HOUSING POLICIES IN THE EUROPEAN UNION Christian Donner / Vienna 2000 Financing of housing (section A 5) is one of the most important areas in housing policy. Long-term fi- nancing for developers and investors or for buyers The present study consists of four parts. Part A of (owner-occupied) housing is dominated by contains a compact theory of housing markets and mortgage loans. The interdependent and combined housing policy. The more voluminous Part B com- effects of loan type, maturity, interest rates, risk and prises 15 monographs on all current EU countries. inflation on annuities are discussed and compo- Part C presents condensed reviews of the same nents of nominal gross active interest rates are ana- countries and some comments on EU activity in the field of housing. Part D includes some suggestions Housing stock structures (section A 6) comprise a on housing policy instruments and, finally, this variety of tenures. Each tenure represents a specific bundle of rights and duties which can be greatly modified by housing policy. Parallel to groups of Initially, the theoretical Part A deals with housing
developers, tenure structure can be broken down terminology (section A 1). Among others, the term into public rental housing, limited-profit rental „social housing" is analysed and because of its im- housing, co-operative housing, private rental hous- precise usage discarded as a viable housing policy ing and owner-occupied housing. In addition to the term. Similarly, the term „sub-standard housing" is regularly used housing stock, there are consider- only meaningful with reference to a generally able shares of secondary residences etc. in some achieved standard. Section A 2 presents housing forms and tenures Current housing expenditure (section A 7) results which normally appear in housing markets, par- from capital cost and operating cost. Manifold ticularly tracing the varying rights and duties combinations of capital from various sources and linked with specific tenures in different countries. different loan types lead to complex user payment When comparing housing sectors, housing forms flows. Regarding equity to be provided by buyers and different tenures must be kept apart. Aspects of of owner-occupied housing, national regulations housing markets such as supply, demand, vacancy and customs vary greatly. In countries with tradi- and price are briefly dealt with. tionally high inflation and high interest rates, bor- rowers try to keep debt low and to repay quickly. In the following sections, housing markets are de- The influence of loan maturity on total real financ- scribed in greater detail according to areas of possi- ing cost is presented in graphs and tables. This sec- ble market intervention by housing policy. tion also evaluates the relative importance of differ- Any production of dwellings requires land for build- ent operating cost elements and shows that market ing (section A 3). In urban areas, because of concen- rent for a totally capital-market financed dwelling trated demand and inelastic supply, the share of would often not cover capital cost. land may reach half of the total production cost of a Taxation of housing (section A 8) is partly moti- dwelling. Additional problems occur when land- vated by a need for revenue and partly by housing owners refuse to sell, speculating on rising prices. If policy objectives. Acquisition, ownership and use of land ownership is scattered, this may obstruct ra- dwellings are all taxed. Because of the „visibility" tional development of human settlements. Finally, of real property, it is often taxed without proper the contradictory aims of mobilising land, keeping justification while capital gains are taxed only land prices low and reducing land consumption are lightly, although they should be taxed. An issue often discussed is classification of housing as in- In section A 4 agents in the housing construction vestment or consumption good. In reality, the two market are described according to their interests. variants are frequently mixed, leading to substan- Among them, there are developers (public authori- tial foregone tax revenue if deductibility of expen- ties, limited-profit housing associations, housing co- diture is not compensated by imputed rent at mar- operatives, private landlords and owner-occupiers) as well as planners and builders. Diverging inter- ests of landlords and tenants often lead to conflict- ing behaviour. Aspects of housing construction quantity and quality are also commented on briefly. HOUSING POLICIES IN THE EUROPEAN UNION Christian Donner / Vienna 2000 Section A 9 contains some considerations regarding Urban renewal policy is mainly concerned with the statistical data on housing. The most useful indica- eradication of slums and the elimination of sub- tors seem to be the ratio of floor area in new hous- standard housing, as well as with improving the ing compared with total floor area in the housing local environment. Specifically, preventive and stock and net floor area per person discounting a corrective measures against the decay of