quoted in Martin 2011). It seems to imply that there will be no state aid (in the form of favourable loans, tax advantages, etc.) to municipal housing companies from either central or local government. Under the new legal framework, public companies should no longer apply the cost-rent principle but instead should charge market rents, including a certain profit margin. Furthermore, municipalities should require a market rate of return on investment, reflecting industry practice and level of risk. However, the law does not require public housing companies to maximise profits. While no immediate effect on rents is expected, they will gradually become more differentiated. They might increase more rapidly in attractive residential areas and little, if at all, in less attractive areas – which could increase socio-spatial segregation. Furthermore, affordability might be affected, as the rent-setting system has also been modified so as to be compatible with EU rules. In Sweden, rents are set through negotiations between the landlord and the Tenants’ Union. This negotiation system has been maintained, but with a major change: rents charged by public housing companies will cease to have a normative role. This was supposed to restrain rent increases in the private sector, like the market-regulating function described by Kemeny in unitary rental markets (1995). In the new system, however, rents are to be based on negotiated rents for other comparable units in any ownership, private or public. One might, therefore, expect rents to rise, but in practice outcomes will depend on the relative strength of the Tenants’ Union and the landlords.

The Dutch case A political debate has been underway in the Netherlands for about a decade concerning social housing. This debate has been influenced on the one hand by national concerns (Elsinga et al. 2008), and on the other by European Union regulations. One of the issues is how to distinguish between housing

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associations’ core social activities and their commercial activities for tax purposes. In 2007, the European Commission received a complaint from the association of Dutch institutional real estate investors (Vereniging van Institutionele Beleggers in Vastgoed, or IVBN) that housing associations were using state aid to expand their commercial activities rather than to provide social housing. State support for Dutch social housing associations mainly takes the form of loan guarantees (see chapter by Elsinga and Wassenberg). The complaint alleged that housing associations had built too many homes with state aid (2.3 million, while only 1.2 million households were entitled to housing allowance), creating an uneven playing field and contravening the basic principles of the European internal market. Furthermore, private landlords argued that state aid allowed housing associations to participate in the private rental market. Following a European Commission investigation into these claims, the Dutch authorities undertook to make the social housing system more transparent and ensure that it targeted a clearly defined group of socially less advantaged persons. Commercial activities could no longer benefit from state aid; social housing companies would have to operate under the same conditions as their private competitors. To ensure that supported housing was allocated only to those in need of it, the Dutch authorities adopted a new, transparent allocation procedure. In 2009, the Commission found that the system was in line with state aid rules, and, in particular, with the Commission’s 2005 SGEI Decision. The Dutch government made two key changes. First, it imposed a new income ceiling: as of 1 January 2011, at least 90% of new leases on social dwellings renting for under €652.52/month had to go to households earning below €33,614 per year. The remaining 10% could be rented to households earning more, or to those in urgent need of a social dwelling. Each housing association was required to state formally how it would allocate this 10%. Second, state guarantees were restricted to SGEI. Previously, the government guaranteed all borrowing by housing associations, which allowed them to access cheaper loans. Partly as a result of a long-term discussion about the activities and financing of housing associations in the Netherlands, and partly as a result of the European Commission investigation, the Dutch government has delineated the activities for which housing associations may receive state aid and those for which it may not. The former includes dwellings renting for below €652.52/month (in 2011) and some types of public real estate. The government no longer guarantees housing association borrowing for dwellings with higher rents, for which they must now pay higher interest rates. In its 2009 decision, the Commission asked the Netherlands to ‘right-size’ its social housing around its new SGEI scope. As Ghekière explains,

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‘( … ) introducing the income ceilings, the Commission says, would lead to an “overabundance of social housing”, and adjustments are therefore in order. Simply put, this means selling off surplus rented housing, i.e. feeding it onto the competitive market at market rates’ (2011: 140). However, the expected market for these homes was assumed to be households earning between €33,000 and €43,000 a year – the middle classes who could not afford to buy. In addition, evidence (Czischke 2014; Martin 2011) shows that commercial landlords are not yet entering this market despite the favourable new regulations. It may be that the market is not profitable enough, or that these investors see their core business as relatively short-term investment with high returns (i.e. buying and selling, or high-end renting) rather than long-term management of rental housing. In any event, the housing needs of middle-income households that cannot afford to buy homes under current market conditions but are ineligible for social housing are not being met in large parts of the Netherlands. There was much criticism of the reforms. Experts said they could increase socio-spatial segregation, particularly in areas with tight housing markets, by concentrating low-income households in social rental housing (Czischke 2014; Gruis & Priemus 2011). As Freek Ossel, Amsterdam alderman for housing explained, the construction of developments offering a mix of inexpensive and medium-priced rental properties was hampered by the Commission decision: ‘[Housing associations] are forced to split the cheap section and the medium-priced section and hence secure a more expensive loan. This means that hardly any properties are being built in the middle segment, neither by other market parties’ (Martin 2011). But regional differences may colour the actual and perceived effects of the ruling: in areas in decline, house prices are already low and hence the income limit will not be such a problem. Following the Commission’s 2009 decision, Gruiss and Priemus (2011) said it put an end to a long period of uncertainty and helped create a level playing field on the Dutch housing market. However, they said it also had drawbacks, in particular ‘for housing middle-income households and urban restructuring aimed at attracting middle- and higher-income households’ (2011: 102). Earlier, Elsinga et al. (2008) had identified the threats posed by EU competition policy to the unitary rental sector in the Netherlands, whose advantages included ‘( … ) providing affordable housing to those who need it, without the sector being marginalized and stigmatized’; they also expressed concern that the government might take surplus capital from housing associations and decide how to invest it (2008: 21). Others regret the loss of the regulating and moderating effect that a unitary or universalist approach to

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social housing has on market prices (Ghekière 2011). On the other hand, some say the changes will mean more competition and a fairer allocation of resources (see Czischke 2014). Beyond the discussion about the appropriate role and size of the social rental sector, there is relative consensus in the Netherlands that the Dutch housing market has a deeper problem. This is rooted in the distortion generated by years of heavy subsidisation of home ownership, and particularly debt financing, which pushes prices up (Czischke 2014; Haffner 2011; Martin 2011). Gruis and Priemus (2008) considered whether the factors that prompted the European Commission to intervene in the Dutch social housing sector also exist in other EU member states. They concluded that ‘the intervention of the European Commission in the Netherlands could become a precedent for other European countries, particularly for those countries that opt against a residualised social rented sector and for a competitive role of social housing providers on the housing market’ (Gruis & Priemus, 2008, p. 485).

The French case These concerns proved to be well founded, as illustrated by the July 2012 complaint submitted by the French association of private landlords (Union Nationale de la Propriété Immobilière or UNPI) to the European Commission. It alleged that the French social housing sector was receiving unlawful state aid, and said ‘€20 billion in state aid (is) allocated to public housing, which includes low cost housing managed by social housing bodies but also housing managed by the local authorities, which unlike the former are not subject to an income ceiling and on which we lack precise data. This grey zone runs counter to the EU regulations’ (Mosca 2012). The complaint stated that providers had not limited themselves to a public service mission and that the housing accommodated, in addition to low-income households, a large proportion of managers and people with ‘very high income’ (Mosca 2012). Eligibility for social housing in France depends on household income (see this book’s chapter by Lévy-Vroelant, Schaefer and Tutin). Income ceilings are revised by the government every year and vary by area. These ceilings are so high that a large proportion of the population is eligible to live in social housing, allowing for a certain degree of socioeconomic mix (Pittini & Laino 2012). As Gruis and Priemus (2008) show, the French social housing sector is characterised by a relatively even spread of households across the income distribution compared, for example, to the social sectors in Great Britain and Belgium, which accommodate a higher concentration of low-income households. By allowing access for middle- and even a few upper-income households, France follows the generalist approach to social housing provision (see

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Czischke [2009] and Ghekière [2007]), but has adopted some features of the residual approach (e.g. priority access for disadvantaged households). This case is the latest of a series using state aid legislation to argue that social housing policies and operators should target the poorest parts of the population in order to qualify as services of general interest. The argument is that providers that do not adopt this residual approach to social housing provision should operate under the same conditions as private, for-profit landlords.

Conclusion The restrictive notion of social rental housing underlying EU rulings does not conflict with social housing systems in countries that target the least advantaged; in Ireland, for example, social rental housing is indeed reserved for the neediest. However, it does clash with universalist or unitary systems, and governments in the member states concerned have had to adapt. Two of the cases discussed in this chapter illustrate very different approaches: Sweden chose to completely liberalise its public housing, removing social housing from the category of SGEI. The Netherlands, on the other hand, chose to impose income ceilings and a strict separation between the funding arrangements (and hence state support) for social (SGEI) and commercial (non-SGEI) activities of housing associations. While the longer term consequences of these cases are yet to fully unfold, critics ranging from politicians to policy makers and scholars have pointed out the risks of increased concentrations of low-income and vulnerable households in social rental housing. Furthermore, problems of housing affordability – in particular, for middle-income groups – might continue or worsen if the current gap in provision persists. The decisions have had some positive outcomes, particularly in the Netherlands. These include greater transparency, a fairer allocation of resources and the possibility that more competition between housing associations and commercial providers might result in a wider and better offer for middle-income households (provided the commercial sector establishes such an offer). The ultimate underlying issue is the distortion of housing markets. To deal with this, we need a better understanding of the relationships between the various segments of housing markets and the effects of different policies on housing outcomes – and in the current atmosphere of economic crisis, the links between social housing, the rest of the housing market and the wider economy are clearer than ever. Finally, the question on whether and how the European Commission will ultimately rule on the role and scope of national social housing

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sectors remains unresolved. Commercial developers’ repeated use of EU competition law to challenge national practice shows that it can be used as an instrument to influence national (social) housing policies.

Notes 1 This classification is based on data available on the size of the social rental housing stock in each member state (Dol & Haffner 2010). The choice of the social rental tenure as a proxy for social housing reflects the availability of statistics on this indicator, which allow cross-national comparison (unlike e.g. statistics on social ownership or other types of social tenures, for which definitions and data collection differ widely between countries). 2 Similar in many respects to Kemeny’s (1995) categories of ‘unitary’ and ‘dualist’ rental systems.

References Czischke D (2014) Social housing organisations in England and the Netherlands: Between the State, Market and Society PhD thesis, Delft University of Technology. Czischke D (2009) Managing social rental housing in the EU: a comparative study. International Journal of Housing Policy, 9, 2, 121–151. Dol K and Haffner M (eds) (2010) Housing Statistics in the European Union Ministry of the Interior and Kingdom Relations, The Hague. Elsinga M, Haffner M and Van Der Heijden H (2008) Threats to the Dutch unitary rental market. European Journal of Housing Policy, 8, 1, 21–37. Eliasson K and Roumet C (2012) EU landlords fight battle over unfair public subsidy for social landlords. Guardian Professional 4 Sept 2012. [Online], Available: http://www.the guardian.com/housing-network/2012/sep/04/private-landlords-public-funding-social -housing. European Commission (2006) Communication from the Commission – Implementing the Community Lisbon programme – Social services of general interest in the European Union {SEC(2006) 516} [COM/2006/0177 final]. European Commission (2004) Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – White Paper on services of general interest. [COM/2004/0374 final]. European Commission (2003) Commission Green Paper of 21 May 2003 on services of general interest [COM(2003) 270 final -Official Journal C 76 of 25.03.2004]. Ghekière L (2011) How social housing has shifted its purpose, weathered the crisis and accommodated European Community competition law, chapter in Houard N (ed) Social Housing across Europe, La Documentation Française, MEDDTL–DiHAL, Paris. Ghekière L (2007) Le développement du logement social dans l’Union européenne. Quand l’intérêt général rencontre l’intérêt communautaire Dexia Editions. Gruis V and Priemus H (2011) Policy review: social housing and illegal state aid: the agreement between European Commission and Dutch Government. International Journal of Housing Policy, 11, 1, 89–104.

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Gruis V and Priemus H (2008) European competition policy and national housing policies: international implications of the Dutch case. Housing Studies, 23, 3, 485–505. Haffner, M.E.A. (2011) The private rented sector in the Netherlands, chapter in Scanlon K and Kochan B (eds) Towards a sustainable private rented sector: The lessons from other countries LSE London, London. Huber M, Maucher M, and Sak B (2009) Study on Social and Health Services of General Interest in the European Union Final Synthesis Report. Prepared for DG Employment, Social Affairs and Equal Opportunities. DG EMPL/E/4 VC/2006/0131 Kemeny J (1995) From Public Housing to the Social Market; Rental Policy Strategies in Comparative Perspective Routledge, London. Martin F (2011a) Commission’s decision hinders social mix. Interview with Freek Ossel, Amsterdam Alderman for Housing. Europolitics, 4328, European Information Service, Brussels. Martin F (2011b) Sweden: Social housing under “businesslike principle”. Interview with Kurt Eliasson, CEO of Swedish Association of Public Housing Companies (SABO). Europolitics, 4328, European Information Service, Brussels. Martin F (2011c) Three questions to MEP Sophie, ‘Blaming the Commission is pure Brussels bashing’ Europolitics, 4328, European Information Service, Brussels. Meyer M (2011) Editorial: EU gradually recognizes key role of social housing. Europolitics, 4328, European Information Service, Brussels. Mosca S (2012) Social housing: complaint lodged with Commission over French subsidies. Europolitics, Thursday 05 July, European Information Service, Brussels. Mosca S (2011) Introduction: Problems divided and rules relaxed. Europolitics, 4328. European Information Service, Brussels. Petitjean S (2011) Social Services of General Interest: SSGI talks making headway. Europolitics, 4325, European Information Service, Brussels. Pittini A and Laino E (2012) Housing Europe Review: The nuts and bolts of European social housing systems CECODHAS Housing Europe Observatory, Brussels. Polacek R (2011) Study on Social Services of General Interest. Commissioned by the Directorate General for Employment, Social Affairs and Inclusion, European Commission.

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Located in Villeurbanne, a municipality near Lyon that has been a pioneer in social housing, this neighborhood is called les gratte-ciels (the skyscrapers). Its construction started in the 1920s. It is ambitious, modern and corresponds to a precise notion of the ideal city: hygienic, industrial, comfortable, framed by socialism and laicism. In conformity with the environment, this statue is called ‘The respite’. Photograph: Claire Levy-Vroelant.

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20 Property, Altruism and Welfare: What Social Housing Allocation Tells Us About English and French Legal Differences Jane Ball Newcastle Law School, Newcastle University, UK

Introduction Political and economic ideas have often swept across several countries of Europe simultaneously, including the use of housing for welfare purposes. This was part of a post-World War II thrust to create welfare states as safety nets for citizens against the troubles of life. ‘Welfare’ is used in this chapter to differentiate the altruistic care of the weak and disadvantaged in society from ‘social’ care, which has multiple meanings. ‘Social security’, for example, can include benefits received in return for financial contributions by people who might not be in any kind of difficulty, but who have made provision for the future by contribution to social insurance. How do national legal systems contribute to differences of outcome? Answering this question means taking a long view of legal systems as a whole and asking whether their norms and institutions obstruct or assist the desired outcome. Which bit of the legal system deals with the care of disadvantaged people? This matters, because altruistic people tend naturally to move towards such areas of law and cluster there to do their good work, and these areas then acquire associations with altruism for the general public. Economists, in particular, might quarrel with this use of the word altruism, but it is difficult to find another word.

Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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England and France both have laws intended to house disadvantaged people in social housing. This chapter shows how these legal systems provide for citizens in housing need using different sorts of law, which reach similar outcomes by different routes (Twining 2005). Despite a remarkable similarity to France in its housing history and despite many common legal devices, the UK still houses more disadvantaged people in social housing than France does. This seems to depend on the way the law was built on older ideas and older conflicts, particularly disputes around property in the nineteenth century. Property law in England and France has a subterranean effect on welfare in the different processes of welfare provision. This is often missed when comparing welfare policy and might have wider European importance. First, this chapter introduces social-housing allocation in its European context. Then it looks at the relevance of property to altruism in England and France and how this affects welfare in general and social housing in particular, in a context of worsening prospects for disadvantaged people. The chapter cites legal and housing scholarship but also draws on a qualitative study of social housing allocation in France (Ball 2012).

Social housing allocation in the European context Housing the disadvantaged is not the only reasonable use for social housing. The word ‘social’ could win any competition for the vaguest policy descriptor. Most European countries that had social housing after the Great War provided it primarily for the middle classes (UN Economic Commission for Europe 2006: 4). After World War II, Northern Europe moved away from this, whilst other countries retained the original model. Ghékière (2006) surveyed 15 older members of the European Union and concluded that countries north of the Netherlands, including Scandinavia, had universal housing policies intended to provide ‘housing for all’. Countries south from Germany and France aimed to house workers, whilst the UK and Ireland housed the poorest people. The UK moved towards housing those in need in social housing more quickly than other European countries. UK social housing is not specifically intended to house the poorest as Ghékière then suggested, but rather is primarily for those in ‘housing need’, with reasonable preference for vulnerable groups such as the homeless.1 This is so even though there is a high level of poverty amongst social tenants (Stephens, Burns & MacKay 2002). More recent research shows a complex picture. The UK is the only European country which has both a large social housing stock (around 18% for England) and where need has primacy in social housing allocation and a high proportion of tenants are poor. Some countries with a much smaller

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social stock also allocate on the basis of need, including Estonia, Hungary, Portugal, Spain and significantly Ireland, Europe’s other common-law country. Other countries allocate partly on the basis of need: France, Belgium and Germany (Czischke 2007). The Netherlands houses a high proportion of poor people in a large social housing stock, but only 23.1% of social tenants are poor as against 47.6% in the UK (European Commission 2010). Austria, and particularly Vienna, has always had strong homelessness policies. Both France and the UK have explicit priorities in their social housing allocation criteria. The UK’s favour those in need (under Parts VI and VII of the Housing Act 1996) and France’s favour ‘disadvantaged people’, a term covering both social and financial difficulties.2 Both countries target the homeless, including those in hostels and the poorly housed. But the disadvantaged do not form the majority of those housed in France, even though since 1990 individuals have the right to housing. Since 2007, French law3 has allowed individuals to take legal action against the State for breach of this principle: ‘Every person or family experiencing particular difficulties, particularly by reason of insufficiency of financial resources or their conditions of existence, has the right to an aid from the government (la collectivité) in the conditions fixed by the present law to obtain access to a decent and independent home or to maintain themselves there …’4 Housing the disadvantaged in social housing might not be altruism within the system as a whole, and in some countries, this activity might not involve ‘social housing’ at all. Kemeny (1995) suggested that in England only those with no other choice lived in social housing. Nonetheless, there is still some generosity when social landlords receive the disadvantaged. What if they did not do this?

A holistic view The broad architecture of the law can help account for differences in approach between England and France. This can accelerate or put a brake on housing policies according to how they fit the national scheme of things or suit the actors involved. The legal system as a whole is a major part of the path dependency in housing policy described by Lévy-Vroelant et al. in this book (see also Esping-Andersen 1990). Within this, property law is exceptionally path-dependent because it is one of the oldest parts of the legal system and one of the hardest to change. This section introduces the basic differences between English and French law, whilst the next two sections describe their respective devices in more detail.

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Comparative lawyers traditionally place England and France in different families of legal systems, so that their differences might illustrate similarities within their respective families. The UK (except Scotland) and the Irish Republic belong to the ‘common law’ family and are isolated in Europe. Regrettably, this chapter must be limited to English law as the rest of the UK is different. France belongs to the ‘civil law’ family, whose members share characteristics such as a ‘unitary’ concept of property (explained subsequently) and codified law (David 1964; Zweigert & Kötz 1998; Glenn 2004). England and France both saw political struggles between capital and labour in the past two centuries but resolved these conflicts differently. Despite similar histories of the development of tenants’ rights and social housing, and many common legal devices and principles, the role of property law in the two countries is different. In France, the provision of welfare is often politically perceived as a common struggle against capital and property by the political left. From the late nineteenth century, French tenants made common cause with workers against employers and landowners. These social differences were resolved by collective bargaining between trade unions and tenants’ unions on the one hand, and employers and landlords on the other. The bargaining structures thus created formed the modern basis of French welfare, explored in more detail below. In the case of England, there is a similar political history of socialism opposed to capitalism, but this opposition to property is reflected much less in the legal system than in France. English property law developed to provide useful mechanisms to assist welfare rather than to resist it. An example is the use of charity and trusts law, which in France was abolished in the revolution. English law has tended to build welfare around mechanisms imposing duties in public and private law rather than declaring rights, even if the welfare results were similar to France. The law of property affects social-housing allocation in at least three important ways: first, in the way welfare law reacted against or was constructed around the older property law; second, in the status of social landlords as owners enjoying a right to property (particularly in France); and third, in typical national ways of doing things for welfare purposes.

Property and altruism in England This section seeks to illustrate traditional approaches in English property law, which were mobilised in the later provision of welfare. England differs from civil law countries in having continuously reformed its mediaeval property law rather than abolishing it. ‘Feudalism’, insofar as it existed,5 was a system of social relations as well as a form of land holding. Topalov (1987: 38–43) described feudal relationships as involving hierarchy and

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mutual duty between feudal tenants and their lord. Modern English law is not feudal and resembles continental property law with a dominance of tenancies and ownership. Former feudal lords have little importance for land law, except for the presence of the Queen at the head of the pyramid of land ownership. She performs a function similar to the State in France. Of major importance is the area of law known as ‘equity’, which is treated as part of property law and has associations with altruism. Equity is a Roman law conception of considerably more importance in England than in France.6 The law of equity and trusts from the thirteenth century developed innovative ways of reducing injustice. This English branch of justice was primarily the creation of judges in the court of Chancery; such judicial activism might be thought undemocratic in France. Equity is said to act on individuals’ consciences, reflecting the fact that the early Lord Chancellors were churchmen. The trust is the archetypal invention of equity and can be associated with the care of the weak and with the imposition of duties to achieve welfare objectives. These moral approaches echo the use of duty found in the English public law of social housing allocation, but also duties imposed, for example, on charities, pensions and insurance funds. A trust is a private law arrangement where the rights and duties of ownership are split, so that trustees are owners of the trust property in name only. Trustees are under a duty not to make a profit and to promote the interests of the trust. They hold and manage the property for another group of people, the beneficiaries, who enjoy its benefits, such as receiving income or occupying land. The modern success of the trust is such that France in 2007 moved to create the fiducie7 (see below). However, the responsibilities of the French fiducie are contractual and statutory, not subject to the duty-laden rules of equity. English beneficiaries have property rights in their trust fund and French beneficiaries do not. Property-type law thus improves the security and effectiveness of beneficiaries’ rights, just as property-type rights improve the position of tenants. The duties of English trustees are also stronger than the duties of good faith imposed by French contract law. Article 1134 of the French Civil Code subjects contracting parties to duties of good faith, but this by itself does not preclude profit and personal interest by trustees. The English law of trusts has a traditional concern for weakness, partly because beneficiaries are often children, people with a disability, pensioners, widows or people generally unable to fend for themselves. The historic heartlands of the trust were family law and the provision for inheritance of land. As soon as land is owned by more than one person, English law usually compulsorily imposes a trust.8 A co-owning husband and wife are thus commonly trustees holding their home for themselves as beneficiaries; in fact, around 7 out of 10 English homes are automatically held in a trust.9 They may not even be aware that the arrangement exists, but the trust governs the

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management of the property and imposes altruistic duties on each trustee in terms of the behaviour towards the other party. The trust is relevant to welfare and social-housing allocation because in English ownership of land there is always someone in charge, often a trustee. A trustee is responsible for the management of the trust, whether he or she receives any allowable benefits out of the arrangement or not. The automatic statutory trust ensures the proper control of land, particularly because there cannot generally be more than four trustees.10 The public law tends to reflect this landscape of duty.

Duties in English social-housing allocation English trustees have much in common with housing officers allocating social homes. Both have a duty to act impartially, disinterestedly and in good faith, and should obtain no financial benefit from their decision, except in ways recognised by the law. Perhaps because of this, there is no expectation in England that a social landlord is necessarily entitled to administer its property for its own benefit, even in the long term. Unlike similar not-for-profit French companies, English companies and charities do not expire after 99 years11 but are theoretically capable of being perpetual (provided they continue to perform their statutory duties). Some English registered social housing goes back to the twelfth century, in the form of almshouses formerly provided by the church. Welfare law echoes earlier property law in its imposition of duties on public and private actors. These tend to involve command rather than the negotiation of welfare with interested representatives as in France (although that may take place at the political level in England). The idea of duty and command can be seen even in the name of UK local authorities. These are, as their name suggests, ‘authorities’, whereas their French counterparts are known as communes or collectivités, underscoring their legitimacy as a collective voice. UK local authorities have traditional freedoms and resemble their French counterparts in many ways; both are responsible for many local services and regulations but also subject to national policies and inspection. English local housing authorities have a duty to house people in need. This is more extensive than any French local duty; unlike their French counterparts, UK local authorities have traditionally been entitled to impose tenants on their own housing stock and now to some extent in privately owned stock (Cowan, McDermont & Morgan 2008). Since the Housing (Homeless Persons) Act 1977, local housing authorities have had immediately to provide people who appear to be unintentionally homeless and in ‘priority need’ with accommodation, pending enquiry and awaiting something more permanent,12 although at present this duty can be satisfied

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by providing private rented housing Those in priority need include single parents, old people and those with health problems.13 This duty is often loosely referred to as a right, particularly because an individual can ask for an internal review if refused, and then for a review by the courts on a point of law.14 UK local authority decisions concerning social housing allocation reflect the notions of duty and command. They are made by one or more housing officers with extensively defined duties, who are required to make disinterested quasi-judicial decisions. No advantages normally accrue to workers or tenant representatives through bargaining – in fact, English mayors, councillors, existing tenants and workers are excluded from the implementation of social housing allocation. Such insistence on fairness is at the root of differences in allocation practice. Until recently, France allocated households to one-quarter of its socialhousing stock in a similar way. The prefect, as the local representative of the central State, had a duty under public administrative law to allocate this part of the stock to disadvantaged people. But this access point and way of doing things have rather fallen into disuse in France (Ball 2012). Both the English and French systems suffer from practical difficulties of administration, and results in practice can differ widely from theory.

Property law and altruism in France According to Pauliat (1998: 12), in France the history of housing is closely bound up with the right to property, because French social or welfare law was the result of a nineteenth-century reaction against a revolutionary conception of property. Even now, in France the altruistic conceptions governing the care of disadvantaged people tend to be embodied in collective contractual legal devices and not in property law. This section sets out how this developed. The French property system prior to the 1789 revolution was impossibly complex, unfair and hierarchical. Fragmentation of property ownership among multiple feudal owners was a cause of inequality, lack of mobility and difficulty in selling land. Revolutionary reforms rejected or modified some feudal legal concepts such as landlord and tenant law, charities and the fidei commissum (a trust-type device in Roman law). The new unitary and absolute conception of French property means there could be only one owner of land; Pauliat (1998: 11) described this right to property as ‘a proud and egotistical absolutism’. Article 17 of the 1789 Declaration of the Rights of Man and the Citizen stated that property ownership was ‘inviolable and sacred’, and Article 544 of the 1804 Civil Code 544 described ownership as the right

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to use and dispose of property in the most absolute way possible provided it was lawful. The new bourgeois classes in France thus enjoyed strong property rights–but what of others? The logical counterpart to the sole ownership of land was that French tenants generally had only contractual or social rights, supported by statute (Malaurie & Aynès 2010: 102). In the nineteenth century, neither France nor the UK was hospitable to the tenants who streamed into cities from the land. But in France, tenants’ lack of property rights meant they could more easily denounce landlords as capitalists. This small but significant technical difference meant that the French law of welfare and altruism was forged by collective opposition to property. From 1880, protests were organised against capitalist employers and landlords by socialists, Marxists and anarchists (Guerrand 1967). Cochon, an anarchist and carpet maker, protested against evictions from 1911. He founded a local union for workers and tenants in 1912, and a national tenants’ union in 1919 with 100 000 members (DAL 1996). There are now five major organisations representing tenants in France, each with between 17 000 and 100 000 members.15 French property law thus did not lend itself to welfare approaches; instead, contract, social and public law governed both tenants’ rights and the organisation of welfare and altruism. French private contract law, as conceived by Pothier and Domat prior to the revolution, is closely associated with equality, involving as it does a lack of hierarchical relationships, personal autonomy and freedom to contract (Bell, Boyron & Whittaker 1996: 306). These ideas could also be harnessed to public and social law. Rousseau (1762) characterised government as a collective contract, where free individuals give up an element of their rights in favour of government and public order. French short-term tenants still have security of tenure in the form of social rights obtained in historic opposition to capitalist landlords, not in the form of their own property rights (Ball 2003).

