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


In this chapter we provide outlines of housing policy in thirteen of the fifteen Member States. Unfortunately, insufficient information was available to include Austria and Luxembourg. We have followed, as far as possible, a standard formula. First, we outline the structures and trends in housing policy, then policy organisation and emphasis. We also aim to cover the key challenges facing the Member States and how policy has adapted to meeting them. Where available we provide information on EU programmes in the Member States.

3.1 Denmark (1)

Mature policies, older population

Since the mid-1950s, as economic prosperity has grown, the Danish state has made a major commitment to housing policy expenditure, often spending 2 per cent of GDP per annum on policies. At the same time, individual Danes have been prepared to pay, on average, high proportions of their incomes (typically 30 per cent) on housing. In consequence, Denmark now has both mature policies and high quality housing so that though housing problems persist they are much less acute than in poorer EU countries. At the same time, Denmark has a relatively 'aged demographic profile and social changes favouring single person living are particularly evident. In 1991, 15.6 per cent of the population were aged 65 years or over, 34 per cent of households were single persons and average household size, at 2.2 persons, was amongst the lowest in the European Union. Past progress and present dynamics give Danish housing policies a distinctive quality-oriented emphasis.

Structures and trends

Demographic maturity and a relative reduction in tax support for home-owners has meant that the share of owner-occupation in Denmark marginally declined from 52 to 51 per cent between 1981 and 1991. Indeed, amongst the West European/Scandinavian economies Denmark was almost unique in avoiding a damaging boom-bust in the housing market and in securing real (but not nominal) reductions in house prices. Private rental housing, largely older flats, has been relatively static in scale (26%) and social housing (18%) has marginally increased its share into the 1990s.

Policy organisation and emphasis

The emphasis, over the last decade, in Danish policy has been to recognise the major role of housing markets but also to stress social housing as being essential to meet necessary housing requirements not satisfied by the market.

The Danish social housing sector comprises almost 700 housing associations (not-for-profits) of varied size spread across urban areas and rural districts. Investment financing is distinctive within the Union; 91 per cent is a private, index-linked loan; 7 per cent is from the municipality and 2 per cent is from tenant deposits (which may be financed by local authorities for low income households; 80 per cent of dwelling subsidy is from central government and 20 per cent from municipalities. Personal, or housing allowance subsidies are available to renters in all rental tenures. There are no income limits on entry to social housing and young people aged 15 and over can register on waiting lists, these are extremely open social housing systems. A further distinctive feature of Danish associations is their role in civil society and in the promotion of social participation and integration through the pervasiveness of tenant control. Since the 1970s, each association has had a Management Board with a tenant majority (an emphasis now disappearing in England and the Netherlands and never present in France); each estate owned by an association is treated as a separate financing entity and has its own tenant committee; majority votes of tenants are required for major changes.

Local authorities provide capital, guarantees and subsidies to housing associations. They also approve rent schemes, administer rent subsidies, organise the production and maintenance of schemes and have a key role in monitoring and regulating associations. Aside from their major planning roles, including assessing housing needs, local authorities have the statutory responsibility of ensuring that all households are adequately houses.

Policy stability has been a feature of Danish housing policy for the last twenty years, policies evolve rather than shift. Sustaining past progress and refining the 'edges or interconnections of housing with other activities have been key features of the 1990s. The main emphases apparent have been

Key challenges

Although Danish housing is plentiful, diverse and high quality, specific problems of neighbourhood quality (in older areas of private renting and in 1960s multi-storey estates), access and affordability remain. And general social trends (ageing, for instance, and splitting households) and economic outcomes (specially rising unemployment near the EU average rate) has posed new problems. The major issues now facing Denmark include

Denmark has responded to all of these issues in a positive, innovative fashion.

Responses and innovations

Recent developments in Denmark have focused innovation in two main policy areas, namely housing in area renewal and housing for the young and old.

In relation to urban renewal

Denmark is, along with other countries such as the Netherlands, the UK and France, at the forefront of European practice in housing-led regeneration. However, along with Sweden, it makes particular efforts to deal with 'age-related housing issues and also integrates policies for the disabled into such strategies. Most elderly Danes live in mainstream housing with municipal provision of support care and alarm systems but there are still a significant number of unadapted or insecure units. Prior to the 1990s the policy approach was to move frailer, elderly households into sheltered housing or subsidised nursing homes. In the 1990s the emphasis has altered

Policy success is reflected in forward thinking urban regeneration, suitably housed young and old and a falling, relatively low level of homelessness.

3.2 Finland (2)

Tenure structure and trends

Finland underwent urbanisation in the 1960s - much later than most other western European countries, and this is reflected in the very high rates of housing production, which typically exceeded 10 units per 1,000 inhabitants in the 1970s and 1980s. Even in the economically stringent 1990s, new production continues at about five units per 1,000 inhabitants.

The tenure structure is:
Owner occupation: 72%
Social rented: 14%
Private rented: 11%

The long-term trend has been for owner occupation and the social rented sector to grow, while the private rented sector has shrank.

Both owner occupation and rented sectors have been underpinned by state subsidised loans since the 1940s. One-third of dwellings built in the 1960s were state supported, and this proportion rose to 50% in the 1970s and remained at 40% in the 1980s, and rose back to 60% in the mid-1990s, although this reflects the depressed state of the private sector. These subsidies go predominantly to supporting rented housing.

The private rented sector is now being targeted for growth, as a means of providing housing for groups, such as young people. This sector has been in long-term decline, and in the 1980s was attracting virtually no new investment, having operated under the burden of rent control. However, rent control on new tenancies was dismantled in all parts of the country by 1992.

Policy organisation and emphases

Housing policy has been driven centrally, although it is now becoming more fragmented. The temporary housing agency (ARAVA) which gave its name to state subsidised housing loans was wound up in the mid-1960s, and replaced by the National Housing Board (NHB). The Ministry of the Environment, advised by an all-party Housing Council, was responsible for general housing legislation and the housing budget, while the NHB was responsible for implementing a wide range of measures, including the distribution of the housing budget (subsidised loans and housing allowances) among local authorities.

In the 1980s, the administration of housing policy was decentralised, with the NHB losing functions to the Municipal and Provincial Councils. At the end of 1994, the NHB was disbanded, its loan portfolio being transferred to a separate Housing Fund under the Ministry of the Environment, and the responsibility for housing allowances to other agencies, such as the National Pensions Institute.

Local authorities are active in local planning and are major players in land markets. They are responsible for drawing up annual housing programmes, purchasing and disposing of land for construction, and to some extent financing housing production. Local authorities are also responsible for administrating applications for housing loans, including those which finance the large renovation programme.

The cost of housing policy is quite low by northern European standards. In 1994, it amounted to FIM 8.9 billion in 1994, the equivalent of about 2% of GDP. By far the largest components are mortgage interest tax relief for owner occupiers (47%) and housing allowances (43%). About 10% of households receive housing allowances (double a decade ago) and of these about half have at least one member who is unemployed. The remainder of the budget is accounted for by:

Key policy challenges

Finlands housing policy has operated in a climate of economic crisis. The early 1990s were marked by the collapse in trade with the former Soviet Union and a banking crisis, which required large government subsidies (amounting to almost 8% of GDP per year in 1992 and 1993). Unemployment, which had been 3.5% in 1989 (among the lowest in western Europe), spiralled up to 18.4% in 1994. Following devaluation in 1992, the government has pursued tight fiscal policies and Finland, which joined the European Union in 1996, is expected to meet Maastricht budget deficit convergence criteria.

These problems have put general pressure on the housing system, while reducing the budget available for housing (it was expected to fall by 6% between 1994 and 1996).

Specific housing policy challenges in the 1990s have included:

Distressed owner occupiers: the housing market boomed in the late 1980s and then crashed in the 1990s, placing many owner occupiers in negative equity. The Government has introduced schemes to allow distressed owner occupiers to remain in their houses, and has also established a relatively small fund to help a limited number of owner occupiers with their interest payments.

Affordability: the house price boom placed severe pressure on the housing market, while the recession has created a lack of confidence. There has been a shortage of rental housing, especially in the free market sector. The Government has established a housing-savings scheme to help young people gain access to owner occupation and has deregulated rents on new tenancies which has helped increase the supply of rental housing.

Social cohesion: Finland has always attempted to provide socially mixed housing. This was to a large extent achieved by providing subsidies across tenures and maintaining high design and construction standards in the social rented sector, which set the norm for the bulk of the free market sector, too. The planning system was used to ensure that developments were small scale and mixed. Hence Finland was freed from the easily identified and stigmatised social rented housing estates common in other European countries. At the same time a policy balance had to be maintained between producing socially mixed developments while housing people in need. Hence subsidised housing was allocated on the basis of housing need, income and assets. The rise in unemployment is creating new challenges on some estates which now have very high levels of unemployment.

Special needs groups: Finland tends to deal with the needs of particular groups by earmarking funds especially for them. There is a separate housing allowance system for the elderly, and a special renovation budget for the adaptation of houses. Although there is no statutory obligation for local authorities to house homeless people, there are special funds to meet their needs, recognising that there may be a social support element to solutions, in addition to the visible housing needs element (see below).

Unemployment: Finland has responded in part to the unemployment problem by promoting a large scale renovation programme. In 1994 almost one in ten houses were improved with the help of state funds. The logic in terms of creating employment is that renovation creates more jobs than new build, because the latter is highly industrialised in Finland.

Policy responses and innovations

Homelessness is increasingly recognised as a significant component of social exclusion across the European Union. The Ministry of Housing in Finland does not claim to have solved the problem, but measures taken have increased understanding.

Finland has measured homelessness systematically since 1986, using a broad definition:

Overall, homelessness in Finland is relatively low by international standards (to the limited extent that they are comparable). There are about 18-20,000 single people measured as being homeless each year and another 1,000-1,200 homeless families. Together they represent about 0.03% of the population. By far the largest category is those living with friends and relatives.

(i) Homelessness as a housing problem
Since 1987 (the United Nations International Year of the Homeless), the Government has provided loans to local authorities and other organisations for the construction or purchase of housing for the homeless. About 1,000 homeless people are housed each year through this scheme.

(ii) Homelessness as a social welfare problem
Social welfare agencies are involved in tackling homelessness:

(iii) Statutory rights
The following groups have statutory rights to housing:

Policies contribute to reducing homelessness, but only by about 1,000 per year. There remains a lack of knowledge about the process of homelessness, - for example some homeless people who are housed under government schemes may become homeless again. Research suggests that policies can have adverse side-effects, such as the stigmatisation of homeless people who have been housed together.

Nevertheless, the Ministry of the Environment points to three positive aspects of the programme to combat homelessness since 1987:

EU actions

There has been little time since Finland joined the EU in 1996 for these to be reported.

3.3 France (3)

Tenure structure and trends

Predictably, France faced severe housing shortages in 1945, but the house-building programme did not really get underway until the 1950s, somewhat later than elsewhere. It peaked in the 1970s and in 1977 policy shifted away from construction subsidies. New build fell throughout the 1980s, but pressures on the housing system in the 1990s, resulting from immigration, high unemployment and a slump in the building industry provoked increased state subsidies for a revival in the house building programme.