large „core area" (kitchen, bathroom, entrance) as well as housing estates built in the 1960s and 1970s are variations of those indicators over time. Regarding required. These measures also have important so- housing price/expenditure, the ratio of purchase cial implications. Especially in inner city areas, the price or annual basic rent to per-capita GDP allows implementation of revaluation strategies may have cross-national comparisons. Finally, difficulties negative effects and lead to social segregation. encountered in determining housing policy expen- Housing construction policy (section A 13) has widely diture are explained. been identified with housing policy and is often Section A 10 discusses possible housing policy goals. substituted for it. For lengthy periods, production The primary goal of socially-oriented coverage of of the largest possible number of new dwellings housing needs is distinguished from secondary was taken for the prime aim of housing policy. aims like increasing the share of owner-occupation Since on-site labour represents an important cost or of local authority housing, reduction of housing element, the pre-fabrication of standardised build- expenditure etc. as well as supplementary aims ing components was thought to be a way of increas- such as policies influencing the distribution of ing productivity. In addition, costs were to be cut wealth or income, and labour market policy. Within by high-density layout, compact dwelling design current housing policy, some problem household and inexpensive appliances. An important role was groups emerge, sometimes identified as elderly or assigned to limited-profit housing providers which unemployed persons, single parents, alcohol or came to dominate subsidised production of multi- drug addicts, foreign nationals and socially disrup- storey housing in several countries. tive persons. Regarding urban development, deg- In view of the magnitude of production costs, hous- radation of the local environment will impair the ing financing policy (section A 14) played a leading housing situation of residents while revitalisation role in housing policy. Most frequently applied strategies (active gentrification) may lead to their forms of supply-side subsidisation were public subsidised loans, grants towards construction cost Section 11 analyses and evaluates various forms of and interest or annuity subsidies. housing policy market intervention. Basically, the pub- Regarding subsidised loans, relative or absolute lic sector may employ legal regulations, provide subsidisation may be distinguished depending on information, participate directly in housing markets the interest rate being higher or lower than the in- and/or provide subsidies. Particularly this last flation rate. If the two rates are equal, the real value policy instrument tends to heavily burden public of the capital provided is preserved. If the subsidi- sector budgets. As subsidies aim at bridging the sation benefit is defined as partial saving of financ- gap between (high) housing cost and (low) house- ing cost compared with capital market loans, and hold income, the advantages and disadvantages of subsidisation cost is defined as loss in the real value supply-side and demand-side subsidies are com- of public funds, then an efficiency factor based on pared. In addition, direct and indirect forms of cost-benefit-analysis can be computed for different housing policy market intervention are grouped subsidy schemes. according to the different housing market agents Premiums for deposits in special financing circuits (e.g. Bausparkassen) and tax allowances for refinanc- The following sections treat specific areas of active ing instruments would be considered indirect sup- housing policy in greater depth. ply-side subsidies. Land and urban development policy (section A 12) Housing stock policy (section A 15) has a strong in- describes the creation of urban land supply by fluence on actual housing consumption by house- planning and zoning and by definition of permitted holds. Various forms of housing deficit (cramped use and density etc. Besides direct instruments of living, under-utilisation, misallocation, sub- market intervention like expropriation and pre- standard and vacancy) all call for housing policy emptive purchase rights, some measures to restrict action. Specific market intervention then takes on hoarding of legally available land are discussed. different forms according to the particular deficit Leasing of land by local authorities allows greater flexibility and furthers rational urban development. HOUSING POLICIES IN THE EUROPEAN UNION Christian Donner / Vienna 2000 Public rental housing is provided at rents (far) be- benefit is a socially targeted housing policy instru- low market level, but access is usually restricted ment, deductibility of mortgage interest and re- because of insufficient supply. Nevertheless, in payment at the individual marginal income tax rate some countries, public rental housing is later sold is a regressive instrument. to sitting tenants. In this situation, heavily