Collective approaches in France Collective contracts in solidarity would facilitate industrial peace after nineteenth-century upheavals, and would ultimately provide for welfare. After the gradual growth of collective bargaining, the right to property was tempered by social agreement. The French lawyer Duguit (1912) pioneered the idea of the social purpose of property, which is explicitly embodied in other civil law constitutions such as those of Spain16 and Germany.17 This section explores this approach and the next shows how it can let disadvantaged people down when they seek access to social housing. The word ‘solidarity’ is often misunderstood in England, where it has no legal meaning. In French, the word is derived from solidaire, a contract term

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with an effect similar to the English ‘joint and several liability’, which allows a creditor to pursue any contracting individual for the whole of a collective debt (Terré, Simler & Lequette 1996). In practice, this means the creditor can pursue the richest debtor. If the term is employed in a collective contract, it means the rich can agree to pay more than the poor, and conversely poor individuals can receive more than they pay for. This is an agreed departure from strict equality, and important in enforcing access to housing for the disadvantaged. The Solidarists were a political party campaigning from the late nineteenth century. They proposed modifying Rousseau’s idea of the social contract to reflect obligations owed by individuals to other citizens and to society. This compulsory social contract allowed impositions such as taxes for social purposes. Such an agreement did not offend equality, which otherwise required equal taxation and equal benefits for all. Solidarism was an organisational model involving saving, insurance and a regard for the weak (Shapiro 1985); it represented a third way between the extremes of left and right. The preamble to the Constitution of 27 October 1946 (still part of the current Constitution) included duties of solidarity (Béguin, Charlot & Laidié 2005). After World War II, the French welfare state was created through a series of collective agreements between employers and employees, often using private mutual companies. The organisation of French tenants reflects the bargaining mechanisms of industrial relations, so tenants have certain rights in the social-housing system. They have the right to elect representatives, who themselves have rights to information and negotiation. These representatives can sign agreements that are binding on their members, even those who disagree.18 National negotiations or pressure can produce agreements that become law, such as the current tenancy statute of 1989.19 It is fair that stakeholders should have a voice in the collective management of social housing, not least because of their social contribution and role in local activities. But there is a problem with local exclusion of disadvantaged people. In the French system, formal representatives of tenants, workers and local people promote their respective interests in the social-housing allocation process. The central problem is that these groups might not welcome people who could take ‘their’ places or be socially undesirable. The right of disadvantaged people under French public law to a decent home (see Chapter 8 in this book) runs up hard against the rights of local people represented in the social-housing allocation system. The right to housing is a general principle of law, currently based on human dignity.20 This collective right must be balanced against other rights and the collective rights of local interests, which can limit the access of disadvantaged people. The outcome depends on who has their hands on the levers of procedure or can avail themselves of principles before the public courts.21

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The right to property colours French views of the primacy of control by the owner of land. Social landlords are landowners and enjoy full constitutional property rights, which are perceived to be in fundamental opposition to the right to housing (Radigon & Horvath 2002: 16). The right to property means that landlords are generally entitled to turn down prospective tenants and to control their own property, subject to the general interest. French social landlords are heavily regulated, but aspects of the right to control and manage their property have survived. Regulation protects existing tenants and imposes duties to house the disadvantaged, but French social landlords are still considered to be decision-makers who choose their own tenants. This is the case even though the formal decision to house someone is taken on behalf of social landlords by an allocation commission. Only recently has it become possible for prefects to impose a tenant on social landlords to satisfy state duties towards disadvantaged people, although as yet this happens rarely (Brouant 2011). More important is the entitlement of social landlord to reject applicants, owing either to their right to property or their public duty to manage their stock. Social landlords take into account the concerns of existing tenants and whether the applicant can pay the rent. There are income ceilings to limit the access to social housing, but Ball (2012) found that social landlords themselves, in the name of good management, still routinely deferred or turned down poorer22 applicants who could not afford the rent. French housing benefit frequently did not cover the whole rent (and was not designed to), but even when added to other benefits there was often an affordability gap, which tended to worsen during recession. Local contributions to construction funding could help reduce rents, but was often insufficient to bring rents down across the board or provide for later social care. Special French schemes and routes provide access to social and private housing for the very poor and those with social difficulties, but they are not sufficient to meet needs – something also true in England at present. Access to social housing can also be restricted by the principles of equality and social mix. Equality within the current French ‘universal’ or ‘housing for everyone’ allocation policy means that the non-deprived must perforce have access as well as the deprived. The goal of social mix was imposed on social landlords in 199123 to try to prevent the emergence of sink estates; it was often invoked to try to ensure that new recruits to the poorest estates had jobs, thus privileging working people over the disadvantaged. Conversely, in better-off areas, there was little new housing for disadvantaged people, so access for such households was reduced in both poor and rich areas (Houard 2009; Blanc 2010). The housing application process allowed certain actors to have a real influence on the intake of social tenants. Local collective interests were represented in all three stages of the allocation process. An applicant could be

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delayed or refused at any stage. At the first stage, local actors were allowed to reserve the right to process social housing applications in return for construction funding. This resulted in increased social housing construction, but up to 20% of housing places were controlled by local authorities (particularly mayors); up to 50% by agencies representing workers and employers; and up to 30% by the local prefect. The support of local mayors for housing disadvantaged people was essential. Mayors were influential in contributing to new construction, providing guarantees for loans and granting planning permission; they sat on allocation commissions and sometimes on the boards of social landlords. However, differences in local practice meant that the minority of mayors accepting disadvantaged people could be inundated, exacerbating the patchiness of the provision. There was substantial Nimbyism (‘not in my back yard’) from mayors in particular. Most mayors or their administrators were said to refuse access to people who were not local and might consume costly local services, an unlawful approach earlier found by Bourgeois (1996). Some interviewees suggested that this was a way of assisting voters, occasionally to the point of corruption. A social landlord put the mayor’s electoral problems thus: ‘Everyone agrees with housing families with behavioral difficulties … but in the next commune, not in my home.’ The Comités interprofessionels du logement (CIL) controlled access to up to half of social housing. These organisations collected compulsory deductions from the incomes of employees of larger businesses and assisted other housing causes with funding.24 Part of the money was used to fund social housing in return for access for contributing workers. Some of them were poor and in difficulties, but they were not necessarily the most disadvantaged. Significantly, these organisations have recently agreed to give priority to disadvantaged people in their contingent of applicants, which has the potential to radically increase access. The final 30% tranche of social-housing applications was theoretically administered by the prefecture. A key to understanding the limitations of the right to housing is the fact that just 25% of vacancies in social housing were earmarked to satisfy the duties of the central State towards disadvantaged people (5% was for civil servants). Even then, most prefectures did not use the places for this, or delegated them to mayors or, later, to communautés (new groups of communes). Ball’s study described an unusually active prefectural unit in Lyon, which struggled to cope with very high demand it could not satisfy (Ball 2012). People in hostels tended to be passed over as they already had a roof over their heads. Although housing the disadvantaged was the responsibility of the central State, the State was not in a position to carry it out. Voluntary workers in the same study said that private landlords also excluded disadvantaged people, a recipe for housing crisis.

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The second and third stages of the allocation process also allowed interested parties to have an input. The second stage was administrative processing by social landlords, who took account of the applicant’s income and behaviour. The third stage was the official decision of the social landlord’s allocation commission, which had seven members, including at least one tenant representative and the local mayor. For private social landlords, the majority of the commission consisted of landlords’ representatives, whilst public social landlords had more political representatives. Most of these local people had a common interest in tenants who could pay, in peaceful neighbourhoods and in limiting the intake of people who might have expensive needs. In summary, the different actors promoted the interests of their own constituencies. Social landlords tended to house people who could be relied on to pay the rent, or to re-house existing tenants, particularly in cases of divorce. Tenant representatives had collective bargaining rights with social landlords and sat on company boards and on the allocation commission itself. They also tended to advocate giving preference to existing tenants. Mayors preferred to house locals, and the employer–employee CIL housed workers at the time of the author’s study. These various local priorities tended to crowd out disadvantaged people, particularly those from outside the area. Bourgeois (1996) found similar results. Despite the altruism of local actors, this collective process reduced recruitment of disadvantaged people because it privileged local interests. Many individual actors would have liked to help disadvantaged people more, but various people with local interests had to agree and specific funding for the disadvantaged was inadequate. Collective participation might mean that the local community was involved in improving living conditions generally, but disadvantaged people were inadequately represented. Although social housing allocation is deemed a public law decision, this process did not meet French legal requirements for impartial administration because of its lack of transparency, fragmentation and susceptibility to influence by local representatives.

Changes and Europeanisation European institutions have started to exercise power over social housing, as Chapter 19 in this book describes. The EU Competition Commission has insisted that social housing should only be subsidised to house the very poor (Lavrijssen & de Vries 2009). Also, in 2007 the European Committee on Social Rights decided that France was not meeting its obligations under the European Social Charter towards homeless people in the social housing allocation process; there was a particular problem with the lack of transparency.

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European competition policy can still be questioned. Each country could fill social homes with those in difficulties, whatever the original purpose of the homes, but even if all such housing were thus allocated, housing problems might recur. The French approach has its merits within profusely innovative housing policies. As an alternative strategy, France continues to attract broad investment into general construction of social homes whilst England does much less.25 It is understandable that many people would prefer to invest in housing for locals, young families in need and employed people without homes. Even though Ball (2012) documents exclusionary French uses of construction for regeneration, housing for disadvantaged outsiders26 has signally failed to attract much investment in England or France. This is not a competition in compassion; the need is to find locally acceptable ways to prevent social exclusion of disadvantaged people, not just in social housing but across the board. Despite these problems, France and England are becoming more similar in this process of Europeanisation. The French use of rights and the English use of duties are not mutually exclusive; there are examples of both approaches in both countries and considerable cross-border influence. The UK is moving towards taking more explicit account of rights internally with the enactment of the Human Rights Act 1998. France has introduced an opposable right to housing for the disadvantaged (described subsequently). This imitated the Scottish system, which is an extended version of the current English system. The French system may be edging towards housing more disadvantaged people, little by little. A 2007 statute27 created a mechanism by which disadvantaged individuals can sue the State for failure to provide housing. Brouant (2011) found this an arduous and difficult process. Critically, a decree was expected in January 2013, which might allow any ‘abnormally delayed’28 applicant to sue; this could dilute the rights of the disadvantaged.29 Some changes might favour increased access for disadvantaged people, such as the acceptance by the CIL of disadvantaged people in their spaces. The localism of French mayors might be mitigated by the increasing power of the communautés, the groups of communes now found everywhere in France. Conversely, the English system may be moving to house fewer disadvantaged people. There are constraints on local authorities’ ability to house disadvantaged people, including funding problems and limitations on construction of social housing. Privatisation of the social stock might result in multiple stages of decision-making as in France, according to Cowan, McDermont and Morgan (2008). The current government’s localism agenda might empower those who would exclude disadvantaged people from their

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areas.30 The discourse of social mix suggests that fewer disadvantaged people might be housed, as in France. It will still take a long time to undo the national ways of doing things.

Conclusion The purposes of social housing are contested across Europe and the place of property in promoting altruism should play a role in the debate. The brief illustrations of this chapter show that old roots of property law continue to exercise a profound influence on modern approaches to welfare and altruism and on the way in which priority access of disadvantaged people to social housing is implemented in these two countries. The imposition on English local authorities of duties to house the disadvantaged has been more effective across the entire social housing stock than bestowing housing rights in France. Social housing may be a special case in welfare, because the limited supply necessarily means that providing more for disadvantaged people means less is available for other politically influential groups. France and England are tending to converge in provision for the disadvantaged in social housing. New French social tenants are increasingly poor.31 There is consistent French national support for the right to housing. At the same time, the UK has been moving closer to Europe on social issues, for example, by implementing European Union directives such as that on disability.32 The UK privatisation of social landlords (see Chapters 7 and 23 in this book) has created autonomous companies that are more similar to French social landlords, and which might be less willing than local authorities to accept the most difficult applicants, as suggested by Cowan, McDermont and Morgan (2008). The entrenched English ways of doing things are not always more effective in housing disadvantaged people. The imposition of duties might have ensured that a high percentage of disadvantaged applicants were housed, but what if central government now wants more working families to be accommodated? If altruistic people cluster in local authority housing departments, their culture – and public outcry – might protect continued access for disadvantaged people. Another barrier to rapid change is the very slow turnover in social housing, but government policies to reduce security of tenure for future social tenants could affect that.33 In France, allocation processes with collective representation have led to low and patchy acceptance of disadvantaged people. Solidarity was a response to a narrow individual concept of property, a collective contract for mutual aid to weaker members of society. Many English people would envy the level of French local engagement in social housing, but French approaches tend to exclude people who might be unable to pay the rent

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or be difficult neighbours. Local conflicts mean there is a long way to go before alleviating disadvantage becomes the main purpose of French social housing. The principles used in France and England to assist disadvantaged people seem, on the face of it, to be ideologically opposed. This is a misunderstanding; the two countries are trying to do the same thing but using different means. The comparative study of European law is a stately dance: contract lawyers pair with contract lawyers, public lawyers with public lawyers, and so on. The altruistic devices clustering in areas such as social law and equity are frequently left out of this dance because they are dissimilar. How shall we altruistically care of the weak and disadvantaged in the new Europe? On the one hand, the UK has not signed the 1996 revised European Social Charter, which includes the collective right to housing in Article 34, out of a failure to recognise that some social provisions do the law job of some English welfare traditions with roots in property.34 On the other hand, French lawyers (and civil lawyers) often associate English property law with capitalism or feudalism. This disregards the modern altruistic devices in the English property law, particularly equity and the ‘court of conscience’. These oppositions tend to reduce the progress of both types of law. It is vital that differences are understood so that the UK can continue to use its devices of property, equity and impartial assessment of need favouring the weak, and France can continue to muster the collective social force of various unionised groups for either universal or targeted care. Wider understanding is essential to prevent those with a concern for human disadvantage from globally attacking the welfare devices of another country because of different cultural associations with property. Without these different approaches, harmonisation is an essentially mean project with little to offer disadvantaged people.

Notes 1

S. 167, Housing Act 1996. Parts VI and VII of that Act specify when local housing authorities should take action. 2 Particularly Article L441-1 of the Code de la Construction et de l’Habitation. 3 By statute n∘ 2007-290 du 5 mars 2007. 4 Article 1 of the Besson Statute, n∘ . 90-449 du 29 mai 1990, confirmed by decision of the Constitutional Council, n∘ 94-359D, 19 janvier 1995. 5 The term was invented after the event (Brown 1974). 6 Equité in France is a public law device of last resort for judges unable to find appropriate law. 7 By statute no. 2007-211 du 19 février 2007.

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Law of Property Act 1925, ss. 34(2), 35 and 36(1). HM Land Registry. Ss.34(2) and 36(1) of the Law of Property Act 1925. This is a consequence of the rule against perpetuities for contracts. The Housing Act 1996, ss. 175-204. Ibid. s. 184. Ibid. s. 204. The Confédération Nationale du Logement, L’Union Nationale des Associations Familiales, La Confédération de la Consommation du Logement et du Cadre de Vie, La Confédération Syndicale des Familles and L’Association Force Ouvrière Consommateurs. The Spanish Constitution of 27 December 1978, Art. 33(2). Grundgesetz, Arts. 1, 2, 6, 14 II-III and 19, read together. See statute no 86-1290 du 23 décembre 1986, Arts. 41 to 44 quater. Statute n∘ 89-462 du 6 juillet 1989, preceded by the accords Delmon following a protracted dispute and rent strikes. See the decision in Note 4. Unless otherwise referenced, the information in this section is taken from study of the law and economics of French social housing allocations in Ball (2012), which began in 1997 and culminated in semi-structured interviews with local housing actors in three regions in 2005 and 2006. Assessing who was ‘poor’ for the purposes of the study is difficult because most available figures were not based on poverty as such. These difficulties, as well as financing problems, limitations to benefits and rent setting are explored in Ball (2012) Chapters 2.2 and 6. Particularly Article L441-1 a) to e) of the Code de la Construction et de l’Habitation. Around half went to increased benefits, and some were used for other housing purposes such as financial assistance for the mobility of the young, special loans and complementing local housing emergency funds. Comparative statistics in Ball (2012) show UK housing construction often at a level of half of the French construction over the past 40 years and the difference is even greater for social housing construction. Ball (2012) uses insider–outsider theory for an economic analysis of why people are excluded, not the point of this primarily law-based chapter. See Note 3. The procedure is now in Articles L.300-1 to L.300-2, Code de la Construction et de l’Habitation, with Article L.441-2-3 for the pre-process. The length of the ‘abnormal delay’ is decided by departmental decree, and differs from place to place.

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Still awaited at the time of writing. Implemented thus far in the Localism Act 2011. From Occupation du Patrimoine Sociale 2006, a composite French government dataset. EC Directive 2000/78/EC. Ibid. ss. 154-5 create ‘flexible’ tenancies. This is particularly obvious in tenants’ rights: social rights in France but property rights in England. See Ball (2003).

References Ball J (2003) Renting homes: status and security in the UK and France. A comparison in the light of the Law Commission’s proposals. The Conveyancer and Property Lawyer, 67, January/February, 36-58. Ball J (2012) Housing Disadvantaged People? Insiders and Outsiders in French Social Housing Routledge, Abingdon. Béguin J-C, Charlot P and Laidié Y (eds) (2005) La Solidarité en Droit Public l’Harmattan, Paris. Bell J, Boyron S and Whittaker S (1996) Principles of French Law Oxford University Press, Oxford. Blanc M (2010) The impact of social mix policies in France. Housing Studies, 25, 2, 257-72. Bourgeois C (1996) L’Attribution des Logements Sociaux L’Harmattan, Paris. Brouant J-P (ed) (2011) Le DALO. Les Cahiers du GRIDAUH, 21 GRIDAUH, Paris. Brown E (1974) The tyranny of a construct: feudalism and historians of medieval Europe. American Historical Review, 79, 1063–8. Czischke D (2007) Current Developments in Housing Policies and Housing Markets in Europe: Implications for the Social Housing Sector CECODHAS European Housing Observatory, Brussels. Cowan D, McDermont M and Morgan K (2008) Problematic Allocations- Final Report to the ESRC [Online], Available: http://www.bris.ac.uk/law/research/centres-themes/ nominations/nominationsreport.pdf DAL (1996) Le Logement un Droit pour Tous Le Cherche Midi Editeur, Paris. David R (1964) Les Grands Systèmes de Droit Contemporain Dalloz, Paris. Duguit L (1912) Les Transformations Générales du Droit Privé depuis le Code Napoléon LeBon, Paris. Dupeyroux J.J (1998) Droit de la Sécurité Sociale, Thirteenth Edition, Dalloz, Paris. Esping-Andersen G (1990) The Three Worlds of Welfare Capitalism Princeton University Press, Princeton. European Commission 2010 Study on Housing Exclusion, Welfare Policies, Housing Provision and Labour Markets European Commission, Brussels. Ghékière L (2006) Social Housing as a Social Service of General Interest: A Need for a Sectorial Directive presented at a seminar of the ENHR Special Project on Social Landlords, 12 May 2006, Paris. Glenn P (2004) Legal Traditions of the World (2nd edition) Oxford University Press, Oxford. Guerrand R.H (1967) Propriétaires et Locataires, les Origines du Logement Social en France (1850-1914) Quintette, Paris. Kemeny J (1995) From Public Renting to Social Housing: Rental Policy Strategies in Comparative Perspective Routledge, London.

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Houard N (2009) Droit au Logement et Mixité, les Contradictions du Logement Social l’Harmattan, Paris. Lavrijssen S and de Vries S (2009) The Netherlands chapter in M Krajewski, U Neergaard and J van de Gronden (eds) The Changing Legal Framework for Service of General Interest in Europe. Between Competition and Solidarity Asser Press, The Hague. Malaurie P and Aynès L (2010) Les Biens Defrénois, Paris. Pauliat H (1998) Logement et propriété: un aperçu historique chapter in M Ségaud, C Bonvalet and J Brun (eds) Logement et Habitat, L’Etat des Savoirs Éditions de la Découverte, Paris. Radigon J-L and Horvath S (2002) Expulsion et Droit au Logement Delmas, Paris. Rousseau, J-J (1918 [1762]) Du Contrat Social ou Principes du Droit Politique Manchester University Press, Manchester. Shapiro A-L (1985) Housing the Poor of Paris, 1850–1902 University of Wisconsin Press, Madison. Stephens M, Burns N and MacKay L (2002) Social Market or Safety Net The Policy Press, Bristol. Terré F, Simler P and Lequette Y 1996 Droit Civil, Les Obligations (Fifth Edition) Dalloz, Paris. Topalov C (1987) Le Logement en France – Histoire d’une Marchandise Impossible Presses de la Fondation Nationale des Sciences Politiques, Paris. Twining W (2005) Have concepts, will travel: analytical jurisprudence in a global context. International Journal of Law in Context, 1, 5-40. UN Economic Commission for Europe (2006) Guidelines on Social Housing, Principles and Examples The United Nations, Geneva. Zweigert K and Kötz H (1998) [trans. T. Weir] An Introduction to Comparative Law (Third Edition) Clarendon Press, Oxford.

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Transformation of Housing Block – Paris 17∘ , Tour Bois le Prêtre Built in 1962 and designed by Raymond Lopez, this 16-storeytower block with 96 apartments in a northern-Paris suburb was renovated in 2011 by Paris Habitat, with the architects Druot, Lacaton & Vassal. The project provided a low-cost alternative to the dominant demolition and new-build urban regeneration policy in France – total costs were half that of demolition and rebuild (€11.25 million vs 26). Retrofitting increased flat size by extending floorplate outwards (from 8900 to 12460m2 ) with energy efficient glass conservatories (“winter gardens”) and balconies. Crucially, the conversion only took two years and residents could mainly stay in place (or move out briefly) while renovation was underway. Photograph: Lacaton and Vassal, and Philippe Ruault.

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21 Urban Regeneration in Dutch, French and German Social Housing Areas Christiane Drostea , Christine Lelévrierb and Frank Wassenbergc a UrbanPlus

Droste & Partner, Berlin, Germany Urban-Planning Institute, University of Paris-East-Creteil, France c Platform 31, The Hague & OTB Research Institute for Housing and the Built Environment, Delft University of Technology, the Netherlands b Paris

Social housing and urban regeneration in the three countries: a comparative perspective Despite national and local peculiarities (Rowlands, Musterd & Van Kempen 2009), some common European trends in social housing regeneration policies can be identified. This chapter outlines the differences and similarities among current urban-regeneration approaches in three major European countries: France, Germany and the Netherlands. It shows how these approaches affect the social housing stock and sets out trends, future challenges and questions for future research. Status and location of social housing: In France and the Netherlands, social housing emerged from surprisingly similar political and historical backgrounds. Both countries are characterised by a large stock of social housing built in the post-war decades (35% social housing in the Netherlands, 17% in France) and an integrated policy approach from the 1980s onwards. In both, contemporary urban renewal focuses mainly on post-war stock. But while social housing in France is generally located in large suburban housing estates, these extensive mono-tenure areas are not Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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so common in the Netherlands, where social housing (often single-family row houses with gardens) is widely available and often located within cities. German social housing, in contrast to that of other European countries, is based on a partly state-subsidised market model and is located in both large housing areas and inner-city areas. Until 2006, non-profit (municipal and cooperative) and private developers could receive state subsidies for building housing in return for up to 40 years of rent and access control. In East Germany, former state-owned stock was after unification transferred to municipal ownership. The share of de jure social housing in the total stock (currently 6%) is decreasing continuously while the proportion of virtual social housing rises (see Chapter 11 in this book for further elaboration on the distinction between de jure, de facto and virtual social housing). Strong regional differences in supply and demand and specific historical legacies in the eastern and the western parts of the country present challenges for policy makers. Because of these differences in location, building typology and dimensions, living in social housing is more stigmatising in France than in the Netherlands or Germany, where a negative image mainly is attached to some problematic large housing estates. The various meanings of ‘urban regeneration’ and its area categories: The use of the term ‘urban regeneration’ in comparative research requires precision and consideration of contextual differences (Van Kempen et al. 2005: 11). Just as the English term has undergone development over time (with variants such as ‘urban reconstruction’ and ‘urban renewal’), so have the equivalent terms in Dutch, French and German. Moreover, policy changes altered the local terminology and usually emphasised a new political strategy: In France, renovation urbaine was used during the 1960s and 1970s, rehabilitation in the 1980s, développement social urbain at the end of the eighties, renouvellement urbain at the end of the 1990s and since 2003 again renovation urbaine – meaning a process of demolition followed by rebuilding. In the Netherlands, the stadsvernieuwing of the 1970s and 1980s, which involved the physical improvement of old housing for low-income people, has a slightly different meaning from the stedelijke vernieuwing of the mid-1990s and 2000s. The latter refers to integrated renewal of mainly post-war areas for mixed incomes. In Germany, after the physical approaches of the post-war Städtebauliche Sanierung and the 1980s’ Behutsame Stadterneuerung, the 1990s term Integrierte Stadtentwicklung indicated the inclusion of social and economic issues. While the Sociale Stadt has further developed this theme since the turn of the century, the Stadtumbau programme aims mainly at demolition of surplus housing and upgrading the urban structure. All German urban renewal programmes

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have formed part of Städtebauförderung, which is jointly funded by the regions1 and federal government. In this text, the English terms ‘urban renewal’ and ‘urban regeneration’ are used interchangeably to describe ‘all activities, physical and otherwise, intended in the local context to renew existing urban spaces’ (see Chapter 15 in this book for further comparison). Urban regeneration focuses on various types of area, each of which involves different policies, interests and actors (Wassenberg et al. 2007): • • • • •

post–World War II estates; large high-rise estates of the 1960s to 1980s; deprived old urban areas around the city centre; central urban areas and city centres; brownfield sites.

Not all of these areas contain social housing, which is most often found in post-war housing areas and large (often high-rise) housing estates, especially in France and the Netherlands. Pre-war housing stock is relevant in Germany and to a lesser degree in the Netherlands. This chapter therefore focuses mainly on the first three categories of regeneration listed. In most areas where urban renewal focuses on social housing, the process has slowed down in the past couple of years and investment has decreased. In Germany, however, massive state funding for CO2 reduction and the Economic Revival Programme (Konjunkturpakete I+II) have had important spatial and social effects. At the same time, turnover rates and vacancies have declined and the demand for social housing has increased in all three countries, even in formerly unpopular housing. Social versus physical regeneration: Broadly speaking, two types of regeneration policy are applied to areas with significant amounts of social housing: Programmes for physical regeneration, which in the past couple of years have focused on social housing areas to support refurbishment or demolition. Programmes aim to improve poor quality, outdated floor plans and inadequate dwelling sizes and to reduce the oversupply of (social) housing caused by deindustrialisation, emigration or population decline (e.g. in the north of France and East Germany). Physical improvement in France and the Netherlands, as in other European countries, has also focused recently on diluting poverty and encouraging social mix by diversifying housing structures (Bolt, Philip & van Kempen 2010). Socially oriented programmes for disadvantaged neighbourhoods often cover areas containing a large share of social housing. The target areas are often characterised by high concentrations of poor, immigrant or

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unemployed households and by social problems. Goals include increasing residents’ satisfaction with their housing situations as well as supporting them socially (e.g. in education or preparation for the labour market) and reducing the negative effects of spatial segregation.

The main periods of urban regeneration in social housing We identify three major periods of post-war urban regeneration across most of Europe (Table 21.1); the first two ended with rather clear changes of policy.

Area clearance (1945–early 1970s) In all three countries, the decades after World War II were devoted to overcoming war damage and rebuilding the central parts of existing cities. Social housing emerged in newly built neighbourhoods to accommodate displaced residents of derelict central slum areas and was also built in many city centres that had been destroyed, as in Germany. In each of the countries, social housing was a major element of the new welfare state, helping to solve the social question by providing housing for the working classes (see Chapter 16 in this book). National governments played the leading role during this first period, providing the political framework and major subsidies for implementation at the local level. The first turning point: popular protest and the criticism of high-rise buildings: In the late 1960s, there was a general reaction against ‘the establishment’, exemplified in student revolts, emancipation processes and the rise of critical discussions about urban planning. In the early 1970s, opposition arose to the area-clearance paradigm of urban regeneration, and in each of the three countries there was a slow down in large-scale road development, new city-centre plans and the construction of high-rise housing estates. The wave of anti-establishment thinking led to a new focus on popular demand and social needs: urban regeneration became more demand-oriented and focused on provision of social infrastructure, including social housing. This change in priorities marked the end of the first period of urban regeneration.

Housing renewal and the shifting role of governments (mid-1970s to mid-1990s) The big top-down plans that characterised the first period were replaced by small-scale renewal of urban neighbourhoods based on bottom-up processes

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Table 21.1 War II.

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Urban regeneration in the Netherlands, France and Germany since World

Key issues

Period

Policies

Leading actors

War damage, housing shortage

1945–1970

Reconstruction, slum and area clearance

Central government

Housing quality, poor housing quality in run-down nineteenth century areas

Early 1970s to mid-1990s

Urban renewal, housing renewal and area-based policy

Central government gradually delegated to local government

Living environment, improving post-war areas, creating attractive cities

Late 1990s to about 2010

Area-based approaches, integrated policies

Local government, housing associations

Growing diversity, segregation, economic crisis, demographic changes, care for the elderly, sustainability, finance

Present

Less steering, more facilitating

Market, civil society, municipalities, housing associations, local actors such as schools, local businesses, and so on

Source: Authors.

(Table 21.2). The focus was on renovation of old houses in old neighbourhoods or on demolition and new construction on the same spot, for the benefit of existing residents. Rotterdam was one of the first cities in the Netherlands (and Europe) to implement these new ideas as part of an urban renewal policy (stadsvernieuwing) in the early 1970s. The target groups were existing local residents and the strategy was called bouwen voor de buurt (‘building for the neighbourhood’ and its people); almost all the building was social housing. Resident participation was seen to be essential, while the role of housing associations was limited. Germany and France later implemented similar programmes. In Germany and the Netherlands, socially engaged individuals squatted in vacant properties and undertook their own small-scale urban renewal initiatives – for example, the 1980s International Building Exhibition included legalised squats in Berlin that had been rehabilitated by their residents. During the 1980s, the object of urban regeneration broadened from housing to the quality of the overall residential environment, including not least problems of pollution, vandalism and safety, particularly in recently built high-rise estates. Although physical strategies prevailed, the period saw municipalities, social landlords and residents cooperate to design projects that combined social and physical elements (Wassenberg 2013).

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Table 21.2 1990s.

Key urban regeneration initiatives in three countries, mid-1970s to early

Country

Time period

Programme name and description

France

1977 onwards

Habitat et Vie Sociale (housing and social life) Experimental programme combining social and housing policies Développement Social des Quartiers (neighbourhood social development) Focus on physical rehabilitation in 148 disadvantaged zones, including socioeconomic development and qualification of residents Développement Social Urbain and Politique de la Ville (programmes for urban social development and urban policy): enlarged the DSQ programme by 500 neighbourhoods. Experimental contracts with 15 cities Loi d’orientation sur la ville (city orientation law) National law requiring municipalities where less than 20% of the housing stock is social housing to build more, in order to combat segregation and avoid new ‘ghettoes’

1981–1989

1989–1991

Netherlands

Early 1970s

1985–1995

Late 1980s

ca. 1990

Germany

1980s

1984–1987

1989 onwards

1992

Source: Authors.

Stadsvernieuwing (urban renewal) Refurbishment or replacement of old dwellings by inexpensive local social rented housing. Stadsvernieuwingsfonds (urban renewal fund) Decentralised fund, combining 19 subsidies, to be spent by local authority. New fields of action: local environment and liveability issues Probleem Cumulatie Gebieden Beleid (socially oriented policy for deprived areas) Added to Stadsvernieuwing to mitigate social segregation Sociale Vernieuwing (social renewal) Added to Stadsvernieuwing to intensify the social elements of the policy Nachbesserung der Großsiedlungen (upgrading the large housing estates) First rehabilitation of large housing estates built in the 1960s and 1970s, physical action Internationale Bauausstellung Berlin (Berlin International Building Exhibition) 12 principles of careful urban renewal. Physical action and resident participation in both new building and rehabilitation Städtebauliche Weiterentwicklung großer Neubaugebiete / Plattenbausanierungsprogramm (panel building rehabilitation programme), Wohnumfeldverbesserungsprogramm (improving the housing environment programme) Physical intervention and increased resident participation Hamburger Armutsbekäpfungsprogramm (Hamburg poverty prevention programme) Urban regeneration embedding poverty prevention projects, one of the predecessors of the Soziale Stadt

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During this second period, responsibility for urban renewal moved gradually (and only partially) away from national towards sub-national governments. The national level sponsored major urban renewal schemes and matching subsidies for physical improvements. At the sub-national level, the number, resources and structural power of cities were key. In West Germany, the influence of the federal government gradually declined, but after unification the country’s approximately 13 000 municipalities assumed a stronger role in urban regeneration. In 1982, France decentralised urban planning and regeneration to its 36 000 communes, but housing policy remained a national responsibility. The Netherlands now has only 408 municipalities, about half as many as 30 years ago, and continues to merge them for efficiency purposes. Even though there was strong central direction of urban regeneration in all three countries, with national governments formulating goals and policies as well as providing finance, municipalities and particularly the German regions were increasingly permitted to design their own implementation strategies. The second turning point: recognition of the limits of physical measures: The focus of urban renewal evolved from improving housing in the 1970s to improving the residential environment in the 1980s. By the late 1980s, it was obvious that physical improvement had to be linked to social and economic measures in order to address multifaceted urban problems. The early 1990s saw the introduction of more social-economic programmes (‘Urban social development’ in France, ‘Neighbourhoods with particular demand for renewal’ in Germany’s North Rhine-Westphalia, ‘Social renewal’ in the Netherlands). These policies had one main goal: to integrate deprived people and to increase social relations between different societal groups. Methodological experiments like the Regies de Quartiers (neighbourhood wardens) in France involved residents in neighbourhood management.

Integrated policies (mid-1990s to early 2010s) With the Politique de la Ville in France, Grote Steden Beleid in the Netherlands and the Soziale Stadt in Germany, urban regeneration combined urban, economic, social and other elements. The goal of these integrated territorial programmes was to keep the residents in the urban regeneration areas, and the dominant paradigm was (socially) sustainable development (Table 21.3). The French Politique de la Ville (250 city policy contracts) was updated and extended twice, in 1994 and 1998. In 1996, the Pacte de relance pour la ville, an economic-oriented programme, was introduced for 750 areas,

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Table 21.3 France

Key urban regeneration initiatives in three countries, mid-1990 onwards. 1994– 1998 1996

1998

2000

2003– 2013 2006– 2012

Netherlands 1995– 2014

2000– 2014

2003– 2007 2007– 2018 Germany

1996 onwards

1999

1999– 2013 2000– 2016 2007 onwards

2008– 2015

Source: Authors.

