RE-VISITING SOCIAL HOUSING REVISITING SOCIAL HOUSING April 2022 © 2022 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433, USA Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundar- ies, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorse- ment or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. 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The GSG has three affiliated communities of practice (Knowledge Silo-Break- ers) and the Global Program for Resilient Housing, that support the same objective and focus areas: Affordable Housing; Urban Poverty and Slum Upgrading; Cities, Migration and Forced Dis- placement and the Global Program for Resilient Housing. Cover page design: Author Images (clockwise, from top left): • Karl Marx-Hof, Vienna: http://oris.hr/en/oris-magazine/overview-of-articles/[101]housing-for-the- new-man,1427.html. • Cabrini Green, Chicago: https://www.chicagoreader.com/chicago/in-high-risers-ben-austen-deliv- ers-a-long-overdue-requiem-for-cabrini-green/Content?oid=40053375. • HDB housing, Singapore: https://development.asia/case-study/promoting-social-equity-through- public-housing. • Council housing, UK: https://blogs.lse.ac.uk/politicsandpolicy/book-review-municipal-dreams/. • Baan Mankong development, Thailand: https://en.codi.or.th/. • Social housing, Denmark: https://www.archdaily.com/903495/homes-for-all-dortheavej-residence- bjarke-ingels-group. • Social housing, Vienna: https://www.huffpost.com/entry/vienna-affordable-housing-paradise_n_5b 4e0b12e4b0b15aba88c7b0. • Zaanhof social housing, Amsterdam: https://evenementen.amsterdam.nl/evenementen/2020/02/ wandeling/. • TOKI mass housing, Turkey: https://www.dailysabah.com/turkey/2019/03/06/turkish-govt-launch- es-nationwide-social-housing-project. • LIHTC housing by The Community Builders, USA: https://www.tcbinc.org/where-we-work/proper- ties.html. • WoZoCo senior housing, Amsterdam: Author. • Social housing in France: https://placesjournal.org/article/the-social-project/?cn-reloaded=1. Contents Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Abbreviations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Context: Why are we doing this study?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Objectives, scope, and methodology of the study. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2 What is Social Housing? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The many definitions of social housing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 A proposed framework for social housing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3 A century of social housing: Global typologies and case studies. . . . . . . . . . . . . . . . . . . . . . 11 Disentangling ‘social housing’ versus ‘social assistance for housing’ . . . . . . . . . . . . . . . . . . . . . . . 11 Social Housing: Models and case examples. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Government agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Non- or limited-profit housing associations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Community land trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Comparing social housing models across framework dimensions. . . . . . . . . . . . . . . . . . . . . . . . . . 25 Social assistance for housing: Models and case examples. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Government-led housing production (supply-side) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Government financial assistance to households (demand-side). . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Private and small-scale landlords . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Comparing social assistance for housing across framework dimensions. . . . . . . . . . . . . . . . . . . . 37 4 Looking Forward: Some Guiding Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Definition of Social Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Prerequisites for social housing development: An enabling environment . . . . . . . . . . . . . . . . . . 41 Government capacity and accountability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Private and non-profit sector interest and capacity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Challenges and trade-offs: A Balancing Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 iii iv RE-VISITING SOCIAL HOUSING Tenure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Institutional structure and data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Financing and costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Subsidies and targeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Planning, regulation, and sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Operations and maintenance (O&M). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 End Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Annexes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Annex 1: Definitions of social housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Annex 2: Government agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 USA: Public housing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Annex 3: Non- or limited-profit housing associations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Netherlands: Social housing associations/Woningcorporaties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 USA: Low Income Housing Tax Credit (LIHTC) program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Vienna, Austria: Limited Profit Housing Associations (LPHAs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 South Africa: Social housing institutions (SHIs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 France: Habitation à loyer modéré (HLM)/ Housing at moderated rents. . . . . . . . . . . . . . . . . . . . 75 UK: Housing associations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Visegrad Group (or Visegrad Four or V4):66 HomeLab projecT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Annex 4: Community land trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 USA: Community Land Trusts (CLTs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Annex 5: Government-led housing production (supply-side). . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Singapore: Public housing/ Housing Development Board (HDB) housing. . . . . . . . . . . . . . . . . . . 93 Turkey: Mass housing, TOKI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Brazil: Minha Casa, Minha Vida (MCMV) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Thailand: Baan Mankong (Secure House) Program, Community Organization Development Institute (CODI). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Ethiopia: Integrated Housing Development Program (IHDP). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 Annex 6: Government financial assistance to households (demand-side) . . . . . . . . . . . . . . . 109 Chile: Housing vouchers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 USA: Housing Choice Voucher (HCV). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 Indonesia: Mortgage-linked down payment assistance (Bantuan Pembiayaan Perumahan Berbasis Tabungan – BP2BT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 CONTENTS v Annex 7: Private and small-scale landlords. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Jordan: Norwegian Refugee Council’s (NRC’s) Urban Shelter Program. . . . . . . . . . . . . . . . . . . . . 119 South Africa: Backyard rentals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 California, USA: Accessory Dwelling Units (ADUs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 Germany: Subsidized housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 List of Figures Figure 1 Social housing framework. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Figure 2 Change in primary social housing providers over time. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Figure 3 Possible financing sources for social housing development. . . . . . . . . . . . . . . . . . . . . . . 8 Figure 4 Social housing 2x2 matrix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Figure 5 Typical modality of government-led social housing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Figure 6 Typical modality of non-profit housing association-led social housing. . . . . . . . . . . . . . 17 Figure 7 La Guardia Houses on Manhattan’s Lower East Side. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Figure 8 Demolition of the Pruitt-Igoe public housing project in St. Louis in the 1970s . . . . . . . 61 Figure 9 The Zaanhof social housing in Amsterdam, built in 1910. . . . . . . . . . . . . . . . . . . . . . . . . 64 Figure 10 Social housing in the Bijlmermeer (Amsterdam), built in the 1970s and renovated in the 1990s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Figure 11 Partners in a LIHTC deal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Figure 12 A 72-unit LIHTC-funded development in San Francisco. . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Figure 13 The Karl Marx-Hof social housing project in the 19th district in Vienna, built 1927–30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Figure 14 Reumann-Hof social housing in Vienna. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Figure 15 Amalinda Village project, built by SOHCO SHI in East London. . . . . . . . . . . . . . . . . . . . . 73 Figure 16 Westgate Grange Social Housing in KwaZulu-Natal province. . . . . . . . . . . . . . . . . . . . . . 74 Figure 17 City of the Grand Parc, Bordeaux. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Figure 18 Atelier Du Pont social housing in Ivry, built as part of the Ivry Confluences Urban Development Zone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Figure 19 Park Hill estate in Sheffield, completed in 1961. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Figure 20 HomeLab project locations in Slovakia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Figure 21 HFH Poland’s HomeLab project structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Figure 22 How Community Land Trusts (CLTs) work. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Figure 23 Bright Street Co-op in Burlington, VT by Champlain Housing Trust. . . . . . . . . . . . . . . . . 90 Figure 24 HDB Housing at Marine Parade built in the 1970s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Figure 25 The Pinnacle@Duxton, a public housing project built in the 2000s. . . . . . . . . . . . . . . . . 95 Figure 26 TOKI social housing in Kocaeli province. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Figure 27 Taroni condominium in Rio de Janeiro. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Figure 28 Financing for housing development under the Baan Mankong Program. . . . . . . . . . . 103 Figure 29 Bang Bua Canal Housing in Bangkok. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 vi RE-VISITING SOCIAL HOUSING Figure 30 Incidence of informal rental by income quintile in Chile, 2011 . . . . . . . . . . . . . . . . . . . 109 Figure 31 Average Per Unit Cost since 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 Figure 32 NRC’s Urban Shelter Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 Figure 33 NRC engineers inspect construction works in Jordan . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 Figure 34 3D view of backyard shacks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Figure 35 3D view of two-story micro-flats. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 Figure 36 3D view of a boarding house. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 Figure 37 The many shapes and sizes of accessory dwelling units (ADUs) . . . . . . . . . . . . . . . . . . 127 Figure 38 Types of ADUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 List of Tables Table 1 Definitions of social housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Table 2 Predominant social housing models (categorized by provider/ owner-operator). . . . . 12 Table 3 Predominant models of social assistance for housing . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Table 4 Comparing social housing models across framework dimensions. . . . . . . . . . . . . . . . . 26 Table 5 Comparing models of social assistance for housing across framework dimensions. . 38 Table 6 Checklist to evaluate proposed social housing programs. . . . . . . . . . . . . . . . . . . . . . . . . 43 Table 7 EIB’s financial products in the housing sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Table 8 Additional definitions of social housing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Table 9 NRC’s financial investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 List of Boxes Box 1 Social Rental Agencies (SRAs) in Poland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Box 2 Dudley Neighbors, Inc. (DNI) Community Land Trust (CLT) in Boston, USA. . . . . . . . . . 24 Box 3 The housing continuum in France. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Box 4 The Housing Finance Corporation (THFC) in the UK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Acknowledgements This paper was co-authored by Vidhee Garg the Global Solution Group on Urban Poverty (Housing Consultant, primary author) and and Housing. Sameh Wahba (Global Director, Ashna Singh (Housing Consultant, contribut- Urban, Disaster Risk Management and Land ing author) under the direction of Dean Cira Global Practice) provided strategic leadership (Lead Urban Specialist), with support from and chaired internal reviews. Judy Baker (Lead Economist), the co-leads of vii Abbreviations ADB Asian Development Bank HTC Historic Tax Credit (USA) AfDB African Development Bank HUD Department of Housing and Urban AMI Area Median Income (USA) Development (USA) APL Aide Personalisée au Logement IDB Inter-American Development Bank (France) IRS Internal Revenue Service (USA) BMP Baan Mankong Program (Thailand) LIHTC Low-Income Housing Tax Credit BTO Build-To-Order (Singapore) (USA) CCG Consolidated Capital Grant (South LPHA Limited Profit Housing Association Africa) MCMV Minha Casa Minha Vida (Brazil) CDBG Community Development Block MINVU Ministerio de Vivienda y Urbanismo/ Grant (USA) Ministry of Housing and Urban CDC Caisse des Dépôts et Consignations Development (Chile) (France) MTO Moving to Opportunity (USA) CEECs Central and Eastern European MTSF Medium Term Strategic Framework Countries (South Africa) CLT Community Land Trust NHA National Housing Authority CODI Community Organizations (Thailand) Development Institute (CODI) NHFC National Housing Finance CPF Central Provident Fund (Singapore) Corporation (South Africa) DHS Department of Human Settlements NHT National Housing Trust (USA) (South Africa) NOAH Naturally Occurring Affordable EU European Union Housing FMR Fair Market Rent (USA) NRC Norwegian Refugee Council FPS Ficha Proteccion Social (Chile) NWE North-West European GPF Gauteng Partnership Fund (South ODA Other Delivery Agents (South Africa) Africa) OECD Organization for Economic HCV Housing Choice Voucher (USA) Co-operation and Development HFH Habitat for Humanity PAC Programa de Aceleração do HLM Habitations à loyer modéré/ Housing Crescimento (Brazil) at moderated rents (France) PAP People’s Action Party (Singapore) ix x RE-VISITING SOCIAL HOUSING PHA Public Housing Authority (USA) SHRA Social Housing Regulatory Authority PLAI Prêt Locatif Aidé d.Intégration (France) (South Africa) PLS Prêt Locatif Social (France) SLA Singapore Land Authority PLUS Prêt Locatif à Usage Social (France) SRA Social Rental Agency PPP Public-Private Partnership SRE Social Rental Enterprise QAP Qualified Allocation Plan (USA) TOKI Toplu Konut İdaresi Başkanlığı RAD Rental Assistance Demonstration (Housing Development (USA) Administration) (Turkey) SAFMR Small Area Fair Market Rent (USA) UNECE United Nations Economic SERVIU Servicios de Vivienda y Urbanizacion Commission for Europe (Chile) UNHCR United Nations High Commissioner SGEI Services of General Economic for Refugees Interest (EU) WBG World Bank Group SHI Social Housing Institution (South WSW Waarborgfonds Sociale Africa) Woningbouw/ Social Housing SHICC Sustainable Housing for Inclusive Guarantee Fund (Netherlands) and Cohesive Cities (EU) Introduction 1 M arkets alone are not enough to serve quests from client governments to support the needs of poor and vulnerable such projects. groups; government needs to play That said, it is important to note at the an active role in supporting their housing outset of this paper that social housing can- needs through a combination of instruments, not be a stand-alone solution for the chal- including subsidies, infrastructure provision, lenges facing any country. It needs to be seen and public/ social housing. This report focuses as one element of a broader agenda that en- on one of many supply-side options—specifi- compasses the range of issues for the entire cally, the provision of social housing—and population distribution. what governments need to consider if they want to go down that path, and by exten- Context: Why are we doing this sion, what World Bank task teams could look study? at to understand the potential viability of pro- posed programs. The approach to social housing has evolved Depending on where the reader is from, through time, ranging from densely concen- the term ‘social housing’ may conjure up im- trated publicly built housing for ownership to ages of grey and derelict tower blocks on the below-market rental housing that is managed outskirts of town, or those of low-rise brick- and maintained by the public sector. There clad buildings in a thriving neighborhood, or have been diverse approaches on financing, both. In reality, social housing encompass- ownership, government involvement, target- es both of these—and many more typologies ing and income mix, and the role of the com- in between these two extremes—often in the munity. same city. Given the vast diversity of typolo- More broadly, over the past five decades, gies—not to mention policies, financing mech- there has been an evolution of housing subsi- anisms, and institutional frameworks—this dies away from sheer public rental to subsidies study starts with positing a working definition for home ownership and subsidies to house- of social housing, before delving into its dif- holds for rent.  Since adopting the ‘Enabling ferent models, and finally makes recommen- Markets to Work’ framework in 1993, the dations to help World Bank staff evaluate re- World Bank’s involvement in the housing sec- 1 2 RE-VISITING SOCIAL HOUSING tor also evolved from project-based support to Objectives, scope, and holistic sector-wide support aimed at—(i) im- methodology of the study proving policy and institutional structures, and (ii) assisting governments to transform their This study aims to re-visit the concept and prac- role from direct housing provision to that of an tice of social housing, take stock of good prac- ‘enabler’. tices and innovations, as well as the failures of Over the last three decades, many coun- social housing, and suggest ways in which the tries have had one or another form of social World Bank can help client countries/cities to housing or social assistance for housing, which make social housing work for the poor and low are distinctly different from each other, but income households, as well as for the function- commonly categorized as ‘social housing’, as ing of the housing market overall. discussed in detail in Chapter 2. These include Specifically, the task at hand in preparing direct provision (Turkey, Singapore, and Bra- this report was to: zil), enabling private sector or community-led provision (India, Thailand, and South Africa), • Develop a working/operational definition and providing rental assistance (Chile). of the loosely used ‘social housing’ termi- That said, with governments transition- nology; ing to playing the role of an enabler, the pro- • Take stock of housing policies and pro- duction of social housing has fallen, and at grams since the “demise” of public hous- the same time, other models of housing assis- ing; tance have emerged—in advanced and emerg- • Undertake in-depth case studies of suc- ing economies alike. Governments around the cesses and innovations, lessons learned, world are now more than ever looking for in- and factors for success; and novative, sustainable, cost-effective solutions • Reflect upon how the World Bank could and requesting World Bank support in the so- engage with the social housing sector. cial housing sector. In this context, this study of global social housing models is intended to The research included an extensive litera- inform the World Bank and their client govern- ture review of primary and secondary sources on ments’ approach going forward. social housing and in-depth case studies. What is Social Housing? 2 The many definitions of social Table 1 below has select examples of the housing terms and definitions of social housing used around the world. More examples are provid- While the most common conception of social ed in Annex 1. housing is subsidized rental dwellings, the lit- It is thus clear that there is no universal erature shows that there is no consensus on term or definition of social housing, and the the definition of the term. In fact, there is lit- term is used rather loosely around the globe. tle consensus on the term itself: while ‘social Yet, a few key elements are common across all housing’ is a commonly used term in several these definitions: 1 countries, it is often used interchangeably with ‘public housing’ or ‘subsidized housing’. These • Some form of state support or subsidy, di- alternate terms focus on a singular aspect rect or indirect (e.g. financing, land, infra- of social housing, i.e. ownership (by public structure, etc.) authorities) in the case of ‘public housing,’ and • Targeting based on socio-economic and/ financial backing (by public authorities) in the or vulnerability criteria case of ‘subsidized housing,’ thereby eclipsing • Below market-rate housing for those who the other elements inherent in the term. cannot afford market rates Social housing, like the national housing • Some form of (public) administrative over- systems they are a part of, are shaped by con- sight in the allocation of housing units, text-specific political, economic, and cultur- rent-setting, and operations and mainte- al environments. As these macro conditions nance of the housing units continuously change over time, so do housing • Owned publicly or privately, but with a ‘so- and social housing systems in a given location. cial’ purpose in the medium-/long-term Therefore, the definition of social housing, as (say >5 years), or in perpetuity. well as the terminology used, varies signifi- cantly across countries and time. Internation- Using these common key elements as the al organizations also define the term differ- unifying thread, this study proposes the fol- ently, often using working definitions that are changed to align with the objectives of differ- 1Rosenfeld, Orna and UN.ECE, 2015; and Braga and ent projects. Palvarini, 2013. 3 4 RE-VISITING SOCIAL HOUSING TABLE 1 DEFINITIONS OF SOCIAL HOUSING COUNTRY TERMA DEFINITIONB Austriac People’s housing and No official definition, but there are different forms of housing limited profit hous- provision beyond the market: ing (wohnungsgemein- nützigkeitsgesetz • People’s housing is subsidized rental housing provided by – WGG) municipalities • Limited profit housing is rental and owner-occupied housing provided on a non-profit basis by investors that are regulated by the Non-Profit Housing Act and have access to public subsidies (Limited Profit Housing Associations) Singapore Public housing Affordable housing for ownership provided by the Housing Development Board (HDB) to all income groups South Africad Social housing Social housing is a rental or cooperative housing option for low- and middle-income households provided by Social Housing Institutions (SHIs) or Other Delivery Agents (ODAs) in approved projects within designated restructuring zones with the benefit of public funding as contemplated in the Social Housing Act Turkeye Social housing or Housing for ownership built by the government, targeted at low- (public) mass housing income families, and with a low down payment and low/no-interest loan to make it affordable UKf Social housing or Rental housing provided at reduced rents, by housing associations council housing or local councils, that is more affordable than housing on the open market and usually built with the support of government funding USAg Public housing Decent and safe rental housing for eligible low-income families, the elderly, and persons with disabilities Housing Europe, Social housing Housing for rent or accession to ownership for which there are 2011h defined rules governing access to households with difficulties in finding housing UN-Habitat, 2011i Social housing Housing that is adequate in quality and location and does not cost so much that it prohibits occupants meeting other basic living costs or threatens their enjoyment of basic human rights OECD, 2020j Social housing Residential rental accommodation provided at sub-market prices that is targeted and allocated according to specific rules, such as identified need or waiting lists a Rosenfeld, Orna and UN.ECE, 2015; and Pittini, Alice and Laino, Elsa, 2012. b Cited from Pittini, Alice and Laino, Elsa, 2012. c Pittini and Laino, 2012. d https://shra.org.za/node/9. e Cited from TOKI Corporate Profile Document 2019, available at: http://i.toki.gov.tr/content/entities/main-page- slider/20191011095737969524-pdf.pdf. f https://www.housing.org.uk/about-housing-associations/about-social-housing/. g https://www.hud.gov/program_offices/public_indian_housing/programs/ph#:~:text=Public%20housing%20was%20 established%20to,rise%20apartments%20for%20elderly%20families. h Hansson and Lundgren, 2019. i https://openknowledge.worldbank.org/handle/10986/21100. j “Social housing: A key part of past and future housing policy”, Employment, Labour and Social Affairs Policy Briefs, OECD, Paris, http://oe.cd/social-housing-2020. What is Social Housing? 5 lowing working definition for social housing: Below is an overview of the approaches to “Social housing is subsidized residential ac- each of these six dimensions based on differ- commodation provided at below-market prices, ent policy objectives and available resources targeted on the basis of socio-economic and/ that have resulted in different social housing or vulnerability criteria, and operating under models and outcomes. some form of (public) administrative oversight in the medium-/long-term.” Tenure Here, it is also important to clarify that, in practice, the term ‘social housing’ often gets Rental and ownership are the two leading ten- used interchangeably with ‘affordable hous- ure options in social housing models across ing,’ leading to confusion. Two questions to as the world. Rental is the dominant tenure in here are: Is all ‘social housing’ affordable? Con- most of Northern, North Western, and South versely, is all ‘affordable housing’ social in na- Eastern Europe4 while Mediterranean coun- ture? Since the answers will vary from country tries5 have provided social housing for sale/ to country, it may be helpful to start by mak- ownership.6 Some countries such as the UK ing a distinction between the two. ‘Affordable and those in Eastern Europe (Hungary, Poland, housing’, unlike social housing, is not necessar- Slovakia, Slovenia) have transitioned from ily subsidized by government programs, does social housing for rent to ownership since the not have government oversight in the medium 1980s-90s. At the same time, countries are also or long term, and may be naturally occurring in experimenting with alternate tenures such as the private market.2 cooperatives and rent-to-own, and ‘continuum’ tenures such as community land trusts and A proposed framework for shared ownership, to improve housing afford- social housing ability and widen the reach of social housing.7 In the case of social rental housing, oneis- Public policy (and laws and regulations) is at sue is the duration that eligible households can the core of building social housing systems, live in it. Programs in North and North-West- tying together all the defining and differenti- ern Europe typically only check eligibility at the ating characteristics. The literature identifies time tenants move in, while in the US, social four dimensions of social housing: (i) tenure, housing residents8 undergo income certifica- (ii) provider (ownership and management), (iii) financing, and (iv) targeting.3 While public pol- 2 In the US, it is referred to as naturally occurring icy serves as the foundation of a social housing affordable housing (NOAH). system, the four dimensions are the building 3 Braga and Palvarini, 2013. 4 Including Denmark, Netherlands, Austria, France, blocks. This study suggests two more dimen- and Germany. sions that are critical: (v) planning and design, 5 Such as Cyprus, Greece, and Spain. 6 Braga and Palvarini, 2013. and (vi) operations and maintenance (O&M). 7 For instance, shared ownership in the UK that Together, these six dimensions can serve as a allows tenants to buy a share of the dwelling and helpful overarching framework for social hous- pay rent on the rest of it has provided a stepping ing. Later in this paper, sections 3.2.4 and 3.3.4 stone to households looking to get on the home- ownership ladder. use this six-dimensional framework to draw a 8 i.e. in public housing and Low Income Housing Tax comparison across different cases. Credit (LIHTC) funded projects. 6 RE-VISITING SOCIAL HOUSING FIGURE 1 SOCIAL HOUSING FRAMEWORK TENURE of arrangement Terms CE Rental | O w n e r s hi p | AN ediate | Shared air s Interm l re N R TE IN ership | Rent-to-own Lo IN own ST p ol c MA co es ITU Cooperatives | ita & a a l n ie ND TIO res m iat cap Duration au s | |Co-o y pa SA ss ate vesto NS p vat ale tho Non nc da oc mai Day- | ons Pr and s& s TION reno e-sc &D io n - iv ri t i to tion e abil io n e l o p e r s e ATA g s|P OPERA L ar na de s Opera ities in nte v | -pro u b lic in g Fund ps PUBLIC t rs POLICY nt s P L A IN A B des SUS la b A N C N D Pu b l | Re rivate debt rants Locatio ume G A Enviro NN TA N ic i n F I N S TS I g r ay | Equ Land g I N G ILI T g t ettin in s CO n | A l sus f ra nme AN |P le .& nt s D cce | ity nta Y ey Av ai ss n on i TARGETING to ab m nts v ic I nte n bl s tai d e d b e n e ci a ri e s s ic er ee me ilit es Pu ra n nt y a Gu en tp R Unive rsalist | Targeted inco me | S o i ti es cial vulnerabil Social support programs Source: Author. tion every year to check eligibility, and are sup- often associated with mismatched preferenc- posed to vacate if their income increases be- es/ needs of target groups due to issues relat- yond the program’s income limits.9 ed to affordability, location, and/or (labor) mo- In many emerging economies, for exam- bility. As a result, the lowest-income and most ple, Brazil, Egypt, India, Mexico, and Turkey, vulnerable groups for whom this housing may the predominant tenure for social housing has not be suitable typically seek out informal been home ownership.. Chapter 3 will elab- rental accommodation with little security of orate more on some of these cases and cat- tenure and poor living conditions. Recognizing egorize them as social assistance for housing rather than social housing. Such programs are 9 Only in the case of rental housing. What is Social Housing? 7 this, there has been increasing discussion on the lead in social housing provision, every the need for social rental housing in emerging model includes multiple stakeholders, each economies in recent years, but their legal and with clearly defined roles and responsibili- financial frameworks are often not designed to ties (Braga and Palvarini, 2013). As shown in adequately support such schemes on a large the figure below, the primary social housing scale (yet). For instance, the Government of In- provider has changed over time, from private dia (GoI) instituted an Affordable Rental Hous- employers and charitable institutions to gov- ing Complex (ARHC) policy to build social rent- ernment entities, and more recently to private al housing for migrants and the urban poor non-profit and for-profit sectors. in the wake of the migrant crisis during the Covid-19 pandemic in 2020. However, due to Financing and costs the absence of appropriate rental housing laws and regulations, progress has been slow. Social housing is financed by multiple sources including governments, private financial insti- Institutional structure and data tutions, foundations, and project rent rev- enues. Any social housing project typically There are a range of social housing provid- requires a layering of multiple financial instru- ers including local authorities, public com- ments to reduce the gap between market rents panies, non-/limited- profit housing associa- needed to make the project feasible and rents tions, community-led non-profit organizations, affordable to the target segment(s). and even private for-profit developers and While in the past, governments typi- investors. Although one or the other takes cally shouldered the bulk of social housing FIGURE 2 CHANGE IN PRIMARY SOCIAL HOUSING PROVIDERS OVER TIME Post nancial crisis Post World War II • Increased involvement • Large-scale of for-pro t govt.-backed housing developers, construction programs managers, and • Targeted at returning investors war veterans and • Dwindling govt. 1920 working class 1980 support and resources 2020 Pre-World Interwar 1945 1980s 2008 Post Wars period onwards COVID-19 • Few comprehensive • Transition to • Cautious but housing policies or non-pro t and increasing govt. well-developed mission-oriented involvement (direct housing ecosystems institutions as housing and indirect) • Worker housing built by providers • Call for localized private employers, • Govt.’s role as enabler solutions union, and charitable institutions Source: Author. 8 RE-VISITING SOCIAL HOUSING FIGURE 3 POSSIBLE FINANCING SOURCES FOR SOCIAL HOUSING DEVELOPMENT Rents need to make project feasible Private/non- Government pro t sector Tenant GAP CLOSED • Grants • Bank loans • Rent revenue WITH • Favorable loans • Foundation (or • Upfront MULTIPLE • Guarantees other) grants payment FINANCIAL • Cheap/Free • Developer (Vienna) INSTRUMENTS land equity • Rental assistance to Rents a ordable to social households housing target segment(s) Source: Author. development costs, in recent decades gov- geting, such as the Netherlands and France, ernment financial support has been decreas- have seen narrower targeting and an increas- ing. Therefore, social housing providers have ing concentration of vulnerable populations in turned to private sector financing instru- their social housing in recent years.11 ments,10 which often tend to be complex, short-term, and expensive. Providers use dif- Planning, regulations, and ferent combinations of these diverse financial sustainability resources, the availability and effectiveness of which are influenced by factors such as— In their bid to address large housing defi- (i) government commitment to the sector; (ii) cits, social housing programs in some coun- maturity of providers; (iii) regulatory structure; tries have focused on the quantitative aspect and (iv) financial market conditions (Pittini and to the detriment of qualitative characteristics Laino, 2012). (for example, Mexico, Brazil, Turkey). How- ever, compromises on location, access to infra- Subsidies and targeting structure and services, design, and construc- tion quality has led to deteriorated, vacant or Generally, targeting in social housing models abandoned housing stock, and poverty con- can be categorized as: (i) universalist, or (ii) tar- centration, among other challenges. In con- geted. The former opens up the program to a trast, programs that have incorporated sound broad swathe of society, with up to 80% of the planning, design and sustainability principles population eligible in some cases. The Neth- have helped create thriving communities, as erlands, Austria, and France are a few coun- tries that use this universalist approach. The 10 Such as bank loans (construction and/or perma- targeted approach is more narrowly focused nent), tax credits, and guarantees. 11 “Social housing: A key part of past and future on specific groups, such as low-income or vul- housing policy”, Employment, Labour and Social nerable populations. However, even coun- Affairs Policy Briefs, OECD, Paris, http://oe.cd/ tries that historically practiced universalist tar- social-housing-2020. What is Social Housing? 9 seen in the cases of Singapore and Vienna.12 buildings, and must be incorporated into proj- These cases owe their success, in part, to many ect financial planning and budgeting from the decades of evolution, strong government sup- start. Lack of financial and technical resources port, and a regulatory framework. In this for adequate maintenance is a strong determi- regard, it is important to note that these coun- nant of the success or failure of a project. In tries are somewhat exceptions to the norm, addition to regular maintenance and repairs, it and their experiences may not be replicable is also important to account for the larger cap- in most developing countries without govern- ital improvements that buildings need periodi- ment support/ financing and the regulatory cally. While day-to-day maintenance is typically environment to make this possible. paid for from project cash flows, large-scale capital repairs may be funded by government Operations and maintenance grants as is the case in Singapore and Vienna. (O&M) 12 Planning and design of social housing in Singa- O&M is an often-overlooked component of pore, like its other aspects, is centralized and man- social housing, as seen in the case of US pub- aged by the Housing Development Board (HDB); in lic housing or municipal housing in Hungary. Vienna, strict regulations, government support, and a competitive jury system ensure that social hous- However, O&M is a critical component to ing meets the highest planning and design stan- maintain the quality of living environment in dards. A century of social housing: Global typologies and case studies 3 Disentangling ‘social housing’ ly, and (ii) to make the point that these other versus ‘social assistance for forms of government assistance are not to be housing’ confused with ‘social housing,’ as defined in this report. Governments in differing socio-economic Table 2 presents three predominant social and political contexts have adopted different housing models, and Table 3 presents three approaches to address social housing demand, forms of social assistance for housing, catego- leading to a variety of models and varying lev- rized by provider. els of public and private intervention in the sec- Given that increasing requests by client tor. This chapter attempts to categorize these governments to the World Bank for support different models into typologies, and further in developing social housing, this study ex- groups them into two broader categories: the amined cases from countries with different first category includes what is deemed social income levels and at different stages of de- housing per the definition presented earlier velopment. In addition to some of the well- in the report, while the second is social assis- known examples such as those from West- tance for housing, which is referred to as social ern Europe, the case examples picked for housing in many countries due their inherent this study represent a cross-section of ad- social characteristics, but in fact, does not fit its vanced and emerging economies to the ex- definition in this report. tent that data was available, long-running More specifically, the models catego- programs as well as pilot projects, and suc- rized under social assistance for housing are cess stories as well as failures—to present distinct from those under social housing in a comprehensive picture of the possibilities that they are time-limited and not designed for social housing going forward.13 to produce a stock of social housing in per- Plotting the selected case examples on a petuity or in the medium/long term, or spur graph, Figure 4 below illustrates the changes production of new social housing. The reason for including them in this report is two fold: 13Due to limited published information of programs in emerging economies, the case studies are more (i) these are currently some of the more prev- heavily weighted towards those from advanced alent forms of government assistance global- economies which are better documented. 11 12 RE-VISITING SOCIAL HOUSING TABLE 2 PREDOMINANT SOCIAL HOUSING MODELS (CATEGORIZED BY PROVIDER/ OWNER-OPERATOR) PROVIDER/ OWNER-OPERATOR SHORT SUMMARY COUNTRIES 1 Government agencies Government builds, owns and rents housing USA, Hungary at regulated prices 2 Non- or limited-profit housing Mission-oriented entities that build and/or Austria, France, associations manage social housing, with government Netherlands, South Africa, support UK, USA, Visegrad Four (Czech Republic, Hungary, Poland, Slovakia) 3 Community land trusts Subsidized housing for ownership, USA, Kenya, , various EU developed and managed by community- led organizations such as land trusts or community cooperatives Source: Author. TABLE 3 PREDOMINANT MODELS OF SOCIAL ASSISTANCE FOR HOUSING TYPE OF ASSISTANCE SHORT SUMMARY COUNTRIES 1 Government-led housing Government builds, owns and sells housing Brazil, Singapore, Turkey, production (supply-side) at regulated prices Thailand, Ethiopia, UK 2 Government financial Residents’ ability to pay for private housing Chile, USA, Indonesia assistance to households boosted by a government subsidy (rental or (demand-side) ownership) 3 Private and small-scale Private housing (subsidized) rentals Jordan, South Africa, USA, landlords managed by not-for-profit or quasi- Portugal (Lisbon), Spain government intermediary, with or without (Barcelona) government support Source: Author. in ownership and financing of social housing The following sections detail the six mod- and social assistance for housing over time, els—three on social housing, and another three from the bottom left to the top right quad- on social assistance for housing—along with a few rant. Over the last half-century, many gov- case examples of each. Each has its advantages ernments have been transitioning to an en- and disadvantages, but the aim here is to use abling role and private sector stakeholders the examples to illustrate the different models have taken a more active role in the devel- rather than delve into their strengths and weak- opment, management, and financing of so- nesses, which are presented in Annexes 2–6 in cial housing. the detailed descriptions of the individual cases. A century of social housing: Global typologies and case studies 13 FIGURE 4 SOCIAL HOUSING 2X2 MATRIX 4 Singapore public housing 5 Indonesia BP2BT 6 US Accessory 6 Jordan NRC For-profit Dwelling Units refugee housing* Private/ 4 Brazil MCMV (ADUs) 6 South Africa 4 Turkey TOKI mass housing backyard rentals 4 Ethiopia IHDP 2 Visegrad 5 Others: Austria, 4 Thailand CODI 2 US low-income Four Social Rental Baan Mankong Non- or limited-profit Owner-operator France, Netherlands housing tax credit Agencies (SRAs)* 3 Community Land 5 Chile rental Trusts (CLTs) – 2 Netherlands subsidy program US, Kenya, EU Housing Assoc. 