Directorate General for Research
Working Document
Social Affairs Series
- W 14 -


Mixed progress

The recent UN Habitat II meeting in, by drawing attention to the appalling housing conditions facing billions of households in the poorer half of the globe, served to emphasise the relatively high average quality of housing within the European Union. At the same time there is a widespread view that housing and neighbourhood conditions for the poorest third of Europeans are neither as intolerable nor as socially divisive as for Americans, especially in the inner cities. In the Union as a whole, but with considerably more emphasis in northern and western Europe, governments have long promoted active housing policies, frequently absorbing from one to four per cent of GDP. And in every Union country, with two exceptions, there is an over-riding policy objective that adequate, affordable housing should be available to all, Maclennan and Williams (1990), McCrone and Stephens (1995).

The reality is, however, that almost every European government fails to achieve their laudable objective. This may reflect resource constraints for public spending, changing socio-economic patterns to which policy only responds slowly, demographic pressures and shocks (such as the vast, post-1989 influx of refugees into a ring of countries from Greece to Germany) or the inherent failure of, sometimes, expensive policy solutions. At the level of the individual the 1990s growth in homelessness and the apparent backlog of provision for the elderly, the disabled and a range of special needs are cause for concern. At neighbourhood and city level the recorded expansion, in many countries, of the economically and socially disadvantaged in both older, over-crowded and low amenity central city areas and in post war social housing estates is heightening concerns about the causes and consequences of social exclusion. At the national level housing market instability has, in the 1980s and 1990s, created particular difficulties for less wealthy home-owners in Britain, Sweden, Finland, Spain and regions of other countries. And in some countries the priority given to curtailing public spending has prompted reductions in capital spending and led to major re-orientations of housing policy; for example, in Sweden, the Netherlands, the UK and most recently France. The same policy imperatives are now questioning support systems for rental payments. Much of Europe is uneasy with its housing policies and outcomes, Dieleman (1996).

Changing responsibilities

Responsibility for housing policies lies at the national level and the Union has no direct competence in the field of housing policy, at least as it is conventionally defined, Priemus et. al (1993). Indeed, within countries there has been a shift throughout the 1980s to expand sub-national and municipal competences in housing (though not always available resources) both in countries with historically strong housing policies, such as Denmark and France, and those developing a new emphasis in housing policy, such as Spain and Ireland. In many countries, following the recognition that the methods used to plan housing investment or control social rental management may contribute to active citizenship and community participation, there have been significant attempts to devolve decision taking powers to neighbourhood communities.

However, the adequacy and efficiency of national and local housing systems must also be a concern, indeed policy question, for the European Union. The over-riding objectives of the Treaty of Maastricht include encouraging further European economic integration and promoting social cohesion. Economic questions are not the focus of this report but it is clear that different housing market instabilities, which housing policies can shape if not cause, hamper convergence and that stressed, fragmented rental systems and differentially taxed home-ownership are not conducive to cross-national labour mobility. Housing systems will influence both the overall levels and patterns of the costs and benefits of monetary union. At the same time it is well recognised that housing markets and social housing systems are key integrative systems within any city or nation. Social and economic disadvantage will be reflected in housing patterns and increasingly there is a view to that emergent pattern of social segregation, based on ethnic as well as age and income groupings, may erode the cohesion and the competitiveness of neighbourhoods, cities and ultimately nations. Housing systems and their outcomes really matter in relation to the Maastricht objectives, see Maclennan and Stephens (1996).

This disparity between concerns and competences may raise some dilemmas for the Union. But even with present patterns of subsidiarity there are two, at least, areas of competence in which actions at Strasbourg and Brussels could be expanded. First, as the subsequent sections of this report demonstrate all too evidently, there is a lack of coherent, centralised, current information on housing needs and policies within the Union. Researching housing issues for EU countries requires more the skill of patient detective work rather than analytical rigour. Secondly, and more positively, housing policy is changing significantly in many countries. It is no longer exclusively about adequate shelter and its affordability. It has become, increasingly, integrated with social security systems, holistic environmental and regeneration policies and the mobilisation of communities. In consequence, housing policies are increasingly inter-facing with policy areas in which the Union has competence and programmes. And this means that well designed social, urban and environmental interventions will have to take cognisance of local housing systems and, of course, that European spending may have significant leverage within such approaches.

Housing policies and their outcomes are, arguably, valid areas of concern for European level politicians and policy-makers. This report provides an introductory, Europe-wide analysis of three related questions. First, what do housing policies contribute to the well-being of poorer Europeans? Secondly, are new innovations improving policy and practice? Finally, what has been the European Union influence on housing outcomes?

The report contains four main sections. Chapter 2 briefly outlines housing contexts and policies for low income households and summarises changing approaches. Chapter 3 assesses European housing outcomes in the 1990s. Chapter 4 provides brief sketches of specific country experience and is largely based on contribution by country consultants. Policy structures and organisation, emphasis, current challenges and innovative responses are summarised. Chapter 5 concludes with an overview of the European Union Funds and Initiatives which interface with housing-related activity and outlines ways in which the Union could further assist integrated policy developments involving housing providers.


1.1 Housing concerns

The home impacts on the social and economic well-being of households in a multiplicity of ways. It is, most basically, shelter from the elements; it is security and privacy from the outside world; it is space in which to relax, learn and live; it is access to more or less comfort. But the home also places the household in a specific neighbourhood context which may influence accessibility to relatives, friends, shopping, leisure, public services and employment. And, where households purchase their homes, housing debt and wealth are also critical concerns for the household.