Contrats de ville (215 city contracts), Grands Projets Urbains (15 large urban projects). Major interventions, contractual form, integrated action Pacte de relance pour la ville (city economic development pact) Measures to create social mix and employment in 750 sensitive urban zones (ZUS) and 44 tax-exempt areas (ZFU) Programme de renouvellement urbain: Contrats de ville (250), Grands Projets de Ville (50), Opérations de Renouvellement Urbain (70) (urban renewal programme: city contracts, big city and urban renewal projects) Physical measures, combined with social measures and resident participation Loi ‘solidarité et renouvellement urbain’ (solidarity and urban renewal law) Obliges municipalities with less than 20% social housing to build social housing Loi d’orientation et de programmation sur la ville et la renovation urbaine (urban renewal programme – 500 neighbourhoods, €42 billion) Demolition, rehabilitation and new social housing construction Contrats Urbains de Cohesion Sociale (CUCS) (urban and social cohesion contracts) 500 contracts for socioeconomic improvements (2000 neighbourhoods) Grote Steden Beleid (big city policy) Integrated policy in major cities, based on physical, social and economic renewal, city-wide programmes. In 2010 narrowed to Stedenbeleid (city policy) Investeringsbudget Stedelijke Vernieuwing (investment budget for urban renewal) ISV gradually developed into the physical pillar of the big city policy. The last and final tranche of ISV is 2010–2014 56 wijken aanpak (56 districts approach) 56 areas within the 30 GSB cities designated for more focus Wijkenbeleid (neighbourhood policy). Policy for 40 deprived areas, emphasising social mobility Integriertes Handlungskonzept für Stadtteile mit besonderem Entwicklungsbedarf (North Rhine-Westphalia, integrated action in neighbourhoods needing specific development) Targeted all aspects of urban quality of life, main predecessor of the Soziale Stadt IBA Emscher Park (International Building Exhibition Emscher Park) New housing models, including projects enhancing social inclusion and education Soziale Stadt (the socially integrative city) Socio-spatially targeted, governance, all aspects of social inclusion Stadtumbau Ost/West (urban regeneration east/west). Area-targeted demolition and urban reconstruction, upgrading, market clearing, governance-oriented Nationale Stadtentwicklungspolitik (national policy for urban development) Leipzig Charter orientation of urban development, new models for integrated urban/neighbourhood development Bildung, Wirtschaft, Arbeit im Quartier (BIWAQ) (education, economy and labour in the neighbourhood) Socioeconomic intervention financed by the state and ESF, sub-programme of the Soziale Stadt

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and in 2006 the Contrats Urbains de Cohésion Sociale widened coverage to 2000 neighbourhoods. The programme focused on the physical, social and economic renewal of housing and public spaces, addressing school performance, safety, employment and social services. In the early 2000s, social mix became a major aim in urban policies. There were two main approaches: to increase the amount of social housing in prosperous areas and to reduce it in deprived large housing estates. The 2000 Solidarity and Urban Renewal Law aimed at forcing municipalities to build more social housing if it made up less than 20% of the existing housing stock. However, many were reluctant to do so, preferring instead to pay the high financial penalties the law imposed. This was especially the case in the Paris region (where 83 of 181 municipalities built no social housing in 2008). The 2003 Urban Renovation Law aimed to reduce the amount of social housing in 500 disadvantaged areas and encourage social and housing diversity. In the Netherlands, the Grote Steden Beleid or GSB (big city policy), developed in the mid-1990s, aimed at integrating three pillars: physical renewal, social renewal (improving schooling, safety, liveability and social care) and economic renewal (increasingly focusing on work and the economy). The programme focuses on social-housing areas in the 37 largest cities and has been extended four times, but will end in 2014. Cities could set priorities, to be implemented at the local level. In 2003, the ministry chose 56 priority neighbourhoods – these were not necessarily the worst areas but ones where ongoing initiatives showed promise. In 2007, a new minister implemented the Wijkenaanpak (neighbourhood approach), targeting the country’s 40 ‘worst’ neighbourhoods according to social, physical and liveability indicators. It focuses particularly on the empowerment and participation of residents. Despite financial cutbacks and a reduction in government support, this programme will last until 2018. German policy has turned from physical rehabilitation to integrated socio-spatial measures, strongly affecting social housing. There was a close link between rehabilitation and social housing until the late 1970s with inner-city ‘scrap and rebuild’ approaches, but the careful urban rehabilitation of 1975–1989 and the Soziale Stadt (Socially Integrative City) (1999 to the present) resulted in only marginal increases in production of social housing. The focus of public investment in social housing neighbourhoods has shifted towards quality of life (Holm 2009). The large imbalance in the East German housing market called for major physical interventions (Stadtumbau/Urban regeneration) after 2002. Soziale Stadt did not explicitly target social housing areas, because most German social housing is dispersed in the stock. However, there are Soziale Stadt areas that include also large quantities of social housing, like in big inner city or peripheral housing estates, and it was successful in these areas.

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Where Soziale Stadt and Stadtumbau target areas overlapped, Stadtumbau was more successful. In summary, both German and Dutch national governments abandoned their leading role in social housing issues in favour of local decision-makers. In Germany, initiatives like the Soziale Stadt Award or the definition of a new kind of city-yield2 (Stadtrendite) at the level of both housing provider and neighbourhood have redefined the roles of German social housing actors in urban renewal. Results of recent urban regeneration policies: All three countries pursued integrated area-based regeneration programmes. Evaluations of the GSB and ISV schemes in the Netherlands show that not everything went well, but that the policies brought about major improvements in residents’ quality of life and satisfaction, and increases in house prices and safety. Housing associations played a major role – in 2010 alone, they improved 132 300 dwellings (5.5% of their stock) at a cost of €1.4 billion, or €10 600 per dwelling. However, they have reduced such activity compared to earlier years. Demolitions in 2011 (7200 or 0.3% of stock), for example, are well down compared to 2006–2009, when an average of 16 000 dwellings were demolished annually. And while housing associations built over half of all new housing in the past four years, their projected investment has recently decreased by 17% (CFV 2012). Evaluations of the German Soziale Stadt cite successes in sociocultural integration, neighbourhood identity building and participation of immigrants and less educated groups – although there is still work to do. The Stadtumbau East and West programmes led to the consolidation of municipal landlords, reduction of oversupply, innovative interim uses of buildings (e.g. for art projects and temporary hotels) and a new role for actor networks in urban regeneration. The government’s investments of €1.1 billion in Soziale Stadt (1999–2012), €1.3 billion in Stadtumbau-Ost (1999–2012) and €597 million in Stadtumbau-West (2004–2012) led to 7.8 times this amount of public and private building investment, and contributed to the creation of up to 152 000 new jobs per year (BMVBS 2011). The programme also motivated housing companies belonging to umbrella organisation GdW to take on more social responsibility; they spent €1.60 on social integration for every €1 spent by public authorities (GdW 2011). Despite these promising results, the centre-right government decided in 2011 to cut financing for Soziale Stadt dramatically. The programme was changed from one that integrated investment, social initiatives and consultation into one that financed only infrastructure, which was expected to finish in 2013. However, the newly elected grand coalition re-opened the debate and as of early 2014 it seemed as if an integrated programme might be revived.

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In France, a state financial and administrative report heavily criticised urban regeneration programmes (Cour des comptes 2012). It said that the whole process including relocation had been more difficult than expected in tightened housing markets and a context of financial crisis; as a consequence, only half of the planned 250 000 social housing units were built. However, as in the Netherlands, surveys of residents indicated that urban renovation had improved urban and housing quality, and a majority agreed that their lives had improved (CSA 2011). Other research showed that urban renovation had retained workers in target areas by offering them better quality housing (Lelévrier 2010; Donzelot 2012). Nevertheless, this did not reduce poverty and sharp economic and ethnic divisions. People who were relocated as part of renovation programmes stayed in their original neighbourhoods or were relocated to other deprived areas, without increasing dispersion or social mix. A 2011 report on the Urban Sensitive Zones (ZUS) showed that 32.4% of people there lived below the poverty line (€954/month), 2.7 times the average in the cities as a whole (ONZUS 2011). The third turning point: differentiation among country policies and post-crisis change in roles: The ambitious attempts of the 1990s to develop integrative policies revealed that while physical improvement alone could not solve urban problems, nor could the simple addition of social and economic measures. Continued social problems and the spatial segregation of deprived households were not explained by inhospitable housing design, bad housing quality or management deficits. Even if physical and social approaches were successful at the neighbourhood level, many cities remained segregated. The lower classes lived in social housing neighbourhoods, middle-class families moved to detached family houses in the suburbs, and post-war areas dominated by standardised mass housing proved least popular – urban sociologists have labelled this phenomenon the doughnut city (Schoon 2001). Over the past decade, refurbishment, improvement and demolition of deprived areas with social housing increased in France and the Netherlands, reaching record highs from 2006–2009. Owing to its dramatic population decrease, East Germany saw massive demolition of de facto social housing from 2002 onwards (almost 300 000 dwellings), but generally German cities used socio-spatial programmes to provide target groups with social housing – and particularly with virtual social housing. There was an increasing feeling that there should be more investment not only in housing but also in local social intervention. This assumed real urgency at the same time as the financial crisis hit. However, political change and the shift in responsibility for urban and housing policy put socially oriented urban renewal programmes at risk, while economic austerity has decreased resources.

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Key features of current social housing renewal The historic overview demonstrates that urban regeneration has changed over time from a technical discipline to a complex process that integrates an increasing number of aspects and actors, carrying out activities at different scales, with a variety of often similar strategies and methods. The changes in the governance, content and organisation of policies have been found across Europe (Wassenberg & Van Dijken 2011; Tosics 2009). Three features are particularly relevant to the three countries’ policies: First, the policies are territorial (area- or neighbourhood-based). They target disadvantaged areas where problems concentrate. Area-based approaches focus measures on spatially limited deprived areas and connect policy-making more directly with implementation. Second, the policies are integrated, to take account of the fact that problems often have no easy universal solutions. Integrated approaches combine physical with social, cultural and economic targets and policies, requiring a shift from sectoral to cross-departmental work. In each country, the focus of urban regeneration has swung between three objectives: socioeconomic, sociocultural and physical-economic (Verhage 2005). Third, there has been a shift from government to governance. Well before the current economic crisis, there was an increasing trend towards public–private and other partnerships, cooperation of different actors, local contracts and the inclusion of citizens in decision-making processes. Multi-level urban governance including a process of coordinating groups and actors is replacing top-down direction (Le Galès 2002). Strong elements of governance occur when power is devolved to the level where problems originate, when new forms of service-oriented local or on-site agencies replace old bureaucracies, and when more process-oriented legal frameworks for action and action-oriented laws replace outdated ones (Droste & Knorr-Siedow 2007).

Territoriality: The neighbourhood as target European comparative research and politics have identified the neighbourhood as an appropriate level for action, even though the administrative definitions of neighbourhoods do not always coincide with residents’ lived reality or the target areas of different actors (Droste & Knorr-Siedow 2007; Wassenberg, van Meer & van Kempen 2007; Tosics 2009). However, even if social, urban and economic problems are spatially concentrated, the processes that cause them often occur on a larger scale. Solutions must be found at a higher strategic, city or regional level. Unemployment is an example, as relevant job creation is seldom possible within the boundaries of

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a single neighbourhood. The distribution of social housing is another. Most social housing regeneration schemes result in areas with better but more expensive housing, necessitating a more even distribution of affordable housing across suburbs or surrounding municipalities. In France, by the end of the 1980s it was clear that only neighbourhood action would improve local management and life conditions. This was also the appropriate level for citizen participation. However, such local policies failed to reduce segregation. Serious riots in some of the most segregated areas were followed by so-called integrated approaches, but these often failed to produce the results hoped for. As of 2013, the debate about the appropriate scale and target of intervention is still ongoing. The embedding of social intervention in area-based policies was stronger in the German Soziale Stadt programme and in the Dutch Big City Policy, which addressed not only residents’ housing situations but also local facilities, education and jobs. The current Dutch territorial approach is the Wijkenbeleid (Neighbourhood Policy), which aims to improve 40 deprived areas in 18 larger cities, with Rotterdam top of the list. The southern part of Rotterdam – a third of the city – is the only deprived area in the country where the state is directly involved in urban regeneration. Waterbed effects: Focusing on particular areas has obvious advantages such as facilitating arrangements between practitioners and ensuring that effects are visible to residents and policy makers, but even if most problems could be solved within a single neighbourhood there might be negative consequences for nearby areas. Demolitions can cause migration to other neighbourhoods, disrupting what had often been stable communities (although in East Germany the oversupply of housing meant that residents were often relocated in the same neighbourhoods). Slob, Bolt and van Kempen (2008) looked at six improved areas in the Netherlands and concluded that receiving areas experienced the arrival of displaced households as a sign that the neighbourhood was deteriorating. More recent research shows that although in fact the number of displaced households is small, residents in receiving areas strongly believe that they are the cause of (negative) local developments (Posthumus, Kelinhans & Bolt 2012). There is thus an argument for paying extra attention to areas close to target neighbourhoods. The Berlin Aktionsräume plus programme is one attempt to deal with such effects, but has yet to produce major impacts. Residential mobility and stigma: Residential stability is often a goal for both policies and residents, but is not guaranteed by area-based policies. In France, between 1990 and 1999, 60% of residents moved and about 40% of residents of ZUS deprived areas moved out, a little above the average for cities. These figures show that residential mobility has its own effects on

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areas and social mix (Bolt, Philips & Van Kempen 2010). Is such mobility positive because it enables successful people to move to better opportunities elsewhere, or negative as it makes it difficult to preserve social capital in the area? In Germany, new mobility issues have arisen because of floor-area and rent caps for welfare recipients, which were implemented in 2005. A related issue, which is still relevant across Europe, is whether neighbourhood policies lead perversely to the stigmatisation of (social housing) urban renewal areas and the people who live in them. Should territorial policy be employed to combat neighbourhood effects? Should we treat the space or the people? France’s large social-housing estates are far more stigmatised than Dutch or German social housing, and a 2009 report on the geography of the French ZUS said area-based policies were inefficient and recommended they be used only in exceptional circumstances. It also suggested reducing the number of eligible neighbourhoods (Hamel & André 2009).

Integrated approaches The integration of physical with social, cultural and economic measures remains a crucial challenge for successful urban renewal – in the Netherlands, for example, the Grote Steden Beleid policy framework for 40 deprived neighbourhoods encompasses all these interventions, with a goal of enhancing social mix. While there is general agreement that large concentrations of deprivation are unacceptable, social polarisation is increasing both between and within cities. Urban restructuring programmes aim to diversify the housing stock and the population. But local policy documents also focus on retaining ‘social climbers’, and experience from housing renewal schemes shows that most new residents come from within the area. In France, the trajectory was very different. After 20 years of integrated policy, the 2003 programme de renovation urbaine focused on physical intervention; then, after the 2005 riots, the plan de cohésion sociale created new Contrats Urbains de Cohésion Sociale and two new national agencies – the renovation agency and the social cohesion agency – to oversee socioeconomic action. This led to the demise of integrated policy in France, as the urban programme aimed at physical change and support for social and economic actions was reduced. But in February 2013, the new government announced a more integrated policy that returned to city contracts (instead of neighbourhood contracts), a reduced number of target neighbourhoods and a focus on youth employment. German physical and social programmes are more separate than in the two other countries. In the German context, integration refers to social and cultural policies as well as provision of health services, education and job qualifications. Where possible, the Soziale Stadt policy has linked the rehabilitation of social infrastructure (such as schools), buildings and

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public space. Since 2008, its target areas have benefited from an economic revival programme. The Stadtumbau-West interventions tend to address a more diverse housing stock and are more likely to combine physical and socioeconomic measures.

The shift from government to governance The shift from government to governance was seen in all three countries, but followed a different trajectory in each. In France since 2003, the renovation programme has been managed by the Agence Nationale pour la Rénovation Urbaine (ANRU), which decides whether mayors’ proposals accord with national rules and frameworks – a form of ‘distant governance’ (Epstein, 2006). Housing associations must integrate demolition and rebuilding into municipal projects, rather than applying for ANRU subsidies directly (as before), and both housing associations and the private sector (developers) have become more involved in urban renewal. In the Netherlands, housing associations play a remarkable role in local governance. They are the largest property owners in deprived areas and, until the economic crisis, increasingly took the lead in urban renewal. They are financially independent and unlike their counterparts in other countries do not receive government subsidies; their investment capacity derives from housing sales and rental receipts. Current market conditions have reduced house sales and thus their revenues. The reduction in income, together with increasing tax liabilities, has led them to reduce their activities. This has slowed renewal processes, affected the type of interventions chosen and shifted the terms of the debate. Large-scale demolitions are now less common, and the associations are investing less in housing regeneration, new construction and social facilities like schools and playgrounds. In Germany, responsibility for urban renewal has shifted from the central government to the Länder and municipalities, and each Land now devises its own policy. Despite their increasing market orientation, the remaining social housing providers are still partners in urban regeneration. Municipal housing companies (with public authorities as major shareholders) help implement housing and welfare policies, and even large private investors see that local partnership-oriented action can have not only a social yield but also an economic one. In 2012, the increasing demand for housing led some German cities to introduce innovative contracts with their housing companies, which, although municipally owned, are legally separate entities. These contracts cover rent fixing, new building and investment in the existing stock. In Germany and elsewhere in Europe, a new type of community-oriented local partnership is emerging in the form of co-housing projects. These projects usually bring together people with similar lifestyles. They are often

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explicitly multi-generational, although there are also projects exclusively for older people. The projects vary in terms of size (from five or six households up to 300–350), legal form (co-ownership, cooperative, mixed tenure) and the community elements they incorporate. To date co-housing has been largely for owner-occupation rather than rental, but there is increasing agreement that its main characteristics – non-speculative, community-oriented, socially and ecologically sustainable – make it equally suitable for social rental. Co-housing communities are being created not only in new construction but increasingly also through regeneration of old or deprived blocks or streets, for example, in Tübingen and Freiburg (Germany), Rotterdam and Amsterdam (Netherlands).

Conclusion: the playing field is changing Urban renewal policy has reached another turning point similar to those of the early 1970s and mid-1990s. The economic crisis has changed the conditions and possibilities for urban regeneration drastically and probably permanently. Worldwide, socioeconomic disparities between regions are increasing. In individual countries, there is a persistent divide between centre and periphery, and in cities a tension between improving and declining areas. Some of the perpetual issues for social housing and urban regeneration have intensified, and new challenges have arisen. These include • demographic challenges (migration flows from both outside and within the European Union; shrinking populations in some regions and growth in others); • ageing populations (adaptation of housing and infrastructure will be required); • climate change (rising sea levels will particularly affect low countries; the requirement for reduction in CO2 production will lead to higher energy costs – which may, in some places, exceed rents). Urban renewal policy is in constant flux, as this chapter has demonstrated, but only comprehensive cross-sectional intervention can hope to address these new challenges or the old ones that remain, reappear or change shape. The job of urban regeneration is never complete. Governments recognise the continuous need to renew cities and neighbourhoods, but the long-lasting financial crisis has forced them to slow down, cut back or postpone neighbourhood regeneration projects. The current stagnation in the housing market has created imbalances and tensions in all three countries: construction of new housing, including affordable housing, has fallen; rents in the private sector have increased; and

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housing actors are less able to invest. This has led to worsening shortages of affordable housing, particularly in areas where it was already scarce, to longer waiting lists, to a reduction in turnover generally and in particular to a decline in forced relocations. Households entering the housing market face particular difficulties. There is an increasing backlog of necessary refurbishments and alterations, including energy-efficiency improvements. These challenges will shape future renewal approaches. In all three countries, area-based approaches have contributed to the success of urban renewal policies: deprived areas have been improved and residents’ housing and neighbourhood conditions have improved. But evaluations have also identified negative side effects. Not all problems can be solved within a single neighbourhood, and targeted renewal programmes sometimes transfer problems to adjacent areas. These waterbed or spill-over effects call for a more strategic, nuanced approach that will incorporate fringe areas in urban renewal schemes and weave local action into a wider urban strategy. There is also a paradoxical relationship between territorial action and residential mobility: urban renewal has led to influxes of better-off people to target neighbourhoods in all three countries. The challenge is to find sustainable solutions to both problems and to strike the right balance between physical and social approaches and between action at the neighbourhood and city levels. Segregation is a persistent issue. Large concentrations of deprived people can have a negative effect on their own quality of life and that of the city overall. But evaluations of the French and Dutch policies described here show that there is significant resistance to the development of social mix in deprived neighbourhoods. Owing to Germany’s social housing structure, even inner city areas have so far been relatively mixed, but in the context of the current shortage of affordable housing the debate about gentrification has gained importance. Given the obvious limits of urban regeneration policies, what is the right balance between physical, social and inclusive-decision-making approaches? Should governments accept segregation as a fact of life, recognising that many people prefer to live among others with similar lifestyles? If so, in order to secure the ‘right to the city’ (or, as housing activists increasingly put it, the ‘right to the neighbourhood’) they must find ways to limit the possible negative effects of concentrations of deprived people. The roles of the different actors in urban regeneration have changed considerably over the past decades and will continue to do so, but despite changing market conditions housing associations and public providers of housing are still key players. They own much of the property in deprived areas and are expected to maintain and update their stock. At the same time, private and market actors are becoming more important, not only because the ‘usual’ partners (governments and housing associations) face financial

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restrictions but also because of the demands of civil society. The meaning of ‘participation’ has evolved – in the 1980s it was defined as informing people, in the 1990s empowering people and in the 2000s involving people. Now it also encompasses self-help and autonomous action. Emancipated and articulate consumer-residents are increasingly willing and able to play an active role in urban renewal, while top-down steering by all-powerful governments, both national and local, is becoming outdated. Comparative urban research suggests that new governance models could be crucial for the success of integrative policies. Specifying such models is difficult because governance is process-oriented and path-dependent, but active resident participation seems to be a crucial component. This can require social capacity building and democratisation, not only in socially deprived neighbourhoods but in all kinds of areas. European cities can only benefit from sharing experiences of urban regeneration and results of research. National and local policies, contexts and solutions should be analysed, compared and tested for transferability. This requires dialogue-oriented research methodologies and conscious application of both national and international perspectives. This would allow practitioners to identify the general trends behind local particularities and thus to deal with the latter in a more enlightened way.

Notes 1 We use the term ‘region’ for the German word Länd (often translated as ‘state’), in order to prevent confusion with federal state (Bund). 2 The concept is that a firm’s yield should be measured not only in economic terms but also by looking at the results of the company’s investment (e.g. in the built environment, social infrastructure, cooperation with schools, etc.) in the district or municipality. This calculation allows comparison of the contributions of public and private companies to cities. See Schwalbach et al. 2006.

References Bolt G, Phillips D and Van Kempen R (2010) Housing policy, (de)segregation and social mixing: an international perspective. Housing Studies 25, 2, 129-135. BMVBS (Bundesministerium für Verkehr, Bau und Stadtentwicklung) (eds) (2011) 40 Jahre Städtebauförderung, Berlin. CFV (Centraal Fonds voor de Volkshuisvesting) (2012) Jaarverslag 2011, Baarn. Cour des Comptes (2012) La politique de la ville, une decennie de réformes, Rapport Officiel [Online] Available at http://www.ccomptes.fr/publications:la-politique-de-la-ville-unedécennie-de-réformes CSA (2011) [Online] Available at: http://www.csa.eu/multimedia/data/sondages/data2011/ opi20110521-la-satisfaction-a-l-egard-des-programmes-de-renovation-urbaine.pdf

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Donzelot J (2012) A quoi sert la rénovation? PUF, Paris. Droste C and Knorr-Siedow T (2007) Von der kommunikativen Planung zu neuen Formen der Governance, chapter in Marzahn-Hellersdorf Bezirksamt (ed), Im Wandel beständig. Stadtumbau in Marzahn und Hellersdorf, Selbstverlag, Berlin. Droste C and Knorr-Siedow T (2011) Social Housing in Germany: Changing Modes for a Changing Society, chapter in A Régnier and A Houard (eds), Social Housing across Europe, La Documentation Française, Paris. Epstein R (2006) Gouverner à distance. Quand l’Etat se retire des territoires. Revue Esprit, 96-111. GdW Bundesverband deutscher Wohnungs- und Immobilienunternehmen e.V. (eds) (2011) Wohnungswirtschaftliche Daten und Trends 2011/2012, GdW, Berlin. Hamel G and André P (2009) Une conception rénovée de la politique de la ville; dune logique de zonage à une logique de contractualisation. Rapport au Premier Ministre, La Documentation Française, Paris. Holm A (2009) Der Ausstieg des Staates aus der Wohnungspolitik. Lecture at Humboldt University, Berlin. Le Galès P (2002) European cities, Social Conflicts and Governance. University Press, Oxford. Lelévrier C (2010) La mixité dans la rénovation urbaine : dispersion ou re-concentration? Espaces et Sociétés, 140–141, 1–2, 59-74, Eres, Paris. ONZUS (Observatoire National des Zones Urbaines Sensibles) (2011) Rapport 2011 [Online] Available at: www.ville.gouv.fr Posthumus H, Kleinhans R and Bolt G (2012) Bijwerkingen van herstructureringsoperaties. Eburon, Delft. Rowlands R, Musterd S and Van Kempen R (eds) (2009) Mass Housing in Europe: Multiple Faces of Development, Change and Response. Palgrave Macmillan, Basingstoke. Schoon N (2001) The Chosen City. Taylor and Francis, London. Schwalbach J, Schrenk A and Smuda D (2006) Stadtrendite – der Wert eines Unternehmens für die Stadt [Online] Available at: http://www2.wiwi.hu-berlin.de/institute/im/_docs/ Schwalbach_Schwerk_Smuda_2006_Stadtrendite-Der_Wert_eines_Unternehmens_fuer_ die_Stadt.pdf Slob A, Bolt G and van Kempen R (2008) Na de sloop. NICIS Institute, The Hague. Tosics I (2009) Dilemmas of integrated area-based urban renewal programmes. URBACT Tribune [Online] Available at: http://urbact.eu/fileadmin/general_library/articleTOSICS_01.pdf Van Kempen R, Dekker K, Hall S and Tosics I (eds) (2005) Restructuring Large Housing Estates in Europe. The Policy Press, Bristol. Verhage R (2005) Renewing urban renewal in France, the UK and the Netherlands. Journal of Housing and Built Environment 20, 3, 215-227. Wassenberg F, van Meer A and van Kempen R (2007) Strategies for upgrading the physical environment in deprived urban areas: Examples of good practice in Europe. European Urban Knowledge Network EUKN / Nicis Institute, The Hague. Wassenberg F and van Dijken K (2011) A Practitioner’s View on Neighbourhood Regeneration: Issues, Approaches and Experiences in European Cities. Nicis Institute, The Hague. Wassenberg F (2013) Large Housing Estates: Ideas, Rise, Fall and Recovery. IOS Press, Amsterdam.

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The Pepys Estate was one of the first major post-war estates to be built in Deptford, London Borough of Lewisham in 1966. It has over 10 blocks of varying heights and smaller buildings all with differing internal arrangements. From 1992 to 2001, a Community Refurbishment Scheme was conducted through partnerships between local government, Family Housing Association the Hyde Group and Deptford City Challenge. The revitalisation of the estate led to the demolition of a total of three towers and the building of new, low-rise housing and community facilities. One of the council high-rises was controversially sold to Berkeley Homes PLC to be redeveloped as luxury riverside apartments. Photograph: James Burns.

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22 The Privatisation of Social Housing: Three Different Pathways Marja Elsingaa , Mark Stephensb and Thomas Knorr-Siedowc a OTB

Research Institute for the Built Environment, Delft University of Technology, the Netherlands b Institute for Housing, Urban & Real Estate Research, School of the Built Environment, Heriot-Watt University, Edinburgh, UK c UrbanPlus, Berlin, Germany

Introduction Germany, the Netherlands and the United Kingdom each built up significant social rented sectors in the twentieth century, especially in the decades following 1945, and each country developed its own model of social housing. Almost all social rented housing in the UK was provided by local authorities that owned and managed the stock. In the Netherlands, the municipal model was replaced by one whereby the vast majority of social rented housing was provided by housing associations. In Germany, a rather different concept of social housing led to a much more diverse range of providers that included municipal housing companies, cooperatives and private landlords. Since the 1980s in the UK, and the 1990s in Germany and the Netherlands, measures have been adopted that can be characterised as the ‘privatisation’ of social rented housing. Privatisation is a relatively new concept that emerged in the UK in the 1980s as the government sold state-owned companies to the private sector. While the sale of state-owned assets to the private sector is an important (and probably also the most robust) characteristic of privatisation, the term is also applied more widely to include any process that reduces

Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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government influence over socially orientated activities or aims to make greater use of the market to achieve social ends. This chapter examines the privatisation of social rented housing in the UK, the Netherlands and Germany. The nature of the privatisation process in each of these countries is examined in turn, and is followed by a comparative analysis.

Privatisation in the UK The first subsidies for social housing in the UK were introduced in 1919 for local authority housing. By the late 1970s, one-third of the British population lived in housing owned and managed by the state, overwhelmingly in the form of the local authority; in Scotland, the size of the sector peaked at more than 50%. Since 1980, the tenure map of Britain has been changed in large part due to privatisation, but also because social housing’s share of new construction fell. By far the most important form of privatisation has been the sale of council houses to sitting tenants at a discount under the Right to Buy policy. However, we also consider the transfer of local authority housing to non-profit housing associations, mostly under a system known as large-scale voluntary transfers (LSVTs) as a significant element of the story.

The Right to Buy The Right to Buy was introduced by the first Thatcher government in 1980. The principal motivation was to promote owner-occupation, rather than to cut public spending. Governments since the 1950s had promoted home ownership as the ideal tenure for aspirational households, especially after the policy switch away from general-needs social housing towards giving priority to rehousing people displaced by slum clearance programmes. Although the government also made claims that Right to Buy would save money, the costs of the policy were not formally estimated until after 2000 (Munro 2007). Nearly all council tenants could exercise the Right to Buy provided that they had been tenants for at least three years. It was backed with strong financial incentives. Qualifying tenants could purchase a property at a minimum discount of 33% from its open-market value, and this discount rose by one percentage point for each year of tenancy up to a maximum of 50%. Over time, the terms became more generous: in 1984, the minimum residency requirement was dropped to two years and the maximum discount rose to 60%. More generous terms for tenants living in flats were introduced in 1986 with a minimum discount of 44%, rising by two percentage points for each year’s residence to a maximum of 70%.

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180 000 160 000 140 000 120 000 100 000 80 000 60 000 40 000 20 000

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80 19 -81 82 19 -83 84 19 -85 86 19 -87 88 19 -89 90 19 -91 92 19 -93 94 19 -95 96 19 -97 98 20 -99 00 20 -01 02 20 -03 04 20 -05 06 20 -07 08 20 -09 10 -1 1

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(a) 2 000 000 1 800 000 1600 000 1 400 000 1 200 000 1 000 000 800 000 600 000 400 000 200 000 82 19 -83 84 19 -85 86 19 -87 88 19 -89 90 19 -91 92 19 -93 94 19 -95 96 19 -97 98 20 -99 00 20 -01 02 20 -03 04 20 -05 06 20 -07 08 20 -09 10 -1 1

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-8

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Figure 22.1 Right to Buy Sales (England) 1980–81 to 2010–11 (a) Number of units per annum. (b) Cumulative total. Source: Department of Communities and Local Government live table 670.