Each sector has enjoyed public subsidy in France, although not on a tenure-neutral basis. Owner occupation is the largest tenure, representing 54% of the stock. Politically, it is favoured for further expansion, partly because its expansion is seen as a way to take better off tenants out of the social rented sector, so freeing tenancies for lower income households. The private rented sector has undergone long-term decline and in the 1990s was still shrinking at a rate of 50,000 units per year. At 21% of the stock it is still somewhat larger than the social rented sector (17%). But if the decline of the private rented sector continues, then the position of the rented sectors will be reversed.

Policy organisation and emphases

The social rented sector is dominated by the Habitations à Loyer Modéré (HLM):

The remainder of the social rented sector is owned by:

Finance, in the form of subsidised loans for new build or renovation, is directed through the Caisse des Depôts et Consignations (CDC), a government-owned intermediary. By controlling the subsidy system, housing policy is fairly centralised: loans are granted only if properties conform to certain space and amenity standards, and rent levels must also be set at approved levels. However, local governments enjoy nomination rights, and of course influence in the operational management of the HLMs which they sponsor.

Although the French social rented sector is smaller, overall it is more socially diverse than the UKs larger stock of social housing, partly because some HLMs have run restrictive allocation policies. Although access to HLMs is restricted by income, 60% of the population would qualify and one-fifth of tenants are in the top half of income distribution. Rents are set at about 40% of their unsubsidised free market equivalents; and about half of tenants receive housing allowances. However, the tenant profile is changing in response to new challenges (see below).

The other tenures also receive subsidies. Owner occupiers have been able to gain low interest loans with the aid of another Government intermediary, the Crédit Foncier de France (CFF), regulated loans from the banks, and grants for improvements. There is also a state supported housing-savings scheme. Private landlords have also had access to similar low interest loans via the CFF.

The emphasis of policy shifted away from subsidies for new construction and towards more targeted subsidies and subsidies for improvements in 1977, when a new housing allowance was introduced. In 1993, the cost of French housing policy was FFr131 billion, the equivalent of 1.8% of GDP, although this may not include some hidden subsidies within the financial system. Only about 12% of this was accounted for by bricks and mortar subsides. Personal subsidies were the most significant single item, representing nearly one half of costs, while tax reliefs accounted for about one-third of costs. However, policy has shifted somewhat since 1993.

Key policy challenges

France faces several policy challenges. The HLM sector itself faces severe problems on some estates, especially those built on the periphery of large cities, constructed using systems building techniques. These estates have come to house poorer people as higher income tenants have moved away. They often suffer from high levels of unemployment and social exclusion has a racial dimension, as they are often the home of ethnic minorities. The main minority group is people either from North Africa of North African origin. The peripheral estates in France have had a history of violence, dating back to the early 1970s and as a result have been the subject of reactive programmes to bring about improvements. However, the lack of progress led M. Chirac to make the peripheral estates around Paris an election issue in 1995, and to tour a project in Glasgow in 1996 in search of good practice.

France also experienced limits to the reduction in state involvement in housing in the 1980s. By the early 1990s there were indications that social rented housing was coming under pressure. In 1993, 60% of new entrants to the sector were classified as being acutely distressed, vacancy rates fell to less than two per cent and there was evidence of shortages. Further, the building industry was in severe recession with high levels of unemployment.

Unemployment is a further contextual problem for housing provision in France. France has pursued vigorously anti-inflationary economic policies since 1983 and in particular has been anxious to protect the value of the franc, the policy known as franc fort. Unemployment in France has been high, and although it fell from more than 12% in 1994, it began to rise towards the end of 1995. Unemployment among young people has been recognised as a particular problem for some time.

Policy responses and innovations

In 1993, the government announced a programme to revitalise the construction industry, largely by expanding existing subsidy instruments. The programme for 1993 consisted of:

For 1994:

But the French government is operating within a very tight budgetary environment, and housing needs remain unmet. Homelessness is estimated at 200,000-400,000, and in 1995 the Housing Minister has resorted to cost-free proposals, such as the creation of 10,000 places in emergency shelters by requisitioning empty buildings under legislation dating back to the immediate post-war period.

EU actions (4)

France has a long tradition of providing foyers for young people as a means of aiding the transition to independent living. There are 450 members of the Union des Foyers des Jeunes Travailleurs (UFJT), which together have a capacity of 45,000 beds, used by up to 150,000 people a year.

While the concept of foyers is not new (UFJT was founded in 1955), they provide the opportunity for other services to be provided, and some provide a link with the labour market.

The FJT 'Edit de Nantes project is supported by the European Social Fund and provides an example of an attempt to link housing provision for young people with labour market access. This Foyer has 61 beds, but the project also provides:

3.4 Germany (5)

Any discussion of the housing situation in the new Germany must necessarily distinguish between the western and eastern parts of the country. This is of course because the development of housing policy and provision from the second world war up to re-unification were rather different in each of these two parts of the country. However, re-unification has had a major impact on the west as well as on the east. On the one hand, a key aim of federal housing policy since 1989 has been to re-integrate the eastern Laender into the legal, policy and market framework of the west. On the other, the influx of migrants from the east of Germany as well as from elsewhere following the collapse of communism in central and eastern Europe has placed significant pressure on the west German housing market and helped to create a new housing shortage there. Moreover, the financial costs of unification, combined with rising welfare expenditures consequent upon the relatively high level of unemployment, have added to the fiscal pressures faced by the federal government. At the same time, the federal government is seeking ways to reduce public spending in order to meet the economic convergence criteria for monetary union.

Tenure structure and trends

In western Germany, owner occupation is of increasing importance but nonetheless remains at a lower level than in many other countries in the European Union. In 1987 (the latest date for which figures are available) owner occupation accounted for 42 per cent of the dwelling stock. To some extent the relatively low level of home ownership is accounted for by the urban planning system, which has constrained the supply of land for building and resulted in high land prices. In addition, the system of loan finance for owner occupation in Germany requires borrowers to have a relatively large down payment (often 25%) and this constrains the effective demand for home ownership. By EU standards, west Germany has a relatively large private rental sector: in 1987, it accounted for 45.2 per cent of the dwelling stock, the great majority of which (41.7%) was market rent housing and only a small proportion (3.5%) was let as 'social housing at regulated rents. Housing associations accounted for 12.8 per cent of the dwelling stock. Some housing associations are owned by local authorities but others are sponsored by churches and trades unions. In 1989 housing associations lost their tax exempt status and became, in effect, private landlords.

The housing tenure situation in eastern Germany is rather different from that in the west. In 1990, approximately two fifths (41%) of the dwelling stock in the east was in private ownership, a similar proportion (42%) was in the form of public rented housing, and the remainder (17%) was owned by co-operatives. However, the ownership status of private property in the former GDR was not always clear, in part because many of the land registers were closed or had fallen into disuse, while many owners had abandoned their property. The restitution of property ownership rights (rather than financial compensation) is one of the basic principles of the treaty of unification and, since 1990, approximately one million claims have been lodged which affect housing; these claims refer to about one in every seven dwellings in the east.

Policy organisation and emphasis

The dominant philosophy underlying economic policy in western Germany since the war has been to promote the soziale Marktwitschaft or 'socially responsible market economy. In housing, this has been reflected in a policy of encouraging both owner occupation and private renting. It has also involved, especially in the early post-war years when there was a substantial housing shortage, the promotion of social housing, mainly via the private sector. Since 1965 and especially since the early 1980s the emphasis in policy has been on income-related housing allowances ( Wohngeld). About six per cent of households in the west currently receives a housing allowance.

In western Germany, direct subsidies in the form of low interest loans as well as tax relief have been provided to owner occupiers, private landlords, and non-profit housing associations ( Gemeinnuetzige Wohnungsunternehmen) in order to encourage new construction and latterly rehabilitation. The direct subsidies were given to private landlords and housing associations on the condition that they agreed to operate the dwellings as 'social housing, originally for 60 years but this was later cut to 30 years. In return for these subsidies, rented housing had to exceed a certain minimum standard (while owner occupied dwellings on which social housing subsidies had been received were not to exceed a certain maximum standard). In addition, tenancies were restricted to certain income groups and rents were regulated to below market levels.

An important element of this strategy has been that the dwellings should be aimed at a broad spectrum of the population rather than just at the poor. This is one reason why social housing in western Germany has not suffered from the stigma which surrounds social housing in other EU countries such as the UK Another is that the dwellings were often built or rehabilitated to relatively high standards.

In recent years, the federal government has encouraged the repayment of social housing loans. Once the loan is repaid, the owner is no longer bound by the regulations governing social housing and may relet the dwellings at market rents. Consequently the supply of social rented housing is now decreasing.

The housing situation in eastern Germany is very different from that in the west and, not surprisingly, reflects the legacy of nearly half a century of communist rule. The central emphasis of federal housing policy for eastern Germany since unification has been to revitalise the housing market, mainly by means of privatising and marketing housing provision and integrating it into the legal framework which exists in the west.

The housing allowance scheme and other social security benefits (at temporarily enhanced levels) and the tax arrangements that apply in the west were extended to the east of Germany following reunification. The enhanced rates of housing allowance were intended to compensate for the lower incomes in the east and for the rent increases that are being made as the housing market is moved onto a more economically rational footing.

Key policy challenges

New housing shortage in the west. Since 1989 the housing market in western Germany has been under considerable pressure as a result of increased immigration from three sources: (i) east Germany, (ii) ethnic Germans from central and eastern Europe, and (iii) asylum seekers from elsewhere. The population of the former west Germany has consequently increased, by well over 2 million since the Berlin Wall came down. This has helped to create a 'new housing shortage ( neue Wohnungsnot) and has increased affordability problems as rents have risen faster than earnings.

Housing conditions in the east. The housing stock in eastern Germany is older than in the west, with 40 per cent of dwellings having been constructed before the 1939 and many of these before 1914. Post-war housing is mainly in the form of system built blocks of flats, often having a uniform or monolithic appearance. Much of the eastern German housing stock is in very poor condition, having been poorly managed and maintained. In addition, many pre-war dwellings are unmodernised and in poor condition.

The local housing companies and the co-operatives have begun the process of modernising their housing stock and by the end of 1992 1.8 million dwellings had been improved according to figures released by the federal government. However, the average cost of works per dwelling has been fairly low, which suggests that much of the improvement work has been relatively superficial. Housing construction fell to a very low level in 1990 and has not yet recovered to a significant extent.

Low rents, low incomes in the east. Prior to unification, rents were very low and on average covered only about 20 per cent of the running costs. While rents are very low, so too are income and savings. Rents have been increased across the board on several occasions but, even so, average rents are still less than half those in western Germany. Moreover, the rent increases have led to rent arrears as some tenants found it difficult to afford the higher level of rents and service charges. By 1993, rent arrears had reached DM 340 million in the east.

Barriers to capital investment in housing in the east. Following unification, the federal government had insisted that the large, inherited loan debts ( Altschulden) from the GDR should be repaid by the local housing companies, but following the 'solidarity pact reached with the Social Democrats and the Laender in March 1993, it was agreed that nearly all of the debt would be written off. However, the local housing companies possess hardly any capital and cannot borrow from the banks until they have a secure title to their property.