Since the home touches upon the quality and feasibility of so many household activities then it is unsurprising that housing is relatively expensive, absorbing 15-20 per cent of average European incomes and, in the absence of subsidies, double that proportion for the lowest income households. It is also unsurprising, given the importance of housing, that most European countries have had some form of housing policy for the last hundred years. In broad terms housing policies have been traditionally concerned with

A number of recent comparative reviews, McCrone and Stephens (1995), Balchin (ed), (1996) and Priemus (1997, forthcoming) emphasise that accessibility, affordability and quality have been at the core of European housing policies and they remain important concerns. Sometimes, as indicated below, they may be mutually exclusive objectives with particular policy choices. In the 1990s, arguably, the growing recognition of the multi-faceted role that housing plays in social and economic cohesion is adding a new, important concern, namely the 'integrability of policy measures. For example, it is increasingly important to understand how housing design and management interact with health care and social service provision in providing for the disabled and the elderly. In addressing Europes homelessness 'housing only solutions are now de-emphasised and social and employment links are stressed. Housing programmes which were, 20 years, ago, initially conceived of as a means to install toilets and baths in poor houses have evolved into large-scale, integrated policies to revitalise neighbourhoods, even whole cities. In all of these important areas of policy, housing actions may be necessary to secure progress but it will seldom be sufficient by itself, Maclennan and Bannister (1996). Contemporary policy concerns usually require a co-ordinated multi-sectoral approach. 'Integrability, as public budgets tighten and, (hopefully), crude housing shortages continue to lessen, will become a dominant concern in future European housing policies.

Before examining the future, it is important to summarise how European Union countries address the policy concerns of affordability, accessibility and quality of housing for citizens. This is a rather complex task. Countries weight or select these objectives differently. Further, they have chosen different means to achieve similar ends and both objectives and means have changed markedly over time. Since both housing and policy influences endure over time then it is impossible to understand present patterns without reference to the past. In the remainder of this section the main methods for delivering housing support are described in principle and then brief overviews are provided of major housing policy patterns across groups of Union countries and of recent, major trends.

1.2 A spectrum of intervention

The history of European housing policies illustrates the full range of housing policy instruments. Direct control of housing quality, by the state, is one means. By the end of the nineteenth century, West European governments had already undertaken demolition programmes and introduced building standards legislation to address the adverse public health effects of slum housing. However, demolition and higher standards do little to improve access and affordability for low income households. Rent controls, essentially suspending the market mechanism, introduced in some countries during World War I, were extended more widely in the 1930s and became near ubiquitous throughout Europe after 1945. They were 'softened in north and western Europe from the 1960s onwards, but not in the Mediterranean states, and largely removed in the second half of the 1980s, at least for newly let tenancies. Rent controls, may have ensured affordability objectives but at the same time, by reducing landlord investment often led to lower housing quality and diminished accessibility (though impacts have varied from country to country), Maclennan (1997).

The suspension of rental market mechanisms, for low income housing provision, led, in many countries, to the displacement of market provision by non-market housing (referred to below as the social housing sector). Social housing provision in Europe commenced in Sweden, Denmark, Austria, Germany, France, the Netherlands and Britain at the beginning of this century. In some countries, such as Denmark, Germany and France provision was always dominated by a diverse set of not-for-profit providers. In the UK and the Netherlands, municipalities were then given the key roles in social housing provision. The sector grew steadily, except in the Mediterranean area and Belgium, through the first half of the century and then expanded markedly, with reconstruction and welfare state provision from 1950-1980. The social sector mechanism in Europe, until then, relied on deep dwelling tied subsidies (commonly 30-50 per cent of capital costs) for new dwellings, which were then let at below market rents. Unit quality was ensured by building standards (though 'neighbourhood quality was often disastrously, de-emphasised) and accessibility for low income households was ensured by below market rents and housing allocation according to social priorities, Priemus (1997).

Social housing provision, and the displacement of the market, is not the only means by which to ensure low-income accessibility, quality and affordability. Nor indeed are deep capital, or dwelling-led, subsidies the only means by which to support the social housing sector. Some countries, most notably, in the Mediterranean area have sought to pursue social objectives in housing through market enhancing, or enabling, measures. For instance, there is no social housing in Greece but rather state support, via subsidised loans and tax-breaks, to low income home-owners. Some countries, such as Germany, whilst developing social housing also adopted a more tenure-neutral view of how to pursue social objectives in housing and also supported low-income home-owners from the 1950s onwards, as did Finland and Belgium, Maclennan and Stephens (1996). Since the start of the 1980s programmes to support low income home-owners, not least in housing rehabilitation and area regeneration, have become more widespread, partly in response to dissatisfaction with the long term outcomes of social housing solutions. Market provision of lower income (subsidised) housing has become more important in Europe in the last decade.

Social housing, like market provision, can be made more affordable to residents either by providing capital subsidies, to enhance supply and restricting rents, or by subsidising the incomes of residents (usually in relation to their rent payments). Again, since the mid-1970s, north and west European countries with large social housing systems have typically switched the pattern of support from 'buildings to 'households (with the objective of targeting scarce resources to poorer households within the social sector, see further below).

Demolition, specification of standards, rent controls, social housing provision, enabling and subsidising home-owners and income related housing supports have been the main means for promoting better, affordable housing for low income Europeans. The previous paragraphs have hinted at how policy approaches have varied across countries and evolved over time.

1.3 Diverse approaches, common strands

Housing policy approaches, in broad terms, are reflected in housing tenure structures (e.g. strict controls reduce private renting and suspension or displacement of the market is associated with large scale social sectors) and in public expenditure shares devoted to housing policies. On the basis of tenure patterns and public expenditure ratios a broad classification of policy systems for meeting social policy objectives in housing can be made. It should be stressed that this classification is only one of several possibilities, it is simplistic and it is based on data relating to the very start of the 1990s. It is not intended to imply good or bad approaches but to illustrate broad differences. The estimated tenure balances of countries and public spending commitments to housing are approximated in Table 1.

Table 1: Tenure & public spending in housing

CountryTenureCost of Housing Policy
 Owner OccupiedSocial RentedPrivate RentedOther(% GDP)
Belgium62630 0.24 (1988)
Denmark501824 1.02 (1988)
Germany382636 1.4 (1991)
Spain76216 0.98 (1990)
France541721 1.8 (1993)
Netherlands473617 3.20 (1990)
UK662410 3.3 (1993)
Finland7214311 1.48 (1987)
Sweden43221816*4.10 (1992)

* co-operative sector

Source: Tenure: ECODHAS; Costs: Stephens (1996)

Three EU countries, the Netherlands, Sweden and the United Kingdom stand out by virtue of having large social or not-for-profit sectors shares and policy costs exceeding 3 per cent of GDP per annum. They are also the countries in which the traditional roles of and approaches to housing policy have most changed since the 1980s, in the sense that traditional welfare state roles have been challenged. They also display important differences. Whilst both the UK and the Netherlands, as the result of past rent controls and extensive slum clearance policies, have extremely small private rental markets The UK, especially since 1980, has vigorously promoted home-ownership. Sweden has had a more tenure neutral approach.