subsi- Limitation of entitlement to and quantification of dised purchase prices act as a strong incentive. housing benefit is still subject to intense discussion. Limited-profit housing companies occupy a some- A balance has to be struck between a socially moti- what diffuse position which also changes over time. vated expansion of housing benefit payments, and The power of public authorities to control and in- the ever rising public expenditure required by this fluence the activities of those housing developers system. At the same time, sufficient incentive must and providers varies among different countries. In be preserved for households receiving housing recent years, a trend towards increasing economic benefit to take up (paid) work instead of immobilis- independence can be observed raising the question ing them through a „poverty trap". of actual ownership of the accumulated (real prop- Tax policy (section A 17) is often not clearly embed- ded in housing policy. Tax revenue is usually more Rent in the limited-profit sector is either deter- important than social housing policy aims. On the mined according to household income or is a func- other hand, vaguely justified tax allowance schemes tion of cost. However, „cost rent" often includes a cause important foregone tax revenue. Also, taxa- number of elements (potentially) exceeding actual tion of land hardly corresponds to the proclaimed cost. In any case, cost rents would not assure access goal of furthering a more flexible land market. to adequate housing for low-income households. Capital gains are inadequately taxed. By contrast, Affordability of limited-profit housing is funda- real property transfers are often taxed quite heav- mentally obtained by subsidies which usually were allocated to the limited-profit sector on an preferen- Finally, section A 18 describes various forms of provision of housing policy funds such as general and Housing co-operatives vary greatly in character housing-specific taxes, repayment of previous pub- depending on the possibility of later commodifica- lic loans, capital market credit, securitisation and tion. Therefore, co-op housing may appear similar sales from the public rental housing stock. to rental housing or also become practically equiva- lent to owner-occupied housing. The private rental housing sector experienced far- reaching market intervention by governments, mainly related to rent control or rent regulation, to Each one of the 15 monographs on EU countries security of tenure and to transfer rights. While justi- presented in Part B is based on the same structure
fied during crisis periods, these housing policy to facilitate use by readers interested in specific instruments proved to be counter-productive when issues or periods. In view of the wealth of material they continued for prolonged periods and pre- presented, numerous references give guidance for vented adequate private housing investment. As further reading. Countries are arranged in alpha- most of those market interventions have been re- betical order according to their abbreviations. duced or abolished, private rental housing is cur- rently closer to free market conditions in many As a background to housing-specific topics, some basic information on the geography, demography, administration, politics and national economies is The relationship between housing expenditure un- presented in section 1 of each monograph. Section 2 der free market conditions and partly insufficient describes developments in housing policy from household income was at the origin of modern 1945 to 1990, arranged by policy area like in Part A. housing policy. Therefore, many forms of housing The same structure applies to section 3, with infor- expenditure policy and income policy developed (sec- mation on housing policy during the most recent tion A 16). Apart from many attempts at reducing decade 1990-2000. The outcome of endogenous housing cost and hence lowering housing expendi- housing market developments and housing policy ture directly, mostly demand-side subsidies were influence is outlined in section 4. Finally, section 5 implemented in order to assure access to adequate attempts to evaluate the individual countries' hous- housing. In this sense, direct income support by ing policy on the basis of the theoretical analyses housing benefit is to be distinguished from indirect undertaken in Part A. income support by tax allowances. While housing HOUSING POLICIES IN THE EUROPEAN UNION Christian Donner / Vienna 2000 AT / Austria DE / Germany Austrian housing policy has predominantly been German housing policy is based on legislative co- supply-side policy. Until now, housing policy funds operation between the state and the Länder and on have mainly been provided by setting aside fixed federalist implementation. Post-war housing sub- percentages of certain kinds of tax revenue and by sidy schemes initially concentrated on rental hous- collecting housing-specific levies. Traditional sup- ing, were later extended to owner-occupied hous- ply-side subsidies are combined with generous ing and have more recently been complemented by income ceilings. Housing benefit is less significant more flexible subsidisation arrangements. and generally linked to supply-side subsidisation. In contrast to other countries, subsidies for rental Tax allowances play a minor role. housing were not only available for limited-profit The sizeable public rental housing sector, especially but also for private developers. Original indefinite in Vienna, and the still larger limited-profit sector control of limited-profit housing was abolished in provide a viable alternative to private renting. 