The housing co-operatives in eastern Germany find it difficult to borrow money from the banks because they own the housing but not the land on which it lies. As a result they are negotiating land purchase from the local authorities, but in many cases the 'market rate is prohibitively expensive, though some have obtained concessionary prices from their local authority.

3.5 Greece (6)

Housing policy at crossroads

Tenure structure and trends

In 1991 76 per cent of the Greek households were owner-occupiers, 20 per cent were renting privately, and 4 per cent were free occupiers gratis (usually relatives of the owners). These percentages represented an 18 per cent increase in owner occupation, a 20 per cent decrease in private renting, and a 22 per cent increase in gratis occupation, since 1981. In 1981 about 9 per cent of owner occupying households (or 6.3 per cent of all households) were in the process of repaying a mortgage; in 1996 the respective figures were about 20 per cent and 15 per cent.

In 1991 1449 dwellings corresponded to 1000 households against 1337 in 1981. The total stock of dwellings was 4643 thousand, of which 51.63 per cent were owner-occupied, 13.79 per cent were rented privately; 2.67 per cent were occupied gratis, 20.49 per cent were secondary homes, and 11.42 per cent were vacant and/or ruined (although the distinction between secondary and V/R is sometimes moot). Nearly one million of the total housing stock were estimated to be unauthorised, one way or another (eg. outside a formal city plan, or in breach of building regulations etc). There are no shanty towns in Greece, and the general quality of housing is good.

There is no public-rented housing in Greece either, whether at central or local government level. The public-sector Workers Housing Organisation (WHO, or, in Greek, OEK) does build a few dwellings for poor workers, and also buys them apartments for large workers families, which it then makes available to them for the purpose of owner-occupation either through repayment over 30 years at no or token interest rates, or through a lottery.

Policy organisation and emphasis

The WHO is the main state housing policy instrument in Greece, followed by five public-sector specialised credit institutions and assorted housing credit and tax measures. Most important of the latter are (a) government subvention of interest rate in case of a loan for ones first owner-occupied dwelling. (Only the state-controlled Housing Bank and Mortgage Bank, and the small private Aspis Bank, offer subsidised loans of this type; commercial banks do not, even though they do advance housing loans). (b) income-tax deductibility of interest part of a loan for ones first owner-occupied dwelling.

These are general measures, aimed at helping all become owner-occupiers, irrespective of income. (Up to very recently, a significant part of housing policy was government regulation of the rented sector, but nearly all remaining controls were removed on 1 July 1996). To these one should perhaps add the tolerance shown to unauthorised building, and avoidance of repossession of the dwellings of WHO-nominated Mortgage Bank borrowers who have been long overdue. (The practice had resulted in heavy losses for the Mortgage Bank by 1993, forcing the government to assume the relevant outstanding debt in exchange for government bonds (worth 46 billion dollars, or £122.7 million) given the Mortgage Bank.

There are, however, more specific measures, offering assistance for the purpose of owner-occupation to low-income households who have been paying contributions to WHO, or to civil servants irrespective of income, or to large workers families. Civil servants, in particular, receive government-subsidised loans from the Post Office Savings Bank and the Loans and Consignments Fund, whilst peasants receive such from the Agricultural Bank of Greece. Finally, the WHO hands out rent benefit to renting households meeting government-designated criteria (about 40,000 households in 1995), and, in co-operation with the Housing Bank and the Mortgage Bank, grants housing loans to workers, and also subsidises loans granted to workers by these two banks (out of their own funds and, nowadays, on the basis of banking criteria).

Part of the cost of these arrangements is difficult to calculate as it involves (a) tax foregone in the case of people borrowing for their first owner-occupied dwelling (since the interest part is income-tax deductable); (b) return of tax charged on interest earned on bank deposits in the case of savers with the Housing Savings Departments of the Housing Bank and the Mortgage Bank, who eventually use their accumulated savings in order to take out a loans towards their first owner-occupied dwelling; (c) ad hoc payments like the bonds given the Mortgage Bank by the government in 1993-94, which nevertheless reflect accumulated losses for 'social purposes over many years.

Another part, involving most of the WHO budget, results from workers contributions rather than the state budget. Still, taxes are taxes no matter what their form. From this point of view it is appropriate to include the entire WHO budget in the cost of this policy. For 1995, that was 100 billion dollars. Together with 3.3 billion dollars towards government subvention of interest rates on peasants housing loans, it makes 0.4 per cent of Greeces GDP for 1995 (at current market prices, post-review). Along with the rest of the interest rate subsidies, and the indirect subsidies mentioned, the total should be in the range of 0.8 per cent of GDP. To that, one should perhaps add 32.6 billion dollars towards public investment in infrastructure, and 47.7 billion dollars in water supply and sewer works.

Policy challenges

There are five main policy challenges, of which only the first three are about narrowly defined social housing policy. First, since 1991 there have been anything from 400 to 600 thousand economic refugees in Greece from the Balkans and the ex-USSR, the vast majority illegally. At 600 thousand, their number represents 5.8 per cent of Greeces population as of 1991, or 13.5 per cent of the economically active population (a more appropriate measure since most of them are of productive age). Again the vast majority of them are in the private rented sector (sharing often) an unknown number sleep rough or occupy vacant and/or ruined dwellings illegally, and some live in-house as domestic servants. Their presence is likely to show up as a dramatic increase in the number of renting households in the 2001 census, and as deteriorated housing conditions, regarding eg. the frequency of sharing. In the meantime, they are likely to put upward pressure on rents, particularly for low-quality dwellings. The Greek government needs to decide soon what it is going to do for these immigrants, not only in the context of housing policy, but also in regard to social security, minimum wage laws, education, and general assimilation. So far it has done nothing.

The second challenge is about redefining social housing policy. Traditionally, the words 'homeless and 'tenant in Greece have been used interchangeably, not only in the press but, more seriously, in government. However, and to a large extent precisely because of the problem of so many economic refugees, the time has perhaps come to redirect social housing policy to securing shelter for those who are truly homeless, whether Greek (a very few) or foreign, rather than to turning tenants into owner-occupiers.

The third challenge is about making housing policy more transparent in cost terms (who pays what), which means, among others, taking the politically sensitive decision in the future to repossess the dwellings of WHO borrowers who have been long overdue (or else assigning the resultant costs to the state budget), and, more generally, making the legal framework governing repossession faster and stricter.

The fourth challenge involves a necessary tax reform, at a time of severe fiscal constraints. Presently Greece has very high property transfer tax rates - 11 per cent up to the first four million dollars (£10,667) and 13 per cent thereafter, payable by the buyer. Inheritance taxes are also very steep, involving, for example, 15 per cent for values from 15 to 60 million dollars (£40 thousand to £160 thousand) - and thats for first degree relatives alone. Since the Greek population is, along with the economy, stagnant, exhibiting an ageing trend, the time is rapidly approaching when a lot of young people will be inheriting dwelling wealth without the wherewithal for the tax; alternatively they will be forced to sell some of the inherited properties (which in practice will mean ceding the properties in question to the Inland Revenue which will auction them in turn), but since a lot of properties will be coming on the market in this way at the same time, there will be downward pressure on prices. In the end, prevailing standards of dwelling wealth, and standards of living also, are going to suffer.

The fifth challenge is about introducing order in the planning sphere. The recent orientation of many households to the acquisition of second homes has been possible, among others, first because of the unabated practice of unauthorised building, second because of deliberate and illegal burning of woodland around Athens and in other parts of Greece (which frees land for unauthorised building), third because public utilities illegally supply power, water etc. to unauthorised buildings, and fourth because there is no Land and Property Register in Greece. Obviously the environment has been suffering, causing deterioration of housing conditions broadly defined. Demolishing unauthorised buildings, however, has never been pursued widely for fear of social and political repercussions.

Policy responses and innovations

Very little has been done (other, that is, than the organisational and institutional arrangements already in place and described above). The only positive developments have been, first, launching in 1996 the campaign to establish Greeces Land and Property Register (Law 2308/95), forecast to finish in 2015, and giving the WHO in 1993 greater freedom to negotiate building contracts with third parties, or loan and subsidy arrangements with the Housing Bank and the Mortgage Bank. Public finances being in dire straits, no significant increase in state spending on housing is forecast in the foreseeable future, whereas decisions to assimilate economic refugees will probably not be taken either on account of the political sensitivity of the issue.

The EU contribution

There is none as yet in Greece (except for funds meant to finance part of the Land and Property Register cost). It might need to come in the form of funds for programmes meant to house Greece s economic refugees, but Greeces lack of policy on the matter plus well-known problems regarding her technical ability to absorb EU funds (eg. for disabled people no less than for public works) might deter the European Commission from earmarking funds for such programmes.

3.6 Ireland (7)

New commitments

The story of Irish housing has been one of high rates of new construction (six units per 1000 people per year) and of progressive quality improvement since the 1970s. For much of the 1980s, and particularly in the second half of the decade when public spending restrictions squeezed down government housing spending, progress stemmed from the more general benefit of European Union membership to the Irish economy. Housing conditions, which had been poor by European standards improved enormously.

Structures and trends

Home ownership, which was already high in the 1970s (around 70 per cent of households) grew rapidly to 81 per cent by 1991. A significant part of this growth was due to the extensive take-up of long-standing discounts on the prices of local authority homes (up to 30 per cent of purchase prices). By 1991, although the municipal housing sector had built a third of the nations housing stock its current tenure share was only 11 per cent. And prior to 1991, unlike the UK and the Netherlands which also reduced the municipal sector share, there had been no significant promotion of housing associations/voluntary sector involvement. The private rental sector had declined and by 1991 provided a static, eight per cent share of homes.

Housing policies were, at the start of the 1990s, still primarily driven by central government, both in relation to financing and policy planning. Local authorities had generally weak roles in policy development and investment choices and were not regarded as innovative providers.

The pre 1991 emphasis has now altered significantly. This partly reflects the growing aggregate prosperity of the country but also a recognition that current housing needs fell from 1983 to 1987, but as new social trends and inequalities became apparent, then grew again to 1993 (back to their 1983 level, and involving three per cent of households). There is also an awareness in Ireland that the country has a relatively youthful demographic profile and faced a (minimum) likely expansion of 6.1 per cent in housing requirements over the decade to 2000. This realisation has led to a new emphasis on social housing provision during the 1990s and the development of new policy commitments.

Policy organisation and emphasis

Whilst continuing to support the growth of home-ownership, the key emphasis in Irish housing policy since 1991 has been the development of a strategy for social housing. It is that sector which is seen as the key locus for the disadvantaged and excluded in Irish society. The post 1991 policy has had the following key features

Key challenges

These policy emphases, commencing in 1991, were reinforced in a review of social housing policy in 1995. They appear to be appropriate to the key challenges facing Ireland. Key housing difficulties now include

There were also significant numbers of households in specific needs categories

Policy action, particularly after 1991, had slightly reduced the numbers of special needs applicants. New policy innovations and emphases, with the expanding budget, should further reduce these totals.

Policy responses and innovations

Ireland now has a modern housing policy, using diverse means to achieve social objectives. The major innovations over the last five years have been to

However, perhaps the most important of all these positive innovations has been the vigorous and multi-faceted approach to attempting to remove, by the year 2000, homelessness and travelling people needs. The imperative is to provide reception centres, temporary accommodation and permanent homes for the homeless and serviced, attractive caravan bays for travellers

In consequence, by 1995, the estimated numbers of homeless persons and travellers living by the roadside are beginning to fall steadily.

