Strategic Use of Land Policy Instruments for Affordable Housing

For decades, many cities have introduced densification policy objectives to stop urban sprawl or to promote efficient use of natural resources. In the urban housing sector, however, densification projects often intensify social challenges. Due to rising rents after the modernization of existing housing stocks as a consequence of densification, low-income tenants are forced to leave their apartments. Risks of social exclusion and segregation increase simultaneously. In this article, we analyze how municipal planning authorities cope with affordable housing shortages in a context of urban densification. Specifically, we ask: How do municipal planning authorities promote affordable housing in densifying cities? To answer this research question, (1) we apply a neo-institutional analysis approach to better understand the basic mechanisms of how land policy instruments impact affordability, and (2) why specific instruments are activated to defend affordable housing objectives. Through qualitative case study analysis of four Swiss urban municipalities, our results show that the mere availability of land policy instruments is not sufficient but that the strategic activation of specific instruments matters.

Urban densification has been a key strategy for many cities aiming to combat urban sprawl and promote sustainable development. By increasing the density of urban areas, cities can make more efficient use of land, infrastructure, and natural resources. However, this approach is not without its drawbacks. One of the most significant challenges associated with urban densification is its impact on housing affordability. As cities become more densely populated, the demand for housing increases, often leading to higher rents and property prices. This, in turn, can force low-income tenants out of their homes, exacerbating social exclusion and segregation.

In many cities, the process of densification involves the redevelopment of existing housing stocks. This can take various forms, such as total replacement construction, renovation, or compaction of existing buildings. While these measures can improve the quality and efficiency of housing, they can also lead to significant increases in rent. For low- and middle-income households, this can make it increasingly difficult to afford housing in densifying urban areas.

Land policy instruments play a crucial role in shaping the affordability of housing in densifying cities. These instruments can include a range of measures, such as zoning regulations, land use planning, and financial incentives for developers. By strategically activating specific land policy instruments, municipal planning authorities can influence the supply and demand dynamics of the housing market, ultimately impacting affordability.

One of the key mechanisms through which land policy instruments impact affordability is by influencing the availability and cost of land for housing development. For example, zoning regulations can determine the types of housing that can be built on a particular piece of land, as well as the density and scale of development. By allowing for higher density development in certain areas, zoning regulations can increase the supply of housing, potentially reducing prices. Conversely, overly restrictive zoning regulations can limit the supply of housing, driving up prices and rents.

Another important land policy instrument is land use planning. Through comprehensive land use plans, municipal planning authorities can identify areas suitable for housing development and prioritize the allocation of land for affordable housing projects. This can help to ensure that a diverse range of housing options is available to meet the needs of different income groups.

Financial incentives for developers are also a common land policy instrument used to promote affordable housing. These incentives can include tax breaks, grants, or subsidies for developers who agree to include a certain percentage of affordable housing units in their projects. By reducing the financial burden on developers, these incentives can make it more economically viable to build affordable housing, ultimately increasing the supply of affordable units in the market.

While the availability of land policy instruments is important, our research shows that the strategic activation of specific instruments is crucial for effectively promoting affordable housing in densifying cities. In our qualitative case study analysis of four Swiss urban municipalities, we found that simply having a range of land policy instruments at their disposal was not enough for municipal planning authorities to address affordable housing shortages. Instead, the successful promotion of affordable housing required a deliberate and strategic approach to the activation of these instruments.

One of the key findings from our case studies was the importance of coordination and collaboration between different stakeholders involved in the housing market. This included not only municipal planning authorities but also developers, housing providers, and community organizations. By working together, these stakeholders were able to identify and address the specific challenges associated with affordable housing in their respective cities. For example, in some cases, developers and housing providers collaborated to develop innovative financing models that made it more feasible to build affordable housing units.

Another important factor was the need for flexibility and adaptability in the activation of land policy instruments. As housing markets and urban contexts evolve, municipal planning authorities must be able to adjust their strategies accordingly. This may involve revising zoning regulations, updating land use plans, or introducing new financial incentives for developers. By remaining responsive to changing conditions, municipal planning authorities can ensure that their land policy instruments remain effective in promoting affordable housing.

Switzerland provides a unique case study for examining the role of land policy in addressing affordable housing in the context of urban densification. In 2013, the Swiss Federal Spatial Planning Act was revised to include a legally-binding densification policy objective. This policy requires Swiss municipalities to densify through inward settlement development to protect agricultural land and preserve natural habitats. As a result, many Swiss cities have been actively pursuing densification strategies in recent years.

However, as with many other cities around the world, the process of densification in Switzerland has led to significant challenges in terms of housing affordability. With limited free inner-city plots available, the redevelopment of existing housing stocks has become the primary means of achieving densification. This has resulted in rising rents and increased pressure on low- and middle-income households.

In response to these challenges, Swiss municipalities have been exploring various land policy instruments to promote affordable housing. For example, some municipalities have introduced inclusionary zoning regulations, requiring developers to include a certain percentage of affordable housing units in their projects. Others have provided financial incentives for developers to build affordable housing, such as tax breaks and subsidies.

Our case study analysis of four Swiss urban municipalities revealed that the strategic activation of these land policy instruments has been crucial for addressing affordable housing shortages. In particular, the municipalities that were most successful in promoting affordable housing were those that adopted a coordinated and collaborative approach involving multiple stakeholders. These municipalities also demonstrated a willingness to adapt and revise their land policy instruments as needed to respond to changing housing market conditions.

Urban densification has the potential to promote sustainable development and efficient use of resources. However, it also poses significant challenges in terms of housing affordability. Through the strategic activation of land policy instruments, municipal planning authorities can play a crucial role in addressing these challenges and promoting affordable housing in densely populated cities. The Swiss experience highlights the importance of coordination, collaboration, and adaptability in the effective use of land policy instruments. By learning from these experiences, other cities around the world can develop more effective strategies for promoting affordable housing in the context of urban densification.

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