1. The Role of Social Housing in Europe
Christine Whitehead
Emeritus Professor in Housing Economics
London School of Economics
Institute for Housing and Urban Research, Uppsala University
October 13th 2015

2. Definitions of Social Housing
No single definition: depends on history, national legal and financing frameworks, interest of the person defining etc;
Legal: mainly based on ownership and control;
Ownership: social objectives; non profit distributing;
Tenure: rented; co-operatives; home ownership?
Pricing: below market rents and prices;
Subsidised: direct from government; indirect – past tenants, landowners, employers etc;
Allocations: non-market allocations; constraints on re-sale;
If it looks like a duck, swims like a duck and quacks like a duck it probably is a duck?
But statistics difficult to interpret and make consistent - always exceptions – Sweden, Germany, Spain - or are all countries now exceptions?

3. Always supply? Always rental?
In Europe traditionally supply side subsidies and rental tenure.
Partly simply history: nineteenth century housing standards raised; lack of affordability; no data on which to base demand side subsidies.
Result government support to supply side enabling pricing and allocation rules and to (try to) ensure financial responsibility.
Nowadays demand side subsidies and many different tenure forms available.
Compare Europe with the rest of the world – mainly owner-occupation; financial innovations and capital subsidies to consumers?

4. Very different approaches over time – and between countries
Historically a charity or employer provided rental housing sector;
State supply subsidies from late nineteenth century associated with the introduction of higher standards – sometimes tenure neutral;
Post-1945 mass, state provided, rental housing development across Northern and Eastern Europe to meet numerical shortfalls and sometimes for ideological reasons;
Aimed at lower income working households rather than the poorest;
In Eastern Europe state owned; employer/state supplied;
In Southern Europe a different model, involving family funding and self build owner-occupation.

5. Related to different objectives?
Ensuring housing for particular groups of households who were inadequately accommodated in the market – charities;
Achieving physical and occupancy standards – local authorities;
Addressing rural/ urban mobility and industrialisation – employers/non profits/local authorities;
Post war – need for any type of housing – most Northern and Western European countries
Political commitment – Eastern Europe and much of Northern Europe;
Alleviation of poverty – not really until numerical shortages addressed – growing role of usually local (legal) responsibilities but often non-profit provision;
Additional services – social housing as part of welfare and substitute for government – increasing role as more vulnerable located in social housing – but financial viability issues.

6. Resulting in changing terminology
Public housing – most traditional social housing usually identified as:
Housing owned by a government authority, whether central or local;
Sometimes defined as housing subsidised by government;
Almost always rented or co-operative.
Social housing - a much broader term:
A range of owners, usually but not always non –profit;
Subsidies from a range of sources;
Can include other tenures;
Objective to provide for those who cannot afford market .
Affordable housing - even broader:
All types of provider;
Often regulated;
Usually financing and subsidies in kind as well as direct financial subsidies;
All types of tenure;
But distinct from market affordability.

7. Changing models of provision and allocation
In (North) Western Europe housing seen as the wobbly pillar of the welfare state. Two main models evolved:
the universalist model: (social) housing for all in eg Sweden, Denmark, the Netherlands;
the targeted model: social housing concentrated on helping poorer households in eg UK, Ireland, W Germany;
Implications for financing, rents and allocations;
Over time the two models have become more similar as all move towards housing more vulnerable households;
Increasing interest in providing low cost/partial homeownership for those on low to middle incomes;
Also sales of social housing to tenants;
In Eastern Europe after the fall of communism moved, in one step, from state housing to owner-occupation.

8. Changing financing approaches
Post war model mainly state finance and subsidy usually through interest rate reductions. Often some local contribution and often on state owned land;
By 1970s and 1980s numerical shortfalls mainly overcome and macro economic problems (including rapid inflation and EU pressure) led to increasing emphasis on reducing public expenditure;
Introduction of income related subsidies and financial market deregulation, from 1970s in some countries;
Changing role of rental income;
Pressures to reduce government involvement in many countries;
Increasingly valuable unencumbered capital assets, opened up opportunities for new methods of financing social housing through the private sector;
Scandinavia, the Netherlands and the UK major innovators.

9. Introduction of private finance
Growth in private finance for social housing from 1980s;
Private finance initially came mainly from retail banks. Conditions necessary included strong asset base; a predictable rental stream; and powers to raise rents/sell assets to cover unexpected costs;
Usually involved continued subsidy (often in the form of an upfront capital grant) to maintain rents at affordable levels – but also capacity to adjust rents in the face of changing circumstances;
Implication: some form of continuing guarantee of income stream to lenders – (eg direct financial guarantees; certainty of continued income related housing allowances; regulation to address problems);
As a result HAs sometimes seen as stronger than many countries by credit rating agencies.