Ireland has taken large, but measured, steps to use rising levels of national prosperity to provide more and better homes for the socially disadvantaged.

European Union contribution

The Cork Urban Pilot Project was initiated in 1993 with a budget of 270 thousand ECU, a third of which was provided by the EU. The project, managed by the City Corporation, is a public-private partnership formed to promote the re-utilisation of vacant, upper spaces in commercial buildings in the city centre (this problem occurs in a number of Union countries). The intention is to re-use vacant spaces as homes, prevent further dereliction, and encourage upgrading which will make the city centre more attractive and, in turn, strengthen its regional functions.

3.7 Italy (8)

New patterns, new problems

Different regions, changing times

In all but a few of the Union States, regional differences in social and economic well-being are reflected in different housing patterns, for instance in Britain declining older industrial regions usually have double the national rate of social housing tenures. And there are widespread rural/urban differences in most States, usually with rental housing above national rates in larger urban areas. Throughout this century, regional differences have been particularly marred with wealthier northern regions having higher quality homes and larger rates of social housing provision. In the Mezzogionno poorer quality and owner occupied homes often dominate provision and over-crowding of low quality rented homes is all too apparent in cities such as Naples.

Traditional problems remain, especially in the south, in spite of high new construction rates from the early 1960s to the late 1980s. Population growth shaped housing policy concerns for much of that period and family, more than state, support was critical in meeting needs. Now there is a new emerging demography, particularly in the North. Overall population growth is now low and falling. But new pressures are becoming apparent. The elderly (more than half living alone) now comprise 16 per cent of the population and this is set to rise to 20 per cent a decade ahead. Immigration from the east and North Africa of low income households has grown sharply. And, perhaps most important of all, there are signs that the traditional pattern of large families (with relatively small amounts of space per capita) is beginning to change with younger people seeking independent living at earlier ages than previously. These new trends are layered upon and reinforcing traditional problems of over-crowding and poor conditions for less affluent Italians.

Tenures and trends

The share of home-ownership in Italy rose from 61 to 67 per cent between 1980 and 1990 and is continuing to expand. With high inflation rates, home-ownership has been a vital "hedging" asset for Italians though real house prices have risen less rapidly and in a more stable fashion than in northern Europe. Home-ownership in Italy is also distinctive in the extent to which it is financed within the family, and mortgage credit comprises less than six per cent of GDP; home-owners in that sense are also protected from high nominal interest rates.

Private rental housing has been declining in relative significance, as ownership has grown, but in 1990 still housed 26 per cent of the population. After 1978 all private tenants were protected by the Equo Canone rent controls with rent increases limited to three-quarters of the increase in the retail price index. These measures protected the rent burdens of renters, usually with lower incomes, but have reduced the supply of rental investment and vacancies and contributed to stock and neighbourhood deterioration.

Social rented housing, often located on the edge of larger cities, provides six per cent of homes (but as much as 18 per cent in Northern cities such as Milan). At the national level the Residential Building Construction Committee allocates limited funds to the 20 Regions. The Regions then allocate resources to local Institutes for Social Housing who may support not-for-profit co-operatives or municipal housing. The municipal rate in providing, planning and enabling housing is extremely weak by European Union standards.

Policy organisation and emphasis

Until the late 1980s the obvious emphasis of Italian housing policy was to expand production, usually of larger homes, to cope with a growing population. However state support for doing so was both extremely restricted and, at the local scale, poorly organised. Special subsidies, including financial assistance for the disabled but not the elderly and other 'special needs groups, have housed around 15 per cent of the population, with less then half of this being provided through the social sector. In many instances the task of providing for special needs has remained within the family or charitable sectors.

Production policies favoured new construction over rehabilitation of older units and, by 1990, more than two million homes had been illegally constructed since the 1960s.

The main measure of low income renter support was the Equo Canone rent control though within the small social sector, intended to house the poorest families, rent allowances were available to the worst-off households.

Policy challenges

The essential difficulties now facing Italian housing policy stem from the inappropriate nature, in terms of unit size and condition, of the housing stock in relation to new patterns of poverty and family living. These include

At the State level, these emerging difficulties have been recognised. For instance, for the 1992-95 period, government initiated a special needs programme for the elderly, large families, students and immigrants. But these programmes have not yet generated the scale of positive policy responses observed, for example, in Ireland. But important innovations, often inadequately resourced, are being made at the local level.

Policy innovations

Innovations have included developments in housing design, a traditional area of strength, and government has facilitated this process, since 1989, by raising required housing standards. The development of new approaches in land-use planning have also been significant.

Recent developments in policies for housing the elderly have demonstrated the capability for innovation when resources are available. Of the one in six Italians who are now elderly some three-quarters live in owner occupied units, often in flats without elevators and without adequate heating facilities. One in eight of the elderly are permanent invalids. They, and the disabled, can request limited financial support for unit conversion. Resource shortage have slowed progress but policy and practice have evolved in encouraging ways

A post 1990 development in Rovigo combines all of this good practice. A rehabilitation project created over 90 'granny annexes complete with communication systems, appropriate internal and external design as well as support services. Essentially these innovations are similar to those emerging in Denmark (see the Danish report) but they contrast sharply, and adversely, in the scale of national resources available and the localised organisations of housing policies.

3.8 The Netherlands (9)

Tenure structure and trends

The housing system in the Netherlands is undergoing radical change. It is shifting from having one of the greatest government interventions in housing policy to having one of the least, and is moving from having one of the most expensive housing policies to one of the cheapest.

This change comes after decades of housing policy which led to the emergence of the largest social rented sector in the European Union. Since the war, the private rented sector has been in consistent decline - it formed 60% of the stock in 1947, but is now down to 11%, with further decline most likely. The social rented and owner occupied sectors grew to about 40% each by the mid 1970s. Since then the social rented sector has remained static, while the owner occupied sector has continued to grow (to 48% by 1994) at the private rented sectors expense. On current construction trends the owner occupied sector will continue to rise proportionately, and the social rented sector will decline proportionately.

Of the member states, The Netherlands had the highest level of construction in the post war period. More than 75% of dwellings have been built since 1945, which is not surprising given that the Netherlands also has had the largest population growth (60%). The stock therefore relatively new and of high standards, although the number of dwellings per 1,000 inhabitants remains among the lowest in the EU.

Standards vary between tenures, with owner occupied dwellings tending to have the highest levels of amenities and the private rented sector the lowest. Owner occupied dwellings are also much more likely than are rentals to be single family dwellings.

The large size of the social rented sector means that it houses much wider social groups than in most other member states, but as owner occupation grows the tenures are likely to become more divided socially. Within the social rented sector, the small local authority sector (4% of the housing stock) has a reputation for housing the poorest people and its dwellings tend to be older than those managed by the dominant social landlords, the housing corporations (36%). A much smaller arm of the social rented sector is made up of other non-profit landlords which often cater for special needs groups, such as students and elderly people.

Policy organisation and emphases

Although construction subsidies have been available to the owner occupied and private rented sectors, the bulk of direct subsidies have been directed at the social rented sector. The housing corporations are the dominant form of social landlord. There are more than 850 such landlords with an average stock of 2,500 dwellings, although 24 have stocks which exceed 10,000 units. Local authority landlords have on average much smaller stocks - about 1,300 units.

The government has been able to exercise very tight control over the social rented sector by controlling the subsidy system. The concentration of subsidies on housing corporations, rather than local authorities, accounts for the dominance of the former within the social rented sector.

But Dutch housing policy has been very expensive. The cost of policy in 1990, including tax reliefs to owner occupiers, was FL16,716, the equivalent of 3.2% of GDP. Policies adopted since the publication of the Heerma Memorandum in 1989 to cut housing costs are having important consequences for the organisation of Dutch housing:

Key policy challenges

Taken together these financial reforms mean that the social rented sector is largely free of government control, but must also stand on its own feet. The housing corporations now face tough challenges:

The new policy seems to be based on the calculation that the social rented sector does not need to house 40% of the population, and by encouraging them to move to the owner occupied sector, relatively cheap properties will be freed in the social rented sector, without the need to subsidise large programmes of new construction. Those tenants attracted to the owner occupied sector will enjoy generous tax reliefs: mortgage interest tax relief remains unrestricted, although (unusually) it is balanced by a tax on imputed rental income.

Policy responses and innovations/EU actions: the Groningen urban pilot project (10)

One of the main areas in which Dutch policy has been innovative is in urban policy. As in other countries, the Netherlands has concentrations of poor quality housing whose residents suffer disproportionately from unemployment and the other forms of deprivation that characterise social exclusion.

The Netherlands has had an active urban regeneration policy although it is now being run down, following the Heerma Memorandum. However, it has created the opportunity to run domestic programmes alongside those funded by the European Union. As in other member states, EU actions relating to housing have been restricted by the rules governing the structural funds, but the Urban Pilot Projects have provided an example of European funds playing a role in urban policy.

The Groningen Urban Pilot Project is one of two such projects in the Netherlands, the other being in Rotterdam. The Groningen Urban Pilot Projects main objective is to integrate the primarily residential area of Kooreweg/Oosterpark in the north east of the city into the wider economy, as part of a larger project known as SEND (Social-Economic Network Development).

There are two parts to the Urban Pilot Project:

(i) Training Project in the Field of Housing Environment: this project aims to train long term unemployed people from the district as specialists in the housing environment. By matching perceived needs with skills, the project aims to:

The project trained a total of 12 people and guaranteed them a permanent job at the completion of their training. The training programme lasts for two years (1994-96). In the first year participants received their social security benefits; and in the second year they receive a salary from project funds.

(ii) Improvement of Rear Courtyards: This part of the project is run along similar lines to the one described above. Its aim is to train unemployed residents within the framework of redesigning and preserving rear courtyards. The project is being carried out jointly with a private company and Groningen District Council. The residents were also involved in its conception.

Both parts of the project involved partnership working. The District Council is involved in both as is private enterprise, where the trainees are guaranteed a job within a private company at the end of their two years.

3.9 Portugal (11)

Minimal past policies, poor housing

In the past, good housing has not been at the top of the political agenda in Portugal and, in consequence, housing problems have tended to perpetuate themselves. In 1966 the Portuguese shortage of decent housing was estimated in 500,000 dwellings, the same figure estimated in the White Paper on Housing Policy almost 30 years later (1993). The Portuguese housing shortage is not merely cyclical but persistent, structural in its nature. The numerous shanty-towns, particularly in the metropolitan areas of Lisbon and Oporto where there are more then 42,000 barracas (huts) affecting about 162,000 people, are its most obvious manifestation. Significant and persistent migration from low-employment regions of the "interior" and from the former Portuguese African colonies has added to urban housing pressures. "Street children" and roofless families are evident in the streets of the two main cities, Lisbon and Oporto. Rooflessness, at an estimated rate of about 0.3 per 1,000 people (a low level by European standards), is in Portugal a complex social problem rather than simply a housing problem. A national programme against poverty (since 1991) and the experiment now being launched by the government of a minimum guaranteed income are intended to tackle this issue.