Figure 22.1a and b show the phenomenal success of Right to Buy in terms of privatising properties and promoting home ownership. An underlying reason for this success was that the local authority sector was relatively mature. Much social housing had been built in the 1930s and the high levels of inflation experienced in the 1970s helped to erode the real value of debts even on relatively recently built housing. The equity that built up in the sector financed the discounts without any ‘financial’ subsidy needing to be inserted into the system. Indeed, the capital receipts helped to reduce the level of government borrowing (Gibb & Whitehead 2007).

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The transfer itself was probably on average ‘progressive’ in the sense that assets owned by the community as a whole were transferred to people who were mostly less well off than the average. But in the longer term, the limitation on using capital receipts for constructing new social housing eventually led to shrinkage in the availability of social housing. The Right to Buy clearly contributed to the process of residualisation in the social rented sector because it was on average the better off tenants who exercised the right, leaving the poorest behind occupying the less attractive properties. But Right to Buy was by no means the only factor influencing residualisation: in housing terms, it coincided with a shift in allocation policies towards prioritising people who were most in need, and this was reinforced by the 1977 Homeless Persons Act (and its successors), which gave local authorities across Great Britain the duty to find permanent accommodation for ‘priority’ categories of unintentionally homeless people (Stephens et al. 2005). This contrasts with many other European countries where very poor and vulnerable groups who are excluded from mainstream social housing are accommodated in separate sub-sectors (Fitzpatrick & Stephens 2007). Moreover, the Right to Buy coincided with the huge restructuring of the British economy that led to very high levels of unemployment in the 1980s and again in the early 1990s. Although employment levels have since risen, and unemployment fallen, there has been a polarisation in the labour market between ‘dual income’ (or ‘work-rich’) households and ‘no income’ (‘work-poor’) households (Holmans et al. 2007). The latter are concentrated in social rented housing and this is now a major subject of official concern (Hills 2007). More recent analyses of Right to Buy have suggested that its impacts have been quite complex. For example, the government has claimed that ‘ … it has encouraged more affluent tenants to remain in the neighbourhood they have lived in for many years, helping to create stable mixed income communities’ (DETR, quoted in Stephens 2005). But the evidence is not straightforward and it is clear that Right to Buy has probably had differential impact depending on the areas (Munro 2007; see also Whitehead’s chapter on England in this book). Until recently, it appeared that the policy – at least in its traditional form – had run its course, as sales have fallen throughout the UK. This was caused in part by the introduction of restrictions, mostly in the form of maximum discounts, which led to reductions in both sales and the size of discounts. In Wales, a maximum discount of £24,000 was introduced in 1999 and then reduced to £16,000 in 2003. Regional maximum discounts ranging from £16,000 (in the high pressure south east) to £38,000 were also introduced in England (Wilcox & Fitzpatrick 2010). The 2004 Housing Act also lengthened from two to five years the period before a tenant becomes eligible to exercise Right to Buy and extended the period during which the

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discount must be repaid from two to five years in the event of a resale. Moreover, the social landlord was given the right to repurchase the property if it was sold within 10 years of the Right to Buy being exercised. Under the ‘modernised’ Right to Buy in Scotland, a reformed discount structure including a cash limit of £15,000 was introduced in 2002. However, sales declined less than elsewhere in the UK as the ‘old’ rights continued to be enjoyed by more established tenants (Wilcox & Fitzpatrick 2010). Under the 2010 Housing Act, the Scottish Nationalist government ended the Right to Buy for new tenants. However, the UK’s Conservative-led coalition government, formed in 2010, has sought to revive the Right to Buy in England, the one jurisdiction in which it controls housing policy. From April 2012, it raised the maximum discount to £75,000 (or 50% of property value if it is a house; 70% if it is a flat). Sensitive to criticisms that social housing stock will be lost, the government has put in place incentives for local authorities to reinvest receipts in new housing. However, the new housing must conform to the new ‘affordable’ housing model under which rents are set at 80% of market value. Local authorities not wishing to reinvest receipts will lose them to a national housing fund. Former local-authority tenants whose homes have been transferred to housing associations (see subsequent text) retain the right to buy and can participate in the new scheme. The new policy marks an important divergence from the rest of the UK. Meanwhile, while Right to Buy was in decline, another form of housing privatisation gained importance.

Large-scale voluntary stock transfers In contrast to the Right to Buy, the policy of transferring council housing to other landlords arose from the bottom upwards (Stephens, 2005). This was in response to changes by the central government in the system of state subsidies to English local authorities, which led to many receiving ‘negative’ subsidies. It was this situation that prompted the first transfers to new landlords. These were formally non-profit housing associations, but in reality they were the old local-authority housing department with a different legal status. The government did not oppose these transfers. It did introduce a charge (the ‘Treasury Levy’) to gain some compensation for the loss of savings relating to housing allowance subsidy, but as long as tenants were balloted and voted in favour of the transfer it went ahead. Normally, tenants were offered guarantees about limits on future rent rises. They retained their rights (e.g. security of tenure as well as the Right to Buy) and were often attracted by the prospect of improvements to the stock.

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This process had its limits. Transfers could only take place if they were financially viable – that is, if the transfer value of the stock matched or exceeded the outstanding housing debt. In many urban areas with higher proportions of newer properties and with greater repair needs, this was not possible. The value of the stock was based on the ‘tenanted market value’ model, which involved calculating the net present value of future rental incomes (over 30 years). A central government grant scheme was established in the mid-1990s to facilitate the transfer of particular estates whose stock value was not sufficient to repay debts. However, the Labour government elected in 1997 more actively promoted stock transfer as a means of leveraging in private finance with which to renovate the stock (Gibb & Whitehead 2007). A Green Paper issued in 2000 suggested that 200 000 units per year might be transferred over the next 10 years, and a wider range of instruments was developed to facilitate ‘negative value’ transfers. As Figure 22.2(a) indicates, stock transfer has led to the privatisation of more than one million council dwellings in England. While the policy has been successful in leveraging in private finance for renovation, it has been controversial and not as successful in the ‘urban’ form promoted by the central government. Particularly controversial was the fact that the government was willing to write off debt only if tenants voted to transfer the stock to a new landlord. The reasons for this lie in public spending rules and a political preference for local authorities exercising a strategic role rather than being a direct provider. In Scotland, attention was focused on whether Glasgow tenants would vote for stock transfer. Glasgow’s stock was the biggest in the UK at around 90 000 units, and the government pledged to write off nearly £1 billion (then equivalent to about €1.4 billion) of housing debt. The ballot was won, but other big city bids, notably in Birmingham and Edinburgh, failed, and in Glasgow much controversy continued over the so-called second-stage transfers that were supposed to see the stock broken up among a wider range of landlords (McKee 2007). ‘Negative’ value stock transfers have therefore become generally limited to partial transfers of problematic estates in urban areas. Policy has begun to shift towards acceptance of a wider range of models that stop short of privatisation, some of which involve new investment – and even new building – by local authorities themselves. Privatisation has reduced the number of state-owned houses in the UK from 6.3 million in 1981 to 2.3 million in 2010 (DCLG live table 101). Within the diminished total of social rented houses, the local authority share has fallen from near monopoly levels (93%) in 1981 to less than half (47.2%) in 2010. Overall some 18% of the UK housing stock was owned by social landlords in 2010 – still a relatively large share by international

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180000 160000 140000 120000 100000 80000

Negative values

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Positive values

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88 19 -89 90 19 -91 92 19 -93 94 19 -95 96 19 -97 98 20 -99 00 20 -01 02 20 -03 04 20 -05 06 20 -07 08 20 09 10 -1 1

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1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

0

(b)

Figure 22.2 (a): Large-Scale Voluntary Transfers of local authority housing (England) 1988–1989 to 2010–2011 (number of units). (b) Cumulative total of Large-Scale Voluntary Transfers (England) 1988–1989 to 2010–2011 (number of units). Source: Wilcox (2006), Tables 68a, 68d, 68e.

standards. Home ownership, which grew to almost 70% in the early 2000s, is now also in decline and fell to 64.7% by 2011. The sea change in UK housing has been the revival of the private rented sector, which by 2011 reached 17.2% of the stock. Insecure and let at market rents, it has rapidly become established as the main alternative for people priced out of owner occupation, and people who can no longer access social rented housing – in part due to the twin policies of the Right to Buy and restrictions on building new social rented housing.

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Privatisation in the Netherlands At 35%, the share of social rental housing in the Netherlands is the largest in Europe. It is almost all owned and managed by housing associations, which also manage some non-social housing. The Dutch housing associations were originally of three types: Catholic, protestant or general (reflecting the ‘pillars’ into which Dutch society was formerly divided) (van der Schaar 1987). The first two had strong ties with the Christian Democrat party, and the latter with the Social Democrats. Alongside these non-governmental associations, local authorities also provided social housing from 1901 onwards. Municipal housing companies accommodated the most vulnerable households that did not qualify for housing-association tenancies. Housing associations were groupings of tenants and were free to determine their own allocation policies. In the past few decades, municipal housing companies have turned into housing associations and the latter have become more professionalised and increased in scale as the result of numerous mergers. Many have changed their legal status from associations to foundations. This has reduced the influence of members and tenants and increased the power of directors. Currently, there are around 500 non-profit housing associations, but the number continues to fall as mergers occur. The average association owns 4500 units,

6000

800 700

5000

600 4000

500

3000

400 300

2000

200 1000 0

100 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

0

Social housing stock (x 1000, left axis) Average size housing stock (left axis) Number of housing associations (right axis) Figure 22.3 Social rented housing stock, number of housing associations and average size of housing associations (Netherlands), 1998–2011. Source: Central Fund for Social Housing.

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but the largest possess 50 000–80 000 dwellings, spread over a number of municipalities and regions (Elsinga & Wassenberg 2007) (Figure 22.3). Here, we discuss three main forms of privatisation: the transformation from municipal housing companies into housing associations, the increasing independence from government of the social rented sector and the sale of dwellings to individual households.

Municipal housing companies became housing associations Municipal housing companies played an important role in solving the Dutch housing shortage after World War II. After addressing the most urgent needs, the Dutch government gave priority to housing associations over municipal companies in distributing subsidies for the production of social housing. Part of the compromise between Dutch Social and Christian Democrats in the decades after the war was that non-profit organisations should be relied on for welfare provision. This implied a steady decrease in municipal housing – a decrease which was officially encouraged in the 1960s and 1970s. In the late 1980s, a White Paper on housing marked a switch to more market-oriented approach. This policy also implied the transfer of stock from municipal housing companies to housing associations. Some companies opposed this transfer and stressed the need for municipal housing as a safety net. Those who supported the transfer argued that in towns without a municipal housing company, housing associations fulfilled the safety net function just as well. They won the argument and it became national policy to reduce the number of municipal housing companies to zero by 1996. However, some municipalities refused and about 20 small companies continued until after this date (Brakkee 1997); few or none are now left. In many cases, the housing company became a housing association. In others, the municipal stock was sold to an existing housing association. Where the municipal companies were healthy, the municipalities gained from the transfer. However, this was not the case everywhere and there were financial problems, in particular, with companies in large cities (Haffner 2002) (Figure 22.4).

The growing independence of housing associations By the 1990s, the Dutch social-housing sector was already owned predominantly by housing associations. However, the post-1995 disengagement of government from their activities represents a form of privatisation. It was partially motivated by the government’s wish to limit its recorded budget deficits, as these were a part of the Maastricht Treaty’s convergence criteria for membership of the new European single currency.

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1000

Municipal company

500

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

0

Figure 22.4 Number of municipal housing companies and housing associations and their housing stock (Netherlands), 1980–2010. Source: CBS, Statline.

The ‘grossing and balancing operation’ in 1995 was the key step in establishing the financial independence of Dutch social housing from government (Priemus 1997). Under this operation, government subsidy to housing associations ceased; in exchange, the government wrote off all outstanding loans to the associations. This meant that no more bricks-and-mortar subsidies would be provided to housing associations. Although the grossing and balancing operation established the housing associations’ financial independence, they are nonetheless subject to regulation. A housing association’s status requires approval under the Housing Act, and their functions and other operating conditions are laid down in a separate government order drawn up pursuant to the Housing Act, known as the Social Rental Sector Management Order (Dutch abbreviation: BBSH). The BBSH, which came into force in 1993, stipulates that approved housing associations have the task of providing good, affordable housing for those who are unable to find a dwelling in the market. The order stipulates that housing associations should take local-government policy into account. One way to achieve this is through performance agreements between local authorities and housing associations that set out how associations will contribute to fulfilling local government objectives. In practice, however, only one-third of housing associations make these agreements (Conijn 2005). The BBSH also obliges housing associations to appoint an internal supervisory board (although the quality of their supervision has been questioned) (Centraal Fonds voor de Volkshuisvesting 2006). A further supervisory organisation is the Central Housing Fund (Centraal Fonds voor de Volkshuisvesting, CFV), a statutory, non-departmental public body funded by the housing associations themselves (Conijn 2005). It has

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three roles: to exercise financial supervision of housing associations on behalf of the minister, to take remedial action if housing associations find themselves in financial difficulties and to redistribute equity for special purposes. The CFV can provide money to housing associations that lack funds for particular investments and can even impose a levy on associations for this purpose. The final external supervision of housing associations’ performance is carried out by the Ministry of Housing. Even after the cessation of direct subsidies, housing associations continued to receive certain types of government support, such as exemption from corporation tax on their social activities, in exchange for performing a social role. In 2006, this exemption was abolished for commercial activities (e.g. construction of owner-occupied dwellings) carried out by separate legal entities, and the wider exemption for social activities was abolished in 2011. A second form of government support is the Guarantee Fund for Social Housing (WSW). The WSW is a private body backed by central and local governments, which guarantees low-interest (below market rate) loans to housing associations. Finally, the associations are often subsidised by land policy; most local authorities charge less than market price for land on which social rental dwellings will be built. The wealth of housing associations was a topic for discussion for a long time. The Central Fund criticised housing associations for not using their equity enough. This has changed substantially in recent years as social housing is suffering from the recession, but the solvency ratio (the ratio of equity to total assets) is still 27% (Centraal Fonds voor de Volkshuisvesting 2011).

Sale of social rental dwellings to individual households Privatisation in the form of the sale of social dwellings has also become a feature of the Dutch system. In 2010, housing associations sold around 18 500 dwellings: 15 100 to individual households for owner-occupation and 2400 to others. Dwellings are sold at market price or slightly below (with price reductions of 5% or at most 10%). Annual sales, at about 0.5% of the total housing stock, are small and roughly equivalent to the yearly production of new social housing (Figure 22.5). Housing associations see the sale of rental dwellings as a way of advancing urban renewal, especially on the post-war estates they own. Selling part of the social stock makes neighbourhoods more mixed by enabling local households to enter home ownership without having to leave the area. Moreover, revenues from sales can be invested in improving the neighbourhoods or building new dwellings. Over the past decade, stock sales have become an element in the portfolio strategies of housing associations, and revenues make an important contribution to financing their investment plans.

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10000

Social home ownership

8 000 6000 4000 2000 0

1995 1997 1999 2001 2003 2005 2007 2009

Figure 22.5 Sale of social rental dwellings and social home ownership (Netherlands), 1995–2005 (number of dwellings). Source: Annual report Central Fund for Housing, 2012.

In the wake of the global financial crisis, house prices are decreasing and households are less keen to buy. While the number of dwellings sold by housing associations has remained stable, that number is far below their target. Because housing associations seek to invest in new housing and housing renovation, they are searching for new ways to sell their dwellings, and their share in the overall amount of dwellings sold has increased considerably. This has also given a boost to so-called social home ownership or intermediate housing tenures. Social home ownership schemes: The first type of social home ownership is known as the Koopgarant (‘guaranteed buying’) or Slimmer Kopen (‘smarter buying’) (Elsinga 2005; Gruis et al. 2005; Costa & Schaefer 2006). A special contract governing the ownership of the dwelling gives a discount of between 25 and 30% on the purchase price of a property; in return, profits or losses on resale are shared between the homeowner and the housing association. Moreover, the owner of the house is obliged to sell to the housing association and the housing association is obliged to buy it back within three months of the owner putting it on the market. The arrangement is based on the principle that housing associations do not subsidise social home ownership; the dwellings are sold at what is considered to be market price. A second type of social home ownership is more targeted at first-time buyers and is seen as a stepping stone to full ownership. The buyer gets a discount on the sales price or the interest rate, which is later repaid. Kopen naar Wens (‘buying to desire’), Starterslening (first-time buyer’s loan) and Starters

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Renteregeling (first-time buyer’s interest deduction) are specific policy tools for this (Elsinga et al. 2012).

Current debates Current discussions regarding Dutch social housing fall into three areas. Efficiency: Politically, the key issue is whether the housing associations, which possess large amounts of capital, do enough to justify their financial position. One recurrent question in this connection is who actually owns the associations’ assets – the associations themselves or the government? Supervision and self-regulation: There is a political debate about the relationship between housing associations and government. One view is that there should be more hierarchy and stronger government supervision to safeguard performance. The housing associations themselves say that as private non-profit bodies with social tasks and responsibilities they can be trusted to regulate themselves. Coping with the stagnating housing market: There is a discussion about the best way to deal with the stagnating market. In 2009, the dominant idea was that the housing market would soon go back to normal. But after the double dip, it has become clearer that housing investment targets might need adjustment. Finally, there is a growing debate about social home ownership and the risks to housing associations of the repurchase condition.

Privatisation in Germany Over little more than 20 years, Germany has experienced two about-faces in the approach to privatising social housing. From the early post-war years onwards the (western) federal state assumed strong responsibility for housing in general, focusing on social housing ‘for a broad stratum of society’ (IInd WohBauG 1956) owned in large part by non-profit social housing companies. After 1989, the privatisation of public assets was seen as a one-size-fits-all prescription for the federal state and the regions (Länder), which were searching for market mechanisms for formerly publicly provided goods. General marketisation of public utilities coincided with a neoliberal turn in the welfare system (Hegelich et al. 2011; Meyer 2004), which was dedicated to cutting welfare expenditure. The sale of publicly owned social housing served two ends: making housing responsive to market pressures and cutting state expenditure. After 2006, a much more critical approach

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was adopted. Privatisation was seen as a partial failure, with often-risky structuring (e.g. cross-border sale and lease-back of public assets) that fostered widespread public dissent. Many municipalities are now trying to regain control and ownership of former publicly owned assets including privatised trams, waterworks and electricity plants as well as housing.

Typology and scale of social housing Social rented housing follows a different logic in Germany than in the Netherlands or the UK. The German de jure concept of social housing operates on a contractual basis. Landlords accept public subsidy in exchange for a contractual commitment to accept means-tested access and rent control for a limited period – usually between 12 and 50 years. Such de jure social housing has since the early 1950s been provided by a wide range of landlords, including cooperatives, municipal and state-owned housing companies (e.g. the post office and railways), institutional investors (such as insurance companies and banks) and many small-scale private landlords. Social rented housing is owned by professional-entrepreneurial landlords (who own 27 million rental flats overall) and many small private ‘amateur’ landlords (owners of 14.5 million flats); it can even be found in owner-occupied two-family homes.1 Owing to this logic, the number of German social dwellings has been shrinking over the past three decades even without the impact of privatisation. About 100 000 dwellings leave the sector annually because the lock-in period has expired, while only about 30 000 new social flats come into the system – and some regions have had none since 2000. Thus, the number of social homes has fallen from over 4 million in the mid-1980s to under 1.4 million in 2012. The number of de facto social housing dwellings exceeds the 1.4 million de jure units. Although landlords are free to raise rents on new leases after the lock-in period, cooperatives (which own 11% of the rental stock) must respect their residents’ decisions about rent revenue and usually continue to charge mid-level ‘social’ rents, and the remaining municipal housing companies are often obliged by their public shareholders to treat much of their post-lock-in stock as de facto social housing. Private landlords and institutional investors, on the other hand, usually move immediately to charging the maximum legal rent after the social lock-in period ends and these homes are lost to social renters. By renouncing the maximisation of financial profits in favour of a Sozialrendite (social yield), municipal housing companies can contribute to socio-spatial cohesion, take some pressure off the (remaining) social housing stock and relieve the municipal purse of the higher housing-benefit payments that usually follow rent rises. This social return on public

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investment benefits both municipalities and municipal housing companies: municipalities have stable partners for local welfare policies, while the companies can engage in socially inclusive local action without pressure to make the highest possible return. In the ideologically heated debates during the peak period of privatisation between 1990 and 2006, the social yield was often seen as the only justification for municipalities to continue to own housing companies. About 50% of the formerly social housing owned by companies with municipal shareholders – or 1.3 million dwellings – is still operated as quasi-social housing.

The story of the privatisation of social housing The decision to sell public assets, including municipal housing, can be attributed to both political ideology and practical pressures. Beginning in the mid-1980s, a strong neo-liberal undercurrent influenced policies across the political spectrum. The protagonists of privatisation argued that the production and public management of social housing were too costly and socially inefficient, and that individual housing benefits would conform better with market mechanisms (Trappmann & Kallenbrunnen 2006). After 1990, the immense costs of unification and the ongoing economic and labour-market crisis (which lasted from the early 1990s to around 2008) put the public sector under constant financial stress, prompting an increase in sales of public assets. Since 1999, German public owners have sold more than 1.5 million dwellings in approximately 150 major transactions (Holm 2007). In 2007, experts estimated that overall 7.5 million former non-profit dwellings could come onto the German market (Vetter 2007). The 10 largest sales of former public housing companies dominated the debates in Germany (Table 22.1). At the same time, there were many smaller transactions (a few hundred to a few thousand dwellings) that scarcely appeared in the statistics. There were considerable regional differences. Sales of social and quasi-social housing were highest in those regions with both high vacancy rates and conservative governments; Berlin and North Rhine-Westphalia topped the list. Regions with high owner-occupation rates retained their (often low) proportion of public housing, even if governed by conservatives. While smaller towns on average sold 15% of their housing stock, larger cities often sold more than 40%; the city of Dresden sold 100% of its stock to a single buyer. Most large state-owned housing companies (for employees of the railways, post and other state-owned industries) were disposed of entirely. A remarkable peak in sales occurred in the new eastern states, where federal legislation (Altschuldenhilfegesetz) forced public companies and cooperatives with debts from GDR times to sell at least 15% of their stock to rid themselves of these ‘old mortgages’.

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Viterra BGAG German trade union holding company HSH Nordbank

66 000 64 000 48 000 31 000 28 000 27 000 23 000

18 000

GSW real estate company Deutsche Bahn housing Thyssen-Krupp housing WCM housing NILEG (various housing associations in N Germany) Viterra housing company BauBeCon residential property development company GEHAG housing association (previously part-owned by state of Berlin) Oaktree

KGLA/Mira Cerberus

Cerberus/Goldman Sachs Terra Firma Morgan Stanley/Corpus Blackstone Fortess

Terra Firma private equity Fortess

Buyer

0.55

1.00 n.a.

2.11 2.10 2.10 1.39 1.50

7.00 3.50

Total price (€ billion)

30 550

37 050 n.a.

31 950 32 800 43 750 44 850 53 650

50 750 42 700

Price per unit (€)

2004

2004 2005

2004 2001 2004 2004 2005

2005 2004

Year

StyleC

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E.ON (utility firm) BfA (state pension organisation) State of Berlin DB German rail Thyssen/Krupp WCM corporation Nord Landesbank

Seller

138 000 82 000

Number of dwellings

Viterra housing company Gagfah housing association

Housing stock sold (in whole or in part)

Ten largest bulk sales of formerly public housing (Germany), 2001–2005.

404

Table 22.1

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Purchasers of privatised housing: In contrast to the UK and Dutch privatisation policies, the mass sales of public and social housing in Germany were never intended to benefit sitting tenants. Strengthening home ownership, a key policy objective of conservative as well as centre-left/green governments, was achieved through tax benefits and subsidies to help middle-class households build their own homes and, between 1985 and 2000, by expanding the ownership element in social housing. Even though some attempts were made to sell flats to residents, only a small minority even considered buying.2 In a country where the majority of households are tenants, renting was – and still is – regarded as a genuine choice and there is no assumption that home ownership is the preferred tenure as is the case in many other countries. German rent laws provide for secure long-term tenure and predictable rent rises.3 Many renters, especially the aged and those in or threatened by unemployment or falling incomes, calculated that over their lifetimes buying would be more expensive than renting. Sales to individual residents were generally understood to be complicated and expensive to manage. As German institutional investors showed limited interest in social or other low-profit housing, public sellers turned to international institutional investors, including pension funds and hedge funds. With a limited grasp of the historically established balance between prices and rent legislation, these investors considered German housing to be under-priced. They expected to move away from the traditional ‘hold and manage’ strategy (with annual returns of 4–6%) towards a speculative profit orientation, promising their shareholders returns of 20% or more per annum. Federal sales: Well before 2000, the conservative-liberal Kohl government started the privatisation of federally owned homes by selling around 230 000 flats belonging to the railway housing company at bargain prices. This sale, which was understood to be pitched intentionally at specific private investors, fuelled the contention that privatisation turned public wealth into private profit. The following Social Democrat/Green coalition sped up sales, usually in conjunction with the privatisation of the ‘mother companies’ (such as the post office). Federal sales only ended during the grand coalition of the Christian Democratic Union and the Social Democratic Party after nearly all housing of this type had been disposed of. The portfolio included the housing companies of large state-owned industrial enterprises like Krupp, whose 48 000 well-maintained dwellings were sold to Morgan Stanley/Corpus. Municipal sales: Generally, sales of municipal assets were prompted by the poor state of German local finances in the 1990s during the economic crisis that affected large parts of old industrial and rural Germany after the initial

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19

99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 0 20 8 09 /2

0

Figure 22.6 Sales of German publicly owned housing (federal, state and municipal) per annum 1999–2009. Source: BBSR 2011.

post-unification boom. But there were also other factors that led mayors and municipal treasurers to consider selling what was formerly considered the public ‘family silver’. The often poor image of municipal housing companies, as managers of neighbourhoods with social ‘development problems’ (Difu, 2008), lessened their economic and political value. So, after selling their municipal energy and water companies, local governments put municipal housing on the block, if no non-financial value – e.g. in terms of contribution to social cohesion – could be identified. Robust figures about sales of municipal housing are hard to find owing to the structure of data collection in federal Germany. Only lots of more than 800 dwellings were systematically counted, while many piecemeal sales went unnoticed except by the residents of the dwellings concerned. Estimates are that up to 2006 some 730 000 municipal dwellings changed owners (Holm 2007). Berlin, which sold more than 150 000 units, and Dresden, which disposed of its entire stock, were amongst the largest sellers, but western cities also contributed. During the early years, about 100 000 access- and rent-controlled municipal dwellings changed hands annually, but by 2004 this number had risen to over 314 000 (BBSR/IfS 2007), although the rate then slowed (Figure 22.6). Secondary sales, however, have gone up sharply. An estimated half million privatised homes were sold to other investors or, to a lesser degree, residents, as many of the first-generation buyers found that their original expectations about the profitability of the German housing market were wrong. The strategies of the new landlords: Most new private owners have followed a typical cherry-picking strategy. In the first stage, the best-quality saleable dwellings were upgraded and converted into condominiums.4 These were sold individually to wealthy speculative purchasers who would usually rent them out at full market prices – resulting in drastic rent increases for

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any remaining sitting tenants.5 Such units could on average be sold for more than double the original purchase price, allowing the new private owners to recoup their original outlay for the whole stock after only three years and by selling less than 50%. A second segment of potentially profitable stock, the medium layer, remained as decently managed rental housing, albeit rented out at the highest legal rent and without the special social attention offered by municipal companies. Lower quality homes, the third layer, were often not maintained and became residual ‘social’ housing for the least advantaged, often problem-prone renter groups. Maintenance investment in this layer has been almost halved by private investors (Holm 2007). This strategy of splitting up municipal and social housing according to profitability has led to complex filtering processes. It provides incentives for the better off to move to the two upper layers, while the only option for those unwanted or unable to pay in the upper levels was to filter down. This mainstream type of privatisation contributed directly to social segregation and spatial polarisation, especially in formerly integrated social housing estates, and on the whole had a negative impact on residents and the welfare system. Investors found this cherry-picking strategy easiest to pursue with de facto social housing. While restrictions were usually imposed on buyers of de jure social housing, the contractual ‘social charters’ were not always enforced for de facto social housing, for example, in Berlin and Dresden. When a dwelling changed hands for the second or third time, it was often impossible to impose the provisions of the charters on the new buyers. Municipal experiences: This cherry-picking, and significant rent increases in former public housing, made it difficult for the public sector to achieve the benefits it expected from sales – that is, reduced public debt without collateral damage. This was especially true in cases where many tenants received rent support (either Wohngeld/housing allowance or as part of social security payments). These payments cover the full housing cost (within certain limits), so rent increases resulted in higher rent-support expenditure – privatisation led to a transfer of public funds to the new landlords. At the same time, the reduction in the amount of affordable de facto social housing increased pressure on the remaining de jure stock. In the end, Kiel and other municipalities that swam against the current by part-privatising existing or newly founded cooperatives fared relatively well, balancing revenue and social benefit. But in areas where housing benefit rose without a corresponding change in municipal budgeting, public debt soon started rising again. In many municipalities, private buyers did not honour the social charters, or the stock left after the cherry-picking turned into a burden. Munich, for example, felt obliged to buy back some rapidly deteriorating privatised stock after the investors went bankrupt. But the clearest example of the risks was Dresden, which sold its remaining 48 000 municipal

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flats for €1.8 billion to Fortress/GAGFAH6 in 2006, having already privatised 120 000 flats between 1990 and 2004. As early as 2007, there was evidence that Fortress was not complying with the social charter. Dresden subsequently sued Fortress/GAGFAH for breaching the contract and received a substantial out-of-court agreement in 2012. But the debate about the social obligations of new private owners is not over. As late as 2012, the scientific service of the German parliament said (with regard to the sale of TLG, former state-owned housing stock in eastern Germany) that any constraint on a purchaser’s rights that went beyond common market practice would be a breach of EU law. There is another side to the privatisation of municipal housing. The critique of public housing companies as over-bureaucratic and inefficient administrators was often well founded. New market actors have been criticised on social policy and housing grounds, but their competition has nevertheless led the remaining municipal housing companies to adopt more professional and efficient approaches, and to forge closer links with local welfare politics.

The debate in Germany The privatisation of municipal and other social housing has provoked strong debate in media, political and academic circles. While political parties almost unanimously followed the neoliberal line during the first decade of privatisation, after 2000 the policy debate became more complex. The number of advocates of privatisation dwindled as evidence of widespread collateral damage accumulated and politicians recognised that renters are also voters. Radio, TV and the print media covered the fallout from privatisation – higher rents and water prices, less investment in maintenance and near-bankrupt municipalities as a result of sale-and-leaseback ventures. The serious and widely read weekly Die Zeit published an article entitled ‘When the investor rings – the end to the dream of humane housing in Germany’ (Kirbach 2006),7 describing the fear of elderly people and young family tenants that they would be priced out of their housing by luxury rehabilitation or residualisation of the remaining municipal stock. In early 2013, a commission of the North Rhine-Westphalia parliament, in a report on new financial actors in the housing system, said that ‘the amount of neglected housing stock has increased with the entrance of private institutional actors … who are often international actors’. Some of them were ‘increasingly renting out to benefit recipients, who are seen secure rent-payers even for run-down properties that are badly maintained or not maintained at all’ (Enquete-Commission of NRW Parliament 2013). Between about 1999 and 2005, the debate about housing privatisation was linked to a wider discourse about the disempowerment of politics and

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politicians by the neoliberal emphasis on market economics. Most political parties advocated more active, socially inclusive strategies for dealing with socioeconomic problems. There is now general agreement that over the past two decades a structural housing crisis has been building up in Germany’s growth areas (BBSR 2011), apart from the worry about the dwindling stock of social rented housing. Experts call for a discussion that goes beyond ‘the common liturgy of checking alternatives like privatising in smaller chunks, founding cooperatives and better tenant protection’ (Holm 2007). Currently, further mass privatisation following the pre-2009 model would be highly unlikely,8 as the public and politicians are now aware of its unintended consequences. The privatisation of public housing companies may even have contributed to a gradual redefinition of social housing, and to the spread of innovations (id22 2012). However, as the association of German municipalities and cities has pointed out, the fundamental driver of privatisation – the dramatic and increasing poverty of public owners – has not ended and might force further asset sales in future (Der Städtetag 2011).