5 US Housing Choice 2 Austria Limited 2 UK Housing Profit HAs Voucher (HCV) 2 France HLM Associations 2 South Africa social housing 6 Lisbon Safe 1 US public housing Rent* 1 Hungary municipal housing sector Public 1 Others: Austria, Australia Public + Private Private sector Source of Funding LEGEND: 1. Government agencies (national, regional, municipal) 2. Non- or limited-profit housing organizations 3. Community-led nonprofit organizations 4. Government assistance for housing production (supply-side) 5. Government financial assistance to households (demand side) 6. Private rentals and small-scale landlords Blue text represents social housing models; Orange brown text represents social assistance for housing models *Pilot projects or new programs; not yet integrated or established in country’s overall housing policy Source: Author. Social Housing: Models and ing development. The funds are generally rout- case examples ed through municipal governments (or an instru- ment thereof); in addition, municipalities provide Government agencies assistance that could include grants, and access to cheap or free land. The construction is typical- The beginnings of social housing, as we know ly contracted to private construction companies it today, were in the post-World War II period that hand over the completed homes to munic- when governments in Europe and USA were ipalities, who then allocate them to beneficiary drawing up plans for reconstruction. To address households for (subsidized) rent. housing shortages, governments instituted While this model was successful in de- large-scale housing programs whereby pub- livering social rental housing and bridging lic agencies funded, built, and managed subsi- quantitative deficits, they were expensive and dized rental housing for the working class, poor, proved to be an inefficient use of government and returning war veterans. resources. Government entities were unable At the helm of this model is the central/na- to manage the properties resulting in oper- tional government that not only sets the policy ating deficits and a backlog in improvements framework but also provides funding for hous- and repairs over time. As a result, the majori- 14 RE-VISITING SOCIAL HOUSING FIGURE 5 TYPICAL MODALITY OF GOVERNMENT-LED SOCIAL HOUSING Construction subsidies Tax incentives Pvt. const. Enabling policy company Central govt. zoning support Land, infra, and Completed homes Unit-/bene ciary-based rental or ownership subsidy (one-time or monthly) Allocation of homes Monthly Municipal payment Bene ciary govt. households Source: Author. ty of these programs have been either discon- Example 1: USA: Public housing tinued or modified (USA, Netherlands, France, Austria) or significantly scaled back (UK). Established in 1937, the goal of the public The US and UK continue to manage leg- housing program was to “build decent and acy government-owned rental housing stock safe rental housing for eligible low-income today; however, the stock has shrunk consid- families, the elderly and persons with disabil- erably due to large-scale demolitions, sale to ities.”14 After World War II, the Housing Act of sitting tenants, and/or wholesale transfer to 1949 expanded the public housing program non-profit housing associations, and there is lit- and it was targeted primarily at the work- tle to no new construction. In most Western Eu- ing class. The federal government provided ropean countries, this model has evolved over loans to Public Housing Authorities (PHAs) time and non-/limited-profit housing associa- for the construction of public housing proj- tions are the main providers of social housing. ects across the country. In Austria, local governments continue to op- However, as middle- and working-class erate legacy municipal housing stock, but limit- households started to move out in the 1950s ed profit housing associations have been at the and 60s, public housing became home to pri- forefront of new social housing construction marily low-income households. Additional- since the 1980s. Since the mass privatization of ly, the program’s targeting criteria was re- social housing in the 1990s, most Eastern Eu- vised, pegging rent contributions to tenants’ ropean countries have relatively small govern- ment-owned social rental housing sectors, usu- 14https://www.hud.gov/topics/rental_assistance/ ally concentrated in large cities. phprog. A century of social housing: Global typologies and case studies 15 incomes. As tenant incomes were low, so was and the Public Housing Operating Fund for the rental revenue, leading to difficulties in ongoing maintenance and repairs. covering the cost of maintenance, and eventu- ally, concentration of poor households in pub- Example 2: Hungary: Municipal lic housing. As a result, although the program housing worked well for the first three decades until the mid-1960s, the subsequent federal fund- Social housing in Hungary refers to “rental ing moratoriums, poor maintenance, and re- units owned by municipal governments and vised targeting criterialed to the deteriora- allocated based on social criteria” (Pittini and tion, and subsequent demolition, of several Laino, 2012). Mass privatization of govern- public housing projects across the country. ment-owned social rental housing in Hungary Further, inferior planning led to poorly in the 1990s16 led to a reduction in social hous- constructed public housing projects (largely) be- ing stock from 20% (as a percentage of total ing built in poor locations without employment housing stock) in 1989 to 3.7% in 2012. Pre- opportunities, thereby leading to poverty con- viously managed by the central government, centration. Further, ineffective management the stock was transferred to municipal gov- and maintenance has hastened their deterio- ernments in 1990 who continue to manage ration. New programs over the years have not social housing today. Most of the roughly been able to cover the funding needs of public 160,000 social housing units in Hungary are housing stock, and with government focus shift- concentrated in municipalities with popula- ing to other social housing programs, public tions greater than 100,000 (Hegedüs, 2013). housing has become a step-child of the system. Municipal governments are responsi- There has been virtually no new pub- ble for deciding policy, rent setting, man- lic housing constructed since the 1970s, and agement, subsidy schemes, and all details much of the existing stock managed by PHAs pertaining to social housing. Since the sec- across the country is lacking in terms of quality tor is financed from municipal budgets, there and quantity. At present, there are 1.2 million is wide variation in the quality and manage- public housing units managed by 3,300 PHAs ment of social housing stock across the coun- across the country.15 try. There is no central government body that Eligibility for public housing is based on sets housing policy; the last central govern- pre-determined income limits; qualification as ment program was from 2000 through 2004 elderly, person with disability, or as a family; and wherein it provided grant support to local au- US citizenship or eligible immigration status. thorities for social rental housing. The grant To ensure affordability for tenants, who are covered up to 75% of the investment for con- in the low-income and very low-income catego- struction or acquisition of social rental hous- ries, public housing follows an income-based ing, cost-based rental, housing for young fam- rent setting method. The Total Tenant Pay- ilies, elderly housing, and retirement homes. ment (TTP) is based on gross household in- The program ended in 2004 due to fiscal con- come minus deductions (if applicable); this is called adjusted gross income. The federal gov- 15 https://www.hud.gov/topics/rental_assistance/ phprog. ernment provides funding to PHAs through a 16 As also in other Central and Eastern European Public Housing Capital Fund for capital needs, Countries (CEECs). 16 RE-VISITING SOCIAL HOUSING straints, and the government proposed a rent cial housing stock.19 Some local nonprofits are allowance program as a substitute. working to address the housing gap facing the Municipal housing is to be allocated on poorest and most vulnerable, but they are lim- the bases of ‘social criteria,’ as per the Hous- ited in their reach in the absence of policy and ing Law, but in the absence of any overarching financial support from government. guidance, municipalities determine alloca- tion criteria. In addition to an income crite- Non- or limited-profit housing rion, other criteria include asset ownership, associations household composition and size, and length of stay in the municipality. Local authorities Since World War II, many social housing mod- usually target young married couples, sin- els have evolved with non- or limited-profit gle parents, and low-income families. How- housing associations leading social housing ever, there have been reports of preferential provision. These mission-driven entities need treatment and discretionary allocation, for in- to be simultaneously adept at what can some- stance, the highly sought after social housing times be conflicting ideals—financial disci- in central Budapest.17 pline, technical (development) know-how, and Rents for municipal social housing are not community engagement. Building capacity in standardized; they differ across properties de- all of these areas takes years, if not decades, pending on the age of the building and the con- as evidenced by the cases of US and European dition of facilities, among other characteristics. countries; and even so, the sector is a mix of Rents typically vary between 20–40% of private housing associations of different scales and market rents, but barely cover 30–40% of actu- capacities. This model of social housing provi- al costs (Hegedüs, 2013). Low rental revenues sion is now common in advanced economies, combined with under-investment from local au- and is generally seen to be more sustainable thorities has led to the continued physical dete- than direct government provision. rioration of social housing stock. In some cities, Pilots such as the HomeLab EU project im- as much as 10% of social housing stock is vacant plemented in the Visegrad Four (V4) countries because of inhabitable living conditions.18 recently demonstrate the potential of (re-)inte- Since the mass privatization drive in the grating private and municipal housing stock into 1990s, the tenants left in social housing have the social housing sector. By shifting manage- typically been low-income and the most needy. ment responsibilities to social rental agencies While there is far from enough social housing (SRAs) that are specialized non-profit agencies, to meet demand, housing policy is fragment- these currently vacant and uninhabitable units ed and not oriented toward expansion of the can be upgraded to meet the housing needs sector. In the absence of central government of many. After a successful pilot (that ended in support and limited local resources, and the 2019), some of the V4 governments are consid- low rents, much of this housing is loss-mak- ing, and it is not conducive for municipalities 17 https://hungarytoday.hu/nearly-4000-of-buda- to adequately manage and maintain even the pests-publicly-owned-apartments-are-uninhabited/. 18 https://hungarytoday.hu/nearly-4000-of-buda- small social housing stock under their purview. pests-publicly-owned-apartments-are-uninhabited/. As a result, local governments have been sell- 19 https://www.reuters.com/world/europe/hungary- ing or plan to sell much of the remaining so- govts-plan-sell-municipal-flats-draws-fire-2021-05-14/. A century of social housing: Global typologies and case studies 17 FIGURE 6 TYPICAL MODALITY OF NON-PROFIT HOUSING ASSOCIATION-LED SOCIAL HOUSING Central govt. Guarantees/ assistance Enabling Tax inc. Rental policy Allocation of Zoning and planning completed homes Housing application Municipal Land & infra. support Non-/Limited- & monthly payments Bene ciary govt. pro t households Source: Author. ering formalizing these programs to make avail- ing associations or other relevant non-profit able much needed social housing stock. entities set eligibility criteria based on govern- Among emerging economies, South Afri- ment guidelines, and are responsible for alloca- ca instituted a social (rental) housing program tion of completed homes to beneficiary house- in 1998. Forming the second rung of the coun- holds as well as for the maintenance of homes. try’s subsidized housing ladder, the program is beset by several challenges that have prevent- Example 1: Netherlands: Social housing ed scale-up so far, but the government imple- associations (Woningcorporaties) mented changes in recent years to help scale the program. In India, non-profit communi- Since the mid-1990s, social housing in the ty-based organizations20 have partnered with Netherlands is a decentralized sector wherein private developers and financiers to build and private non-profit housing associations and manage social housing, but these are indepen- municipalities play the key roles in its pro- dent projects that have not been institutional- vision. Housing associations build, own, and ized at a programmatic or policy level. manage social rental housing stock in accor- While program details vary across coun- dance with national and local regulations. His- tries, the fundamentals remain the same—i.e. torically a system that was targeted at a broad housing associations develop and manage so- swathe of the population, social housing in the cial housing, with different degrees of govern- ment support (financial and other), and raise 20Such as Mahila Housing SEWA Trust (MHT) and capital—mix of debt, equity, and grants—from the Society for the Promotion of Area Resource Cen- a number of public and private sources. Hous- ters (SPARC). 18 RE-VISITING SOCIAL HOUSING Netherlands has become more narrowly tar- become the most important resource for social geted over time, now focusing primarily on housing production in the US. The program is low- and low-middle-income households. designed to encourage private investment in Housing associations finance social hous- social housing development in exchange for ing construction with a mix of private debt federal tax credits. and equity, backed by a three-tier govern- The program is managed primarily by state ment guarantee system.21 All revenues are housing agencies,24 which allocate tax credits reinvested into new construction and main- based on published guidelines and priority ar- tenance of existing housing stock. Since social eas. Private developers that qualify for tax housing is targeted at households who can- credits sell them to investors in return for up- not afford housing in the private market, rents front capital for the project; this helps lower are set at affordable below-market levels. Ad- their debt obligation. The investor gets a dol- ditionally, households might be eligible for a lar-for-dollar tax reduction spread over the ten housing benefit (also called rent benefit) if they years once the project is complete and rented out. meet pre-determined income and rent crite- Tax credit equity is seldom enough to cov- ria. This housing/ rent benefit is meant to plug er development costs, particularly in large cities the gap between rent and the tenant’s ability where the demand for housing and construc- to pay; since social housing rent is strictly regu- tion costs are high. Federal, state, and local lated,22 the gap tends to be small and the rent government soft loan and grant programs benefit usually covers only a small amount.23 help further subsidize development costs. Close cooperation between HAs, munic- Developers are required to keep the units ipalities, tenant organizations, and other lo- income-restricted and rents low for 30 years cal groups ensures that priorities and targets after project completion. Rents are to be are decided upon collectively. Further, over- maintained at 30 percent of tenant house- sight and regulation by the Housing Associa- hold incomes; in some cases, renters are el- tion Authority (Aw) ensures the sector’s finan- igible for housing choice vouchers to supple- cial stability. ment rent payments. Despite its successes, the Dutch social Developers are responsible for renting out housing sector faces several challenges in- completed units, and managing the buildings. cluding—(i) increasing concentration of low-in- Day-to-day maintenance and capital repairs come and vulnerable households; (ii) decreas- are paid for from the project’s cash flow. ing affordability of market-rate housing for 21 The guarantee is backed by three levels of gov- middle-income households who do not quali- ernment—the Housing Association Authority (Aw) fy for social housing; and (iii) increasing costs at federal level, the Social Housing Guarantee Fund (particularly land) leading to lesser new social (WSW), and finally, central and local governments. 22 The government sets ceilings for social housing housing being constructed. rent every year. 23 This is unlike the US where rents are set at Fair Market Value (FMV)/Fair Market Rent (FMR), and the Example 2: USA: Low Income Housing gap between rent and tenant’s ability to pay tends Tax Credit (LIHTC) program to be high. Therefore, housing vouchers in the US often cover nearly all of the rental payment. 24 In a few large cities such as New York and Chi- Since its inception in 1986, the Low Income cago, local agencies also allocate a portion of the Housing Tax Credit (LIHTC) program has federal tax credits. A century of social housing: Global typologies and case studies 19 The program has been criticized for be- Rents are strictly regulated, to roughly 25% ing economically inefficient, owing to the of household income in the social housing sec- time-consuming and expensive processes of tor. Rents are based on the costs of construc- tax credit allocation and of raising funds from tion and financing, and do not include a profit myriad other sources. Further, the program component. Additionally, the city offers pay- provides low-rent housing for only 30 years, ment assistance—wohnbeihilfe (housing bene- beyond which additional funding is needed to fit)—to those who cannot afford rent.27 A portion maintain affordability for target populations. of rent is earmarked for day-to-day building Finally, the program has led to a concentra- maintenance, while government grants cover tion of social housing in some low-income the costs of periodic capital repairs. neighborhoods, thus contributing to concen- The high quality of Vienna’s social housing tration of poverty.25 This is due to a combi- stock is a result of the social, economic, and nation of factors: (1) most projects set aside environmental sustainability principles that 100% of their units as ‘affordable’ (low-rent) to are deeply embedded in the system. Broad maximize the equity investment;26 (ii) land pric- targeting has helped create mixed-income es are lower in high-poverty areas; and (iii) de- communities in social housing projects. Fur- velopers are encouraged to build in Qualified thermore, there is an even spatial distribution Census Tracts (QCTs) or Difficult Development of social housing across the city, thereby pre- Areas (DDAs), which are usually in or near ex- venting the creation of concentrated pockets isting low-income communities. of poverty. However, increasing construction costs and land prices make new social hous- Example 3: Vienna, Austria: Limited ing less affordable for low-income and vul- Profit Housing Associations (LPHAs) nerable households, as a result of which new stock is more heavily weighted toward mid- Social housing in Vienna consists of stock dle-income households. owned and managed by the municipal gov- As the social housing sector in Vienna has ernment as well as limited-profit housing evolved from being government-led to LPHA- associations (LPHAs), and is home to low- and led over the last century, one of the strongest middle-income households alike. drivers of success has been the continued pri- Since the 1980s, LPHAs have developed oritization and support from city and nation- the bulk of social housing in Vienna, support- al governments. The City of Vienna invests ed by subsidies and fiscal incentives from the roughly €500 million every year for housing government. These subsidies are in the form of construction, rehabilitation, and direct finan- long-term low-interest loans for construction, cial support to low-income households. It is with repaid loans rotated back into the sector. the longest running social housing system in LPHAs are required to re-invest their the world, the foundation for which was set in profits back into social housing (akin to hous- ing associations in the Netherlands) (Forster, 25 This is more so in big cities where centrally located 2013). Another source of financing is deposit land is expensive. 26 This is because only affordable units qualify for from tenants, which developers refund to ten- tax credits. ants, with interest, when they move out (For- 27 https://www.wien.gv.at/english/living-working/ ster, 2013). housing/grants-funding.html. 20 RE-VISITING SOCIAL HOUSING the decade after World War I. The sector has has been a barrier to scaling up delivery. Lim- evolved over time and adapted to changing ited and often inconsistent support from local macro conditions, with unwavering commit- governments has constrained social housing ment from stakeholders, all of which has re- development. Further, commercial banks are sulted in social rental rental units becoming reluctant to lend to low-capacity SHIs, there- the housing of choice for residents. by making the sector overly reliant on shrink- ing government funding. Although the regula- Example 4: South Africa: Social tor, SHRA, was placed under administration30 housing institutions (SHIs) (lifted in July 2017) to stabilize its operations, recruit new leadership, and improve organiza- Social housing is the second rung of the sub- tional performance, the sector has a long way sidized housing ladder in South Africa,28 and is to go to improve capacity and meet its targets. a rental or cooperative housing option pro- vided by accredited Social Housing Institutions Example 5: France: Habitation à loyer (SHIs) in specific urban areas. modéré (HLM)/ Housing at moderated SHIs are responsible for project de- rents sign, development and management. Grants from the Social Housing Regulatory Authority Social housing in France is built and managed (SHRA) cover part of the development costs, by Habitation à loyer modéré (HLM) organi- while SHIs cover the rest with a combination of zations, with the State defining housing needs private debt and equity. and subsidy amounts, and approving projects. With affordability being the key objec- It is broadly targeted at all income groups, tive, rents are set at below-market levels, and and covers three categories: (i) high-income or are based on unit size, location, and amenities, Prêt Locatif Social, PLS; (ii) middle-income or Prêt among other criteria. Rental income is used to Locatif à Usage Social, PLUS; and (iii) low-income cover ongoing maintenance costs. However, or Prêt Locatif Aidé d’Intégration, PLAI. Qualifica- low rental collections and increasing mainte- tion criteria, including income ceilings, are set nance costs pose challenges to the financial by municipalities, and depend on the type of sustainability of this model. housing (PLAI, PLUS, or PLS) and location. The program is targeted at low- and mid- Financing for social housing construction dle-income households with a monthly income is a mix of grants from state and local author- between R 1,500 and R 15,000,29 and who can ities, equity from HLM organizations, and rent social housing at no more than 33% of long-term low-interest loans from the Caisse their income. The income range is large to facil- des Dépôts et Consignations (CDC), a public itate mixing of tenants from different income state bank. CDC loans are funded by Livret A groups. However, it is unclear from the litera- savings, an individual savings account that can ture how SHIs verify tenants’ incomes, especially 28 The first rung is a fully subsidized 40 sq.m. home for those who are informally employed and may available to households earning less than R 3,500 per not have the usually accepted proof of income month, under the government’s housing program. 29 1 USD = R 14.20. (such as income statements or salary slips). 30 Due to challenges in fulfilling its mandate, the The social housing sector in South Africa Minister of Human Settlements appointed a new is small, and its weak institutional structure Council for the SHRA in March 2015. A century of social housing: Global typologies and case studies 21 be opened by anybody in France with tax-free people at risk of homelessness, single parents, interest on earnings.31 Local authorities co-fi- migrants, refugees, young people leaving fos- nance social housing, supervise HLM organi- ter care, and families escaping domestic vio- zations, provide long-term loan guarantees, lence, among others. The reason for targeting and make land available for the construction these groups was to create an adaptable and of social housing. scalable solution that could break the cycle Demand-side subsidies are intended to of poverty and constant danger of eviction reduce the rent burden for households be- that vulnerable households face. low a certain income threshold; this Aide Per- Implementing partners (local NGOs) set up sonalisée au Logement (APL) is given to rent- a Social Rental Enterprise (SRE) that managed ers in the social and private rental housing the cases, supervised client journeys, and con- sectors. Rents are regulated through state nected with public and private stakeholders. decree and are set on cost-basis. There are This support included liaising with public and no time limits on rental contracts, but if ten- private property owners willing to rent their ants’ incomes rise beyond a fixed ceiling, rents housing units through this program, building increase accordingly (Schaefer, 2003). connections with employers, working with local Two of the biggest challenges facing the partners to provide social services, providing social housing sector in France today are— necessary training to tenants, and helping ten- (i) the degradation of big suburban social hous- ants fully integrate into new housing and jobs. ing estates, and (ii) the concentration of the Housing was secured through munici- poorest households in social housing in disad- pal and private sector, although the former vantaged neighborhoods. Despite the govern- constituted the bulk of it. SREs negotiated be- ment’s urban renewal programs and efforts low-market rents that would be affordable for to prioritize social mixing, they have had lim- target households. To alleviate landlords’ con- ited success and the unequal distribution of cerns about participating in the program, SREs social housing persists. provided a range of incentives, including ren- ovation support, property management ser- Example 6: Visegrad 4 (or Visegrad vices, and rent guarantees. Four or V4): HomeLab pilot project HomeLab was an entirely grant-funded pilot project, with 80% of the financing com- The EU Programme for Employment and ing from the EU (roughly €1.3 million annual- Social Innovation launched HomeLab, a three- ly), and the rest contributed by the implement- year pilot project that ran from October 2016 ing partners. through September 2019. The program’s While grant funding covered the expens- aim was to integrate housing and employ- es of the three-year pilot project, long-term ment support, two major social services, in sustainability requires stable financial, legis- the unstable welfare environment in the V4 lative, and operational support at local and countries (Czech Republic, Hungary, Poland, EU-levels. The position of social rental spe- and Slovakia). The project assisted 245 house- holds in the three-year period. 31The Livret A savings program was started in France in 1818 to finance public infrastructure and The project was narrowly targeted at vul- since 1945, has been used to finance social housing nerable and marginalized groups, including construction as well. 22 RE-VISITING SOCIAL HOUSING BOX 1 SOCIAL RENTAL AGENCIES (SRAS) IN POLAND HFH Poland and SRAs: Habitat for Humanity Poland (HFH Poland) has been strategically advocating for SRAs since 2013, including conducting feasibility studies, publications, and designing a strategy for implement- ing the model in the country. It is estimated that as many as 30,000 apartments in Poland can be leased via SRAs. Since its participation in the HomeLab EU project, implemented in Warsaw, SRA has become the flag- ship program for HFH Poland. The pilot: Through the HomeLab EU project, HFH Poland set up an SRA, a non-profit intermediary that ne- gotiates between property owners and households in need of housing. To the owners, it guaranteed regular rent payments and proper use of the housing unit in exchange for a discounted rent (roughly 10–20% low- er than market rates). For tenants, it offered long-term and affordable leases, generally up to two years, and apartments in good conditions. Additionally, the SRA offered social support to the tenant to prevent defaults on monthly payments and accumulating debt. Social rental specialists were responsible both for rent administration and social services support. HFH Poland partnered with Caritas of Warsaw, The Open Door Association, Association for Legal In- tervention, Salvation Army Social Welfare for the Wola District, Monar Associations in Wyszkow, and “Spoza” Society to provide social support services. It also partnered with Mzuri Property Management who provided property management know-how and promoted the project amongst landlords. The SRA’s portfolio in the Warsaw pilot project comprised 38 housing units, 14 of which were owned by the municipality and the remaining 24 were privately owned. HFH Poland refurbished 12 of the municipal flats to bring them up to habitable standards (7 at its own expense, and 5 at Warsaw Municipality’s expense). The project targeted the following groups: people at risk of homelessness; people at risk of exclusion (single parents, migrants, refugees, young people leaving foster care); people living in substandard condi- tions; people with unmet housing needs; and low-income households. What next: The definition of SRAs was written into the National Housing Fund Act, and the government agreed to provide grants to establish SRAs. In the scaling up phase, HFH Poland is working on the following areas: portfolio risk management, applying for public subsidies, broadening the target groups, decreasing risk, and increasing guarantee fund reserves. Source: Habitat for Humanity, Poland. cialists is particularly critical to program lon- Community land trusts gevity, since they are the main point of con- tact for tenants and assist them in all aspects. Although not quite as prevalent as the govern- While funding streams for the future are as yet ment-led social rental model or the non-profit unclear, all implementing partners have made housing association model, community-led so- significant progress in building private and cial housing development has been around for public sector partnerships that has helped many decades. In the US, it emerged from the lay the groundwork for scale-up. civil rights movement in the 1960s, and in Thai- A century of social housing: Global typologies and case studies 23 land, since the 1980s (it has since evolved). An which is permanently owned and maintained EU-funded project, started in 2017, Sustain- by the CLT.35 The purchase price is more af- able Housing for Inclusive and Cohesive Cities fordable since the buyer is only paying for the (SHICC), “seeks to support the establishment of house; and the homeowner pays a monthly (or more successful Community Land Trusts (CLTs) annual) fee to the CLT for the land lease. Addi- in cities across the North-West European (NWE) tionally, when homeowners sell, they are bound region.”32 The project is being implemented in by CLT rules in establishing the sale price.36 seven NWE countries—England and Wales CLTs generally target low- and moder- (UK), Scotland (UK), Republic of Ireland, Bel- ate-income households who are unable to gium, France, Netherlands, and Germany—and purchase market-rate housing. However, each aims to create an enabling policy and financ- CLT draws up its own specific eligibility crite- ing environment to scale up CLTs in the region. ria, such as income limits based on household This model is based on the premise that size, ability to fund closing costs, and value of communities are best positioned to devise other assets, among others. solutions to their housing (and other) prob- CLTs raise money from a mix of public and lems, and that these solutions must arise out private sources, including equity, debt, and of a collaborative process rooted in the local grants, for housing development and ongoing context. Therefore, there is no single univer- operations. Federal and state grants are the big- sal community-led social housing model; rath- gest source of funding; when mandated by local er, it takes on very different forms in different governments, private developers provide sup- contexts, as evidenced by the two case exam- port in the form of land or development fees. Pri- ples described below. Similar to the non-prof- vate financial institutions and foundations also it housing association model, the CLT model fund CLT activities, as do individual donors.37 must also straddle multiple worlds at the same The CLT model has been successful in time, and government support is critical to its enabling homeownership for households continued functioning. that do not have other opportunities to en- ter the market. The principal benefit of this Example 1: USA: Community Land model is that the initial subsidy related to Trusts (CLTs) 32 https://www.nweurope.eu/projects/proj- Established in the US in the 1960s, the com- ect-search/shicc-sustainable-housing-for-inclu- munity land trust (CLT) movement advocates sive-and-cohesive-cities/#tab-1. 33 “Urban Community Land Trust in Europe: Towards for collective land ownership and a change in a Transnational Movement,” SHICC, October 2020. established property rights systems.33 CLTs Available at: https://www.nweurope.eu/projects/ are “non-profit community-based organiza- project-search/shicc-sustainable-housing-for-in- clusive-and-cohesive-cities/resources/europe- tions designed to ensure community steward- an-clt-guide-towards-a-transnational-movement/. ship of land.”34 34 https://community-wealth.org/strategies/panel/ clts/index.html. To achieve its goal of maintaining housing 35 https://groundedsolutions.org/strengthen- affordability in perpetuity, CLTs sell the house ing-neighborhoods/community-land-trusts. 36 Each CLT sets its own formula and conditions to the buyer, but not the land; instead, the regarding sale price. homebuyer enters into a long-term renewable 37 h t t p s : / / w w w . b u r l i n g t o n a s s o c i a t e s . c o m / ground lease (typically 99 years) for the land, files/2813/4523/7678/Chapter_7_-_Funding.pdf. 24 RE-VISITING SOCIAL HOUSING BOX 2 DUDLEY NEIGHBORS, INC. (DNI) COMMUNITY LAND TRUST (CLT) IN BOSTON, USA Dudley Street Neighborhood Initiative (DSNI) was formed in 1984, in response to the devastation wrought on the Roxbury neighborhood by massive disinvestment, arson, and dumping of toxic waste. Community leaders and residents worked with local foundations and city government to revive the neighborhood. DSNI created Dud- ley Neighbors, Inc. (DNI), a CLT in 1988 to take control of the 1,300 vacant parcels in the area, and to “realize a vision of development without displacement.” The formation of the CLT prevented – (i) low-income households from being pushed out, and (ii) the area from being swept up in the wave of urban renewal ongoing at the time. DNI got eminent domain powers to acquire privately owned vacant land in the 62-acre area called the Dudley Triangle. DSNI created a bottom-up development plan, with support from local entities includ- ing community development corporations (CDCs) and foundations. Today, more than 30 acres of former- ly blighted land has been developed into more than 225 permanently affordable homes (mix of rental and ownership), a 10,000 sq.ft. community greenhouse, urban farm, playground, gardens, and other amenities. In keeping with CLT principles, DNI is governed by a board comprised of local residents, members of non- profit agencies and CDCs is in the area, representatives from small businesses and religious organizations, and youth (aged 15–18 years) from the area. DNI has been pivotal in preserving affordable housing in the area – 50% of homeowners earn between USD 20–40,000 per year, and 80% of the families earn less than USD 70,000 per year. Combining vacant privately owned land with City-owned parcels, DNI leases land to private and non- profit developers to build affordable housing aligned with the community’s master plan. Additionally, DNI conducts training sessions for aspiring CLT homeowners, and provides ongoing support to homeowners in areas such as home maintenance and repairs, refinancing, financial planning, and taxes, among others. The only CLT in the US to have eminent domain powers, DNI is one of the oldest and most successful CLTs in the country, and “serves as a model for other communities organizing to promote development with- out displacement and long-term control of the land.” Sources : https://www.dudleyneighbors.org/dni-today.html. https://community-wealth.org/content/dudley-street-neighborhood-initiative. https://labgov.city/theurbanmedialab/community-land-trust-dudley-street-neighborhood-initiatives-development-without-displacement/. the land gets passed on to subsequent own- Land for the CLT may be acquired from ers while allowing owners to benefit from the public or private sources, but it is important to appreciation in the house value. Grassroots note that there may be limitations with respect participation and tripartite governance help to applying eminent domain, and particular- maintain community control of assets. At ly its potential misuse in countries without the the same time, low ground lease fees and lim- proper controls in place. ited grant funding make it difficult to main- tain financial sustainability. To address this, Example 2: Voi, Kenya: Tanzania- some CLTs are partnering with housing co- Bondeni CLT operatives and mutual housing associations (MHAs) wherein the former focuses on com- The Tanzania-Bondeni CLT was implemented munity-led development and the latter on between 1991 and 2004 as part of a settlement construction and property management. upgrading project in Voi, Kenya. The CLT model A century of social housing: Global typologies and case studies 25 was chosen because of the tenure security it tlement society and a trust—to fit within the lo- provides to residents, a severe challenge for cal legal framework. The board of trustees had the urban poor in Sub-Saharan Africa. resident representatives and was responsible The project was a collaboration between for managing the CLT, and was funded by an- multiple parties: the Ministry of Local Govern- nual contributions from the CLT members. ment (MoLG), the German Development Agency The key achievement of the project was (GTZ), the municipal council, and resident rep- that it gave poor residents access to urban resentatives. While the MoLG provided policy land. Already a tightly knit community, the CLT direction and liaised with other state agencies, further united the residents and helped create GTZ provided financial and technical assistance a vibrant community. Building on the social to design and implement the CLT. Other part- cohesion among residents, there was commu- ners included—(i) the two land owners (Kenya nity participation in the running of the CLT. Railways Corporation and Voi Sisal Estates Ltd.) By giving residents access to land and oblig- who donated the land for the project; (ii) the ing residents to live on their property, the CLT National Co-operative Housing Union (NACHU) framework prevented post-project displace- that provided subsidized loans to finance hous- ment thereby improving stability. Finally, the ing development; and (iii) the University of Nai- project also facilitated systematic access to robi’s Housing and Building Research Institute housing finance for residents; working with (HABRI) that developed cheap building technol- NACHU, the residents formed four housing co- ogy to lower housing construction costs. operatives over the years to finance incremen- Project financing was based on the princi- tal housing construction. ple of cost sharing wherein community mem- While the project achieved some of its key bers paid for infrastructure and housing devel- objectives, it was plagued by issues of absen- opment (the land was free) and GTZ paid for tee landlordism and declining commitment developing the CLT instruments. GTZ also pro- from residents over time, (Bassett, 2005) vided grants to residents to reduce their out- thereby leading to questions about the longev- of-pocket expenses. Cheap building technology ity of the CLT. The key challenge, however, has developed by HABRI and subsidized loans pro- been the lack of proper legal frameworks and vided by NACHU further helped lower develop- lack of government support for the model. ment costs and allay residents’ cost burden. Nearly two decades after project completion, Community members were actively in- Kenya’s land laws still do not support CLT for- volved throughout the planning process, and mation, which (in part) has prevented meaning- the master plan included commercial and com- ful scale-up of the model. munity facilities in addition to residential plots. Even the choice to go with a CLT (as opposed to Comparing social housing models the other tenure options of co-operative or in- across framework dimensions dividual ownership) was picked by community members. Using select case examples from each of the A key hurdle was developing a CLT with- models described in section 2.2, Table 4 pro- in Kenya’s land law and administration sys- vides a comparative analysis of the examples tem, which is not designed to support CLTs. across the six dimensions of the proposed The project team created two entities—a set- social housing framework. 26 RE-VISITING SOCIAL HOUSING TABLE 4 COMPARING SOCIAL HOUSING MODELS ACROSS FRAMEWORK DIMENSIONS NON- OR LIMITED-PROFIT GOVERNMENT AGENCIES HOUSING ASSOCIATIONS COMMUNITY LAND TRUSTS Public housing in the US a Social housing in Vienna, Community land trusts in 1937 onwards Austriab the USc (no new construction since 1920 onwards (approximately 90 1960s onwards the 1970s) years, including a 10-year break in the WW II period) Tenure: Terms of • Rental • Predominantly rental; some • Ownership; no limit on arrangement • Annual income ownership duration certification of tenants • No limit on duration • Land is permanently to ensure continuing owned and maintained qualification for by the CLT; owner is public housing vis-à- allowed to sell only vis program eligibility the house to maintain criteria affordability Institutional • Public housing • Limited Profit Housing • Community land structure and authorities (PHAs) are Association-led (LPHA- trust (CLT) leads the data: Alignment responsible for building led) system but in close provision, but in close of complementary and managing public cooperation with and cooperation with strengths and housing supervision by regional local government, responsibilities • PHAs are government other community between multiple instrumentalities of • Other stakeholders such organizations, stakeholders municipal government as architects, building developers, building contractors, and private contractors, and banks, are all well-embedded architects into the system Financing and • Funded almost entirely • Mix of supply- and demand- • Mix of equity, debt and costs: Capital by federal government side assistance grants, raised from stack/sources • In recent years, • Supply side: City of Vienna public and private used to maintain programs such as HOPE provides low-interest rate sources affordability for VI and Rental Assistance loans (1%), and bank loans at • Local, state and federal target segments Demonstration (RAD) 2.5% to developers – together, governments provide have given PHAs access these account for roughly 85% resources in the form to private financing to of development costs; also, of free or cheap land, rehabilitate and maintain some public grant such as for grants, or tax credits public housing renewable energy (approx. • Private financing 5%). Repaid loans as well as includes grants and LPHA profits are reinvested loans into new social housing construction and maintenance • Demand-side: Rents are strictly regulated and capped at 25% of household income to ensure affordability for tenants; and the city provides rental assistanced to make up the difference between tenant contribution and actual rent (continued on next page) A century of social housing: Global typologies and case studies 27 TABLE 4 (continued) COMPARING SOCIAL HOUSING MODELS ACROSS FRAMEWORK DIMENSIONS NON- OR LIMITED-PROFIT GOVERNMENT AGENCIES HOUSING ASSOCIATIONS COMMUNITY LAND TRUSTS Subsidies and • Narrowly targeted at • Broad targeting driven by the • Low- and moderate- targeting: Intended low- and very low- goal of social mixinge income households that beneficiaries income households • Relatively high income limit; are unable to afford (defined as those earning about 80% of the population market-rate housing less than 80% and 50% is eligible for social housing • Each CLT develops its of Area Median Income— own specific eligibility AMI—respectively) criteria • Initially targeted at working class households Planning, • Poor planning and • Planning and design is • CLTs work with local regulation, and design integrated with the City community groups sustainability: • Projects built in minority Development Plan to ensure and local government Connectivity neighborhoods or that social housing is well- representatives to to public peripheral locations located with access to identify and prioritize infrastructure, and leading to poverty amenities, and is not designed community needs, and integrated design concentration or built in isolation align them with available principles • Poor construction quality • Project proposals are resources (including led to deterioration of evaluated by a jury for, land) housing stock among other aspects, design innovation and environmental sustainability, which helps maintain high design standards Operations & Initially, rental income O&M is part of the long-term Homeowner is responsible maintenance covered O&M asset management strategy for the maintenance of the (O&M): Ongoing With tenant mix getting Funded by two sources: (i) Part house and capital repairs poorer, rental income of rental revenue goes to a fund CLT is responsible for the decreased, and was not dedicated to O&M; and (ii) City maintenance of land and enough to cover O&M of Vienna provides grant funding common areas Decreased federal for major rehabilitation projects Homeowners pay CLT a funding meant that PHAs monthly land lease fee deferred capital repairs CLT can intervene if homes which accelerated the are dilapidated deterioration of housing stock PHAs have several billions of dollars in capital repairs backlog Source: Author. a Other case example covered includes: Hungary. b Other case examples covered include: France, Netherlands, South Africa, US, and UK. c Other case example covered includes: Kenya. d Provided for social housing as well as private sector rental, and in some cases, ownership too. e When the program was first instituted in 1919, low- and middle-income households alike were suffering from poor housing conditions in the aftermath of World War I. 28 RE-VISITING SOCIAL HOUSING Social assistance for housing: and Development Bank (HDB), a govern- Models and case examples ment entity. HDB’s public housing program started off as rental housing but soon pivoted Government-led housing to ownership by 196439 to align with the gov- production (supply-side) ernment’s ideologies of nation building and to enhance social cohesion among Singapor- Among the forms of social assistance for hous- eans. More than 80% of the country’s popula- ing, financial assistance by government for pro- tion lives in HDB flats, with 90% of them own- duction is a common model. Starting in the ing the flats.40 HDB’s more than 1 million units 2000s, such programs were launched in several constituted 75% of the country’s total housing emerging economies but focusing on home- stock in 2018 (Arora et al., 2019). ownership (not rental), for example, in Colom- HDB acquires land from the Singapore bia, Egypt, Ethiopia, Mexico, and Turkey. While Land Authority (SLA), typically on a 99-year some of these programs may have contrib- lease term. The planning process for HDB es- uted to bridging the quantitative deficit, they tates includes connecting the planned devel- have been criticized for falling short in other opment to the public transportation network, aspects. For instance, some programs have and the planning of neighborhoods and pre- quickly fallen into disrepair due to poor con- cincts within an estate that includes commer- struction quality and inadequate infrastructure cial, recreational, education, health and other (Mexico),38 or have remained vacant because amenities. they are located too far from economic oppor- HDB calculates sale prices of its units on a tunities and services (Brazil, India, Thailand). At cost-based model, i.e. based on the total, con- the same time, learning from the challenges struction, financing, and soft costs. HDB sells faced in the past, some countries are modifying flats at below development costs to maintain their approach to accurately target and meet affordability for end users; land costs are not the social housing needs of their populations. factored into the sale prices of HDB housing. Singapore is an exception in this catego- In addition to a discounted sale price, buyers ry in that it its social housing program is wide- can also access grants that are made on the ly regarded as a success in terms of meeting basis of a progressive subsidy schedule. quantitative and qualitative gaps. The corner- HDB builds housing for households stone of the program is continued financial and across the income spectrum; regardless of the legislative support from the government, which income group, all HDB flats are cheaper than is difficult to replicate in many emerging econ- those in the private market. Eligible citizens omies where government budgets are already buy units directly from HDB and are bound to strained, and the policy and regulatory environ- the Minimum Occupation Period (MOP) before ment is not amenable for such a large program. they can sell the units in the open market. The Example 1: Singapore: Public housing/ Housing Development Board 38 https://www.latimes.com/projects/la-me-mexi- (HDB) housing co-housing/. 