Pricing and subsidy systems in British social rented housing: Assessing the policy options

In common with other similar countries Britain has displayed a tendency to shift from investment based housing subsidies to income related forms of assistance. However, despite two attempts at reform since 1970 a durable, effective and equitable system of pricing and subsidy has yet to be devised Further legislation is in prospect and this paper reviews the issues and principles confronting policy makers, before turning to a discussion of three policy options, chosen to illustrate different general approaches to pricing and subsidy. The options considered are capital value rents, national rent pooling and consumption expenditure pricing.     

Is private rental an option for urban housing provision in Hungary?

By 1998, 91 percent of all housing units in Hungary were occupied by owners –an extremely high percentage by international standards. Today's Hungarian housing politicians, whose anti-rental convictions stem from the experience of the previous regime, tend to disregard arguments about the consequences of this bias: the negative impact on mobility, the creation of a rigid housing market (lack of adaptability to the housing market), hardships in addressing social problems, conflicts between generations (obligations borne by elder generations) as well as the `compulsory' purchase of housing by younger generations and the drain of subsidies. There is extensive evidence that current Hungarian regulations are hostile to rental housing. With subsidies channeled to the ownership sector (housing construction benefits, interest subsidies, local subsidies, employer subsidies) as well as tax relief (purchase of privately owned housing, savings-linked subsidies, imputed rents), it is more expensive for households to rent than to buy or build housing. This leads to a distorted economic structure and a distorted use of society's resources. A housing policy based on modern economic theory pursues neutral subsidy and tax policies concerning ownership. Thus, from an economic point of view, there is no reason to prefer owner-occupied housing to rental housing. This paper explains why the private and public rental sectors are so small. But at a deeper level, the question is why private rented housing exists at all. The paper also explores related questions: who tend to rent out their units, why, for how long and how much; and who tend to rent these units, why do they rent them, and at what prices? The key policy issue is to define the basic impediments to the sector's expansion. On this basis, a new housing policy program can be formulated.     

Housing careers,asset accumulation and subsidies to owner occupiers — A microsimulation

Owner occupiers in the UK housing market receive considerable central government subsidies, namely through provision of tax relief upon mortgage interest, through exemption of private house sales from capital gains tax and through tax advantages relative to those who pay rent out of their net incomes. This paper sets out a framework for assessing the incidence of these subsidies upon different groups of owner occupiers over time, and suggests how regional fluctuations in house price inflation, size of house purchase loan and residential mobility behaviour affect the incidence of exchequer subsidy.     

Developments in the provision of housing finance in the UK

Recommended reading for providers and designers of housing. The results of the housing finance changes in the UK included a wider range of institutions involved, significant developments in the source and delivery of that finance, as well as important changes in government policy opening up social housing to the private finance market, targeting subsidy more directly at particular groups of individuals and introduction of specific supply subsidies to new private rented sector. The considerable unease with certain outcomes is dealt with.     

The future of the private rental sector in sweden

The private rental sector in Sweden is competing on a less-regulated and less-subsidized housing market. The paper analyses the prospects of this sector. The private sector has the dual advantage of an older (more attractive and centrally located) stock and a slightly beter-off tenant profile than the municipal sector. Thus, the private sector will be less affected by the withdrawal of interest subsidies, as these were given to new stock. The rent-to-income ratio will surpass 30 per cent in all sectors of the housing market in the year 2002, according to a recent projection. The private sector suffers less from vacancies than the municipal sector. The economic situation is, however, characterized by high LTV ratios, due to a price and borrowing boom in the late 1980s. This has led to bankruptcies and a weak economic situation for many private landlords. The boom was followed by a bust in 1990–93. Both the upswing and the downturn can be explained by fundamentals such as changes in GDP, unemployment, housing subsidy and tax rules. In the present recession, the private rental sector will benefit from its large share of small dwellings, which will also be advantagenous in the longer run, in view of the demographic trend towards more small households. There is fierce competition between the private and the municipal housing sector. In the short run, the private sector will benefit from the removal of interest subsidies. The effects will be felt in the younger municipal sector. All in all, both short-run and long-run considerations point at a housing market in Sweden which will keep its dualistic character of free competition between the private and the municipal sector in the future. Bengt Turner is Professor of Economics and Chair of the Institute for Housing Research at Uppsala University. He is also chairman of the European Network for Housing Research and coordinates a working group on housing finance. His research area is housing policy, microeconomic analysis of the housing market, as well as housing finance. He has also analysed the housing situation in transitory (East European) countries. In Sweden he is actively involved in housing policy formation as an expert in Governmental commissions and as a member of a number of research boards. Tommy Berger is an economist at the Institute of Housing Research, Uppsala University. His main interest is in housing finance and taxation policy.     

