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.     

Meeting commercial and social goals: institutional investment in the housing association sector*

Analyses of the impacts of the use of private finance by housing associations (HAs) across Europe regularly align with the hybridity in the social housing sector, linking private finance to a range of negative consequences related to the loss of social purposes by HAs. This article examines some of the implications of institutional investment for HAs in Britain to meet their economic and social goals. Using a combination of interviews with HAs and institutional investors and a round table discussion, the study shows how such investment has facilitated HAs as hybrid organisations which adopt a pragmatically ‘fit-for-purpose’ approach that combines social benefit with profitability. For institutional investors, investing in social housing is a profit-oriented business as well as a corporate social activity that creates public relations benefits. Importantly, the study shows how government regulations can affect the form of institutional investment (bond finance rather than equity investment) in social housing and help HAs balance the opportunities and risks in combining business and social orientations.     

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.     

Institutional logics and organisational hybridity: English housing associations’ diversification into the private rented sector

State withdrawal combined with challenges in raising private finance has led not-for-profit housing organisations in a range of countries to diversify into commercial activities as means to generate additional income streams and cross subsidise their core social operations. Within England, an increasing number of housing associations (HAs) has looked for new forms of investment, notably from private rental housing, to generate additional cash flows and fill gaps in the housing market. Drawing on the concepts of institutional logics and organisational hybridity, the paper uses organisational archetypes to examine the different hybrid financing, governance structures and housing products that two pioneering London-based HAs have employed to undertake private rental activities alongside their social businesses. The paper argues that the trends identified are indicative of wider institutional change, with not-for-profit housing organisations facing difficult strategic choices about how to fund their core business in a world of lower public subsidy and uncertainty over future sources of private finance.     

Transnational migration,remittances and the financialization of housing in Colombia

Recently, various Latin American governments have sought to render migrants as development agents by channelling remittances to specific sectors such as housing and finance. The available literature has yet to articulate how these developments are reconfiguring the political economy of housing in the region. The paper draws on empirical data collected at both ends of the Colombia–UK migration network. It argues that the Colombian Government’s efforts to incorporate migrants into the polity through a renovated housing policy aim to institutionalize migrant households’ transnational practices and their links with global circuits of capital and finance. They are underpinned by the repositioning of housing away from consumption into an investment item and driver of economic growth and the financial sector as the main medium for households’ access to public and private housing, and other basic services. These developments have taken place in the context of a broader process of financialization of the global development agenda in the last three decades.     

欧洲住房金融改革对中国的借鉴意义

自从1960与1970年代以来,更多的欧洲国家放松了它们的住宅政策。我们注意到从公共融资向私人融资的转变、从社会住宅向商业住宅的转变、从住房建设补贴向住房人头补贴的转变、从管制租金向市值租金的转变、以及从租赁房向自有房的转变。大部分这些转变都可以统称为＂私有化＂以及＂自由化＂这些定义不明的词语。然而,欧盟大部分国家的住宅金融体系仍然复杂而不合理,需要更多的住宅金融改革。我们将详述一种住宅金融改革的核心内容,包括如下几点：住房建设补贴、租户的住房人头补贴、自有房的税收优惠、房屋租赁政策、以及住宅联盟的角色。通过这种分析,我们勾画出欧盟国家住宅金融深入改革的轮廓。在不久的将来,中国也会考虑相似的住宅金融改革。     

Happy Returns: The Individual Investor as a Source of New Capital for Rented Housing in a Time of Changing Social Welfare Structures

Recent changes in the ideology of welfare have led to reductions in the scope for some individuals to play their desired part in funding the social welfare system through taxation. At the same time, there is a widely held view in the housing world that over the next 20 years the supply of rented homes is going to be too low to meet rising demand. Prospects for significantly increased public investment in new rented housing look slight. Private finance is now seen by government as the preferred source of capital funds for the creation of extra housing, not only in the private rented sector but also in the housing association sector, and perhaps in future in the local authority sector. However, the financial institutions-the most often quoted source of private finance currently appear reluctant to take on this role, at least in the privately rented sector. Presently, little attention is being given to the individual, as opposed to the institutional, investor. This paper-based on evidence gathered in a national survey of individual shareholders in companies listed on the London Stock Exchange-explores the possibility of individuals becoming more involved in investing capital in rented housing, both private and public. It suggests that there is some interest in such investment among current shareholders who have considerable assets. More specifically, it argues that there is a group of ethical investors who would be willing to invest in rented housing, some of whom may be willing to accept a lower rate of return on rented housing than on competing investments. Together these groups (and other 'socially disenfranchised' citizens) may offer a source of considerable capital to complement that which institutional investors may provide. If such capital is to be forthcoming, policies are required which address their requirements. A number of suggestions are put forward.     

