Social housing in Europe: now and tomorrow

Kath Scanlon, LSE/SBiParis, 22 November 2007

Structure of presentation

• Methodology • Findings

– Ownership– Decision-making– Rents– Demographics

• Trends and current issues

Objectives of the project

Not to obtain detailed descriptive information, but:• To understand key attributes of the

social rented sector across a range of European countries

• To clarify major trends, past and future• To get a feel for political and other

pressures for change

Participants & methodology

Specialists in 9 countries:Austria, Denmark, England, France,

Germany, Hungary, Ireland, the Netherlands, Sweden

– Country reports– Seminars– Editing process

‘Social Housing in Europe’

English version funded by UK’s Higher Education Innovation Fund

– Short overview of comparative trends– Chapter on each country, plus general

overview of transition economies

Housing tenure / size of social sector

O-O PRS SR Number social units

Netherlands 54 11 35 2,400,000

Austria 55 20 25 800,000

Denmark 52 17 21 530,000

Sweden 59 21 20 780,000

England 70 11 18 3,983,000

France 56 20 17 4,200,000

Ireland 80 11 8 124,000

Germany 46 49 6 1,800,000

Hungary 92 4 4 167,000

Trends in supply• Demand for social housing is generally high and

increasing, with long waiting lists at least in major urban areas.

• Oversupply in some areas (eastern Germany; Northern England) has led to large-scale demolitions.

• Even in pressure areas like Dublin, Amsterdam & Paris, social housing from 1950s -1970s is being demolished.

• Large estates that are demolished (in whole or in part) are often replaced by mixed-tenure housing (France, Denmark, England), possibly at higher densities and with mixed use to sweat assets.

• Increasing emphasis on construction of sustainable buildings/zero carbon emissions (Germany, France, Denmark, suddenly UK)

• Special needs housing makes up increasing % of new build—Sweden, Denmark (> 50%). Definitions of special needs differ, but include housing for the elderly, handicapped, sometimes large families.

Ownership

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Hungary Sw eden Ireland England Austria France Denmark Netherlands

Municipally owned or controlled Housing association

Involvement of private sector

Germany Long involvement in German system – limited term social housing. Munich requires % social housing in new developments

Ireland Private developers must transfer 20% of new dwellings on large sites or equivalent to local authority for use as social or affordable housing

England Between 20% to 50% of larger new/regeneration developments must be affordable housing – about half of all social provision. New initiative to allow private developer social housing

France Private individuals can acquire subsidised dwellings as investments; mixed housing companies are public/private partnerships

• Privatisation tends to remove the better-quality stock from the tenure.

– Ireland, UK: decades– Netherlands: since late 1990s– Denmark: tentative first steps– Germany: special case. About 100,000 units of

social housing per year move to the private sector as rent restrictions expire. Sale of municipal housing stocks to private investors.

– Hungary: restitution/privatisation after 1989

Decision-makingCentral/

federal govt←→ Local/

ProvincialLocal govt in negotiation

with providers

Austria R ANC, LNC, €

Denmark R, € ANC, LNC

England R, ANC, LNC, €

ANC, LNC

France R, LNC, € ANC LNC

Germany R € ANC, LNC

Hungary R, ANC, LNC, €

Ireland R, € ANC, LNC

Netherlands

R, € ANC, LNC

Sweden R, € ANC, LNCANC = amount of new construction R = system for rent determinationLNC = location of new construction € = definition of financing/subsidy system

←→ = in negotiation with

• Shift from national to more local decision-making—– Austria 1987/88– Netherlands 1989– Denmark 1994– Hungary 1990s– France 1982, 1991, 2000 & 2004– Germany 2006

• England moving against the trend—shifting decision-making away from local government to national government or landlords

Social vs private rent determination: cost-based rents

Social Private

Austria Cost-based. Both cost based; private <10% higher

Denmark 3.4% of building cost + bank charges. Average 2005 €6.67/m2/month

Private rents also regulated. Average €6.83/m2/month

Germany In some regions rents vary with household income. €4-7/m2/month

Rent on new leases free, but rises regulated

France Central government decrees maximum rents (vary by region)

Rent on new leases free, but rises regulated. 30-40% higher than social rents.

Sweden Set by annual negotiation between landlords and tenants

Private rents limited by social rents; private slightly higher

Other rent systemsSocial Private

England Rents based on local earnings and dwelling price. Landlords must cover outgoings

Private rents freely set since 1988.