Housing Subsidies in the Nordic Countries1

Housing subsidies are substantial in all the Nordic countries. Very little consideration has, however, been given to analyzing the efficiency of the subsidy systems. This report presents a study on housing subsidies and their distribution and reviews some central issues of principle raised by it. Housing subsidies are defined in financial terms and are calculated for 1979. Both the total amount of subsidies and their distribution by income, household types and tenures are calculated. The results of the study suggest that the distributive effects of housing subsidies are in conflict with fundamental housing policy goals of the Nordic countries. In Finland, the largest proportion of subsidies, in relative terms, goes to groups in the middle income range, while the subsidy profile in Norway is strongly progressive, i.e. high‐income groups get the largest share. In Sweden, the different income groups receive roughly the same share of the total subsidies. Further research is needed to provide a basis for an evaluation of the existing subsidy systems.     

中央国家机关公务员的住房补贴形式选择

公务员住房制度,是国家住房政策的重要组成部分。以中央国家机关公务员为研究对象,在对实物补贴和货币补贴形式进行理论分析、对中央国家机关公务员现有住房补贴形式及其执行状况进行分析总结的基础上,运用二元离散选择模型对影响中央国家机关公务员住房补贴形式选择的因素进行了定量分析,提出了调整实物补贴发放形式,调整特殊公务员群体获得住房补贴的时间顺序,通过创新住房金融模式提高公务员住房补贴效率等建议。     

Meeting housing needs through the market: An assessment of housing policies and the supply/demand balance in France and Great Britain

In both Britain and France, for the last 15 years or so, housing policy has become more market‐orientated. This paper examines what this has meant for the balance between supply and demand and for progress in meeting housing needs. Current projections for how housing needs and the demand/supply balance will develop in the 1990s are also analysed. For each country, the determinants of housing demand, both demographic and economic, and the supply position in both the private and public sectors, are examined. Several common issues are identified: the existence of unmet housing needs, problems of indebtedness, the limits to the expansion of owner occupation, problems of social housing finance, and concerns about the decline of the private rented sector. There are also important differences between the two countries: housing output remains at a higher level in France than in Britain; deregulation of housing finance has gone further in Britain than in France; and in France there remains a greater recognition by government that housing is a national responsibility. But in both countries, the ‘marketisation’ of housing policy has meant that housing outcomes have become more dependent on factors external to the housing system.     

The effectiveness of selected housing subsidies in the Czech Republic

The goal of this article is to evaluate the effectiveness of the new housing policy in the Czech Republic as an example of a transitional society after the collapse of communism. The first part provides a brief history of the housing policy dating back to 1918. The second part presents the results of empirical tests of effectiveness (or equity) of selected housing subsidies applied during the transition. As in other transitional countries, the considerable decrease in the financial affordability of housing after 1989 demanded an active housing policy. Housing subsidies, whether direct or implicit, were, however, often not well targeted. The economic subsidy from rent regulation, tax relief and housing allowances are especially assessed here.

The Effect of Housing Expenses and Subsidies on the Income Distribution in Flanders and the Netherlands

This study explores the role of housing expenses and subsidies with respect to income distribution in Flanders (the northern part of Belgium) and the Netherlands in 2005–2006. It analyses income poverty and inequality by comparing equivalent disposable income before and after housing expenses with a relative poverty threshold and the Gini coefficient. Poverty and income inequality increase in both ‘countries’ when equivalent disposable income is corrected for housing expenses. Furthermore, the relative position of outright owners and social tenants regarding poverty improves. Housing subsidies play a (partly) different role in Flanders and the Netherlands. The implicit social rent subsidy in Flanders and the explicit housing allowance in the Netherlands serve the same goal; however, they both redistribute income relatively strongly in favour of low-income tenants. The tax relief system on the other hand increases income inequality in society, in both Flanders and the Netherlands, whereas our comparative analysis suggests that tax relief does not have a moderating effect on net housing expenses.     

The taxation of housing consumption

The chief objective of this paper is to bring the subject of the taxation of housing consumption into future analysis of the housing system. It is shown that the domestic rates levied by local authorities in Britain are precisely such a tax and that net of various remissions total receipts in 1981–82 from the twenty million hereditaments in the domestic sector probably exceeded £4 billion. This is less than the flow of subsidies on housing consumption but of the same order of magnitude. It is also made clear that in recent years there has been widespread ignorance of housing consumption taxation amongst specialists from a variety of ‘schools’ and an explanation is advanced for how this came about.     

Approaches to workforce housing in London and Chicago: from targeted sectors to income-based eligibility

In many cities, people with jobs essential to daily urban life—bus drivers, teachers, police, nurses and the like—cannot afford housing in proximity to their work. Municipal efforts to counter such job–housing imbalances include targeting such workers specifically or moderate-income households, more broadly, for housing support. This article investigates and assesses housing policy for modest-income workers in two cities, Chicago and London. Based on review of documents and key informant interviews, each city’s policy context, aims, means and outcomes are analyzed. Effective strategies include working with public, private and third-sector partners to find upstream cost-effective solutions, increasing shared equity/ownership products and developing mechanisms to ensure long-term affordability of workforce housing. While each city’s policies reflect local conditions, they also are indicative of broad trends in intermediate housing policy: an increase in stakeholders involved in programme administration and delivery, a continued focus on homeownership, rising income thresholds for eligibility and a shift away from targeting employment sectors.     