Conclusion These descriptions of housing privatisation in the UK, the Netherlands and Germany allow us to explore the nature of privatisation further. We can identify four different ways of transferring the housing asset from a public or social entity to a private one (Table 22.2). It is notable that the transfer of publicly owned housing assets to the commercial sector has been a feature only of the German system. This is especially important because other forms of privatisation (such as the transfer to housing cooperatives or resident associations) are generally rare. The transfer of housing from local authority ownership to non-profit housing associations is a historic feature of the Dutch system, and more recently has become a very important feature in the UK. By far the most extensive sales to sitting tenants have occurred in the UK under the Right to Buy scheme. The sale of housing into ‘social’ home ownership in various forms has occurred in each country, but is probably most developed in the Netherlands. However, this typology does not capture the more general retreat of the state that is the defining characteristic of housing privatisation in the Netherlands, as housing associations were ‘set free’ in the mid-1990s via the ‘grossing and balancing’ operation. While forms of privatisation vary across the three countries, in all of them the policy has been driven by concerns over public expenditure. This is most clearly the case in Germany, where some municipalities sold their housing stocks to improve the state of their finances. The ‘grossing and balancing’ operation in the Netherlands was motivated in part by the need to meet

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Different ways of privatising of social housing.

Table 22.2

Purchaser Private social providers UK

From local authorities to housing associations (large-scale voluntary transfers)‡ Netherlands From local authorities to housing associations‡ Germany From public social owners to cooperatives∗

Commercial landlords

Owneroccupiers

Social owner-occupiers

–

From local authorities and housing associations to home owners (Right to Buy)‡

Very limited shared ownership/equity (‘Social Homebuy’ in England) ∗

–

From housing associations to home owners†

Social owner-occupation∗

From public social owners to residents∗

From public social owners to cooperatives∗

Sale of municipal housing to private equity funds ‡

Key: ∗ very limited; † extensive; ‡ very extensive. Source: authors.

European rules on government deficits (although it implied an increase in the stock of government debt). Although the Right to Buy in the UK was not motivated by public spending concerns, the transfer of local authority housing to the housing-association sector was attractive to the government, as housing-association borrowing does not count as public spending. There is widespread concern that Right to Buy in the UK and the sale of municipal housing stocks in Germany contribute to a residualisation of the remaining publicly owned housing. However, the longer experience of Right to Buy suggests that its impacts have been more complex (see Malpass, Whitehead [England] and Murie chapters in this book); they also vary locally, often reflecting wider regional economic and demographic development. One thing is common to all three countries: the political systems appear to have little positive commitment to social rented housing. Only the German local authorities (regions and municipalities) seem inclined to positively re-engage with this form of housing, despite difficult fiscal conditions. This widespread retreat from the provision of decent social housing for rent is worrying, as there is no evidence that its demise would be necessary or desirable. But neither is its demise inevitable: there are a range of options between full marketisation and traditional social housing that can be further explored.

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Notes 1 See Figure 2 on the structure of German housing provision in Droste and Knorr-Siedow chapter in this book. 2 In a campaign to raise home ownership after 1993 in the eastern regions, 93% of those offered the opportunity to buy their flat at a discount rejected it. 3 The civil code allows for maximum rent rises of 20% over three years (after a contract of at least 15 months), as long as the resulting rent does not exceed the local average (Mietspiegel). 4 Under the German condominium law (Wohnungseigentumsgesetz WeiG) 5 Such rent rises often occur with secondary sales of de jure social housing either because the secondary buyer is not informed about the rent ceilings, or because municipalities do not check rents on privatised social housing. 6 The globally active Fortress Investment Group LLC, based in New York, acts through locally based housing companies. These include GAGFAH, a non-profit housing company founded 1918 to provide affordable housing for clerical workers. After denazification, GAGFAH was acquired by the German state pension funds, who sold it to Fortress in 2004. 7 The same author wrote ‘Für dumm verkauft’ (‘Sold to the fools’) about cross-border lease-back scandals (Kirbach 2009). 8 The 2012 sale of 12 000 former state-owned dwellings in eastern German by federally owned TLG was highly controversial. It was the last of the saleable federal housing assets.

References IInd WohBauG (1956) [II. Housing and Family Homes Building Law] Bundesgesetzbalatt, Bonn. BBSR/IfS [Institut für Stadtentwicklung und Strukturplanung] (2007) Veränderung der Anbieterstruktur im Deutschen Wohnungsmarkt und Wohnungspolitische Implikationen [Changes in the Structure of Provision on the German Housing Market and Housing-Political Implications], Volume 124. BBR Forschungen, Bonn. BBSR (2011) Housing and Property Markets in Germany at a Glance. Bundesinstitut für Bau-, Stadt-, und Raumforschung, Bonn. Brakkee G (1997) Kroniek der gemeentelijke woningbedrijven. Platform voor de Volkshuisvesting. Centraal Fonds voor de Volkshuisvesting (2006) Sector Beeld 2006 [Picture of the Social Rental Sector 2006], Centraal Fonds voor de Volkshuisvesting, Huizen. Centraal Fonds voor de Volkshuisvesting (2011) Sector Beeld 2010 [Picture of the Social Rental Sector 2010]. Centraal Fonds voor de Volkshuisvesting, Huizen. Conijn J (2005) Naar een Duidelijke Taakafbakening en Heldere Sturing [Towards Clear Division of Responsibilities and Clear Steering]. RIGO, Amsterdam.

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References

Costa A and Schaefer J P (2006) Quelques expériences européennes sur nouvelles fromes de propriété. L’observateur de l’immobilier 67, 26–32. DCLG Live Tables [Online], Available: https://www.gov.uk/government/organisations/ department-for-communities-and-local-government/about/statistics#latest-statisticalreleases Der Städtetag (2011) Gemeindefinanzbericht 05-2011. Berlin/Köln. Difu (2008) SozialeStadt, (English). Berlin/Bonn. Elsinga M (2005) Affordable and low risk home ownership, in P.J Boelhouwer, J Doling and M Elsinga (eds) Home Ownership: getting in, getting from, getting out DUP Science, Delft. Elsinga M, Joris H and Dol K (2012) Financial consequences of intermediate housing tenures in the Netherlands. Paper presented at ENHR conference on Housing: Local Welfare and Local Markets in a Globalised World, Lillehammer, Norway. Elsinga M and Wassenberg F (2007) Social Housing in the Netherlands. In: Social Housing in Europe. (eds K Scanlon and C Whitehead). London School of Economics, London. Enquete Commission of NRW parliament (2013) Wohnungswirtschaftlicher Wandel und neue Finanzinvestoren auf den Wohnungsmärkten in NRW (’Housing Economic Change - New Financial Actors in the North-Rhine Westfalian Housing System’), (Drs. 16/2299). Düsseldorf. Fitzpatrick S and Stephens M (2007) An International Review of Homelessness and Related Social Housing Policies. Department for Communities and Local Government, London. Gibb K and Whitehead C (2007) Towards a more efficient use of housing finance and subsidy. Housing Studies 22, 2, 183–200. Gruis V.H, Elsinga M, Wolters A.G and Priemus H (2005) Tenant empowerment through innovative tenures: an analysis of ‘Woonbron Maasoevers’ client choice programme. Housing Studies 20, 1, 127–147. Haffner M (2002) Dutch social rental housing: the vote for housing associations? Paper presented at 9th European Real Estate Society Conference: The changing role of private finance in social housing, Glasgow. Hegelich S, Knollmann D and Kuhlmann J (2011) Agenda 2010 – Strategien, Entscheidungen, Konsequenzen, [Agenda 2010 – strategies, decisions, consequences]. VS Verlag, Berlin. Hills J (2007) Ends and Means: The future roles of social housing in England. Centre for the Analysis of Social Exclusion (CASE), London. Holm A (2007) Zweitverwerter der Wohnungsprivatisierung [Secondary beneficiaries of housing privatisation], Mieterecho, 322 [Online], Available: http://www.bmgev.de/mieterecho/ 322/25-zweitverwerter-wohnungsprivatisierung-ah.html Holmans A, Stephens M and Fitzpatrick S (2007) Housing Policy in England since 1975: an introduction to the Special Issue. Housing Studies, 22, 2, 147–162. id22 (2012) CoHousing Cultures -Handbuch für selbstorganisiertes, gemeinschaftliches und nachhaltiges Wohnen [Handbook for selforganised, joint and sustainable housing] von id22: Institute for Creative Sustainability, experimentcity, Berlin. Kirbach R (2006) Wenn der Investor klingelt [When the investor calls]. Die Zeit, 5 January, 2. Kirbach R (2009) Cross-Border-Leasing: Für dumm verkauft [Sold to the fools]. Die Zeit, 12 March. McKee K (2007) Community ownership in Glasgow: the devolution of ownership and control, or a centralizing process? European Journal of Housing Policy 7, 3, 319–336. Meyer T (2004) Die Agenda 2010 und die soziale Gerechtigkeit [Agenda 2010 and social justice]. Politische Vierteljahresschrift 45, Baden Baden. Müller S (2007) Wohnungsprivatisierung, Privatisierungsgewinner - Privatisierungsopfer [Privatisation of Housing – Winners and Losers] [Online], Available: http://www.bmgev.de/ privatisierung/konferenz-dokumentation/praesentationen/praesentation-sebastian-mueller .pdf

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Munro M (2007) Evaluating Policy towards Increasing Owner Occupation. Housing Studies, 22, 2, 243–260. Priemus H (1997) How to abolish social housing? The Dutch case. International Journal of Urban and Regional Research, 19, 1, 145–155. van der Schaar J (1987) Groei en bloei van het Nederlandse volkshuisvestingsbeleid [Growth and flourishing of Dutch Housing Policy]. DUP, Delft. Stephens M (ed) (2005) Evaluation of Individual Policies and Technical Report: Evaluation of English Housing Policy 1975-2000. Office of the Deputy Prime Minister, London. Stephens M, Whitehead C and Munro M (2005) Lessons from the Past, Challenges for the Future for Housing Policy: An Evaluation of English Housing Policy 1975–2000. Office of the Deputy Prime Minister, London. Trappmann H and Kallenbrunnen T (2006) Kommunale Wohnungsbestände – ein Auslaufmodell? [Municipal housing stock – an exit model?]. VHW, 6, Neue Investoren auf dem Wohnungsmarkt [New investors on the housing market], Berlin. Vetter H (2007) Der Handel mit Wohnungen boomt - Die Milliardenspieler [The trade with housing booms – The billion players]. Mietermagazin, [Online], Available: http://www. berliner-mieterverein.de/magazin/online/mm0106/hauptmm.htm?http://www .berliner-mieterverein.de/magazin/online/mm0106/010614.htm Wilcox S and Fitzpatrick S (2010) The Impact of Devolution: Housing and Homelessness. Joseph Rowntree Foundation, New York.

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Since 2012 Birmingham City Council has been redeveloping Lyndhurst Estate in Erdington, Birmingham, re-starting a programme stalled since 2010 when the Government’s Private Finance Initiative (PFI) withdrew funds. Plans will see around 284 houses built over the next five years, of which 150 will be new council homes and 134 for sale. Retained council homes like Lyndhurst Estate will be provided with new doors, windows and heating. Photograph: Birminham City Council.

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23 Housing and Neighbourhoods: What Happened After the Sale of State Housing to Sitting Tenants in England? Alan Murie* Centre for Urban and Regional Studies, University of Birmingham, UK

Introduction Earlier chapters have outlined different approaches to the provision of affordable housing in European countries. State intervention to subsidise housing and to boost housing production has left various legacies in regard to home ownership and in the form of state and not-for-profit housing. In more recent years, countries with strong traditions of public housing have generally developed policies to privatise some or all of their state housing. The variations in the policies adopted to achieve this are discussed in Elsinga et al., in this book. Some 30 years on from the upsurge of these processes of privatisation, there is a significant body of literature that describes such policies and assesses their impacts (Jones & Murie 2006; Gruis et al. 2009). This literature refers not only to changes in ownership of state housing but also shows more complex outcomes. There has been considerable variation in the pattern of privatisation and in what remains as social rented housing. In addition, the housing that has been privatised has not always been easily absorbed within the mainstream market. Thus, the legacy from state housing and its privatisation was not always anticipated and can ∗ The detailed analysis of data for Birmingham was carried out with Rob Rowlands and Andy Tice at CURS, University of Birmingham.

Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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present problems for households and for public policy. This chapter refers briefly to evidence about the uneven pattern of privatisation, to emerging questions about management and maintenance and, at greater length, to evidence from England about the social and ethnic mix on estates affected by privatisation. It does not attempt to evaluate housing privatisation and does not refer to the beneficiaries of the policy in different countries, but reflects on the existing evidence that privatisation has not resolved problems previously associated with public housing and has generated new unanticipated issues for policy. There are three initial dimensions that impact significantly on the legacy of European housing privatisation: • Europe embraces very different housing policy traditions: the distinction between the state socialist systems in Central and Eastern Europe, the least interventionist approaches in Southern Europe and the mixed intervention elsewhere only serves as a crude device to manage the debate about variation. • Public-sector housing in European countries was highly differentiated, with both very good housing and housing that was not so good. In Britain, for example, some of the very good housing was built before the 1960s and comprised well-built traditional houses with gardens and three or more bedrooms, built at low density with very high amenity and space standards. Other housing (including walk-up flats, medium and high-rise one- or two-bedroom flats and maisonettes) had less generous space standards and amenity provision and proved much less attractive. Estates, which are all labelled as ‘council estates’, involve very different sets of connectivities, qualities and life chances for their residents if we consider differences related to dwelling type and size, standards of housing, estate management and maintenance and neighbourhood and locational differences. Within this picture of mixed quality, public sector housing in most of Europe is typically multi-storey and multi-family housing. It often contrasts with earlier single-family housing and demands different arrangements for ownership, management and maintenance. In order to highlight these multiple differences, this chapter offers a polarised presentation of good estates or good housing versus the worst estates or housing. This is done in the knowledge that, in reality, there is a greater continuum and different dimensions of quality. • All European housing systems are characterised by social stratification both between and within tenures, with public housing estates having different reputations and serving different social strata. Each of the above-mentioned features affects the situation before and after privatisation.

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Privatising public housing in Europe Housing privatisation in Europe has most commonly involved national policies to sell dwellings to sitting tenants at discounted or nominal prices. The resulting pattern of sales of state housing can be partially explained by the framework adopted by central government policy. However, the assumption that a national policy has the same impact everywhere is false. The long-term impact of national policies providing a Right to Buy depends on the reactions of sitting tenants who choose to buy properties or not, and on how those privatised properties are then absorbed within the wider housing market on resale (Forrest & Murie 1995). The final outcomes are determined at local and neighbourhood levels and affected by market processes as well as devices and regulations produced by central government to achieve initial privatisation. Accounts of housing policy, which summarise national legislation and regulations, neglect what happens on the ground to transform regulations and legislation into lived outcomes. National policies have generated uneven local outcomes because of differences in local administration, but more importantly because of the decisions individual households made about whether to buy or not. These decisions are influenced by the quality and desirability of their dwelling and by the resources and expectations of the households. Even where prices were extremely low, the take-up of house purchase was highest among the most affluent tenants living in better housing (see, e.g. Gruis et al. 2009; Forrest & Murie 1990a; Jones & Murie 2006; Kovacs 2009; Spevec & Bogadi 2009). Thus, privatisation initially led to an uneven pattern of tenure transfer. In different countries, the number of sales was greatest in the best estates and among households with higher occupational and social status, and higher incomes. The remnant public sector was most apparent in problematic estates with the worst reputations, housing the most socially excluded sections of the population. In this way, the role of this remnant sector after privatisation became, more firmly, to house the poor and vulnerable. The transfer of ownership is not the end of the privatisation story. In Central and Eastern Europe, rapid privatisation was often completed without robust arrangements for management and maintenance. In many situations, there were problems with the condition of properties that had not been well maintained. Where did the responsibility for addressing any backlog of disrepair lie? And how was ongoing management and maintenance to be organised and paid for? In many cities, legal documentation did not leave clear responsibilities or robust organisational arrangements. Furthermore, many low-income purchasers who had bought at very low prices did not anticipate continuing charges for management and maintenance and could not afford them. These issues were most evident where condominium laws were

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inadequate and unclear. But even when legislation was introduced to try to remedy the situation, the problems remained. In places like the UK, where the legal position was unambiguous, it is evident that tenants often bought with inadequate advice and appreciation of their obligation to meet their share of management and maintenance costs, and few understood the potential level of charges associated with major repairs.

The Right to Buy in England The general process described earlier can be illustrated through reference to England (Forrest & Murie 1990a; Jones & Murie 2006). In 1980, mass privatisation was invited through national legislation providing all council tenants with a Right to Buy on unambiguous, uniform terms. That year, the council housing sector formed some 31% of the housing stock and England had one of the highest levels of social renting in Europe (compared e.g. with 34% in the Netherlands at the same time). Council housing had developed over the previous 60 years, particularly in the larger cities as a sector for the more affluent sections of the working class and white-collar workers. Cities had different stocks of private and council dwellings and the proportion of the public-sector stock that was high-rise or flatted accommodation varied significantly, although it formed a minority part of the council stock everywhere. It is important to recognise that the Right to Buy was introduced alongside policies that made social renting less attractive (increased rents, restrictions on new building and on expenditure on management and maintenance). These meant that the gap between the attractiveness of council housing and that of home ownership widened. Under the Right to Buy, local authorities were required to sell properties to qualifying sitting tenants who applied, were eligible and able to buy. Sitting tenants were entitled to buy the house that they occupied as long as they had been tenants for a minimum (initially) of three years. They could purchase at discounts of up to 50% of market value (initially) and would be able to sell the dwelling on the market after five years without incurring any penalty. Although the details of eligibility, discount, purchase price and repayment all changed over the next 20 years, they remained remarkably generous throughout. It is only after 2005 that the attractiveness of the Right to Buy began to be eroded (Jones & Murie 2006). The immediate impact of the Right to Buy in England is evident from national and regional statistics. Between 1979 and 2004, there were 1 678 769 Right-to-Buy sales – representing almost one out of every three properties in the stock (Jones & Murie 2006: 60). The same policy produced different impacts in different regions and sub-regions, with the highest levels of sales in the Eastern region (35%) and the lowest in Yorkshire and Humberside

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(below 25%). By 2005/06, some local authorities had sold well in excess of 40% of their stock, while others had sold less than 30%. The highest selling authorities were outside the big industrial cities and London. Large-scale voluntary transfers after 1986 complicate the pattern, but all the evidence demonstrates that the same policy varied in its impact over time and place. The variations related to differences in housing stock and housing-market considerations, but also in local and regional economic performance. They were affected by policy changes in housing but also by the buoyancy of the local economy and housing market.

Social and spatial differences There is much less analysis in England or elsewhere of the impact of housing privatisation at an estate or neighbourhood level. In order to fill that gap, this chapter refers to patterns for Birmingham using data from the population census and local authority sources. The data has some limitations but provides a clear picture that is consistent with other evidence related to the Right to Buy referred to in this chapter. Birmingham is a good city in which to carry out this research: it is a large, diverse manufacturing city undergoing economic restructuring. It is the largest local authority and landlord in England with a remaining council stock of some 68 000 properties in 2006. It had sold 41 903 dwellings between 1979/80 and 2005/06. A further 13 510 dwellings had been sold between 1945 and 1979/80 and some properties were sold in the inter-war period. So it is a very large landlord with a differentiated housing stock and a very high level of completed sales. Previous research on council house sales in Birmingham showed the purchasers of council housing to be disproportionately middle aged and middle income. They had been council tenants longer, reflecting their age, and they had often transferred to the better properties in the stock. Both because of who was living in them and because of what the properties were, it was the better ones, those in more attractive estates, that were sold. Sales of houses were much higher than for flats – in the period 1980–1995, 39% of houses were sold but only 6% of flats and 8% of maisonettes (Murie 1976; Forrest & Murie 1976; Forrest & Murie 1990a, 1990b; Jones & Murie 1999). The key questions addressed through the estate-level analysis presented here relate to social mix and the populations living in the council sector and its estates. Essentially, we ask whether privatisation changed not just tenure but population as well; and how those two evolved in the years following privatisation. In all European countries with significant public or not-for-profit housing, some neighbourhoods built by the state to house affluent working-class groups or a mix of income groups have become less attractive to middle-income groups over time. Social stratification

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between estates within state housing was also normal in Central and Eastern European countries (Szelenyi 1983) and is evident in all state housing systems. As social and economic inequality has increased, the least reputable and attractive estates have become more associated with lower-income, unemployed and benefit-dependent households, while the concentration of deprivation in these neighbourhoods has come to be seen as an emerging problem for public policy. On the one hand, public and social rented housing is increasingly associated with deprivation. On the other, mixed-tenure neighbourhoods are assumed to have a greater mix of incomes because home ownership is less associated with the lowest income groups. According to this logic, privatising housing and introducing mixed tenure is a solution to the problems associated with concentrations of deprivation in areas of public and social rented housing. However flawed this may be, many countries justify privatisation of housing (at least partly) as a way of reducing concentrations of deprivation and introducing greater income mix. The remainder of this chapter, therefore, sets out to consider whether privatisation through the sale of properties to sitting tenants in some places in England did in fact introduce social mix into neighbourhoods and reduce the tendency towards segregation. The initial question guiding the inquiry is ‘What was the immediate impact of the Right to Buy on social mix?’ In discussing this, we need to distinguish between what is most usually referred to – the tenure level – and what is less often referred to – the neighbourhood level. At the tenure level within the social rented sector, the Right to Buy contributed to the established trend towards the residualisation of council and social rented housing. Middle- and higher-income groups and middle-aged groups were disproportionately likely to buy their homes and the tenure therefore became more uniformly one of lower-income households, associated with either a very young or a very old population. The more important question is ‘What was the impact at a neighbourhood level?’ and the answer to this is much clearer. The Right to Buy had no immediate impact at a neighbourhood level. Tenants who bought were sitting tenants and they bought the property they already lived in. They changed their tenure label but there was no change in who actually lived in the house. Most tenants bought because they liked the house that they were living in. They did not buy speculatively and the evidence suggests that very few moved, even when they would not incur a penalty (initially after five years). If they had been tempted to move earlier they would have incurred a penalty, but very few did so. It is possible that some potential leavers (people who would have left the estate in order to buy) stayed because they could now become a home owner without leaving. But the likelihood is that this effect was relatively small. At one level, then, it is reasonable to

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conclude that the short-term impact of the Right to Buy on social mix and on the profile of neighbourhoods was zero. It made no difference whatsoever and there was no adverse consequence. The next question that arises is ‘What happens to social mix when properties are resold on the market?’ All of the properties sold under the Right to Buy will, in the course of time, be resold. Some will be resold earlier because tenants decide to move – perhaps to retire to the seaside, to go and live with family or to trade up in the market. Some owners may see out the rest of their lives in the house they bought under the scheme, but at some point the property will be resold. At that point, it is no longer the local authority that decides who becomes the next tenant, but a market process that determines who becomes the next owner and occupier. The existing evidence shows that the pattern of resale of Right to Buy dwellings varies according to the type of property involved and the market within which it is located (Jones & Murie 2006). In some cases, the households that access the property through the market are very similar to those that would have moved in if the property were still in the social rented sector. In other cases, the households are different: they are less likely to be families with children and they are more likely to have higher incomes. In these cases, there could be some argument that there is an element of gentrification: that working-class family houses are being bought by middle-class professional couples. It may be argued that in all areas there is likely to be higher turnover and more young and employed households than would apply if the dwellings had been allocated through the local authority. More of those who buy on the open market will move on if and when their financial circumstances improve. If they had been allocated houses as council tenants, they would be less likely to move on within the council sector if their circumstances improved, and they would not have the resources to access better housing within the private market. Having said that, in lower-priced areas there are less likely to be significant numbers of higher-income gentrifiers and the purchasers of properties are more likely to be manual workers and self-employed workers, perhaps with families. In the high-house-price estates market, purchasers are more likely to be young professionals with two earners that gentrify. The final possibility applies to flats and leasehold properties, a relatively small part of the market, which, in some cases, have proved unsaleable at a price that would give the vendor the chance of moving to a better home. These properties are more likely to prove difficult to sell even at very low prices. The initial conclusions are, then, that the variations in sales at neighbourhood level reflect the popularity of properties and the preferences of tenants. High rates of sale to sitting tenants are experienced in the best areas where the most affluent long-standing tenants lived. This further residualises the

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least popular estates because the applicants for council housing have fewer opportunities to move to the better estates. While at this stage it is less clear what happens on resale, it is likely that the divergence in populations relates to the differences between the best and worst estates, depending on the market context.

Estate-level analysis This story can be taken further by looking at 12 estates in Birmingham through the lens of the 1981 and 2001 censuses of population (Figure 23.1). The analysis initially involved identifying (from a local authority database) the properties that had been sold by them. From this, we have selected 12 estates which date from different phases of council-house building and which have different qualities and types of council housing within them. • Four less attractive estates built in the 1960s, almost uniformly containing council accommodation and with a very high proportion of flats; • Four estates built earlier in the post-war period, with a lower proportion of flats and a higher proportion of houses with gardens; • Four estates of houses built in the inter-war period in more mixed areas. The analysis uses the population census to compare the profiles of these 12 estates in 1981 at the outset of the Right to Buy, and in 2001 after 20 years of the Right to Buy (Table 23.1). We have checked whether the number of properties in these estates is dramatically different between the two periods and whether the picture of change is distorted by the growth in the number of properties. Two estates (Castle Vale and Perry Common) have experienced demolition and new building and although we have included them in the analysis for the full picture to be presented, less attention is given to them. Below, I refer to the three dimensions outlined earlier that have had an impact on the legacy of housing privatisation in Europe more widely.

Leakage to private renting The language of the Right to Buy was about introducing a mix of home ownership into council estates. It was about meeting the desire to own and providing opportunities for it. The policy itself achieved that by enabling people to buy the property they lived in. However, by 2001, each of the 12 estates had very considerable amounts of privately rented property (Table 23.2). In some of the estates, this could have involved the transfer of other properties, rather than the Right-to-Buy properties, into private renting. However, at least some portion of the growth of private renting is attributable to transfers of Right-to-Buy properties into that sector. The

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Ratio of RTB to remaining social stock (>1 = RTB in excess of social stock) 4 – 19 2–4 1–2 0.5 – 1 0 – 0.5

Falcon lodge

Kingstanding Perry common

Castle vale

Ward end

Shard end

Central ladywood

Sparbrook Woodgate valley

Spring hill Pineapple

Hawkesley

Figure 23.1 Right to Buy sales and remaining council stock, 2001. Source: Author’s original analysis of data from Birmingham City Council.

extreme case in our data is Ladywood, where the decline in the social rented sector was 27% but where the private rented sector had grown by 43%. There is no other possible source for the growth of private renting other than from the stock that had been sold through the Right to Buy. While the initial sales of council properties were to sitting tenants and generated growth in home ownership, subsequent sales did not retain all of those properties within the home ownership sector and did not sustain the

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Table 23.1

Change in the share of social rented housing: Birmingham 1981–2001 % Social 1981

% Social 2001

Difference

96 86 81 80

69 57 54 50

−27 −29 −27 −30

79 77 64 47

45 45 33 33

−32 −34 −31 −14

44 43 39 27

36 30 22 17

−8 −13 −17 −10

Large 1960s estates Ladywood Hawkesley Woodgate Valley Castle Vale

Large earlier post-war and inter-war estates Shard End Kingstanding Falcon Lodge Pineapple Council housing in mixed areas Sparkbrook Ward End Perry Common Spring Road All estates

61

39

−22

Birmingham

39

28

−11

Source: Analysis of ONS Census data and Birmingham City Council data.

Table 23.2

Private housing in Birmingham: changes 1981–2001 Net change 1981–2001 Stock

Owner-occupied All social Private rented PRS growth as % of (PRS) all private growth

Large 1960s estates Ladywood Hawkesley Woodgate Valley Castle Vale

18 −22 0 −836

327 768 601 777

−558 −1039 −842 −1830

249 249 241 217

43.2% 24.5% 28.6% 21.8%

383 1355 545 67

−591 −1642 −515 −93

132 407 107 30

25.6% 23.1% 16.4% 30.9%

222 519 833 374

−228 −642 −1423 −360

151 216 337 148

40.5% 29.4% 28.8% 28.4%

Large earlier post-war and inter-war estates Shard End Kingstanding Falcon Lodge Pineapple

−76 120 137 3

Council housing in mixed areas Sparkbrook Ward End Perry Common Spring Road All estates Birmingham

144 94 −253 162 −524

6445

−9573

2474

27.7%

34,042

48,446

−29,585

15,181

23.9%

Source: Analysis of ONS Census data and Birmingham City Council data.

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growth of home ownership. Indeed, in the studied estates, home ownership declined. Some properties became privately rented, and the pattern of ownership and the rights of tenants changed in a way that was not anticipated by policy makers. Rather than creating mixed social-rented/home ownership estates, what has been created is mixed social-rented/private-rented or social-rented/private-rented/home ownership estates. This is an important difference for two reasons: first, and most obviously, it is not what the stated intention of the policy was. It means that one generation benefited through a transfer to home ownership but that those properties do not remain in the sector and may not continue to provide the same kinds of opportunities afterwards. Perhaps, more importantly, it means that the estates themselves have a fragmented pattern of rental ownership; that tenants living within the estates have different rights, and that the dynamics of the estate and the problems of managing the estate become very different. There are some extreme stories that can be constructed in this. For example, we know that the least desirable properties for home owners may be flats within high-rise blocks, and partly because of this, their prices tend to be lower. They become attractive targets for private landlords, who buy the properties and may subdivide them by converting them into three bedsits with shared use of a toilet and a kitchen. So, a two-bedroom flat with a living room becomes three bedsits, generating three rent payments. The use of the flat, the noise associated with comings and goings and the amount of activity affecting neighbours will be very different than was intended in the design of these properties. In this scenario, the management problems are likely to become greater. This study contends that this kind of phenomenon is most likely to occur in the least desirable estates. In the worst estates, we are more likely to see the emergence of much higher levels of private renting alongside social renting. It is reasonable to hypothesise that as the resale process works evolves over a period of 30 or more years, the worst estates may see the decline of home ownership down to a very low or even zero level. This is attributable in part to the fact that the higher the concentration of private tenants and social rented tenants in an area, the less attractive it becomes to home owners. The scenario then is, on the one hand, that the worst estates will revert to rented estates and, on the other, that the best estates will remain mixed tenure, but that mix will include private as well as social renting. The differences in tenure mix will not be associated with the rate of privatisation or the initial tenure structure but are more likely to relate to the initial attributes of the estate, whether it is popular and attractive to live in or not, and the nature of the market that exists in the area: whether there is high demand for properties from owner-occupiers or whether that demand is met and can be met elsewhere.