Austria, Denmark, France and Germany (prior to 1989) have had, arguably, less market displacement. Private rental sector policies, whilst retaining controls in some form, have permitted a significant private landlord sector to remain and, particularly in France and Germany, facilitated upgrading of the sector. They have also built social sectors on a significant scale and with reunification Germany now has a social sector share second only to the Netherlands within the EU. But to a greater extent than the first group, prior to the 1990s, these countries met more low income housing needs in privately provided rental homes (and, in the case of Germany, also in home-ownership). Annual policy costs appear to lie in the range of 1-2 per cent of GDP per annum.

Ireland, Italy, Belgium, Finland and Luxembourg form a rather disparate group of countries characterised by high shares of home-ownership and small social housing sectors, and policy costs of around 1 per cent per annum. Finland and Ireland (when account is taken of the fact that Irish municipalities have built, and then largely sold at a discount, a third of the nations housing stock) have some similarities to the UK. Belgium and Luxembourg are the two western European countries in which the state has de-emphasised the pursuit of social policy objectives via social housing and emphasised solutions within home-ownership. Italys overall pattern reflects a decentralised housing policy in which sharp regional differences in wealth (which exist also in other countries, e.g. between the old and new Lander in Germany and North and South in Britain) have produced social housing in more affluent northern cities, e.g. Milan, and seen more private rental reliance in the South, e.g. Naples.

Portugal, Spain and Greece have particularly high home-ownership rates, traditions of support for owners, minimal social housing provision and large, but declining and low-quality private rental sectors. Policy costs in these countries usually fall below 1 per cent of GDP per annum.

Looking across Europe this diversity of approaches means two important things for low income households seeking adequate, affordable housing. First, within the policy intensive countries routes to good housing differ sharply across national systems. Dutch citizens, for example, face very different opportunities from their Belgian and German neighbours. Secondly, the levels of support, and varieties of support, differ markedly from Sweden in the north to Greece in the south. In relation to European integration issues, housing systems and support levels differ much more across countries than do policies across States and regions in the USA.

Measures to help households with housing costs, and improve housing conditions, are generally organised and differentiated by housing tenure. The following three sections present a brief overview of the main kinds of assistance according to tenure sector.

1.4 Helping home-owners

Home-ownership, at the start of the 1990s, was the largest tenure sector in 14 of the 15 Union states and was the most rapidly growing in all. In Europe as a whole, some 56 per cent of the housing stock is in owner-occupation.

The broad pattern of support for home-owners in Europe is indicated in Table 2. The mainstream form of support arises because tax relief is available on mortgage interest payments and because tax is either not levied on assessed rental income or levied at a low rate on outdated valuations. In the majority of countries the non-taxation of selling gains reinforces this fiscal advantage. In addition to general tax support there are also specific measures targeted to achieve particular social objectives. For instance, in Spain and Finland young buyers receive extra support and the UK and Ireland pursue a variety of measures to boost low-cost home ownership (in addition to active policies to sell municipal units). Home improvement grants, often targeted at the elderly or disability conversions, is promoted in a range of countries. Further, housing allowances are available to poorer home-owners in Denmark (pensioners only), Finland, Sweden, Germany and the UK (where their generosity has been greatly reduced since 1995). With the exception of the UK, Ireland, Denmark and Germany, high turnover taxes act as a deterrent on home-owner mobility.

Until recent years home-ownership would have been de-emphasised in any overview of the 'social policy effects of housing policies. However, such an omission would have been inappropriate in the past and is seriously misplaced now. Although home-owner sectors are, in general, characterised by more affluent, two-adult families living in larger, high amenity homes ( vis-à-vis the rental sector) national averages conceal more specific difficulties. These difficulties, which have become more apparent as sectors have expanded and matured, plus the reliance of the Mediterranean countries, Finland, Ireland, Belgium and the UK on large home-owner sectors, need to be addressed by housing policies. They include

Responses to these problems in particular countries, are discussed in the next chapter. There is also a more general concern that past tax policies to promote home-ownership have been socially divisive. In general, support has been regressive; it has been most valuable to the more affluent. At the same time, inflation and taxation (prior to the 1990s) have encouraged the more affluent to become home-owners and, often, to suburbanise well away from lower-income, rental areas. Home improvement and area regeneration policies have, since the mid-1980s, begun to counter the geographic separation trend, particularly for younger households, for instance in Britain and Denmark. Of even greater importance, however, is the emerging trend in the 1990s to follow Denmarks lead of a decade earlier and to reduce tax-subsidies for home-owners, Maclennan and Meen (1993).

This marked shift in policy (in Sweden, the UK, the Netherlands, France, Finland, Italy and, to a lesser extent, Ireland) is an important new development in the 1990s. It has been largely prompted by desires to reduce government deficits. On the positive side, it does offer more scope for rental housing initiatives. On the negative side, it also reflects a reduction in support for housing which is also apparent in other tenures. Detailed statistical evidence is not yet available but it is likely that housing in Europe, because of reductions in the north and west and static positions in the south, is becoming less subsidised than at the end of the 1980s. With housing costs rising as fast as inflation, and often ahead of incomes, this implies a likely increase in European housing affordability -problems.

Table 2: Approaches to supporting home-owners in European Countries (circa 1993-94)

 VAT on RepairsVAT on New HomesStamp Duty1993
Rental Value Tax
Interest Relief

Relief on MaintenanceTax on Selling Gains1994
Targeted Measures
Current Change on Tax Support
Netherlands17.517.56YY YLow IncomeReducing
Sweden25.025.0 YYYYHome Improvement
Housing Allowance
UK17.501NY  Home Improvement
Low-cost Owners
Denmark25251YY (P)Elderly ImproversReduced
Germany15-2NY (P)Low IncomeStable
Austria10-2010-20-NY (P)Low IncomeStable
France18.618.67.0YYY Home improvementReducing
Belgium6/19.512/17.512.5YY Y NK
Luxembourg15--YY Y NK
Finland    Y  Young First-time BuyersReducing
Ireland12.512.50NY  Variety of MeasuresReducing for higher income
Italy4/1948NYY ImproversStable
Spain156/3-YYYYLow Income; Young Improvers

Portugal5/16-10YYY  Stable
Greece18-10YY YLoan Subsidy to Low Income


Y = yes; N = 0; (P) = if resold in a short period

Sources: Hedman (1993), ENHR Housing Finance Working Group (1995).