1990 through repeal of the Limited-profit Housing Long-term regulation of private rental housing has Act. In addition to controlling some (previously reduced the share of this sector. Privately devel- limited-profit) housing companies, the local autho- oped housing mainly consists of owner-occupied rities also procure allocation rights in the private single-family homes. rental sector. In some Länder, tenants of subsidised For several decades, Austrian housing policy was housing whose income exceeds current income based on corporatist „social partnership". Since the ceilings are obliged to pay supplementary rent. 1980s, it has progressively been regionalised. Only In the private rental sector the „comparable rent in recent years has housing policy become more system" works quite well. However, regionally market-oriented. differentiated housing benefit has become an indis- pensable element of housing policy. In the owner-occupation sector, tax allowances BE / Belgium were based on degressive depreciation, originally balanced by imputed rent, which was later abol- During the 1980s, most aspects of Belgian housing ished, when housing was reclassified as a consump- policy were decentralised to the three regions of tion good. Some years ago, this regressive tax bene- Flanders, Wallonia and Brussels. The only respon- fit was replaced by a non-income-related owner- sibilities remaining with the national parliament are occupation subsidy. rent and tax legislation. Integration of the former GDR into the Federal Re- Belgian housing policy focuses on owner- public brought far-reaching difficulties. Because of occupation. Because of generous income limits, fundamental differences between the GDR and the relatively small subsidies for owner-occupiers are FRG regarding their legal systems and their hous- widely available. Limited-profit rental housing is of ing economy, but also because of severe deficits in little importance, also because limited-profit dwell- the eastern housing stock, expensive and extensive ings were often sold to sitting tenants. Refinancing transition schemes had to be devised. Large num- of housing policy funds on the capital market re- bers of still undecided restitution claims for prop- quired extensive operating subsidies. Income- erty continue to affect the validity of property related rents in the limited-profit sector partly act as a substitute for a general housing benefit system. The private rental sector provides accommodation for many low-income households, some of it even in furnished rooms. Tenure security in the private DK / Denmark rental sector is limited. Several social service groups As part of wider welfare policy, Denmark gave are active in the housing sector. They provide assis- strong impulses to limited-profit housing compa- tance and act as intermediaries between private nies controlled by local authorities. Large and landlords and tenants in unstable conditions. partly pre-fabricated housing estates of high stan- Annuities for mortgage loans in the owner- dard were complemented with comprehensive occupied sector are deductible within limits. Im- social infrastructure. Later, based on (negative) puted rent is fairly low. However, transaction costs experience, high-density low-rise estates were pre- for owner-occupied housing are quite high, except ferred. Limited-profit housing is open to all strata for low-priced or limited-profit housing. of society. A distinct feature of Danish limited- profit housing is well-developed tenant participa- HOUSING POLICIES IN THE EUROPEAN UNION Christian Donner / Vienna 2000 tion in the operation of housing estates. As rent in Owner-occupation is, by far, the dominant tenure. high-standard limited-profit housing is relatively It was favoured by tax allowances and first-time high and housing demand is largely satisfied, some buyers were granted special relief. However, subsi- estates register recurrent prolonged vacancy. In the dies dedicated to owner-occupied housing were private rental sector dwellings are generally older largely absorbed by the land market. and of lower, yet adequate, standard. Most of the private rental stock is still subject to rent regulation. The two-tier housing benefit system is limited to FI / Finland A Danish speciality are long-term mortgage loans Post-war Finnish housing policy had to react to refinanced with long-term fixed-interest bonds. In several large migration movements. In addition, in view of traditionally high marginal income tax 1990, the