39 h t t p s : / / e r e s o u r c e s . n l b . g o v . s g / h i s t o r y / events/2ab696d3-d9f5-4970-9108-e0f95919cc98. Social housing in Singapore is entirely funded, 40 https://www.hdb.gov.sg/about-us/our-role/pub- developed and managed by the Housing lic-housing-a-singapore-icon. A century of social housing: Global typologies and case studies 29 MOP varies between 0 and 7 years depending to pay for the low-cost housing. To ensure af- on the type of unit and other criteria. fordability for target groups, TOKI adopts sev- Consistent government support to hous- eral measures depending on target groups’ ing development and an integrated plan- household income. These include sale pric- ning and design approach are the hallmarks es that exclude land costs, and favorable be- of HDB’s successful social housing program. low-market mortgages (low down payment, Town Councils are responsible for the mainte- low/zero interest rate, long term) for low-in- nance of common areas in HDB’s for-sale prop- come and vulnerable households. erties.41 HDB oversees renovation works for all This centralization of land, infrastruc- its properties, including those carried out in- ture, urban planning, and housing finance side the units by homeowners, to ensure that functions (in TOKI) has enabled the govern- the structural integrity of the work and proper- ment to build housing at scale. That said, a ty is maintained. common criticism is that projects targeted to However, the rising resale prices of HDB lower income households give little to no con- units in recent years have been a matter sideration tothe planning and design of build- of concern. After the lapse of the MOP peri- ings or their surroundings. Residential towers od, unit owners are able to resell their units; built on city outskirts are often poorly connect- there is no income ceiling to buy an HDB resale ed to transportation networks and job oppor- flat, although there are other eligibility condi- tunities, and largely unresponsive to tradition- tions including citizenship, age, and family size, al Turkish neighborhood culture. In contrast, among others.42 Demand for resale flats in- developments targeted at middle- and high-in- creased in 2020, particularly as construction come households are typically located on prime of new units slowed down due to pandemic-in- well-located government-owned land, and duced lockdowns. Although HDB expects to have been criticized for enriching the wealthy. launch 17,000 new flats in 2021,43 construction delays might lead to further price increases for Example 3: Brazil: Minha Casa, resale flats and exacerbate the situation.44 Minha Vida46 Example 2: Turkey: Mass From 2009–2016, Minha Casa Minha Vida housing, TOKI (MCMV) was the Brazilian government’s Since 2003, the Housing Development Admin- 41 HDB is responsible for the maintenance of its (few) rental properties. istration (TOKI) leads social housing delivery 42 https://www.hdb.gov.sg/residential/buying-a-flat/ in Turkey. TOKI is a subsidiary of the Prime resale/eligibility. 43 https://www.channelnewsasia.com/news/sin- Ministry that is attached to the Ministry of gapore/hdb-resale-prices-transactions-flats-bto- Environment and Urbanization.45 sold-2020-14017640. Focusing solely on home ownership, 44 https://www.straitstimes.com/singapore/hous- ing/hdb-resale-prices-climb-for-4th-consecutive- TOKI builds housing for all income groups, in- quarter-volume-dips. cluding low- and middle-income households 45 http://i.toki.gov.tr/content/entities/main-page- that cannot afford housing on the private mar- slider/20191011095737969524-pdf.pdf. 46 Conversions are based on foreign exchange rates ket. The program is based on a cross-subsi- during program implementation; roughly 1 USD = 1.85 dy model wherein TOKI builds high-end units BRL. In 2021, the conversion rate is 1 USD = 5 BRL. 30 RE-VISITING SOCIAL HOUSING largest social housing program. The pro- sign that resulted in projects being located on gram was part of the government’s push to urban peripheries, far from jobs and amenities drive economic growth and upgrade infra- and lacking in adequate infrastructure. structure.47 Over two phases, the government invested nearly BRL 160 billion/ USD 86 bil- Example 4: UK: Rent to Buy48 lion with the goal to build three million units. The program was targeted at households While the bulk of social housing in the UK is that earning up to 10x minimum wage, with nearly built and managed—in perpetuity—by hous- 80% of housing provision focused on the poor- ing associations or local councils, Rent to Buy est and low-income. Geographically, the pro- is an alternative tenure aimed at easing the gram focused on metropolitan areas in Brazil transition from renting to homeownership including all state capitals and municipalities by subsidizing rent. Also referred to as Rent to with a population greater than 50,000. In ur- Save, Rent to Own, or Intermediate Rent, this ban areas, the modality consisted of construc- government program in England, Scotland, and tion or acquisition of new housing for families Northern Ireland is slightly different from that earning up to 10x minimum wage per month; in Wales. While the former provides homes in rural areas, the program supported con- at reduced rent, roughly 20% below market struction, acquisition and refurbishment of rates, the latter rents homes at market rates. housing units for families with a monthly in- Designed to help first-time homebuyers come up to BRL 5,000 (USD 2,704). who cannot afford the upfront down pay- Since cost recovery was not the program’s ment, through the Rent to Buy program, hous- goal, sale prices were determined on the ba- ing associations provide homes at rough- sis of household income. Financial assistance ly 80% of local market rents. The lower rent was calibrated based on the target group’s in- gives households a chance to save for a down come. For instance, for those in the lowest in- payment. The lease period typically lasts for come category, the program subsidized be- anywhere between six months up to five tween 60 and 90 percent of the property value. years. At the end of the rental period, house- Financial support was also provided in terms holds have to either purchase the property or of low interest rate mortgages, tax exemp- move out. Households that need additional as- tions, and exemptions from property regis- sistance have the option to buy the home on tration and insurance payments. In addition shared ownership terms. The number of units to the federal subsidies, states and municipal- available under the Rent to Buy program are ities also provided finances, land, and tax re- limited, and varies by local authority. bates to facilitate delivery of social housing un- The Rent to Own program in Wales pro- der this program. vides homes for rent at market rates, for up Although the MCMV program delivered to five years. Households can apply to buy the housing at scale (nearly 3 million units), it home between the second and fifth years of was expensive and heavily dependent on gov- tenancy. To assist households in making the ernment funding. In 2016, the program stalled abruptly as a result of the budget deficit and 47 This was in the aftermath of the global financial crisis of 2007-08. recession in Brazil. Additionally, the program 48 https://hoa.org.uk/advice/guides-for-homeown- has been criticized for poor planning and de- ers/i-am-buying/rent-to-buy/. A century of social housing: Global typologies and case studies 31 upfront down payment, at the time of applica- CODI’s Baan Mankong Program (BMP) tion to purchase, they receive 25% of the rent marked a dramatic shift in the Thai govern- paid and 50% of any increase in the property ment’s approach to housing in that its role value since they moved in. transitioned from direct housing provision to Since eligibility criteria are set by housing enabling a community-led process of hous- associations that offer homes under this pro- ing development. The BMP targets the urban gram, these vary across HAs. Basic eligibility poor living in informal settlements, and aims criteria include: (i) household income less than to provide decent and secure housing. £60,000 per year; (ii) first-time buyer, or used to The core elements of BMP are commu- own a home and cannot afford one on the open nity savings, large-scale networks of poor market now; and (iii) good credit history. Hous- communities, and community-driven devel- ing associations generally prioritize existing opment. The first step is the setting up of a social housing tenants and those that meet ‘City Development Committee’ that includes the priority criteria set by local authorities. representatives from poor communities, lo- One advantage of the Rent to Buy program cal governments, professionals, universities is that it gives households access to proper- and NGOs. Simultaneously, poor communi- ties that they otherwise might not be able to ties in the city come together to form a ‘Com- afford. However, households bear the risk of munity Network.’ The formation of these two home prices rising during the rental period, collective platforms is the cornerstone of the sometimes beyond their affordability. Wales’ BMP approach—it fosters collaboration be- Rent to Own program and the shared owner- tween different stakeholder groups, and en- ship option are designed to help households riches the housing development process. CODI weather (dramatic) house price increases. plays a supportive role in this process, leaving the reins in the hands of the two committees. Example 5: Thailand CODI: Baan Once land has been secured, the commit- Mankong (Secure House) Program, tees jointly plan and implement the housing Community Organizations project(s), with financing support from CODI. Development Institute (CODI) The BMP allows for different forms of develop- ment, including on-site upgrading, land shar- The Community Organizations Development ing and reconstruction, re-blocking and re-ad- Institute (CODI) is a Thai Government insti- justment, and resettlement. tution. Its mission is to support communi- Financing from CODI is in two forms—a ties and their organizations as key agents of subsidy and a loan—both of which are given change and as central actors in development to the community cooperative, not to individu- which affects their lives and communities. al families. Additionally, each community is re- CODI is funded by the government for many quired to have savings equal to at least 10% of its ongoing programs. Its main financial tool of the loan amount, which must be maintained is the CODI revolving fund, which provides soft throughout the loan repayment period. loans to community cooperatives and commu- Buoyed by the success of the first ten pi- nity networks to undertake a variety of devel- lot projects, BMP scaled rapidly in the first six opment initiatives that they plan and imple- ment themselves.49 49 https://en.codi.or.th/about/what-is-codi/. 32 RE-VISITING SOCIAL HOUSING years and projects were launched across the ownership for low-income households). In Indo- country. However, BMP project finances are nesia, where the policy focus is on homeowner- almost entirely contingent on government ship, the government has been implementing funding, and as funds almost dried up by 2009, multiple demand-side subsidy programs to re- the program momentum slowed down despite duce the country’s quantitative backlog. In col- some infusion of funds from the government. laboration with the World Bank, the government Furthermore, decentralization of CODI into re- launched a credit-linked housing assistance pro- gional offices and implementation challenges gram in 2018 to assist lower-income households also slowed down the program. Thailand’s gov- with a down-payment assistance to help first- ernment is in the process of drafting a 20-year time homeowners buy or build their homes. National Housing Strategy, and CODI is work- ing with the government and other stake- Example 1: Chile: Rental housing holders to renew and refine BMP. vouchers Government financial assistance to Pivoting away from its historic singular focus households (demand-side) on homeownership, the Chilean government introduced a rental subsidy program in 2014 All of the supply-side programs described above targeted at low- and moderate-income young lower development costs using some combina- families throughout the country. tion of government subsidies, free or low-cost Realizing that more than a third of home- land, and below-market rate financing. Costs ownership subsidies were mis-targeted at are intentionally kept low to ensure affordable young families whose housing needs would rents (or sale prices, in the case of homeowner- likely change in the short-term, the rental sub- ship programs). However, despite lower costs, sidy program was designed to support young rents (or sale prices) are often not affordable for households’ residential mobility and chang- the target segment of social housing. To reduce ing housing needs in the short-term. The sub- the payment burden on households, govern- sidy is intended as bridge assistance until ments offer demand-side assistance to com- young households decide on their long-term, plement supply-side initiatives. Demand-side more permanent housing needs. assistance can take the form of vouchers/bene- The program provides a flat subsidy of fits for tenants, or down payment assistance or USD 140 per month across all municipalities. low interest-rate loans for home buyers. The subsidy amount does not vary with the In some countries, including the Nether- amount of total rent paid, but eligible rents are lands, Austria, and France, beneficiaries are el- capped at USD 400 per month. At the same igible to receive rental benefits for not only so- time, subsidy-to-rent ratio is capped at 0.8. cial housing but also for housing in the private The subsidy is offered for a maximum of eight market. In the US, the Housing Choice Vouch- years. In line with the government’s enduring er (HCV) program is designed to enable house- focus on homeownership, after the first three holds find housing in the private market. Chile’s years, the subsidy is reduced to USD 110 per rental subsidy program, instituted in 2013, is the month, to encourage residents to start con- country’s first rental housing initiative (previous sidering homeownership. Additionally, the efforts focused on improving access to home- goal is to have renters become self-sufficient A century of social housing: Global typologies and case studies 33 by paying an amount that more closely reflects ers are current, the PHA issues an HCV to the typical monthly payments if they enrolled in family. Once the selected unit is approved, the the government’s homeownership programs. PHA executes a contract with the landlord, and Dwellings must meet minimum quality directly pays him/her the subsidy amount. Ten- standards, and are checked by regional ser- ants pay the remainder, i.e. the difference be- vice providers called Servicios de Vivienda y Ur- tween the actual rent and the subsidy amount. banizacion (SERVIU). PHAs set eligibility criteria for the HCV Given that the program is relatively new program, such as annual gross income, fam- and is yet to complete its first cycle of eight ily size, and US citizenship status. In general, years, there is little information on program household income must be less than 50% of implementation and outcomes. However, the area median income (AMI), i.e. very low-income government is contemplating next steps for households. Additionally, PHAs are permitted to the rental subsidy program as well as the rent- establish priority eligibility criteria, which are al housing sector at large, both of which will be based on local conditions and housing needs. particularly relevant in a post-Covid context. The HCV program has helped improve housing outcomes for low-income families in Example 2: USA: Housing Choice a variety of ways. However, there is a severe Voucher (HCV) program shortage of vouchers, with only a quarter of eli- gible households receive housing assistance as Introduced in 1974 as a project-based sub- of 2017.52 Further, participation by landlords in sidy, the Section 8 voucher program marked the voucher program is not always guaranteed, a shift of US federal assistance from produc- especially in locations where housing is in high tion to demand-side programs. The program demand. So, while increasing voucher funding has since been amended (in 1983) to make can be helpful, it is important to simultaneous- the vouchers tenant-based, and renamed the ly increase the effective supply of housing. Housing Choice Voucher (HCV); it helps about 2 million low-income households annually.50 Example 3: Indonesia: Credit- The HCV program is one of the largest linked housing finance assistance housing programs, designed to assist “very (Bantuan Pembiayaan Perumahan low-income families, the elderly, and the dis- Berbasis Tabungan – BP2BT) abled to afford decent, safe, and sanitary housing in the private market.”51 Voucher re- The Government of Indonesia has histor- cipients are free to choose any housing that ically provided policy, institutional, and finan- meets program requirements, and are not cial support to the housing sector, yet these restricted to subsidized housing. efforts have been partially hindered by poor The US Department of Housing and Urban program design and inefficient implementa- Development (HUD) provides funding to local 50 HCV Data Dashboard, available at: https://www. bodies called public housing agencies (PHAs) hud.gov/program_offices/public_indian_housing/ to administer the program. The PHA sets mini- programs/hcv/dashboard. 51 https://www.hud.gov/topics/housing_choice_ mum quality standards for housing that can be voucher_program_section_8. rented under this program. Households apply 52 https://www.cbpp.org/research/housing/feder- to their local PHA. Once approved and if vouch- al-rental-assistance. 34 RE-VISITING SOCIAL HOUSING tion. Its two main housing finance programs cantly reducing the burden on the government in recent years (Subsidi Selisih Bunga – SSB, budget through one-time assistance instead of an interest rate buy-down program and Fasili- a large upfront capital allocation. As the pro- tas Likuiditas Pembiayaan Perumahan – FLPP, gram is relatively new (launched in 2018) and is a liquidity facility cum interest subsidy pro- still under implementation (slated for comple- gram) subsidized mortgage interest rates at a tion in February 2023), there are no conclusive high fiscal and economic cost and being distor- results on its effectiveness. tive to the mortgage market with low interest rates. Moreover, they disproportionately ben- Private and small-scale landlords efited salaried middle- and upper-middle-in- come households purchasing developer-built Small-scale and private landlords are the domi- units, while leaving behind 60% of the Indone- nant providers of rental housing the world over, sian population that work informally. in advanced and emerging economies alike. With assistance from the World Bank This private rental stock caters to renters across (WB), the Ministry of Public Works and Hous- the income spectrum, and constitutes a sizeable ing (MPWH) launched a mortgage-linked proportion of the naturally occurring affordable housing finance assistance program (Bantu- housing (NOAH) market.53 In the United States, an Pembiayaan Perumahan Berbasis Tabun- NOAH units are the most common affordable gan – BP2BT) in 2018 targeted at lower-income housing available.54 In its current form, private households. Through BP2BT, the govern- rental stock presents an opportunity, especially ment provides a one-time down-payment as- in places with an available stock of rental hous- sistance, ranging from approximately 25% of ing, or otherwise underutilized or vacant hous- the house price for home purchase, 33% for ing that can be converted to rental. self-construction, and 49% for home improve- Although housing policies have not yet ment. The exact subsidy amount is determined tapped the potential of this private rental sector, by the housing type, household income, geo- there are examples of pilot projects that provide graphic location, and other criteria. support to small-scale landlords and make af- Unlike the SSB and FLPP’s heavily subsi- fordable rental housing available to tenants (fo- dized interest rate, BP2BT is a market-friend- cusing on the low-income and vulnerable seg- ly scheme by mandating that mortgages be ments). This model entails renting out privately provided at market interest rates. Recogniz- owned units, but managed either by non-prof- ing that the vast majority of Indonesians build it, mission-driven organizations (as in Jordan, their own homes, the subsidy applies to pur- South Africa, and the US) or by municipalities (as chase, self-construction, reconstruction, and in Lisbon and Barcelona). Amongst advanced improvement of a home. Furthermore, the economies, private sector-led provision of so- program is targeted at households between cial housing is the norm in Germany; private in- the 30- and 60-income percentiles, including salaried and non-salaried households. 53 Distinct from social housing in that naturally BP2BT has been designed to be mar- occurring affordable housing units are not subsi- ket-friendly while maintaining the same af- dized by any government programs, do not have any specific eligibility criteria or allocation mecha- fordability levels (in terms of monthly housing nisms. payments) as the FLPP program, while signifi- 54 https://gmhf.com/finance/noah-impact-fund/. A century of social housing: Global typologies and case studies 35 dividuals and non-listed private housing compa- with the twin goals of addressing the immedi- nies own nearly half of the social housing stock ate housing needs of refugees while also sup- in the country. In South Africa, backyard rentals porting host communities. The project was have grown tremendously in recent years, and implemented in the Governorates of Irbid, Jer- play an important role in plugging the housing ash, and Ajloun57 between 2013 and 2015. gap in the country. Although not yet a regulat- For this project, NRC prioritized extreme- ed sector, in the absence of other affordable op- ly vulnerable Syrian refugee households, tions, backyard rentals are a popular housing measured against criteria such as household type, and have given rise to a specialized ecosys- size and composition, female-headed house- tem of small businesses catering to it. In the US holds, people with disabilities, health status, (and Canada), accessory dwelling units (ADUs) economic conditions, risk of eviction, and shel- have gained momentum, especially in the last ter conditions. few years. With social housing development not Building on existing practices, NRC provid- keeping pace with demand, there is huge unmet ed technical and financial support to Jordani- demand that ADUs are beginning to meet. Sev- an homeowners to facilitate the completion eral cities and states across the country have of additional units atop their existing homes updated their laws to enable faster and cheap- to be rented to Syrian refugee households, er ADU construction; however, these are early rent-free, for a period of 12–24 months. NRC days, and more needs to be done to fully inte- also provided legal assistance to landlords and grate ADUs into the larger housing ecosystem renter households throughout the contract pe- and meet its full potential. riod, and provided relocation assistance (grant In addition to the Jordan, South Africa, and of JD 100/USD 141). US projects described below, several govern- In addition to providing (short-term) hous- ments are looking toward this sector to pro- ing for vulnerable refugee households and im- vide housing to vulnerable citizens in a post- proving their integration with host communi- Covid world. Lisbon’s Safe Rent program offers ties, the project also positively impacted the private landlords up to three years of rent local economy by creating jobs and helped upfront and tax exemptions in exchange for add good quality rental housing stock that converting their short-term rental units for will be useful to host communities even after tourists to long-term rentals for locals.55 Bar- the refugees leave. While the model has appli- celona’s housing department has warned own- cability in non-refugee situations as well, scal- ers of vacant apartments to find tenants or risk ability will depend on program redesign and having their units possessed by the city at half government support, among other things, to their market value, which the city would then make it cost-effective and sustainable. One rent out to low-income tenants.56 challenge faced during the refugee inflow was Example 1: Jordan: Norwegian https://www.bloomberg.com/graphics/2020-airb- Refugee Council’s (NRC’s) Urban 55 nb-short-let-reforms-lisbon/. Shelter Program 56 h t t p s : / / w w w . b l o o m b e r g . c o m / n e w s / a r t i - cles/2020-07-16/to-fill-vacant-units-barcelona-seiz- es-apartments. The Norwegian Refugee Council (NRC) imple- 57 These were home to more than 25 per cent of reg- mented the Urban Shelter Program in Jordan istered Syrians in Jordan in 2015. 36 RE-VISITING SOCIAL HOUSING the displacement of low-income renters in the subsidies for the practice of backyard rentals, host community by refugees whose effective since it is a market-based intervention and rental payments58 were higher than what the not regulated by any policy or law. However, locals could afford. Creating an additional pool municipalities—such as the Khayelitsha Plan- of housing for the refugees is likely to have ning Council—are beginning to recognize the ameliorated that problem to some extent. need for backyard rental development.59 De- pending on the modality of the backyard rent- Example 2: South Africa: Backyard al, either tenants or owners are responsible rentals for the construction and maintenance of the structures. In the face of huge unmet housing demand Backyard rentals plug in the housing in the country, informal renting is a com- gap, and offer a market-based solution for mon practice, of which backyard rental is the those who are not eligible for free government fastest growing house type (Brueckner et al, housing, but also cannot afford market-rate 2019). Originally started in the 1920s, backyard housing. There is high demand for these, as rentals first became widespread in the 1970s evidenced by the rapid growth of the sector and 1980s; in the 1990s, the government’s in the last two decades. Furthermore, recog- housing program (referred to as Reconstruc- nizing the viability of the business proposition tion and Development Program (RDP) hous- (of backyard rentals) and with the goal to help ing) enabled the intense growth of the prac- landlords and tenants overcome the challeng- tice (Scheba and Turok, 2020). es they face, several small businesses have Backyarding refers to the practice where sprung up in recent years. These businesses (typically) the original house is retained as is, provide a range of services including assisting and the owner rents out backyard space to owners get access to finance, overseeing the one or more tenants. Renting out extra yard design and construction process, and manag- space generates additional income for land- ing backyard rental properties. lords, many of whom are often low-income Despite its positive impacts, the sector fac- earners themselves. There are multiple mo- es certain challenges that prevent scaling up of dalities, including—(i) renting out backyard the model. Limited access to capital lengthens space to tenants wherein they build their own the construction time, with owners often build- shacks; (ii) the owner himself/herself builds ing backyard rental units incrementally over the backyard rental units (micro-flats)—these time, which often results in a haphazard appear- are one or more blocks comprising multiple ance. Without little or no previous construction rooms, each of which is rented separately; and experience, owners struggle with the construc- (iii) the owner demolishes the original struc- tion process that ends up bring fragmented ture altogether and builds a new multi-story and inefficient. Depending on the owner’s fi- rental structure, called a boarding house. 58 Since the refugee households did not directly pay Backyard rentals appeal to a broad rent, but NRC provided financial assistance to land- range of users, including informal workers, lords in exchange for rent-free accommodation for young professionals, and white-collar work- Syrian refugee households for 12-24 months. 59 https://housingfinanceafrica.org/documents/ ers, with income ranging from below ZAR innovations-in-backyard-rental-models-for-the- 3,500 to ZAR 10,000. At present, there are no 2020s/. A century of social housing: Global typologies and case studies 37 nancial situation, construction could take any- laws to enable and encourage ADU develop- where between two months and several years. ment, albeit slower than California. One of the key advantages of ADUs is that Example 3: California, USA: Accessory they provide an additional income source Dwelling Units (ADUs) for homeowners. This is a big motivating fac- tor, especially for low- and moderate-income Accessory dwelling units (ADUs) have prolifer- homeowners. Another motivating factor to ated across the US in recent years, especially build ADUs is the ability to have extended so on the West coast where housing afford- family members live together while main- ability is a severe challenge.60 California’s state taining everyone’s privacy. ADUs also enable and city governments have been loosening senior citizens to age in place while they rent restrictions on ADU construction since 2016. out the main house (that they lived in earli- The most recent changes, effective January 01, er). Finally, the rise of ADUs has led to a rise in 2021, further reduced barriers, streamlined companies offering services to ease the ADU approval processes, and expanded capacity to construction process and address challenges build more ADUs. faced in the areas of design, engineering, per- “An accessory dwelling unit (ADU) is a mitting, and construction. smaller, independent residential dwelling unit As ADUs scale up, one area that needs to located on the same lot as a stand-alone (i.e. be addressed is limited access to financing, es- detached) single-family home.”61 Referred to pecially important for low- and moderate-in- by many names—granny flats, secondary suites, come homeowners. Although state and city gov- and in-law units, to name a few, ADUs have sev- ernments have instituted programs to finance eral variations: detached; attached; converted ADU development, there is a pressing need for existing space; and junior ADUs (JADUs). ADU-specific construction lending programs. Although there is no specific targeting or eligibility for ADUs, they are most popular Comparing social assistance amongst singles and couples, followed by for housing across framework adult children and senior citizens.62 Respond- dimensions ing to the tremendous interest and demand for ADUs, governments across the country Using select case examples from each of the are beginning to offer financial incentives and models described in this section 3.3, the table subsidies. At present, these are all targeted at below provides a comparative analysis of the homeowners to encourage ADU construction; examples across the six dimensions of the pro- there are no subsidies for tenants. posed social housing framework. Although ADUs are not a silver bullet to California’s housing crisis, they have the poten- tial to make a dent in it. As a result of changing 60 h t t p s : / / w w w . b l o o m b e r g . c o m / n e w s / a r t i - cles/2018-01-16/the-rise-of-the-backyard-granny- regulations, there has been a tremendous in- flat?sref=QFCZ3YPm. crease in ADU permits and completions since 61 https://www.planning.org/knowledgebase/acces- 2018. These changes are not confined to Cal- sorydwellings/. 62 h t t p s : / / w w w . b l o o m b e r g . c o m / n e w s / a r t i - ifornia alone; other state and city govern- cles/2021-03-25/can-granny-flats-fill-california-s- ments across the country are also enacting housing-gap. 38 RE-VISITING SOCIAL HOUSING TABLE 5 COMPARING MODELS OF SOCIAL ASSISTANCE FOR HOUSING ACROSS FRAMEWORK DIMENSIONS GOVERNMENT-LED HOUSING GOVERNMENT VOUCHERS PRIVATE RENTALS AND SMALL- PRODUCTION (SUPPLY SIDE) (DEMAND SIDE) SCALE LANDLORDS Social (public) housing in Rental housing vouchers Backyard rentals in South Singaporea in Chileb Africac 1960 onwards 2014 onwards 19070s onwards (scaled up after (approximately 60 years) 1994) Tenure: Terms of • Predominantly ownership; • Rental • Rental arrangement some rental (driven by • Maximum eight years; • No limit on duration political ideology of subsidy amount reduced nation-building and social after first three years to cohesion) encourage households to • No limit on duration consider ownership • Intended as bridge assistance until households decide on long-term housing needs Institutional • Government-led • Program administered by • Led by individual owners and structure and system wherein HDB, a the central government, small-scale landlords data: Alignment government agency, sets working in coordination • Owners/ Landlords hire of complementary policy, designs, builds, and with municipal private sector materials and strengths and runs the entire process governments and private service providers, such as responsibilities landlords building contractors between multiple stakeholders Costs and • Mix of supply- and • Government-funded • No government assistance/ financing: Capital demand-side assistance subsidies for supply- or stack/sources • Supply side: Land demand-side used to maintain costs are not included • Owners/ Landlords cover affordability for in the sale price; HDB construction costs via their target segments sells homes at below own resources (in the case development costs to of micro-flats and boarding maintain affordability for houses); and tenants build end usersd units with their own resources • Demand side: Grants for (in the case of backyard low- and middle-income shacks) Singaporeans using a progressive subsidy schedule, and buyers can access CPF savings for down payment or monthly payments Subsidies and • Covers the entire income • Young low- and middle- • No government subsidies targeting: spectrum: Started with income households (since not currently Intended low-income only but soon • Monthly household regulated) beneficiaries expanded to middle- income between 2nd • No specific targeting, but income and eventually and 6th decile of income popular among singles and high-income distribution young professionals, with (continued on next page) Looking Forward: Some Guiding Principles 39 TABLE 5 (continued) COMPARING MODELS OF SOCIAL ASSISTANCE FOR HOUSING ACROSS FRAMEWORK DIMENSIONS GOVERNMENT-LED HOUSING GOVERNMENT VOUCHERS PRIVATE RENTALS AND SMALL- PRODUCTION (SUPPLY SIDE) (DEMAND SIDE) SCALE LANDLORDS • as well (driven by • monthly incomes ranging the aim to enhance from below ZAR 3,500 to social cohesion among 10,000 Singaporeans and in line with the government’s ideology of nation- building) Planning, • Estate planning is a core • N/A • Design and construction regulation, and tenet of the social housing • Dwellings must meet of backyard rental units is sustainability: system minimum quality theoretically governed by Connectivity • HDB responsible for standards and are municipal zoning and building to public planning and design: checked by regional codes; but not necessarily infrastructure, and Includes planning of the service providers followed in practice integrated design estates, connection to • New small businesses assist principles public transportation owners design and build networks, and inclusion durable backyard rentals that of commercial, health, are code-compliant educational and other uses/amenities within estates Operations & • O&M is an important • N/A • Landlords and tenants are maintenance consideration baked into responsible for O&M (O&M): Ongoing the programe and capital • Designated entities for repairs O&M: Town Councils to maintain common areas in for-sale properties, and HDB in rental properties • HDB supervises all renovation works to ensure structural integrity is maintained, including inside ownership units • Large-scale renovation programs every 20–30 years, funded in large part by HDB Source: Author. a Other case examples covered include: Brazil, Turkey, UK, Thailand, and Ethiopia. b Other case example covered includes: US and Indonesia. c Other case example covered includes: Jordan, South Africa, USA, and Germany. d HDB acquires land from Singapore Land Authority (SLA), typically on 99-year leases. e Since the 1970s. Looking Forward: Some Guiding Principles 4 There is no one-size-fits-all solution to the other forms of social assistance for hous- thorny challenge of housing, or for that mat- ing that are often referred to as ‘social hous- ter, that of social housing provision. Macro ing’, but in fact are not (per the above defi- conditions and available resources differ from nition). Accordingly, the models presented in place to place, and since these directly influ- section 3.2—government-owned subsidized ence a given government’s approach to social rental housing, and housing owned and/or housing, it is not possible to prescribe one par- managed by non- or limited-profit housing ticular model to address the diverse housing associations or community land trusts—are needs across the world. Learning from the all forms of social housing. In contrast, models case examples covered in this study, below presented in section 3.3—government-subsi- are some general guiding principles that the dized housing for sale, demand side subsi- World Bank could use to assist client govern- dies, including vouchers, or other forms of ments with respect to social housing deliv- assistance to increase the supply of rental ery—starting with the definition of social hous- by small landlords—are forms of social assis- ing, followed by the rationale, prerequisites, tance for housing, not social housing, per the and broad challenges and trade-offs associ- definition recommended in this paper. ated with its delivery. Prerequisites for social housing Definition of Social Housing development: An enabling environment To recap, social housing may be defined as: Government capacity and “Subsidized residential accommodation provided accountability at below-market prices, targeted on the basis of socio-economic and/or vulnerability criteria, and The government has a crucial role to play in operating under some form of (public) adminis- enabling the delivery of social housing, at trative oversight in the medium/long term.” national, regional, and local levels. Proac- tive government involvement is necessary in As mentioned earlier, these elements the areas of policy-making, regulation, data differentiate between social housing versus collection and monitoring, financing, and 41 42 RE-VISITING SOCIAL HOUSING subsidies, and to incentivize other stakehold- rental housing development ifappropriate pre- ers to provide social housing. Public policies conditions are in place. set the objectives and overall direction for In addition to being financially sustain- the sector, and regulatory and legal frame- able, social housing must also deliver positive works govern stakeholder roles and respon- social impact (to residents as well as society). sibilities as well as access to financial instru- Non-profit housing developers have proven ments. Regional and local governments that adept at delivering this double bottom line ob- are legally responsible for meeting people’s jective, by placing communities’ needs at the housing needs can provide active policy, center of their mission and partnering with so- operational, and financial support to devel- cial services providers as needed, while work- opers and financiers. This support can take ing within the ambit of policy and regulatory the form of: (i) free or cheap land for social frameworks. That said, it is crucial for govern- housing development, (ii) property, corpo- ments to provide capacity-building support to rate or other tax exemptions, (iii) fast-track such organizations, as needed, to enable them permitting processes, (iv) development sub- to scale up and become an effective social sidies, and (v) collectively setting targets for housing provider over time. social housing. With increasing private sector involvement in social housing development Challenges and trade-offs: and financing, it is important to develop insti- A Balancing Act tutional structures that align the complemen- tary strengths of different stakeholders. As governments explore innovative approaches to meet the increasing demand for social hous- Private and non-profit sector ing, especially in a post COVID-19 environment, interest and capacity the case examples in this study shed light on global experiences, innovations, as well as chal- The development of social rental housing lenges faced in social housing provision. This entails all the same skills as developing market much is clear: there is no silver bullet and no housing, or any other urban real estate asset perfect social housing model that can be readily class. Development in turn combines techni- transferred from one country to another. Each cal elements, risk tolerance, capital deploy- model has its advantages and disadvantages, ment, decision speed, and adaptability. These but there are some common challenges and skills and capacities are almost antithetical to dilemmas that are worth highlighting here, par- the business of government, which depends ticularly in the context of developing countries.63 on predictability and high certainty, and which These require a balancing act by project man- is often deliberate in its decision-making. Few agers, leaders, decision-makers, and designers government entities are suited—or inclined— of social housing, to minimize any unintended to take on the role of a social rental housing effects of otherwise well-intended programs. developer. On the other hand, government Below is a checklist that can help cli- entities are very well-suited to the administra- ents and project teams as they evaluate the tive oversight role of such a development, and market-based residential developers are clear 63The detailed case studies in Annexes 2-6 describe candidates to play the risk-taking role in social case-specific contexts, successes, and limitations. Looking Forward: Some Guiding Principles 43 TABLE 6 CHECKLIST TO EVALUATE PROPOSED SOCIAL HOUSING PROGRAMS ATTRIBUTES CONSIDERATIONS 1 Tenure • Market environment for rental • What is the affordability gap in market-based rental housing? • What is the real demand for rental housing (youth, poor, elderly other vulnerable groups)? • Need for social rental • What are the pros and cons of a government-funded program of social rental housing versus one for ownership (including rent-to-own)? • Where does the proposed social housing program fall on the housing continuum? Does it support people/beneficiaries to climb the housing ladder in their lifetime? 2 Institutional • Institutional structure structure and • How much social rental housing is in the public versus private domain? data • What is the role of public and private sector stakeholders in the proposed program? • What additional support, if any, is needed to build their capacity? • Data • What data is available (at local and national levels) on income (formal, informal), household characteristics, and the housing stock (cost/ price, quality, quantity, typology etc.)? Is the data updated? • How does the program propose to fill in data gaps, especially re: informal income and affordability? 3 Financing and • Public funds and private capital mobilization costs • Are there any public/ private funds to finance social housing, and if not, what is the potential to set one up? • How much debt are private banks/lenders providing; and at what terms? • How much equity are developers required or willing to contribute? • What is the percentage split between public and private sources of funding/ capital? • Investors • Who are the prominent donors / international organizations investing in the social housing space? • How can the World Bank partner with them, or set up similar channels to invest in social housing? • Costs • What are the ‘true’ development costs (including land, infrastructure, etc.) that may be subsidized by government? • How are development costs estimated? • Do costs (development and O&M) align with income/affordability levels of the target segment(s)? If not, how is the gap covered? 