1.5 Assisting private renting

Private landlords provide 21 per cent of European Union citizens with homes. Within the Union, only in Germany (prior to 1989) has it been the largest sector in modern European housing systems. The relative significance of the sector was declining (from 1980-1990) in all countries except Greece, France and Sweden. However, there are two important caveats to this depiction of decline. First, in most countries private rental housing has remained disproportionately more significant in larger urban areas (often twice the national rate) and capitals (at treble national rates). Secondly, as discussed below, after half a century of sustained decline in share there are mid-1990s signs of rental sector revival in more than half of EU countries.

Private rental housing decline, to a significant extent, reflects past emphases in policy. Decline in provision has been most marked (in the UK and the Netherlands, for example) where rent controls were strict, slum clearance extensive and subsidies directed at other sectors. In Germany, by way of contrast, fiscal support to landlords maintained a large, adequate quality sector whilst in Portugal deep rent controls (until the late 1980s) and no slum clearance/social rehousing left a large-scale and poor quality sector. There is now extensive empirical evidence that Europes long run attempts to solve affordability problems through controlled rents have resulted in deteriorated housing quality and entry/access difficulties for the low income households that such policies were intended to benefit.

Research across a range of countries suggests that the average incomes of private sector tenants fall below those of home-owners but exceed social renters. Resident ages, for adults, are similar across tenures. However, these averages conceal the fact that private rental sectors are usually comprised of at least four segments, the first three of which still raise acute social concerns. These are:

Policies for private rental housing have often, in Europe, been predicated upon the imperfections of the housing market dominated by private landlords. But this view is misplaced and mythological; the inadequate housing now prevalent in parts of every European private rental sector is now primarily a reflection of policy failure, either by suppressing landlord investment or by failing to target subsidies to acutely needy households. Even worse, if cutbacks in policy provision are indeed occurring then they will inevitably produce their social consequences in residual private rental sectors.

However, there are some signs that Union countries have begun to have some positive policy impacts in private renting. As private lets are low quality and concentrated in central city areas (in the main) they have been positively impacted by housing rehabilitation policies. In some countries, such as Denmark, the Netherlands and the UK, area regeneration often involves not-for-profits purchasing and improving (and adapting for special, elderly and disabled needs) poor quality private lets. In other countries, for instance France and Germany, grants and tax aid (respectively) have improved living conditions for millions of private tenants. There are more isolated examples of such progress in southern Europe, for instance in Lisbon and Oporto, but resources for older rental renovation have been on a very limited scale and it is precisely in countries such as Spain, Portugal and Italy where such programmes are badly needed to improve homes and neighbourhoods. In northern and western Europe, there are typically no more than 5 per cent of households living in unimproved private lets. In the south this proportion is typically closer to 15 per cent and this is a major European inequality.

Countries, both north and south, have recently been relaxing controls on new investment or tenancies. And in seven northern countries new fiscal support measures for private landlord investment have been developed in the 1990s. These measures are a recognition that changing demography, lower inflation, increased need for young person mobility, expansion of higher education and post boom-bust changes in attitudes to early housing career ownership are all raising demands for renting. Young person demands for independent living are also rising in Greece and Italy but there has been little policy response to the shift. In consequence, if rental housing supply does not expand, poorer renters will be displaced into poorer properties or, even worse, homelessness.

As rent controls have been removed and 'softened, private sector rents in Europe have risen at above inflation rates since the late 1980s, though in southern Europe rent increases to 1993 fell below general inflation. Even with 'soft controls, governments have had to pursue policies to mitigate the rent burdens.

The general pattern of assistance, around 1990, is indicated in Table 3. After support related to incomes, the average European tenant pays in private renting around a fifth of their incomes in rent. This proportion is lower in the poorer countries, where 'controls are still important and housing quality is often poor. In other countries different burdens reflect different sector composition and the different benefit systems. The proportion of tenants receiving support varies from around 25, 21 and 20 per cent, respectively, in Britain, France and Denmark through 13 per cent in the Netherlands to 10 per cent in Sweden and Germany. These average figures do not suggest any crisis in paying for rental housing (they are not unduly high by OECD standards) but they may mask real difficulties encountered by the 'socially excluded. Undoubtedly the rental sector, even as it re-expands, will be the locus of some of the most acute housing difficulties concerning costs and conditions within the European Union.

Table 3: Housing allowances and net rental burdens for private tenants in European Union countries, around 1992

CountryTenant Support MechanismProportion of Private Renters Receiving SupportAverage Net Rental Income Burden (after Support)
PortugalTax Relief on Rentn/a10 (old), 30 (new)
IrelandTax Relief on Rentn/a16
GreeceTax Relief on Rentn/an/a
SpainTax Relief on Rentn/a18
FranceHousing Benefit2017
DenmarkHousing Benefit1920
NetherlandsHousing Benefit1320
GermanyHousing Benefit1021
UKHousing Benefit2522
SwedenHousing Benefit927
LuxembourgHousing Benefitn/a29

Source: Hedman (1993)

1.6 Supporting social renting

Just under a fifth of Europeans live in social rental housing (and here the term 'social is applied to provision by public bodies and not-for-profits with no implication that all residents are poor). As noted above, in some countries the sector was developed on an extensive scale, for instance in the Netherlands, Sweden and the UK, to meet social objectives and housing needs. In other nations, for example Greece and Belgium, this approach attracted no or little support, see Table 3.

