Social and affordable housing OVERVIEW 2020
Introduction:
Over 70% of Europeans live in urban areas. This translates into high demand for access to Social and affordable housing prices in several cities. According to the latest Eurostat data (Living conditions in Europe – 2018), almost 1 in 20 people across the European Union faced severe housing deprivation in 2016, and some 11% of the EU‑28 population spent 40% or more of their household disposable income on housing. Due to gradually decreasing investments since 2009, the affordable and social housing sector is confronted with two main problems: a decline in stocks and quality of dwellings, and the increasing need for accommodation.
HOW DOES THE EIB SELECT SOCIAL AND AFFORDABLE HOUSING PROJECTS?
A recent EU study[1] reveals a €6bn annual investment gap in social and affordable housing, meaning that investment in this sector should increase by 25%. Housing is a basic human need and the European Investment Bank is committed to easing the pressure on housing markets in Europe. The EIB creates advanced financial tools to meet that need. Social and affordable housing loans are a major element of the EU bank’s €150bn in urban lending. The EIB support in this sector includes the retrofitting of existing housing and the construction of new social and affordable accommodation, ranging from housing schemes in small towns and rural areas often facing demographic challenges to development projects in large cities with very severe housing shortages.
The EIB typically finances:
• social housing and affordable housing for rent;
• refugee accommodation and reception centres, and associated infrastructure and start-up costs (typically provided during an asylum process);
• student accommodation and accommodation for apprentices;
• care homes and assisted living facilities.
Affordable housing – SNI (CDC-Habitat), France:
In March 2017, the EIB and the SNI Group announced a €500m loan for affordable housing in France, backed by the Investment Plan for Europe. This EU financing operation will enable the SNI Group to build 13 000 affordable housing units by end2019 in an area of France where housing demand outstrips supply, which is close to employment centres and in which rents are 15-20% below the market rates. This new stock of rental accommodation will offer a sustainable response to requirements of those segments of the population who find it difficult to access housing on the free market. The housing units will also meet the latest energy performance standards.
Social housing, Ireland:
This involves Housing Finance Agency (HFA), a public limited company backed by the Minister for Housing, Planning and Local Government in Ireland. In 2017, the EIB signed a €405m Irish social housing investment programme that will construct and improve thousands of properties across Ireland. It comprises the construction of 1 400 new homes and the upgrade of more than 700 properties in Dublin and across the country and is jointly financed with the Housing Finance Agency.
Framework loan to local affordable housing company – Poznańskie Towarzystwo Budownictwa Społecznego (PTBS), Poland:
In March 2019, the PTBS housing association completed the construction of new housing units in the Strzeszyn district of Poznan. Ultimately, about 1 100 new housing units will be built in the new housing estate. Half of the apartments will be inhabited by Poznań residents, who received an allocation under the PTBS recruitment process. In the remaining units, the city will implement the “Mieszkanie dla Seniora” (homes for the elderly) programme for people on the housing lists of the Office for Housing Affairs.
Expansion and energy-efficiency improvement of Madrid’s social housing stock, Spain:
In March 2019, the EIB lent €49m to the Madrid Region to build 612 affordable rental flats. Half of the new units will be low-consumption homes and a further 1 337 will be renovated to reduce energy costs
Conclusion:
The EIB checks social and affordable housing projects against their eligibility criteria, income related and other social criteria, such as: rent setting, administration of waiting lists, transparency of the allocation process, market functioning across public and private providers, potential state aid issues and procurement arrangements for housing construction. Where some of these elements are not in place, the Bank seeks to incorporate appropriate safeguards on a project-specific basis and provides advice if needed.
As recent initiatives in Poland show, the EIB is also supporting the development of social and affordable housing in countries with limited experience in this sector for historical reasons – especially in Central and Eastern Europe – by providing advice and exploring the potential to finance pilot projects as the regulatory regime evolves.
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