At the same time, a significant part of the housing stock (about 240,000 dwellings) is in serious disrepair. Other not so visible problems exist. The last Census (1991) indicates that

Tenures and Trends

Unable to produce effective changes in the private rental housing market (strictly controlled from the 1940s to the 1980s), Portuguese governments since 1976 have tended to base their housing policy almost exclusively on a subsidised credit scheme for the acquisition or building of owner-occupied housing. Private rented housing, which is concentrated in urban areas, constituted a dual market (older, low-rent tenancies versus recent, scarce and high-rent ones) and a declining alternative. Its weight in 1981 was 39 per cent of the total stock but has decreased 23 per cent in 10 years, representing 27 per cent of the stock in 1991. Owner-occupation, instead, has increased 26 per cent between 1981 and 1991 passing its share from 57 per cent of the stock in 1981 to 65 per cent in 1991, one of the highest increases in the EU.

Policy emphases

The Portuguese constitution stages in its article 65 the right to appropriate housing for everyone and requires the government to design and execute a housing policy to make that right effective. Yet this constitutional rule has not been met and the commitment of successive governments to solve the housing problems has been sufficient. Housing policy is designed at the national level, with the definition of objectives and instruments an exclusive competence of the central government. Meanwhile, in spite of the scrapping of the national institution responsible for the development of social housing in 1982, local governments and co-operatives have been called to act an increasing role in the development of social housing production. This change, however, has not had a counterpart in terms of increasing funds available to local governments for that purpose. This, in conjunction with the indebtedness limits legally imposed on them, has restricted their ability to act. Policy, in the past, emphasised rent controls and credit support for home-owners.

Policy challenges

Aside from the condition problems noted in the introduction, there are other major policy challenges. Although supported by the subsidised credit system, low-income households hardly have had access to the owner-occupied sector. Evidence on affordability, although scarce, suggests important problems faced by Portuguese households. An official study estimated house price/income ratios for an average dwelling in 5.8 minimum annual wages in 1987, 6.3 in 1988 and 6.8 in 1989.

The supply of "low cost" (or "social") housing is insufficient and the sector represented in 1991 just about four per cent of the housing stock. Hardly finding a solution in the formal sector, low-income households have had to search for housing solutions such as construction of barracas in the shanty-towns or self-construction of low cost houses without legal permits. However there has been a recent increase in the importance of social housing production through co-operatives: in the 1986-93 period co-operatives produced almost six per cent of the total new dwellings (legally built), with central and local governments adding 3.5 per cent and social solidarity private institutions just 0.2 per cent.

In line with the housing policy priority given to the access to owner-occupation, there is a special more favourable credit scheme for house acquisition by disabled people. There are no special housing regulations intended for elderly.

Policy innovation

Following a "National Meeting on Housing", where complaints about the neglect of the housing sector by the government put the public authorities under pressure, the government launched in 1993 a broad package of initiatives (12). This was the "Housing Plan of 1993", again stressed in the "Strategic Options for the Development of Portugal in the period 1994-1999" (13). The announced goals were to increase the housing supply, improve its condition and to eliminate housing in serious disrepair. The global investment for the execution of the Plan was initially estimated by the government in 270 milliard of escudos (PTE), distributed over six years. A sum of 150 milliards was provided for the elimination of shanty towns in the metropolitan areas of Lisbon and Oporto (14). From the actions included in the Housing Plan of 1993, given the magnitude of the housing shortage in the metropolitan areas of Lisbon and Oporto, reference will be made here to the two programmes particularly intended for them: the one for the elimination of shanty towns and the other for the construction of "low cost" housing.

The government had launched a national programme for the re-accommodation of poor households in 1987 (15), through the construction of dwellings at "controlled costs" (16) by the municipalities, supported by the central administration through the concession of grants up to 50 per cent of the construction value and reductions of 60 per cent in the interest rate. Indebtedness limits of local governments and the magnitude of the problem in the metropolitan areas of Lisbon and Oporto made this programme insufficient. A special programme for the elimination of the shanty towns in those two metropolitan areas and the re-accommodation of households in dwellings at "controlled costs", the PER (17), was then launched aiming at the total and definitive elimination of shanty towns. For this purpose general agreements between the central administration and the local governments have been established, by which local authorities benefit from funding for the acquisition or building of the dwellings needed, against the compromise that new shanty towns will not be established again in their jurisdiction areas. The central administration finances local authorities through the concession of grants up to 50 per cent of the cost of land and house construction or of the price of acquisition of dwellings already built and provides loans with a subsidy of 75 per cent of the contractual rate of interest (which is fixed for periods of 5 years) to local authorities up to 50 per cent of the cost of land and construction or of the acquisition price of houses. Grants and loans could not exceed 80 per cent of the total value of the project (18). For the determination of the indebtedness limits of local authorities, loans under this Programme are counted by half of its value. Central administration may transfer to local government (free of charge) its housing stock. The programme is also extensive to "Social Solidarity Private Institutions (IPSS) in the same conditions as for the local governments.

By July 1995 all municipalities and one IPSS had celebrated the general agreements with the central administration, by which the local governments and the IPSS compromise to build 35,366 dwellings plus the acquisition of more 13,025, giving a total of 48,391 dwellings. The majority of local governments would complete the programme before the year 2000 although five overcome that deadline, being 2009 the most extended one. The total investment amounts to PTE 343.7 milliard, being 45.1 per cent credit funded through the CGD (19), 46 per cent granted by the central administration and 8.9 per cent self-financed by the promoters (municipalities or IPSS).

Dwellings built or bought will be property of the local authorities and subject to strict conditions on rents and transmission rules.
Meanwhile, the programme for the re-accommodation of poor households launched in 1987 has been directed to solve the problem of shanty towns in the rest of the country.

Land is expensive in Portugal. Through the programme for the construction of "low cost" housing in the metropolitan areas of Lisbon and Oporto (20) the central administration - that owns a vast amount of lands - aims at stimulating private builders to construct social housing of quality by making available land at under-market prices in those areas and through fiscal and financial incentives. The goal was the construction of 15,000 "low cost" dwellings. For this purpose, international contests would be launched until December 1996 to sell lands to firms proponents of projects of construction. The maximum price of the dwellings built is pre-determined by the government and announced at the launching of the contest and their quality had initially to be guaranteed through a certification by the Laboratório Nacional de Engenharia Civil (LNEC), a condition left behind in the meantime. These dwellings are intended for low-income households; nevertheless, everyone can buy them although for rental or for permanent owner-occupation purposes. After being commercialised dwellings are subject to certain rules in terms of rents and transmission. Builders may reserve up to 35 per cent of the total area for housing or other purposes sold without any limitation of prices.

Until now, only three projects summing together proposals for the construction of less then 1,500 dwellings in the metropolitan area of Lisbon have been awarded (10% of the programme) and none of them had started by late 1995 (at best house completions foreseen for the last semester of 1997) (21). According to the news, there have been lots of problems with this programme and there are fears that housing prices actually might not be significantly different from the ones practised in the free market (22).

There are other housing programmes being now implemented in Portugal that deserve mention. It is the case of RECRIA - a programme launched in 1988 to provide financial support through grants for the rehabilitation of the rented housing stock, undertaken by landlords or, if they do not, by their tenants or the municipalities - and the IAJ - a programme launched in 1992 to stimulate house renting by young people (23) through the concession of a rent subsidy for working people up to 30 years old (single or married), depending on the income and the size of the household and that cannot exceed 75 per cent of the rent. It is awarded for a maximum of five years (consecutive or not) and has been designed in parallel to the young borrowing scheme for housing acquisition so that it would be tenure neutral.

Meanwhile, recent declarations of the Minister responsible for the housing policy suggest that the socialist government - aware that the benefits of the important financial support to owner-occupation have not primarily been to low-income households - intends to make changes in the system of credit for house acquisition and redirect government support more towards subsidising people to access the privately developed rental market. However, there are no concrete measures yet.

The European contribution

At the moment, Portugal - being one of the four European countries of the so-called "cohesion" group, with a GDP in 1995 representing 67 per cent of the European average - benefits from several European funds in a significant amount for the necessary modernisation of its productive structures and to face the challenge of integrating the euro area. It is the case of the Cohesion Fund and the structural funds, mainly the ERDF and the ESF. Funding under the URBAN Community Initiative is one of the most closely linked to housing issues. However, in line with the EU subsidiarity principle, programmes directly intended to social housing provision are not supported by the European funds. This is hardly understandable, at least in the Portuguese case. The obligation of a national contribution in the projects funded by the EU and the need to achieve the Maastricht convergence criteria - such as the reduction of the public deficit - lead to a bias in the national government financial effort towards the projects funded by the EU in detriment of those which were supposed to be an exclusive national responsibility. So the European subsidiarity principle is being an obstacle to the resolution of the Portuguese problem of shanty towns. The cohesion principle stated by the Single European Act should then lead to the consideration of actions intended to eliminate shanty towns and to improve housing conditions as fundable by the EU.

3.10 Spain (24)

Tenure and trends

Spain has one of the highest home-ownership rates of the European countries, largely at the expense of private renting which now houses a fifth of households. Although long term rent controls have been relaxed, ?? new units, with three out of four households in the sector. Ownership has been growing for the past few decades. There is no evidence yet of a change in its trend. The new rental laws aim to back the rental sector, by assuring five year contracts at an annual increase rate equal to the general consumption price index. Social rental housing provision, through a range of not-for-profits, provides around five per cent of homes.

Low income households access the lower part of both rental and ownership markets. For both, there are some local authorities that provide a limited number of social housing at below market price/rates. Otherwise, the private market filters down older and lower quality housing toward this segment of the market.

While there is a large volume of houses not used as main residence (5.3 million dwellings due out of 17 million), many families cannot afford to buy a house in many areas of the country, the rental sector being insufficient. The mismatch is twofold: territorial, because there is an excess of supply in places of decreasing population; and social, because some segments of demand face prices which are too high for their income.

Policy emphasis

Traditionally, the main issue of the Spanish housing policy has been "affordability". However, this term is used in a rather broad sense. Rather than being limited to the socially excluded, the disabled, the elderly, refugees/asylum and seekers and the homeless, it is meant for the lower-middle income people in general.

Overall levels of fiscal support for home-ownership are limited and the main "affordability" policy was rent controls. The mean Spanish family devotes some 28-29 per cent of their income to housing. The figure may be much higher for lower income people, but no specific statistics are available.

Under the 1978 Constitution, the regions of Spain were recognised as Autonomous Communities. Thus, the administrative system was organised in three tiers: central, regional and local. In the following years, 17 Autonomous Communities passed their own Constitutional Chart and claimed most of the responsibilities that the Spanish Constitution allowed at regional level, taking at the same time some power from local authorities. Housing and planning were among the responsibilities the central government had to decentralise to the Autonomous Communities.

The only responsibilities for housing policy remaining at central level are the preparation and approval of a financial framework programme and the regulation of the urban housing rental sector. Also, the central administration has full responsibility on fiscal policy and, therefore, establishes the fiscal exemption levels, if any, for housing buyers and renters.

The Autonomous Communities undertake the actual management and part of the implementation of the financial housing policy designed by the central government. They can develop their own legislation to meet the regional housing needs.