Habitations à loyer moyenne

Social housing covers a wide range of providers and roles. The European norm is for not-for-profits, such as housing associations, co-operatives and the Habitations à Loyer Moyenne (HLM) in France, to be the main providers. Direct provision by municipalities has been historically important in the Netherlands, the UK, Ireland and Austria (with smaller roles in Portugal and Italy). However, these countries have increasingly switched (in 1963 in the Netherlands, in 1980 in the UK and 1991 in Ireland) to shift investment and stock into the not-for-profit sector. This change partly reflects fiscal pressures to move spending out of public sector budgets; but it is also a recognition that not-for-profits have been able to display diverse innovative capacities, deliver more effective, decentralised management and maintenance and, in some countries, to involve citizens and communities in the design and management of their homes. Tenant involvement has varied in significance, for instance associations are resident-controlled in Denmark and Scotland but much less so in the French HLM and there are concerns that recent financial reforms have reduced tenant roles in the Netherlands and England.

Typically, in Europe, not-for-profits rely upon private sector loans with interest subsidies provided by central government with the UK a major exception by relying on capital grants. Supplementary funds (often small grants) from regional or local authorities are also common. Not-for-profits, except in the UK, are supervised by local authorities. There has, since 1980 been a marked increase in the share of loan finance drawn from private sector lenders and (in contrast to home-ownership) there is a European market in funds for social housing emerging.

Until the late 1970s, in those countries which had adopted the model as the solution to 'social problems in housing, social housing was expanded as extensively as public funds would allow. And in many countries there was no explicit income level limiting eligibility for social housing - for instance in the UK, Sweden, and the Netherlands (and in France it was set two-thirds of the way up the income distribution). Indeed, in all of these countries social landlords still house significant, if declining, minorities of households in the upper half of the income distribution. The intent, although not always the reality as social separation occurred in many local public housing systems, was that social housing should support socially and economically diverse populations. Other countries, often but not always with smaller sectors, had explicit income rules limiting entry, for example Germany and Ireland.

These patterns began to change in the 1980s, see Table 4, when Belgium, Ireland, West Germany (prior to unification) and, especially, the UK began to curtail investment in new social housing. With subsidised sales policies in both countries the shape of the sector then contracted rapidly in Britain and Ireland. Through the 1980s some countries continued a strong commitment to social housing investment, including the Netherlands and Sweden, and in France, Austria and Germany (facing a sudden, massive increase in needs) the investment share of the sector increased. In the early 1990s relative decline of the sector became apparent in Sweden and the Netherlands and, more recently budgets have declined in Denmark and France. Only Ireland and Germany have given a new priority to social housing in the 1990s.

Some of this retrenchment may be temporary, reflecting recessionary public budget pressures as countries seek to meet the Maastricht convergence criteria. There are signs, however, that in Britain, the Netherlands and Sweden that there has been a more fundamental shift against reliance upon social housing investment on a large scale. This may mirror shifting ideologies, but it also reflects a growing unease with the outcomes of past policies in relation to subsidy-targeting, social segregation and dwelling quality. In some countries large scale social housing is now seen as being as much a problem as a solution.

Whilst many areas of social housing have remained well organised and liveable, there are significant shares of social housing that have come to constitute (sometimes within 10 years of their construction) areas of poor housing, poor people and poor living conditions. In north and western Europe, social exclusion is often now just as apparent in municipal and not-for-profit housing as it is in older, central city homes provided by private landlords. This observation is self-evident in Dublin or Paris or London or Copenhagen or Berlin and in a host of other cities. The key issue is whether this is a set of problems inherent to or manifested within social housing systems.

The answer to this question, in most places, is both. When social housing was constructed and let the priority applicants were generally poorer but employed families, usually with two adults and children. Over the last two or three decades the employment prospects of these households have fallen rapidly, they are precisely the most affected groups in economic restructuring. At the same time, residents have aged in situ. Hence the resident composition of these areas became older and poorer. Arguably these effects would have occurred regardless of tenure or location.

The quality of homes and estates also deteriorated, and in this the nature of social housing policy did have a negative role. In France and Britain, for example, homes were under-maintained. There, and elsewhere, high-rise and other modern dwelling forms were unpopular with residents and eroded commitment to neighbourhoods. And this commitment waned even faster where tenants, such as in British council housing and numerous French HLM, had little direct influence on estate management.

As these estates became less popular they generated higher turnover rates, destabilising communities, and increasing vacancy rates. The nature of local housing allocation schemes then meant that the new poor of the 1980s, for instance single parents and the young homeless people, then filled the vacancies. Residents with jobs and rising incomes left, often to subsidised home ownership. These processes have been well established for social housing estates in Dublin, Glasgow, Lyon and Amsterdam. Clearly, adverse economic and social trends occurring outside the housing sector changed the client flow for social housing but arrangements within the sector sometimes reinforced social separation and exclusion consequences.

Table 4: Key features of social rental housing in EuropeanUnion countries

 Tenure ShareShare of New Completions 1990-92Provider TypesEstimated New Construction Subsidy 1993Rehabilitation Programmes 1992 x 100 dwellingsSpecial Needs Subsidies 1993 (1)Present Trend (Share)
Netherlands343628LAs 1963 then HAs35-50% (now none)57.4D,ELiberalisation, No Capital Subsidy Investment Down
Sweden323121NHCs50 D,E,Y,AInvestment and Subsidies Reducing
UK342617LAs, HAs, make new investment since 198060267D,EInvestment in New Falling, Rehabilitation Increasing
Austria162118Co-operatives, Municipal66, 88 D,E,Y,ASmall Reduction in Investment
Germany  15HAs in West, Former State Now Municipal in East\35-50 D,E,Y,AIncreased Output Since 1989 to meet Immigrant Needs
Denmark171738HAs35-500.5D,E,Y,R,AInvestment Reduced in 1992, Static Since
France141519HLM60171-New Investment Reduced in 1995
Finland 15 Co-operatives  n/a 
Ireland13119LAs, HAs also in 1990s90-100 D,ENew Priority, Investment up Since 1993
Italy  7Co-operatives, Last100 D,EStatic
Belgium762Societies60-100 D,En/a
Spain01-Co-operative45 -Housing Budget Reduced in 1995

1. Key: D = Disabled; E = Elderly; Y = Youth; R = Immigrants; A = Other groups

Sources: Hedman (1993) and Country Reports

These difficulties were, in turn, exacerbated by changes in rent policies. Towards the end of the 1970s, with still modest unemployment rates in social housing, a majority of countries de-emphasised dwelling subsidies in favour of housing allowances. It was argued that this would target assistance more effectively to needier households and, sometimes, in a tenure neutral fashion. In consequence, see Table 4, rents then rose ahead of inflation in countries with housing allowance systems and this pattern has continued into the 1990s. The Mediterranean countries, with no housing allowance systems, have, in contrast, had rent increases below inflation rates.