economy suffered a severe recession rates, tax allowance for mortgage interest was an which could only be overcome by drastic budget important incentive in favour of owner-occupation. cuts and by anti-cyclical subsidisation. The Housing However, instead of previous deductibility at the Fund of Finland / ARAVA is the official agency individual marginal rate, in more recent years a - implementing housing policy. decreasing - flat rate has been applied. Another Subsidies for new housing are available for all important feature of Danish housing policy is the types of developers. With the aim of reducing pub- relatively high land tax which largely prevents lic debt, outstanding ARAVA loans were sold on speculation with vacant land. the international capital market to procure funds for new ARAVA loans. Except for the city of Helsinki, municipal housing ES / Spain stocks are rather small. A Finnish speciality are the so-called housing companies which play an active After Franco's death, the Spanish constitution was role as developers of owner-occupied flats. Any reformulated and many responsibilities, among physical or legal person may purchase shares in them housing policy, were transferred to the new these companies representing indirect ownership of Autonomous Regions. Only general funding re- a specific dwelling. In view of limited tenure secu- mained under the authority of central government. rity in the private rental sector, „right-of-occu- In the absence of a welfare state structure, housing pancy" dwellings have become quite popular since policy apparently reflects traditional strong family the early 1990s. They require a tenant contribution ties which still provide most support in the case of but offer unlimited tenancy. personal difficulties. Therefore, up to the present, there is no general housing benefit system in Spain. Owner-occupation traditionally enjoyed income tax deductibility of mortgage interest at the individual Massive post-war migration from the countryside marginal rate. In view of economic crisis, a flat tax into the cities required large-scale housing produc- rate was introduced instead, but the former im- tion in spite of initially very limited public funds. puted rent was abolished. Rapid financial sector New housing was mainly provided in the form of deregulation led to an unprecedented availability of small simple flats making up the major share of mortgages, to a speculative increase in house prices high-density residential developments. However, and, after 1990, to a severe drop in housing prices parting with early public housing construction pro- that caused bankruptcies in the construction sector grammes, private development subsequently took and destabilised several banks. over housing production. Subsidisation mostly consisted of interest subsidies towards capital mar- ket loans. Public rental housing represents a very small share of all primary residences. Not least because of seri- ous operating difficulties, many dwellings were sold to sitting tenants. On the other hand, the pri- vate rental sector was tightly regulated for several decades. Tenants not only benefited from low rents but also from excessive transfer rights. From the 1980s onwards, deregulation took place. The Span- ish capital market developed in a similar way. HOUSING POLICIES IN THE EUROPEAN UNION Christian Donner / Vienna 2000 FR / France above the rapidly increasing stock of primary resi- In connection with forced industrialisation after the dences, Greece also has one of the largest shares of second world war, French housing policy designed not permanently occupied housing, partly due to ambitious housing construction programmes which massive internal migration. required a modern and high-capacity construction Greek housing policy is limited in scope and effect. sector. Numerous large and rather monotonous Subsidised loans are available for specific groups of housing estates were built with pre-fab technology employees but limited funding requires rationing. during the early post-war years. Because of their Housing benefit is not very common yet. The most limited attractiveness, they currently represent one important form of support for owner-occupation is of the most intractable problems of French housing unlimited deductibility of mortgage interest. Theo- policy, aggravated by local concentrations of immi- retically, imputed rent must be added to income, grants. Therefore, HLM companies charged with but generous exemptions apply. Transaction costs the production of subsidised housing face relatively in the owner-occupied sector are fairly high. high vacancy rates, especially in smaller cities where cost rent often exceeds market rents. In some cases, partial demolition of stock seems the only solution. On the other hand, demand for HLM IE / Ireland housing in the capital region by far exceeds avail- The Irish economy developed extremely fast in the able supply because of below-market rents. last few decades. Reflecting this trend, the general Subsidisation instruments and schemes were fre- housing situation has also