Cost-Based Social Rental Housing In Europe: The cases of Austria, Denmark, and Finland.
Introduction:
Funding structures for the delivery, maintenance and renovation of social housing in Europe are extremely varied. In some instances, housing provision relies almost exclusively on direct funding — like grants or loans — from national or local governments or public agencies. In other instances, providers have significantly more diversified sources of funding; making use of not only public funds, but also private sources of finance. At the same time, so-called ‘own resources’ (e.g., a housing provider’s own ‘savings’ generated from operating surpluses or the sale of assets) can form an important part of the required capital funding for social housing projects.
General Overview Of The Social Housing Sector:
At 24% of the overall national housing stock, Austria boasts one of the largest social housing sectors in Europe. To arrive at this point, the country has benefited from a strong legal framework, which underpins the sector and offers clarity to housing providers, as well as a broad political consensus around the value and importance of access to a decent and affordable home.
The non-profit housing sector in Denmark is made up of over 500 housing associations, covering around 7,000 individual housing estates across the country.
Regulations Underpinning The Cost-Based Rental System:
The limits and obligations of the cost-based social housing sector in Austria, as provided by LPHAs, are clearly set out by the ‘Limited-Profit Housing Act’. While some changes to the text have occurred over time, the main pillars of the legislation have remained largely intact. Thus, the WGG has provided the solid foundation upon which the LPHA sector has so successfully developed over the last number of decades. The WGG sets out how the housing associations are established, as well as clearly outlining the basis for the cost-rent mechanism applied by the sector.
Non-profit housing in Denmark is provided almost exclusively by registered housing associations. While they are an essential part of the welfare system, they are also detached from the state, and act as separate legal entities.
Financing Of New Developments And Renovations:
The low-interest public loans used for cost-based rental housing development come from regional governments. The money for these loans come from two primary sources. Firstly, regional governments receive loan repayments from LPHAs, based on historic lending for housing development. When it is repaid, this money can then be lent out again for future development, meaning there is a self-financing or ‘revolving’ element to the funding of cost-based social housing in Austria. Additional money required for the public loans comes directly from the financial resources of regional government.
The development (or not) of new non-profit housing in Denmark is the decision of the municipalities, in consultation with the local non-profit housing providers. They decide when, and what quantity and type of housing is built. Thus, there is a very strong connection between the municipalities and the non-profit housing associations.
Responsibilities And Rights Of Tenants:
Once tenants have moved into their new cost-based social home, they have a right to live there forever, if that is what they choose. This helps to support social cohesion, as well as promoting the idea of social housing as a choice. This has helped to destigmatize the idea of social housing in Austria.
In Denmark, tenant democracy is one of the three key pillars of the non-profit housing sector. Since 1984, tenants have a right to the majority of the seats on the board of management of their building or housing estate. The remaining seats are taken by external auditors or supervisors, which can sometimes include elected politicians such as mayors or members of the municipal government. The estate boards manage operations and budgets, while they also make decisions regarding the long-term direction of the estate.
Conclusion:
In many respects, the focus on the ‘long-term’ that is built into the three systems reviewed in this report is the key takeaway. The structures of the cost-based systems are such that public financing is well retained within the system, helping to reduce the future need for such investment, and delivering an important element of self-reliance on the part of social providers. Furthermore, it is clear that new housing developments fit into larger overall housing strategies, rather than forming piecemeal or standalone outputs.
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