This near-universal shift in approach, albeit with markedly different increases in real rents (highest in the UK and least in Germany) has had mixed effects. Poorer tenants have received more assistance and net (after benefit) rent to income ratios lie in the range of 12-15 per cent in most countries. But more affluent tenants have been encouraged to leave the sector and in higher rent countries or cities it is often only benefit dependent households who can afford to enter higher rent, new and rehabilitated houses. The characteristics of allowance schemes differs across countries, see Table 6, but often where benefit replacement rates are high (that is rent allowance, and other benefits, fall as employment income increases) a deep poverty trap is formed. This problem is most acute in the UK, with a relatively low level of basic social security and high withdrawal rates; recent research suggests that in the UK an unemployed adult with two children would have to secure a wage above the average manual workers salary before escaping the poverty trap. The interaction of housing and social security policies is reinforcing social exclusion in such circumstances. It is also likely that low net rents contribute to the under-utilisation of larger social housing units, thus leading to stock misuse.

The rise in European rents, rising unemployment and pensioner status of social sector tenants and recession have contributed to a growing sense of alarm at housing allowance bills within the Union. In Britain, France and the Netherlands housing allowance bills roughly doubled over the five year period 1988-93. There, and in other countries, there are continuing policy reviews to contain the growth in spending. But the problem is sufficiently intractable that no obvious solutions have yet emerged which reach to the heart of the problem. In the meantime rent rises are being moderated but, as noted above, investment budgets are being reduced.

The larger social rental sectors in Europe have, over the last decade, come to house a larger proportion of the poor, including the unemployed, single parent families, ethnic minorities and migrants. In some senses this is a positive achievement but, at the same time, also negative as they have increasingly come to dominate the sector. Tenure is a major contour of social exclusion. Within the tenure, social segregation appears to have increased. But social housing has also been characterised by positive achievements in many countries

Table 5: Incomes, inequality and rent increases in Union countries

 Real Income 1992Incom Share of Poorest 40 %Unemployment RateUnemployment Rate Males Under 25Social Security Benefits as a % of GDPProportion of Population Over 65Social Rent/Price Index Ratio% of All Households Receiving Housing Allowances
 US $199219931993199319901980-19921992
Austria18.7na3.4 (1)1912.4151.34nr
Germany21.118.88.2 (2)416.1151.12 (2)25
Italy18.118.811.5 (1)261114.30.93nr
Greece8.3na8.7 (1)na11.413.6nrnr
Luxembourg21.5na1.6 (1)nana13.4nanr

(1). 1992 data (2). FRG area

Sources: Hedman (1993), OECD Country Reports

Table 6: Income related assistance for rental housing costs

Country/BenefitWho is EligibleHow Many Get ItHow Benefit Varies at the MarginTrend
Housing Benefit:
mortgage interest
Low-income tenants, owners on poverty line5.1 million: 59% of tenants
3% of owners
HB falls by 65% of extra
income: rises by 100% of extra rent
Number of claimants: rising
Size of claims: rising fast
Aides a personnes
People on low incomes from all tenures: influenced by size of family and of home: and how home was financed16% of all tenants:
39% of social housing tenants
VariableRise in rents exceeds rise in allowances, leaving tenants with less disposable income\
Housing allowance
Anyone in any tenure whose income is too low relative to housing costs1.5 million = 10% of tenants: 1% of home ownersFalls by 15-30% of extra income: rises by <66% of extra rent

Number of claimants: stable Size of claims: stable
Housing allowance

Tenants with low incomesOne million = 30% of tenantsRises 100% with rent to 1st ceiling taper steepens up to 2nd absolute ceilingTighter eligibility rules contain a rise in size of claims
Housing allowance
Pensioners: low-income families40% of pensioners
30% of families with children
Pensioners: falls by 35-40% of extra income rises by 85% of extra costNumber of claimants and expenditure rising

Sources: Hedman (1993) and research by Peter Kemp

The major, positive breakthrough has, however, been the development of large scale programmes to rehabilitate rundown social housing estates, see Table 4. Extensive programmes already exist in Britain, France, the Netherlands and Sweden and have developed in the 1990s in Ireland and Denmark. Where they do take place they have a fundamental effect on the lives of the European poor. Such initiatives are increasingly partnerships between the public sector, the community and the private sector. Housing investment and management changes are integrated with social, health and environmental actions and much emphasis is placed on raising resident employability through a series of measures ranging from increased child-care to training. Recent successes in cities such as Dundee, Rotterdam and Lyons illustrate that real progress can be made in tackling the causes as well as the symptoms of social exclusion. But for further progress resources will be required plus a new emphasis on 'integrability in housing policy thinking and funding.

1.7 Major trends reviewed

It was noted above that housing policy approaches differ across countries and that policy objectives and means may change over time. In the previous sections discussion of cross-country contrasts has inevitably meant mention of changes. It is, however, pertinent in this section to briefly summarise the recent major trends in European housing policies.

There are seven noteworthy areas of generalisations

Before turning, in Chapter 3, to consider recent experience in individual Member States it is relevant to ask what past policies have achieved and what challenges remain.


Housing policies, as noted above, have to be concerned with 'affordability, 'accessibility, 'quality and 'integrability. 'Integrability is a new theme in housing actions and there is little systematic knowledge on progress to date. This section, therefore, concentrates on 'affordability, 'quality and 'accessibility. It should be stressed, however, that there is limited cross-national, comparable information on these topics. Housing policies, say in contrast to health and education, have been rather sloppily monitored by many national governments.

2.1 Affordability

Affordability is a broad measure of the burden of housing costs in relation to incomes. The discussion above on rental housing systems and housing allowances suggests that, in most countries, households who have access to rental housing and some form of tenant support generally face 'affordable rents in Europe. The discussion is not repeated here.