4 Subsidies and • Subsidies targeting • What is the mix of supply- and demand-side subsidies for housing development? • What is the average subsidy per beneficiary? • How much of the subsidy is upfront versus long-term, and what is the overall cost to the government? • Targeting • Who is the targeted beneficiary? • How wide is the target group and what implications does this have on the mix of residents in the proposed program/ project? • What is the data to back the targeting criteria? • How does targeting impact the financial viability of the project in the long term? (continued on next page) 44 RE-VISITING SOCIAL HOUSING TABLE 6 (continued) CHECKLIST TO EVALUATE PROPOSED SOCIAL HOUSING PROGRAMS ATTRIBUTES CONSIDERATIONS 5 Planning, • Planning regulation, • How does the planning and design of the project (at unit, building, and neighborhood and levels) respond to the needs of the target segment(s)? sustainability • How does the program provide room for/ encourage innovation in planning and design? • Is the project well located? i.e. does it have access to jobs, schools, and other necessary infrastructure? • Building codes and regulation • Is there a legal framework for social housing? • Is there sufficient regulation and enforcement to ensure adequate building quality and safety? • Environmental sustainability and resilience • Does the planning and design address concerns of climate change, disaster risk, and environmental sustainability? • What is the legal framework to incorporate ‘green’ and energy efficient elements into housing design? • What is the added cost of ‘greening’ the buildings, and its benefit in terms of energy savings in the long term? • What is the potential to make social housing more resilient from climate disasters? 6 Operations • Programming O&M and • Is O&M factored into project planning? maintenance • How does the program propose to pay for O&M (day-to-day and periodic capital (O&M) repairs)? • How do the proposed O&M costs compare with those for other residential properties? Source: Author. strengths and weaknesses of potential social oldest, the least structurally safe, the most housing project requests, and provide support crowded or overcrowded. Informal rental to design new or update existing social hous- housing, prevalent in many developing coun- ing programs. tries is a goodexample, as is in some ways, much of the older multifamily housing stock Tenure in former Soviet Union countries. A proac- tive and effective social housing program can What is the rationale to choose between social help close this gap by being more accessible to housing for rental and social housing for own- lower income households with low or informal ership? The argument in favor of social rental incomes as compared to a housing assistance is that low-income renters face some of the program for homeownership. worst and most severe housing challenges, The argument also extends to who fi- largely because there is never ‘enough’ natu- nally retains ownership of this social hous- rally occurring affordable (rental) housing pro- ing. When too little is in the social sector com- duced by the private market. Where it does pared to the market sector, a (low) supply and exist, naturally occurring affordable rental is (high) demand imbalance is very likely to bid likely to be the least desirable asset class: the up market prices. A housing subsidy program Looking Forward: Some Guiding Principles 45 BOX 3 THE HOUSING CONTINUUM IN FRANCE To stem the dwindling stock of private rental housing, and to develop an affordable housing option for mid- dle-income and mobile young families and singles, France instituted a number of tax incentives in 1984 and 1996. With caps on rent and tenants’ incomes and strict regulations, private affordable rental housing has become permanent, and forms an appropriate intermediate option between social rental and owner-occu- pied housing. In 2018, the distribution of housing stock in tenure was as follows: owner-occupied – 58%, pri- vate rental – 25%, and social rental – 17%. At the same time, while 43% of housing subsidies went toward so- cial rental housing, 36% went toward private rental housing, and 21% to homeowners. Source: The Private Rental Sector in France | Presentation by Claude Taffin | Center for Policy Research Policy Lab 3 | November 2020. Available at: https://cprindia.org/events/policy-labs-webinar-on-private-sector-investment-in-rental-housing-challenges- opportunities/. is such a scenario will require deeper subsidies centives to private owners can also help in- to make housing affordable, rendering public crease the stock of affordable private rental housing assistance much more costly. This is housing (Peppercorn and Taffin, 2013). Afford- true whether the form of public subsidy is tax able housing in the private market, for rent breaks, cash/grants, vouchers, or deals with and ownership, will help facilitate turnover of developers to set aside some percent of units social housing residents whose socio-econom- as affordable.64 In contrast, social housing in ic conditions improve over time. the public domain can be protected from ris- ing prices, particularly in places where housing Institutional structure and data is expensive and unaffordable. Finally, social housing is part of the hous- Social housing cannot be built and managed ing continuum, i.e. a ladder of tenures that by public or private sector alone. Experience people ascend throughout their younger life, shows that while it is not efficient for public and potentially descend when they become el- sector to be the leading provider of social hous- derly. Ideally, a household should be able to ing, government has an indispensable enabling move out and up to homeownership when role in shaping policy, defining objectives and ready and capable to do this. For example, stakeholder roles, providing financial sup- youth and young adults are more likely to rent, port, and regulating the sector. On the other starter households are more likely to purchase hand, specialized non-profit associations that a small first home, mature adults with grow- are driven to achieve the dual goals of social ing children are likely to up-size/ upgrade their impact and financial sustainability are best house, and seniors or empty nesters are more suited to lead social housing development and likely to be at a down-sizing stage. These needs management. To build a strong social housing can be predictable, and this is where demo- sector, it is therefore important that the com- graphic trends provide very useful information about housing need. 64Peter Dreier (2018). Why America Needs More Social Housing, American Prospect, 2018. https:// Designing social housing policy as part of prospect.org/infrastructure/america-needs-so- the housing continuum and providing tax in- cial-housing/. 46 RE-VISITING SOCIAL HOUSING plementary strengths of each are aligned and While improving the reliability of available that they work together, in any given context. data and building up databases is a long-term In countries with well-developed social proposition, the Government of Chile’s (GoC’s) housing ecosystems, governments used to be approach offers a possible way forward. In de- the main social housing provider, but the sys- signing its first ever rental housing subsidy tems have evolved over time. For instance, al- program, the GoC carried out a diagnostic sur- though the US government used to be the vey to assess where the need was the greatest, main provider of social/public housing from and developed a means-tested subsidy target- the 1930s through the 1970s, it has since been ed at a very specific target group (young low- replaced by specialized private housing asso- and middle-income households). ciations as the main providers of social hous- ing in the country. The government continues Financing and costs to play an integral role, including setting policy, providing funding, and regulating the sector, Driven by the goal to minimize development which is a complement to the private sector’s costs and therefore maintain low rent lev- role in leading the development, financing, els, providers typically use multiple sources and management processes. to finance social housing development, typi- cally a mix of public and private sources. Pub- Data: Many countries lack a robust and stream- lic sources take the form of non-cash subsidies lined system for collecting and managing (for example, land), tax incentives, and low-in- income—disaggregated data on housing pro- terest loans, among others. Private financing duction, which is critical to inform the structur- is a mix of equity, debt, and grants, from vari- ing of targeted, effective national housing pro- ous sources. The availability and costs of these grams, including social housing. In a complex different financing sources varies based on urban society, different levels of government laws and regulations in different contexts, and play distinct roles within urban policy. National therefore, there is no standard or ideal financ- government defines the macroeconomic envi- ing mix (across countries). ronment, national tax policy and interest rates, For instance, the LIHTC program in the US and national housing programs. These are nec- was designed to enable social housing provid- essarily independent of place; they apply every- ers to raise upfront equity for development where in the country. But cities are place-spe- so as to reduce their debt commitment, and cific, and housing is the most place-specific therefore maintain affordable rent levels. As a asset there is. For this reason, provincial and result, tax credit equity accounts for the bulk local government are always much closer to the of social housing development costs in the US, granular challenges of cities, neighborhoods, ranging from 50–80% of total development and housing, and hence the entities best placed costs. Private debt (for example, bank loans) to collect housing related data in their cities. cover anywhere between 10–30% of develop- Further, given the vast extent of informal- ment costs, while public loans and grants cov- ity—in housing and in employment—it is criti- er the rest. cal to consider creative ways to collect data on In Vienna, where there is no LIHTC pro- income that is largely informal or may be un- gram, equity refers to contributions from derreported. housing associations’ own reserves, and typ- Looking Forward: Some Guiding Principles 47 BOX 4 THE HOUSING FINANCE CORPORATION (THFC) IN THE UK THFC raises funds solely for on lending to registered providers of affordable housing, and on lent to HAs on a substantially identical maturity, interest and repayment profile, ensuring best possible terms for HAs and no material mismatch risk. No currency risk is taken by the group or passed on to its borrowers. THFC has a track record of innovation including the introduction of EIB funding to the sector, some of the earliest green finance products for retrofit and sustainable developments, the hugely successful Affordable Homes Guar- antee Scheme which saw some of the lowest rates of funding ever achieved for HAs, and the establishment of bLEND to provide easy access to funding. In 2019, THFC’s Funding no.3 bond reached a £1 billion thresh- old, five years after it was launched. It remains one of the largest public bonds in UK’s social housing sector, and it is the second THFC Group bond to exceed £1 billion, after the £1.3 billion AHF bond. Source: www.thfcorp.com. ically covers only 5% of development costs. and on-lends the proceeds to HAs. It currently The bulk of development costs are covered by has some 160+ HA borrowers.67 debt—subsidized public loans from the City International Housing Solutions (IHS) is an- of Vienna65 and private bank loans66 each ac- other fund and property manager in the afford- count for 42% of total development costs. The able housing sector, in Sub-Saharan Africa. IHS remaining 11% is covered by tenant contribu- partners with real estate developers to provide tions and public grants. equity finance for affordable residential prop- erties. IHS finances the development of ener- Public funds and private capital mobilization: gy efficient, affordable housing communities. It Another way to finance social housing proj- manages three multi-investor funds, one single ects is through dedicated funds that finance investor fund, and a publicly traded REIT: developers and housing associations. Two such funds, in the UK and South Africa, are • South Africa Workforce Housing Fund described in brief below. (“SAWHF”) – IHS’ first multi-investor fund In the UK, until the 1980s, most social • IHS Fund II SA – A multi-investor fund fo- housing was built by local authorities through cused on investments in South Africa direct public subsidy or the Public Works Loan • IHS Fund II SSA – A multi-investor fund fo- Board. After a succession of reforms culminat- cused on investments in Namibia and Bo- ing in the 1988 Housing Act, housing associa- tswana tions (HAs) were able to access private finance • IHS Residential Partners – A single inves- to maintain and expand their stock of social tor fund, focused on investments in mid- housing. Over the following decades, HAs have dle-income residential properties in South grown to be sizeable and professional business- Africa es. The Housing Finance Corporation (THFC) is the UK’s leading affordable housing aggrega- 65 At 1% interest rate. tor. Set up in 1987 as a non-profit, THFC issues 66 At 2.5% interest rate. long-term bonds in the Sterling capital markets 67 www.thfcorp.com. 48 RE-VISITING SOCIAL HOUSING • Transcend Residential Property Fund – A older residential buildings, the expansion of REIT publicly traded on the AltX of the Jo- renewable energies, and the creation of bar- hannesburg Stock Exchange68 rier-free housing. For example, KfW, working in tandem with other donors, is investing €15 Investors: International institutions work with million in the construction of new homes in governments to support social housing devel- South Africa. On the one hand, this money is opment, often investing in the sector. Two such being used to finance more than 25,000 new examples—European Investment Bank (EIB) homes for the lower middle classes. Addition- and KfW Development Bank—are described in ally, technology to conserve energy and water brief below. is also being installed in 5,000 of those units. The European Investment Bank (EIB) The South African housing fund International works closely with the Committee of the Re- Housing Solutions II (IHS II), discussed earlier, gions as well as with a wide array of local is acting as a partner to KfW and the other in- and regional governments and federations of vestors on this project. IHS II brings together housing associations to promote investment the funds contributed by various donors, such in social and affordable housing as part of as KfW and the International Finance Corpora- their wider collaboration on the Urban Agen- tion (IFC), as well as South African banks and da for the EU. Social and affordable housing pension funds, and invests them in the hous- loans are a major element of EIB’s €150 billion ing construction projects. It is the first-ever Af- in urban lending over the last seven years and rican fund to specialize in financing affordable of its support for EU urban policy. EIB lends to and energy-efficient housing.70 a wide range of social and affordable housing clients, from cities and government agencies Subsidies and targeting to housing companies in the public and private sectors. The focus is on: Subsidies: Globally, rising development costs, particularly land, construction and financing • Social and affordable rental housing (mar- costs, have resulted in a slowdown in social ket-rate housing is excluded except in cas- housing development. While increased public es of strong energy performance) financial support would help address the issue • Projects aimed at improving social cohe- of rising development costs, it is a challeng- sion and the quality of life of vulnerable ing proposition in emerging economies where groups whose housing needs are not met public funds are limited. Governments often by the market.69 provide other forms of support (non-financial) to reduce development costs—such as free or Housing eligible for EIB financing includes cheap land or infrastructure for social housing all non-market or regulated accommodation and housing. That includes social housing, af- 68 https://www.ihsinvestments.co.za/. 69 Source: Social and Affordable Housing with the fordable housing, student accommodation, as EIB: Advanced Finance for a Basic Need https:// well as care homes and assisted living. www.eib.org/attachments/thematic/social_and_ KfW’s Development Bank is also promot- affordable_housing_en.pdf. 70 https://www.adfiap.org/news/members-news/ ing the construction of new energy-efficient kfw-promotes-affordable-sustainable-hous- homes, the energy-efficient refurbishment of ing-south-africa/. Looking Forward: Some Guiding Principles 49 TABLE 7 EIB’S FINANCIAL PRODUCTS IN THE HOUSING SECTOR INSTRUMENT BORROWER PURPOSE Investment Housing associations Direct loan for a specific investment project or program Loan Cities and municipal companies All investment components identified/appraised up-front Approved/regulated social and affordable housing providers Direct Housing associations Finances a three to five-year slice of an investment program Framework Cities and municipal companies Multi-scheme investment that meets defined criteria, Loan Approved/regulated social and including those not completely prepared at time of signing affordable housing providers Framework National and local promotional Facility for financing housing associations loan via an banks Relies on a good intermediary that applies financing criteria intermediary Dedicated financial organizations agreed with the EIB backed by governments Commercial banks Investment National and local promotional An umbrella framework under which different financing platforms banks products can be used within the platform, tailored to Dedicated financial organizations different sizes or types of housing project backed by governments Different sources of co-financing can be combined, including national or EU grant funding A national promotional bank can apply thematic focus to windows under the platform: e.g. focusing on energy efficient housing or housing prioritized according to specific urban or social criteria Advisory Any client URBIS is already used in Ireland and Poland, and is under discussion in Malta. It helps countries to pilot social housing programs or design innovative financing approaches to social housing Source: Social and Affordable Housing with the EIB: Advanced Finance for a Basic Need. https ://www.eib.org/attachments/thematic/social_and_affordable_housing_en.pdf. development. For example, local governments These may be up-front grants and/ or recur- in the US provide land for free or for a nominal rent tax incentives. The former are a direct, amount for social housing development under simple, and most transparent form of sub- the LIHTC program. Similarly, CLTs either get sidizing the provision of new rental housing. land donations from public or private sources, Loan guarantees and tax breaks are long-term as in the case of the Tanzania-Bondeni CLT in budgetary commitments, but are often more Kenya, and in some CODI Baan Mankong proj- manageable in terms of budgetary burden. In ects in Thailand, which help reduce overall exchange for subsidies, landlords make so- development costs. cial commitments in terms of below-market Other supply-side subsidies can help re- rents and income limits of their tenants for an duce construction costs of rental buildings agreed period of time. and/ or reduce operating costs such as prop- These subsidies impose a cost to gov- erty management and building maintenance. ernment and the taxpayer, and are why 50 RE-VISITING SOCIAL HOUSING government-funded social housing projects particular, rental) housing, where a fixed rent should be designed as rentals rather than for payment is expected, is not well suited for sale. As a general rule, therefore, it is recom- households facing extreme poverty (say, the mended that in social housing construction bottom income quintile) unless other forms of programs funded with government resourc- complementary social assistance programs or es, most of this housing be for rental use, rent subsidy are available. This is evident from and be retained under public / quasi-pub- some of the social rental housing programs lic / non-profit ownership and/ or adminis- in Eastern Europe: by targeting the poor- tration through its lifespan. This is so that est households, many social housing projects the subsidy is retained in the unit, and can have become pockets of concentrated poverty be passed on, over time, to multiple house- that are extremely difficult to administer. Fur- holds in need, rather than to a single benefi- ther, a program targeted solely to the poorest ciary household.71 households will be significantly more expen- sive per housing unit. In other words, social Targeting: The setting of eligibility criteria and rental housing at below-market rents may be prioritization of beneficiaries are political and best-suited to households that are ‘too poor’ policy issues that need to be decided by gov- for homeownership and ‘too rich’ for public ernment. Decisions about eligibility and pri- housing. These are usually households in the ority will need to be made both programmat- second and third quintiles of household in- ically (that is, via a list of attributes that either come distribution. include or exclude households, or score points While income has typically been the pri- on a priority scale) and then individually, one mary characteristic on the basis of which tar- household at a time. It is important to ensure geting is determined, it is also important to that such decisions are made in a fair, equita- factor in household characteristics such as ble and transparent manner, by an entity with household size and beneficiary age. There are public accountability, and appropriate checks experiments that aim to broaden the concept and balances in place. of social mixing to improve livability and social Deciding on which beneficiaries to tar- cohesion among resident communities. For in- get can be a difficult balancing act. On the one stance, a 500-unit social housing development hand, broadening social housing eligibility to in Amsterdam (called Starblok Riekerhaven) is include a wide swathe of the population en- home to young people aged between 18 and courages income mixing thereby decreasing 27 years, half of whom are asylum seekers and stigmatization (though this approach has been the other half are Dutch. The assumption is criticized for directing public resources away that living close to Dutch people will aid new- from those who need it most). On the other comers better integrate into the city. Similar- hand, targeting a very narrow segment of the ly, a Swedish housing company is running an population, particularly the poorest, as is the experiment wherein the residents are nearly case in many social housing programs, leads to poverty concentration and requires higher 71 That said, given the prevalence of govern- public subsidy. ment-funded housing projects for sale/ home- ownership, it is important to note that, at a very While the target group is likely to vary minimum, all real costs (of land, construction, infra- across countries, as a general rule, social (in structure etc.) be factored into the sale price. Looking Forward: Some Guiding Principles 51 evenly split between young people (under the nity-based organizations, and tenant/target age of 25) and pensioners. groups. Although the two models differ in oth- Housing associations in UK certainly also er aspects, the user-centered planning process provide ‘assisted living,’ which is housing de- has been successful in creating thriving com- signed for the elderly to live independently but munities. with some care on site. This also extends to housing for those with disabilities, as well as Location: Due to high land prices in central student housing in some cases. urban neighborhoods (especially in large cit- That said, effective targeting, however, ies), new social housing is often built in areas requires stable fiscal commitment and an ef- where land is cheaper; such land tends to be fective means-testing administration capable poorly located, far from city centers, and far of collecting and updating relevant informa- from employment opportunities, schools, and tion on a household’s financial situation (both other essential services. Further, due to lim- income and assets), and on other household ited availability of social housing, it is often characteristics. targeted to the lowest income groups, which can end up creating pockets of poverty, and Planning, regulation, and the ‘ghettoization’ of social housing. That said, sustainability building new social housing on prime land within cities is unlikely to be financially viable Planning for social housing provision along- for municipalities, unless there is sustained side citywide infrastructure such as schools, financial support by the national government health facilities, and public transportation, is or public land available for that purpose. essential from the perspective of creating inte- Socio-spatial segregation remains an ongoing grated neighborhoods. This can include the challenge, even in countries with well-devel- identification of well-connected and serviced oped social housing systems. Stigmatization land, in partnership with local government. and discrimination (on the basis of class, race, For example, in Vienna, social housing plans caste, etc.) against social housing residents are included in the City Development Plan adds another layer of complexity in address- that is revised and adopted by the City Coun- ing this challenge. cil every ten years. Amongst other rules, the Governments have used different ap- plan focuses urban development (residential proaches to address the issue of socio-spatial and other uses) along public transportation segregation, including changing regulations, corridors and green areas. Similarly, planning targeting criteria, and planning approaches. of Singapore’s social housing is based on the Mandating minimum percentages of social principles of mixed-use town planning. housing in each municipality/city, France and In order to ensure that social housing re- some states in the US aim to distribute social sponds to target segments’ needs, they should housing to reduce spatial inequality and give be included in the planning and design pro- social housing residents the opportunity to in- cess, alongside other relevant stakehold- tegrate with the rest of society and reap the ers. Social housing models in Thailand and benefits of living in good locations. Further, ex- the Netherlands include a tri-partite planning periments (primarily in Western Europe) have process, including local government, commu- shown that it is possible to broaden the mixing 52 RE-VISITING SOCIAL HOUSING criteria to include, for example, lifestyle (stu- gram targets Mexico’s well-established mort- dents) and ethnicity (status holders, migrant gage market which finances roughly 600,000 workers).72 new homes every year.73 NAMA provides finan- cial incentives to homeowners/ homebuyers Building codes and regulation: Further, as well as construction companies through a there is a need to have a regulator that points-based system to incentivize incorpora- can enforce a set of basic minimum hous- tion of energy efficiency measures. Since 2016, ing standards in social housing—pertain- 300,000 low-income homes have been built as ing to health and safety. In the UK, this role per NAMA requirements. is taken on by the Regulator for Social Hous- Further, incorporating green elements ing which oversees 4 million social housing into social housing may also open up avenues units, mostly from housing associations. And for financing from green funds. For example, yet, the system is not foolproof: the Grenfell compliance with international standards al- Tower case in 2017 where 72 people tragi- lowed Belhar Gardens, a social housing project cally lost their lives due to inappropriate clad- in Cape Town, to access South Africa’s Green ding being applied to the outside of a tower Fund.74 In this PPP model, the City of Cape block for energy efficiency purposes is a stark Town made land available for development, reminder of the need for extreme vigilance in to make rental costs more affordable. Due in housing standards and design. That said, set- part to significant utilities bill reduction, house- ting the standards unreasonably high could holds were able to save more on their utili- significantly increase costs, and make social ty bills, allowing them to buy extra food and housing unviable. The basic premise is to clothing, or save money.75,76 incorporate basic hygiene, health and safety Similarly, the Global Climate Partnership standards, while keeping costs (for construc- Fund (GCPF) provides financing to local finan- tion and O&M) viable. cial institutions who then on-lend to their de- velopers, along with free technical assistance Environmental sustainability and resilience: Where possible, provision of new housing 72 Case studies in the Netherlands including two should include some policies related to energy social housing projects—Startblok Riekerhaven in efficiency, and green construction methods Amsterdam and Majella Wonen in Utrecht. 73 https://www.conavi.gob.mx/images/documen- and materials. After all, social housing is an tos/sustentabilidad/2_NAMA_for_Sustainable_New_ opportunity for public sector to instill some of Housing_with_Technical_Annex.pdf. 74 The project was funded by the Sustainable Afford- the objectives of sustainable development in able Housing finance facility that was put in place housing production. through the collaborative efforts of Nedbank’s For instance, in 2012, Mexico’s National Affordable Housing Development Finance division, and South Africa’s Green Fund. https://www.ned- Housing Commission (CONAVI) developed the bank.co.za/content/nedbank/desktop/gt/en/news/ world’s first National Appropriate Mitigation corporate-and-investment-banking-news/press-re- leases/2017/nedbank-funding-makes-green-afford- Action (NAMA) in the housing sector. Unlike able-housing-a-reality.html. previous programs that focused on specific 75 Rusmir Music´ (2021). Building the business case technologies, Mexico’s Housing NAMA adopts a for green affordable housing, IFC. 76 BBC (2020) ‘Building a better future: green social ‘whole house approach’ that focuses on the to- housing in Cape Town’ www.bbc.com/storyworks/ tal energy performance of a building. The pro- building-a-better-future/ifc-sa. Looking Forward: Some Guiding Principles 53 and subsidized certification fees. ProCredit at a certain percentage of the family income, Bank offers interest rate reduction and tech- irrespective of the cost of the dwelling (includ- nical assistance. Reall, a UK-based affordable ing operations and maintenance, major cap- housing investor, found that although the lo- ital repairs etc.). This means that buildings cal developers intend to build green, they lack designed for social housing are a net drain a standardized approach. Offering techni- on the finances of the administrative author- cal assistance, along with preferential finance ity, which in many cases is the local govern- rates, allowed for a transition to a green port- ment. This is not only a significant disincen- folio, with commercially viable homes starting tive to develop more units; it also makes the at USD 7,500.77 basic upkeep and management of these units impossible. Density: The promotion of denser housing Hence, instead, rents should be set at a developments with smaller and higher num- level sufficient to recover all costs of the de- bers of units would help to drive down per unit velopment and day-to-day maintenance and costs. Higher density developments within the management costs. This will make such proj- city make more efficient use of existing trunk ects financially viable. Tenants in such devel- infrastructure (to offset the additional cost opments whose income is insufficient to pay of land) as well as spreading the cost of new the rent should receive a subsidy from the na- networks among a greater number of hous- tional government to make up the difference. ing units. To promote denser developments Whether the rent of such families is paid di- in underdeveloped parts of the cities, instru- rectly to the landlord, or whether it is paid to ments such as flexible and mixed-used zon- the family will depend on the local administra- ing and up-zoning or allowing greater floor- tive arrangements. area ratio (FAR) can be utilized in certain areas, Many government-led models have been especially in infill sites and areas that already unsuccessful in managing the properties have access to roads and other basic infra- over time. An essential component of suc- structure. cessful operations and maintenance (O&M) In the case of limited budgetary resources, is budgeting for regular upkeep and period- the government could also increase the volume ic capital repair costs, which should happen of social housing by purchasing—or facilitat- at the project planning stage, but often does ing the non-profit sector to purchase—low-de- not. This is what explains the poor condition mand or underutilized housing in the market of much of the social housing in some East- for renovation and use as social housing. This ern European countries, such as Hungary, will be a more gradual, but over time, could Poland, and Slovakia. lead to a more diverse stock of social housing At the same time, it may not be viable to that is better integrated within the city. cover periodic capital repairs (which are sig- nificantly higher than regular maintenance) Operations and maintenance through rental payments, and without addi- (O&M) tional government resources. Therefore, as in Current policy for social housing in many coun- 77Rusmir Music´ (2021). Building the business case tries subsidizes the rent payable, by setting it for green affordable housing, IFC. 54 RE-VISITING SOCIAL HOUSING Vienna and Singapore, the government pro- End Note vides grants for large-scale renovations, gen- erally required every 20 years. However, this This paper attempted to clarify the definition could be challenging in emerging econo- of social housing, and distinguished it from mies where government budgets are already other from of social assistance programs in strained. housing, which are often loosely termed social Another point to note is that the govern- housing. In doing that, it laid out the broad ment is not always in a good position to man- typologies of social housing versus social assis- age (social) rental housing. This task may be tance for housing, illustrating them with global better done by the non-profit sector or enti- examples, and highlighting some of the good ties that are closer to the people and better practices, challenges, and trade-offs that come understand their needs. For instance, hous- into play while designing such programs. ing associations in the US, UK, Netherlands, Overall, the paper makes the case that there and Austria, among other countries where is a vast amout of experience in social housing the non-profit-led model is prevalent, man- that can be leveraged to explore social housing age their social housing properties. Large more widely, especially in developing countries. housing associations have in-house proper- At the same time, it is important to reiterate that ty management capacity (typically as a line social housing is not—and cannot be—a stand- of business distinct from their development alone solution for the challenges facing any business), while smaller housing associations country. It needs to be seen as one element of outsource property management to special- a broader agenda that encompasses the range ized companies. of issues for the entire population distribution. ANNEXES 55 Annex 1: Definitions of social housing TABLE 8 ADDITIONAL DEFINITIONS OF SOCIAL HOUSING COUNTRY TERM1 DEFINITION Czech Municipal rental No official definition, but in practice refers to: Republic2 housing • Pre-1990 rent-regulated units in municipal housing as well as in the private rental sector (independent of the social and economic status of tenants) • Some new municipal rental flats that are subsidized by the state, let at non-profit rents, and are socially targeted to households with defined incomes and persons disadvantaged due to health, social and other reasons Egypt Social housing No official definition, but in practice refers to: • Housing (for rent or ownership) built under the Social Housing Program and affordable for low- and middle-income households France3 Housing at moderate No official definition, but in practice refers to: rent • Housing provided by HLM organizations, which are specific actors (habitations à loyer entrusted by the state to fulfill a mission of general interest modéré – HLM) Hungary4 Social housing Rental housing owned by municipal governments and allocated based on for rent (szociális social criteria bérlakás) Jordan5 Low-income or low- No official definition, but in practice refers to: cost housing • Housing for which the monthly finance cost is no more than a third to half of household income Netherlands6 Social housing No official definition but in practice refers to: (woningcorporaties) • Provision of housing at below market price to a target group of disadvantaged people or socially less advantaged groups, as well as to certain categories of key workers Poland7 Municipal housing No official definition, but refers to the following three types of housing: or non-profit TBS • Rental dwellings and social rental dwellings with regulated rents housing or State- provided by non-profit housing associations (called TBS), and dwellings owned housing8 provided by state-owned companies or the state treasury for their employees (continued on next page) 57 58 RE-VISITING SOCIAL HOUSING TABLE 8 (continued) ADDITIONAL DEFINITIONS OF SOCIAL HOUSING COUNTRY TERM1 DEFINITION • Cooperative dwellings with tenement title (as opposed to owner- occupied title) • Protected dwellings and owner-occupied housing built with state aid Portugal9 Social housing Legal concept based on 1983 legislation defining social housing as housing built and bought with the financial support of the state, through fiscal benefits and financing for acquisition of land, construction, and promotion of housing CECODHAS, Social housing is housing where the access is controlled by the existence 200810 of allocation rules favoring households that have difficulties in finding accommodation in the market11 UNECE, 201512 Social housing has no one definition, it is in essence a key word used to enable governments and interested stakeholders to exchange knowledge about the part of their housing system that is aimed to satisfy the housing need, that is supported by the state and distributed through administrative process distinct to their local contexts World Bank No official definition, and is modified based on context, but generally refers to housing for low- and underserved middle-income populations. For example: • In the National Affordable Housing Program in Indonesia, the World Bank adopts the following definition: “Affordable housing is housing units that are affordable by the section of society whose income is below the Indonesian median household income.” 13 Asian No official definition, and is modified based on context, but generally Development refers to housing for low- and underserved middle-income populations. Bank For example: • In its Shapoorji Pallonji Affordable Housing Project in India, the Asian Development Bank adopts the following definition: “Affordable housing is that where the cost of housing should not exceed 40% of a household’s gross income. Income, size of dwelling, and affordability are the three key parameters used to define affordable housing” 14 1 Rosenfeld, Orna and UN.ECE, 2015; and Pittini, Alice and Laino, Elsa, 2012. 2 Pittini and Laino, 2012. 3 Pittini and Laino, 2012. 4 Pittini and Laino, 2012. 5 https://unhabitat.org/sites/default/files/download-manager-files/JAH%20%2003%20May%202015.pdf. 6 Pittini and Laino, 2012. 7 Pittini and Laino, 2012. 8 Pittini, Alice and Laino, Elsa, 2012. 9 Pittini and Laino, 2012. 10 Now, Housing Europe. 11 Rosenfeld, Orna. (2015). Social Housing in the UNECE region: models, trends and challenges. 12 Rosenfeld, Orna. (2015). Social Housing in the UNECE region: models, trends and challenges. 13 http://documents1.worldbank.org/curated/en/121201489975262694/pdf/Indonesia-NAHP-PAD-PAD1788-P154948-02282017.pdf. 14 https://www.adb.org/sites/default/files/project-document/162043/48341-001-rrp.pdf. Annex 2: Government agencies USA: PUBLIC HOUSING Context The passage of the 1937 Wagner-Steagall Housing Act1 marked the beginning of public housing in the US, and the government’s first foray in the sector. With a goal to eradicate slums and provide decent, safe, and sanitary dwellings for low-income families, the government provided loans for low-cost housing projects across the country. After World War II, the Housing Act of 1949 expanded the public housing program and it was targeted primarily at the working class. At present, there are 1.2 million public housing units managed by 3,300 Public Housing Authorities (PHAs) across the country. 2 Key figures:3 Total population, 2019 328.24 million Urban population (% of total) 82.46% Poverty ratio at national poverty rate (% of total population) N/A GNI per capita, 2019 (USD) 65,850 Project The federal government provided funding to PHAs for the construction of public housing, initially description through the Housing Division of the Public Works Administration (PWA) when the program was initiated in 1937 and then through the Department of Housing and Urban Development (HUD) after it was set up in 1965. The goal of the program was to “build decent and safe rental housing for eligible low-income families, the elderly and persons with disabilities.”4 PHAs are responsible for the management of public housing properties. The program worked well for the first three decades, until the mid-1960s, but federal funding moratoriums, renewed targeting, and new regulations led to the deterioration and subsequent demolition of several public housing projects across the country. There has been virtually no new public housing construction since the 1970s, and existing stock is (largely) in poor shape, managed by PHAs across the country. Targeting Eligibility for public housing is based on the following criteria: • Maximum annual gross income limits • (i) Lower-income limit is 80% of the area median income (AMI), and (ii) Very Low Income limit is 50% of AMI • Qualification as elderly, person with disability, or as a family • US citizenship or eligible immigration status (continued on next page) 59 60 RE-VISITING SOCIAL HOUSING (continued) USA: PUBLIC HOUSING Subsidy To ensure affordability for tenants, who are in the low-income and very low-income categories, features public housing follows an income-based rent setting method. The Total Tenant Payment (TTP) is based on gross household income minus deductions (if applicable); this is called adjusted income. The TTP is usually the higher of 30% of adjusted income or 10% of income, with utility expenses subtracted from the monthly amount. PHAs are also required to maintain and publish flat rents for each apartment, based on size, condition, location, and age, among other factors. Tenants can choose to pay either 30% of the adjusted income or flat rent. Since 2014, Congress has mandated that flat rents be at least 80% of the Section 8 Fair Market Rent (FMR) for the area. The federal government provides funding to PHAs through Public Housing Capital Fund for capital needs, and the Public Housing Operating Fund for ongoing maintenance and repairs. FIGURE 7 LA GUARDIA HOUSES ON MANHATTAN’S LOWER EAST SIDE Source: City of New York: http://nychanow.nyc/nextgen-neighborhoods-development-at-la-guardia-houses- moves-forward/. Project When first formulated, the project was targeted at working class households and rental income sustainability streams were adequate to cover operations and maintenance (O&M) costs. Over time, however, amidst renewed targeting and segregationist policies, the tenant mix got poorer. At the same time, public housing stock started to age and with decreased rental income, it became more expensive to manage the properties and PHAs started to require federal assistance for regular O&M as well as capital repairs. Both federal funds for public housing – the Public Housing Capital Fund and the Public Housing Operating Fund – have been chronically underfunded starting with drastic cuts to the HUD budget in the 1980s (under the Reagan administration). With the government shifting its focus to other housing programs, including the Section 8/ Housing Choice Voucher (HCV) and the Low-Income Housing Tax Credit (LIHTC) programs, since the 1970s, public housing has not been a focus area. (continued on next page) ANNEX 2: GOVERNMENT AGENCIES 61 (continued) USA: PUBLIC HOUSING Since the 1990s, HUD has instituted new programs to revitalize public housing, including HOPE VI since 1992 and the Rental Assistance Demonstration (RAD) program since 2012. Both programs were designed to revitalize public housing projects by allowing PHAs to access private and public sector funds to make capital improvements to projects. Nearly 100,000 public housing units were demolished in the 1990s and 2000s as a result of the HOPE VI program. 5 Despite these efforts, there is not enough funding to maintain public housing stock. In 2011, HUD estimated that there was a budget shortfall of nearly USD 26 billion for capital repairs,6 which had ballooned to approximately USD 70 billion by 2019.7 FIGURE 8 DEMOLITION OF THE PRUITT-IGOE PUBLIC HOUSING PROJECT IN ST. LOUIS IN THE 1970S Source: US Department of Housing & Urban Development: https://www.huduser.gov/portal/pdredge/pdr_ edge_featd_article_110314.html. Key reasons for The program is widely regarded as a failure. success Limitations/ • Inferior planning and design of public housing projects from the beginning led to projects Constraints/ being built in minority neighborhoods leading to poverty concentration, and poor Lessons construction quality led to deterioration of housing stock learned/ • Inadequate and ineffective management by PHAs has led to deteriorating quality of the Scope for housing stock, with tenants facing issues ranging from water leaks and mold to lead paint and improvement rodent infestations • Consistently decreasing federal funding, and shift of government focus (and funding) to other private-sector led housing programs has effectively left public housing projects to fall into disrepair and in many instances, demolition 1 A part of the federal government’s New Deal legislation. 2 https://www.hud.gov/topics/rental_assistance/phprog. 3 https://data.worldbank.org/country/united-states. 4 https://www.hud.gov/topics/rental_assistance/phprog. 5 https://prospect.org/infrastructure/housing/public-housing-is-going-private-and-its-congress-fault-HUD/. 