The local administration can play an active role in housing supply, although in practice the limited budget they manage constitutes a major handicap. Nevertheless, some local authorities, in partnership with the private sector or on their own, become major developers of social housing.

In 1992, a four year housing programme was implemented in co-ordination with different administration levels. In 1996, the programme has continued with minor changes, for four more years (1996-1999).

Key challenges

Since the first four-year programme, affordability issues have figured less prominently in the public debate. Instead, planning and land speculation have gained importance, reflecting the belief that the origin for the higher cost of housing lies in the lack of cheaper land. Accordingly, several local governments have been providing land at below market cost in order to build social housing.

Social housing take the form of blocs of apartments of several storeys (between 5 and 10, typically), and of limited size (typically under 80 square meters). This has not caused any controversy, due to the traditional location in high blocs of apartments for most of the middle and upper middle income people. For the social housing built in the last two decades, quality has not become an issue either, since materials are fairly good and local authorities tend to commission the project to younger architects with new and attractive ideas.

The problems of poor dwelling conditions remains in the older housing market in older and/or marginal neighbourhoods, with rehabilitation policies progressing slowly.

Policy responses

Besides the two four-year programme, which embraces people earning less then 2.5 (or even 5.5) times the Minimum Official Wage (i.e. middle and lower income people), there are no general or large scale policy actions oriented toward the most disadvantaged.

In the older and marginal neighbourhoods, most local authorities have implemented programmes of urban renewal. Typically, they provide new open spaces (squares) and restore older houses. When the older neighbourhood is located in the central area of the town or city, prices go up very sharply, since they add the new look value to the centrality of its location, which is much appreciated in Spain, especially in comparison with central, and northern European countries. In consequence, gentrification or displacement of lower income groups takes place.

EU contribution

Several EU programmes are used to complement regional and local policies, specially as far as urban regeneration is concerned.

3.11 Sweden (25)

Tenure structure and trends

Compared with many other countries in the European Union, Sweden is relatively unusual in that there are four distinct housing sectors: owner occupation, private renting, social renting, and housing co-operatives. In 1990, owner occupation accounted for about two fifths of the housing market, private renting and social renting each accounted for a fifth, while co-operatives accounted for about a seventh of the total.

In the post-war period, owner occupied homes decreased slightly as a proportion of the total housing stock, from 38 per cent in 1945 to 35 per cent in 1970, but then slowly increased to 40 per cent. Private renting has fallen from 51 per cent in 1945, while social renting has increased from two per cent and co-operative housing has risen from four per cent at the same date. Both private and social renting have remained at about a fifth of the stock each since 1980.

In 1990, just over half of the four million dwellings were single family houses while the remainder were multi-family dwellings. About nine out of ten single family units were owner occupied, while most multi-family dwellings were rented or part of a housing co-operative. The housing stock in Sweden is relatively new: three quarters of the stock was built after 1940. About a quarter of the housing in the three largest cities was built as part of the so-called Million Programme (1965 to 1974) when the aim was to construct a million dwellings over ten years.

Policy organisation and emphasis

When the foundations of post war housing were laid down in 1946-47, the goal for social housing was 'good dwellings for all. Hence, in principle, social rented housing is open to all households and no income tests are used to decide upon eligibility. A further key principle of Swedish housing policy since 1974 has been the goal of tenure neutrality in terms of financing and subsidies.

Social rented housing in Sweden largely takes the form of municipal, non-profit housing companies. These companies are controlled by and operate within single municipalities. Some municipalities have more than one company, which may be in competition with each other. They range in size from a hundred or so to more than 50,000 dwellings. The management boards of these companies are composed of members of the municipal council.

In the private rental sector there are a small number of very large owners and a large number of very small owners. Thus about a third of the sector is owned by landlords who have just one apartment block, while another third is owned by only one per cent of landlords. Like social housing landlords, private landlords have been eligible to receive state housing subsidies, though on slightly less generous terms. The rental housing market has been described as a unitary one in the sense that the rent setting rules, security of tenure and to some extent even allocation of tenancies are the same in both the private and the social housing sectors.

In Sweden, there is in principle, if not exactly in practice, a unitary system of rent determination which applies to both the private and the social rented sectors. In this system, the municipal housing stock is priced according to the principle that it should not generate a profit, which in practice means a cost-related rent setting system. The rents for dwellings owned by the municipal non-profit housing companies are then used as a yardstick for privately owned rental housing. if there is a dispute between the landlord and the tenant over the rent to be paid, then the rent shall be determined at a level that is comparable to that for dwellings in the locality which have a similar utility value.

There is a high level of organisation among landlords and tenants representatives in Sweden. The municipal housing companies are organised into a national umbrella organisation known as SABO, which is involved in the national rent negotiations. Private sector landlords are represented by the Swedish Federation of Rented Property Owners. Tenants are also highly organised and there is an organisation of building contractors.

Bricks and mortar subsidies in Sweden have taken the form of interest subsidies for the construction of new housing and the rehabilitation of the existing stock. For rental dwellings built by the municipal housing companies, the subsidised loan covers 100 per cent of the approved cost of construction. For co-operatives, the subsidised loan covers 99 per cent of the approved cost, while for private landlords it covers 92 per cent of the cost. For owner occupiers, it covers 95 per cent. The non-subsidised portion and any costs in excess of the approved amount have to be covered by a market loan. The subsidised portion of the costs are covered by two loans: a loan equal to 70 per cent of the approved cost has to be obtained from a mortgage bank, while the remaining subsidised share (30%, 29%, 22% and 25% respectively of the approved cost) is covered by a loan from the state. The amount of the interest subsidy is gradually tapered off until the market level is reached .

These interest subsidies are being phased out as part of a radical reform following the election in 1991 of a non-socialist coalition government. The new administration outlined four goals: (1) to integrate Sweden into the European Union, (2) to tackle the economic stagnation of the country, (3) to increase 'free choice in welfare and social care, and (4) to lay the foundations of a more sustainable society. As part of this reform, housing policy is to be made more market oriented and cutbacks made in housing subsidies. In 1992/93, housing subsidies accounted for an estimated eight per cent of total government expenditure.

Among the changes that are being made, the interest subsidies are to be gradually reduced and completely phased out by the year 2000 or thereabouts. The interest subsidies on dwellings built between 1978 and 1992 are also to be run down. The Ministry of Housing was abolished in 1991, with responsibility for housing being divided among seven ministries. However, a year later it re-appeared in another guise, when an inter-ministerial delegation was established with the job of co-ordinating government housing policy.

A radical reform of the Swedish tax system was also introduced in 1990 and 1991, the stated objective of which was to increase the efficient functioning of markets. Housing was central to this reform. Income tax rates were lowered but the tax base was broadened: housing investment and property management ceased to be exempt from VAT, the property tax was increased, and the rate of mortgage interest tax relief was lowered.

The position now is that nominal capital gains are taxed, but imputed rental income is not. Owner occupiers receive tax relief at a rate of 30 per cent on the first 100,000 SEK per person in mortgage interest costs and 21 per cent on interest costs above that amount.

As a result of these changes to housing and taxation, housing costs rose by about 20 per cent in real terms between 1989 and 1991. In order to alleviate the effects of this marked reduction in housing subsidies and tax expenditures, the housing allowance scheme was enhanced, which in turn resulted in an increase in its cost. Housing allowances have consequently increased as a proportion of total housing subsidies, from 22 per cent in 1990 to 32 per cent in 1993. The Social Democrats returned to power in September 1994 as part of a coalition government. The perceived need to reduce the relatively large budget deficit has led the government to propose wide ranging cuts in benefit expenditure. As part of these proposals, it is planned to reduce expenditure on housing allowances by 20 per cent.

Key policy challenges

High public sector deficit. Sweden has a very high public sector budget deficit. In 1994 it was around 10%, the largest deficit among the OECD nations apart from Greece. This level of deficit is well above the 3% required by the economic convergence criteria agreed in the Maastricht Treaty. So far as housing is concerned, this high level of deficit means that interest rates are higher than they would otherwise be. In part, the high deficit also accounts for the pressure to cut spending on housing subsidies including housing allowances. Sweden spends a higher proportion of GDP on housing subsidies than most EU countries, but this high level of expenditure is set to fall. In turn, reduced housing subsidies imply higher housing costs, which are likely to impact most adversely on lower income households.

High unemployment. The unemployment rate in Sweden is relatively high and this is of course one reason for the high public sector deficit. The relatively well-developed welfare state in Sweden means that the risk of social exclusion arise from high levels of unemployment is much less than in many other EU countries. However, the rising cost of the welfare state has led to some rethinking about the future of welfare in recent years and steps have been taken to trim social security costs and to place rather more reliance than previously on the private rather than the state sector in the provision of services. However, there has been considerable opposition to this, especially from women as they have benefited considerably not merely from the provision of state services (e.g. for child care) but also from employment in the public sector.

Empty homes. In Sweden there has been a dramatic switch from a shortage to a surplus of dwellings in the housing market. This trend began in 1991 and by the beginning of 1994 nearly 70% of municipalities stated that they had a surplus of homes. Not surprising, housing construction has fallen considerably and by 1994 was at its lowest level since the second world war. The refurbishment of existing dwellings has also declined substantially. The value of credit losses by mortgage lenders increased significantly in the early 1990s.

3.12 The United Kingdom (26)

Regeneration amidst restraint

Structures and trends

Home-ownership is the dominant tenure in the UK, with heavily subsidised sales of municipal homes accounting for two-fifths of the rise from 55 to 68 per cent between 1980 and 1995. The private rental market, with new investment finally freed from controls in 1989 but relatively unsubsidised, has shown signs of growth in the 1990s as inflation remains low and younger households either stay longer at home or live longer in market rentals prior to ownership. But it remains small, at less than 10 per cent of the stock.

The non-market sector, comprising municipal housing and housing association stock, is the major vehicle for delivery of 'social objectives in UK policies. The sector has contracted and changed significantly in structure over the last decade. In contrast to 1980, when municipalities and associations, respectively, provided 31 and 2 per cent of homes, the 1995 figures record that councils now provide 19 per cent and associations 4 per cent of homes. That is, there has been a major reduction in municipal stock and new investment and a shift of new investment to the association sector. This shift primarily reflects central government investment limits.

Policy organisation and emphasis

Tax policies, which have become less important since 1990 (with home owner tax breaks falling from £7.7 billion to£2.8billion, and Housing Benefit, which is universally available to renters only and has expanded over the same period from £5.6 billion to£12 billion, are both national, UK wide policies. However, especially in relation to local authority and housing association sectors, there is administrative decentralisation of policy separately for England, Scotland, Wales and Northern Ireland. Within these areas, respectively The Housing Corporation, Scottish Homes and Tai Cymru are quasi-autonomous non government organisations responsible for funding, supervising and monitoring housing associations. Municipalities have key planning powers, statutory obligations to house the homeless and are often large scale providers of homes (especially in urban areas exceeding half a million population where they often still provide half of homes).

