The development of social housing in the European Union: When general interest meets Community interest
Chapter II
Social Housing in the 27 Member States
Compared conceptionsand characteristics of a service of general interest
Introduction
Social housing in the EU Member States is a fully valid instrument of housing policy intended to guarantee access to decent housing for all. The housing policies that exist in the 27 Member States are based on the recognition of the right to housing, already proclaimed as a precursor in Europe in 1919 in the Constitution of the Weimar Republic, and in the Universal Declaration of Human Rights of the General Assembly of the United Nations of 1948.
The right to housing is a common constitutional tradition of all 27 Member States, either inscribed in their modern constitutions, or proclaimed or effectively implemented on the basis of specific legislation making public authorities responsible for it, or by corresponding commitments on the level of the European Union, the Council of Europe and the revised Social Charter of 1996.
On the occasion of the European Nice Council, the Heads of State and Government of the European Union committed themselves to implement policies likely to ensure access to decent housing and affiliated services for all.
Social housing is a response of public authorities to the structural failure of the housing market to meet all housing needs and to guarantee access to decent and financially affordable housing for all.There are multiple reasons for this structural failure on the part of the housing market. They stem from the intrinsic nature of real estate, its locational immobility, its dimension as an infrastructural element requiring long-term financing and its rooting in given land and territory, which constitutes a certain inflexibility in face of the fluctuating and mobile demand, increasingly concentrated on urban centres characterised by a scarcity of building land. Real estate also represents a captive demand given the essential nature of the need to be met and the lack of potential substitution.
The optimal allocation of resources likely to guarantee a spontaneous balance of offer and demand is therefore impeded by the asymmetry of information between users and home owners, as housing is a need to be met in face of a scarce and rigid offer characterised by the inelasticity of its amplitudes and strongly regulated in quantitative terms by standards of urban development and minimal standards of habitability. Also, the housing offer is not very reactive and frequently fails to coincide timewise with the demand, which explains real estate cycles. And above all, it depends on the conditions of the land property market with its structurally fairly rigidstyle of functioning.
In view of this structural disequilibriumof offer and demand, the market proceeds via the selection of risks in allocating the offer to the demand and by the exclusion and / or discrimination of households or social groups which represent customer-specific risks in terms of solvency and / or presumed social behaviour.The flexibility of the labour market and increasing income disparities between precarious jobs and permanent employment contribute to accentuating the structural imbalance between housing offer and demand even more. As a result, an increasing segmentation can be observed between a solvent group contributing to substantial price increases and a less solvent or even insolvent group which, due to low income, is excluded from the housing market or relegated to sub-standard housing (insanitary and / or overoccupied dwellings, emergency accommodation, campgrounds, etc.).
In the European Union, on average 22% of the budget of households is spent for housing, thus making it the most expensive budget item. As a permanent cost type, it can reach up to 50% of all expenses in low income households or those who depend on the minima of social welfare. Some 22 million households are therefore living in social housing, with several million on waiting lists in those European cities where the social demand concentrates and where housing prices increase much quicker than the income of households.
1: Two centuries of social housing in Europe: developmentand adaption of a service of general interest to the environment.
Social housing has its roots in the second half of the 19th century with the industrial revolution and the development of a working class living in sub-standard accommodation. It emerged almost everywhere in Europe, especially in the most industrialised Member States, and driven mainly by private initiative before being taken over and regulated by public authorities.
Social housing is the result of the mobility of “civil society”.
With its philanthropic, trade unionist and hygienic origins in connection with problems of health and epidemics, and thanks to the initiative of the great industrial entrepreneurs who cared for the health of their workers and needed to offer accommodation in situfor the labour force moving from the rural areas into the cities, social housing initially was a response of what we would qualify today as the civil society to a social and health situation of the exploited working class housed in humanly deplorable conditions. In a context which was in fact characterised by the massive migration into towns, the European cities developed very quickly, so that the working population often had to live in sub-standard housing, with very high mortality rates being a consequence. Apart from all of the private initiatives, some local authorities pioneered the development of social housing, such asGlasgow, Birmingham, Liverpool or Vienna, and in the United Kingdom they laid the foundations for the greatest stock of public rental dwellings in Europe.
The first International Housing Congress held in Paris in 1889 was the starting signal for a growing awareness of the issue of social housing on the European and international level.