6 https://www.housingfinance.com/news/public-housing-faces-26-billion-in-capital-repairs_o. 7 https://nlihc.org/resource/public-housing-where-do-we-stand. Annex 3: Non- or limited-profit housing associations NETHERLANDS: SOCIAL HOUSING ASSOCIATIONS/ WONINGCORPORATIES Context The Housing Act of 1901 led to the establishment of housing associations for the purpose of developing and managing social housing in the Netherlands. The Act delineated the roles of public and private sector in the social housing sector. Initially, with the aim of stimulating private sector involvement, the central government made concessionary loans through municipalities to government-approved housing associations.1 Since its establishment in 1901, social housing in the Netherlands has evolved from a government-led sector to being private sector-led. With the passage of two acts in the mid-1990s, the Dutch social housing sector became administratively (1993) and financially (1995) independent of the central government. Most social housing was built between 1945 and 1990 (Elsinga and Wassenberg, 2007). Today, social housing units make up approximately 75% of the 3 million rental homes in the Netherlands, 2 and one-third of the total housing stock. Non- or limited-profit housing associations manage 2.4 million rental homes in the country, home to 4 million people. 3 Key figures:4 Total population, 2019 17.33 million Urban population (% of total) 91.87% Poverty ratio at national poverty rate (% of total population) 13.6% GNI per capita, 2019 (USD) 53,100 Project description Social housing in the Netherlands is a decentralized sector wherein private non-profit housing associations (HAs) and municipalities play the key roles in provision. Housing associations build, own and manage social housing stock in accordance with national and local regulations. HAs work with municipalities, tenant organizations, and other local groups to decide collective priorities and set targets for social housing. Social housing development is financed by a mix of HAs’ equity and debt raised from private banks, backed by a three-tier guarantee system. All revenues are reinvested into new construction and maintenance of existing housing stock. Housing associations allocate social housing units based on government regulations and guidelines. Households register with HAs who conduct income and other checks to verify eligibility for social housing. Households that have an urgent need might qualify for priority, depending on the rules set by the relevant municipality. Households must approach the municipality to check if they qualify for priority and if so, to get a priority declaration letter. (continued on next page) 63 64 RE-VISITING SOCIAL HOUSING (continued) NETHERLANDS: SOCIAL HOUSING ASSOCIATIONS/ WONINGCORPORATIES FIGURE 9 THE ZAANHOF SOCIAL HOUSING IN AMSTERDAM, BUILT IN 1910 Source: Author, 2020. Targeting The Netherlands is one of only three EU countries5 that have traditionally had a universalist model, i.e. targeted at a broad swathe of the population. This, in part, explains the high percentage (32%) of social housing stock in the country.6 However, social housing in the Netherlands has transitioned to a targeted model over time, as a result of country- and EU-level decisions. That said, more than half the Dutch population is eligible for social housing under current income limits (reviewed and published annually). Housing associations are required to allocate most of the units to low- and low-middle- income households. They allocate units based on joint/household income, and with the aim of social mixing, social housing stock is allocated as follows:7 ANNUAL SUPPLY OF SOCIAL RENTAL UNITS FROM HOUSING ASSOCIATIONS JOINT INCOME LIMITS (2021) Minimum 80% Up to and including €40,024 Maximum 10% More than €40,024 up to and including €44,655 Maximum 10% More than €44,655 Subsidy features On the construction/supply side, housing associations finance construction with a mix of debt and equity, and do not receive direct construction subsidies from the government (details in next section). On the demand side, since social housing is targeted at households who cannot afford housing in the private market, rents are set at affordable below-market levels. Every year, the government sets minimum and maximum rent levels – for 2021, the minimum rent level is €225 and the (initial) maximum rent is €752.33. (continued on next page) ANNEX 3: NON- OR LIMITED-PROFIT HOUSING ASSOCIATIONS 65 (continued) NETHERLANDS: SOCIAL HOUSING ASSOCIATIONS/ WONINGCORPORATIES Additionally, households might be eligible for a housing benefit (also called rent benefit) if they meet pre-determined income and rent criteria. The Tax and Customs Administration manages the rent benefit program, and the exact amount is calculated based on income and rent levels. 8 Rent increases are tied to household income, and the percentage increase (reviewed every year) depends on whether the income is lower or higher than the set income limit.9 Project Housing associations are private independent entities that are responsible for project sustainability design, finance, construction, and maintenance. Associations use a combination of equity and debt (from private banks and capital markets) to finance construction of new housing. Revenue from non-SGEI (Services of General Economic Interest) activities10 and rental income from social housing is ploughed back into new construction and maintenance of the existing portfolio. FIGURE 10 SOCIAL HOUSING IN THE BIJLMERMEER (AMSTERDAM), BUILT IN THE 1970S AND RENOVATED IN THE 1990S Source: Author, 2020. While the government does not provide direct subsidies for construction or maintenance, it is responsible for financial supervision of the sector, through the Housing Association Authority (Aw). Additionally, a three-tier guarantee system – the Aw, the Social Housing Guarantee Fund (WSW), and central and local governments – contribute to the financial stability of the sector. (continued on next page) 66 RE-VISITING SOCIAL HOUSING (continued) NETHERLANDS: SOCIAL HOUSING ASSOCIATIONS/ WONINGCORPORATIES Key reasons for • Alignment and cooperation between municipalities, housing associations and tenant success organizations: In accordance with the regulations laid out in the Housing Act, these three groups create multi-year performance agreements. These agreements are based on local discussions and cover goals/targets and a range of topics including, for instance, energy savings, and accessible living for vulnerable living and people with disabilities. • Financial oversight and government guarantees ensure financial stability of the sector: The Dutch Housing Association Authority (Aw) supervises individual housing associations as well as the sector as a whole, including reporting on the financial situation.11 Furthermore, the government’s three-tier guarantee system enables housing associations to get cheap loans, thereby supporting financial viability. Limitations/ • Poverty concentration: Increased targeting of social housing to low-income and vulnerable Constraints/ groups over the last several years has led to a concentration of low-income households Lessons learned/ in certain neighborhoods, thereby decreasing social mixing and creating pockets of Scope for concentrated poverty. improvement • Decreasing affordability for middle-income households: Lower income limits in the social housing sector (to address the needs of those on the lowest incomes), and higher rents in the private unsubsidized rental sector, are putting affordable housing out of reach for an increasing number of middle-income households in the country. • Low(er) levels of new construction: Declining (rental) income,12 higher construction costs, and landlord levies have increased operational costs for housing associations thereby slowing new construction of much-needed social housing. USA: LOW INCOME HOUSING TAX CREDIT (LIHTC) PROGRAM Context With the passage of the Tax Reform Act of 1986, the US government instituted the LIHTC program, designed to encourage the use of private equity in the development of social housing for low-income households.13 The Internal Revenue Service (IRS) runs the program, with minimal involvement from HUD. It is the most important resource for social housing production in the US today, and has provided financing for 3.23 million units between 1987 and 2018.14 On average, the LIHTC program supports the acquisition, construction, and rehabilitation of more than 100,000 housing units each year. Key figures:15 Total population, 2019 328.24 million Urban population (% of total) 82.46% Poverty ratio at national poverty rate (% of total population) N/A GNI per capita, 2019 (USD) 65,850 Project description The IRS allocates tax credits annually to state and local LIHTC-allocating agencies, which are responsible for administering the program and adapting it to the housing needs under their jurisdiction. Each year, each allocating agency publishes a Qualified Allocation Plan (QAP), which details qualification guidelines and priority areas. State and local housing agencies allocate tax credits to private developers through a competitive process (as laid out in the QAP). Developers then sell the tax credits to investors in return for upfront capital for the project; this helps lower their debt and debt service. The investor gets a dollar-for-dollar tax reduction spread over the ten years once the project is complete and rented out. Investors are attracted to the LIHTC program because it gives them an absolute reduction in taxes owed as opposed to tax incentives that reduce taxable income. (continued on next page) ANNEX 3: NON- OR LIMITED-PROFIT HOUSING ASSOCIATIONS 67 (continued) USA: LOW INCOME HOUSING TAX CREDIT (LIHTC) PROGRAM FIGURE 11 PARTNERS IN A LIHTC DEAL US DEPARTMENT OF HOUSING AND INTERNAL REVENUE SERVICE URBAN DEVELOPMENT Allocates tax credit, Submits Sets income provides tax credit off data limits and rents of investor tax forms State Housing Finance Agency Sets priorities, scores applications, allocates credits, and monitors compliance Local government Applies for LIHTC Allocates LIHTC Often reduces tax burden, provides permits, land, Infrastructure, etc. Owners or Equity Reports to developers Often investors demonstrate form LLC compliance Can be private, public. Mostly C-corporations with LIHTC Property managers or nonprofit partners who invest equity in a rules Often the owner, who usually form an property in exchange could be separate LLC for the project for tax credits service provider Syndicators LIHTCs Provides Attorneys and equity Play matchmakers other Put deal between investors and investment together tax owner or developer benefit s A ordable housing project Must meet income eligibility restrictions Residents must submit to annual income verification by owner or manager Source: Urban Institute. Targeting State and local housing agencies set qualifying criteria in the QAP, including priority groups (if any). In general, however, the program is targeted at low-income households, and projects must meet the income test to qualify: • At least 20 percent of the units are occupied by tenants with an income ≤50% AMI; or • At least 40 percent of the units are occupied by tenants with an income ≤60% AMI; or • At least 40 percent of the units are occupied by tenants with an income ≤60% AMI, and no units are occupied by tenants with income >80% AMI.16 Subsidy features On the supply side, the program subsidizes development costs by providing upfront equity to developers, thereby reducing debt obligations. However, tax credit equity is seldom enough to cover development costs, particularly in large cities where the demand for housing and construction costs are high. Federal, state, and local government soft loan and grant programs help further subsidize development costs; for example, HOME and CDBG grant funding. On the demand side, developers are required to keep the units income-restricted and rents low for 30 years after project completion. Rents are to be maintained at 30 percent of tenant household incomes; in some cases, renters are eligible for housing choice vouchers to supplement rent payments. (continued on next page) 68 RE-VISITING SOCIAL HOUSING (continued) USA: LOW INCOME HOUSING TAX CREDIT (LIHTC) PROGRAM Project Developers are responsible for renting out completed units, and managing the buildings. sustainability Day-to-day maintenance and capital repairs are paid for from the project’s cash flow, throughout the life of the project. Large developers (i.e. those with more than a few thousand units in their portfolio) typically have an in-house property management arm, while smaller developers (i.e. those with a few hundred units) typically contract with specialized property management firms. In addition to property management, several developers/owners also offer resident services to support tenants in finding employment, organizing community events, and other services. FIGURE 12 A 72-UNIT LIHTC-FUNDED DEVELOPMENT IN SAN FRANCISCO Source: https://bridgehousing.com/properties/1101-connecticut/. Key reasons for • The LIHTC program has been the longest running social housing program in the country: success Public housing and project-based Section 8 were the two largest federal programs to subsidize social housing construction, but neither ran for as long or produced as many units as the LIHTC program has. • Strong performance, ease of administration, and bipartisan support have helped the program’s durability: The program devolves responsibility from federal to state and local agencies, and requires minimum involvement from HUD. Further, it leverages private investment and is not dependent on government funding; and investors benefit from dollar-for-dollar tax deductions. Limitations/ • Units produced with LIHTC funding are not permanently affordable: The program requires Constraints/ Lessons that LIHTC-funded projects be kept income-restricted and affordable to target populations learned/ Scope for for 30 years. To extend affordability beyond the 30-year mark, additional funding is needed, improvement which often comes in the form of subsidies or more LIHTC investments. • The program is economically inefficient: The tax credit allocation and award process is lengthy and complex, as is the process of pooling capital from multiple investors. The intricate processes and professional fees associated with them can cost between 10 and 27 percent of project equity making the program economically inefficient. (continued on next page) ANNEX 3: NON- OR LIMITED-PROFIT HOUSING ASSOCIATIONS 69 (continued) USA: LOW INCOME HOUSING TAX CREDIT (LIHTC) PROGRAM • The program has led to the concentration of units in high-poverty areas: Since only the affordable units in a given project qualify for tax credits, most projects are developed with affordability restrictions on all units. Additionally, the program also prioritizes development in low-income neighborhoods classified as Qualified Census Tracts (QCTs) or Difficult Development Areas (DDAs), which leads to a clustering of LIHTC units. Finally, lower land prices in low-income neighborhoods are another reason for concentration of LIHTC units in high-poverty areas. VIENNA, AUSTRIA: LIMITED PROFIT HOUSING ASSOCIATIONS (LPHAS) Context Known globally for its success in the provision of affordable housing, Vienna’s social housing system is characterized by continuing government support, a combination of supply- and demand-side subsidies, established limited profit housing associations, and a large rent regulated private sector housing stock. Unlike other European countries and cities, the foundation for Vienna’s social housing system was laid before World War II, in the period between 1919 and 1934, also called ‘Red Vienna.’ The Social Democratic Workers’ Party launched a large-scale housing program to address the quantitative and qualitative housing deficits in the city after World War I, building roughly 65,000 units.17,18 With the same party coming to power after World War II, the government embarked on another large-scale housing program as part of a wider post- war welfare state program. Social housing in Vienna consists of stock owned and managed by the municipal government as well as limited-profit housing associations (LPHAs), and is homes to low- and middle-income households alike. While the government led the first two waves of housing development (inter- war and post-World War II), they transitioned to an LPHA-led model in the 1980s.19 In addition to social housing, regulation helps keep rents in the private sector20 low as well.21 FIGURE 13 THE KARL MARX-HOF SOCIAL HOUSING PROJECT IN THE 19TH DISTRICT IN VIENNA, BUILT 1927–30 Source: https://www.wien.info/en/sightseeing/red-vienna/museum-in-the-laundry-room. (continued on next page) 70 RE-VISITING SOCIAL HOUSING (continued) VIENNA, AUSTRIA: LIMITED PROFIT HOUSING ASSOCIATIONS (LPHAS) The City of Vienna is Austria’s biggest landlord, owning 220,000 social housing units, and has supported the development of another 200,000 units by LPHAs. Together, these 420,000 units house nearly 60 per cent of Vienna’s population. 22 Key figures (Austria):23 Total population, 2019 8.87 million Urban population (% of total) 58.5% Poverty ratio at national poverty rate (% of total population) 13.3% GNI per capita, 2019 (USD) 51,460 Project description Since the 1980s, LPHAs have developed the bulk of social housing in Vienna, supported by subsidies and fiscal incentives from the government. LPHAs are required to re-invest their profits back into social housing (akin to housing associations in the Netherlands) (Forster, 2013). LPHA housing stock is primarily targeted at middle-income households. The city buys land and stipulates conditions for the type and nature of development; then invites proposals from LPHAs who will build and manage the units. The proposals are evaluated by an interdisciplinary jury on the basis of four criteria – (i) architectural quality; (ii) environmental performance; (iii) social sustainability; and (iv) economic parameters such as rent and costs. 24 Once the developer is selected, the city sells the land to them at an affordable price, and also provides low-interest long-term loans for development. 25 In addition to government financing, another source of financing is down payment from tenants – not to exceed 12.5% of total construction costs which developers refund to tenants, with interest, when they move out (Forster, 2013). In response to rising rents and market pressures, the City of Vienna launched a new municipal housing construction program in 2015, called Municipal Housing NEW. The program aims to build 4,000 new units by 2020. 26 Additionally, an amendment to the Building Code adopted in November 2018 stipulates that all new projects that will have more 5,000 sq.m. of housing must include at least two-thirds social housing, the rents for which cannot exceed EUR 5 per sq.m. 27,28 Targeting Social housing in Vienna is known for its broad targeting, which arose from the goal to promote social mixing and create mixed communities. Under the high income limits, roughly 70–80% of the population is eligible for LPHA housing (Mundt, 2018). Social housing in Vienna can be classified into two types, based on the provider: (i) council/municipal housing which is owned and managed by the city; and (ii) subsidized housing provided by limited-profit housing associations. The former is cheaper, has lower income limits, and stricter allocation rules. Given the increasing affordability challenges, new allocations of municipal housing are more strictly targeted at vulnerable groups. Subsidized housing by LPHAs, which constitutes the bulk of new social housing, is increasingly targeted at middle-income households. LPHAs give a third of the units to the city for allocation (which follows the same allocation principles as it does for municipal housing) and the LPHA allocates the rest (a mix of rent and ownership) (Forster, 2013). (continued on next page) ANNEX 3: NON- OR LIMITED-PROFIT HOUSING ASSOCIATIONS 71 (continued) VIENNA, AUSTRIA: LIMITED PROFIT HOUSING ASSOCIATIONS (LPHAS) FIGURE 14 REUMANN-HOF SOCIAL HOUSING IN VIENNA Source: https://medium.com/la-fabrique-de-la-cit%C3%A9/affordable-housing-the-viennese- exception-50c58ccabe45. Subsidy features Austria is one of the few countries in the world where the bulk of government spending on housing continues to be supply-side/production subsidies.29 These subsidies are in the form of long-term low-interest loans for construction, with repaid loans rotated back into the sector. Rents are strictly regulated, to roughly 25% of household income in the social housing sector. Income restrictions only apply when tenants first move in; and they are not required to move out if their income increases subsequently. Rents are based on the costs of construction and financing, and do not include a profit component. Rents decrease as the building gets older and financing costs reduce over time (Mundt, 2018). Additionally, the city offers payment assistance – wohnbeihilfe (housing benefit) – to those who cannot afford rent. 30 This rent subsidy is granted for subsidized units as well as those rented on the private market; and in some cases, it is also granted to homeowners. Eligibility criteria for this housing benefit include: household size, household income, size of the flat, and housing expenditure. Project The high quality of Vienna’s social housing stock is a result of the social, economic, and sustainability environmental sustainability principles that are deeply embedded in the system. Broad targeting has helped create mixed-income communities in social housing projects. Furthermore, there is an even spatial distribution of social housing across the city, thereby preventing the creation of concentrated pockets of poverty. In LPHA properties, a component of rents are earmarked for building maintenance and periodic renovations/upgrading; this is in addition to cost-rents and increases with the age of the building. All new construction proposals are evaluated, among other things, on the economic sustainability of the project, which includes rents and cash flow. The city received special funds to refurbish and modernize the inter-war housing stock (built in the 1920s) (Mundt, 2018). Also, tenants are heavily involved in the day-to-day management of the building. (continued on next page) 72 RE-VISITING SOCIAL HOUSING (continued) VIENNA, AUSTRIA: LIMITED PROFIT HOUSING ASSOCIATIONS (LPHAS) Key reasons for • Progressive planning policy and sustainable design: Social housing is not planned or built success in isolation, but is based on the City Development Plan which includes infrastructure development plans, to ensure that social housing is integrated into wider city development and has access to the necessary infrastructure (Forster, 2013). • With the design approach centered on building neighborhoods (not just dwellings), social housing incudes commercial uses on the street level and social uses in the courtyard, including day care center, medical clinics, and libraries. 31 • Special focus on building operations and maintenance (O&M): With special funds reserved for building O&M, the social housing stock in Austria is often of better quality than private rental stock. Rents in LPHA subsidized housing stock include a component reserved for regular maintenance as well as for periodic large-scale renovations as the building ages. The refurbishment of municipal housing stock built in the 1920s was funded by targeted government subsidies. • Continued government support: With social housing being a priority for both city/state and national governments, the sector has received tremendous support for the better part of the last century. The City of Vienna invests roughly € 500 million every year for housing construction, rehabilitation, and direct financial support to low-income households. 32 Limitations/ • Supply of social housing is not adequate to meet demand: In recent years, decreasing Constraints/ incomes, rising unemployment, and an increase in vulnerable households have been Lessons learned/ the driving forces behind the higher demand for social housing. At the same time, new Scope for subsidized housing built by LPHAs is more expensive due to rising construction costs, and improvement33 is therefore less affordable for low-income and vulnerable households. • Newer housing stock targeted primarily at middle-income households: With increasing market orientation and higher land prices and costs of construction, new stock built by LPHAs is more heavily weighted towards unsubsidized housing that is not affordable for low-income or vulnerable households. SOUTH AFRICA: SOCIAL HOUSING INSTITUTIONS (SHIS) Context The provision of affordable rental and social housing is one of the four the priority areas of the Department of Human Settlements (DHS) of South Africa. Social housing is the second rung of the housing ladder in South Africa, 34 designed to serve the upper end of the low- income market and the middle-income housing market. It is a rental or cooperative housing option provided by accredited SHIs in designated ‘restructuring zones.’ These are specific urban areas identified by local authorities for targeted investment. There were 12 fully accredited SHIs as of January 2020, and 90 conditionally accredited SHIs. 35 As of 2017/18, 36 there were nearly 31,000 total social housing units in the country. The Medium Term Strategic Framework (MTSF) of 2019–2024 aims to build 30,000 additional units in this five-year period. Key figures:37 Total population, 2019 58.56 million Urban population (% of total) 66.86% Poverty ratio at national poverty rate (% of total population) 55.5% GNI per capita, 2019 (USD) 6,040 (continued on next page) ANNEX 3: NON- OR LIMITED-PROFIT HOUSING ASSOCIATIONS 73 (continued) SOUTH AFRICA: SOCIAL HOUSING INSTITUTIONS (SHIS) Project To support the delivery of social housing, the DHS provides capital subsidies to accredited description38,39 Social Housing Institutions (SHIs) and Other Delivery Agents (ODAs) to reduce construction costs and therefore the rental burden on tenants. The Social Housing Regulatory Authority (SHRA) regulates and invests in the social housing sector including managing the flow of investments into projects and accrediting SHIs. SHIs are responsible for project design, development and management. The first step is to get an endorsement from the municipal or provincial official in the given area. Then, SHIs apply to the SHRA for a grant that covers part of the development costs; SHIs cover the rest of the costs through loan financing. Households apply directly to SHIs, which allocate units after reviewing prospective tenants’ income and other documentation. FIGURE 15 AMALINDA VILLAGE PROJECT, BUILT BY SOHCO SHI IN EAST LONDON Source: SOHCO, https://www.sohco.co.za/our-complexes/east-london/. Targeting Social housing in South Africa is targeted at low- and middle-income households with a monthly income between R 1,500 and R 15,000, and who can rent social housing at no more than 33% of their income. To ensure income mixing of tenants, at least 30% of tenants in a social housing project must have a monthly household income between R 1,500 and R 5,500, and the remaining must earn between R 5,500 and R 15,000 per month. Subsidy features40 The state provides capital grant funding, called the Consolidated Capital Grant (CCG), to subsidize the cost of construction of social housing. The subsidy accounts for roughly 64% of the construction cost, based on current estimates of a total construction cost per unit of R 426,000. A mix of loan funding and equity from the SHI or ODA covers the rest of the construction costs. There are no government subsidies for rent or operations and maintenance. Rents are a percentage of household income, and are based on unit size, location, and amenities, among other criteria. SHIs cover maintenance costs with rental income. (continued on next page) 74 RE-VISITING SOCIAL HOUSING (continued) SOUTH AFRICA: SOCIAL HOUSING INSTITUTIONS (SHIS) Project In its current form, social housing provision in South Africa is not a financially sustainable sustainability model. SHIs are required to maintain below-market rent levels so they are affordable for the target segment, and use rental income for property management. However, with average rental collection of 78%, revenue is not enough to cover operational costs or generate surpluses to fund new construction. On the other hand, increasing maintenance costs makes it financially unfeasible to set very low rents. Some SHIs have diversified their operations by building market-rate housing to cross-subsidize their social housing portfolio, such as Communicare in Western Cape.41 FIGURE 16 WESTGATE GRANGE SOCIAL HOUSING IN KWAZULU-NATAL PROVINCE Source: Social Housing Regulatory Authority, https://www.shra.org.za/node/36. Additionally, the sector’s weak institutional structure has been a barrier to scaling up social housing delivery. SHRA, the regulator, was put under administration (lifted in July 2017) to stabilize its operations, recruit new leadership, and improve organizational performance. Further, limited and often inconsistent support from local governments has constrained social housing development. Key reasons for The social housing program in South Africa is small, and scale-up has been hindered due to success several reasons. However, there are some small successes: • Program mandate that projects be located in restructuring zones means that they are centrally located in cities close to job centers, schools, hospitals, and other infrastructure • In addition to housing, some SHIs provide social development programs to help improve socio-economic outcomes for tenants Limitations/ • Low capacity of new and small SHIs: The majority of the 31,000 social housing units have Constraints/ been built and managed by a handful of large, experienced SHIs. Most SHIs in the country Lessons learned/ are new, small and do not have the capacity to help the sector meet its goals. Over the last Scope for few years, SHRA has enhanced its capacity building programs to support SHIs, but there is improvement still a long way to go. (continued on next page) ANNEX 3: NON- OR LIMITED-PROFIT HOUSING ASSOCIATIONS 75 (continued) SOUTH AFRICA: SOCIAL HOUSING INSTITUTIONS (SHIS) • Sector financial sustainability over-reliant on shrinking government funding: In 2016–17, government subsidies accounted for 65% of development funding. On average, SHI equity accounts for only 3% of capital costs, and commercial lenders are reluctant to lend to the sector. Therefore, the bulk of debt financing in the sector comes from DFIs such as the National Housing Finance Corporation (NHFC) and the Gauteng Partnership Fund (GPF). • At the same time, government resources are stretched thin. For instance, in the 2014–19 MTSF period, government funding was equivalent to subsidies for roughly 17,800 units, short of the target of 27,000 units in the same five-year period.42 • Poverty concentration: With few other affordable housing options, the lowest-income and most vulnerable populations end up renting in social housing projects, leading to poverty concentration. FRANCE: HABITATION À LOYER MODÉRÉ (HLM)/ HOUSING AT MODERATED RENTS Context Like other Western European countries, social housing in France has its origins in the post- World War II era wherein a large-scale housing program was part of the government’s recovery efforts. Social housing production was at its peak for the two decades between the mid-1950s and mid-1970s, driven directly by government. From the 1970s onwards, the responsibility of construction and management of social housing was transferred to private developers and landlords (HLM organizations of today). FIGURE 17 CITY OF THE GRAND PARC, BORDEAUX Source: https://journals.openedition.org/crau/314. (continued on next page) 76 RE-VISITING SOCIAL HOUSING (continued) FRANCE: HABITATION À LOYER MODÉRÉ (HLM)/ HOUSING AT MODERATED RENTS Social housing in France comprises different types ranging from low (or very social) to intermediate (or standard) social housing. Comprised primarily of tower blocks built in large suburban estates (grands ensembles) outside cities, early social housing had a mix of tenants of different incomes. However, the combination of physical deterioration of the properties and the graduation of middle-income households to homeownership in the 1980–90s led to a higher concentration of low-income and vulnerable populations (though not exclusively) in social housing estates (Levy-Vroelant and Tutin, 2007). Today, social housing is generally perceived not as an option of choice but of necessity for those who cannot afford other options. To address these issues, the government has prioritized social mixing and implemented several urban renewal programs since the early 2000s such as the Solidarity and Urban Renewal Law of 2000 (revised in 2013), which mandates a certain minimum percentage of social housing in each municipality.43 However, these programs have had limited success and the unequal distribution of social housing across municipalities persists. There are roughly 750 HLM organizations in France, including public housing offices (OPH), private companies/social enterprises for housing (ESH),44 cooperatives (COOP’HLM),45 and semi-public companies (SEM).46 Together, they manage 4.6 million social housing units across the country, roughly 17% of the total housing units in the country, that are home to more than 12 million people.47 In addition to formal social housing, a portion of rental housing in the private market is also affordable, as a result of tax incentives given to owners who adhere to rent (and previously income too) ceilings for a pre-determined duration.48 Key figures:49 Total population, 2019 67.06 million Urban population (% of total) 80.71% Poverty ratio at national poverty rate (% of total population) 13.6% GNI per capita, 2019 (USD) 42,450 Project While HLM organizations are responsible for construction and management of social housing, description50,51,52 the State defines housing needs, decides the amount of subsidy, and approves projects. Local authorities co-finance social housing, supervise HLM organizations, and guarantee long-term loans. Over the last two decades, local authorities have increasing power and responsibilities, including setting the scope of local policies and making land available for the construction of social housing. Financing for social housing construction is a mix of grants from state and local authorities, equity from HLM organizations, and long-term low-interest loans from the Caisse des Dépôts et Consignations (CDC), a public state bank. CDC loans are funded by Livret A savings, an individual savings account that can be opened by anybody in France and the interest earnings on which are tax-free. 53 As of 2017, the ceiling for deposits in a Livret A account was € 22,950 and the interest rate was 0.75%. 54 Livret A funds constitute the majority of financing for social housing in France, amounting to € 231 billion in 2016. (continued on next page) ANNEX 3: NON- OR LIMITED-PROFIT HOUSING ASSOCIATIONS 77 (continued) FRANCE: HABITATION À LOYER MODÉRÉ (HLM)/ HOUSING AT MODERATED RENTS FIGURE 18 ATELIER DU PONT SOCIAL HOUSING IN IVRY, BUILT AS PART OF THE IVRY CONFLUENCES URBAN DEVELOPMENT ZONE Source: https://divisare.com/projects/369596-atelier-du-pont-social-housing-ivry-france. Targeting 55,56 Social housing in France is broadly targeted at all income groups, in line with the three categories of social housing: (i) high-income or Prêt Locatif Social, PLS; (ii) middle-income or Prêt Locatif à Usage Social, PLUS; and (iii) low-income or Prêt Locatif Aidé d.Intégration, PLAI. Approximately two-thirds of the population is eligible for the PLUS category housing, which constitutes nearly 90% of the total social housing stock in the country (Beaubrun- Diant and Maury, 2020). Qualification criteria, including income ceilings, are set by municipalities, and depend on type of housing (PLAI, PLUS, or PLS) and location. However, the poorest households are concentrated in social housing in disadvantaged neighborhoods whereas higher income social housing tenants live in centrally located housing projects. Subsidy features57 Supply-side subsidies for social housing include grants and low-interest loans for construction. Over the years, demand-side subsidies have increased and are intended to reduce the rent burden for households below a certain income threshold. This Aide Personalisée au Logement (APL) is given to renters in the social and private rental housing sectors, and is financed by a mix of social security funds, State budget (Ministry of Housing), and Employers Fund. Subsidies for social ownership follow similar targeting criteria as for social rental. There are two types of assistance for social homeowners: (i) the Social Home Ownership Loan (PAS) is secured by a state guarantee, which covers payment defaults; and (ii) grant for home improvement (PAH). Rents are regulated through state decree and are set on cost-basis. There are no time limits on rental contracts, but if tenants’ incomes rise beyond a fixed ceiling, rents increase accordingly (Schaefer, 2003). Project HLM organizations are responsible for operations and maintenance of projects, and it is paid sustainability for through project cash flow. (continued on next page) 78 RE-VISITING SOCIAL HOUSING (continued) FRANCE: HABITATION À LOYER MODÉRÉ (HLM)/ HOUSING AT MODERATED RENTS Key reasons for • Livret A funds have been a consistent and stable source of funding for social housing success construction: With the interest earnings being tax-free, Livret A savings accounts are an attractive investment for individuals and the French public has consistently invested in it since inception (Owen, Cady and Schijven, 2017). • Efforts to improve residential and labor mobility among social housing tenants: As part of its efforts to promote social mixing, the Paris region collects information from 24 major social housing providers to enable social housing tenants to exchange their dwellings. The goal is to give households, especially vulnerable households, access to labor markets that offer employment opportunities. Limitations/ • Degradation of big suburban social housing estates has created ghettos: A combination of Constraints/ factors has led to lower-income populations inhabiting the large suburban housing estates Lessons learned/ since the 1980s-90s, creating concentrated pockets of poverty. Although the government Scope for has launched urban renewal programs to address this issue, these have had limited success improvement thus far in promoting social mixing. • Upward drift of social housing: In recent years, new social housing development has mostly been of the PLS and PLUS type, serving middle-income households more so than low- income households. • Lack of transparency on how social housing units are allocated: The 2017 Equality and Citizenship Law aims to increase transparency on this front UK: HOUSING ASSOCIATIONS Context Social housing in the UK refers to below-market rate housing (for rent or ownership) provided by non-profit housing associations (HAs) or local councils. Social housing by local councils marked the government’s first foray into the sector (starting in 1919); they were responsible for the majority of social housing construction in the years following World War II. Since the 1970s, social housing provision has been led by non-profit HAs. 58 FIGURE 19 PARK HILL ESTATE IN SHEFFIELD, COMPLETED IN 1961 Source: https://www.independent.co.uk/arts-entertainment/photography/council-estates-design-style- history-addison-act-1919-a9024646.html. (continued on next page) ANNEX 3: NON- OR LIMITED-PROFIT HOUSING ASSOCIATIONS 79 (continued) UK: HOUSING ASSOCIATIONS The three decades after World War II were the heyday of social housing in the UK, with roughly 126,000 units built every year. Since then, however, new social housing construction has decreased dramatically, to 44,000 homes in 1983 and less than 6,500 homes in 2018–19. 