Housing policies in the UK now absorb about three per cent of GDP, a reduction from five per cent of the 1970s but still a large proportion by EU standards. In recent years the dominant, clear policy themes of the 1980s have altered markedly in many respects. Fiscal support for home-ownership has been reduced and council house sales have slowed markedly. The sector is still growing but the difficult boom-bust of 1985-1993, which resulted in half a million home repossessions (putting new demands on the social sector) and has still left just under 10 per cent of owners with negative equity has changed consumer and lender attitudes. The private rental sector receives minimal support.

Whilst local authority capital spending on in Great Britain housing remains at record low levels, £2.8 billion in 1995 in contrast to £6.2 billion in 1980, the 1980s rental policy of rents rising, often, at two or three per cent above inflation has now come to an end. As two-thirds of council tenants receive housing benefit and as rents enter the consumer price index, it is now recognised that steep rent increases raise the public deficit and deepen poverty traps. Similar comments apply to housing association rents. Whilst housing associations received major increases in grant aid (and new capacities to attract private finance) from 1988 to 1993 to promote affordable rental homes there is now a worrying reduction in their funding and a diversion of their output towards low-cost home ownership. Gross rent to income ratios (for 'cold rents) are commonly 25-30 per cent for the private tenants and 20-25 per cent for association and municipal residents. Net rent burdens are, on average, lowered by Housing Benefit to, respectively, 20 and 11 per cent.

Rent increases, recession and social change have all added significantly to the Housing Benefit bill. It is now widely recognised that, with relatively low levels of basic social security, Housing Benefit covering 100 per cent of housing costs in many cases, high rents and steep withdrawal rates as households increase earnings, the UK Benefit system does not promote efficient use of the rental housing stock and creates deep poverty traps. Housing policies may often exacerbate social exclusion for the poorest fifth of households.

Policy challenges

Despite high levels of policy expenditures (including tax concessions) the UK still faces a range of critical housing issues, though they relate primarily to access and quality rather than affordability

Policy responses/innovations

There have, against a bleak background of resource levels, been important innovations in the UK social housing sectors over the last ten years

British housing policy has, arguably, not been lacking in creative ideas, from central government to local volunteers, but in resource levels. There has, however, been a significant increase in resources directed towards the regeneration of rundown social housing estates, now amounting to over £3 billion annually. The conception and implementation of these programmes has really been the 'flagship of UK housing policy in the 1990s and there has been a continuing evolution in the approach

In short, housing-led regeneration programmes have done much to reduce social exclusion in some of Britains worst social housing estates. Doubts persist, however, as to the sustainability of the changes given the continuing low incomes and high unemployment rates of the residents involved.

The EU contribution

In Glasgow, the Strathclyde European Partnership channelled European Social Fund support in the 1990s to the pre-existing WISE Group. WISE is a not-for-profit organisation which works closely with other regeneration agencies and trains formerly unemployed workers through projects upgrading housing insulation, environmental and street quality as well as land reclamation. Funding sources have changed over time but in 1993 the European Social Fund financed a quarter of the annual 13m ECU budget. The WISE Group has now begun to 'franchise their approach and is setting up new ventures in two English cities. Independent evaluations have praised the effectiveness and innovative features of WISE activities.


4.1 The status quo

In line with the principle of subsidiarity, the European Union has no powers to pass housing legislation. The Commission also does not allow European Structural Funds to be spent directly on housing investment projects, partly because these funds are designed to meet economic, rather than social, objectives, and partly because these funds should not be used to replace national governments expenditure (the principle of 'additionality). Hence some regulations, notably those governing the URBAN Community Initiative, acknowledge that areas of housing deprivation can quality for funds, but specify that they may not be spent on housing. The low cost housing loans for coal and steel areas, which are administered by the European Commission, come under the 1952 Treaty of Paris which established the European Coal and Steel Community. The Treaty expires in 2001.

This overall clarity is, however, somewhat illusory. There are EU actions, such as in agriculture and labour market policies where Union actions complement national programmes. And, of course, financial assistance from a higher level of government does not preclude lower levels of government being able to decide how it is best spent. Indeed within nations such measures have become more commonplace in housing policies in recent decades. Since the Single European Act of 1986, with the adoption of the goals of promoting economic and social cohesion, the European Union needs to look again towards housing.

In the previous Chapter it was apparent that specific European Union actions sat comfortably within 'integrated local approaches to housing policy. That is, European Union support does assist what are regarded by residents, providers and local governments as 'housing-led or 'housing-related actions. But the old-fashioned view of housing policy implied in European Union thinking (perhaps capital support to provide new, affordable homes) means that the Unions real contribution to contemporary policy actions often remain unrecognised. It is quite wrong to conclude that the European Union does nothing in housing.

The specifics of what the Union promotes in housing related projects are, however, not very clear. This may stem from the fact that housing-related support arises from the Structural Funds, particularly the European Regional Development Fund (ERDF), and the European Social Fund (ESF), a range of at least a dozen small Community programmes and initiatives as well as finance from the European Investment Bank. A second consideration is that it is usually difficult to identify the housing related element of European Union supported projects unless each project is analysed in detail. As most Member State governments do not appear to have a published record and audit of EU supported schemes within their own country, broken down by programmes and purpose it then becomes extremely difficult to identify, in exercises such as this, the Unions record of support and achievement. There are two member states where the national Housing Ministry does have such a record and audit. Other states could be encouraged to follow this approach and to establish the housing benefits from EU supported 'integrative projects. EU successes in supporting such initiatives are not as transparent as they should be and the vast majority of citizens remain unaware of EU support for Europes worst neighbourhoods and poorest citizens.

In the paragraphs which follow there is no quantitative assessment of how European Funds and programmes help in housing. The absence of published data and evaluations makes that task impossible. Instead, the report provides qualitative illustrations of the kinds of programmes and projects which facilitate local housing change. Structural Funds are examined first and then Community Initiatives and other programmes.

4.2 European structural funds

Structural Funds play key roles in promoting social and economic change to meet social and economic cohesion objectives. They have grown in importance within the Budget, their share rising from a fifth to a third for the period 1988-1999, and by 1999 will have a likely value of 30 billion ECU. For the Union as a whole they comprise 0.3 per cent of GDP, but a higher share, around three per cent, in the Cohesion States (Ireland, Portugal, Greece and Spain). In that respect, they benefit most the countries with relatively poor physical housing conditions. Housing-related measures are most relevant in relation to the ESF and the ERDF. The detailed objectives of these Funds are reported elsewhere (Stephens, et al. 1996).

Recent research (1996) conducted by CHRUS for the Housing Corporation (the governments supervisory and funding body for housing associations in England) illustrates the ways in which European funds could be used either by housing associations as part of wider community activities or in relation to housing. Six examples from Germany and Scotland illustrate the main points, and they are summarised in Table 9.

These examples illustrate four principal types of project which demonstrate the linkages between the Structural Funds and social housing organisations:

Table 9 indicates that these properties of projects are not mutually exclusive. For example, the Hamburg Eimsbüttel Poverty 3 project used EU funds for non-housing objectives and also to lever additional funding for housing-related investment. One of the projects strands was to carry out environmental improvement in this area of high-rise dwellings. The co-operation of local housing companies was required and was used to lever in funds from the Construction Department of the local authority to finance the environmental improvements. More clearly, the Bremen Tenever Urban Pilot Project involved the establishment of a concierge service as a means of providing employment and training for local residents.

Of these examples the closest a project came to using European funds for housing investment was the Munich Poverty 3 project. WOHNforum was established as a limited company with funding from the EU, the local authority and local charities as a vehicle for conducting the Poverty 3 project. WOHNforum was used to establish a demonstration project, providing training for local people and participation for future tenants in the renovation of 22 flats and workshop space. WOHNforum thus provided 50 per cent of the cost of renovation (an example of European funds leaking into housing). The local authority provided the remainder from its renovation programme (an example of European funds being used to lever in additional investment to housing).

In Glasgow, Partick Housing Associations use of the European Regional Development Fund to convert the lower floors of an old building into workspaces enabled the remainder of the building to be converted into flats using funds from the national housing programme and the private sector.

The other examples each involved the use of the European Social Fund to provide training for people carrying out housing-related activities, such as the insulation of social housing, the improvement of back courts and housing management.

4.3 Community initiatives and programmes, 1994-1999

The European Union uses 9% of the ERDF and ESF budgets to finance Community Initiatives. These programmes are intended to provide solutions to problems which have a particular impact on the Community. A further 1% of the ERDF and ESF budgets are devoted to Pilot Projects and Innovative Measures. These are the only projects funded by the Structural Funds which are allocated and administered by the Commission itself, rather than the Member States. Outside the Structural Funds, the Poverty 3 programme was intended to promote multi-agency approaches to tackling poverty and helped to develop the concept of social exclusion. Poverty 3 ended in 1994, and its successor programme (EXCLUSION) has yet to be agreed.

The projects supported by these programmes have been diverse in nature and are not per se to support housing. However, the Urban Pilot Projects almost invariably involved integrated area regeneration with housing providers as partners or lead agents. The Poverty 3 supported a wide range of housing-related projects, from improving shanty towns in Perama (Greece) to promoting regeneration of rundown social housing areas in Edinburgh (Pilton) and providing training for street children in Lisbon. More systematic research of the POVERTY 3 programme, indicates that housing action was involved in three-quarters of the projects supported.

The range of Community Initiatives at the start of the 1994-1999 period are indicated in Table 10. Further developments since that date, of housing interest, include

As noted above, there is not presently available a country by country summary of housing-related projects supported by these European Programmes. But from British experience it is apparent that a wide range of projects matter and are being proposed in increasing numbers. The City of Glasgow, where this report was written, illustrates the point well. As Integrated Development Operation (involving ERDF and ESF funds) led to the Strathclyde European Partnership (with 400m ECU). This Partnership promoted environmental and infrastructure actions which facilitated neighbourhood restructuring helping public and private housing investment. In the same city, the not-for-profit WISE Group have used EU Funds to provide training for unemployed people by promoting energy conservation and environmental improvement actions in poorer housing programmes. The City Council used THERMIE I to develop innovative housing heating solutions; Partick Housing Association used the RENEVAL programme to provide business spaces in an integrated development and to make streets safer and more attractive; in nearby Paisley, an URBAN initiative has facilitated the formation of a significant area regeneration partnership with 5m ECU of EU money likely to leverage a further 15m ECU of housing and related spending.

Similar actions exist in other UK cities. Merseyside has an Integrated Operation programme; Hackney in London, has developed an explicit strategy of how Objective 2 areas can use European Union funds; Foyers, combining housing and training for young homeless , have been promoted by the ESF and ERDF in seven English cities; housing associations have also been active users of programmes, with SHAPE using EMPLOYMENT, HORIZON, Hastoe involving THERMIE support and Hanover, specialised in providing for the elderly, the TIDE programme. Housing Associations also participate in the European network for the Care and Health of the Elderly.