However, there are particular categories of Europeans, both in renting and owning, who have to make housing payments without ready recourse to allowances. They include

The first of these difficulties is most acute in southern Europe, and will become more acute as younger persons seek earlier independent living, related to career mobility and higher education as well as family tensions. The other two issues are most acute in northern Europe. Unfortunately no precise, comparable figures are available on the extent of these specific problems or the distribution of housing costs in relation to household types.

2.2 Improving conditions

National statistics on the quality of housing tend to be restricted to relatively simple measures of size, number of rooms and the presence or absence of 'standard amenities such as baths, showers, inside toilets and central heating. Statistics for the 15 Member States indicate that housing quality (so measured) has been improving steadily since at least the 1960s. However, they also indicate marked disparities in amenity across the Member States.

Cross-country differences in amenity are indicated for the Member States in Table 7. The figures presented are deviations from the EU country average for each indicator. For the indicators on persons per room, space per person, single family dwellings, proportion of good units and central heating positive scores record higher amenity. However, for the indicators of proportion of homes pre-1918 and per cent of units without bath or shower above average scores imply higher disamenity. An overall quality index, based on these indicators was then calculated.

A number of conclusions can be drawn from the figures

The overall composite indicator emphasises the high amenity/quality levels of housing stock in the Netherlands, Sweden, Denmark and the UK and the poorer quality of housing in the Cohesion States. Historic patterns of urbanisation, wartime damage and income levels all help to explain the patterns of amenity indicated in Table 7. But it is also no accident that the high performers have been those with the most active policies for housing and those with the lowest (with the recent exception of Ireland) the least.

Table 7: Indicators of housing quality (around 1990); performance of individual countries relative to EU averages

 Persons Per RoomSpace Per PersonSingle Family% of Dwellings Pre-1918% of Units Without Bath/ShowerProportion of Good UnitsCentral HeatingAverage of All Indicators
Germany (BRD)0.160.06-0.210.05-0.50na0.290.18

Source: Hedman (1993)

In countries where detailed research studies have been conducted, the pattern of standard amenities (of the types listed above) tends to vary by resident income and age. Higher income households have, inevitably, more amenities whilst the poor reside in low amenity housing. Forty years of housing policies may have weakened the low-income/low-amenity relationship but they have not removed it within or across countries. For given income levels, the elderly often have poorer amenity provision.

The provision of standard amenities also vary across housing tenures

The presence or absence of standard amenities is not, however, a very precise guide to housing quality. Over the last fifteen years or so national governments in the Union have collected more detailed statistics on house condition and categorised units into 'good, 'unfit, etc., see Table 7, though definitions differ across countries. More systematic work is required in this area, but a number of illustrations make the point

The major exceptions (to the pattern of poor quality private renting vis-à-vis other tenures) appear to be Greece and Germany. Of course, high quality rental segments exist in most countries. Equally, poor quality is also evident in segments of both social renting and home-ownership.

These housing quality issues and measures are important, not just because they are concentrated in particular locations but they are closely associated with lower income groups. But, for modern 'integrated housing policies they understate the potential problem. National housing censuses, and even special house condition surveys, do not usually record the extent to which dwellings are adapted for the elderly or the disabled. Nor do they record the neighbourhood conditions of poor housing (often in social housing which meets amenity norms), such as the incidence of vandalism, abandoned properties, fear of crime, and so on, which influence resident perceptions of housing quality. European housing statistics are locked into a 1950s perception of housing quality and problems. With an emerging emphasis on the 'integrability of housing policies new statistical information is required to shape national housing policies in all but a few of the Member States.

New perceptions may be required which match emerging concerns with social exclusion. At the same time, however, with policy support levels stagnating, it is all too apparent that millions of Europeans live in homes which fail to meet widely accepted norms of 'decent housing and the problems are most acute in Europes poorer countries, cities and neighbourhoods. Even worse, as the paragraphs below reveal, there are significant numbers of Europeans who have no access even to poor homes of their own and countless more who wait long periods to secure decent homes.

2.3 Access to housing

Homelessness is the key accessibility issue in European housing systems but it is by no means the only one. In a more general sense, accessibility is an issue where households are either denied a 'right or 'expectation or where households are denied or excluded from housing which they could afford to pay for.

At the less acute end of the spectrum of accessibility questions, there has been growing accessibility to home-ownership across Union countries in the 1980s as incomes have grown and policies supported the tenure. Two particular policy changes have facilitated access to home-ownership, though with lesser impacts in Italy, Greece and Portugal. First, financial deregulation has reduced mortgage rationing, most obviously in Britain, Finland and Spain. Secondly, inner-city rehabilitation programmes have significantly increased home-ownership in central cities, especially in the UK. As noted above, reductions in tax subsidies may reduce accessibility to the sector in the coming years but few of those excluded are likely to be denied adequate rental housing.

Accessibility to private rental housing, with the exception of Germany, Belgium, Luxembourg and Sweden, has been a longstanding difficulty of Europe as policies have precluded the 'fast-access characteristics of rental housing. In controlled, declining sectors unfurnished rental homes have often been unavailable, thus forcing more affluent households into owning and poorer households into social renting or, in its absence, unsatisfactory sharing. For younger households, long searches and sharing outcomes have been commonplace in much of Europe. However, 1980s deregulation of new tenancies and 1990s moves to support private landlords via tax breaks, have apparently eased access in such sectors though immigrants, ethnic minorities and benefit dependent households (especially single parents) still face, reportedly, access problems.

Social rental housing, in northern and western Europe, copes (more or less adequately) with the bulk of flows of low-income households seeking housing. Once again there is no systematic, comparable data on households seeking to enter or move within European social housing. In the country overviews, in the next chapter, some specific experiences are reported. There is evidence to suggest that as household formation rates and unemployment rates rose in the 1980s, entry queues for social housing lengthened in Britain, Ireland, France, Germany and Austria (in the latter cases particularly because of high and sudden immigration from the east). Queuing times of 2-4 years, in poor housing or difficult household circumstances, for general applicants were not uncommon. Waiting times vary by geographic area, often being most acute in growing metropolitan areas, but not exclusively so as rural areas also encounter difficulties. In northern Britain, for example, where growth is slow and council housing vacancies are high, waiting times seldom exceed one year. In growth areas, in the south-east of England, waiting periods of seven years have been reported. Of course, waiting times also vary within cities; applicants willing to live on the worst estates in Britain can have, often, near immediate access. But then one form of social exclusion is often merely swapped for another, say domestic violence for a poor quality, inaccessible neighbourhood.