59 There are several reasons for this precipitous drop including declining public investment, rising land and development costs, and the government’s focus on affordable homeownership, which have effectively reduced the stock of social rental housing. At present, social housing accounts for 17% of the total housing stock in England, 24% in Northern Ireland, 24% in Scotland, and 16% in Wales.60 Key figures:61 Total population, 2019 66.8 million Urban population (% of total) 83.65% Poverty ratio at national poverty rate (% of total population) 18.6% GNI per capita, 2019 (USD) 42,220 Project Housing associations build social housing using a combination of government grants, description62 own reserves, and private finance (including bank loans and funding raised on the capital markets). Some HAs also cross-subsidize social housing development through market-rate or affordable homeownership programs. Another major source of social housing provision has been Section 106 that mandates the inclusion of a certain percentage of affordable housing in large private developments. Although the numbers are low, the majority of new social housing construction is by HAs. Combined with the large-scale stock transfer from local councils since 1988, HAs manage 54% of all social housing. When government subsidies for social housing construction were first introduced in 1988, they accounted for more than 90% of total development costs. Since then, government funding has decreased, and subsidies account for roughly 35–50% of total development costs (Whitehead, Christine, 2007). Targeting The 1977 Housing Act obligates all municipalities to provide housing for those in need, provided they meet pre-determined objective criteria including priority categories. Social housing is targeted at vulnerable groups, with priority being given to certain categories such as the homeless. As is the case in several other countries, local authorities are permitted to develop eligibility criteria based on local market conditions, including defining priority categories (Pittini and Laino, 2012). Subsidy features Rents are determined on the basis of property value, area-based incomes, and dwelling size, and are set at lower than market rates to be affordable to the target segments. In general, social housing is rented at about 50% of the average local market rent.63 Social housing tenants are eligible for housing benefits, based on their income and household characteristics. This assistance helps pay a proportion or all of their rent, and helps reduce the payment burden. Project Decades of disinvestment (financial and regulatory) have led to an acute shortage of sustainability social housing in the UK. Every year, the sector loses thousands of units, as a result of which there are 1.5 million fewer social housing dwellings today than there were in 1980. In response to the current situation, the government has, in recent years, pledged additional support to the sector, especially in the wake of the Covid-19 pandemic. (continued on next page) 80 RE-VISITING SOCIAL HOUSING (continued) UK: HOUSING ASSOCIATIONS Key reasons for • Re-investment of HA revenue into social services: The mission of HAs is to support local success communities, including building and maintaining social and affordable homes, and providing community services. Regulations mandate that HAs reinvest all revenue into these activities. Especially in the face of shrinking public investment, this has helped maintain a steady stream of financing for new social housing development (though it is not, by itself, adequate to cover all new development costs. • The social housing sector is driven by mature mission-driven entities: With their roots in late 19th century Victorian philanthropy, HAs have grown over the last century, especially since the 1970s. The Housing Act of 1974 made HAs eligible to receive public funding to build social housing, catalyzing the first at-scale growth of the sector. Since then, HAs have been at the forefront of social housing innovation, including adapting to changing funding programs.64 Limitations/ • Decreasing government support to sector: Since the 1980s, consistently decreasing public Constraints/ investment and rising development costs have contributed to a shrinking social housing Lessons learned/ sector. The government’s Right to Buy act in the 1980s resulted in the sale of social Scope for housing (at heavy discounts) to sitting tenants, resulting in a drastic reduction of social improvement rental housing. Without government subsidy, HAs’ own funds and private debt are not adequate to build enough new social housing, resulting in a situation where demand far exceeds supply. To address this severe lack of social housing, the government has recently announced a number of programs. Such intervention is even more important in the post- pandemic scenario, but their effectiveness is yet to be seen. • Increasing spatial concentration of economic and social problems: The policy to target social housing to those in urgent/priority need has resulted in a concentration of low-income and vulnerable families in social housing estates (some more so than others). The government has instituted regeneration programs to address the issue, including Section 106, which led to mixing of tenants at different income levels. However, this program is set to end amidst a slew of recent reforms, and the alternative is as yet unclear. Moreover, while Section 106 promoted mixed incomes in new developments, (many) existing social housing estates continue to suffer from the social and economic problems arising out of poverty concentration. • Physical deterioration of older housing stock: Some of the old council housing stock has suffered from neglect and lack of investment in maintenance. Although the government has periodically emphasized the need to improve the quality of existing housing stock, funding for such programs has been limited, thereby leaving much room for improvement in a significant percentage of housing stock. In recent years, the government has prioritized the renovation and ‘greening’ of social housing, and has allocated upwards of £100 million for renovations and retrofits.65 VISEGRAD GROUP (OR VISEGRAD FOUR OR V4):66 HOMELAB PROJECT Context Like much of the rest of the Central and Eastern European Countries (CEECs), the housing market in the Visegrad Four – Czech Republic, Hungary, Poland, and Slovakia – is dominated by owner-occupied stock, upwards of 90%. Mass privatization and right-to-buy legislation passed in the 1990s enabled sitting tenants to purchase social/public housing stock at deep discounts (10–15% of market value) (Pittini and Laino, 2012). Czech Republic and Poland were the exceptions to the rule resulting in – (i) relatively larger social housing stock today (around 9–15%) compared to other CEECs; (ii) lower percentage of owner-occupied stock; and (iii) other forms of social housing, such as cooperatives, forming part of the overall housing sector. (continued on next page) ANNEX 3: NON- OR LIMITED-PROFIT HOUSING ASSOCIATIONS 81 (continued) VISEGRAD GROUP (OR VISEGRAD FOUR OR V4):49 HOMELAB PROJECT Regardless of the size of the social housing sector today, the stock is predominantly owned and managed by municipalities in all of the V4 countries, is targeted at vulnerable populations, and is generally not well maintained due to budget constraints. With little new construction of social housing and under-regulated and over-priced private rental markets, low- and low-middle income households are forced to live in overcrowded or otherwise inadequate housing.67 Precarious employment situations and low wages have fueled the difficulties of housing affordability and stability. In this context, the EU Programme for Employment and Social Innovation launched HomeLab, a three-year pilot project that ran from October 2016 through September 2019. The program’s aim was to integrate housing and employment support, two major social services, in the unstable welfare environment in the V4 countries. The pilot was implemented in the Moravian Silesian, Olomouc, and Pardubice regions (Czech Republic), Budapest and Veszprém (Hungary), Warsaw (Poland), and three micro-regions in Eastern Slovakia. The project assisted 245 households in the three-year period. FIGURE 20 HOMELAB PROJECT LOCATIONS IN SLOVAKIA Source: https://homelab.mri.hu/slovakia/. Key figures (Poland):68 Total population, 2019 37.97 million Urban population (% of total) 60.04% Poverty ratio at national poverty rate (% of total population) 15.4% GNI per capita, 2019 (USD) 15,350 (continued on next page) 82 RE-VISITING SOCIAL HOUSING (continued) VISEGRAD GROUP (OR VISEGRAD FOUR OR V4):49 HOMELAB PROJECT Project The HomeLab pilot project was rooted in the principle of innovative service design and description69,70,71 delivery, specifically the two areas of housing and employment, aligned with strategic EU goals regarding economic growth and jobs. Based on the principle that integrated housing and employment services mutually reinforce each other, the project piloted the Social Rental Enterprise (SRE) model in the V4 countries. The project objectives were two-fold: • “Establish and test the efficiency of integrated service provision in the fields of housing, employment, and social integration through the SRE model; and • In-depth evaluation of the model to see how it can perform under current market circumstances in the V4 countries.” Implementing partners (local NGOs) in each of the locations set up an SRE that managed the cases, supervised client journeys, and connected with public and private stakeholders. This support included liaising with public and private property owners willing to rent their housing units through this program, building connections with employers, working with local partners to provide social services,72 providing necessary training to tenants, and helping tenants fully integrate into new housing and jobs. FIGURE 21 HFH POLAND’S HOMELAB PROJECT STRUCTURE ® Poland Operatis • Live in poor housing conditions • Individuals and municipality • Have a difficult employment • Guaranteed regular rent situation payment and proper use of • Are migrants apartments PROJECT PARTICIPANTS APARTMENT OWNERS Providers HOUSING SUPPORT Possible thanks to Access to affordable rental housing Benefits EMPLOYMENT SERVICES Coordinated by Provided by cooperation with SOCIAL INTEGRATION SUPPORT SOCIAL RENTAL SPECIALISTS PARTNER ORGANIZATIONS Source: https://homelab.mri.hu/poland/. (continued on next page) ANNEX 3: NON- OR LIMITED-PROFIT HOUSING ASSOCIATIONS 83 (continued) VISEGRAD GROUP (OR VISEGRAD FOUR OR V4):49 HOMELAB PROJECT Housing was secured through municipal and private sector, although the former constituted the bulk of it. SREs negotiated below-market rents that would be affordable for target households. To alleviate landlords’ concerns about participating in the program, SREs provided a range of incentives, including renovation support, property management services, and guarantees. In Poland, HFH’s partner – Mzuri Property Management – provided property management know-how and promoted the project amongst landlords.73 Targeting74 The project was narrowly targeted at vulnerable and marginalized groups, including: • People at risk of homelessness • People at risk of exclusion (single parents, migrants, refugees, young people leaving foster care) • People with unmet housing needs • Families escaping domestic violence • Special emphasis on Roma population (in Czech Republic and Slovakia pilots) The reason for targeting this group was to create an adaptable and scalable solution that could break the cycle of poverty and constant danger of eviction that vulnerable households face. Subsidy features HomeLab was an entirely grant-funded pilot project, with 80% of the financing coming from the EU (roughly € 1.3 million annually), and the rest contributed by the implementing partners. The project marked the first time that most partners provided the project services, and therefore required tremendous effort to build up institutional capacity. Further, since the project was in incubation stage, cost efficiency was not measured. The EU grant covered most project activities including employment training and support and social services, while partner funding usually covered the costs of renovating housing units and/or served as a guarantee fund.75 In Poland, HFH received € 320,000 from the EU Programme for Employment and Social Innovation, and HFH contributed another 20%.76 Project Grant funding covered the expenses of the three-year pilot project, but long-term sustainability77 sustainability requires stable financial, legislative, and operational support at local and EU-levels. The position of social rental specialists is particularly critical to program longevity, since they are the main point of contact for tenants and assist them in all aspects. While funding streams for the future are as yet unclear, all implementing partners have made significant progress in building private and public sector partnerships that has helped lay the groundwork for scale-up. HFH Poland’s advocacy has led to a national call to fund similar projects and also helped initiate a legislative process at the national level to include SRE/SRAs in housing legislation.78 In Hungary, other municipalities have expressed interest in implementing this model, and in Slovakia, the regional government is supporting the established of a social employment agency and employers are willing to fund it, based on the training provided by People in Need (PIN). Additionally, HFH Poland has introduced SRE as a permanent program and in the scaling up phase, they are working on the following areas: portfolio risk management, applying for public subsidies, broadening target group, decreasing risk, and increasing guarantee fund reserves. (continued on next page) 84 RE-VISITING SOCIAL HOUSING (continued) VISEGRAD GROUP (OR VISEGRAD FOUR OR V4):49 HOMELAB PROJECT Key reasons for • Program structured to build on existing market dynamics: The integrated provision success79,80 of housing, employment, and social services to vulnerable populations has been effective (and is much needed) in a region where individual service provision has been uncoordinated. Additionally, the program taps into the potential of large stock of vacant housing81 in the pilot countries (and CEECs, in general) by offering below-market rentals to target households while also guaranteeing revenue to property owners. • Flexible project design that harnessed the strengths of different implementing partners: With the basic structure and goals of the project in place, the different NGO partners in each country tweaked the details based on local market conditions and played to their individual strengths. For instance, HFH Poland worked with the municipality (City of Warsaw) from the beginning, building on existing relationships; and PIN Slovakia developed a strong network with employers. • Knowledge exchange between partners in different countries was critical in ensuring a successful pilot: The project included periodic peer-to-peer learning opportunities throughout the three-year period. In addition to the conferences, there was regular dissemination of project progress and reporting on conferences. These knowledge transfer opportunities enabled the partners to learn from and assist each other, strengthening overall project implementation. • Expanded suite of services and increased capacity of local NGOs: All implementing partners have expanded and diversified their service portfolio, and the project managed to successfully lay the groundwork to scale up the SRE model in the pilot locations. Limitations/ • Local and national government support is essential for scale-up: While local NGOs are key Constraints/ to implementing the SRE model, owing to their work with vulnerable populations, their Lessons learned/ efforts are constrained by limited resources. In addition to funding, policy and planning Scope for support from government at local and national levels is critical to scaling up the HomeLab improvement82,83 pilot. Finally, as demonstrated through the pilot, municipal government aid in the form of social housing is an important contribution to make housing available to target groups. • Tapping into private sector housing has been challenging: The HomeLab project struggled with convincing private homeowners to participate in the program. Owners either preferred to let their units sit vacant than rent them out at below-market rents, or expressed concern about the stability of rental revenue. Another common concern related to the poor regulation of the private rental sector, which exposes owners/ landlords (and tenants) to risks. While municipal housing units filled the gap in the pilot project, scaling up the project will require large-scale participation from private homeowners as well. • Strong links with employers and assistance throughout the job search process is a critical element: As evidenced in the pilot project, program participants were at different stages in the job search process, and required different types of assistance. Implementing partners provided assistance ranging from resume writing, job leads, interview preparation, and post-job support. Going forward, in addition to such support, it will also be important to sensitize employers. • Dropping out of tenants/project participants: Due to insurmountable or previously undisclosed issues such as high indebtedness or rent arrears, participants dropped out of the project at various stages. Implementing partners addressed this by developing a careful selection process, which helped minimize the risk of participant drop out. However, as the project scales up, partners might have to adopt other measures as well to tackle the issue. (continued on next page) ANNEX 3: NON- OR LIMITED-PROFIT HOUSING ASSOCIATIONS 85 (continued) 1 There were two types of associations – (i) municipal housing organizations that provided housing for the lowest-income households; and (ii) private housing associations that provided housing for their members, usually lower-middle income households. 2 https://www.government.nl/topics/housing/rented-housing. 3 https://www.aedes.nl/algemeen/over-aedes#About. 4 https://data.worldbank.org/country/netherlands. 5 The other two being Austria and Denmark. 6 https://www.government.nl/topics/investing-in-dutch-housing/basics-dutch-housing. 7 https://www.rijksoverheid.nl/onderwerpen/huurwoning-zoeken/vraag-en-antwoord/wanneer-kom-ik-in-aanmerking-voor-een- sociale-huurwoning. 8 https://www.belastingdienst.nl/wps/wcm/connect/bldcontenten/belastingdienst/individuals/benefits/moving_to_the_ netherlands/i_live_in_a_rented_house/i_live_in_a_rented_house. 9 https://www.rijksoverheid.nl/onderwerpen/huurwoning-zoeken/vraag-en-antwoord/welke-regels-gelden-er-voor-een- huurverhoging. 10 Housing associations are permitted to undertake non-SGEI activities subject to certain conditions, including a connection to their core task which is the provision of social housing. More information available at: https://www.woningmarktbeleid.nl/ onderwerpen/niet-daeb. 11 https://www.ilent.nl/onderwerpen/themas/autoriteit-woningcorporaties. 12 https://www.ilent.nl/actueel/nieuws/2020/01/31/woningcorporaties-maken-korte-termijnplannen-weer-niet-waar. 13 Housing produced through the LIHTC program is referred to as ‘affordable housing,’ but in keeping with the definitions we are using in this report, we refer to it as ‘social housing’. 14 https://www.huduser.gov/portal/datasets/lihtc.html. 15 https://data.worldbank.org/country/united-states. 16 https://www.taxpolicycenter.org/briefing-book/what-low-income-housing-tax-credit-and-how-does-it-work. 17 “Municipal Housing in Vienna. History, facts & figures.” Available at: https://www.wienerwohnen.at/wiener-gemeindebau/ municipal-housing-in-vienna.html. 18 The government instituted an aggressive tax regime, including taxing luxury goods and services and private property, to pay for this social housing building boom. 19 https://www.huduser.gov/portal/pdredge/pdr_edge_featd_article_011314.html. 20 For units built before 1945; in 2017, rents per sq.m. were as follows: Municipal housing: €6.30; LPHA housing: €6.60; private sector: €8.60. Source: Mundt, 2018. 21 https://citymonitor.ai/housing/red-vienna-how-austrias-capital-earned-its-place-in-housing-history. 22 https://www.wienerwohnen.at/wiener-gemeindebau/municipal-housing-in-vienna.html. 23 https://data.worldbank.org/country/austria. 24 Housing in Vienna, Annual report 2018-19. 25 https://www.huduser.gov/portal/pdredge/pdr_edge_featd_article_011314.html. 26 Housing in Vienna, Annual report 2018-19. 27 https://www.equaltimes.org/can-vienna-s-model-of-social?lang=en#.YDYtcelKiSM. 28 Housing in Vienna, Annual report 2018-19. 29 Unlike most countries where spending on housing mainly focuses on demand-side/housing benefits or indirect, tax-based support. 30 https://www.wien.gv.at/english/living-working/housing/grants-funding.html. 31 https://citymonitor.ai/housing/red-vienna-how-austrias-capital-earned-its-place-in-housing-history. 32 https://www.wienerwohnen.at/wiener-gemeindebau/municipal-housing-in-vienna.html. 33 Mundt, 2018. 34 The first rung is a fully subsidized 40 sq.m. home available to households earning less than R 3,500 per month, under the government’s housing program. 35 https://www.shra.org.za/node/80. 36 SHRA – State of the Social Housing Sector Report 2017, available at: https://shra.org.za/sites/default/files/SHRA_State%20 Sector%20Report_Final_OL.pdf. 37 https://data.worldbank.org/country/south-africa. 38 https://www.gov.za/about-sa/humansettlements#. 39 https://shra.org.za/node/9. 40 https://www.shra.org.za/node/74. 41 https://communicare.co.za/. 42 SHRA – State of the Social Housing Sector Report 2017, available at: https://shra.org.za/sites/default/files/SHRA_State%20 Sector%20Report_Final_OL.pdf. 43 http://www.cohesion-territoires.gouv.fr/loi-solidarite-et-renouvellement-urbain-sru. 44 Public offices (OPH) and social enterprises (ESH) are the biggest HLM organizations in terms of the number of units they own and manage. 45 Cooperatives deal primarily with social home ownership. 46 https://www.union-habitat.org/l-union-sociale-pour-l-habitat/annuaire-des-organismes-hlm. 47 https://www.parishabitat.fr/Pages/Anglais-About-us.aspx. (continued on next page) RE-VISITING SOCIAL HOUSING (continued) 48 Schaefer, 2003 and Taffin, 2020. 49 https://data.worldbank.org/country/france. 50 Schaefer, 2003. 51 Levy-Vroelant and Tutin, 2007. 52 Owen, Cady and Schijven, 2017. 53 The Livret A savings program was started in France in 1818 to finance public infrastructure and since 1945, has been used to finance social housing construction as well. 54 The Ministry of Economy sets the ceiling and interest rates based on overall economic indicators. 55 Levy-Vroelant and Tutin, 2007. 56 Schaefer, 2003. 57 Schaefer, 2003. 58 The passage of a new Housing Act in 1974 made significant public funding available to HAs for social housing development. In the late 1980s, the transfer of social housing stock from local councils to HAs through Large-Scale Voluntary Transfer (LSVT) agreements and the freedom to raise private debt increased HAs portfolios. Available at: https://www.housing.org.uk/about- housing-associations/the-history-of-housing-associations/. 59 https://england.shelter.org.uk/support_us/campaigns/story_of_social_housing. 60 The State of Housing in Europe 2021, Housing Europe. 61 https://data.worldbank.org/country/GB. 62 Pittini and Laino, 2012. 63 https://www.housing.org.uk/about-housing-associations/what-housing-associations-do/. 64 https://www.housing.org.uk/about-housing-associations/the-history-of-housing-associations/. 65 The State of Housing in Europe 2021, Housing Europe. 66 Includes four Central European countries, namely Czech Republic, Hungary, Poland, and Slovakia. 67 HomeLab – ‘Integrated Housing and Labour Services in the Social Rental Enterprise Model’: Final Report. 68 https://data.worldbank.org/country/poland. 69 https://homelab.mri.hu/. 70 Owen, Cady and Schijven, 2017. 71 HomeLab – ‘Integrated Housing and Labour Services in the Social Rental Enterprise Model’: Final Report. 72 For instance, HomeLab’s implementing partner, Habitat for Humanity Poland partnered with Caritas of Warsaw, The Open Door Association, Association for Legal Intervention, Salvation Army Social Welfare for the Wola District, Monar Associations in Wyszków and „Spoza” Society. 73 https://issuu.com/mri_budapest/docs/homelab_-_warsaw_workshop_habitat. 74 https://homelab.mri.hu/poland/. 75 HomeLab – ‘Integrated Housing and Labour Services in the Social Rental Enterprise Model’: Final Report. 76 A Window of Opportunity: First Experience of a Social Rental Agency in Warsaw. 77 HomeLab – ‘Integrated Housing and Labour Services in the Social Rental Enterprise Model’: Final Report. 78 The government formally approved the draft bill in March 2021, and it will now proceed to the Polish parliament for approval. 79 HomeLab: Project closure and Final conference document. 80 HomeLab – ‘Integrated Housing and Labour Services in the Social Rental Enterprise Model’: Final Report. 81 In Hungary, vacant housing stock is 11% of the total housing stock. 82 HomeLab: Project closure and Final conference document. 83 HomeLab – ‘Integrated Housing and Labour Services in the Social Rental Enterprise Model’: Final Report. 86 Annex 4: Community land trusts USA: COMMUNITY LAND TRUSTS (CLTS) Context Inspired by the US civil rights movement of the 1960s, the community land trust (CLT) movement advocates for collective land ownership and a change in established property rights systems.1 CLTs are “non-profit, community-based organizations designed to ensure community stewardship of land.” 2 CLTs are governed by a board of directors comprised of CLT members, community/neighborhood residents, and local government representatives. CLTs can be used for different types of development, including commercial and agriculture, but are primarily used to preserve long-term housing affordability or to prevent displacement of lower-income households in gentrifying neighborhoods. Since its establishment in the 1960s, the movement has grown to include more than 200 CLTs in the US, improving housing outcomes for a growing number of households, based on the shared equity homeownership principle. Key figures:3 Total population, 2019 328.24 million Urban population (% of total) 82.46% Poverty ratio at national poverty rate (% of total population) N/A GNI per capita, 2019 (USD) 65,850 Project description The CLT model is based on the premise of maintaining housing affordability for low- and moderate-income households in perpetuity. To achieve this, CLTs sell the house to the buyer, but not the land; instead, the homebuyer enters into a long-term renewable ground lease (typically 99 years) for the land, which is permanently owned and maintained by the CLT.4 Removing the speculative aspect of home purchases from the equation, the purchase price is more affordable since the buyer is only paying for the house. The homeowner pays a monthly (or annual) fee to the CLT for the land lease. Additionally, when a homeowner sells, s/he is bound by CLT rules regarding sale price. 5 The resale price is based on a formula whose aim is to balance the homeowner’s interest of reaping benefits from their investment and the CLT’s interest in maintaining affordability for future buyers. The seller typically gets 25–30% of the increase in the value of the home,6 while the CLT retains the rest in the property. Homeowners have exclusive use of the property, the right to privacy, and the right to bequeath the property and lease. The CLT has the right to purchase the house when the homeowner wants to sell. Since the CLT is the landowner and has a stake even after the house is sold, it can force homeowners to make repairs if the building is dilapidated or step in if there is risk of default. (continued on next page) 87 88 RE-VISITING SOCIAL HOUSING (continued) USA: COMMUNITY LAND TRUSTS (CLTS) CLTs raise money from a mix of public and private sources, including equity, debt, and grants, for housing development and CLT operations. Federal Community Development Block Grant (CDBG) and HOME grants are the biggest source of funding. CLTs that build rental housing are also eligible for Low-Income Housing Tax Credit (LIHTC) and Historic Tax Credit (HTC) funding. State and municipal governments offer additional resources that could include grant funding and land at no cost or below-market prices. When mandated by local governments, private developers provide support in the form of land or development fees. Private financial institutions and foundations also fund CLT activities, as do individual donors.7 Finally, some organizations such as the Institute for Community Economics, part of National Housing Trust (NHT), provide – (i) acquisition loans to help CLTs expand, and (ii) foreclosure prevention loans to help CLTs stabilize troubled properties on their land. 8 There is a wide variety in housing typologies, including single-family homes, townhomes as well as multi-family buildings. FIGURE 22 HOW COMMUNITY LAND TRUSTS (CLTS) WORK How does a Various sources of public ...are used by community ...to acquire homes in a community and philanthropic capital... land trusts... geographic focus area. land trust work? • Private donors • Federal housing subsidies • City-owned properties • Community foundations • Anchor institutions Why CLTs Matter Community A new resident They pay an annual fee Although the first community land land trusts buys their house to the CLT to support trust in the US was started in rural tweak the outright... its operations... Georgia in 1970 by civil rights leaders normal process to help poor black farmers, today, the of majority of the country’s nearly 250 homebuying... community land trusts are located in urban areas. CLTs create affordable housing while still allowing low-income residents to build equity as homeowners. ...and the CLT retains Moreover, because the CLT retains permanent ownership ownership of the underlying land, this ...but leases the land of the land. housing remains permanently underneath from the affordable, even as the original CLT. beneficiaries of an affordable home price sell and move on. This ...to make A new resident buys long-term, continuing benefit makes the CLTs an especially efficient use of housing house at a price that's affordable housing subsidies. permanently been kept affordable... a ordable. Current resident sells their By locking in permanent access to affordable housing, CLTs can play an house at a price set by the important role in countering the CLT, earning a portion of the market-driven displacement increase In value of their associated with gentrification. And by home... stewarding neighborhood land for the public good, not speculative ...and agrees to the profit, CLTs have played an equally same requirements important role in stabilizing around resale. communities by preventing ...while the CLT unnecessary foreclosures. retains the land. The CLT’s geographic focus allows it to not only provide affordable housing, but to play an important role in stabilizing CLTs are typically governed by: neighborhoods. 1 3 CLT residents 1 3 Other community residents 1 3 As it diversifies its portfolio, the Experts and stakeholders CLT can also own land in trust for permanently affordable rental housing or community-focused commercial developments. Source: https://democracycollaborative.org/learn/blogpost/infographic-community-land-trusts. (continued on next page) ANNEX 4: COMMUNITY LAND TRUSTS 89 (continued) USA: COMMUNITY LAND TRUSTS (CLTS) Targeting CLT priorities range from permanent affordability to asset building, and working in gentrifying neighborhoods to foreclosure-riddled areas.9 CLTs generally target low- and moderate-income households who are unable to purchase market-rate housing. However, each CLT draws up its own specific eligibility criteria, such as income limits based on household size, ability to fund closing costs, and value of other assets, among others. Some CLTs, such as those in Europe, focus on special needs populations, eg: the elderly, those with mental health issues, etc.10 Households must meet income and other eligibility criteria only at the time of purchase; CLT homeowners can stay as long as they please. Homeowners can also bequeath the house and the inheritors do not have to meet eligibility criteria; however, resale restrictions still apply.11 Subsidy features On the supply side, public and private grants help subsidize construction costs for CLTs. On the demand side, affordable home prices are maintained by – (i) removing the land price from the equation, and having buyers only pay for the house; and (ii) limiting the resale price to (generally) 25–30% higher than the original sale price. Additionally, some CLTs provide financial support for down payment. Project Most grant funding for CLTs is earmarked for land acquisition and housing development, sustainability not operations and maintenance (O&M). Therefore, CLTs must use land lease fees for maintenance purposes. At the same time, land lease fees must be kept low (typically $25–50) to ensure it is affordable for homeowners. In most cases, the fees so generated is not enough to cover O&M costs; only the large CLTs that have a few hundred/thousand units are able to cover O&M costs through ground lease fees. However, most CLTs in the US are small (with less than 100 units) and struggle to make ends meet. Increasing development costs and high competition for limited grant funding has forced CLTs to become highly professionalized affordable housing organizations. In the process, the original focus on grassroots community organizing often takes a backseat. To address this, some CLTs are partnering with housing cooperatives and mutual housing associations (MHAs) wherein the former focuses on community-led development and the latter on construction and property management. Key reasons for • Enable homeownership for households that do not have other opportunities to enter the success market: The separation of land and home ownership enables CLTs to sell homes at below- market prices, thereby making them affordable for the target segment that is priced out of the open market. Further, the limits on resale price and CLTs’ stewardship of the land ensure that homes remain affordable and prevent the displacement of homeowners due to gentrification pressures. Finally, it also gives homeowners an opportunity to reap the benefits of built-up equity that in turn enables them to graduate to the open homeownership market when they are ready to do so. • The CLT model, along with community engagement and tailored mortgage products, keeps foreclosure rates low: The land trust model is structured such that the CLT remains a party to the deal, responsible for ensuring the structural integrity of buildings and the security of occupants. Moreover, the ground lease permits the CLT to step in in case of default, thereby forestalling foreclosure. Since homeowners are not over extended (due to the affordable home prices), they are protected in times of market downturns. For example, when the nationwide foreclosure rate for mortgages in 2010 was 4.63%, that for CLT homeowners was a mere 0.046%, a tenth of the national foreclosure rate.12 (continued on next page) 90 RE-VISITING SOCIAL HOUSING (continued) USA: COMMUNITY LAND TRUSTS (CLTS) FIGURE 23 BRIGHT STREET CO-OP IN BURLINGTON, VT BY CHAMPLAIN HOUSING TRUST Source: https://www.getahome.org/listings/37-bright-street-2/. Limitations/ • Low ground lease fees and limited grant funding make it difficult to sustain operational Constraints/ costs: With monthly ground lease fees typically between USD 25–50, and a few hundred Lessons learned/ units (if that), CLTs are unable to cover operations and maintenance (O&M) costs. There Scope for is intense competition for limited grant funding, thereby forcing CLTs to become highly improvement professionalized, similar to other affordable housing organizations. In several instances, this has led to mission drift, diluting the community-led aspect of the CLT model. Some CLTs have started to partner with housing cooperatives to address this.13 • Fostering and maintaining community involvement is not easy: Despite its democratic tri-partite governance structure, sustained grassroots participation and community engagement is not a given. In several cases, homeowners are not active in the community once they have purchased a home.14 • Limited funding for land acquisition: Most public funds for CLTs are in the form of repayable loans, so they cannot be used to fund land acquisition (which requires a permanent subsidy that stays in the project). Therefore, funds for land acquisition typically come in the form of grants from private foundations. However, although foundations are interested in funding CLTs when they’re a novel idea, they move on to something else soon after. This forces CLTs to keep looking for alternative funding sources without any reliable source.15 (continued on next page) ANNEX 4: COMMUNITY LAND TRUSTS 91 (continued) 1 “Urban Community Land Trust in Europe: Towards a Transnational Movement,” SHICC, October 2020. Available at: https://www. nweurope.eu/projects/project-search/shicc-sustainable-housing-for-inclusive-and-cohesive-cities/resources/european-clt-guide- towards-a-transnational-movement/. 2 https://community-wealth.org/strategies/panel/clts/index.html. 3 https://data.worldbank.org/country/united-states. 4 https://groundedsolutions.org/strengthening-neighborhoods/community-land-trusts. 5 Each CLT sets its own formula and conditions regarding sale price. 6 https://shelterforce.org/2019/08/30/are-we-diluting-the-mission-of-community-land-trusts/. 7 https://www.burlingtonassociates.com/files/2813/4523/7678/Chapter_7_-_Funding.pdf. 8 https://www.nationalhousingtrust.org/community-land-trust-lending. 9 “Investing in Community Land Trusts: A Conversation with Funders of CLTs,” by Miriam Axel-Lute. Available at: https://98pg5li6v8-flywheel.netdna-ssl.com/wp-content/uploads/2010/12/Investing_in_CLTs_2010_final-1.pdf. 10 “Towards stronger EU support for Community Land Trusts,” SHICC, December 2020. Available at: https://www.nweurope.eu/ projects/project-search/shicc-sustainable-housing-for-inclusive-and-cohesive-cities/resources/european-clt-policy-paper/. 11 https://www.burlingtonassociates.com/files/4813/4461/1844/6-Community_Land_Trusts_-_The_Developer_That_Doesnt_Go_ Away.pdf. 12 “Community Land Trusts: An Overview,” Burlington Associates, LLC. 13 https://shelterforce.org/2019/08/30/are-we-diluting-the-mission-of-community-land-trusts/. 14 https://shelterforce.org/2019/08/30/are-we-diluting-the-mission-of-community-land-trusts. 15 https://www.burlingtonassociates.com/files/2813/4523/7678/Chapter_7_-_Funding.pdf. Annex 5: Government-led housing production (supply-side) SINGAPORE: PUBLIC HOUSING/ HOUSING DEVELOPMENT BOARD (HDB) HOUSING Context Social housing in Singapore is synonymous with HDB housing. The Housing Development Board (HDB) is an instrumentality of the Ministry of National Development. Public housing in Singapore is entirely funded, developed and managed by the government, through HDB. HDB was formed in 1960 when Singapore got self-governance, and has built the bulk of the nearly 1 million public housing units in Singapore today. One of the key objectives of public housing in Singapore has been to give Singaporeans an asset that can appreciate in value over time. Key figures:1 Total population, 2019 5.7 million Urban population (% of total) 100% Poverty ratio at national poverty rate (% of total population) N/A GNI per capita, 2019 (USD) 59,590 Project description HDB’s public housing program started off as rental housing but quickly pivoted to ownership by 19642 to align with the government’s ideologies of nation building and to enhance social cohesion among Singaporeans. HDB acquires land from the Singapore Land Authority (SLA), typically on a 99-year lease term. The planning process for HDB estates includes connecting the planned development to the public transportation network, and the planning of neighborhoods and precincts within an estate that includes commercial, recreational, education, health and other amenities. Eligible citizens buy units directly from HDB and are bound to the Minimum Occupation Period (MOP) before they can sell the units in the open market. 3 At present, HDB follows a Build-to-Order (BTO) model; it is a demand-led system wherein HDB does not start construction until 65–70% of the units have been sold. This is to avoid over-supply as was the case in the late 1990s. The waiting period for a BTO flat is roughly four years. For those who cannot wait, some units are available through the resale mechanism as well. More than 80% of the population (mainly Singaporeans but some permanent residents as well) lives in HDB flats, with 90% of them owning the flats.4 (continued on next page) 93 94 RE-VISITING SOCIAL HOUSING (continued) SINGAPORE: PUBLIC HOUSING/ HOUSING DEVELOPMENT BOARD (HDB) HOUSING FIGURE 24 HDB HOUSING AT MARINE PARADE BUILT IN THE 1970S Source: Housing & Development Board, Singapore: https://www.hdb.gov.sg/about-us/history/hdb- towns-your-home/marine-parade. Targeting Initially, HDB targeted only low-income households, but soon expanded to targeting middle- income households as well. Over time, HDB has also included developments for high-income households. Regardless of the income group, all HDB flats are cheaper than those in the private market. Subsidy features HDB calculates sale prices of its units on a cost-based model, i.e. based on the total of land, construction, financing, and soft costs. HDB sells flats at below development costs to maintain affordability for end users; land costs are not factored into the sale prices of HDB housing. However, the exact formula for how HDB calculates sale prices is not available in the public domain. In addition to a discounted sale price, buyers can also access demand-side subsidies such as – (i) the Special Central Provident Fund (CPF) housing grants for low- and middle-income Singaporeans, and (ii) the Step-up CPF housing grant. These grants are made on the basis of a progressive subsidy schedule wherein the grant amount decreases with higher incomes. All eligible CPF members can use their CPF savings for purchasing an HDB property, either for the down payment or for ongoing monthly repayments. Project Town Councils are responsible for the maintenance of common areas in HDB’s for-sale sustainability properties; however, HDB is responsible for maintenance of its rental properties. HDB oversees renovation works for all its properties, including those carried out inside the units by homeowners, to ensure structural integrity of the work and property is maintained. (continued on next page) ANNEX 5: GOVERNMENT-LED HOUSING PRODUCTION (SUPPLY-SIDE) 95 (continued) SINGAPORE: PUBLIC HOUSING/ HOUSING DEVELOPMENT BOARD (HDB) HOUSING FIGURE 25 THE PINNACLE@DUXTON, A PUBLIC HOUSING PROJECT BUILT IN THE 2000S Source: Housing & Development Board, Singapore: https://www.hdb.gov.sg/cs/infoweb/about-us/ news-and-publications/press-releases/hdb-projects-voted-among-singapore. (continued on next page) 96 RE-VISITING SOCIAL HOUSING (continued) SINGAPORE: PUBLIC HOUSING/ HOUSING DEVELOPMENT BOARD (HDB) HOUSING Key reasons for • Strong government support (political, financial, legislative, and regulatory): Linking good success housing to the national ideology, in 1960, the People’s Action Party (PAP) campaigned on a platform to solve the severe housing shortage in the country. Since then, the PAP has stayed in power and continued to provide support to housing development, including the Land Acquisition Act of 1966 that enabled HDB to acquire land from the state for public purposes. • Integrated planning and design approach: HDB estates are designed to not only provide access to a house, but also to good living conditions and to promote social and communal interactions among residents. These principles are reflected in estate-, building- and unit- level design interventions, such as: • Town planning approach to ensure that HDB estates include commercial areas, schools, public transit, recreational areas such as parks and food courts, health care, and other amenities • In addition to public parks in the estates, each block (i.e. building) has “void decks,” i.e. empty spaces that can be used for communal activities and foster community interaction • Variety of unit types and layouts to cater to different income and affordability levels • Maintenance and upgrading programs: HDB’s maintenance and upgrading programs complement its planning and design approach. Recognizing that regular maintenance and timely capital repairs are critical to prevent its estates from deteriorating, it has instituted large-scale programs at regular intervals since the 1970s. Limitations/ • Increasing prices of resale flats over the years Constraints/ • In recent years, questions have been raised about what would happen at the end of the Lessons learned/ lease period when land is to be handed back to the SLA. Does a homeowner lose their Scope for asset or will there be an opportunity to recoup the value?5 improvement TURKEY: MASS HOUSING, TOKI Context Government-led mass housing delivery in Turkey started in 2003 after the government passed the ‘Emergency Action Plan for Housing and Urban Development.’ Originally established in 1984, the powers and duties of the Housing Development Administration (TOKI) were expanded to include land and housing development, jurisdiction over public land, urban planning, financing for housing construction, and urban infrastructure development, among others.6 A subsidiary of the Prime Ministry, TOKI is attached to the Ministry of Environment and Urbanization.7 Key figures:8 Total population, 2019 83.43 million Urban population (% of total) 75.63% Poverty ratio at national poverty rate (% of total population) 14.4% GNI per capita, 2019 (USD) 9,690 Project description TOKI is tasked with building housing for low- and middle-income households that cannot afford housing on the private market. TOKI follows a demand-based production model in that it constructs housing only if there is sufficient demand, as ascertained by the ‘pre- demand collection method’ organized by Governorships, District Governorships, or Municipalities. (continued on next page) ANNEX 5: GOVERNMENT-LED HOUSING PRODUCTION (SUPPLY-SIDE) 97 (continued) TURKEY: MASS HOUSING, TOKI Focusing solely on home ownership, TOKI sets sales prices and loan terms based on the income of target groups (more details in ‘Subsidy features’ section below). Beneficiaries make a down payment at the beginning of the construction period and make monthly repayments through the loan term (ranging from 8–20 years), at the end of which they receive property title. Sales prices are derived based on development costs (including land, construction, financing, and soft costs) but are determined without a profit motive, to ensure affordability for target groups. FIGURE 26 TOKI SOCIAL HOUSING IN KOCAELI PROVINCE Source: TOKI Corporate Profile 2019: http://i.toki.gov.tr/content/entities/main-page- slider/20191011095737969524-pdf.pdf. Targeting Low- and middle-income housing is targeted at households in the 20–40% income group who do not own housing elsewhere. The net monthly household income ceiling for low- income households is set at 5,500 TL (6,000 TL for low-income households in Istanbul). In social housing, disadvantaged groups are given priority including the disabled, martyr families, retirees, widows, and orphans. For housing sale lotteries: • 10% of the dwellings are reserved for martyr families, war and duty individuals, and widows and orphans • 5% of the dwellings are set aside for citizens with disabilities of at least 40% • 25% of the dwellings are offered to retired citizens Subsidy features Subsidy features in TOKI’s low-income and social housing programs differ by target group and include measures to – (i) reduce the sale price of homes, and (ii) to reduce the loan repayment burden as well. (continued on next page) 98 RE-VISITING SOCIAL HOUSING (continued) TURKEY: MASS HOUSING, TOKI • For social housing projects, the sale price of units does not include land costs • For low-income households, the down payment is 12% and the loan term is 15 years (compared to 10–25% and 8–10 years respectively for middle-income households) • TOKI offers interest-free housing loans to families of martyrs and terror and duty casualties, as well as to widows and orphans Project Households are responsible for maintenance of units after they move in. It is unclear if TOKI sustainability provides funding for capital repairs or if its responsibilities extend to property maintenance. Key reasons for • Large-scale housing production: The aggregation of powers and duties into one central success body has enabled TOKI to consistently achieve its housing delivery targets since 2003, which had reached nearly 850,000 units as of September 2019. • Revenue-sharing model: TOKI enters into public-private partnerships (PPPs) with private developers to build housing for high-income groups on TOKI-owned land. The resulting sales proceeds are shared between TOKI and the private stakeholder, and are used to establish a fund for TOKI’s low- and middle-income housing programs. Limitations/ • Financial viability of TOKI’s housing programs cannot be ascertained: Land and construction Constraints/ costs for TOKI’s housing programs is not publicly available information making it difficult to Lessons learned/ quantify the amount of subsidy or the financial viability of the program. Scope for • Quality at the expense of quantity: In an effort to meet the acute housing demand, TOKI has improvement successfully deployed construction technology to deliver housing at scale over the last 17 years. However, in doing so, there has been little thought to the planning and design of the buildings or their surrounds. Housing towers dotting Turkish cities are considered an eyesore and have been criticized as “spoiling” the skylines of cities by President Erdogan himself.9 • To correct this, in announcing its 2023 vision to build 100,000 social housing units, the government announced its intention to combine project development with an urban transformation approach which will include a focus on building traditional neighborhood culture and low-rise building (maximum four stories) to achieve “horizontal urbanization” • Majority of housing development has been targeted at the higher end of the income segment: TOKI mass housing projects have mostly served middle- and high-income groups, missing their target of serving low-income households. BRAZIL: MINHA CASA, MINHA VIDA (MCMV)10 Context The MCMV program, which ran from 2009–2016, was the Brazilian government’s largest social housing program. The three decades prior to this program were marked by increasing decentralization and devolution of responsibilities from national to local governments. However, in the face of limited technical and financial resources, local governments were ineffective in responding to the housing demand that arose primarily from increasing rural- urban migration in this period. The creation of the Ministry of Cities in 2003 marked a turning point in the evolution of the country’s housing sector. The MCMV program was instituted in 2009, as part of the government’s push to drive economic growth and upgrade infrastructure,11 funded through the Growth Acceleration Program (Programa de Aceleração do Crescimento – PAC). In 2007, Brazil’s housing deficit was estimated at 6.2 million homes, of which nearly 83% was in urban areas.12 Key figures:13 Total population, 2019 211.05 million Urban population (% of total) 86.82% Poverty ratio at national poverty rate (% of total population) N/A GNI per capita, 2019 (USD) 9,130 (continued on next page) ANNEX 5: GOVERNMENT-LED HOUSING PRODUCTION (SUPPLY-SIDE) 99 (continued) BRAZIL: MINHA CASA, MINHA VIDA (MCMV) Project description To address the housing backlog and generate employment opportunities in Brazil, the MCMV program was launched in 2009 with a federal investment package of BRL 34 billion (USD 18.4 billion) aiming to build one million units in urban and rural areas. The second phase (2011–2014) aimed to build 2 million units with a federal investment of BRL 125.7 billion (USD 67.2 billion).14 In urban areas, the modality consisted of construction or acquisition of new housing for families earning up to 10 minimum wages per month; in rural areas, the program supported construction, acquisition and refurbishment of housing units for families with a monthly income up to BRL 5,000 (USD 2,704). FIGURE 27 TARONI CONDOMINIUM IN RIO DE JANEIRO Source: UN-Habitat, https://unhabitat.org/scaling-up-affordable-housing-supply-in-brazil. (continued on next page) 100 RE-VISITING SOCIAL HOUSING (continued) BRAZIL: MINHA CASA, MINHA VIDA (MCMV) CAIXA, the government-owned bank, managed the bulk of the subsidies and financing allocated by the federal government. It was responsible for – (i) awarding construction contracts, providing construction loans to developers, setting the technical criteria for project design, and supervising project implementation; and (ii) facilitating beneficiary selection along with municipal authorities and