greatly improved, espe- quently modified giving observers a bewildering cially compared with the relatively low standard of overall impression. Alternating combinations of 1945. However, unbridled production of single- subsidised loans, construction cost grants and in- family homes grouped by social class was largely terest subsidies have been available. However, pre- unplanned and caused a wasteful use of land. Sub- vious tax allowances for mortgage loans were sidies went into owner-occupation almost exclu- gradually reduced in the 1990s. Refinancing of sively. Only a small sector of terraced council hous- housing policy expenditure is based on housing- ing was provided for low-income households. Rent specific levies, on low-interest but tax-exempt sav- for council housing is determined according to in- ings deposits and on budget appropriations. come. Therefore, large operating deficits must be balanced by additional subsidies. Consequently, the As a result of long-lasting regulation, the private maintenance of local authority housing is not up-to- rental housing stock is currently of below-average date. In principle, council tenants may buy their standard and partly needs renovation. This sector respective dwelling. mainly accommodates lower-income households. The private rental sector used to be strictly regu- The French housing benefit system is well devel- lated but was deregulated in the 1980s. However, oped but housing benefit payments are considered security of tenure is far from adequate. Most pri- as a reduction of housing expenditure and therefore vate rental housing is let as furnished dwellings. are directly transferred to the respective landlord. Therefore, it must be considered as a largely tem- This practice has negative consequences. In view of strongly rooted private property rights, Irish legislators were not able to introduce a per- GR / Greece manent general property taxation system. At least, Rapid population growth during the early post-war former unlimited deductibility of mortgage interest decades was mainly concentrated in the capital for the acquisition of owner-occupied housing has region which now accommodates almost one-third been restricted in recent years. of the entire population. The development of Greek settlements was based on small-scale land owner- ship and loose, if any, planning. Because of gener- ally low incomes, many households were often obliged to cover their housing needs by illegal self- help building. The main characteristic of Greek housing is a high percentage of owner-occupied housing, usually acquired with a large share of savings and financial help by the family. Over and HOUSING POLICIES IN THE EUROPEAN UNION Christian Donner / Vienna 2000 IT / Italy In the private rental sector official rent guidelines Italy is marked by large regional differences. Mas- apply but are not always respected. In any case, sive migration from the mezzogiorno to the north there are no general demand-side subsidies. Only caused additional housing demand. As a comple- beneficiaries of the guaranteed minimum income ment to insufficient official housing production, are also entitled to a rent supplement. large numbers of illegal self-developed homes were initially tolerated and later often sanctioned by the authorities. However, the enormous scope of ir- regular self-help housing was fraught with severe NL / Netherlands ecological consequences. On the other hand, innu- After 1945, the Netherlands experienced strong merable legal requirements make it extremely diffi- population growth. Housing policy therefore aimed cult for Italians to stick to the rules. at providing a maximum number of new dwellings through rationalised construction as well as eco- Ambitious multi-year official housing construction nomical design and equipment. Provision of land is programmes distinguished between fully subsi- the task of local authorities which thereby largely dised rental housing, partially subsidised owner- control local land markets. By prescribing certain occupied housing and flexible subsidisation construction densities and cost-covering land schemes for private developers. Public rental hous- prices, speculation with land was largely avoided ing is produced and operated by limited-profit while, at the same time, land was used sparingly. housing companies. Rents in this sector are income- related and far too low to cover operating expendi- Moving from one community to another was dis- ture. Because of frequent sales of dwellings to sit- couraged by the requirement that one had first to ting tenants, this sector is too limited in size to in- obtain a local residence permit. fluence the housing market. The low rent level also Rental housing was originally subsidised by public restricts household mobility and reduces fluctua- loans and later by interest subsidies towards capital tion. Apart from those income-related rents, there is market loans. Actual housing production was the no general housing benefit system yet. task of limited-profit housing associations and of Because of long-term market intervention, the