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Ethnicity The second issue addressed relates to ethnicity. Is there more ethnic mix following privatisation? The old history of council housing in Birmingham was that ethnic minority households were largely excluded. Black and minority ethnic groups were disadvantaged in gaining access to the tenure because of residential qualifications and a variety of other allocation policies and practices. However, over time, the situation, policies, practices and problems of allocation and application have all changed. The emerging pattern is one of segregation between estates rather than exclusion from the tenure. Some estates had very high proportions of black and minority ethnic households and others very small – some of the estates in this study were predominantly white and some housed more ethnic minority households.1 How was this affected by the Right to Buy? If we take the estates together, they show a pattern very similar to that of the city as a whole (Table 23.3). The non-white population of the city grew by 8% between 1991 and 2001. One estate, Pineapple, had insulated itself from these changes and showed exactly the same proportion of white households in 1991 as in 2001. Six other estates showed a lower rate of decline of the white population than the city as a whole: these were the estates that already had the highest white populations. The four estates with a much higher rate of growth of non-white households were those that already had higher non-white populations. These data fit with a polarisation or segregation thesis. They also Table 23.3

Ethnic change in Birmingham estates 1991–2001

Estate Birmingham

% White 1991

% White 2001

Difference

78

70

−8

68 94 94 95

55 91 89 92

−13 −3 −5 −3

95 94 98 91

90 91 96 91

−5 −3 −2 0

24 69 92 76

14 48 87 61

−10 −21 −5 −15

81

71

−10

Large 1960s estates Ladywood Hawkesley Woodgate Valley Castle Vale

Large earlier post-war and inter-war estates Shard End Kingstanding Falcon Lodge Pineapple Council housing in mixed areas Sparkbrook Ward End Perry Common Spring Road All estates

Source: Analysis of ONS Census data and Birmingham City Council data.

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fit with a view that privatisation in these areas has not introduced greater mix or reduced the trend to segregation. Overall, the evidence suggests that different tenures located in the same estates develop similar ethnic profiles and reflect common drivers and patterns of demand. While the different policy and access processes at work do not generate opposite outcomes, there is some limited difference in outcome. The evidence also suggests that following privatisation, the polarisation between the estates runs somewhat more rapidly than it would have otherwise. However, it is important to stress that this is not a dramatic difference because whether or not privatisation had taken place, polarisation tends to occur. The impact of the social rented sector was to moderate that process in some estates but not to prevent it.

Property values The evidence about leakage to the private rented sector and about ethnicity is a picture of differential patterns – estates are affected in different ways. The final category of evidence looked at relates to property values. We have drawn on data on the sale prices of properties in the estates in the year concerned. We can be certain that it relates to council properties and is largely unaffected by particular features of individual dwellings such as improvements or extensions. The values are net of discount, so the trend is of interest £33 000

Perry Common

£31 000

Falcon Lodge Greater Kings Norton

£29 000

Sparkbrook and Sparkhill

£27 000

Greater Bournville

£25 000

Kingstanding £23 000 Grand Total £21 000

Hodge Hill, Shard End and Bucklands End

£19 000

Bartley Green

£17 000 £15 000

Spring Road 1998

2003

Figure 23.2 Council dwelling valuations, 1998 and 2003. Source: Author’s original analysis of data from Birmingham City Council.

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rather than actual values. Although there will be differences in discounts and property sizes in each year, there is no reason to expect these to be sufficient to distort the results significantly. The evidence shows that values of council properties in the 12 estates in Birmingham have diverged over time (Figure 23.2). The data understates actual prices but demonstrates divergence. The estates studied have different property types and sizes. They also exist in higher and lower priced segments of the market within the city of Birmingham and the most obvious explanation of the emerging pattern is that the estates begin to be absorbed in the adjacent market. If the estate is next to a low-value area, the appreciation in values is much less than where adjacent areas are relatively high value.

Conclusion This chapter has referred to what has happened to housing and estates following widespread sales of state housing to sitting tenants. In European countries, housing stratification existed within and between tenures before mass privatisation occurred and there has been a socially and spatially uneven pattern of privatisation. In addition, there were often flawed legal and financial arrangements for management and maintenance of properties and these are likely to have particularly affected what has happened in the least attractive or lowest income neighbourhoods after privatisation. The shortcomings of arrangements are not to be underestimated and may even trigger new patterns and forms of segregation (Kovacs 2009; Sykora 2009; Leetma et al. 2009; Spevec & Bogadi 2009). These considerations suggest that continuing stratification and social division will be present in these countries in ways that are similar, but also reflecting elements that are distinctive. More specifically, this chapter has presented a fuller account of neighbourhood outcomes following the Right to Buy in England and its differential take-up by sitting tenants at the estate level. We can draw the following conclusions from this: First, privatisation has longer-term rather than immediate effects on the changes in position of estates. It does not mean that estates that were unpopular become popular or estates that were extremely popular to live in become unpopular. Rather, over time, this hierarchical difference will be reflected in a divergence of property values. The estates are exposed to processes that are likely to speed differentiation and segregation, as well as to the growth of private renting and the different dynamics associated with that sector. The most important conclusion emerging from this relates to the worst-off estates. Privatisation through the Right to Buy will rarely revitalise the least attractive estates or increase diversity, and contrary to some popular assumptions, it will make their regeneration more difficult.

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The second conclusion involves stepping back from this immediate policy debate and suggests that rather than portraying the social rented sector as a rationed sector, driven by a completely different decision-making framework than that which operates in the market, we should perceive social renting as operating with internal processes similar to the market. The hierarchy of quality and choice within the social rented sector is essentially the same as the hierarchy of quality and choice in the market. Price may be added in the market, but this will reflect the same hierarchy that existed within the social rented sector. And within the social rented sector the bargaining power of individuals or the negotiating capacity within choice-based letting schemes affects who gets what. Whether estates are social rented or private, there is a differentiation between them. The poorest households tend to move to the poorest estates and the most affluent to the best estates. In this sense, privatisation does not disrupt the position of estates within the city’s housing-market hierarchy. The worst estates remain unattractive and the issues associated with them re-emerge within the market. The more worrying element is that within the market some of the differentiation between estates is uncontrolled and some of the moderating influences, especially on the worse estates, are taken away. So the tendency for polarisation between estates in terms of their social profile, their ethnic profile or how attractive they are to live in actually becomes greater. Housing choice is less managed within the market. Without the social rented sector lettings distorting the market, housing is wholly commodified and solely reflects choice and ability to pay. The investment in property within the market will also relate purely to market position, so estates with more affluent households and with better prospects of achieving a higher sale price are likely to be better maintained and to attract more investment. Within the social rented sector, that would not always be the case. Investments in maintenance and repair and refurbishment would be more likely to be politically controlled or on some planned maintenance cycle. Turnover and turbulence will reflect the role in the market and again, without the bureaucratic processes associated with the social rented sector, the instability of the worst estates is likely to get worse rather than better. Finally, within the market there will be a weaker direct management of the neighbourhood. The fragmented ownership of property will mean that however poorly the local authority or housing association previously managed the neighbourhood, now there is no landlord or equivalent body responsible for managing the neighbourhood as a whole. These differences are significant. They will not generate change everywhere but they are likely to result in divergent trajectories for estates and to mean that the worst estates do not improve. These conclusions are most problematic and raise the most critical questions regarding the advisability of privatisation in relation to the worst estates. At a neighbourhood level,

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it is perfectly reasonable to argue that the best estates will become better. They may have a greater mix of households; there may be more investment in them. The downside of this is not at a neighbourhood level, but in the consequences for the households that are now no longer able to access these estates unless they have higher incomes. We need to distinguish here between debates about social mix and neighbourhood dynamics and those about opportunities for individual households. Privatisation of the better estates has adverse consequences on the opportunities of lower-income households. But deterioration of neighbourhood is more likely in those estates that are already difficult to live in and to manage. Taking one step further back, the evidence presented in this chapter shows that housing tenure interacts with economic, demographic and social factors to shape social mix. Privatisation itself neither creates nor preserves social mix but works in tandem with other influences. The conclusion emerging from this is that social-mix strategies based on manipulating housing tenure are unreliable. Building private housing on new council or housing-association estates will not necessarily mean that a mix of income groups emerges. Some of the private housing may become privately rented and be occupied by very different households and the consequences will vary between places. We cannot read off from some initial tenure categorisation a certain future pattern of social mix. Finally, the problems associated with the least attractive estates are not addressed by the sale of individual dwellings. They require policies to address regeneration, neighbourhood dynamics and management. The logic of this account is that it is better to start by looking at the problems on the worst estates and develop a strategy for them. The consequences of privatisation are affected by reinvestment and if the resources released through privatisation were reinvested, especially in the worst estates, it is conceivable that privatisation could provide a mechanism which would help set off a process that would improve more estates and have positive outcomes in the long term. This opportunity was missed with the Right-to-Buy policy in Britain. National policies should enable locally sensitive policies to develop, rather than impose a common one for all and hope that it will not produce locally damaging effects.

Note 1

The population census in England in 1991 and 2001 recorded selfdetermined ethnicity and the analysis reported here involves combining all non-white categories to create two discrete groups: white and black and minority ethnic.

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References Forrest R and Murie A (1976) Social Segregation, Housing Need and the Sale of Council Houses. University of Birmingham, Birmingham. Forrest R and Murie A (1990a) Selling the Welfare State: The Privatisation of Social Housing, (Second Edition). Routledge, London. Forrest R and Murie A (1990b) Moving the Housing Market. Avebury, Aldershot. Forrest R and Murie A (1995) From privatization to commodification: tenure conversion and new zones of transition in the city. International Journal of Urban and Regional Research, 19, 3, 407–422. Gruis V, Tsenkova S and Nieboer N (2009) Management of Privatised Housing. WileyBlackwell, Oxford. Jones C and Murie A (1999) Reviewing the Right to Buy. University of Birmingham, Birmingham. Jones C and Murie A (2006) The Right to Buy. Blackwell, Oxford. Kovacs Z (2009) Social and economic transformation of historical neighbourhoods in Budapest. Tijdschrift voor Economische en Sociale Geografie, 100, 4, 399–416. Leetma K, Tammaru T and Anniste, K (2009) From priority led to market-led suburbanisation in a post-communist metropolis. Tijdschrift voor Economische en Sociale Geografie, 100, 4, 436–453. Murie A (1976) The Sale of Council Houses. University of Birmingham, Birmingham. Spevec D and Bogadi S.K (2009) Croatian cities under transformation: new tendencies in housing and segregation. Tijdschrift voor Economische en Sociale Geografie, 100 , 4, 454–468. Sykora, L (2009) New socio-spatial formation: places of residential segregation and separation in Czechia. Tijdschrift voor Economische en Sociale Geografie 100, 4, 417–435. Szelenyi, I (1983) Urban Inequalities under State Socialism. Oxford University Press, Oxford.

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The ‘Hatert Housing’ tower, built in 2011, was designed by the Rotterdam studio 24H > architecture. It was built as part of a larger urban renewal programme in the Dutch city of Nijmegen that saw older houses refurbished and new buildings erected in empty plots. Here, the municipality paired up with the Portaal and Talis housing corporations to build 72 social housing apartments, a health centre, community hall and underneath car park that allows for a public square at ground level. Photograph: Boris Zeisser – 24H >architecture.

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24 Conclusion Kathleen Scanlonn and Christine Whitehead LSE London, London School of Economics, UK

In this final chapter, we discuss some of the main trends that have emerged from the book’s country-by-country reviews and thematic analyses, and assess the likely role and attributes of European social housing into the future. Historically, the social sector was very strong in Northern Europe and particularly in most of the socialist states. It was strongest in the immediate post-war period, when the state held the commanding heights of many economies and directed the allocation of the majority of resources. In Western Europe, housing was seen as part of the social contract between government and citizens which made up the welfare state. In Eastern Europe, housing was more tied to the organisation of production, and therefore accommodated workers and their dependants where required. The provision and allocation of housing varied between countries and responded to the distinct political imperatives of the time and place. Looking further back, social housing was often provided by charities or employers for particular groups. From the nineteenth century onwards, however, local authorities played an increasingly important strategic role as they developed local infrastructure and services. In some countries, these authorities worked with independent housing providers, while in others municipalities provided accommodation directly. Underlying the role of the state at the national or local level were several objectives. These included effective urban planning in rapidly growing urban areas, direct support for the development industry, provision of affordable housing for the workforce and the maintenance of political power. Social housing’s role in accommodating lower-income and vulnerable households Social Housing in Europe, First Edition. Edited by Kathleen Scanlon, Christine Whitehead and Melissa Fernández Arrigoitia. © 2014 John Wiley & Sons, Ltd. Published 2014 by John Wiley & Sons, Ltd.

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tended to be relatively low down the list of priorities, at least until national numerical housing shortages had been overcome in the 1970s and 1980s. This position started to change in the 1970s as other housing options opened up for mainstream households and income-related subsidies towards housing costs became more prevalent. The 1970s and 1980s were also the time when finance started to be liberalised and governments began to reduce direct assistance for housing in the face of the need to control public expenditure (Turner & Whitehead 1993). The scale of change was greatest in post-1989 Eastern Europe, where it was often overlaid with other policies, notably restitution. However, the pressures to redirect resources were found even in those countries with a tradition of social rented housing. In many, these tensions led to large-scale shifts away from public ownership and finance as well as to greater targeting both in terms of people and areas. The next decade was, therefore, a period of rapid change in the organisation of social housing, the demographics of its residents and indeed in the scale of provision. The first edition of Social Housing in Europe I, published by LSE London in 2007, took these rapid changes in the role of the sector as its starting point and described the situation across a range of countries (Whitehead & Scanlon 2007). It pointed to important differences between countries in the definitions, stock profiles and client groups for social housing. However, it also identified some more general trends nearly everywhere: there was a fall in the proportion of social housing; a growing role for public/private funding arrangements; an increasing emphasis on rehabilitation and mixed-tenure developments; and greater targeting resulting in higher proportions of low-income and vulnerable households within the sector – including, often, increasing numbers of ethnic minority and immigrant households. That book concluded that the tensions affecting the sector – and many of the innovations introduced to deal with them – appeared to be similar across countries, but were always mediated by different histories and institutions. At the time, interestingly, a growing commitment to social housing was perceptible in political rhetoric, but the funding streams to make this rhetoric reality were absent. Social Housing in Europe II, published by LSE London in 2008, provided both a historical perspective and detailed comparison of particular cross-country trends (Scanlon & Whitehead 2008). The chapters of this book deepened our understanding of the profound differences in the nature and working of the social sector across countries with diverse traditions and priorities. Apparent similarities often seemed quite superficial once the details of governance and implementation were taken into account – and appeared to arise more from macro economic pressures than any convergence of values, experiences, understanding or indeed powers and responsibilities.

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Since the publication of these books (now combined and updated in this volume), Europe has faced a credit crunch followed by continuing financial constraints and increasing debt burdens, recession and austerity. The effects of these economic pressures have differed greatly between countries; some (notably Germany and Sweden) were hardly affected, at least in the early years, while others, especially those most exposed to international financial markets, suffered major declines in GDP and employment as well as massive cutbacks in public expenditure. Moreover, across Europe there is less confidence in future growth. The extent to which social housing has been affected by these pressures has also differed greatly. Some countries, such as Denmark and France, have invested in social housing as a stimulus to the economy, while others including the Netherlands and the UK have significantly cut public expenditure, thus reducing the capacity for new social provision. Some countries used these economic and financial pressures to introduce policies that had seemed politically unacceptable before the crisis – notably by limiting funding streams while requiring social landlords to take on increasing responsibilities. On the other hand, in most countries the crisis has increased demand for social housing, putting additional pressures on an already overstretched sector. Thus, the hopefulness expressed at the end of the first edition has not been realised – now both the resources and the rhetoric are less. The editors now turn to themes emerging from chapters of this book to ask whether they point to convergence in the role that social housing plays and the sources of funding available, or to continued differentials both between and within countries. More fundamentally, they ask whether the role of European social housing is changing, and if so whether the new role is sustainable into the longer term.

Country comparisons Table 24.1 brings together the editors’ understanding of the major trends in the way social housing is provided across European countries. The column headings list the most important potential policy shifts: the continued move towards privatisation, declines in supply subsidies, shifts towards income-related demand-side subsidies, growing residualisation, increasing unmet demand, moves away from central government involvement and increasing diversity of social provision. The wording of these categories emerges from the individual country chapters, and many sound negative – reflecting a general perception that housing provision and particularly financing have become more difficult over the past few years both for social tenants and landlords. But although the proportion of social housing has been falling in most countries and new investment has become

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Potentially Very few or nonexistent already; not decreasing Potentially increasing Yes No

Yes – but varies by region

Already very limited

Yes

Very limited

Yes

No

Already highly privatised

Already privatised

Czech Republic

Denmark

England

France

Germany

Hungary

Reduction in subsidies for new social supply

Yes

Move towards privatisation/ liberalisation

Looking forward: general trends

Already highly residualised

Yes

Already very important

Yes

No

Yes

No

Yes

Already highly localised

Yes

Already regional

Shift towards regionalisation/ localism

Yes

Yes

Yes

Yes

Yes

Yes

Increasing unmet demand

No

Yes

Yes

Yes

Yes

Yes

No

Increasing diversity of provision/ services

Rescue scheme for low-income mortgagors in some areas, but generally very limited

Strong; possible stimulus packages Stable or slow decline May undergo rapid change in near future Furthest down the line of privatisation; some local/regional variation

Will continue to be significant Increase from low level

Future role of social housing

StyleC

No

No

Unclear

No

Yes

Yes

Yes

Yes

No

Yes

Greater residualisation

Potentially

Move towards demand-side subsidies

436

Austria

Table 24.1

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Yes

Yes Emphasis almost wholly on owneroccupation Yes

Yes Reduced

Already occurred Limited availability

Already self-sufficient Yes

Already very important

Rents determined by income

Yes Increased in 2006 but now reversed

Already self-sufficient

Yes

Yes

Yes

Yes No

Yes

Yes

Yes

Yes

Yes Yes

Yes

Yes

Already localised

Already regional

No Yes

No

No

No

No

Yes No

Yes

No

Declining Continuing subsidised home ownership Very little new supply Varying political responses

Financial crisis– increasing role of private rented sector with income supplements Still central to overall system – but government introducing higher taxes

StyleC

Source: Country chapters, country chapter authors

Other post- Already occurred socialist countries (on average)

Sweden

Scotland Spain

Netherlands Yes

Ireland

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more difficult, social housing remains significant as a percentage of overall housing stock in 7 of the 10 countries outside the post-socialist area. The role of the sector also continues to be an important element in social and political debate in these countries. There are five countries where social housing in the main continues to play its traditional role in a traditional fashion: Austria, Denmark, France, the Netherlands and Sweden. In three of these countries – Austria, France and the Netherlands – changes are expected in the near future, while in Sweden important changes, notably with respect to funding, have already taken place. Only in Denmark is the social sector expected to maintain its traditional role intact. On privatisation and liberalisation, the general trends are very clear: all the countries except Denmark and France have seen moves to increase the role of the private sector or are already highly privatised. Declines in capital grants or other supply subsidies are also fairly general; again, Denmark and France stand out as having maintained investment. They have also used social housing to stimulate the macro-economy. The use of housing investment as a stimulus also occurred in other countries, notably the UK, the Netherlands and in the mid-2000s Spain, but in these cases the investment proved short-lived and austerity measures caused major cutbacks. The availability of demand-side subsides is fairly general across Western Europe, but further shifts in this direction depend mainly on changes in rent policies and the way that the existing social housing stock is funded. In most countries, social rents still relate closely to costs and are not affected by changes in subsidies to tenants. In England, new rent policies push up rents and therefore housing allowances, while in the Netherlands social landlords’ greater freedom to set rents above a relatively low minimum could result in larger bills for government. In some countries, notably the post-socialist ones but also Spain and (outside our remit) Italy, demand-side subsidies are generally provided at the regional or local level – and tend to be more restricted because of funding constraints. One area where there are obvious differences between and indeed within countries (as noted in the 2007 volume) is the extent to which housing responsibilities lie with regions or municipalities. These differences reflect much more fundamental variations between countries in the approach to the governance and finance of local services, but if anything the tendency to increase local responsibilities has strengthened since the crisis. In all the countries studied, there is increasing pressure of demand for social rented housing, which has resulted in longer waiting lists, at least in pressure areas. At the same time, in most countries the social rented sector is becoming more residualised, both as a result of shifts in the nature

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of demand (notably increased demand from migrants and ethnic minority households) and of increasing concentrations of new entrants being placed in less desirable locations. On the other hand, there is also growing demand from many mainstream households that are finding it increasingly difficult to obtain affordable homes in the private sector. In some countries, these lower-income employed households are more often accommodated in new tenures such as shared ownership and near-market-rent housing, which involve either more limited (or even no) direct public subsidy. This is one area where there has been increasing diversity of provision. Another area where there has been a considerable shift in policy across countries is the relationship between the private rented sector and social housing – as, in many countries, social housing is increasingly provided by private landlords. Germany is clearly in the lead in this context but other countries (notably England and Ireland) are also expanding the range of providers. Of particular importance in this context is how and where the very vulnerable households are accommodated – and this is often in the private rented sector. Table 24.2 provides a summary of the current position across countries. It shows that in almost all countries, municipalities are responsible for accommodating households who are homeless, although who is included in that category varies enormously. In many countries, these households will be placed in municipal housing, especially in lower-demand areas. In some countries, housing associations and charities have a role in accommodating asylum seekers, often in special hostels. But although social housing now tends everywhere to concentrate on lower-income households (even in countries that still technically have a universalist approach, like the Netherlands and France), the private rented sector remains the main source of accommodation for non-priority groups. The definitions of priority and non-priority vary by country, but single-person households, households without children and migrants are often low on the priority list for social housing. The private housing that they can access is usually of poor quality and often in inaccessible locations. The use of the private rented sector by the most vulnerable households, including those in acute housing need, appears generally to be increasing. Most of the country specialists expect these trends to continue, even in countries with large social sectors and universalist traditions. The optimism that they felt in 2007 about a revival of investment disappeared during the financial crisis or in its aftermath, as austerity has become the norm. Compared to six years ago, social housing providers now generally have fewer resources but far greater responsibilities, while the private rented sector is the tenure of last resort.

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No (exceptions at regional level)

Some (especially single mothers, pensioners)

Municipality can use its 25% allocation for households in need according to local criteria

Yes – the local authority is responsible for housing homeless families and determining priorities

Yes, but only in low-demand areas. New housing types such as residences sociales receive public funding

Austria

Czech Republic

Denmark

England

France

In the social sector in general

Joint allocation processes between local authorities and housing associations. In those local authority areas that still have their own stock, vulnerable are concentrated in municipal housing No, although departments are supposed to facilitate accommodation of excluded households. Provide temporary housing for homeless

Some (Vienna: emergency dwellings in municipal housing) Some (municipal housing is the only type of social housing) By tradition, this sector has had a high concentration of very vulnerable people

In municipal housing

No. Asylum seekers are supposed to be housed in special centres (CADA) but their numbers are highly limited. Temporary housing of homeless is increasingly provided by charitable associations

Asylum seekers, yes, but they are not recognised as residents. There are also institutions for temporarily housing the homeless Special-needs housing and hostels are concentrated in independent sector because of history of provision. Homeless and those in priority need allocated by local authorities

Some (e.g. asylum seekers, homeless people housed by charities) There are no independent social landlords

In housing owned by independent social landlords

Very social housing: where are there concentrations of vulnerable households?

Yes, but the sector has shrunk. Hotels and private furnished accommodation used

Yes – partly in partnership with housing associations and local government, partly just because the sector is easy to access and rent can be paid with housing benefit

Yes (migrants, Roma, homeless, people in acute housing need) Easy access means the PRS functions as acute housing provider more than social renting or owner occupation

Yes (migrants)

In the private rented sector

440

Country

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Most of those housed are vulnerable

65% (housing associations own many dwellings which are managed by a special organisation for homeless, etc.) Yes – the local authority is responsible for housing homeless families and determining priorities

Yes, in the small social rented sector, but not in social owner-occupation

Ireland

Netherlands

Spain

Source: Country chapters, country chapter authors

Special-needs housing and hostels concentrated in independent sector because of history of provision. Homeless and those in priority need allocated by local authority There is almost none

Joint allocation processes between local authorities and housing associations. In those local authority areas that still have their own stock, the vulnerable are concentrated in municipal housing Yes in municipal housing

Younger single people

Yes, especially migrants

30% (with buildings of their own)

None

Poorest families tend to live in municipal housing

Yes – partly in partnership with housing associations and local government, partly just because the sector is easy to access and rent can be paid with housing benefit

Most are vulnerable

Yes, typically in the periphery of urban areas, poor substandard housing where both the rent and the energy cost are affordable Yes with some local-authority involvement, especially in determining individual based subsidies 5%

Very few independent social landlords (e.g. churches)

Yes

Most housed are vulnerable

Yes, responsibility lies with municipality Almost entirely made up of very vulnerable, but extremely limited provision

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Scotland

Yes, the social rented sector provides more and more housing opportunities for vulnerable groups

Hungary

Germany

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Cross-cutting themes Perhaps the most fundamental area of difference across countries is in the original principles that lie behind social housing. In some countries, social and charitable housing was simply an element of the private market that developed to address specific gaps in provision. In others, social housing was provided to allow households to live near their work and to enable rural/urban migration. In still others, provision of housing was one of the roles of the socialist state; even in non-socialist countries, state provision was one way of ensuring housing investment took place. Almost all countries have a centuries-old tradition of providing for those without means through almshouses, poorhouses and hostels. The large growth in government-sponsored social housing was however mainly a post-war phenomenon, rooted in the shortages that built up during the conflict. How each country organised and funded it depended on the local approach to resource allocation and the development of the welfare state. Here, the split between universalist, corporatist and dualist approaches became apparent – although in many ways, especially in the early years, what happened on the ground differed rather less than the rhetoric did. None of these different approaches inherently meant that priority was given to the poorest and most vulnerable households. Indeed, in most countries, employed households actively sought state-provided housing, which was seen as more desirable than the private rented sector in terms of both quality and rents. It was only from the 1970s and 1980s that more vulnerable households began increasingly to be accommodated in mainstream social housing. Thereafter, both demand- and supply-side factors, changing government priorities and the ageing of the post-war stock meant that social housing in many countries became residualised – at least in some parts of the sector. This has resulted in increasingly negative public attitudes to social housing, which have been reinforced by government cutbacks and by EU competition rulings, which have forced governments to target subsidised housing towards more vulnerable households and made it increasingly difficult to provide social housing for households across the income scale. On the other hand, social providers have been pioneers in a range of areas. They have taken the initiative in the development of mixed communities and mixed-tenure developments, which have helped offset some of the pressures towards residualisation and exclusion. They have also been leaders in raising the general standards for new building, in energy efficiency and in large-scale improvement and regeneration programmes. Finally, social housing providers are under constant pressure to achieve greater efficiency. There is an increased need for financial and management skills as well as a shift towards a more business-oriented approach, even

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among charitable organisations. In most countries, there is no longer a major role for social providers who are not focused on reducing costs and providing greater value for public money. The financial crisis has reinforced these trends as direct subsidies decline and many households accommodated in the sector need additional social and work-related support.

A final conclusion It is often said that social housing is at a crossroads. In the sense that few expect established systems to survive into the longer term without change, this may well be true. Five of the countries examined in this book (Austria, Denmark, France, the Netherlands and Sweden) have maintained the traditional role of social and municipal housing in providing for a wide spectrum of the population. However, all but one of these countries have either already experienced large-scale change that has restricted capacity to provide in traditional ways, or expect such changes in the near future. Although there is evidence almost everywhere of some reduction in the total stock of social housing, decline has been slower than predicted in 2007 and much slower than during the period of mass privatisation. There is generally less new investment than there was before, but also fewer losses – and in most countries commentators expect the role of social housing to remain significant. Its form and organisation will undoubtedly change, with respect to methods of financing and the range of providers (including e.g. cooperatives and other means of involving occupiers) as well as probably the types of housing provided and the terms and conditions of tenancies. It will have to become more efficient and consumer oriented. The tensions between the positive political rhetoric in many contexts and the capacity to attract adequate resources will continue. Yet, at a more fundamental level, European social housing has proved to be both flexible and robust.

References Scanlon K and Whitehead C (2008) Social Housing in Europe II: A Review of Policies and Outcomes. LSE London, London. Turner B and Whitehead C (eds) (1993) Housing Finance in the 1990s. Research report, National Swedish Institute for Building Research, Gavle. Whitehead C and Scanlon K (eds) (2007) Social Housing in Europe. LSE London, London.