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 provision of private finance for social housing: An outline of recent developments in funding existing housing associations in England

With successive Housing Acts in 1985 and 1988 the British government declared its intention to create an environment for the integration of social housing and private finance. This paper draws on empirical research to consider the success to date this policy initiative from the perspective of financial institutions. This research concentrated on attitudes to the availability and suitability of financial instruments for social housing funding for existing housing associations in England. After an introduction clarifying the framework in which funds are raised, the first substantive section provides an overview of the characteristics of the potential lenders to social housing in England and of the regulatory environment affecting their lending policies. Section 3 outlines the main uses to which funds are put and the types of financial instrument currently available to housing associations. The paper next examines the scope for increasing the supply of these funds through wholesale markets, particularly via The Housing Finance Corporation. One attempt to expand the supply of finance to existing associations through ‘credit enhanced’ funds is then described. The paper concludes by evaluating progress so far and by questioning the degree to which social housing will have to change if private finance is increasingly to replace public sector funds.     

The State and Self-help Housing in Urban Finland, 1920 to 1950

This paper examines self-help housing and state housing policies in urban Finland from 1920 to 1950. In Finland self-help housing consisted primarily of self-building of one- and two-family houses. It is often assumed that self-building used to be the typical urban form of housing production. It was certainly the form that housing reformers preferred. However, most urban housing production was private speculative production. Self-building became relatively important only when other production was depressed. The state supported self-building by providing subsidised housing finance. Of the three successive housing finance systems examined, only the last concerned only self-building. The loan policies also included an attempt to control the quality and design of self-built housing. The policies were, however, so limited that they did not have a large impact on urban housing in normal times. In Finland, as in many other countries, the government's attitude towards self-building can be characterised as guarded support.     

Private rented housing in France

This paper reviews the evolution of the French private rented housing sector. It traces post-war policy developments, putting the specific tenure in a wide housing market context. The paper reviews France’s intricate system of personal and property—oriented housing subsidies, and assesses their demand and supply side repercussions. Discussion of the general post-war decline in private rented housing as a means of housing consumption is situated in the evolution of the national housing system, and the paper alludes to some key regional and local differentiations. The paper discusses the market contexts for attempts to revitalise the sector, concluding that broad fiscal measures are likely to have greater impact than rent decontrol. Madhu Satsangi is Lecturer in Housing Studies at the School of Planning and Housing, Edinburgh College of Art/Heriot-Watt University. Madhu has researched housing markets, voluntary and private-sector housing finance and housing management issues.     

Private renting in England

This paper presents an overview of the privately rented sector of the housing market in England. The first section sets out some key features of privately rented housing in England that distinguish it from many other advanced industrial nations. The second section briefly summarises the main reasons for the decline of private renting. This is followed by sections dealing with the demand for private rental housing and tenants’ rents and incomes. The paper then moves on to the supply side, focusing on the stock of privately rented dwellings, the nature of private landlordism in England, finance and rates of return. The final two sections examine rent control and security of tenure legislation and current policy debates about the future of the privately rented sector.     

Housing finance for lower income urban households in Zimbabwe

Housing finance systems in developing countries have been the subject of considerable international agency research and lending attention in recent years. The lack of availability of finance for public sector housing programmes and for the purchase of construction of housing by all income groups in urban areas is typically a major constraint on the ability of supply to meet demand. However, national efforts have often not dealt systematically with the housing finance system as a whole. The housing finance system in Zimbabwe is described and critically analysed in this paper, paying particular attention to the provision of funds for local authority housing programmes for low income residents, the place of housing finance institutions in the national finance system, the ability of the building societies to attract savings, and their lending programmes. The results of government measures to transfer responsibility for lending to low‐income households from local authorities to the building societies since the mid‐1980s are evaluated. It is concluded that Zimbabwe has an unusually well‐developed financial sector and housing finance system for a recently independent developing country. Although this evolved to meet the needs of the settler population, the extension of its activities into lending for low‐income aided self‐help housing was successful, within limits. However, events of the early 1990s demonstrate the vulnerability of such a system to the changes accompanying liberalisation. Suggestions are made for further possible reforms and the importance of monitoring the effects of economic liberalisation on the system and its beneficiaries stressed.     