In some countries 1980s actions to meet the requirements of 'special needs groups have reduced specific queues. For instance in Sweden, the UK, Denmark and the Netherlands new programmes for the elderly and disabled have, reportedly, reduced waiting times for specialised housing. There are also some signs that in western and northern Europe that the passing of peak waves of household formation, by the early 1990s, has now reduced entry pressures. Massive investment in German rental housing, since 1989, is now alleviating access problems also.

In most countries with large social sectors or investment programmes, the rapid growth in homelessness in the 1990s also led to a higher prioritisation to such groups, vis-à-vis 'housed applicants. Wider evidence is not available on the impacts of this shift but the UK experience may be illustrative. As the proportion of council housing lets rose, in the late 1980s, to over 50 per cent, 'normal applicants and tenants seeking transfers faced longer waits (though this problem was avoided in countries such as Denmark where transfer applicants are allocated homes ahead of other priority groups). The UK governments response to charges of homeless people 'queue jumping has been to increase temporary housing and propose temporary tenancies thus eroding the rights of the statutorily homeless to be housed in the local authority sector. Arguably these measures merely redistribute limited housing opportunities between 'needy and 'very needy households. This brings us to the difficult issue of homelessness in Europe.

2.4 Homelessness

Homelessness represents perhaps the most acute manifestation of social exclusion in Europe, Fitzpatrick (1996). However, although the European Federation of National Organisations Working with the Homeless has done much to clarify the meaning and extent of homelessness, there is still much debate on how 'homelessness should be defined and the problem(s) measured. Lack of an agreed definition and firm measures cannot, however, disguise the fact that homelessness grew worryingly in Europe from the mid-1980s onwards and in all countries. Nor can there be any dispute about the wretched conditions in which different groups now exist.

A variety of dystopian existences face those widely regarded as homeless. Rooflessness, usually single males but with a growing share of women, exists not just in large north European cities but in smaller towns and some rural areas. In southern Europe homeless families and 'street children are increasingly evident difficulties in Portugal and Greece. Illegal shanty towns built from impermanent materials such as cardboard and corrugated iron now house 60,000 people in Portugal and in Spain they have reappeared to house gypsies and immigrants. All told there may be 150-200,000 shanty town residents in southern Europe. and a further 200,000 homeless immigrants, spread more widely. FEANTSA also estimate, throughout the Union, a further 200,000 people living in caravans and tents. Homelessness also absorbs those leaving institutions such as psychiatric homes and prisons, with no place to go. Homelessness totals also include those living in insecure housing and in overcrowded homes with friends and relatives (referred to as the hidden homelessness) as well as those in hostels and bed and breakfast accommodation.

FEANTSA estimated, in 1993, that there was a minimum of 2.5 million homeless households in Europe and at least 3.5 million if shanty/illegal, tent/caravan and homeless immigrants were included. But with measures largely based on counts of those receiving or seeking support this figure probably remains an under-estimate. Similar factors also influence the observed cross-country patterns, see Table 8, which suggest the highest incidence rates at 10 per thousand people in France, Germany and the UK and the lowest rates, at less than 2 per thousand in Portugal, Spain, Greece and Ireland. As the country sketches (in the next chapter) indicate, policy action and reducing demographic pressures (in some countries) are now leading to reductions in homelessness in the UK, Ireland and Denmark. Overall totals remain worryingly high but it should be stressed that the quality of the data reported in the last two paragraphs is poor.

Table 8: Extent of estimated homelessness in the early 1990s

CountryYearPopulation (Millions)Estimated HomelessHomeless per 1,000

Source: Second and third reports of the European Observatory on Homelessness

Homelessness, and the implied failure of housing policies to meet housing needs, has grown because of rising pressures on the supply of adequate, affordable housing. Different factors, varying across and within countries, have contributed to these emerging imbalances. These include

The elements of this list of structural and personal factors often interact. Many of the homeless experience a devastating amalgam of several of these factors and homelessness is not a problem simply requiring housing investment solutions. Policy 'integrability is again critical in dealing with the issues. This is well illustrated by listing the general characteristics of Europes homeless

And these homeless people only have direct rights to housing in France and the UK, though in the latter case they are now weakening. Policy responses in the 1990s have been relatively swift and, in some countries, extensive and innovative. But they are still inadequate. The previous section indicated how, in countries with large social housing systems, higher proportions of lets were directed at the homeless. Social housing investment programmes targeted at the homeless have been boosted in range of countries including France, Ireland and Denmark. New emphasis has been given to the provision of reception centres and complementary social support, including facilitating the difficult transition to permanent living. Private and charitable agencies have made important contributions in this reception, integration process and in southern Europe it has reflected a near absence of government action.

2.5 What to do now?

Homelessness is the most obvious consequence of how European housing policies are failing to cope with social and economic changes. The increasing concentration of poor households in poor neighbourhoods, in both social and private rental sectors, is another failure which is likely to threaten both social cohesion and economic competitiveness. These acute issues are by no means the complete set of European housing difficulties. Gaps in 'affordability measures, show progress in meeting special housing needs in some places, inequitably distributed subsidies and other issues are still of significance.

Not all of these difficulties are resource problems, better planning and management have a role to play in improving outcomes, but many are. Yet the general, but not ubiquitous, trend is for reducing support for housing. The case for housing has to be remade but this case is no longer simply about shelter and affordability but about recognising the benefits from linking housing more effectively to other financing, management and investment measures.

But what should countries do, and how can Europe help without transgressing agreed lines of subsidiarity? In the next chapter, brief reviews (developed by a number of national experts) of pressures, policies and innovations are presented for selected Member States. Countries, even those with fewer resources, are doing a lot and new styles of housing policy are emerging in the 1990s. In the final chapter the potential roles of the European Union in facilitating such change are examined.

European Parliament: 12/1996