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Glossary

Term

Country/countries

Meaning

Aedes

Netherlands

ALJT ALMO ANRU

France England, Scotland France

AVS

Spain

BBSH

Netherlands

BGK

Poland

BIWAQ

Germany

BWS

Netherlands

CADA

France

CASP

France

CBL CBX

Various Netherlands

CECODHAS

All

CFV

Netherlands

CIL

France

CONCOVI

Spain

CUCS

France

DCLG

England, Scotland

DKK

Denmark

Aedes vereniging van woningcorporaties (national umbrella organisation for social housing providers) Association for Young Workers’ Housing Arms-length management organisation Agence Nationale Pour la Rénovation Urbaine (national agency for urban renewal) Asociación Española de Promotores Públicos de Vivienda y Suelo (association of social housing developers) Besluit Beheer Sociale Huursector (social housing management decree) Bank Gospodarstwa Krajowego (state-owned bank) Bildung, Wirtschaft, Arbeit im Quartier (education, economy and labour in the neighbourhood) Besluit Woninggebonden Subsidies (decree on dwelling-linked subsidies) Centre d’accueil de demandeurs d’asile (asylum-seekers reception centre) Centre de Action Sociale Protestant (centre for protestant social action) Choice-based letting Centraal Bureau voor de Statistiek (central statistics bureau) Comité Européen de coordination d’habitat social (European social housing umbrella organisation) Centraal Fonds voor de Volkshuisvesting (central public housing fund) Comité Interprofessionnel du Logement (interprofessional housing committee) Confederación de Cooperativas de Viviendas de España (association of cooperative housing organisations) Contrats urbains de cohesion sociale (urban and social cohesion contracts) Department for Communities and Local Government Danish kroner (continued overleaf)

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Glossary

Term

Country/countries

Meaning

DSQ

France

DWP EBRD

England, Scotland All

EC EHS EIB EPF ESF ESH

All England All EU All France

EU EU-SILC

All All

GBV

Austria

GDR

Germany

GdW

Germany

GIS

France

GSB HA HAG HBM

Netherlands England, Scotland, Ireland England, Scotland France

Développement social des quartiers (neighbourhood social development) Department for Work and Pensions European Bank for Reconstruction and Development European Commission English Housing Survey European Investment Bank European Property Federation European Science Foundatioin Entreprises sociales pour l’habitat (social housing enterprises) European Union European Union Statistics on Income and Living Conditions Gemeinnütziger Bauvereinigungen (federation of limited-profit housing associations) German Democratic Republic (former East Germany) Bundesverband deutscher Wohnungs- und Immobilienunternehmen e.V. (organisation of non-profit and former public landlords) Groupement d’intérêt scientifique (scientific interest group) Grote Steden Beleid (big city policy) Housing association

HC HLM HMOs HRA HUF IBA

England, Scotland France England, Scotland England, Scotland Hungary Germany

ICO

Spain

IMF INE

All Spain

ISV

Netherlands

IVBN

Netherlands

LHA LSVT MHC MLSA MRD

England, Scotland England, Scotland Sweden Czech Republic Czech Republic

Housing association grant Habitations bon marché (affordable housing before HLM) Housing Corporation Habitation à loyer modéré (social rental landlords) Houses in multiple occupation Housing Revenue Account Hungarian forint Internationale Bauausstellung (international building exhibition) Instituto de Crédito Oficial (official credit institute – government guarantee body) International Monetary Fund Instituto Nacional de Estadística (national statistics office) Investeringsbudget Stedelijke Vernieuwing (investment budget for urban renewal) Vereniging van Institutionele Belegger in Vastgoed (association of institutional property investors) Local housing authority Large-scale voluntary transfer Municipal housing company Ministry for Labour and Social Affairs Ministry for Regional Development

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447

Term

Country/countries

Meaning

NAHP NGO ODPM

England, Scotland All England, Scotland

ONS PAP

England, Scotland France

PCS PLA-I

France France

PLH

France

PLI

France

PLS

France

PLUS

France

PRS PSO RAS REIT RSL SEM

All EU Ireland All England, Scotland France

SFHD SGB SGEI SGI SSGI SNP SPA

Czech Republic Germany EU EU EU Scotland Spain

SPC SRU

EU France

TBS

Poland

TSA UMR-LAVUE (CNRS)

England, Scotland France

UNDP UNPI

All France

USH

France

VPO

Spain

VROM

Netherlands

National Affordable Housing Programme Non-governmental organisation Office of the Deputy Prime Minister (forerunner of DCLG) Office for National Statistics Prêt d’aide à l’accession à la propriété (state loans for home purchase) Plan de cohésion sociale (social cohesion plan) Prêt locatif aidé d’intégration (subsidised social-housing loan) Programme local de l’habitat (local housing programme) Prêt locatif intermédiaire (subsidised loan for intermediate housing) Prêt locatif social (subsidised loan for intermediate housing) Prêt locatif à usage social (subsidised loan for certain housing investment) Private rented sector Public service obligations Rental Accomodation Scheme Real estate investment trust Registered social landlord Sociétéd’économie mixte (company whose capital is majority-owned by one or more public entities) State Fund for Housing Development Sozialgesetzbuch (social code) Services of general economic interest Services of general interest Social services of general interest Scottish National Party Sociedad Pública de Alquiler (public rental society – intermediary in rental market) Social Protection Committee Solidarité et renouvellement urbain (solidarity and urban renewal) Towaryszystwa Budownictwa Spolecznego (type of non-profit housing association) Tenant Services Authority Unité mixte de recherche laboratoire architecture ville urbanisme environnement (Centre national de la recherche scientifique) United Nations Development Program Union national des propriétaires immobiliers (national union of property owners) L’union sociale pour l’habitat (social housing umbrella organisation) Vivienda de Protección Oficial (social housing, mostly owner occupied) Ministerie van Volkshuisvesting, Ruimtelijke Ordening en Milieu (Ministry of Housing, Spatial Planning and the Environment) (continued overleaf)

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Glossary

Term

Country/countries

Meaning

WB WBO/WoON

All Netherlands

WoFG

Germany

WSW

Netherlands

ZUS

France

World Bank WoningbehoefteOnderzoek (housing demand survey) Wohnraumförderungsgesetz (bricks-and-mortar subsidy act of 2001) Waarborgfonds Sociale Woningbouw (guarantee fund for social housing construction) Zones urbaines sensibles (sensitive urban zones)

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Index access concepts, 8, 10, 11–19, 334–45, 350–65, 426–30, 433–43 see also income levels; individual countries, conclusions, 439–43 country comparisons, 439–43 statistics, 8, 10, 11–12, 439–43 Affordable Rents policy, England, 111–12, 114, 117–18, 324, 328, 393–4 Africa, 139 Albania, 240, 242 Alberdi, Baralides, 223–37 altruism and welfare, English/French legal differences, 349–65 Amsterdam, 25–40, 281–93 Anglo-Saxon nations, 261, 264–5, 292, 425–30 see also United Kingdom; USA, ANRU, 383–6 anti-social behaviours, history, 282–3 Arms Length Management Organisations (ALMOs), England, 108–9, 111–12 Arrigoitia, Melissa Fernández, 1–20 asylum seekers, 16, 18–19, 440–3 Australia, 320 Austria, 4–6, 7, 10–12, 13, 15–18, 60–73, 266, 276, 277–93, 297–312, 320–9, 335–45, 440–3 access, 10–12, 61–5, 69–70, 72–3, 282–93, 297–312, 335–45, 440–3 Civil War of 1934, 283 current policy environment, 61–5, 71–3, 436–43 demographics, 15–18, 64–5, 68–73, 297–312, 440–3 finance, 61–2, 63–5, 66–7, 283–93, 299–312, 320–9, 436–43 governance and regulations, 60, 63–6, 68–9, 71–3, 335–45, 436–43 history, 60, 63–5, 276, 277–93, 297–312 housing allowances/benefits, 13, 62–3, 66–7, 68–9, 303–12, 436–43

learning from history, 277–93 migrants and ethnicity demographics, 17, 64–5, 69–73, 298–9, 301–12, 440–3 new construction, 62–3, 68–9, 279–93, 436–43 ownership of social housing, 61–6, 278–93, 302–12 path dependencies and changes in social housing, 277–93 privatisations, 64–6, 72–3, 309–12, 436–43 public–private partnerships, 64–5, 72–3 Red Vienna municipal housing estate, 276, 281, 282–3, 302–3 rents, 6, 7, 13, 61–5, 67–9, 71–3, 278–93, 320–9, 436–43 the Reumannhof, 60 Right to Buy scheme, 65–6 sociopolitical context, 60, 61–5, 71–3, 277–93, 297–312, 440–3 statistics, 4–6, 7, 10–12, 13, 15–18, 60–73, 278–93 stock of social housing, 4–6, 61–5, 278–93, 302–12, 436–43 subsidies, 61–5, 66–7, 71–3, 327–9, 436–43 ‘very social’ housing sector, 298–312, 441–3 vulnerable tenants demographics, 18, 69–73, 297–312, 440–3 baby boom of the 1950s, history, 284 Ball, Jane, 349–66 banks, global financial crisis from 2007, 272–3, 287–8, 292 Barcelona, 223–36 BBSH, 398–401 Belgium, 280, 335, 343 Berlin, 182–201, 403–11 Besson, Louis, 299–300 ‘Big Bang’ financial deregulation of 1986, 287 Birmingham, 414, 415–30

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Brandon Estate, London, 104 Budapest, 204–21, 238 Bulgaria, 240, 242, 248 capitalism, 260–73, 307–12, 324, 352–3 Caribbean, 34, 116 central governments, 1–3, 43–4 CFV, 398–401 changes in social housing, history, 260–73, 277–93, 297–312, 362–3, 434–43 charity law, 352–65, 442–3 Charter of Fundamental Rights, 338, 360–1 ‘cherry-picking’ practices, privatisations, 406–8 Chinese households, England, 116 CIL, 359–65 Cité ‘Jean Moulin’ in Gagny, 122 ‘civil law’, France, 352–65 Civil War of 1934, Austria, 283 climate change, 384 co-housing projects, 383–6 co-ownership of property, trust law, 353–4 collateral uses, social-housing capital, 323–4 collective contractual legal devices, France, 352–65 collectivism, 272–3, 284–93, 309–12, 352–65 ‘common good’ consensus, social housing, 288–91, 293 ‘common law’, England, 352–65 communism, 283, 302–3, 356–7 see also socialism, comparative approach, histories of social housing, 259–73 competition law, 10, 332, 333–45, 360–5, 408, 442–3 see also legal issues, conclusions, 56–8, 101, 178–9, 199–200, 220, 250–1, 272–3, 291–3, 311–12, 328–9, 344–5, 362–5, 384–6, 409–11, 428–30, 433–43 convergence theory, 250–1, 260–3, 264–6, 321, 435–43 cooperative home ownership schemes, 325–6, 443 Copenhagen, 76–89 Cork, 153–60 corruption, 249–50 ‘council estates’, England, 416–30 Council of Europe, 291 council housing, 6, 43–58

see also England; Scotland; social housing, country comparisons, see also individual countries, conclusions, 435–43 Croatia, 241, 242, 243 cross-cutting themes, 3–4, 16, 255, 442–3 see also finance; history; legal issues; private sector, conclusions, 442–3 Czech Republic, 5–6, 7, 11, 12, 13, 15–18, 164–80, 238–53, 322–9, 436–43 access, 11, 165–6, 170–1, 174–5, 176–9, 440–3 conclusions, 178–9, 436–43 de facto social housing, 178 demographics, 15–18, 165–6, 170–1, 174–5, 176–9, 180, 249, 440–3 finance, 166–7, 172–80, 322–9, 436–43 governance and regulations, 165–73, 177–80, 245–6, 436–43 history, 164, 168–71 housing allowances/benefits, 12, 13, 173–4, 175–6, 243, 248–9, 436–43 inequalities, 176–7, 245–6 loan guarantees, 175–6 migrants and ethnicity demographics, 17, 165–6, 177–8, 440–3 new construction, 173–7, 245–6, 436–43 ownership of social housing, 4–6, 165–7, 168–70, 177–9, 242, 245–6 pre-fab housing construction techniques, 164, 168–9, 170–1 privatisations, 165–7, 168–71, 176–9, 436–43 rents, 7, 12, 13, 166–7, 168–9, 170–1, 174–5, 176–9, 243, 322–9, 436–43 Right to Buy schemes, 166–7, 170–1, 240–1 social mix policies, 178–9 socialism ‘collapse’ in 1989, 168–70, 178–80 sociopolitical context, 165–6, 168–71, 172–3 standards of housing, 170–1 statistics, 5–6, 7, 11, 12, 13, 15–18, 164–80 stock of social housing statistics, 5–6, 165–7, 168–70, 177–9, 245–6 subsidies, 165–6, 168–70, 173–5, 248–9, 436–43 tenancy titles, 168–70, 175–6

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Index vulnerable tenants demographics, 18, 165–6, 170–1, 174–5, 177–8, 180, 249, 440–3 Czischke, Darinka, 333–46 Dale and Owen’s development in New Lanark, Scotland, 280 de facto social housing, Czech Republic, 178 Germany, 192–5, 197–201 debt, 2–3, 217–18, 219–20, 247–8, 264–8, 317–19, 321–9, 357, 391–5, 435–43 Decent Homes Programme, England, 111–12, 114–16, 117–18 deindustrialisation trends, Scotland, 47–8 demographics of social tenants, 12–19, 247–51, 268–73, 279–93, 298–312, 343–5, 416–30, 434–43 see also individual countries; migrants and ethnicity …; vulnerable tenants …, conclusions, 439–43 country comparisons, 439–43 statistics, 12–19, 279–93, 343–5, 439–43 demolition rates, 30, 31, 38, 87, 114–16, 124–5, 128–9, 132, 144, 153, 158–9, 192–3, 199–201, 205–6, 258, 326, 371–86, 388, 422–3 Denmark, 4–6, 7, 10, 11–13, 15, 17, 18, 76–89, 124, 263–4, 319–29, 334–45, 435–43 access, 10, 11, 79–83, 87–9, 334–45, 440–3 demographics, 15, 17, 18, 77–8, 79–85, 87–9, 440–3 finance, 79–83, 319–29, 435–43 governance and regulations, 77–8, 79–83, 334–45, 435–43 history, 76, 77–8, 263–4 housing allowances/benefits, 12, 13, 79–83, 436–43 migrants and ethnicity demographics, 17, 440–3 National Building Fund, 79–83, 435 new construction, 79–83, 435–43 ownership of social housing, 6, 76, 77–8, 79–83 rents, 7, 13, 79–83, 85–6, 88–9, 319–29, 436–43 statistics, 4–6, 7, 10, 11, 12, 13, 15, 17, 76–89, 436–43

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stock of social housing, 4–6, 77–8, 124, 334–45, 435–43 tenure profile and trends, 77–9 vulnerable tenants demographics, 18, 77–8, 81–3, 87–9, 440–3 deregulated financial markets, 287, 321–9 deserving poor, access concepts, 10 disabled persons, 10, 36, 45, 82, 87–9, 92–3, 115–17, 148–9, 174–5, 193–4, 233–4, 270–1, 298–9, 335, 355, 362–3 ‘disadvantaged people’, France, 351–65 divergence theory, 260–1, 264–7, 435–43 ‘doughnut city’ phenomenon, 379 Dresden, 325, 403–11 Droste, Christiane, 183–202, 369–87 drug addicts, 16, 18–19, 92–3, 99–100 dual rental markets, 264–6, 267–73, 345, 442 Dublin, 144–62 duties, England, 352–65 Eastern Europe, 1–6, 164–80, 204–21, 238–53, 263–4, 321–9, 335–6, 416, 417–18, 420, 433, 434, 437–43 see also post-socialist countries, history, 1–3, 263–4 housing model, 239–51 privatisations, 417–18, 420, 437–43 rents, 239–51, 321–9, 437–43 socialism ‘collapse’ in 1989, 168–70, 178–80, 239–51, 263, 434 withdrawal policies, 1–2 economic contexts, 1–6, 10, 16, 36–8, 45–50, 55, 62–3, 67–9, 73, 87–9, 96–7, 111–12, 114–16, 129, 140–1, 145–6, 148–9, 158–60, 199–200, 209–10, 218–20, 225–6, 233–4, 235–6, 260–73, 283–93, 344–5, 379–86, 435–43 economic recessions, 2–3, 37–8, 45–6, 49–50, 55, 56–7, 67–9, 73, 96–7, 110–11, 114–16, 129, 140–1, 145–6, 148–9, 158–60, 199–200, 209–10, 218–20, 233–4, 235–6, 261–73, 283–93, 329, 344–5, 379–86, 435–43 efficiency pressures, social housing, 442–3 elderly people, 10, 12–19, 34–5, 36, 45, 70–1, 87–9, 100–1, 115–17, 148–9, 170–1, 174–5, 189–91, 212, 289, 384–5 Elsinga, Marja, 25–40, 341, 389–413, 415 Emmaüs, 305

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employment rates, 47–8, 115–17, 140–1, 270–1, 279–93, 298–312, 335, 371–2, 380–1, 392, 420, 435 empty homes, Spain, 234–5 energy-related expenditures, Hungary, 217–18, 219–20, 247–8 post-socialist countries, 217–18, 219–20, 246–7 Engels, 277 England, 4–7, 10–13, 15, 17, 18, 25–6, 43–5, 49–50, 104–20, 259–73, 280, 319–29, 335–45, 349–65, 370–1, 389–95, 405, 409–11, 414, 415–30, 435–43 see also United Kingdom, access, 10, 11–12, 114–18, 335–45, 349–65, 426–30, 440–3 Affordable Rents policy, 111–12, 114, 117–18, 324, 328, 393–4 altruism and welfare comparisons between England and France, 349–65 Arms Length Management Organisations (ALMOs), 108–9, 111–12 Brandon Estate, 104 ‘common law’, 352–65 critique, 267–73, 390–5, 409–10, 415–30 Decent Homes Programme, 111–12, 114–16, 117–18 demographics, 15, 17, 18, 114–18, 268–73, 343–5, 349–65, 392–5, 416–30, 440–3 duties, 352–65 employment rates, 115–17, 270–1, 392 finance, 7, 105–6, 108–15, 117–18, 264–6, 271–3, 280–2, 319–29, 361–5, 389–95, 409–11, 415–30, 435–43 future prospects, 117–18, 272–3, 361–5, 436–43 governance and regulations, 108–10, 111–15, 271–3, 335–45, 349–65, 389–95, 409–11, 415–30, 436–43 history, 104, 105–6, 261–73, 280, 350–65, 389–95, 416–30 housing allowances/benefits, 12, 13, 110–11, 112–13, 117–18, 436–43 insecure accommodation, 117–18, 393–5 intermediate housing, 117–18 migrants and ethnicity demographics, 17, 115–17, 270–1, 416–17, 426–30, 440–3 mortgage-interest support, 12, 13, 287 new construction, 328–9, 435–43

new social housing, 107–9, 117–18 ownership of social housing, 44–5, 104, 105–9, 267–73, 362–3, 389–95, 409–11, 415–30 privatisations, 362–3, 389–95, 405, 409–11, 415–30, 436–43 property law, 349–65 public–private partnerships, 326, 328–9, 414 quality houses, 416–17, 442–3 registered social landlords, 107–9 rents, 7, 105–6, 108–10, 111–15, 264–7, 271–3, 319–29, 436–43 Right to Buy scheme, 106–7, 115–16, 268–73, 286–7, 325, 390–5, 409–10, 415–30, 436–43 satisfaction levels, 116–17 social mix policies, 328, 416, 419–30 sociopolitical context, 105–19, 261–73, 349–65 spare-room welfare changes, 112–13 statistics, 4–6, 7, 10, 11, 12, 13, 15, 17, 18, 43–5, 104–20, 259–73, 389–95, 409–11, 415–30, 436–43 stock of social housing, 4–6, 25–6, 44–5, 104, 105–9, 113–14, 264–6, 268–73, 350–65, 389–95, 415–30, 435–43 tenure profile and trends, 105–7, 114–19, 268–73, 390–5, 422–30 trust law, 352–65 Universal Credit scheme, 118 urban renewal, 370–1, 428 vulnerable tenants demographics, 18, 114–19, 350–65, 392–5, 440–3 equity finance for social housing, 317, 324–9, 391–5, 405, 410 ‘equity’ law, 353–65 Esping-Andersen, G., 264–5, 351–2 estate-level analysis, Right to Buy schemes, 422–30 Estonia, 240, 242, 243, 245, 249, 259, 351 Europe, see also individual countries, finance mechanisms, 317–29, 410 learning from history, 277–93 privatisations, 389–411, 415–30, 436–43 Social Services of General Economic Interest EU Directive, 36, 66, 289–90, 332, 333–45, 360–5 state aid concepts, 336–45

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Index The Treaty on European Union (Maastricht Treaty), 336–7, 397–8 urban renewal, 369–87 European Commission, 338–45, 360–5 European Court of Justice, 338–9 European Social Charter, 360, 363 evictions, France, 304 Hungary, 211, 215–16 Spain, 234–5, 236 ‘fair’ rents policy in the UK, 267 families with children, 10, 12, 34–5, 70–1, 115–17, 139–40, 177–8, 319, 439–43 country comparisons, 439–43 rationing methods, 10 ‘family silver’ perceptions, privatisations, 406 ‘feudalism’, 352–3 finance, 1–6, 16, 30–3, 36–7, 49–58, 239–51, 259–60, 264–6, 271–93, 299–312, 315, 389–411, 434–43 see also debt …; equity …; individual countries; privatisations; rents, concepts, 1–3, 264–6, 271–93, 299–312, 317–29 conclusions, 328–9, 434–43 history, 1–3, 264–6, 271–93, 299–312 mechanisms, 317–29, 336 private equity, 325, 329 public–private partnerships, 64–5, 72–3, 228–30, 326, 328–9, 380–6, 414 statistics, 317–29 financial maturity notion, 264–5, 267–8 Finland, 264, 323–4, 335 flats, Right to Buy schemes, 421–30 fragmentation and marketisation, 285–93, 297–312, 401–2, 410, 425–30, 443 France, 2–8, 11, 13, 15–18, 25–6, 122–42, 263–4, 266, 277–93, 296–313, 316, 319–29, 335–45, 348, 349–65, 368, 369–87, 435–43 see also Paris, access, 11, 123–8, 135–9, 282–93, 297–312, 335–45, 348, 349–65, 439–43 altruism and welfare comparisons between England and France, 349–65 ‘civil law’, 352–65 collective contractual legal devices, 352–65 current position, 123–8, 140–1, 435–43

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demographics, 15, 17, 18, 123–9, 132–3, 134–6, 137–8, 139–41, 296–312, 343–5, 349–65, 369–87, 439–43 ‘disadvantaged people’, 351–65 employment rates, 140–1, 298–312 evictions, 304 finance, 126–7, 130–5, 140–3, 283–93, 299–312, 319–29, 361–5, 378–86, 435–43 furnished/unfurnished dwellings, 300–12 governance and regulations, 125–9, 130–1, 137–9, 140–3, 335–45, 348, 349–65, 380–6, 436–43 Habitat Sud Atlantic, 316 history, 126–9, 263–4, 277–93, 296, 297–313, 350–65, 369–86 housing allowances/benefits, 13, 133–4, 136–7, 303–12 income levels, 123–5, 126–7, 134–9 learning from history, 277–93 location of social housing, 125–8, 369–70 migrants and ethnicity demographics, 17, 122, 139–40, 284–5, 296, 298–9, 301–12, 439–43 milestones, 129 new construction, 132–3, 140–1, 279–93, 300–1, 359–65, 368–87, 435–43 ownership of social housing, 123–8, 130–1, 278–93, 302–12 path dependencies and changes in social housing, 277–93 property law, 138–9, 349–65 rents, 6, 8, 13, 127–8, 129, 132–4, 278–93, 319–29, 343–5, 436–43 revolutionary workers, 356–7 rights, 138–9, 352–65 riots, 128, 296, 381 satisfaction levels, 125–6 social mix policies, 126–7, 135–6, 140–1, 287, 302–12, 358–65, 385–6 sociopolitical context, 125–9, 135–9, 140–3, 263–4, 277–93, 296–312, 349–65, 369–87, 439–43 ‘solidarity’ concepts, 356–65 standards, 125–7, 140–1 statistics, 4–6, 8, 11, 13, 15, 17, 18, 122–42, 278–93, 359–65, 436–43 stock of social housing, 4–6, 25–6, 123–8, 140–1, 278–93, 302–12, 350–65, 369–87, 435–43 subsidies, 132–4, 327–9, 383–6, 436–43

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France (continued) sustainability standards, 125–6, 140–1 taxation, 128–9, 132–3 tenure profile and trends, 123–8 urban renewal, 369–87 ‘very social’ housing sector, 298–312, 441–3 vulnerable tenants demographics, 18, 129, 132, 137–9, 140–1, 296–312, 343–5, 350–65, 371–86, 439–43 Franco era, Spain, 226 Frankfurt, 187–201 Fugger, Jakob, 279–80 furnished/unfurnished dwellings, France, 300–12 future prospects, 2–3, 16, 45–7, 53–4, 117–18, 145–6, 159–60, 197–201, 219–20, 235–6, 250–1, 259–60, 272–3, 278–93, 361–5, 384–6, 409–10, 433–43 Garden City layouts, history, 184–5, 282–4, 301 Germany, 5–6, 8, 10–15, 17, 18, 167, 182–201, 243, 263–4, 265–7, 283, 319–29, 335–45, 369–87, 389–90, 401–11, 435–43 access, 10–12, 183–4, 189–91, 197–201, 335–45, 441–3 conclusions, 199–200, 435–43 current developments, 183–4, 196–201 de facto social housing, 192–5, 197–201 demographics, 15, 17, 18, 183–4, 189–94, 197–9, 369–87, 401–11, 441–3 East/West Germany, 184–94, 370, 379–80, 403–7 finance, 4–6, 184–94, 196–201, 266–7, 319–29, 378–86, 389–90, 401–11, 435–43 future prospects, 197–201, 436–43 governance and regulations, 183–201, 335–45, 380–6, 401–11, 436–43 history, 182, 183–201, 263–4, 265–6, 283, 369–86, 401–11 housing allowances/benefits, 13, 183–4, 189–90, 192–3, 403–5, 436–43 Kottbusser Tor protests, 188 landlord types, 194–6, 199–200 migrants and ethnicity demographics, 17, 190–1, 441–3 ‘mirror’ rent system, 6

nazi regime, 283–4 new construction, 185–7, 196–201, 369–87, 436–43 ownership of social housing, 4–6, 167, 183–201, 265–6, 389–90, 401–11 privatisations, 183–4, 187–8, 264, 389–90, 401–11, 436–43 rents, 6, 8, 13, 184–5, 186–8, 189–90, 199–201, 243, 266–7, 319–29, 402–11, 436–43 sociopolitical context, 187–94, 263–4, 369–87 standards of housing, 185–6 statistics, 5–6, 8, 11, 13, 15, 17, 18, 182–201, 389–90, 401–11, 436–43 stock of social housing statistics, 5–6, 167, 183–201, 265–6, 369–87, 401–11 subsidies, 6, 185–6, 188–94, 199–200, 327–8, 370–86, 436–43 Tübingen Mill Quarter, 197–8 undesirable tenants, 187–8, 381–6 urban renewal, 369–87 virtual social housing, 184, 188–9, 193–4, 370, 402–3 vulnerable tenants demographics, 18, 189–90, 193–4, 371–86, 441–3 GIS Réseau Socio-Economic de l’Habitat , 2–3 Glasgow, 42, 46–58, 258, 278–93, 394–5 see also Scotland, global financial crisis from 2007, 2–3, 10, 37–8, 46, 49, 50, 55, 67–8, 87, 88–9, 110–11, 114–15, 129, 140–1, 145–9, 159–60, 199–200, 209, 219–20, 233–4, 235–6, 272–3, 286–8, 323, 326, 329, 344–5, 379–86, 400–1, 405–6, 435, 439–43 banking causes, 272–3, 287–8, 292 debt finance, 323 public services, 272–3, 287–8, 379–86, 405–6, 435, 439–43 Gold Standard Crisis of the late 1960s, 45 ‘golden age of social housing’, 262–3, 284–5, 302–3 good/worst estates, privatisations, 416–30 the Gorbals, Glasgow, 42 Gothenburg, 90–102 Goujon, Lazare, 282 Greece, 3, 259 ‘Green Ladies’ of Glasgow, 282 GSB, 376–8

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Index Habitat Sud Atlantic, France, 316 Hamburg, 187–201 Harloe, Michael, 261–4, 266–8, 272 Heerma, Enneus, 28–9 HegedüA s, József, 4, 205–21, 239–53 high rises, history, 285, 370–3, 388, 416–18, 425–30 history, 1–4, 6, 10, 16, 47, 257, 259–73, 277–93, 297–312, 389–411, 417–30, 433–43 see also individual countries, anti-social behaviours, 282–3 baby boom of the 1950s, 284 changes in social housing, 260–73, 277–93 collectivism/individualism challenges, 272–3, 284–93, 309–12, 352–65 ‘common good’ consensus, 288–91, 293 comparative approach, 259–73 conclusions, 272–3, 291–3, 311–12, 433–43 convergence theory, 250–1, 260–3, 264–6, 435–43 divergence theory, 260–1, 264–7, 435–43 fragmentation and marketisation, 285–93, 297–312, 401–2, 410, 425–30, 443 Garden City layouts, 184–5, 282–4, 301 ‘golden age of social housing’, 262–3, 284–5, 302–3 housing inspectors, 282–3 industrialisation, 277–8, 279–83, 291–2, 307, 310–12 Keynesian economics, 283–4 learning from history, 277–93 main sequences, 184–5, 262–3, 279–93, 300–1, 350–1, 372–80, 418–19, 422–3, 433–4, 442–3 metamorphosis of social housing, 285–93 new comparative housing histories approach, 266–73 overcrowded housing, 279–80, 300–1, 307–12 path dependencies, 277–93 perspectives, 260–73 philanthropists, 261–3, 277–93, 307, 310–12, 433–4 privatisations, 1–2, 47, 264, 389–411, 417–30 ‘respectability’ notions, 282–3 Right to Buy schemes, 286–7, 390–5, 417–19 trade unions, 277, 281, 283, 290, 307

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urban renewal, 1–2, 287–93, 301–2, 369–87 ‘very social’ housing sector, 298–312 welfare state, 1–2, 277–93, 297–312, 372–86, 442–3 World War I, 44, 128, 168, 262–3, 267, 277, 279, 281–4, 289, 350–1 World War II, 1–2, 26–8, 32, 44, 62–3, 72–3, 105, 128, 184–5, 186, 199, 239–40, 241, 267, 277, 284–5, 291–2, 301–3, 349–51, 357–8, 371–3, 442–3 Hollande, François, 290 homeless persons, 10, 16–19, 37–8, 46, 47–8, 52–7, 70, 92–3, 114–19, 129, 132, 137–8, 140–1, 148–9, 165–6, 177–8, 212, 247–8, 298–312, 351–65, 392–5, 439–43 see also poverty, approaches, 311, 351–2, 392–3, 439–43 country comparisons, 439–43 rationing methods, 10 Homeless Persons Act 1977, 392 Homes and Communities Agency, 271 ‘Homes fit for heroes’, 282 Housing Act 1924, Scotland, 282 Housing Act 1996, 351 Housing Act 2010, Scotland, 393 housing allowances/benefits, 12–16, 243–51, 303–12, 334–5, 339–45, 403–5, 436–43 see also individual countries; subsidies, post-socialist countries, 12, 13, 14, 173–4, 175–6, 205–6, 210–11, 214–15, 243–51, 437–43 statistics, 12–16 Housing Association Grant 1974, 271 housing associations, 4–9, 25–30, 35–40, 43–58, 61–5, 76–9, 97–8, 105–7, 111–12, 113–16, 117–18, 145–7, 153–60, 165–6, 270–3, 283–93, 303–12, 316, 319–29, 362, 385–6, 389–411, 419, 439–43 see also privatisations, critique, 38–40, 270–1, 292–3, 323–4, 328, 362, 393–401 definitions, 393–4, 396–7 history, 270–3, 283–93, 303–12, 389–411, 419 Housing Corporation, 271 Housing First approach, Vienna, 298, 306, 311

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Housing (Homeless Persons) Act 1977, 354–5 housing inspectors, history, 282–3 housing of last resort social housing, 10 ‘housing need’, UK, 350–65 Housing and Regeneration Act 2008, 271 Housing of the Working Class Act 1890, 280 housing-benefit changes, UK, 6, 10 Human Rights Act 1998, 361 Hungary, 5–6, 8, 10–12, 14, 15, 17, 18, 204–21, 238–53, 322–9, 351, 436–43 access, 10–12, 210–13, 215–17, 219–20 conclusions, 220, 436–43 demographics, 15, 17, 18, 204, 206–8, 210–12, 214–17, 218–19, 247–9 economic context, 209–10, 218–20 energy-related expenditures, 217–18, 219–20, 247–8 evictions, 211, 215–16 finance, 8, 14, 210–17, 322–9, 436–43 future prospects, 219–20, 436–43 governance and regulations, 206–9, 210–14, 215–17, 219–20, 243, 436–43 history, 204, 205–10 household-related debts, 217–18, 219–20, 247–8 housing allowances/benefits, 14, 205–6, 210–11, 215–19, 243, 436–43 migrants and ethnicity demographics, 17, 211–12, 218–19, 247–8 mortgage-interest support, 219 ownership of social housing, 205–11, 218–20, 242 pre-fab housing construction techniques, 218–19 privatisations, 4, 205–6, 209, 210–11, 213, 219–20, 436–43 rents, 8, 14, 210–15, 217–18, 219–20, 243, 322–9, 436–43 satisfaction levels, 210 standards of housing, 205–6, 210, 215, 218–19, 238 statistics, 5–6, 8, 10–12, 14, 15, 17, 18, 204–21, 436–43 stock of social housing statistics, 5–6, 205–13, 214–15, 245–6 subsidies, 206–9, 213, 218, 245–6, 436–43 tenements, 204, 205–10 tenure profile and trends, 205–9, 218–20, 242

vulnerable tenants demographics, 18, 211–12, 218–19, 249 Iceland, 264 IMF crisis of the 1970s, 45 income levels, see also access …; individual countries; lower …, statistics, 6, 8, 9–19, 36–7 Indian households, England, 116 individualism, 272–3, 285–93, 309–12 industrialisation, history, 277–8, 279–83, 291–2, 307, 310–12 inequalities, 176–7, 245–51, 292–3, 298–312, 420–30 Czech Republic, 176–7, 245–6 post-socialist countries, 176–7, 245–51 inflation, 264–5, 267–8, 287–8, 322, 391–2 insecure accommodation, England, 117–18, 393–5 Scotland, 46, 47–8, 56–7, 290–3 ‘insertion’ work, the poor, 297–312 insider information, 10 interest-rate subsidies, 323 intermediate housing, England, 117–18 introduction to the book, 1–20 Irish Travellers, 148–9 Italy, 3, 324, 328 Jizni Mesto II housing estate, Prague, 164 Kemeny, Jim, 263–8, 271–2, 345 Keynesian economics, 283–4 Kiel, 325 Knorr-Siedow, Thomas, 183–202, 389–413 Kottbusser Tor, Berlin, 188 large social housing sectors, 4–6, 16, 23 see also Austria; Netherlands; Scotland, statistics, 4–6 Latvia, 240, 242, 245 learning from history, 277–93 leasing schemes, Republic of Ireland, 157–60 legal issues, 4, 10–12, 16, 25–40, 47–53, 63–5, 77–8, 127–8, 172–3, 226–7, 271–3, 280–93, 315, 322, 328, 333–45, 349–65, 384, 392–3, 418–19, 428, 442–3 see also Europe; individual Acts; individual countries, altruism and welfare comparisons between England and France, 349–65

