Overcoming Obstacles to the Funding and Delivery of Affordable Housing Supply in European States

Introduction

The report titled “Overcoming Obstacles to the Funding and Delivery of Affordable Housing Supply in European States” by Kenneth Gibb and Jim Hayton provides a comprehensive analysis of the challenges and potential solutions related to affordable housing in Europe. Commissioned by Policy Scotland at the University of Glasgow in partnership with the Scottish Cities Alliance, the study aims to understand the barriers inhibiting affordable housing supply and explore strategies to overcome them.​

Context and Background

Europe faces a significant affordable housing crisis, characterized by shortages, rising costs, and increased homelessness. The report draws on data from Housing Europe’s Housing Observatory, highlighting issues such as access difficulties, cost overburdening for low-income households, and energy inefficiency in housing stock. These challenges are exacerbated by factors like fuel poverty and the need to reduce carbon emissions.​

Identified Barriers to Affordable Housing

The study identifies several key barriers:

1. Land Supply and Market Failures: Limited availability of land and market inefficiencies hinder the development of affordable housing.​

2. Inadequate Public Funding: Insufficient subsidies and public investment restrict the capacity to build and maintain affordable housing units.​

3. Tax Policies Favoring Ownership: Tax incentives often favor homeownership over rental options, reducing the focus on affordable rental housing.​

4. EU State Aid Rules: Interpretations of state aid regulations can limit support for not-for-profit housing providers.​

5. Low Supply Responsiveness: The housing market’s slow response to demand, partly due to speculative behaviors, affects affordability.​

6. Risk-Averse Lending: Financial institutions’ cautious lending practices, especially post-financial crisis, limit access to housing finance for low-income groups.​

7. Access Difficulties: Lower and middle-income households face challenges in accessing affordable housing due to stringent lending criteria and high costs.​

Potential Enablers and Solutions

The report suggests several strategies to address these barriers:

1. Policy Reforms: Implementing policies that directly tackle identified problems, such as redesigning subsidies and financial instruments.​

2. International Best Practices: Learning from global experiences to apply effective rules and strategies in the European context.​

3. National Initiatives: Adopting specific policies from countries with successful affordable housing models.​

4. Innovative Financing: Exploring new finance sources, including state-backed guarantees and aggregators, to support affordable housing projects.​

5. Inclusionary Zoning: Utilizing planning obligations to ensure a portion of new developments is allocated for affordable housing.​

Case Studies and Examples

The report highlights successful models:

• Germany: Demonstrates resilience in moderating house price inflation and sustaining affordable housing supply.​

• Austria: Employs a strong social housing sector with effective financing mechanisms.​

• France: Utilizes inclusionary zoning and planning obligations to promote affordable housing.​

Recommendations

To enhance affordable housing supply:

1. Long-Term Policy Adjustments: Redesign subsidies and financial policies to support affordable housing.​

2. Effective Land and Planning Policies: Promote land use strategies that facilitate affordable housing development.​

3. Political Commitment: Ensure sustained political leadership to address complex housing issues.​

4. Financial Innovations: Develop creative financing solutions, including mutual guarantee funds and surplus-sharing models.​

5. Regulatory Reforms: Reassess EU state aid rules to better support not-for-profit housing providers.​

Conclusion

Addressing the affordable housing crisis in Europe requires a multifaceted approach involving policy reforms, financial innovations, and strong political will. By learning from successful models and implementing targeted strategies, European states can overcome existing obstacles and enhance the supply of affordable housing.

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External Link:

Housing Europe

European Observatory : Housing and urban life