Housing Privatization: Social Goals and Policy Strategies

ABSTRACT: This essay examines privatization proposals for publicly assisted housing in the context of adjustments in the state's role within a mixed economy. Four case studies are presented that deal with: (1)tax subsidies for homeownership, (2)the use of subsidies to private developers, (3)the use of housing vouchers, and (4)ownership for the poor. The author compares how well these solutions perform in relation to quality, equity, efficiency, choice, and community.     

Housing Investment Trusts: A New Structure of Rental Housing Provision?

Recent governments in Britain have sought to attract financial institutions into private rental housing in order to increase the scale, professionalism and reputation of the sector and thereby to 'modernise' private landlordism. In 1996, in order to provide an attractive vehicle for the financial institutions to invest in the sector, the government introduced legislation permitting the establishment of housing investment trusts. These residential property companies have a reduced tax liability compared with normal property companies. However, no housing investment trusts have so far been established and none seem likely to be set up. This paper reports on qualitative interviews with financial institutions to examine why housing investment trusts have proved to be a policy failure. It is argued that the rules governing such trusts did not reflect the normal operations of a property company and that the existing structure of housing provision in the private rented sector was itself an obstacle to the modernisation of private landlordism.     

A Tale of Two Conservatives: Housing Policy Under Reagan and Thatcher

Low-income housing policies under Ronald Reagan in the United States and Margaret Thatcher in Great Britain have emphasized increased reliance on the market, individual choice, and sharper means testing of the recipients of subsidies. Their housing agendas were justified on grounds of promoting greater efficiency and equity in low-income rental housing programs. An evaluation of those policies indicates, however, that gains in efficiency—a given amount of spending producing greater benefits—are small compared to increases in inequities between low-income renters and other households, especially when all housing policies are considered.     

Housing Associations and Housing Policy in Britain Since 1989

Important changes in the pattern of new building, investment and ownership of social rented housing in Britain in the period since 1989 can be seen as moves towards a more European style of provision. Similarly, reductions in general subsidy and a switch to greater reliance on personal income related forms of assistance with housing costs are consistent with developmentselsewhere, as is concern to contain public expenditure by placing more emphasis on private finance. The themes of the paper are the growth and transformation of housing associations in Britain. The importance of stock transfers from local authorities has grown to the point where they have become the major source of growth, and it is argued that within the foreseeable future the majority of the social rented sector may be owned by housing associations or other registered social landlords. The paper looks at finance, development and governance issues, concluding that housing associations have been drawn into an ever closer relationship with the state.     

Public utility ownership and in-kind trade policy in vertically related markets

This analysis examines the optimal government ownership level of an upstream public utility when considering an import tariff and a production subsidy. It analyzes a simple two-country model in which a home public and a foreign private utility firm in the upstream market supply their produced inputs exclusively to compatriot downstream firms that compete in the home country's final good market. The paper shows various conditions for determining the optimal level of government public utility ownership and the role of that ownership. If the import tariff and production subsidy are sufficiently small (or large), then the optimal government ownership policy will likely be complete (or partial) nationalization, and the ownership of the home public utility works as an in-kind subsidy to (or tax on) the home downstream firm. The analysis also examines a case where the home downstream firm monopolizes the market. It shows that the optimal policy is the complete nationalization of the upstream public utility. The World Trade Organization (WTO) limits the direct use of tariffs and subsidies as a strategic trade policy tool. Under such a situation, this paper suggests that government ownership of a public utility can be used as an in-kind trade policy tool, and privatizing without considering this role of public utilities may neglect a potentially useful trade policy channel.     

ANOTHER LOOK AT HOUSING ALLOWANCES: A RESPONSE TO CHESTER HARTMAN

Program experience with the Section 8 Existing Housing program and final research findings from the Experimental Housing Allowance Program have shown that, contrary lo Chester Hartman's conclusions in his recent Journal article, housing allowance programs similar to HUD's proposed Housing Payment Certificate program are an effective way to provide housing subsidies for families in need of assistance. Comparisons with public housing and unrestricted cash grants show that allowances produce the largest increase in housing consumption per subsidy dollar, and the design of the Housing Payment Certificate program will assure that those subsidies go to families most in need. Criticisms suggesting an inadequate supply of affordable, standard housing are refuted by the Section 8 Existing record of 750,000 families now renting units on the private market. Finally, discrimination has not prevented these families from finding standard housing or moving to different neighborhoods. The Housing Payment Certificate program is proposed not as a substitute for the Department's current commitment to a range of housing programs, but rather as the vehicle for new assistance.     

Fiscal policy,taxation incentives and inner‐city housing development

This paper considers the risk and uncertainty attached to inner‐city environments and analyses the use of taxation incentives as a policy instrument in generating demand‐led residential development in such localities. Initially an international perspective is outlined; however, particular attention is focused on Dublin, Ireland, where taxation breaks specifically orientated at both owner and occupiers and investors have been a prime influence in stimulating private sector residential development on a major scale within the central core of the city. The case is presented for the imaginative use of tax incentives in achieving effective urban regeneration. Whilst it is recognised that housing policy and mechanisms cannot simply be replicated from one situation to another, there is need for policy‐makers, especially in Britain, to consider more innovative approaches to inner city housing renewal by integrating macro‐economic, fiscal and housing policy objectives.