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Index concepts, 333–45, 349–65, 418–19 conclusions, 344–5, 362–5 history, 280–93 property law, 349–65 Social Services of General Economic Interest EU Directive, 36, 66, 289–90, 332, 333–45, 360–5 state aid concepts, 336–45 Lelévrier, Christine, 369–87 Lever foundation, 280 Lévy-Vroelant, Claire, 123–42, 277–94, 297–313, 351–2 liberal capitalism phase of capitalist expansion, 261–3, 268–73, 292–3, 298–312, 436–43 limited-term tenancies, UK, 6 Lind, Hans, 91–102, 338–9 Lithuania, 242 loan guarantees, Czech Republic, 175–6 local authorities, 1–3, 9, 105–19, 145–60 London, 104–20, 388 see also England, lower-income households, 1–3, 6–19, 32–4, 47–8, 68–70, 91–2, 101, 115–17, 170–1, 185–6, 205–6, 209, 215–17, 227, 232–3, 243–51, 261–73, 292–3, 297–312, 319–29, 343–5, 350–65, 419–30, 433–43 see also housing allowances/benefits; poverty, history, 1–3, 270–1, 292–3, 297–312 statistics, 270–1, 297–312, 350–65 LSE, 434 LSVTs, 390–5, 410, 419 Lux, Martin, 4, 165–80, 239–53 Luxembourg, 335 Lyon, 125–42 Maastricht Treaty see Treaty on European Union, Madrid, 222–37 Maghreb, 139–40 maintenance/management problems, privatised estates, 417–18, 428–30 Malmö, 95–102 Malpass, Peter, 259–74, 410 market rents, 320–9 Marseille, 125–42 Marxism, 356 mass model of social housing, 261–3, 267–73, 335–45

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medium social housing sectors, 4–6, 16, 75 see also Denmark; England; France; Sweden, statistics, 4–6 mental health patients, 298–9 metamorphosis of social housing, history, 285–93 migrants and ethnicity demographics, 15, 16, 17, 247–8, 270–1, 284–5, 288–90, 298–312, 371–86, 416–17, 426–30, 434–43 see also individual countries, conclusions, 439–43 country comparisons, 439–43 learning from history, 284–5, 288–90 privatisations, 426–30 statistics, 15, 16, 17, 247–8, 270–1, 284–5, 288–90, 426–30, 439–43 ‘mirror’ rent system, 6 models, social housing, 1–20, 239–51, 260–73, 333–45, 360–5, 389–411, 435–43 Monti-Kroes (Altmark) package , 338–9 Morocco, 34 mortgage-interest support, England, 12, 13, 285, 287 Hungary, 219 Spain, 230–1, 236 Munich, 17, 198–201, 407–11 municipal housing companies (MHCs), Sweden, 91–102, 338–45 municipal ownership, concepts, 4–6, 11, 12, 16, 38–9, 44–58, 65–6, 71–3, 79–83, 92–6, 165–80, 211–12, 228–30, 245–51, 270–3, 280–93, 302–12, 389–411 Murie, Alan, 410, 415–30 National Building Fund, Denmark, 79–83, 435 national stocks of social housing, see also individual countries; stock …, statistics, 3–6 nazi regime, Germany, 283–4 negative equity, Republic of Ireland, 145–6, 148–9 neighbourhoods, privatisations, 419–30 urban renewal, 380–1 neoliberal policies, 4–6, 64–6, 71–3, 183–4, 187–8, 261–3, 268–73, 292–3, 298–312, 390–5, 401–11, 436–43

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Netherlands, 2–6, 9–19, 25–40, 111–12, 259, 263–4, 266–7, 277–93, 319–29, 332, 334–45, 369–87, 389–90, 396–401, 405, 409–11, 418, 432, 435–43 access, 10, 11, 28–30, 32–8, 282–93, 334–45, 396–401, 439–43 current debates, 37–8 demographics, 12, 15, 17, 19, 24–30, 34–5, 37–8, 340–5, 369–87, 439–43 finance, 30–3, 35–40, 111–12, 266–7, 283–93, 319–29, 342–5, 378–86, 389–90, 396–401, 409–11, 435–43 governance and regulations, 32–4, 35–40, 334–45, 380–6, 396–401, 437–43 history, 2–3, 25–30, 263–4, 277–93, 369–86, 396–401 housing allowances/benefits, 14, 29–30, 32–4, 38–9 learning from history, 277–93 migrants and ethnicity demographics, 17, 34–5, 38–9, 439–43 milestones, 29–30 ownership of social housing, 25–30, 36–40, 259, 278–93, 389–90, 396–401, 409–11, 418 path dependencies and changes in social housing, 277–93 privatisations, 37–8, 325, 389–90, 396–401, 405, 409–11, 437–43 public–private partnerships, 326, 328–9, 380–6 rents, 6, 9, 14, 28–30, 31–4, 37–9, 266–7, 278–93, 319–29, 340–5, 437–43 revolutionary workers, 27–8 sales of social housing stock, 37–8, 325, 389–90, 396–401, 409–11 social home ownership, 400–1 social mix policies, 33–4, 328, 385–6 statistics, 4–6, 9, 10, 11, 12, 14, 15, 17, 19, 25–40, 259, 278–93, 389–90, 396–401, 409–11, 437–43 stock of social housing, 4–6, 25–30, 33–4, 259, 278–93, 334–45, 369–87, 396–401, 418, 435–43 taxation, 341–5 urban renewal, 2–3, 28–30, 35–40, 369–87, 432 vulnerable tenants demographics, 19, 34–5, 37–8, 340–5, 371–86, 439–43 new social housing investment, post-socialist countries, 244–51

New Zealand, 320 Norris, Michelle, 145–62 Northern Europe, 1–4, 6, 10 see also individual countries, Northern Ireland, ownership of social housing, 270–1 Northwest Europe, 3–4 see also individual countries, Norway, 264, 324, 328 overcrowded housing, history, 279–80, 300–1, 307–12 overview of the book, 3–4, 16 owner-occupation stock, 3–6, 10, 12, 25–30, 38–9, 43–58, 61–5, 77–9, 91–2, 105–8, 123–8, 134–5, 140–1, 145–7, 166–7, 173–80, 184–5, 194–6, 206–10, 223–36, 259–73, 287–8, 292–3, 335–45, 390–411 see also individual countries; Republic of Ireland; Spain, history, 259–73, 287–8, 292–3 statistics, 3–6, 25–30, 43–4, 259–60, 267–8, 287–8, 292–3, 335–6, 423–30 ownership of social housing, 3–20, 25–30, 36–40, 44–5, 104, 105–9, 240–51, 259, 264–73, 278–93, 389–411, 434–43 see also housing associations; individual countries; municipal …, post-socialist countries, 240–51 Pakistani households, England, 116 Paris, 6, 122–42, 278–93, 296–312, 368 see also France, path dependencies, learning from history, 277–93 Peabody foundation, 280 The People’s Home (Harloe) , 261–4 philanthropists, 261–3, 277–93, 307, 310–12, 433–4 physical/social regeneration contrasts, 371–80 Pierre, Abbé, 291–2, 293 Poland, 177, 240–1, 243, 245–6, 248–50 policies, 1–4, 16, 27–30, 35–40, 50–2, 56–8, 61–5, 71–3, 111–12, 113–15, 126–7, 159–60, 173–6, 194–201, 233–6, 250–1, 259–73, 286–93, 298–312, 349–65, 369–87, 389–411, 416–30, 435–43 see also neoliberal …; privatisations, country comparisons, 435–43

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Index critique, 270–3, 283–93, 297–312, 435–43 history, 1–3, 16, 27–30, 259–73, 372–80 urban renewal, 1–2, 16, 29–30, 36–8, 126–7, 194–6, 287–93, 301–2, 369–87 Portugal, 351 post-industrialism (post-Fordism) capitalism phase of capitalist expansion, 261–3, 308–9 post-socialist countries, 5–6, 12, 16, 164–80, 204–21, 238–51, 321–9, 437–43 see also Czech Republic; Eastern Europe; Estonia; Hungary; Latvia; Poland; Romania; Russia; Slovak Republic; Slovenia, conclusions, 250–1, 437–43 energy-related expenditures, 217–18, 219–20, 246–7 future prospects, 250–1, 437–43 governance and regulations, 165–73, 177–80, 206–14, 215–17, 219–20, 241–3, 437–43 housing allowances/benefits, 12, 13, 14, 173–4, 175–6, 205–6, 210–11, 215–19, 243–51, 437–43 new social housing investment, 244–51 ownership of social housing, 240–51 policy prospects, 250–1 privatisations, 4, 165–7, 168–71, 176–9, 205–6, 209, 210–11, 213, 219–20, 240–51, 437–43 rents, 7, 8, 12, 13, 14, 166–7, 168–9, 170–1, 174–5, 176–9, 210–15, 217–18, 219–20, 239–51, 321–9, 437–43 Right to Buy schemes, 166–7, 170–1, 240–51 statistics, 5–6 stock of social housing statistics, 5–6 subsidies, 165–6, 168–70, 173–4, 206–9, 213, 218, 244–51, 437–43 trends in affordability/inequalities, 176–7, 244–51 trial-and-error transition processes, 240–1 poverty, 1–3, 6–19, 32–4, 47–8, 68–70, 91–2, 101, 115–17, 170–1, 185–6, 205–6, 209, 215–17, 227, 232–3, 243–51, 261–73, 292–3, 297–312, 350–65, 420–30, 440–3 see also homeless persons; lower-income households, conclusions, 311–12, 440–3 Prague, 164–80

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Práter Street project, Budapest, 238 pre-fab housing construction techniques, Czech Republic, 164, 168–9, 170–1 Hungary, 218–19 private equity, 325, 329, 404, 410 Private Finance Initiative (PFI), 414 private rental stock, see also individual countries, statistics, 3–6, 25–30, 268–73 private sector, 2–12, 16, 25–34, 43–58, 64–5, 68–70, 79–83, 87–9, 91–6, 99–102, 105–7, 111–12, 123–8, 133–5, 145–7, 165–7, 184–8, 194–6, 205–11, 215–17, 240–51, 268–73, 280–93, 319–29, 333–45, 360–5, 367, 384–6, 389–411, 422–30, 439–43 conclusions, 439–43 learning from history, 280–93 profit-driven private rental markets in Anglo-Saxon nations, 264–5, 292, 425–30 rents, 6–10, 12, 67–9, 187–8, 319–29, 406–11, 422–30, 439–43 Right to Buy scheme transfers, 422–30 Social Services of General Economic Interest EU Directive, 333–45, 360–5 statistics, 2–10, 25–30, 268–73, 335–6, 395, 406–11, 423–30 privatisations, 1–2, 4, 47–8, 64–6, 72–3, 165–7, 168–71, 176–9, 183–4, 205–6, 209, 240–51, 264, 309–12, 323, 361–5, 389–411, 415–30, 435–43 see also housing associations; Right to Buy schemes, Austria, 64–6, 72–3, 309–12, 436–43 ‘cherry-picking’ practices, 406–8 concepts, 389–411, 415–30 conclusions, 409–11, 428–30, 435–43 country comparisons, 435–43 critique, 389–411, 415–30, 443 Czech Republic, 165–7, 168–71, 176–9, 436–43 definitions, 389–90, 417–18 different pathways, 389–411 Eastern Europe, 417–18, 420, 437–43 England, 362–3, 389–95, 405, 409–11, 415–30, 436–43 ethnicity demographics, 416–17, 426–30 ‘family silver’ perceptions, 406 Germany, 183–4, 187–8, 264, 389–90, 401–11, 436–43

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privatisations (continued) good/worst estates, 416–30 history, 1–2, 47, 264, 389–411, 417–30 Hungary, 4, 205–6, 209, 210–11, 213, 219–20, 436–43 maintenance/management problems, 417–18, 428–30 neighbourhood effects, 419–30 Netherlands, 37–8, 325, 389–90, 396–401, 405, 409–11, 437–43 post-socialist countries, 4, 165–7, 168–71, 176–9, 205–6, 209, 210–11, 213, 219–20, 240–51, 437–43 property values, 427–30 reinvestment needs, 430 Scotland, 47–8, 51–2, 286–7, 393, 437–43 profit-driven private rental markets in Anglo-Saxon nations, 264–5, 292, 425–30 property law, altruism and welfare comparisons between England and France, 349–65 property values, Right to Buy schemes, 427–30 public ownership, see also municipal …, concepts, 4–6 public services, global financial crisis from 2007, 272–3, 287–8, 379–86, 405–6, 435, 439–43 public–private partnerships, 64–5, 72–3, 228–30, 326, 328–9, 380–6, 414, 434–43 Austria, 64–5, 72–3 England, 326, 328–9, 414 Netherlands, 326, 328–9, 380–6 Spain, 228–30, 328 ranking of households, rationing methods, 10 rationing methods, 10, 34–6, 56–7, 95–6, 137–8, 148–9, 215, 219–20 real estate investment trusts (REITs), 326 Red Road housing estate, Glasgow, 258 Red Vienna municipal housing estate, 276, 281, 282–3, 302–3 Redmond, Declan, 145–62 regional variations, Right to Buy schemes, 418–22, 428–9 registered social landlords, England, 107–9 Reinprecht, Christoph, 61–73, 277–94, 297–313 religion, 280, 283, 305–6, 396–7

rents, 6–16, 29–30, 32–4, 61–5, 67–9, 71–3, 79–83, 94–7, 105–6, 112–15, 138–9, 239–51, 264–73, 278–93, 298–312, 317–29, 334–45, 384–6, 402–11, 436–43 see also finance; housing allowances/benefits; individual countries, concepts, 317–29 conclusions, 328–9, 384–6 controls/regulations, 6–10, 29–30, 32–4, 61–5, 67–9, 71–3, 79–83, 94–7, 105–6, 112–15, 138–9, 271–2, 324–9, 334–45 determination mechanisms, 317–21, 336 Eastern Europe, 239–51, 321–9, 437–43 history, 264–73, 278–93 market rents, 320–9 mechanisms, 317–29 post-socialist countries, 239–51 statistics, 6–10, 271–3, 278–93, 317–29, 406–11, 436–43 Republic of Ireland, 5–6, 8, 11, 12, 14, 15, 17, 19, 144–62, 319–29, 335–45, 351, 437–43 access, 11, 148–9, 335–45, 351, 441–3 demographics, 15, 17, 19, 148–9, 441–3 economic context, 145–6, 148–9, 158–60 finance, 8, 12, 14, 145–6, 150–60, 319–29, 437–43 future prospects, 145–6, 159–60, 437–43 governance and regulations, 147–8, 154–60, 335–45, 437–43 history, 144, 145–8 housing allowances/benefits, 14, 146–7, 155–6, 159–60, 437–43 leasing schemes, 157–60 migrants and ethnicity demographics, 17, 441–3 milestones, 159 negative equity, 145–6, 148–9 new construction, 145–51, 437–43 ownership of social housing, 145–7, 150–2, 153–4, 159–60 planning gain and social housing, 154–6 rents, 8, 12, 14, 145–6, 152–60, 319–29, 437–43 Right to Buy scheme, 145–6, 147–8, 160, 325 social mix, 155–6 sociopolitical context, 145–6

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Index statistics, 5–6, 8, 11, 14, 15, 17, 19, 144–60, 437–43 stock of social housing, 5–6, 145–6, 150–1, 159–60 taxation, 145–6 vulnerable tenants demographics, 19, 148–9, 441–3 resale effects, Right to Buy schemes, 421–30 residual model of social housing, 56, 261–3, 265–6, 268–73, 298–312, 335–45, 392–5, 407–11, 422–30, 435–43 ‘respectability’ notions, history, 282–3 the Reumannhof, Austria, 60 revolutionary workers, France, 356–7 Netherlands, 27–8 Right to Buy schemes, 51–2, 65–6, 93, 106–7, 115–16, 145–6, 147–8, 160, 166–7, 170–1, 240–51, 268–73, 286–7, 325–6, 390–5, 409–10, 415–30 Austria, 65–6 Birmingham case study, 415–30 conclusions, 428–30 critique, 390–5, 409–10, 415–30 Czech Republic, 166–7, 170–1, 240–1 definition, 390–2, 417–19 England, 106–7, 115–16, 268–73, 286–7, 325, 390–5, 409–10, 415–30, 436–43 estate-level analysis, 422–30 ethnicity demographics, 416–17, 426–30 flats, 421–30 history, 286–7, 390–5, 417–19 post-socialist countries, 166–7, 170–1, 240–51 private renting transfers, 422–30 property values, 427–30 purchaser types, 419–21 regional variations, 418–22, 428–9 reinvestment needs, 430 Republic of Ireland, 145–6, 147–8, 160, 325 resale effects, 421–30 Scotland, 51–2, 286–7, 393, 437–43 social mix objectives, 420–30 social/spatial differences, 419–22, 428–9 statistics, 268–9, 270–1, 286–7, 390–5, 417–19 subsequent resales, 421–30 rights, France, 138–9, 352–65 riots, France, 128, 296, 381

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risk-free interest rates, 323–4 Robertson, Douglas, 43–59, 277–94 Roma households, 16, 17, 166, 211–12, 218, 233–4, 248–9, 440 Roman law, 353–6 Romania, 240–1, 243, 245, 248–9 Rothschild foundation, 280 Rotterdam, 25–40, 373–86, 432 Rowston foundation, 280 RTB see Right to Buy …, Russia, 240, 242, 243, 247, 249–50, 281 sales of social housing stock, 37–8, 325, 389–90, 396–401, 409–11 see also privatisations; Right to Buy schemes, Salt, Titus, 280 Scanlon, Kathleen, 1–20, 77–89, 434 Schaefer, Jean-Pierre, 123–42 Scotland, 4–6, 9, 10–12, 14, 15, 17, 19, 42–59, 258, 260, 270–1, 277–93, 322–9, 361, 393–5, 437–43 see also United Kingdom, access, 11, 45–6, 47–8, 53–4, 56–7, 282–93, 361, 441–3 conclusions, 56–8, 437–43 deindustrialisation trends, 47–8 demographics, 15, 17, 19, 43–6, 47–8, 56–7, 441–3 employment rates, 47–8 finance, 49–58, 282–93, 322–9, 393–5, 437–43 the Gorbals, 42 governance and regulations, 43–4, 49–50 history, 42–58, 258, 260, 270–1, 277–93 ‘Homes fit for heroes’, 282 housing allowances/benefits, 12, 14, 43–4, 47–8, 50–2, 56–7, 437–43 independence referendum of October 2014, 44, 49, 57 insecure accommodation, 46, 47–8, 56–7, 290–3 learning from history, 277–93 migrants and ethnicity demographics, 17, 441–3 new construction, 282–93, 437–43 new house-building trends, 54–8 ownership of social housing, 43–58, 270–1, 278–93, 393–5 path dependencies and changes in social housing, 277–93

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Scotland (continued) privatisations, 47–8, 51–2, 286–7, 393, 437–43 property law, 361 rents, 9, 14, 43–4, 55–8, 278–93, 322–9, 437–43 Right to Buy scheme, 51–2, 286–7, 393 sociopolitical context, 43–58, 270–1, 277–93 statistics, 4–6, 9, 10, 11, 12, 14, 15, 17, 19, 43–58, 278–93, 437–43 stock of social housing, 4–6, 43–4, 49–52, 54–8, 278–93 tenements, 42, 44–5 tenure profile and trends, 46–7, 270–1 urban investment policies, 50–2, 56–8 vulnerable tenants demographics, 19, 45, 47–8, 56–7, 441–3 secured tenancies, concepts, 6, 10, 118–19, 168–70, 234–6, 299–300, 393–5 segregation problems, 334–5, 342–5, 371–86, 420–30, 442–3 Sellier, Henri, 282, 301 Serbia, 242, 243, 247–9 Serpa, Regina, 43–59 Services of General Interest (SGI), 336–45 SGEI see Social Services of General Economic Interest EU Directive, SGI see Services of General Interest, side payments, 10 single-parent families, 12–19, 24–5, 34–5, 45, 70–2, 115–17, 139–40, 157, 180, 270–1, 312, 335, 355, 439–43 Slovakia, 242, 243, 245, 248–50 Slovenia, 240–1, 242, 243, 245–8 small social housing sectors, 2–4, 16, 143 see also Czech Republic; Eastern Europe; Germany; Hungary; Republic of Ireland; Spain, ‘social contracts’, 357–8 social home ownership, Netherlands, 400–1 ‘Social Homebuy’, England, 410 social housing, see also access …; demographics …; finance; housing allowances/benefits; individual countries; legal issues; ownership …; rents; stocks …, altruism and welfare comparisons between England and France, 349–65 changes in social housing, 260–73, 277–93, 297–312, 362–3, 434–43

collectivism/individualism challenges, 272–3, 284–93, 309–12, 352–65 ‘common good’ consensus, 288–91, 293 comparative approach on history, 259–73 conclusions, 56–8, 101, 178–9, 199–200, 220, 250–1, 272–3, 291–3, 311–12, 328–9, 344–5, 362–5, 384–6, 409–11, 428–30, 433–43 convergence theory, 250–1, 260–3, 264–6, 321, 435–43 country comparisons, 435–43 critique, 260–73, 283–93, 297–312, 362–5, 409–10 definitions, 3–4, 36–7, 61–2, 66–7, 77–8, 91–2, 145–7, 165–6, 183–4, 205–6, 262–73, 277–93, 297–312, 334–5, 362–3, 402–3, 433–43 divergence theory, 260–1, 264–7, 435–43 efficiency pressures, 442–3 EU definition, 292, 350–1, 360–5 fragmentation and marketisation, 285–93, 297–312, 401–2, 410, 425–30, 443 future prospects, 2–3, 16, 45–7, 53–4, 117–18, 145–6, 159–60, 197–201, 219–20, 235–6, 250–1, 259–60, 272–3, 278–93, 361–5, 384–6, 409–10, 433–43 history, 1–4, 6, 10, 16, 257, 259–73, 276–93, 297–312, 389–411, 417–30, 433–43 introduction to the book, 1–20 models, 1–20, 239–51, 260–73, 333–45, 360–5, 389–411, 435–43 overview of the book, 3–4, 16 path dependencies and changes, 277–93 privatisations, 1–2, 4, 37–8, 47–8, 64–6, 72–3, 165–7, 168–71, 176–9, 183–4, 205–6, 209, 240–51, 264, 309–12, 323, 361–5, 389–411, 415–30 Social Services of General Economic Interest EU Directive, 36, 66, 289–90, 332, 333–45, 360–5 statistics, 3–20, 268–73 urban renewal, 1–2, 16, 29–30, 36–8, 126–7, 194–6, 287–93, 301–2, 369–87 ‘very social’ housing sector, 298–312, 440–3 Social Housing in Europe publications , 2, 434–5 social integration needs, 311–12 social market approach, divergence theory, 264–7

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governance and regulations, 226–32, 233–6 history, 222, 226–4 housing allowances/benefits, 12, 14, 229–31, 437–43 migrants and ethnicity demographics, 17, 233–4, 441–3 mortgage-interest support, 230–1, 236 new construction, 223–6 ownership of social housing, 6, 222–36, 259 public–private partnerships, 228–30, 328 reform proposals, 235–6 rents, 9, 12, 14, 228–32, 233–6, 322–9, 437–43 secured tenancies, 234–6 sociopolitical context, 225–6, 233–6 statistics, 5–6, 9, 11, 14, 15, 17, 19, 222–36, 259, 437–43 stock of social housing statistics, 5–6, 223–6, 259 structure of social housing, 228–30 taxation, 230–1 tenure profile and trends, 223–6, 234–6 VPO housing, 222–36 vulnerable tenants demographics, 19, 232–8, 441–3 spare-room welfare changes, England, 112–13 SSGI see Social Services of General Interest, standards, 125–6, 140–1, 238, 273, 281–93, 299–300, 416–17, 442–3 state aid concepts, 336–45 Stephens, Mark, 389–413 stigmatisation problems, 299, 308–12, 339–45, 370, 381–6, 419–30, 442–3 Stockholm, 93–102 stocks of social housing, see also individual countries, statistics, 3–6, 259–73, 287–93, 334–45, 350–1, 390–411, 423–30, 434–43 subsidies, 1–2, 6, 12–16, 27–8, 30–3, 43–5, 50–2, 56–7, 61–5, 66–7, 71–3, 87, 91–2, 101, 105–6, 110–15, 117–18, 132–4, 147–8, 154–5, 165–6, 168–70, 173–4, 185–6, 206–9, 227, 229–30, 233–4, 236, 244–51, 262–73, 283–93, 299–312, 317–29, 383–6, 434–43 see also housing allowances/benefits, Austria, 61–5, 66–7, 71–3, 327–9, 436–43 concepts, 326–9, 435–43

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subsidies (continued) country comparisons, 435–43 Czech Republic, 165–6, 168–70, 173–4, 245–6, 248–9, 436–43 France, 132–4, 327–9, 383–6, 436–43 Germany, 6, 185–6, 188–94, 199–200, 327–8, 370–86, 436–43 Hungary, 206–9, 213, 218, 245–6, 436–43 post-socialist countries, 165–6, 168–70, 173–4, 206–9, 213, 218, 244–51, 437–43 statistics, 12–16, 327–9, 435–43 Sunega, Petr, 4, 239–53 Surinam, 34 sustainability standards, 125–6, 140–1, 238, 273, 281–93, 299–300, 416–17, 442–3 Sweden, 4–6, 9–12, 14, 15, 17, 19, 90–102, 111–12, 167, 266–7, 311, 322–9, 334–45, 435–43 access, 10, 11, 95–6, 100–1, 311–12, 334–45, 441–3 conclusions, 101, 311, 435–43 demographics, 12, 15, 17, 19, 91–3, 95–6, 98–102, 311, 339–45, 441–3 finance, 6, 9, 10, 14, 92–7, 99–102, 266–7, 322–9, 435–43 governance and regulations, 91–2, 93–8, 99–102, 334–45 history, 90–3 housing allowances/benefits, 14, 91–2, 97–8, 100–1, 339–45, 437–43 migrants and ethnicity demographics, 17, 92–3, 98, 100–1, 441–3 municipal housing companies (MHCs), 91–102, 338–45 ownership of social housing, 91–7, 167 rents, 6, 9, 14, 92–7, 99–102, 266–7, 322–9, 338–45, 437–43 sociopolitical context, 91–2, 100–1 statistics, 4–6, 9, 10, 11, 12, 14, 15, 17, 19, 90–102, 437–43 stock of social housing, 4–6, 90–102, 167, 334–45 tenure profile and trends, 93–7, 99–102 trends, 99–102 undesirable tenants, 96–8, 100–1 vulnerable tenants demographics, 19, 92–3, 98–102, 311, 339–45, 441–3 Switzerland, 266 targeted social housing systems, 334–45, 442–3

taxation, 31–3, 38–9, 64–5, 66–7, 113–14, 128–9, 132–3, 145–6, 165–6, 188–9, 217–18, 230–1, 247, 285–6, 341–5, 405 TBS dwellings, 245–6 Teller, Nóra, 4, 239–53 tenancies, concepts, 6, 10 Tenant Services Authority, 271 tenants, 1–3, 6, 10, 12, 419–21 history, 1–3, 6, 10 purchaser types, 419–21 tenements, Hungary, 204, 205–10 Scotland, 42, 44–5 tenure, statistics, 3–20, 268–73, 422–30 Thorncastle Street Ringsend, Dublin, 144 Tinggarden, Denmark, 76 Town Planning and Housing Act 1919, Scotland, 282 trade unions, 250–1, 277, 281, 283, 290, 307, 352 The Treaty on European Union (Maastricht Treaty), 336–7, 397–8 trial-and-error transition processes, post-socialist countries, 240–1 trust law, 352–65 TüA bingen Mill Quarter, Germany, 197–8 Turkey, 34, 71, 139 Tutin, Christian, 123–42 Ukraine, 242, 243, 249–50 undesirable tenants, 96–8, 100–1, 381–6 unfurnished dwellings, France, 300–12 unitary rental markets, 265–6, 267–73, 345 United Kingdom (UK), 6, 10, 25, 43–59, 104–20, 259–73, 280, 319–29, 335–45, 349–65, 389–95, 405, 409–11, 414, 415–30, 435–43 see also England; Northern Ireland; Scotland; Wales, access concepts, 10, 335–45, 349–65 critique, 267–73 ‘fair’ rents policy, 267 ‘Homes fit for heroes’, 282 housing-benefit changes, 6, 10 limited-term tenancies, 6 ownership of social housing, 6, 44–5, 104, 105–9, 267–73, 389–95, 409–11, 415–30 privatisations, 362–3, 389–95, 405, 409–11, 415–30, 436–43

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Index statistics, 4–6, 7, 9, 10, 11, 12, 13, 14, 15, 17, 18, 19, 43–59, 104–20, 259–73, 389–95, 409–11, 415–30 Universal Credit scheme, 57, 118 USA differences, 266 Universal Credit scheme, United Kingdom, 57, 118 universalistic social housing systems, 334–45, 442–3 unmet demands, country comparisons, 435–43 urban renewal, 1–2, 16, 29–30, 36–8, 126–7, 194–6, 287–93, 301–2, 369–87, 428, 432 concepts, 369–87 conclusions, 384–6 definitions, 370–2 England, 370–1, 428 France, 369–87 Germany, 369–87 history, 1–2, 287–93, 301–2, 369–87 integrated approaches, 382–6 key features of current policies, 380–6 main periods, 372–80 neighbourhood targets, 380–1 Netherlands, 2–3, 28–30, 35–40, 369–87, 432 recent policies, 378–86 social/physical regeneration contrasts, 371–80 waterbed effects, 381–6 USA, 263, 266 utopian ideals, 279–80, 289–90 ‘very social’ housing sector, 298–312, 440–3 Vestergaard, Hedvig, 77–89 victims of abuse, 16, 137–8, 166, 180, 233–4 Vienna, 60, 62–73, 276, 278–93, 297–312, 440 see also Austria,

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virtual social housing, Germany, 184, 188–9, 193–4, 370, 402–3 VPO housing, Spain, 222–36 vulnerable tenants demographics, 15–19, 34–5, 37–8, 81–3, 247–51, 270–1, 290–3, 296–312, 334–45, 350–65, 371–86, 433–43 see also individual countries, conclusions, 439–43 country comparisons, 439–43 statistics, 15–19, 270–1, 439–43 stigmatisation problems, 311–12 waiting lists, 10, 33–4, 56–7, 81–2, 88, 95–6, 137–8, 148–9, 215, 219–20, 303–4, 334–5 Wales, 392 Wassenberg, Frank, 25–40, 277–94, 341, 369–87 waterbed effects, urban renewal, 381–6 welfare (Fordism) capitalism phase of capitalist expansion, 261–6, 308–9 welfare state, English/French legal differences, 349–65 history, 1–2, 277–93, 297–312, 349–65, 372–86, 442–3 Whitehead, Christine, 1–20, 105–20, 263, 317–30, 410, 434 Wibaut, Florentinus, 281 World War I, 44, 128, 168, 262–3, 267, 277, 279, 281–4, 289, 350–1 World War II, 1–2, 26–8, 32, 44, 62–3, 72–3, 105, 128, 184–5, 186, 199, 239–40, 241, 267, 277, 284–5, 291–2, 301–3, 349–51, 357–8, 371–3, 442–3 worst/good estates, privatisations, 416–30 WSW, 399–401 Yugoslavia, 71, 240

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