Tenant satisfaction with public housing management: Budapest in transition

Poor maintenance, low rents, and high levels of occupants’ dissatisfaction with their housing have been hallmarks of state‐rental housing in Hungary and other countries in Eastern Europe. The introduction of private management has been touted as an efficient way to improve services and increase tenant satisfaction, thereby paving the way for higher rents. This paper uses a new data set for January 1992 for dwellings in Budapest which were state rentals in January 1990, the majority of which were still rentals at the time of the survey, to analyse the impact of private management on tenant satisfaction and willingness to pay. The central conclusion of this analysis is that the introduction of private management significantly improves the satisfaction with maintenance services of occupants of units owned by Budapest district governments and now typically managed by the public IKV management companies. Similar results were found for occupants of units privatised in the past two years. We take this to mean that private firms are providing more services more efficiently. Remarkably, the increase in monthly fees (compared with state‐administered rents) associated with private management are modest. This and other findings suggest a three‐part housing reform strategy: (1) a rent increase to finance improved services; (2) a major shift to private firms to provide management services; and, (3) introduction of a housing allowance programme to protect poor households from the full impact of rent increases and to make the rent hikes politically more acceptable.     

SECONDARY MORTGAGE MARKETS AND FEDERAL HOUSING POLICY

ABSTRACT The government sponsored secondary mortgage markets (Fannie Mae and Freddie Mac) are crucial infrastructure links in the housing finance system. This paper examines the evolution of the policy debate about the public purpose of the enterprises. It focuses on three recent reform efforts: the need to redress discrimination in access to credit, the need to resolve the credit crunch for multifamily housing, and the need to ensure financial safety and soundness. Recent changes in corporate strategy and reforms enacted in Title XIII of the 1992 Housing and Community Development Act are assessed in the context of these three issues and conclusions are drawn about the implications this restructuring will have for the public / private basis of US housing policy.     

Housing Maintenance and Management in Russia during the Reforms

The primary objectives of the housing reforms in the Russian Federation were to reduce the balance of the state housing stock by privatisation and to raise rental payments in order to permit the market to achieve a more efficient utilisation of the housing stock by allocating available housing to those with effective housing demand. Part of these objectives also included improving the quality of maintenance in state housing by breaking up the monopolies of state maintenance firms and replacing them with private firms procured through competitive bidding procedures. Moscow, in particular, has been a forerunner in implementing housing reform policies, including shifting from state maintenance firms to contracted private ones. Using Moscow and other Russian cities as illustrations for reforms in maintenance and managementbrings to light the benefits of private maintenance and also problems which must be overcome, not only throughout Russia but in nearly all the countries of the formerSoviet bloc. This paper evaluates the institutional changes of maintenance and sources of funding for maintenance in Moscow during the reforms; it shows evidence of improved quality of housing maintenance through the use of contracted private firms; and providesa general overview of competitive maintenance and condominium formation throughout Russia.     

Housing Reform in Kolkata: Changes and Challenges

Since 1991 the housing sector in Kolkata has been the subject of significant reforms based on profound changes in the political economy of the State of West Bengal. The paper reviews four reform initiatives: public-private partnership, privatisation of public rental housing, development of New Towns, and the finance sector deregulation in Kolkata and discusses their relevance to the urban context of the city. It is observed that the new reform measures have been successful in reviving the housing market by attracting private and foreign investment and producing housing for the middle- and upper-income population, but have led to the loss of safety nets, and ignored the informal urban context of the city, resulting in the exclusion of about a third of the city population who live in slums and bustees. As a result, the benefits of housing market growth have been offset by the failure to meet the broader social agenda. While a general consensus in favour of the reform is evident, there is growing concern that the broader ideology of housing the poor is being discounted in favour of capital-driven development fuelled by globalisation and privatisation.     

The new housing policy — a critique

This paper considers whether the Housing Act 1988 and other recent housing measures will succeed in their aims. The 1988 Act is necessary for the revival of private renting and the diversification of choice for low income tenants. But it is unlikely to be sufficient; too many reforms are needed for one Bill. Substantial transfers from council tenure are unlikely until local authority housing finance is reformed by the next housing Act. A long‐term replacement for BES will be needed. Artificial land shortages will continue to hamper the solution of housing problems. Housing associations are inadequate alternatives to local authorities because of their small scale finance structure and public sector ethos. Present arrangements for subsidy and transfers may ensure a housing association monopoly in low rent housing. Suggestions are made for encouraging genuine competition in this sector.