Takeover by the state
Social housing was quickly taken over by the state and regulated by numerous national legal provisions since the end of the 19th century, for instance:
- the 1846 housing act on special request of the City of Glasgow,later amended by the housing acts of 1852 and 1890 on the construction of workers’ housing in Great Britain,
- the 1860 working-class housing act in Ireland,
- theEmpain act on social housing of 1889 in Belgium,
- theSiegfried act in 1894 in France codifying the legal framework for social housing undertakings called sociétés d’Habitations à bon marché,
- the great 1901 housing act in the Netherlands, which is still in force,
- the housing acts of 1903 and 1908 in Italy as founding acts for the first autonomous social housing undertakings (IACP),
- the 1911 housing act on affordable housing in Spain,
so that social housing as an originally private initiative was quickly taken care of and regulated by public authorities.
In addition to the symbolic social workers’ achievements and also the social commitment of a certain part of employers, social housing became an indispensable concomitant element for the industrial boom, the preservation of social peace and the galloping urbanisation of the big industrial cities in Europe, all the way from Barcelona to Stockholm.
It is interesting to compare this episode of the European history of social housing and its direct linkswith industrialisation and urbanisation with the present evolutions in the emerging countries, namely in China. On 24 January 2007, the Chinese minister of construction, Wang Guangtao, announced that Chinese cities will have to provide a system of affordable housing. Wan Guangtao stressed, in particular, that the implementation of a protective housing system on various levels is incumbent on the government. Local authorities should optimise their social housing and improve the protection of low-income families with difficulties to house themselves. And he stated clearly that local governments would also have to plan the construction of small dwellings and the refurbishment of existing housing in order to meet the needs in terms of “protected housing”. In addition to that, the minister declared his intention to improve housing for migrant workers. He said that 274 Chinese cities already have a system of affordable housing.
In Europe, as in China, social housing has always been an indispensable element of social peace and competitiveness in completion of the economic and urban development, as well as a fully valid component of a productive infrastructure required for economic development and progress.
Housing for large groups of the population
The two major World conflicts, the requirements of massive reconstruction and the economic development of the GoldenThirties, which combined mass urbanisation, industrialisation, demographic boom and decolonisation, only accentuated the determination of the Member States to regulate and to promote social housing as a key sector for the transformation of the European society from a rural society to a modern urban society.
Thus, social housing targeted the working classes of that era, i.e. “large groups of the population«as stated in the German Federal Housing Act of 1958, which introduced a special fiscal status for social housing undertakings. The main objective consisted of moderating housing costs and, consequentially, wages. This concept was reflected by the historical perceptions of affordable housing, cheap housing, moderated rent housing or even publicly protected housing,a concept which emerges again in modern China today.
That is the period of modernism in housing, of the new residential estates and the huge “dormitory towns” shooting up like mushrooms everywhere on the outskirts of the big European cities at the end of the fifties. And it is the era of mass construction in response to housing shortage,as demonstrated for instance by the “one million”programme in Sweden, with the objective of building one million dwellings within ten years and the clear intention to tear down the last remaining slums in the European cities and to refurbish remaining unhealthy spots in the city-centres.
The transition of the new Member States
In the new Member States, which had disappeared behind the iron curtain at the end of World War II, the national housing stock was partly nationalised and the state took care of the massive construction of new housing in large prefabricated neighbourhoods, starting in the Seventies and continuing until the fall of the Berlin Wall. Since the Nineties, this public housing stockhas been transferred to the local communities and then largely privatised to the tenants. The old and previously expropriated housing stock that had been neither maintained nor refurbished for more than fortyyears was restituted to its historical owners. After a transition period with the attempt to create a real housing market again and to ensure its funding, the new Member States implemented, step by step, new social housing systems in order to provide affordable social housing in a market that had virtually no rental dwellings and indeed no residential mobility. A large majority of the new Member States do actually share a common priority: the development of modern social housing and the transfer of competences to the local level and its local operators. Strongly mobilised by the Community debates on social cohesion and the perspectives of European funding, the new Member States formed an alliance in the Council in order to obtain, under the British presidency and against the European Commission’s position, the explicit eligibility of social housing for the 2007 – 2013 Structural Funds of the Community. A real premiere in the history of the cohesion policy of the European Union.