pri- larger local authorities. In 1990, the subsidised vate rental sector has lost importance. However, housing stock represented over 40 % of all dwell- many restrictions were circumvented by illegal ings. Both in the subsidised rental sector and in the private sector rents were determined according to a utility-value system whose basic point price was The dominant owner-occupied sector benefits from adjusted every year. deductibility of mortgage interest and from gener- ally low taxation. Necessitated by rapidly rising operating subsidies, Dutch housing policy was thoroughly reformed in the 1990s. Limited-profit housing associations be- came largely independent, credit had to be ob- LU / Luxembourg tained on the capital market and rents had to cover The country's small size and its large share of for- costs. On the other hand, part of existing housing eign residents make Luxembourg a special case. stock could be sold. Owner-occupation still enjoys More than half of all employed persons are foreign unlimited deductibility of mortgage interest. nationals. Financial services take up a higher than The housing benefit system is an important element average share in the national economy. in Dutch housing policy. It is available for all ten- Luxembourg has kept its housing policy instru- ants. During the late 1990s, more than half of all ments almost unchanged over the last 20 years. direct housing policy expenditure went into hous- Widely preferred owner-occupation benefits from construction grants, interest subsidies and savings contract premiums. More importantly, generous refunding of value-added tax for new owner- occupied housing provides a strong incentive to acquire one's dwelling. On the other hand, de- ductibility of mortgage interest is limited. Supply of subsidised rental housing is restricted. On the other hand, rents in this sector depend on HOUSING POLICIES IN THE EUROPEAN UNION Christian Donner / Vienna 2000 PT / Portugal New housing was largely developed by municipal Strong fluctuations characterised Portuguese housing companies which up to this day are impor- demographic development. Outward migration of tant providers of housing. Municipal dwellings are „guest workers", Portuguese citizens returning open to all households and are therefore not con- from the former colonies and internal migration sidered to be „social housing". Rents are deter- from eastern to western regions all caused shifts in mined by corporate negotiation and serve as a basis housing demand. Household incomes being low, a for rents in the private rental sector, too. Tenants large share of new housing was produced by self- enjoy far-reaching participation rights. Due to cur- help in illegal settlements. Growing slums within rent migration from smaller towns to the three met- and around cities were at first ignored by the au- ropolitan areas, many small municipal housing thorities, but later eradication was attempted. companies are faced with vacancy of new (and It was not until the late 1990s that the mostly pri- expensive !) municipal housing. vate housing output reached a level resulting in a Independently, the co-operative housing sector general improvement of housing conditions. A progressively became more market-oriented and considerable share of all housing is only used tem- today in effect is a substitute for condominiums of porarily or not at all. owner-occupied flats, which are not permitted in Directly subsidised public housing production rep- resents a small share of total output. Original inter- Subsidisation of new housing production followed est subsidies were later replaced by public loans the principle of tenure neutrality and was originally and low-cost land from municipal land reserves. As implemented through subsidised loans and later by public rental housing is often sold to sitting tenants, interest subsidies for capital market loans. During the total stock remains quite small. Therefore, pub- the 1990s, the latter were reduced in amount and lic rental housing is considered as a transitory ten- finally abolished for owner-occupied housing. ure before passing on to owner-occupation. Rents However, owner-occupiers are still entitled to a are determined according to income. 30 % flat rate deduction of mortgage interest. Im- puted rent has been abolished. Housing co-operatives have become more active in If household income is insufficient, there is entitle- recent years but are mostly founded by better-off ment to housing benefit regardless of tenure. households. As a rule, they dissolve after comple- Municipal land policy instruments, although avail- tion of the respective project. able, were not widely employed and landowners For a long time, the private rental sector was subject were left with considerable freedom of action. to strict legal regulation. This prevented any nota- ble private investment in rental housing. Only since 1990 have rent contracts been decontrolled. UK / Great Britain Buyers of owner-occupied housing are entitled to During the early post-war decades, large accumu- interest subsidies and