providing financing to beneficiaries. Private sector companies built the bulk of the projects under this program, but a sub- component of the program – called MCMV Entidade – offered subsidies and financing for housing construction through cooperatives or community-based organizations. In this modality, the organizations were responsible for organizing demand, acquiring land, and for designing and building the projects. Targeting The program had a wide eligibility range, including households earning up to 10 minimum wages. However, target households were divided into the following three groups: • Group 1: Household income up to 3 minimum wages (BRL 1,395/USD 754) • Group 2: Household income from 3 to 6 minimum wages (BRL 1,395–2,790/USD 754– 1,508) • Group 3: Household income from 6 to 10 minimum wages (BRL 2,790–4,650/USD 1,508– 2,513) Within this range, the program focused on housing provision for the poorest and low- income by allocating 80% of the total units to Groups 1 and 2 (split equally), with the remaining 20% of units allocated to Group 3. To qualify, households were required to meet the following conditions: • Income requirements • Families with monthly incomes less than BRL 4,650 • Priority to families with monthly incomes less than BRL 1,395 • Never benefited from a government housing program before • Not be homeowners or have participated in another finance program Geographically, the program focused on metropolitan areas in Brazil including all state capitals and municipalities with a population greater than 50,000. Subsidy features The financial assistance provided by the program was provided primarily in the form of subsidies, low interest rate housing finance, or tax exemptions.15 The subsidies were targeted at Group 1 beneficiaries, while the other assistance was targeted at beneficiaries in Groups 2 and 3. For the poorest households in Group 1, the MCMV program subsidized between 60 and 90 percent of the property value. Since the goal was not cost recovery, beneficiary payments were not linked to construction cost, but to household income. Households were required to pay up to 10 per cent of their monthly income for 10 years, with a minimum payment of BRL 50 (USD 27). Additionally, beneficiaries in this group were exempt from property registration and insurance payments, and risk of eviction in the event of default was zero. However, beneficiaries were provided the title deeds only once the payments had been completed. Households in Group 2 benefited from a partial subsidy as well as low interest rate (5% per year) loans, and reduction of insurance and property registration costs. Group 3 households benefited from reduced interest rate (8% per year) loans and reduction of insurance and property registration costs. Further, CAIXA set up a guarantee fund for Groups 2 and 3, which could be accessed in cases of insolvency, death or permanent disability of the borrower. (continued on next page) ANNEX 5: GOVERNMENT-LED HOUSING PRODUCTION (SUPPLY-SIDE) 101 (continued) BRAZIL: MINHA CASA, MINHA VIDA (MCMV) In addition to the federal subsidies, states and municipalities also provided financial resources, access to land, and reduction in taxes to facilitate delivery of social housing under this program. Project Although the program has been lauded for the large volume of housing units produced, the sustainability financing mechanism was not sustainable. Roughly 75% and 60% of the federal investment consisted of subsidies, in phases 1 and 2 respectively. While the program did increase the private sector involvement in the social housing sector,16 it remained heavily dependent on government funding either in the form of subsidies for construction or guarantees in the event of default on repayments. Therefore, the program flourished for the duration it was backed by the government, but the expected third phase was cancelled in 2016 as a result of the budget deficit and recession.17 Key reasons for • Enabling regulatory, legislative and institutional frameworks, including – (i) success decentralization and increasing involvement of local governments in housing and urban development, and (ii) strong civil society in the urban realm, both from the 1980s • Delivered housing at scale, nearly 3 million units: With strong backing from the federal government, the MCMV program made a “dent in the number of people needing secure housing” 18 • Created jobs and stimulated economic growth, which in turn supported continued public sector investments in social housing production • Some resident cooperatives leveraged the MCMV program to create new innovative housing projects that were designed with input from members and encouraged community-led development. Examples include Quilombo da Gamboa in the Port Region and Grupo Esperanca in Colonia Juliano Moreira (but only account for 5–10% of the MCMV budget) Limitations/ • Poor planning and design: Despite achieving program targets in terms of the number Constraints/ of units to be built, the MCMV program has been widely criticized for the location of Lessons learned/ the projects. Due to high land prices in city centers, most projects were located on Scope for urban peripheries, far from jobs and amenities and lacked adequate infrastructure. For improvement example, 53% of the units delivered in Rio de Janeiro between 2009 and 2013 were built in the West Zone, 50 km from the city center where residents were up to four hours and multiple transfers away from employment centers and urban services19 • Inadequate post-occupancy social support programs: While the MCMV program budgeted for social development programs after occupancy, these programs ran for only six months. Social support programs must be integrated with housing provision to stimulate overall socio-economic development of beneficiaries. • Unsustainable development from environmental, social, and economic perspectives: While the MCMV program included some environmentally sustainable features at the unit level, such as solar panels and solar water heaters, neighborhood and city-scale planning was not based on environmental sustainability principles. For instance, the location of most projects far from places of work and leisure imposes significant social, economic and environmental costs on residents as well as on the extensive infrastructure systems built to service these projects. THAILAND: BAAN MANKONG (SECURE HOUSE) PROGRAM, COMMUNITY ORGANIZATION DEVELOPMENT INSTITUTE (CODI) Context Despite the rapid economic growth in the 1980s, the living conditions of the urban poor in Thailand did not improve. The National Housing Authority’s (NHA’s) resettlement programs had failed to improve housing conditions, and informal settlements continued to grow. At the same time, there were some successful examples of community-led and participatory upgrading projects and financing schemes. (continued on next page) 102 RE-VISITING SOCIAL HOUSING (continued) THAILAND: BAAN MANKONG (SECURE HOUSE) PROGRAM, COMMUNITY ORGANIZATION DEVELOPMENT INSTITUTE (CODI) Against this backdrop, CODI was set up in 199220 with an initial grant of USD 34 million, to be used as “a revolving fund to—(i) support urban community development activities, and (ii) provide low-interest loans to community organizations for housing, livelihood, and other purposes.” 21 Since the early 2000s, the Thai government’s housing policy was channeled through two programs: (i) the Baan Ua Arthorn (We Care) Program, wherein the NHA designed, built, and sold flats and houses at subsidized prices to low-income households who could afford the monthly rent-to-own payments; and (ii) the Baan Mankong Program, wherein CODI channeled government funds directly to poor communities that planned and implemented housing and other development plans. The Baan Mankong Program (BMP) marked a dramatic shift in the government’s approach to housing in that its role transitioned from direct housing provision to enabling a community-led process of housing development. Despite a slowdown since 2009, the BMP Urban program remains CODI’s largest housing program. As of May 2019, the program had approved 1,042 projects serving nearly 104,000 households in 343 cities across the country. 22 Key figures:23 Total population, 2019 69.62 million Urban population (% of total) 50.7% Poverty ratio at national poverty rate (% of total population) 9.9% GNI per capita, 2019 (USD) 7,260 Project description Launched in 2003, the structure of the BMP was the result of a process that had been evolving for more than a decade, and included core elements such as community savings, large-scale networks of poor communities, and community-driven development. The premise of BMP is not individual projects but citywide housing development plans. The first step is the setting up of a ‘City Development Committee’ that includes representatives from poor communities, local governments, professionals, universities and NGOs. The committee works together and jointly oversees a process that includes surveys of poor communities, identification of land for housing development, land negotiations, and project planning. Simultaneously, poor communities in the city come together to form a ‘Community Network.’ This platform allows communities that previously had little/no connection to get to know each other and therefore, collective strength throughout the citywide housing development process. The formation of these two collective platforms is the cornerstone of the BMP approach – it fosters collaboration between different stakeholder groups, and enriches the housing development process. CODI plays a supportive role in this process, leaving the reins in the hands of the two committees. Once land has been secured, the committees jointly plan and implement the housing project(s), with financing support from CODI. Given the grassroots approach, solutions vary across communities. The BMP allows for different forms of development, including on-site upgrading, land sharing and reconstruction, re-blocking and re-adjustment, and resettlement. Financing from CODI is in two forms – a subsidy and a loan – both of which are given to the community cooperative, not to individual families. Additionally, each community is required to have savings equal to at least 10% of the loan amount, which must be maintained throughout the loan repayment period. (continued on next page) ANNEX 5: GOVERNMENT-LED HOUSING PRODUCTION (SUPPLY-SIDE) 103 (continued) THAILAND: BAAN MANKONG (SECURE HOUSE) PROGRAM, COMMUNITY ORGANIZATION DEVELOPMENT INSTITUTE (CODI) FIGURE 28 FINANCING FOR HOUSING DEVELOPMENT UNDER THE BAAN MANKONG PROGRAM 1 Upgrading physical infrastructure and social facilities: 25,000–45,000 baht x no. of families 2 5% of total infrastructure development subsidy for local management costs by the community SUBSIDY Total subsidy (grant) Is 80,000 baht ($2,500) per 3 Subsidy to support housing construction: 25,000 baht per household x no. of families household (from the 4 government fiscal budget) Support for capacity building, exchange, seminars, coordination, architects: 9,500 baht x no. of families Interest 4% Interest 6% Member From CODI Community LOANS Revolving Housing Member Fund Cooperative Loans for housing and land: 65,000–200,000 Member baht ($2,000–$6,000) per household Some community loans Member sold to GHB to free up Government finance in the CODI Housing Bank Fund for more loans Source: https://en.codi.or.th/baan-mankong-housing/baan-mankong-rural/. Targeting The BMP targets the urban poor living in informal settlements, and aims to provide decent and secure housing. Subsidy features In keeping with CODI’s motto of community- and demand-driven development, financing for the BMP is also structured so that communities have a stake in financial management. The subsidy accounts for 10–20% of the total development cost per house/family. Instead of providing the subsidy and loan to individual families, CODI provides them to community cooperatives that then on-lend to individual families. Project Buoyed by the success of the first ten pilot projects, BMP scaled rapidly in the first six years sustainability and projects were launched across the country. The program also reached agreements with the three largest public landowning agencies to provide land for BMP projects at nominal rates. Community cooperatives and savings groups were also strengthened. However, BMP project finances are almost entirely contingent on government funding. With funds almost dried up by 2009, program momentum slowed down, despite some infusion of funds from the government. Furthermore, decentralization of CODI into regional offices and implementation challenges also slowed down the program. Thailand’s government is in the process of drafting a 20-year National Housing Strategy, and CODI is working with the government and other stakeholders to renew and refine BMP. (continued on next page) 104 RE-VISITING SOCIAL HOUSING (continued) THAILAND: BAAN MANKONG (SECURE HOUSE) PROGRAM, COMMUNITY ORGANIZATION DEVELOPMENT INSTITUTE (CODI) Key reasons for • BMP changed the perception and the way of addressing the issue of low-income housing success in Thailand: The coming together of different stakeholders and perspectives in the BMP made people view it as “a structural issue that relates to the whole city and that can be resolved.” The program helped integrate the housing needs of poor communities into overall city development plans, enabling holistic resolution of issues over time. • BMP encourages varied solutions and housing forms: Recognizing that housing form is a result of context-specific conditions, community negotiations, and politics, BMP is structured to allow communities flexibility on project design and form. This has led to a variety of design typologies and materials across BMP’s multiple projects, rather than a standard design/form. • Collaboration and partnership building are deeply embedded in CODI’s DNA: CODI implements projects in partnership with other actors – government agencies, NGOs, civil society organizations, activists, architects, academic institutions, and professionals. These partners are also represented on CODI’s board and joint committees that are an integral part of the organization’s management structure and guide decision-making. In addition to achieving a common understanding, this collaborative culture helped build a broad base for demand-driven development processes. • CODI’s methods created momentum and led to other demand-driven initiatives that addressed other aspects of poverty and development: Even though BMP has slowed down in recent years, CODI continues to implement other programs based on similar principles. These include community welfare funds, community housing insurance funds, and community councils. These initiatives help link together and address multiple dimensions of poverty. FIGURE 29 BANG BUA CANAL HOUSING IN BANGKOK Source: https://en.codi.or.th/baan-mankong-housing/canal-upgrading-project/. (continued on next page) ANNEX 5: GOVERNMENT-LED HOUSING PRODUCTION (SUPPLY-SIDE) 105 (continued) THAILAND: BAAN MANKONG (SECURE HOUSE) PROGRAM, COMMUNITY ORGANIZATION DEVELOPMENT INSTITUTE (CODI) Limitations/ • Lack of funds slowed down the program: With CODI funds almost all tied up in long-term Constraints/ BMP housing loans, funding had nearly dried up by 2009. The Government Housing Bank Lessons learned/ (GHB) provided additional funds by refinancing 20 completed housing projects, and the Scope for government made a capital infusion of USD 94 million. However, despite this additional improvement funding, other factors also contributed to the program’s slowdown. • Decentralization of CODI and BMP were not accompanied by decentralized of knowledge and management capacity: Although BMP had been run out of CODI’s Bangkok office, by 2013, it had grown too large and it was agreed that management should be decentralized to regional CODI offices. However, the central team’s historic knowledge of the citywide and community-driven process was lost in this transition, leading to capacity deficits and implementation problems. ETHIOPIA: INTEGRATED HOUSING DEVELOPMENT PROGRAM (IHDP) Context Much like other rapidly urbanizing countries in Africa, Ethiopia has a high urbanization rate (4. 9 per cent). 24 This rapid urbanization, coupled with high population growth and urban poverty rates, has put enormous pressure on its cities and infrastructure. As a result, nearly 80 per cent of the country’s population lives in sub-standard or inadequate housing. 25 Its capital and largest city, Addis Ababa, houses nearly 5 million people, ten times that of Ethiopia’s second largest city, Dire Dawa. Historically, the state has been the dominant player in the housing sector, while the private construction industry has been very small. However, the poor quality of housing supplied by the state and the extremely limited housing supplied by the private sector resulted in informal self-built housing becoming the dominant mode of housing supply. In Addis Ababa, informal housing accounted for 34 per cent of the city’s total housing supply from 1996 through 2003. Rental has been the dominant tenure, with nearly 60 per cent of housing in Addis Ababa (in the 1994 census) being government rental, and only 30 percent being homeownership. 26 The country has a housing backlog of 1.2 million units, with demand projected to be 655,800 units between 2015 and 2025. 27 Key figures:28 Total population, 2019 112.08 million Urban population (% of total, 2020) 29 21.7% Poverty ratio at national poverty rate (% of total population, 2015) 23.5% GNI per capita, 2019 (USD) 850 Project description In response to the large unmet demand for housing, the government launched the Integrated Housing Development Programme (IHDP) in 2005. Initially planned as a five-year program, IHDP has since been extended and continues to this day (with some modifications). In addition to addressing the housing shortage, the program was designed to improve capacity in the construction sector as well as among micro and small enterprises. Some of the initial goals of the program were: • Construct 400,000 condominium units • Create 200,000 jobs • Promote development of 10,000 micro and small enterprises • Enhance capacity of the construction sector • Regenerate inner city slum areas • Promote homeownership for low-income households30 (continued on next page) 106 RE-VISITING SOCIAL HOUSING (continued) ETHIOPIA: INTEGRATED HOUSING DEVELOPMENT PROGRAM (IHDP) All of the projects built under the IHDP follow the same typology – multi-story condominium buildings with common areas being jointly owned and managed. The projects have been built on brownfield sites or cleared slum areas. One of the most striking features of the program was its large scale, in contrast to the prevailing approach of small-scale slum upgrading and housing cooperative schemes. Furthermore, it marked a decided shift from rental housing (the dominant tenure) provided by government to homeownership. Funded by the government, the program was designed for 100 per cent cost recovery; construction costs would be recovered by sale of the condo units, and land and infrastructure costs would be recovered through the sale of the commercial units. As of 2020, the government had built 400,000 units under this program. Targeting The program is targeted at low-income households, with special focus on female-headed households (30 per cent of units to be allocated to women). Beneficiaries are selected by randomized lottery. While one of the eligibility criteria is that beneficiaries should not own any other property, there are no credit or income checks. The program has different unit sizes (studio, 1-, 2-, and 3-bedroom units) to suit households at different levels and to promote income mixing. Beneficiaries are not allowed to resell units for five years after taking ownership. Subsidy features Recognizing the limited affordability of the target population, the program kept construction costs low by – (i) using new technologies to reduce construction time, and (ii) providing unfinished units. Furthermore, the program included cross-subsidy elements to enable full cost recovery: • The commercial development subsidizes residential development in that the sale proceeds of the former fund infrastructure development for the latter • 2- and 3-bedroom units are sold at higher than construction cost (5 and 10% respectively) to cross-subsidize studio and 1-bedroom units (sold at 30 and 10% below construction cost, respectively) to improve affordability for low-income households Project The project included features to help achieve financial and social sustainability. For instance, sustainability all developments included commercial and community uses to encourage mixing and activity, thereby improving security and discouraging unsociable behavior/petty crime. Furthermore, the community uses were intended to cater to the cultural needs of residents, be it communal space to cook extensive meals or hand wash laundry. Although the project aimed for financial sustainability and 100 per cent cost recovery, evidence suggests that it is fiscally unsustainable. Estimates suggest that the program has cost the government upwards of USD 9 billion, as of 2018–19. Further estimates suggest that the government recovers approximately 35% of the cost of producing an IHDP unit, thereby putting the total government subsidy amount at roughly USD 5.3 billion. 31 Key reasons for Although the IHDP has not met all of its stated targets, it has been successful in many respects: success • IHDP has resulted in housing production at scale, delivering 400,000 units between 2005 and 2020. Given the (previously) limited capacity of the Ethiopian housing sector, this is a remarkable achievement, and is one of the biggest housing production programs on the African continent. • Improved capacity in four sectors – construction, skilled labor, manufacturing, and transportation. IHDP has helped improve technical capacity in these sectors and created significant employment opportunities, as evidenced by the growth (in size and number) of small and medium companies in these sectors. (continued on next page) ANNEX 5: GOVERNMENT-LED HOUSING PRODUCTION (SUPPLY-SIDE) 107 (continued) ETHIOPIA: INTEGRATED HOUSING DEVELOPMENT PROGRAM (IHDP) • Improved the living conditions for many low- and middle-income households. For those who are living in IHDP projects, they have access to better physical environments, infrastructure and services, thereby improving their quality of life. Furthermore, the program has brought previously excluded households into the formal financial sector by providing access to housing credit. Limitations/ • IHDP is not fiscally sustainable. The program needs considerable funding and large capital Constraints/ outlays which strains already overstretched city government budgets. Additionally, Lessons learned/ there has been some criticism that city government has focused almost exclusively on Scope for financing condo development while ignoring other development needs (such as urban improvement infrastructure and services) leading to imbalanced development. • Limited affordability for female-headed households. Although the program focuses on women as a priority group by allocating 30% of units to female-headed households, it does not go far enough to address the affordability gap. Poverty levels are higher among female-headed households, including single mothers with little formal education or employment. This translates into a higher payment burden and lower affordability for down payment as well as monthly payments. • Unaffordable for target low-income groups. Despite the program’s focus on improving housing for low-income households, post-completion evaluations have shown that there has been an upward drift and these are serving middle-income households. Construction cost increases made the units unaffordable to low-income households, both in terms of down payment as well as monthly payments. This inability to pay monthly mortgage and service fees has forced many households to move out and rent their units (the program places no restrictions on this) rather than risk losing the unit to foreclosure. • Remote locations of IHDP project sites. Many condominium sites are located on urban peripheries, with few employment opportunities close by, thereby limiting the earning potential for large numbers of households. This has placed additional strain on households in terms of higher transportation expenses. Further, the peripheral location translates into higher infrastructure provision costs thereby increasing overall project costs. • Unresponsive design and sub-standard construction quality. IHDP project design has been criticized for being unresponsive to occupants’ needs and activities; for example, some sites do not provide space (at all or adequate) for communal activities that are integral to Ethiopian culture (such as injera making, hand washing laundry or goat slaughtering). Further, poor quality construction has resulted in burst sewerage piped, cracking of wall plaster, and breaking of substandard fixtures/hardware. • No systems for operations and maintenance (O&M). One of the most glaring gaps in the program is the lack of attention to post-occupancy O&M procedures. Most occupants are new to multi-story condominium living; this has resulted in problems such as noise and privacy issues because of the close proximity of neighbors, and management of communal facilities and common areas. In response, the government published and distributed written manuals but they have had limited effectiveness in terms of facilitating community cohesion and management of common areas. 1 https://data.worldbank.org/country/singapore. 2 https://eresources.nlb.gov.sg/history/events/2ab696d3-d9f5-4970-9108-e0f95919cc98. 3 The MOP varies between 0 and 7 years depending on the type of unit and other criteria. 4 https://www.hdb.gov.sg/about-us/our-role/public-housing-a-singapore-icon. 5 https://www.straitstimes.com/singapore/housing/understanding-what-happens-at-the-end-of-a-99-year-lease. 6 Prior to 2003, TOKI’s primary role was to finance housing construction, and it had a limited role in housing production. 7 http://i.toki.gov.tr/content/entities/main-page-slider/20191011095737969524-pdf.pdf. 8 https://data.worldbank.org/country/turkey. (continued on next page) 108 RE-VISITING SOCIAL HOUSING (continued) 9 https://www.dailysabah.com/turkey/2019/12/12/turkeys-social-housing-project-reaches-out-to-low-income-families. 10 UN-Habitat, 2013. Available at: https://unhabitat.org/scaling-up-affordable-housing-supply-in-brazil. 11 In the aftermath of the global financial crisis of 2007-08. 12 Ministerio das Cidades (2009) Deficit Habitacional no Brasil 2007. Fundacao Joao Pinheiro. Available at: http://www. bibliotecadigital.mg.gov.br/consulta/consultaDetalheDocumento.php?iCodDocumento=50695. 13 https://data.worldbank.org/country/brazil. 14 The total investment, in both phases, included federal subsidies (non-refundable) as well as refundable funds used for housing and infrastructure financing. 15 https://www.archdaily.com/504114/minha-casa-nossa-cidade-brazil-s-social-housing-policy-and-the-failures-of-the-private- public-system. 16 As was one of the goals of the program. 17 https://www.reuters.com/article/us-brazil-politics-landrights-idUSKCN0ZA03C. 18 https://www.reuters.com/article/us-brazil-politics-landrights-idUSKCN0ZA03C. 19 https://www.urbanet.info/brazil-social-housing-shortcomings/. 20 The government set up the Urban Community Development Office (UCDO) in 1992, as a part of the NHA. UCDO was merged with Rural Development Fund (RDF) in 2000, and renamed CODI, an independent public organization within the Ministry of Social Development and Human Security. 21 https://en.codi.or.th/about/history-of-codi/. 22 https://en.codi.or.th/baan-mankong-housing/land-reform-porgram/. 23 https://data.worldbank.org/country/thailand. 24 https://housingfinanceafrica.org/countries/ethiopia/. 25 UN-Habitat (2010) The Ethiopia Case of Condominium Housing: The Integrated Housing Development Programme. United Nations Human Settlements Programme: Nairobi. 26 UN-Habitat (2010) The Ethiopia Case of Condominium Housing: The Integrated Housing Development Programme. United Nations Human Settlements Programme: Nairobi. 27 https://housingfinanceafrica.org/countries/ethiopia/. 28 https://data.worldbank.org/country/ethiopia. 29 https://data.worldbank.org/indicator/SP.URB.TOTL.IN.ZS?locations=ET. 30 UN-Habitat (2010) The Ethiopia Case of Condominium Housing: The Integrated Housing Development Programme. United Nations Human Settlements Programme: Nairobi. 31 World Bank Group. 2019. Unlocking Ethiopia’s Urban Land and Housing Markets: Urban Land Supply and Affordable Housing Study. World Bank, Washington, DC. Annex 6: Government financial assistance to households (demand-side) CHILE: HOUSING VOUCHERS1,2 Context The Chilean government’s housing policy and programs since the 1990s helped halve the proportion of households without any housing or living in sub-standard housing. Focused on improving access to homeownership for low- and moderate-income households, the range of programs included subsidies for construction and home improvements, tax deductions for mortgage interest, household savings schemes, and rent-to-own subsidies, among others. However, these programs had a singular focus on homeownership, and rental housing policy was largely absent. As a result, rental housing comprised only 18% of the housing stock in Chile in the early 2010s,3 all of it in the private sector. Amid growing demand for interventions in rental housing, Chile introduced a rental subsidy program in 2014 targeted at low- and moderate-income young families throughout the country. FIGURE 30 INCIDENCE OF INFORMAL RENTAL BY INCOME QUINTILE IN CHILE, 2011 Top quintile Quintile 4 Quintile 3 Quintile 2 Bottom quintile 0% 20% 40% 60% 80% 100% Informal lease Formal lease Source: Salvi del Pero, Angelica, 2016. Key figures:4 Total population, 2019 18.95 million Urban population (% of total) 87.64% Poverty ratio at national poverty rate (% of total population) 8.6% GNI per capita, 2019 (USD) 15,010 109 110 RE-VISITING SOCIAL HOUSING (continued) CHILE: HOUSING VOUCHERS Project description The subsidy is a “demand-side means-tested earmarked temporary rent subsidy directed at low- and middle-income young households,” (Salvi del Pero, 2016) specifically, young couples with or without children, or young single parents with one or more children. Chile’s Ministry of Housing and Urban Development (MINVU) conducted a diagnostic survey to inform the design of its subsidy program. The findings showed that more than a third of homeownership subsidies were going to young families whose family size and housing needs would likely change in the short-term. Therefore, the rental subsidy program was designed to support young households’ residential mobility and changing housing needs in the short-term. The subsidy is intended as bridge assistance until young households decide on their long-term, more permanent housing needs. The program provides a flat subsidy of USD 140 per month across all municipalities. The subsidy amount does not vary with the amount of total rent paid, but eligible rents are capped at USD 400 per month. At the same time, subsidy-to-rent ratio is capped at 0.8. The subsidy amount is paid into a bank account at Banco Estado (state-owned bank) as is the tenant’s portion of the rent – and together, the rent payments are transferred to the landlord. Dwellings must meet minimum quality standards, and are checked by regional service providers called Servicios de Vivienda y Urbanizacion (SERVIU). Targeting The program is designed to support young low- and middle-income households, and provide bridge assistance until recipients are ready to transition to homeownership. Specific eligibility criteria include: • A multi-dimensional vulnerability score in the Ficha Proteccion Social (FPS) below 13,484 points (i.e. the third quintile of the vulnerability distribution) • Monthly household income between USD 360 and 1,125 (i.e. between 2nd and 6th decile of the income distribution) • Households must have USD 180 in a special savings account, to be used as a guarantee for the rental contract (1 month’s rent) Subsidy features Program participants are eligible to receive a flat subsidy of USD 140 per month. The subsidy is transferable, i.e. it moves with the recipient if they move residences. The subsidy is offered for a maximum of eight years. In line with the government’s enduring focus on homeownership, after the first three years, the subsidy is reduced to USD 110 per month, to encourage residents to start considering homeownership. Project Given that the program is relatively new and is yet to complete its first cycle of eight years, sustainability there is little information on program implementation and results. However, the government is contemplating next steps for the rental subsidy program as well as the rental housing sector at large, both of which will be particularly relevant in a post-Covid context. Key reasons for • Reduced rental payment burden and improved living conditions for program participants: success Data on the pilot from MINVU showed that the subsidy enabled households living in overcrowded or otherwise inadequate housing to live independently with sufficient space. Further, the portion of income spent on rent fell from 40% to 16%. • The program has built in payment flexibility to avoid evictions in case of temporary loss of job/income: Intended to avoid the disruption of eviction, program participants are allowed to miss three rental payments without losing the subsidy. The government does not act as guarantor for missed payments, and withdraws support if the tenant does not pay after three months. The rental contract is not automatically terminated when the subsidy contract ends. (continued on next page) ANNEX 6: GOVERNMENT FINANCIAL ASSISTANCE TO HOUSEHOLDS (DEMAND-SIDE) 111 (continued) CHILE: HOUSING VOUCHERS Limitations/ • Small size of the rental housing market might limit the reach of the rental subsidy program: Constraints/ At the time of program launch, experts were concerned that the constrained supply Lessons learned/ of rental housing in the short run might inflate rental prices. Additionally, landlords are Scope for hesitant to rent units to tenants they are not familiar with because of weak enforcement improvement of tenancy laws, such as long and expensive eviction processes for non-payment of rent. Providing subsidies to improve the supply of rental housing or providing government guarantees on subsidized rental contracts were floated as ideas to address this issue. • Rental housing subsidies can only go so far in meeting the housing needs of vulnerable households: Although the subsidy program is a good first step in supporting the rental housing sector, it is unlikely to address the complex needs of the socially vulnerable. Additionally, Chile’s housing policies are still geared towards improving access to homeownership, thereby hindering investment in the rental sector. Building a large social rental housing sector will require more supply-side assistance – including enabling policy and governance frameworks, and financial support – to encourage the development of rental housing. • Targeting of the subsidy may need to be revised: Results from the pilot showed that 73% of the subsidy recipients were in the first quintile of the income distribution, 20% in the second, and the rest in the third quintile (Salvi del Pero, 2016). Given that the majority of the subsidy was helping households below the income eligibility threshold, it might need a review to ensure proper targeting. USA: HOUSING CHOICE VOUCHER (HCV)5,6 Context By the 1960s, the US government’s public housing program (instituted in 1937) was widely regarded as a failure, and it was not achieving its intended goal of meeting the housing needs of low-income and working class households. Additionally, studies showed that rental housing produced by the private market provided good quality units as compared to the substandard quality of public housing units built by the government. Therefore, with the goal of encouraging private sector participation in the development and maintenance of affordable housing, Congress passed the Housing and Community Development Act in 1974. The Act included direct assistance to households for rental and homeownership through Sections 8 and 235. The passage of the Act in 1974 was significant in that it marked the shift of federal programs from production to demand-side programs.7 The primary impetus for this shift was the failure of public housing in the decades immediately preceding it. Moreover, studies showed that the biggest housing problem was no longer poor housing quality8 but the high percentage of income that low-income households were spending on housing. 9 Initially designed as a project-based subsidy, the Section 8 voucher program proved to be a drain on the public purse and was criticized for poverty concentration (since Section 8 projects were built primarily in low-income neighborhoods). The program was amended in 1983 to make the vouchers tenant-based, giving recipients the flexibility to choose housing in the private market and in any neighborhood. Since renamed the Housing Choice Voucher (HCV), the federally funded program helps about 2 million low-income households annually.10 Key figures:11 Total population, 2019 328.24 million Urban population (% of total) 82.46% Poverty ratio at national poverty rate (% of total population) N/A GNI per capita, 2019 (USD) 65,850 (continued on next page) 112 RE-VISITING SOCIAL HOUSING (continued) USA: HOUSING CHOICE VOUCHER (HCV) Project description At a budget of nearly USD 18 billion in 2020,12 the HCV program is one of the largest housing programs, designed to assist “very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market.” 13 Voucher recipients are free to choose any housing that meets program requirements, and are not restricted to subsidized housing. The US Department of Housing and Urban Development (HUD) provides funding to local bodies called public housing agencies (PHAs) to administer the program. The PHA sets minimum quality standards for housing that can be rented under this program. Households apply to their local PHA. Once approved and if vouchers are current, the PHA issues an HCV to the family. It is the responsibility of the voucher holder to find a unit that meets program requirements. The PHA inspects the selected unit, and if approved, executes a housing assistance payment (HAP) contract with the landlord. The PHA directly pays the subsidy amount to the landlord, while the tenant pays the remainder (i.e. the difference between the actual rent and the subsidy amount). HCVs are portable, i.e. recipients can move residence without losing the rental assistance. Households are required to inform the PHA ahead of time, terminate their existing lease, and find new housing that meets program requirements. Targeting PHAs set eligibility criteria for the HCV program, including those such as annual gross income, family size, and US citizenship status. In general, household income must be less than 50% of area median income (AMI), i.e. very low-income households. PHAs are required to allocate 75 per cent of vouchers to households whose income is less than 30% of AMI. HUD publishes AMI annually and they vary by location. For instance, median family income in FY2021 is USD 129,000. HCV program income limits for a 4-person family are as follows:14 Extremely Low-Income (ELI) USD 38,700 Very Low-Income (VLI) USD 64,500 Low-Income (LI) USD 82,300 Additionally, PHAs are permitted to establish priority eligibility criteria, such as homeless families or families paying more than 50% of income on rent. PHAs set these priority criteria based on local conditions and housing needs. Families that meet these criteria move ahead on the waiting list compared to others that do not. Subsidy features Households are required to pay 30% of adjusted monthly gross income for rent and utilities, with the rest covered by the voucher. Each PHA sets a payment standard, which is the typical rent for a moderately priced dwelling unit in the local market. If the rent for the selected house is higher than the payment standard, the household must pay the difference. The maximum payment a household can make is 40% of adjusted monthly gross income. (continued on next page) ANNEX 6: GOVERNMENT FINANCIAL ASSISTANCE TO HOUSEHOLDS (DEMAND-SIDE) 113 (continued) USA: HOUSING CHOICE VOUCHER (HCV) FIGURE 31 AVERAGE PER UNIT COST SINCE 2014 750 700 650 2014 2015 2016 2017 2018 2019 2020 Source: https://www.hud.gov/program_offices/public_indian_housing/programs/hcv/dashboard. Project While the program assists roughly 2 million low-income households annually, there is a sustainability severe shortage of vouchers. As of 2017, only a quarter of eligible households receive housing assistance.15 Wait times of a few years is commonplace for applicants once they are on the waiting list and before they receive a voucher. This is a particularly acute challenge in big cities such as New York City where new applications have not been accepted since May 2007.16 The Housing Authority of Los Angeles (HACLA) opened its voucher waiting list in October 2017, the first time it did so in 13 years; the program was over-subscribed by 8.5 times.17 Key reasons for Beyond enabling millions of families to afford decent, stable housing, policy changes and success pilot initiatives by PHAs have helped improve housing outcomes for low-income families in a variety of ways. • The Moving to Opportunity (MTO) experiment18 improved long-term economic outcomes for children and youth: While previous research has shown that this experiment positively impacted the health and well being of adults as well as family safety, a 2015 study analyzed outcomes for children who were below the age of 13 and were part of the experiment. The study found robust evidence that these children had – (i) better educational outcomes (measured by the quality of college and attendance); (ii) substantially higher income as adults; and (iii) lived in better neighborhoods themselves as adults.19 Implementing this change widely could help improve outcomes for the 315,000 children (part of voucher families) living in high-poverty neighborhoods as of 2017. 20 • Access to permanent housing subsidies (vouchers) improved outcomes for formerly homeless families: A 2016 evaluation21 of HUD’s Family Options Study22 found that participants who were given a permanent housing subsidy (SUB) saw a reduction in homelessness and doubling up. Compared to the other interventions, SUB had substantial impacts not only on housing stability but also in other areas such as improved family wellbeing (high school attendance for children and reduced intimate partner violence for adults) and reduced food insecurity. Limitations/ • Discrimination by landlords: Across the country, being turned by reluctant landlords is a Constraints/ common experience for several voucher holders, even for the 50% that are protected by Lessons learned/ source-of-income laws23 (that require landlords to treat voucher holders as they would Scope for other prospective tenants). As a result, vouchers end up unused or lapsed despite the improvement urgent need, often exacerbating housing and health outcomes for voucher holders. To improve enforcement of these laws, some cities have brought lawsuits against landlords who discriminate against voucher holders, or provide additional support in the search for a (continued on next page) 114 RE-VISITING SOCIAL HOUSING (continued) USA: HOUSING CHOICE VOUCHER (HCV) rental unit. Experts recommend making the process more efficient and actively recruiting landlords to participate in voucher programs as possible solutions to address this issue. • Inaccurate rent calculations limit access to well-located housing and force voucher holders to live in high-poverty areas where rents are lower: Since Fair Market Rent (FMR) is calculated at the metropolitan area level, it doesn’t accurately reflect the actual rents in the private market, especially so in large cities. As a result, families are forced to rent housing in areas where rents are lower, leading to poverty concentration. To address this issue, HUD conducted a Small Area FMR (SAFMR) demonstration in 2011, in which FMR was calculated at zip code level. A 2017 study showed that the use of SAFMR led to increased voucher use in low-poverty neighborhoods that offer opportunities for upward mobility. 