Across Europe, social housing and the rental sector are in much demand and are coming under stress, writes Europe Correspondent Ann Cahill
ONCE, your home was the place you lived, grew up, raised a family, and left to your children.
Shelter is a fundamental right under the UN charter, the basis of a stable society, and from which education, employment, and self-fulfilment arise.
More recently it became an asset — firstly when the availability of cheap and easy mortgages created competition and increased its value to home owners.
That ended in grief for many. But something similar is happening now with social housing and the rental market, where the rental market is seen as a business that must be regulated by an unfettered market. Many places agree with this approach, some having set it in motion, such as Ireland and Britain, while others, such as Vienna in Austria, do not.
“There is a big share of the housing market which is out of speculators’ hands and the price and rent is quite low because there is a strong number of political decisions to create enough stock to influence the price,” said Michaela Kauer of the Viennese city office in Brussels. “This is, after all, a matter of universal human rights. But of course some of the investment funds do not like this because they could make more profit if they controlled the sector, but we will not let them.”
The collapse in house prices, the tightening of mortgage lending rules, and the increase in unemployment mean that people who need housing must turn to the rental sector.
But the rental sector, especially social housing, is under stress in Ireland and many other countries, with the economic crisis reducing the amount of money the state has to invest in the area, and a new neoliberal philosophy about social housing taking hold.
This sees the state disengaging from housing, leaving it to the market to fill the gap, and helping tenants pay the rent with state allowances. The move has been under way in Britain since Margaret Thatcher was prime minister in the 1980s and has picked up momentum in recent years with successive governments.
People are warning of a return to ghettos and slums, rack-rent landlords, and increasing social costs. Some of Europe’s housing authorities — like in Vienna — are resisting the latest political mood, but all are now under pressure from EU rules designed to regulate business competition rather than social housing.
The head of one of the Swedish housing co-operatives, Kurt Eliasson, said many policymakers have been insisting countries cannot afford the welfare state since the crisis began in 2008. While they insist public spending needs to be cut, GDP has in fact increased 64% from 1980 when they maintained such spending.
Housing Europe, a network of European housing providers that manage about 12% — 25m — of homes in Europe, warn that the changes being pushed are poorly thought through.
A survey of the effect of the crisis on social housing shows that citizens have to spend more on housing at a time when governments are failing to support the affordable housing sector — of which there is a variety of different types in Europe.
In Ireland, social housing has, until recently, been predominantly provided by local authorities in specific council areas, which were frequently maintained poorly and with little thought to providing a social mix. Poverty and unemployment were high.
Other countries have social housing dating back more than a century, where the state does not own the housing but supports local housing associations to raise the money through guaranteeing loans or providing cheap loans. Tenants are shareholders, taking decisions on the running of the buildings, in some.
Some arrangements have worked well, such as in Sweden where they have a large social housing stock linked to the cities, with much of the shares held by trade unions and banks. However, they have been experiencing some problems attracting finance. They pride themselves on running it as a business and must make a profit that goes back to the city.
France has huge problems in its massive social housing neighbourhoods in the suburbs of big cities such as Paris, but has built up sophisticated financial instruments for providing them that have withstood the crisis, says Sorcha Edwards, head of Housing Europe. France has also made good use of the EU’s social fund to promote green housing.
Germany has its own problems, especially in Berlin where the public housing stock was sold off, some to hedge funds that did not reinvest in the property. There are similar issues for many former Soviet-controlled countries where the state dwellings were privatised.
The southern European countries have traditionally had a poor supply of social housing but the housing crisis in Spain, for instance, has created a catastrophe; whatever there was was sold off to vulture funds and investors such as Goldman Sachs.
Some 30% of housing in the Netherlands is not for profit, but they had difficulties when the investment funds attacked the system. As housing associations were linked, when one got into difficulties it created a domino effect and badly affected the rest, impacting on tenants.
In Britain, according to James Meek, who has written extensively about the changes, the market no longer functions. He says the country’s established house builders have enough land on which to provide 1.5m homes, but the price they paid for the land is tied to the price they expect to get for the houses when they finally build on it.
The system incentivises land hoarding and an under-supply of new homes compared to demand, to keep prices high. This is an incentive to banks to favour property loans — with 76% of all bank loans in Britain going to property, the majority of which is on residential mortgages.
Report after report from all over the world show that money invested in strategic areas, such as affordable housing, saves money for countries. With housing a big consumer of energy, British studies show that improving on energy efficiency has big advantages, apart from lowering heating bills.
In the North, spending €600m on such projects will save €40m a year on healthcare, repaying the initial costs over 13 years. Other UK studies show that, for every €1 spent on adapting homes for older people, €69 was saved for the National Health System.
A social housing company in Quebec, Canada, says that, for every euro, spent on social housing, more than double is generated in the general economy.
Alternative sources of funding are being promoted, such as from the European Investment Bank, but Housing Europe says they tend to be only for bigger developments, or involve a lot of projects being bundled together.
This shortage is not something that has just come about because of the crisis, said Alice Pittini, co-ordinator of Housing Europe’s observatory responsible for tracking trends around the EU. “Decreasing finance is everywhere, even where things are good,” said Ms Pittini. “And where there was just a small supply of social housing has been hardest hit.”
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