The new challenge of the Eighties and Nineties: disengagement of State, privatisationandsocial redirection
The repeated oil crisis, the return of growth and the appearance of structural mass unemployment progressively led the old Member States to redefine their social housing in relation to their reform of the Welfare State. Social housing - used to cushion social tensions and elements of income distribution - was realigned by several Member States to the social demand in the context of a public disengagement, of tight public budgets, of more targeted public interventions and the return to policies of self-regulation of the market. Stigmatised by the first Thatcher era, the privatisation of social housing and the end of programmed public sector housing by the transfer of Council Housing to Registered Social Landlords characterised the development in the United Kingdom in the Eighties and Nineties. In Germany, the abolishment in 1990 of the Non-Profit Housing Act of 1958 resulted in the full privatisation of the specific social housing undertakings, their taxation and the end of the regulation of their social objective.
The progression of social exclusion then only reinforced the dimension of social inclusion by housing. Social housing has actually changed its target. Originating as working class housing intended to accommodate the workers of the industrial revolution, then the working classes and employees of the Golden Thirties, social housing suddenly concentrated on new forms of exclusion and discrimination in connection with access to housing. The preservation of social and territorial cohesion, which suffered more than ever before from new processes of social exclusion and urban segregation, is again a new challenge for the sector.
Housing policies which had hitherto represented a national competency of the central or federal Member States are decentralised and entrusted to the Regions,as in Spain and Italy, in Germany, where the role of the Länder is strengthened in comparison with the Bund, and in the United Kingdom,where England, Wales, Scotland and Northern Ireland have their own legal framework for social housing, including the implementation of the right to housing. The role of local communities is also strengthened, namely for the definition of the activities and their effective implementation on the basis of regional social housing policy or in compliance with the national regulation for the small Member States which have no competent regional levels. In certain Member States, the funding of social housing is becoming more and more privatised, using ordinary capital market resources. Rent policy is developing towards economic rents to integrate the actual production costs for social housing and the reduced subsidies to the operators. This development of rent policy is partly compensated for by increased housing benefits for the tenants, such as the Housing benefit in the United Kingdom, the Huur-subsidies in the Netherlands, the Wohngeld in Germany and the Aide personnalisée au Logement in France. In certain Member States, such as the United Kingdom and the Netherlands, the sector has been substantially reformed, e.g. withthe rapid development of Registered Social Landlords who are progressively substituting Council Housing in the management of social housing in the United Kingdom, and the financial autonomy of the Dutch Housing Corporations obtained thanks to an unprecedented action called “Brutering” which will result in balanced accounts of the social housing sector and the public authorities in terms of indebtedness and subsidies.
Turning back in the new millennium: the failure of the housing market and the urban development of social housing
The housing crisis that characterises a large majority of the Member States today and affects an increasing number of households and social categories, including employees, raises the question again of social housing, but on new foundations and in close connection to competitiveness, occupational mobility and sustainable urban development of the European Union.
Although the issue of access to decent housing for disadvantaged groups remains a real priority,as illustrated in Scotland and France by the proclamation of the enforceable right to housing for all, the provisioning of a sufficient social housing supply accessible to employees regardless of whether they are poor or less poor also arises, namely in the city centres where employment is concentrated and where the prices of building sites are exploding. The medium-term objectives for the construction of social housing are increasing in almost all Member States, especially Ireland, Belgium, Spain, Italy, the United Kingdom, the Netherlands and in France. This opens up a new chapter in the development of social housing in the European Union after the clean break of the Eighties. This development of social housing, which also affects the new Member States,goes hand-in-hand with a process of modernisation of all operators, of stategovernance, regulation and funding, and leads to a rethinking of social housing in view of the new social demand.
The development of social housing can also be observed in the new Member States, where the provisioning of modern social dwellings is a common priority after the waves of massive privatisation of the local housing stock inherited from the communist era and the saturation of a housing market consisting almost exclusively of owner-occupied condominiums. This housing market cannot respond to either the demand of insolvent households or to the growing demand as a result of the mobility of middle classes. The development of social housing in the new Member States is explicitly linked to objectives of growth, employment and competitiveness defined by them in context with their membership in the European Union. (cf. the table on the next page).
Furthermore, the social turmoil in the French banlieues, the interethnic conflicts in the United Kingdom and the Netherlands and Community reflections on the understanding of sustainable communities raise the question again of whether processes of urban segregation through the relegation of excluded households can actually be sustained, i.e. migrants in the large urban neighbourhoods on the outskirts of the big cities consisting exclusively of social housing as a heritage of the former dormitory towns of the Golden Thirties, which had initially been built for the employees in times of growth and the middle classes.