24 • Demonstrations and pilot projects are helpful, but the HCV demand-side subsidy alone cannot address the affordable housing crisis: The HCV program is premised on the availability of good quality, affordable housing in the private market. However, housing markets vary greatly across different locations, and the program in its current form does not account for these differences. Therefore, program performance and results have been uneven across the country. While increasing voucher funding is one solution, it is important to increase supply-side assistance and therefore housing production to meet low-income households’ housing needs. INDONESIA: MORTGAGE-LINKED DOWN PAYMENT ASSISTANCE (BANTUAN PEMBIAYAAN PERUMAHAN BERBASIS TABUNGAN – BP2BT) Context The Government of Indonesia has a long history of providing policy and financial subsidy to support the affordable housing sector. Although the government has a home-improvement grant program to address qualitative deficit (BSPS – Bantuan Stimulan Perumahan Swadaya) and a public rental housing program (Rusunawa), homeownership has been the focus of the housing policy and subsidy. To support the Government’s One Million Homes Program (Satu Jutah Rumah) launched in 2015, there are several subsidy programs focused on homeownership which have supported approximately 200,000 first-time homeowners annually. Before the National Affordable Housing Program (NAHP) was introduced in 2018, Indonesia’s primary demand side intervention was an interest rate subsidy offered through two housing finance products: Fasilitas Likuiditas Pembiayaan Perumahan – FLPP (liquidity facility cum interest rate subsidy) and Subsidi Selisih Bunga – SSB (interest rate buy- down). Both products brought down the mortgage market interest rate (10–12%) to a fixed 5% for the life of the loan. FLPP was designed to provide low-cost liquidity25 support to participating banks, while SSB involved a monthly buy-down of the difference in the mortgage market rate and subsidized interest rate of 5%. While both programs succeeded in lowering costs for homebuyers, the SSB program also resulted in sizeable future liabilities for the government (estimated to be upwards of USD 2.5 billion). These future liabilities risk combined with the complexity of implementation of the SSB program have led to its termination in 2021. Starting in 2018, with assistance from the World Bank, the Ministry of Public Works and Housing (MPWH) introduced a new credit-linked housing finance assistance program (Bantuan Pembiayaan Perumahan Berbasis Tabungan – BP2BT ) through the NAHP. This program is designed to maintain the same affordability levels (in terms of monthly housing payments) as the FLPP program, while significantly reducing the fiscal burden on the government budget through one-time assistance instead of a large upfront capital allocation. Recognizing that most low-income Indonesian households cannot afford a housing loan without subsidy support, BP2BT provides one-time assistance for first-time home buyers, as well as for households building or rebuilding their home. (continued on next page) ANNEX 6: GOVERNMENT FINANCIAL ASSISTANCE TO HOUSEHOLDS (DEMAND-SIDE) 115 (continued) INDONESIA: MORTGAGE-LINKED DOWN PAYMENT ASSISTANCE (BANTUAN PEMBIAYAAN PERUMAHAN BERBASIS TABUNGAN – BP2BT) Project description BP2BT is a credit-linked housing finance assistance targeted at lower-income first time homeowners. The assistance applies to (i) the purchase of a new home (landed and multi- story), and (ii) self-construction or reconstruction of a home. The program included improvement or expansion of a home after the COVID pandemic to support healthy homes, and also to address the government policy target toward reducing the country’s sizeable qualitative housing deficit. To ensure that the financed homes meet minimum basic living standards, the program defines property eligibility parameters such as location, access to services and amenities, and construction standards26. Additionally, all properties must have a formal land title. The program also defines a maximum property value (based on type of unit and geographic location) to prevent leakage to households that have greater purchasing power than those targeted by BP2BT. The loan product linked to this one-time assistance must be provided at market interest rates – this is stipulated to ensure program sustainability (as opposed to FLPP’s unsustainable interest rate subsidies). Additionally, the loan-to-value (LTV) ratio must be at least 50 percent, and households must provide a minimum 1 percent down payment. Targeting The BP2BT program goal is to support households that have limited purchasing capacity and need government assistance. Hence, it specifically targets households between the 30th and 60th income percentiles, including salaried and non-salaried households, all over the country. The program clearly defines income limits (maximum monthly household income) to prevent leakage to non-target beneficiaries; these limits vary across the country and have been defined as per the geographic zones. Other eligibility criteria include: • Households must demonstrate 3 months of savings, minimum savings amount varies by income tier • Maximum equity of 50 percent of property value or construction cost (including savings and assistance) • No prior homeownership (exception made for self/ re-construction and home improvement / expansion) • Households should not have received any housing subsidy in the past Subsidy features The program specifies maximum assistance levels for its beneficiaries based on a matrix as shown in the figure below. MAXIMUM ASSISTANCE BY MONTHLY HH INCOME LANDED HOUSE/ SELF- CONSTRUCTION/ RE-CONSTRUCTION/ MONTHLY HH INCOME IMPROVEMENT MULTI-STORY IDR IDR IDR < 5,000,000 40,000,000 60,000,000 5,000,001 - 6,000,000 38,000,000 58,000,000 6,000,001 - 7,000,000 36,000,000 56,000,000 7,000,001 - 8,000,000 34,000,000 54,000,000 8,000,001 – 10,000,000 32,000,000 52,000,000 (continued on next page) 116 RE-VISITING SOCIAL HOUSING (continued) INDONESIA: MORTGAGE-LINKED DOWN PAYMENT ASSISTANCE (BANTUAN PEMBIAYAAN PERUMAHAN BERBASIS TABUNGAN – BP2BT) Another unique feature of BP2BT is an Assistance Index of 49%, which is applied across all income groups and housing types. Households are eligible for the maximum assistance eligibility, or up to 49% of the purchase price / construction cost, whichever is lower (see Figure 33). For example, a BP2BT consumer with a monthly income of IDR 4.5 M and a self- construction loan for a total construction cost of IDR 80 million will qualify for an assistance of IDR 39.2 M (49% of IDR 80 M), even though his/her eligibility as per Income-Assistance matrix is IDR 40 M. Project The BP2BT program has been designed to be more cost-effective than the previous sustainability SSB and ongoing FLPP program, in terms of government budget allocation and per unit subsidy cost. However, as the program is relatively new (launched in 2018) and is still under implementation (slated for completion in February 2023), there are no conclusive results yet. Following the onset of the Covid-19 pandemic, the program has also undergone some modifications, including the addition of a home improvement product. Key reasons for Although there are no conclusive results on program effectiveness yet, below are some success key interim results from the World Bank’s Implementation Status Report published on January 2022: • The program is overachieving its target for percentage of beneficiaries in the bottom 60 percent of the income distribution; 93.46% (current) vis-à-vis a target of 80% • >34% of program beneficiaries are from the non-salaried sector, compared to a target of 10% Limitations/ Although there are no conclusive results on program effectiveness yet, below are some key Constraints/ interim results from the World Bank’s Implementation Status Report published in January Lessons learned/ 2022: Scope for improvement • Only two lenders (Bank Tabungan Negara (BTN) and Bank Negara Indonesia (BNI)) have contributed to >5% of disbursements, compared to a target of three. • 28% of housing units financed under this program fulfilled minimum construction standard requirements compared to the 2020 target of 35%. 1 Salvi del Pero, 2016. 2 Ross and Pelletiere, 2014. 3 Compared to 32% on average across OECD countries. 4 https://data.worldbank.org/country/chile. 5 https://www.hud.gov/topics/housing_choice_voucher_program_section_8. 6 https://www.hud.gov/program_offices/public_indian_housing/programs/hcv/tenant. 7 Mallach, Alan. 2009. A decent home: planning, building, and preserving affordable housing. Chicago: American Planning Association Planners Press. 8 When the government first started to address housing issues in the early 1900s, they found that the biggest concern was the quality of housing and thus programs focused on improving the quality and provision of basic amenities. The aim was to set and maintain a minimum threshold for quality of housing units. 9 Grigsby, William G., and Steven C. Bourassa. 2004. “Section 8: The time for fundamental program change?” Housing Policy Debate. 15 (4): 805-834. 10 HCV Data Dashboard, available at: https://www.hud.gov/program_offices/public_indian_housing/programs/hcv/dashboard. 11 https://data.worldbank.org/country/united-states. 12 HCV Data Dashboard. 13 https://www.hud.gov/topics/housing_choice_voucher_program_section_8. 14 https://www.huduser.gov/portal/datasets/il/il21/Section8-IncomeLimits-FY21.pdf. 15 https://www.cbpp.org/research/housing/federal-rental-assistance. 16 https://access.nyc.gov/programs/section-8/. 17 https://housingmatters.urban.org/articles/role-housing-choice-vouchers-addressing-americas-rental-housing-crisis. (continued on next page) ANNEX 6: GOVERNMENT FINANCIAL ASSISTANCE TO HOUSEHOLDS (DEMAND-SIDE) 117 (continued) 18 In the mid-1990s, HUD offered housing vouchers to 4,604 randomly selected families to move from high-poverty to low-poverty neighborhoods. The experiment was conducted in five cities – Baltimore, Boston, Chicago, Los Angeles, and New York. 19 Chetty, Hendren, and Katz, 2015. 20 Sard, Rice, Bell, and Mazzara, 2018. 21 HUD Office of Policy Development and Research, October 2016. 22 Between September 2010 and January 2012, nearly 2,300 families across the country participated in HUD’s Family Options Study. After spending at least seven days in emergency shelter, families were randomly assigned to four groups: (i) SUB – access to a permanent housing subsidy; (ii) CBRR – priority access to community-based rapid re-housing; (iii) PBTH – priority access to project-based transitional housing; and (iv) UC – access to usual care homeless and housing assistance but no priority access to any particular program. 23 https://prrac.org/pdf/AppendixB.pdf. 24 “Small Area Fair Market Rent Demonstration Evaluation: Interim Report,” HUD Office of Policy Development and Research, August 2017. Available at: https://www.huduser.gov/portal/sites/default/files/pdf/SAFMR-Interim-Report.pdf. 25 75% of loan amount is being provided to the banks by the GoI as upfront liquidity. 26 The BP2BT program is the only demand-side subsidy program that requires construction quality standards monitoring and reporting. Annex 7: Private and small-scale landlords JORDAN: NORWEGIAN REFUGEE COUNCIL’S (NRC’S) URBAN SHELTER PROGRAM Context1 The significant influx of refugees, migrants, and workers to Jordan has driven population growth in recent years. Between 2004 and 2015, annual population growth averaged close to 6 per cent. Over the same period, the private sector built over 1.1 million units, nearly doubling the housing stock; owner-builders built 60 per cent of this stock. With much of this new development targeted at high-income households, it exacerbated the mismatch between demand and supply, further reducing housing options for the bottom 40 per cent of households. The shortage has driven up rental prices, pushing households to live in overcrowded or inadequate conditions. The Syrian refugee crisis has intensified the housing sector issues, particularly in the country’s urban areas. Vulnerable refugee households outside camps lived in overcrowded or otherwise substandard housing, and had little tenure security. The lack of sufficient affordable housing stock drove up rental prices for refugees and locals alike. With more than 80% of refugees living in urban areas, 2 competition for limited resources (housing and otherwise) led to increased tensions between Jordanian host and Syrian refugee communities. In this context, the Norwegian Refugee Council (NRC) implemented the Urban Shelter Program with the twin goals of addressing the immediate housing needs of refugees while also supporting host communities. Provision of legal support was an integral component of the project with the goal of strengthening landlord-tenant relationships and improving integration of refugees within host communities. The project was implemented in the Governorates of Irbid, Jerash, and Ajloun3 between 2013 and 2015. Key figures:4 Total population, 2019 10.1 million Urban population (% of total) 91.2% Poverty ratio at national poverty rate (% of total population) 15.7% GNI per capita, 2019 (USD) 4,410 Project description NRC provided technical and financial support to Jordanian homeowners to build new or complete unfinished housing to be rented to Syrian refugee households, rent-free, for a period of 12–24 months. Once matched, landlord and renter signed a standard tenancy agreement, in line with Jordanian law. NRC connected refugee households with other organizations providing legal and other help, and also provided relocation assistance (grant of JD 100/USD 141). (continued on next page) 119 120 RE-VISITING SOCIAL HOUSING (continued) JORDAN: NORWEGIAN REFUGEE COUNCIL’S (NRC’S) URBAN SHELTER PROGRAM NRC conducted a technical assessment of all landlords’ properties, including the state of each property, expected scope of work, location and accessibility, and due diligence of land documents and building permits. 5 Minimum living space was set at 3.5 square meters per person, excluding kitchens and bathrooms. Participating landlords signed contracts for 1–4 units; the majority of contracts were for 2–3 housing units. In addition to funding homeowners’ home building/upgrading activity, NRC also provided legal assistance to landlords and renter households throughout the contract period, including contract negotiation, implementation of agreements, and dispute resolution. FIGURE 32 NRC’S URBAN SHELTER PROGRAM Hired local labor Grant + Technical assistance Building contractors Jordanian Procured landlords materials locally Legal and other Rent-free accommodation assistance for 12–24 months Local suppliers Other orgs. & community groups Syrian refugee HHs Source: Author. Targeting For this project, NRC prioritized extremely vulnerable Syrian refugee households, measured against criteria such as household size and composition, female-headed households, people with disabilities, health status, economic conditions, risk of eviction, and shelter conditions. Interested refugee households registered for the program through a national hotline or at NRC’s offices, or were referrals from the UNHCR and other international and national partners. Using the information shared in this pre-registration phase, NRC identified households for full assessments to assess their vulnerability and suitability for the project. Subsidy features6 NRC provided grant funding to landlords to build housing that was offered rent-free to vulnerable Syrian refugee households. NRC funding was contingent on two factors: (i) the condition of the property, and (ii) duration of the rental agreement (larger grants for longer rental periods). The grant amount varied between JD 1,000 for one unit rented for 12 months to JD 5,600 for four units rented for 18 months. (continued on next page) ANNEX 7: PRIVATE AND SMALL-SCALE LANDLORDS 121 (continued) JORDAN: NORWEGIAN REFUGEE COUNCIL’S (NRC’S) URBAN SHELTER PROGRAM TABLE 9 NRC’S FINANCIAL INVESTMENT 12-MONTH RENT-FREE PERIOD 18-MONTH RENT-FREE PERIOD 1 housing unit JD 1,000 (USD 1,400) JD 1,400 2 housing units JD 2,000 JD 2,800 3 housing units JD 3,000 JD 4,200 4 housing units JD 4,000 JD 5,600 Source: Home Sweet Home: Housing Practices and Tools That Support Durable Solutions for Urban IDPs, March 2015. Project While the project was successful in meeting Syrian refugees’ housing needs in the short- sustainability term, the 5,100 units it provided was a small percentage of the 120,000 housing units needed. Post-project evaluation showed that nearly half the refugee households would need to look for cheaper accommodation after the rent-free period. This is not a failure of the project (since it did not aim to provide durable housing solutions), but highlights the multi- dimensionality and resource intensiveness of interventions in refugee contexts. In 2015–16, NRC implemented a modified version of this program in Arsal, Lebanon, on a smaller scale; called the Sub-Standard Building Program (SSB). The model has applicability in non-refugee situations as well, and could help inform governments’ responses to housing and urban development challenges. NRC published a guide7 based on its experiences in the Urban Shelter Program to support its own programming and also advise other stakeholders. However, scalability will depend on program redesign and government support, among other things, to make it cost-effective and sustainable. Key reasons for • Innovative approach to addressing refugees’ housing needs: By shifting the focus from success funding refugees to funding host communities, NRC’s Urban Shelter Program in Jordan provides an innovate model that deviates from the cash-for-rent programs typically employed in humanitarian contexts. In doing so, the project helps add new and good quality rental stock that will be useful for host communities even if the refugees leave. • Stabilized housing conditions for refugee households: The project assisted 1,100 landlords build 5,100 housing units that provided safe and affordable shelter to more than 18,000 refugees for the project duration. NRC’s legal assistance strengthened tenure security for refugees, and technical assistance ensured that housing met (or even exceeded) habitability guidelines. Since the housing was located in well-established neighborhoods, it improved refugees’ access to local markets and services. • Going beyond the direct outcomes of improved housing, the project had a positive impact on the local economy: NRC’s investment of nearly USD 10 million had an economic multiplier effect on local markets. The construction activity created more than 20,000 short-term jobs and increased demand for local building materials and contractor services. (continued on next page) 122 RE-VISITING SOCIAL HOUSING (continued) JORDAN: NORWEGIAN REFUGEE COUNCIL’S (NRC’S) URBAN SHELTER PROGRAM FIGURE 33 NRC ENGINEERS INSPECT CONSTRUCTION WORKS IN JORDAN Source: NRC Jordan/ Rawan Bayabrs, March 2014. Limitations/ Though successful at the scale it was implemented, the project is resource-intensive and Constraints/ scalability in its present form is challenging: The project’s success was a result of close Lessons learned/ oversight by NRC, legal assistance, and technical and financial support. While the model Scope for worked well to achieve short-term objectives, it would require significant redesign and more improvement funding (which is challenging in itself) to achieve long-term economic stability for refugees. SOUTH AFRICA: BACKYARD RENTALS Context In the absence of adequate affordable housing provision by the formal private sector and severe backlogs in government-sponsored social housing, most housing in South Africa is self-built. 8 This practice is especially prevalent among low-income households, who build their homes incrementally over time. In the face of huge unmet housing demand, informal renting is a common practice, and includes makeshift structures in low-income suburbs, inner city tenement buildings, or other people’s backyards (Scheba and Turok, 2020). Of the many forms of informal renting, backyard rental is the fastest growing house type (Brueckner et al, 2019). Between 2011 and 2016, the percentage of households living in formal or informal backyard rental units increased from 7.3% of the country total to 12.5%. Backyarding is predominant in urban areas, with 84.2% of households living in backyard rentals in 2011 residing in urban areas.9 Originally started in the 1920s, backyard rentals first became widespread in the 1970s and 1980s when legal occupants of council housing illegally provided rental space to relatives (in exchange for in-kind payments) or paying renters. In the 1990s, after the fall of the apartheid regime, the government’s housing program (referred to as Reconstruction and Development Program (RDP) housing) enabled the intense growth of the practice (Scheba and Turok, 2020). Through the RDP program, the government provided large plots (up to 100 sq.m.) with a house of 40 sq.m. to households earning less than ZAR 3,500 per month. To supplement their income, households started to build backyard shacks to rent. (continued on next page) ANNEX 7: PRIVATE AND SMALL-SCALE LANDLORDS 123 (continued) SOUTH AFRICA: BACKYARD RENTALS Key figures:10 Total population, 2019 58.56 million Urban population (% of total) 66.86% Poverty ratio at national poverty rate (% of total population) 55.5% GNI per capita, 2019 (USD) 6,040 Project description Backyarding refers to the practice where (typically) the original house is retained as is, and the owner rents out backyard space to one or more tenants. Renting out extra yard space generates additional income for landlords, many of whom are often low-income earners themselves. One modality involves renting out backyard space to tenants wherein they are required to build their own shacks (rooms). As far as backyard rentals go, such an arrangement is on the informal end of the spectrum. Tenants pay the landlord a monthly land rent, and use materials depending on their income and affordability levels. Access to basic services (water and electricity) can sometimes be a challenge in such arrangements. A second modality is one where the owner himself/herself builds the backyard rental units (sometimes called micro-flats) – these are one or more blocks comprising multiple rooms, each of which is rented separately. These type of backyard rentals are of better quality than shacks, built with durable building materials, finished walls, and access to basic services. Units could have shared or individual bath and toilet facilities; and generally have a separate electricity meter for each unit.11 The better quality and access to services translates into higher rent for micro-flats than that for backyard shacks. A third modality is one where the owner demolishes the original structure altogether and builds a new multi-story rental structure, called a boarding house. These are usually two- story buildings with multiple rooms of good quality construction and access to services. FIGURE 34 3D VIEW OF BACKYARD SHACKS Source: https://journals.sagepub.com/doi/full/10.1177/0956247819895958. (continued on next page) 124 RE-VISITING SOCIAL HOUSING (continued) SOUTH AFRICA: BACKYARD RENTALS FIGURE 35 3D VIEW OF TWO-STORY MICRO-FLATS Source: https://journals.sagepub.com/doi/full/10.1177/0956247819895958. FIGURE 36 3D VIEW OF A BOARDING HOUSE Source: https://journals.sagepub.com/doi/full/10.1177/0956247819895958. When the practice of backyarding started to proliferate in the 1990s, several studies showed that owners were motivated not by profit but wanted to express solidarity with the homeless and excluded black population (Scheba and Turok, 2020). Later studies (since the 2000s), however, show the increasing commercialization of the sector as evidenced by the newer modalities of backyard rentals and the growth of new (small) businesses specifically to support this sector. (continued on next page) ANNEX 7: PRIVATE AND SMALL-SCALE LANDLORDS 125 (continued) SOUTH AFRICA: BACKYARD RENTALS Targeting Backyard rentals are targeted at a wide range of users, including informal workers, young professionals, and white-collar workers. Tenants’ incomes range from below ZAR 1,000 to as high as ZAR 10,000, reflecting the broad appeal of backyard rentals. The different types of backyard rentals cater to the different income and affordability levels of the tenants, including those whose income is between ZAR 3,500 and ZAR 10,000, i.e. too much to qualify for a free government house and too little to affordable market-rate housing. Regardless of income, it is typically single and young adults that occupy backyard rentals. Subsidy features At present, there are no subsidies for the practice of backyard rentals, since it is a market- based intervention and not regulated by any policy or law. There is, however, municipalities – such as the Khayelitsha Planning Council – are beginning to recognize the need for backyard rental development.12 Although there is no subsidy (to landlords or tenants) for backyard rentals, many of these units are built on plots that households have received for free through the government’s RDP program. Project Depending on the modality of the backyard rental, there are various types of landlord- sustainability tenant relationships. For example, in the case of backyard shacks, tenants are responsible for the construction and maintenance of their own structures. In the case of micro-flats and boarding houses, which are more commercial arrangements, landlords are responsible for construction and maintenance. In micro-flats, the owner lives in the original house on the same plot, whereas in boarding houses, the owner lives elsewhere and appoints a caretaker who lives in one of the rental units. While backyard shacks are an informal arrangement, the other two modalities typically include lease agreements between tenant and landlord. Key reasons for • Market-based solution that accurately identifies and targets customer demand. Backyard success rentals plug in the housing gap, and offer an in-between solution for those who are not eligible for free government housing, but also cannot afford market-rate housing. There is high demand for these, as evidenced by the rapid growth of the sector in the last two decades. Furthermore, demand comes from diverse segments, as evidenced by the different types, quality, and price points of backyard rentals. • The backyard rental industry has supported the proliferation of many small businesses that support sector growth. Recognizing the viability of the business proposition (of backyard rentals) and with the goal to help landlords and tenants overcome the challenges they face, several small businesses have sprung up in recent years. For instance, Bitprop provides an end-to-end solution for landlords and tenants, improving access to finance, securing land title, assisting in the design and construction process, signing on tenants, and managing the property.13 Other companies include isiDuli14 and Xtenda15 that are improving access to finance for owners. Limitations/ The backyard rental sector has been growing rapidly in recent years and has the potential to Constraints/ help meet the government’s objectives related to poverty reduction, densification, and quality Lessons learned/ affordable housing. Despite its positive impacts, the sector is not regulated nor does it receive any Scope for government support. As such, it faces certain challenges that prevent scaling up of the model: improvement • Limited access to capital to build rental units. Owners typically use their savings, sell assets to get started, participate in savings groups, borrow from family members, or take personal loans from banks to finance backyard rental development. However, interest rates are high at 22%, so owners generally prefer to not use debt. As a result, backyard rental development is often done incrementally, one rooms at a time, resulting in a haphazard appearance. (continued on next page) 126 RE-VISITING SOCIAL HOUSING (continued) SOUTH AFRICA: BACKYARD RENTALS • The construction process is fraught with difficulties. Few owners have construction experience, so the process gets split into smaller components thereby lengthening the construction time and cost. For example, although owners usually hire contractors to oversee construction, they buy building materials directly (which would typically be done via a building contractor). Depending on the owner’s financial situation, construction could take anywhere between two months and several years. • Unreliable construction quality. Although there are official City Council laws regarding land use planning and building standards, few landlords follow those. From their perspective, building codes and permitting processes is costly and time-consuming. As a result, it is unclear if backyard rentals are structurally safe. Since the municipality does not have the capacity to monitor or enforce regulations, these issues mostly go unaddressed. CALIFORNIA, USA: ACCESSORY DWELLING UNITS (ADUS) Context With social housing programs and naturally occurring affordable housing (NOAH) unable to meet housing demand, housing costs have spiraled in the US in recent years, especially so in coastal cities. At the same time that millions are under-housed, single-family zoning in most cities led to a situation where millions others being over-housed. Recognizing the need to explore non-traditional housing types, governments are increasingly targeting the potential of under-utilized land on single-family lots all over the country. Accessory dwelling units (ADUs) have proliferated across the US in recent years, and can help achieve policy goals related to creating new affordable housing, reducing carbon emissions, and promoting resilient infrastructure.16 ADUs are especially popular on West coast where housing affordability is a severe challenge,17 and California has been the frontrunner in the US. Inspired by regulatory changes in Cascadia (i.e. Portland, Seattle, and Vancouver), California’s state and city governments have been loosening restrictions on ADU construction since 2016. The most recent changes, effective January 01, 2021, further reduced barriers, streamlined approval processes, and expanded capacity to build more ADUs. Key figures:18 Total population, 2019 328.24 million Urban population (% of total) 82.46% Poverty ratio at national poverty rate (% of total population) N/A GNI per capita, 2019 (USD) 65,850 Project description “An accessory dwelling unit (ADU) is a smaller, independent residential dwelling unit located on the same lot as a stand-alone (i.e. detached) single-family home.” 19 Referred to by many names – granny flats, secondary suites, and in-law units, to name a few, ADUs have several variations: • Detached: separated from the main structure • Attached: attached to the primary structure • Converted existing space: space (such as a garage or storage area) on the lot that is converted to an independent living unit • Junior ADU: Conversion of an existing space that is contained entirely within an existing or proposed single-family residence20 (continued on next page) ANNEX 7: PRIVATE AND SMALL-SCALE LANDLORDS 127 (continued) CALIFORNIA, USA: ACCESSORY DWELLING UNITS (ADUS) FIGURE 37 THE MANY SHAPES AND SIZES OF ACCESSORY DWELLING UNITS (ADUS) DETACHED ADU ATTACHED ADU ATTACHED (ABOVE GARAGE) ADU INTERIOR (BASEMENT) ADU INTERIOR (CONVERTED GARAGE) ADU INTERIOR (UPPER FLOOR) ADU Source: The ABCs of ADUs21. People have been building ADUs for decades; the difference is that they were not in keeping with zoning codes (and several still are not). However, changing regulations are encouraging more people to build ADUs and to build them better and safer. 22 Targeting Although there is no specific targeting or eligibility for ADUs, they are most popular amongst singles and couples, followed by adult children and senior citizens. 23 Subsidy features Responding to the tremendous interest and demand for ADUs, governments across the country are beginning to offer financial incentives and subsidies. At present, however, there is no federal subsidy for ADUs. Some of the local and state subsidies include:24 • ADU Forgivable Loan Program, Santa Cruz County: Provides loans of up to USD 40,000 to homeowners who rent an ADU to a low-income household at an affordable rent for up to 20 years. • Junior Unit Initiative Program, City of Napa: Provides homeowners with technical assistance and up to USD 50,000 of below-market forgivable financing for converting or creating a JADU and renting it to a low-income tenant at an affordable rate. (continued on next page) 128 RE-VISITING SOCIAL HOUSING (continued) CALIFORNIA, USA: ACCESSORY DWELLING UNITS (ADUS) • Basement Apartment Conversion Pilot Program, New York City: Provides homeowners with low-interest, no-interest, or forgivable loans and technical assistance to convert their basements into safe apartment-style JADUs. • ADU Loan Program, City of Boston: The program grants no-interest loans of up to USD 30,000, and has set aside USD 650,000 to promote the construction of ADUs. However, at this time, subsidies are targeted at homeowners to encourage ADU construction. There are no subsidies for tenants, to reduce the rent payment burden, but some municipalities are permitting tenants to apply other (existing) rent subsidies. For example, through the Backyard Homes Project, Los Angeles allows Housing Choice Voucher (HCV) recipients to rent ADUs. Project Although ADUs are not a silver bullet to California’s housing crisis, they have the potential to sustainability make a dent in it. A 2020 UCLA study estimates that enabling state legislation had created the potential to build nearly 1.5 million new ADU housing units. 25, 26 As a result of changing regulations, there was a nearly three-fold increase in ADU permits in the state between 2018 and 2019, from 6,000 to 16,000. In the same period, ADU completions increased 3.5x from 2,000 to 7,000 (Chapple, et al, 2020). These changes are not confined to California alone; other state and city governments across the country are also enacting laws to enable and encourage ADU development, albeit slower than California. FIGURE 38 TYPES OF ADUS Source: Accessory Dwelling Unit Handbook, California Department of Housing and Community Development, December 2020. Key reasons for • (Additional) source of income for homeowners. Research by the Terner Center has shown success that supplemental income is one the biggest motivating factors for homeowners to build ADUs. This is especially true for low-income homeowners. • Enables extended families to live together. Another motivating factor for homeowners to build ADUs is to house family members. ADUs provide the flexibility to allow extended family members to live together while maintaining their own privacy, be it parents, adult (continued on next page) ANNEX 7: PRIVATE AND SMALL-SCALE LANDLORDS 129 (continued) CALIFORNIA, USA: ACCESSORY DWELLING UNITS (ADUS) children, or caregivers. Additionally, ADUs allow senior citizens to age in place while they rent out the main house (that they lived in previously), and are cheaper than senior living facilities. • Rise in companies providing specialized services for ADU construction. Spurred by an enabling regulatory environment and increasing demand for ADUs, several new companies have sprung up in recent years. The companies’ goals are to address the challenges in the ADU delivery chain, and they provide services covering design, engineering, permitting, and construction. Examples include: Abodu, Habitat ADU, Mighty Buildings, and Cover. 27 Limitations/ • Limited access to finance for low- and moderate-income homeowners. 28 The bulk of ADUs Constraints/ in the Los Angeles (LA) area have been built by low- and moderate-income homeowners Lessons learned/ in low-resource areas. These homeowners have limited access to cash savings and cannot Scope for leverage home equity. To help address this issue, the Terner Center recommends that “the improvement federal government create ADU-specific construction lending programs.” GERMANY: SUBSIDIZED HOUSING Context The social housing sector in Germany has followed, in large part, trends observed in other European countries – broad targeting in the 1950s and 60s to alleviate the general housing shortage, delegation from national to provincial and local governments over time, and the gradual reduction of subsidies. The key difference is that the German social housing system is not linked to a particular type of provider, but is instead based on the provision of subsidies (to all types of providers) in exchange for the use of a dwelling as social housing for a specific period of time (Pittini and Laino, 2012). The transfer of social housing to private landlords and time-limited subsidy programs has resulted in a gradual depletion of social housing stock. At present, there are roughly 1.12 million social housing units in Germany, representing less than 3% of the total housing stock. These are units that are within the lock-in period and are therefore subject to rent and income limits. There are another nearly 4 million municipal and cooperative housing units that are not within the lock-in period, but generally continue to contribute to affordable (not necessarily social) housing stock in the country. 29 Key figures:30 Total population, 2019 83.1 million Urban population (% of total) 77.4% Poverty ratio at national poverty rate (% of total population) 14.8% GNI per capita, 2019 (USD) 48,600 Project description With increasing decentralization over the years, provincial and local governments are responsible for social housing provision in Germany, while the national government sets the policies and provides housing allowances. With provincial and local governments implementing different programs, social housing models vary across the country. Therefore, the term generally refers to the provision of a public subsidy to housing providers that let dwellings to eligible households under regulated conditions for a fixed period of time. 31 The public subsidy typically takes the form of grants or tax relief, which covers the gap between the rent (or mortgage) payment and cost rent. In exchange for public financial support, developers rent the dwellings as social housing for a given period of time, based on income and rent ceilings decided by the government. This lock-in period is traditionally 30 years, but has been reduced in recent years to as little as 12 years in some instances. Dwellings become part of the private rental market at the end of the lock-in period and can be rented out at market rates. (continued on next page) 130 RE-VISITING SOCIAL HOUSING (continued) GERMANY: SUBSIDIZED HOUSING Social housing used to be provided by an institutionalized nonprofit sector, but it was dissolved in 1989, and social housing owned by municipalities was transferred to private market-oriented owners (Pittini and Laino, 2012). At present, social housing providers include municipal housing companies, cooperatives, private landlords, as well as commercial developers and investors. Targeting Social housing in the post WWII era was broadly targeted and was meant to alleviate the general housing shortage. However, starting in the 1970s, targeting for social housing programs became more narrowly defined. Target groups have been defined by legislation and include “households who cannot secure themselves with adequate accommodation and need support.” In particular, the policy supports low-income households as well as families with children, single parents, pregnant women, elderly, homeless, and other needy persons. 32 Subsidy features Given the highly decentralized nature of social housing provision in Germany, it is difficult to provide a comprehensive picture of how it is financed. In general, public subsidies are designed to reduce the upfront capital costs for social housing developers and investors, in exchange for the dwellings being rented out to target groups at discounted rents on a temporary basis. Supply-side subsidies have reduced over time, as has the lock-in period, leading to a reduction of social housing stock – from 19 percent of total housing stock in 1968 to less than 3 percent at present (Kofner, 2017). At the same time, government focus has shifted to demand-side subsidies, in the form of housing allowances/benefits. Eligibility for housing benefits is determined on the basis of household size, household income, and the amount of rent or mortgage that qualifies for support. Households living in social housing as well as privately rented units are eligible for housing benefits (Droste and Knorr-Siedow, 2007). Project Declining subsidies have led to a shrinking of the social housing sector, especially in sustainability recent decades as new production has fallen and the number of social housing units leaving the lock-in period is higher than construction of new units. This decrease in social housing most acutely affects low- and middle-income households in big cities with tight housing markets such as Munich and Berlin. The tightening of rules governing social security and housing benefits payments has also increased the rent burden on many. As a result, there is increasing pressure for higher investment in social housing production across the country. Key reasons for Social housing built in West Germany until the 1980s was generally known for its high success quality, generous sizes, and broad targeting. However, social housing production has fallen drastically since the 1990s, with the sector losing roughly 100,000 units per year in the two decades thereafter. With the challenges around housing affordability and inclusive growth, the current regime of social housing provision is woefully inadequate to meet social housing needs in the country. Limitations/ Socio-spatial segregation in social housing projects. Driven by the idea that social housing Constraints/ should provide for a majority of the population, projects built in the early years had a good Lessons learned/ social mix. In fact, well-located projects in high-growth cities continued to be attractive Scope for places to live in even for those whose incomes increased over time. At the same time, estates improvement built in the 1960–70s or on urban peripheries were less desirable, and saw an exodus of the better-off residents. Misguided laws33 and private landlords’ cherry picking of ‘desirable’ tenants further compounded socio-spatial segregation in social housing. Today, social housing in inner city locations in economically strong regions have only a minority of legally eligible residents, while that in stigmatized areas struggle with socio-economic problems accompanying segregation (Droste and Knorr-Siedow, 2007). (continued on next page) ANNEX 7: PRIVATE AND SMALL-SCALE LANDLORDS 131 (continued) GERMANY: SUBSIDIZED HOUSING Recent increase in federal support is helpful, but far from enough to meet the estimated need. Increased financial assistance from the federal government helped increase social housing stock (new construction and renovations) in the 2016–2019 period; and the government also made changes to the constitution in 2019 to boost the supply of social and affordable housing. The Federal Association of German Housing and Real Estate Companies (GdW) estimates that 80,000 new social housing units are needed each year; the 25,600 units built in 2019 fall far short of that goal. Looking at current trends in social housing production, the government will need to provide significantly more funding to meet GdW estimates of social housing. 34 1 Hamilton, et al, May 2018. 2 Especially in urban areas in the north, close to the Syrian border. 3 Which were home to more than 25 per cent of registered Syrians in Jordan in 2015. 4 https://data.worldbank.org/country/jordan. 5 NRC adopted Sphere standards related to water, electricity, sanitation, ventilation, access to basic services and markets, and protection from the elements to determine suitability. 6 https://www.internal-displacement.org/sites/default/files/inline-files/20150325-global-home-sweet-home-case-studies-en- case1-Incremental-housing.pdf. 7 A Guide to Regulations governing Upgrading and Construction of Residential Properties in Irbid: Facilitating Improved Housing Responses for Syrian Refugees, March 2014. 8 By households themselves or by contractors/small builders hired by them. 9 Statistics South Africa. 10 https://data.worldbank.org/country/south-africa. 11 Electricity is supplied by hooking up to the main house or to a nearby utility pole; sometimes, owners follow formal procedures to get an electricity connection for backyard rental units. 12 https://housingfinanceafrica.org/documents/innovations-in-backyard-rental-models-for-the-2020s/. 13 https://www.bitprop.com/. 14 https://vc4a.com/ventures/isiduli-financial-solutions/. 15 http://www.xhf.co.za/. 16 https://www.boston.gov/departments/neighborhood-development/addition-dwelling-units. 17 https://www.bloomberg.com/news/articles/2018-01-16/the-rise-of-the-backyard-granny-flat?sref=QFCZ3YPm. 18 https://data.worldbank.org/country/united-states. 19 https://www.planning.org/knowledgebase/accessorydwellings/. 20 Accessory Dwelling Unit Handbook, California Department of Housing and Community Development, December 2020. 21 https://www.aarp.org/content/dam/aarp/livable-communities/livable-documents/documents-2019/ADU-guide-web- singles-071619.pdf. 22 https://www.bloomberg.com/news/articles/2018-01-16/the-rise-of-the-backyard-granny-flat?sref=QFCZ3YPm. 23 https://www.bloomberg.com/news/articles/2021-03-25/can-granny-flats-fill-california-s-housing-gap. 24 ‘Reaching California’s ADU potential: Progress to Date and the need for ADU Finance,’ Terner Center for Housing Innovation, August 2020. 25 https://escholarship.org/uc/item/8gh2x0tj. 26 This figure might have increased since publication, since California enacted sweeping new legislation in January 2021, six months after the publication of this report. 27 https://www.bloomberg.com/news/articles/2021-03-25/can-granny-flats-fill-california-s-housing-gap. 28 ‘Reaching California’s ADU potential: Progress to Date and the need for ADU Finance,’ Terner Center for Housing Innovation, August 2020. 29 The State of Housing in Europe 2021, Housing Europe. 30 https://data.worldbank.org/country/Germany . 31 “Social housing: A key part of past and future housing policy”, Employment, Labour and Social Affairs Policy Briefs, OECD, Paris, http://oe.cd/social-housing-2020. 32 Law on State Funding of Housing and Housing Construction (Wohnraumförderungsgesetz, WoFG). 33 Such as rent increases to induce those with higher incomes to leave social housing, and free letting for all income groups from the late 1990s onwards. 34 The State of Housing in Europe 2021, Housing Europe. 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Katz. 2016. “The Effects of Exposure to Better • https://nlihc.org/resource/public-hous- Neighborhoods on Children: New Evidence from ing-history. the Moving to Opportunity Experiment.” Ameri- • https://nlihc.org/resource/public-housing- can Economic Review, 106 (4): 855–902. where-do-we-stand. https://dx.doi.org/10.1257/aer.20150572. • https://archive.curbed.com/2020/1/13/ 21026108/public-housing-faircloth-amend- Additional resources: ment-election-2020. • https://prospect.org/infrastructure/ameri- • https://www.hud.gov/topics/housing_choice_ ca-needs-social-housing/. voucher_program_section_8. • https://www.bloomberg.com/news/arti- • https://www.hud.gov/program_offices/pub- cles/2021-01-29/a-plan-to-boost-public- lic_indian_housing/programs/hcv/about. housing-in-post-covid-nyc. • https://housingmatters.urban.org/arti- • https://www.fdrlibrary.org/housing#:~:tex- cles/role-housing-choice-vouchers-address- t=President%20Roosevelt%20signed%20 ing-americas-rental-housing-crisis. the%20Wagner,housing%20projects%20 • https://www.vox.com/future-per- across%20the%20country. fect/2019/12/10/21001692/housing-vouch- BIBLIOGRAPHY 141 ers-discrimination-racism-landlords. • https://community-wealth.org/strategies/ • https://www.cbpp.org/research/housing/fed- panel/clts/index.html. eral-policy-changes-can-help-more-families- • https://housingmatters.urban.org/articles/ with-housing-vouchers-live-in-higher. three-ways-community-land-trusts-support- • https://www.huduser.gov/portal/sites/default/ renters. files/pdf/family-options-study-full-report.pdf. • https://shelterforce.org/2010/12/21/invest- • https://www.huduser.gov/portal/sites/de- ing_in_community_land_trusts_a_conversa- fault/files/pdf/SAFMR-Interim-Report.pdf. tion_with_clt_funders/. • https://shelterforce.org/2019/08/30/are-we-di- USA – Community Land Trusts luting-the-mission-of-community-land-trusts. 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