10. Structural changes
Reductions in supply side subsidies. Also shifts towards other sources of subsidy, e.g. public land and guarantees;
Higher rents, wider range of products (including low cost home ownership) and more targeted income related subsidies;
Regeneration including densification/mixed use redevelopments to cross subsidise social housing;
Strong capital base allows borrowing at relatively low interest rates;
Use of bonds, complex financial instruments, sales to tenants, other suppliers and private equity;
Especially post GFC, lower levels of social housing investment.

11. Current Role of the Social Sector
Size of the social rented sector declining in some European countries – but not as fast as had been predicted;
Changing attributes of social tenants – more vulnerable, more ethnic minorities, more migrants;
Increasing emphasis on regeneration of post-war estates which are now of poor quality and expensive to maintain and improve;
Continuing shift from supply side to income related subsidies

12. Who are the providers? Exceptions
Most countries
Vast majority of social housing is rented from municipalities or non profit organisations – notably housing associations
Varying percentages:
Netherlands: 100% housing associations
Czech Republic: 100% municipalities
Exceptions
Spain: mostly social owner-occupation
Germany: time-limited subsidies to private landlords
Sweden: profit oriented LA housing corporations

13. Scale of Provision Country Social rented housing as % of housing stock
Change in last decade
Netherlands 32 -4
Scotland 24 -6
Austria +1
Denmark 19
Sweden
LA corporations (not seen as social) 18 -3
England 18 -2
France 16 -1
Ireland 9
Czech Republic 8 -0
Germany 5
Hungary 3
Spain 2

14. Access to social housing
Country
% of population eligible
Formal income limits
Austria
80-90
Spain
Over 80
France
33 (non-owners only)
Hungary
15-40
Germany 20
Ireland
Very few
No formal income limits
Denmark
100
Sweden
England
Scotland
Netherlands 40
Varies
Czech
Varies by municipality

15. Rents: social and private
Social v private rents
Country
How social rents are set
Social rents close to market
Austria
Cost-based
Denmark
Cost-based at estate level
Germany
Varies with building period and funding
Sweden
Set by negotiation in same way as prs
Social rents 50-66% of market rents
France
Central government sets—cost-related
Netherlands
Points system—’utility value’ prs regulated in same way
Scotland
Historic cost-based
England
Were based on local incomes and dwelling price; for new lets now up to 80% of market
Social rents less than 50% of market rents
Czech Republic
Hungary
Set by municipalities; very low
Ireland
A percentage of tenant incomes
Spain

16. Demographics ‘Hollowing-out’ but also ‘generation rent’ But
The young and the old (pensioners)
Single parents - and large families?
The unemployed or non participant
Low incomes—median incomes of social tenants 50-70% of national median incomes.
Migrants and ethnic minorities often overrepresented
But
Growing need for shallow subsidy housing for those somewhat further up the scale
Intermediate rent and low cost/equity share homeownership
Private renting as social housing

17. Are models converging? – name the countries
Country A: single parents; elderly single people
Country B: young and old; singles and single parents;
Country C: single parents; single people; childless couples;
Country D: single people; young people and families;
Country E: single parents; older and one person households.

18. Are models converging? Proportions of minorities: Guess the countries
Country 1: 25%
Country 2: 16%
Country 3: 31%
Country 4: over 30% in metropolitan areas
Country 5: twice the share in population

19. Are Models Converging? Again which countries?
Country I: 50% 0f average income
Country II: 68% of average income
Country III: increasing concentrations of low incomes
Country IV: 60% with incomes 60% below average
Country V: increasing concentrations of low income households
So does it look like a duck? – but not the same duck as in twentieth century?

20. European Social Housing: the Challenges
Declining population in some regions/countries
Worsening income distribution in most countries
Increasing problems of residualisation – tenure and /or spatial
Increasing need for regeneration investment in post war housing
Increasing pressure to cut public budgets
Increasing issues of affordability among lower income employed households
Increasing role in welfare support
Increasing emphasis on private renting

21. A Continuing Role? Overall evaluation
Accommodating those who have few options or as one of many providers?
Capital base available - outside Eastern Europe
Increasing range of other sources of income and subsidy to providers
Diversifying into other activities- market and intermediate housing, welfare services
Surprisingly resilient in terms of changing proportion of the stock
Why not – someone has to do it
Overall evaluation
Social rented housing appears quite robust and remains a good and sustainable model in many countries
But probably NOT directly provided by the public sector except in partnership with specialist providers