Hungary Set by local authorities Market based

Ireland Tenants pay % of income in rent. Average rent €155/month

Rent control abolished 1981.

Netherlands Rent based on utility value of dwelling & target household income level. Average €353/month

Also controlled; average rent €419/month

• Cost rents by definition cover historic costs, but have

no direct relation to market forces, producing distortions. Economists advocate moving to more market-based system.

• Rents related to income produce low revenue, make it difficult to employ private finance. Experts argue against (associated with small social sectors - Ireland – also USA; Australia)

• Countries with low average rents (Hungary, Ireland) have affordable housing but receipts don’t cover costs so major problems of management and maintenance.

• Rent system bound up with housing benefit/rent allowance—and in transition economies there is none.

Access to social housingFormal income limits at entry

De facto income limits

% of population eligible

Austria Yes Yes, but high 80-90

Denmark No Yes 100

England No Yes 100*

France Yes Yes 80.7/65.5/30

Germany Yes Yes About 20

Hungary Yes Yes Very small

Ireland Yes Yes Very small

Netherlands Yes Yes <40%

Sweden No Yes 100%

*But access based on housing need

What if incomes exceed limits?

Austria Rent unchanged

France Small supplement applied to rent (in theory)

Germany Municipality may raise rents; happens rarely in practice

Ireland Rent rises

Netherlands Rent unchanged

Demographics of social housingAge Household type Income

Y O Single Single w/children

Couples w/children

Low Middle

Austria X X X X X X X

Denmark X X X X

England X X X X X

France X X X

Germany X X

Hungary X

Ireland X X X

Netherlands X X X

Sweden X X X X

• Increasing income/social segregation in

many countries, especially on worst estates – not obviously related to size of sector

• Near-universal preference for owner-occupation and government policies to promote it → departure of middle classes

• Subsidy becomes better targeted, but poor households become more concentrated

EthnicityEthnic minorities/immigrants

Overall % in social housing % of social housing residents

Austria 20+* 6

Denmark 6.6 (8.7)

60 20

England 7.9 28 10

France 30 of foreign-born 2x share in population

Germany 9 Varies High in W Berlin, Munich

Ireland 10%

Netherlands

25 51 (68 of non-Western)

34 (non-Dutch)

Sweden varies >30 in metropolitan areas; 15 elsewhere

*In Vienna 33%. Until 2006 only Austrian citizens had access to municipal housing

Ethnic patterns by countryDenmark: Immigrants concentrated on large

urban estates and newer estates

Germany: On some large estates in Berlin & western Germany, 35-40% of residents are immigrants. German-Russian migrants concentrated on large east German estates

Austria: Non-Austrians not allowed in municipal housing until 2006. Influx of naturalised immigrants in 1990s→ tensions on some estates

France: Large immigrant population in estates on peripheries of cities.

Netherlands: Concentrations of minorities on postwar estates with low-rise flats. Concern about segregation of housing, neighbourhoods and schools.

England: High concentrations of minority households on large urban estats. Competition for housing greatest area of tension between established households and new migrants.

• Minorities tend to live disproportionately in social housing:– Low incomes– Tend to live in cities– May prefer living in own communities

• Move to mixed communities and tenure integration unlikely to reduce the level of segregation, unless income distribution/levels of migration change

Current debates • Demographics: Does social housing

generate segregation?

• Politics: Is social housing now seen to be the problem, rather than part of the answer?

• The social contract: Should social housing

go to local residents, or to those with the greatest need?

• Location: What should be done about a mismatch between locations of supply and demand?

• Supply: How can pressure for new supply best be met?

• Tenure/use mix: Is it better to provide social housing in separate areas, or in those with mixed tenure and use?

• The role of social housing providers: Should they be given new functions?

• Rent determination: Should rents be based on costs, income, or market value?

Trends

• Housing providers increasingly separate from local authorities; shift towards more local decision-making

• Newly constructed social housing is generally mixed tenure. Efforts made to introduce a mix in existing stock and use public assets more effectively : a dominant idea but difficult to realize in practice

• Private sector increasingly asked—or forced—to become involved in provision of social housing

Trends (2)

• Ethnic minorities live disproportionately in social housing, often on large estates – issues of need versus entitlement

• Highly targeted subsidies can lead to residualisation; lack of provision for employed households and intermediate market

• Countries where social housing does cater for intermediate market running into problems with EU for subsidising the undeserving--SGEI question.