first-time buyers additionally lated housing deficits required substantial slum enjoy tax allowances. eradication programmes. In part, former residents Only young households have access to a limited moved to new satellite towns. Later, more conser- housing benefit scheme. vative urban renewal replaced large-scale slum clearance. As of late, revitalisation of idle inner-city land has become a priority. SE / Sweden Large-scale production of new housing was initially a task assigned to local authorities, which thus built Within the framework of general Swedish welfare up large stocks of council housing, representing policy, housing policy played an important role. Its almost one-third of all housing in 1980. However, aim was to provide every household with a mod- inadequate management and considerable operat- ern, comfortably equipped dwelling. With this in- ing deficits caused by too low rent, tention, housing output was to be boosted by the inter alia moti- vated the Thatcher government to restrict the hous- „Million Programme" adopted in the early 1960s. It ing role of local authorities drastically from 1979 materialised over a decade and consisted mainly of onwards. In this vein, generous discounts were large housing estates, often of a monotonous ap- offered to sitting tenants who over time purchased pearance. At the same time, many older residential about two million former council dwellings. In ad- buildings were demolished. dition, a considerable share of local authority hous- HOUSING POLICIES IN THE EUROPEAN UNION Christian Donner / Vienna 2000 ing was transferred to limited-profit housing asso- Part D presents a series of suggestions by the author
ciations which were to assume the role of non- (section D 1). They, too, follow the same subdivi- market housing providers. sion by policy areas used throughout the study.The Rents in the private rental sector that had been suggestions listed below may be considered as most regulated for a long time were replaced by „fair rents". Many private landlords therefore opted for furnished or „holiday" letting which were not sub- ject to any restrictions. In view of usually short - general land tax tenancy and limited tenure security, private rental - effective capital gains tax housing has essentially become a transitory tenure, - general municipal pre-emptive purchase right mostly for young households. Housing benefit is available for both rental sectors. Housing construction However, the design of the housing benefit - acquisition of local authority housing stock schemes implies a „poverty trap", i.e. households often cannot obtain additional net income by taking Housing finance - establishment of a Housing Financing Fund (HFF) Owner-occupation was traditionally favoured by - refinancing by a pension fund full deductibility of mortgage interest at the indi- vidual marginal tax rate. However, deductibility Housing stock was reduced during the 1990s and finally abolished - operation of local authority housing stock in the year 2000. - reduction of market intervention in the private The low volume of housing completions in recent years has lead to a further increase in the average Housing expenditure and income age of housing stock. - general but limited housing benefit - abolishment of real property transfer tax Part C summarises the most important traits of
national housing policies and housing markets. For easy reading, there are no references and few fig- ures (sections C 1 to C 15). All country reviews are divided into the sections development and evaluation. They should give a first impression of individual In addition, section C 16 presents a comparative synopsis of national housing policy instruments and some statistical graphs for cross-national compari- Finally, the European Union's possible role with respect to housing policy is briefly discussed. Basi- cally, official EU documents do not contain any explicit reference to housing which, according to the principle of subsidiarity, is left to national gov- ernments. However, several EU directives concern housing-related matters, such as competition, capi- Dr. Christian Donner tal markets, construction materials, etc. Further- Schlimekgasse 15 more, the Maastricht criteria exert an indirect influ- A - 1238 Vienna / Austria ence on housing policies. Several subsidisation pro- grammes concerning urban renewal and social tel + fax (+43 1) 889 85 71 integration are simultaneously related to housing. e-mail: Finally, the European Parliament has passed a web: number of resolutions on housing-related issues, for example against social exclusion.


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Volume 10 • Number 5 • 2007 Principles of Good Practice for Budget Impact Analysis:Report of the ISPOR Task Force on Good Research Practices—Budget Impact Analysis Josephine A. Mauskopf, PhD,1 Sean D. Sullivan, PhD,2 Lieven Annemans, PhD, MSc,3 Jaime Caro, MD,4C. Daniel Mullins, PhD,5 Mark Nuijten, PhD, MBA, MD,6 Ewa Orlewska, MD, PhD,7 John Watkins, RPh, MPH,8Paul Trueman, MA, BA9

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