Table 9: Examples of the Use of European Funds

Case StudyEuropean FundingAgencies InvolvedProjectUse of EU Funds
1. WOHNforum (Munich)Poverty 3- charities
- local authority
training & participation in design & renovation of building for flats & workspaces- to "leak" into housing investment
- to lever additional funding for housing investment
2. Hamburg EimsbüttelPoverty 3- voluntary sector
- state ministries
multi-dimensional project to tackle social exclusion, including environmental improvements- for non-housing purposes, but concentrated on particular housing estates
- to lever additional funding for housing-related investment
3. Bremen TeneverUrban Pilot Project- regional partnership
- housing companies
multi-dimensional project to tacke social exclusion, with focus on skills upgrading, including establishment of concierge service- for non-housing purposes, but concentrated on particular housing estates
- to leak into housing-related activities
4. Partick HousingmAssociationRENEVAL (ERDF Community Initiative- Partick HA
- Scottish Homes
- Glasgow Development Agency
provision of workshops- by a housing association diversifying into activities eligible for EU funding
- to support non-housing activities which make a housing development financially viable
5. Wise GroupEuropean Social Fund- local authorities
- training agencies
- government departments
training activities using socially useful projects. eg. house insulation- to "leak" into housing-related projects
6. SHAREEuropean Social Fund- SHARE
- Scottish Homes
training for housing qualifications- to "leak" into housing-related projects

Source: Stephens et al. 1996

Table 10: Community Initiatives 1994-1999 (start of period)

Community InitiativeDescriptionQualificationFunds (ECU bn, 1994 prices)
INTERREGCross-border & transitional co-operation & networksAll internal border with Objective 1, 2 or 5 (b) status; external borders2.9
LEADER IIRural DevelopmentObjective 1 and 5(b) regions1.4





Labour market integration

Integration of women into labour market

Training & job creation for disadvantaged groups

Combat unemployment for under 20s, especially those without qualifications

By scheme

Not region-specific

Not region-specific

Not region-specific






2) - ADAPT

3) - RETEX




7) - SME

1) Adaptation of workers & regions to industrial change

2) To help workers adapt to industrial change

3) Aid to areas heavily dependent on the textiles industry

4) Aid to areas affected by rapid decline of coal and lignite mining

5) Aid for areas heavily dependent on defence industry. Ends 1977

6) Aid for areas affected by decline of steel industry. Ends 1997

7) Encourage development of small and medium size enterprises

1) By scheme

2) Not region-specific. Projects must be transnational.

3) Textile regions in Objective 1, 2 and 5(b) regions. Ends 1997.

4) Declining mining areas in Objective 1, 2 or 5(b) regions

5) Regions heavily dependent on defence industry in Objective 1, 2 or 5(b) regions

6) Declining steel areas in Objective 1, 2 or 5(b) regions

7) SMEs in Objective 1 regions

1) 4.7

2) [1.4]

3) [0.5]

4) [0.4]

5) [0.5]

6) [0.5]

7) [1.0]

PESCAAid to areas affected by decline in fishing industryDeclining fishing areas in Objective 1, 2 or 5(b) areas0.25
URBANLabour market and infrastructure measures to tackle urban problemsUrban areas with populations over 100,0000.6
TOTAL  13.45

* Excludes ECU 0.4 billion for the Portuguese textile industry, included under 'Others & Reserves

Source: European Information Service, March 1994

The country reports, above, have provided illustrations of similar projects in other EU countries. But these examples are only the tip of the iceberg of EU support for housing related activities. It is clear that European Union support already plays a significant role in providing 'the mortar for integrating nationally funded 'building-blocks in neighbourhood and social renewal projects. Moreover these actions have helped promote national level policy developments around the notion of 'social exclusion and reinforced the shift to integrated policy solutions.

4.4 Should the EU do more?

Clearly the Union does need to do more to audit and articulate the housing-related impacts of Structural Funds including the Community Initiatives. It is also apparent that as Community funding interacts with national housing policies, it would be helpful if there was better, regular, annual statistics and information regarding housing within the European Union. European wide research and comparative knowledge on national housing systems remains underdeveloped, especially in southern Europe, perhaps because housing is not an area of EU competence. At the same time European level representations on housing issues are split by tenure; the European Liaison Committee for Social Housing (CECODHAS) speaks for much, but not all, of the social housing sector; the European Mortgage Federation reviews national mortgage markets. But they speak with uncoordinated voices and there is no body representing private rental providers who house a fifth of Europeans. Unless the EU takes a lead this unsatisfactory position is likely to remain.

Better auditing and information on national housing systems raises no fundamental issues about subsidiarity. Nor would efforts to promote operational networks across housing providers and community groups involved in integrated policy development and implementation. In 1995 the European Network for Housing Research, which receives no support from the EU, set up a cross-national group for research commissioners in EU countries to facilitate cross-national discussion on housing research. Similar initiatives are needed at the operational level, involving housing practitioners. All of these developments are potentially useful to the Union because housing providers often take the lead in promoting integrated policies and in many instances are the major investors involved. The housing sector has to know about European Union initiatives and conversely the Union has a need to know about housing.

But would such developments in information and co-ordination be enough? The earlier parts of this report stressed that national housing policies are now operating in a more adverse context

At the same time national levels of policy support for housing investment are declining or static in Union countries, with the exceptions of Ireland and Germany. This reduction in support clearly does not reflect a resolution of housing difficulties. It may reflect temporary reductions in support, until GDP grows more rapidly, as countries struggle to meet the Maastricht criteria on public expenditure and debt. But in some countries, such as the UK, Sweden and the Netherlands a more sustained reduction in support is planned. Unless support is also effectively re-targeted to the poorer third of households in these countries the prospect that the poor will be well housed and re-integrated out of exclusion is diminishing. Some countries, such as Portugal, would like to see the European Union develop programmes allowing direct (and matched) expenditures on housing. This may well make sense in relation to specific actions, such as regeneration and special needs. Such action would not require European laws but is more likely to be ruled out by budgetary politics.

This still leaves the Union, if aims in relation to social and economic cohesion are to be attained, in a real dilemma. And this dilemma will grow as monetary union proceeds. Within a single currency area it is important that labour can migrate with minimal frictions. And it is also likely that adjustment will require the unemployed and lower income workers to move. It is difficult to see how present policies, sharply segmented at local authority let alone national boundaries, facilitate such moves. Private rental systems are often disorderly and social housing queues are long. Property market instabilities, with different national cycles in house prices, also complicate beneficial economic integration.

Such economic consequences of national housing systems have been hardly raised at all in the debates surrounding monetary union, and this is a culpable omission. At the very least the European Union should have a working knowledge of European housing systems and a clear view on the kinds of policies which facilitate economic adjustment and social integration. Housing systems and policies are too central to both of these processes for the Union to continue to ignore them. At the very least a European Housing Systems Observatory, with a much broader remit and competence than the existing Laboratoire Logement, is required.

There is, then, much that can be done to improve European-wide understanding of housing issues and the important, supportive role of Union actions, even without a new European competence in housing provision. The concluding section of the report sets out possible actions.

4.5 Breaking down barriers

Throughout this report there has been an emphasis on the inadequacy of research, information and statistics of housing in general in Europe but more particularly in relation to European funded initiatives. This over-arching sense of mystery may also occur in practitioner communities. In one of the few published audits of the housing relevance of European programmes, the Housing Corporation (1995) in England noted, 'Europe is a bit like that. Where do you begin? The whole process seems so complicated, the initials, the jargon and the acronyms unintelligible, the experts insufferable. The report, published in 1996, further recommended 'use your MEPs shamelessly, they like to feel wanted. Clearly experts and MEPs alike are set to face new bottom-up challenges from housing providers! In reality European programmes are no more complex than many national efforts nor the experts and acronyms really any different. Routes for accessing programmes are improving. However more efforts are needed to familiarise investors with new opportunities.

That report also stressed the lack of knowledge that housing organisations, especially smaller not-for-profits have of Community Programmes, a serious consideration given their role in policy. Not-for-profits which have experience in seeking European support also stress the costs of preparing bids to Europe (particularly as staff resources are threatened by other cutbacks), and they comment adversely on slow decision-taking, exacerbated by dual scrutiny (as national governments also have to approve all bids), and the complex monitoring requirements involved.

Measures could be taken at European, national and local levels to promote a more cohesive understanding of housing-related EU activities.

At the European scale, the Union could

At the national level, Member States could strengthen the process of mutual understanding by

At the more local scale, and within housing provider organisations, it would be helpful

4.6 An enlightening role

Some of the required national and local actions noted above already take place but they are the exception rather than the rule. But if housing-related European actions are to be properly recognised, their potential understood and bids generated where they are most needed then they have to become part of the normal practice of European housing policy-makers and providers. And at the European level, knowledge of housing policies has to move on from partial, retrospective, detective work to better informed, up-to-date statistical overview. Neither of these changes for the better will occur without leading action from the European Union.

The European Union should be open about and encouraged by the ways in which its actions have helped housing providers to develop better integrated policies and projects pursued by housing providers. It can do so without remaking subsidiarity patterns. And it will have to do so as long as the actions of housing providers not only meet acute housing needs but also contribute crucially to economic adjustment and social cohesion. If it does not do so, Members of the European Parliament will be exposed to growing pressures for action from housing providers and community groups aiming to reduce social exclusion. Without a clear view of housing policies and priorities and clear routes for linking such interests with European Union programmes they will be left without appropriate responses.

The Habitat II Conference confirmed that, in global terms, Europe is well housed and the policy effort in many countries is forward thinking and significant in scale. But this report emphasises that old problems remain and new challenges are emerging in a difficult resource climate. The changing nature of housing problems and policies, requiring more integrated responses, has brought the strategic and operational concerns of housing providers closer to the roles of European Union programmes. European providers and the European Union need new knowledge, if not new formal competences, to secure the most effective responses to some of the most acute problems now facing poor European citizens. It is time for housing to have a place in the major discussions shaping the new Europe.


This report has utilised a wide range of statistical and written sources. The works cited below are the principal sources and a starting point for further reading.

Principal sources:

Balchin P, (ed.) (1996) Housing Policy in Europe, Routledge

Boelhouwer P, et al (1996) 'The Netherlands, in Paul Balchin (ed.) Housing Policy in Europe, Routledge

CECODHAS. (1994) A Roof Over the Head of Every European: 5 Years of Involvement and Action.

Dieleman F M, (1996) European Housing Market Developments. ENHR Conference Keynote, Copenhagen.

Fitzpatrick S, (1996) Homelessness in the European Union. Paper Presented at the "Future of Housing Services" Conference, University of Glasgow.

Hedman E, (ed.) (1994) Housing in Sweden in an International Perspective, BOVERKET

Housing Corporation (London), (1996)

McCrone G, and Stephens M (1995) Housing Policy in Britain & Europe, UCL Press.

Maclennan D, and Williams R, (1990) Affordable Housing in Europe, Joseph Rowntree Foundation, York.

Maclennan D, and Meen G, (1993) Housing Markets and National Economic Performance in the OECD Countries. Joseph Rowntree Foundation, York.

Maclennan D, and Stephens M, (1996) European Monetary Union and the Housing Sector. ENHR Conference Keynote Speech, Copenhagen.

Maclennan D, and Bannister J, (1996) Housing: Making the Connections. Urban Studies, Special Issue 1996.

Maclennan D, (1997) (Forthcoming) Private Rental Housing in the Advanced Economies. Netherlands Journal of Housing and the Environment, Special Issue.

Priemus H, Kleinman M, Maclennan D, and Turner B, (1993) European Union: Consequences for National Housing Policies. Delft University Press.

Smith F, and Urquhart A, 'The Scope and Availability of European Structural Funds, case study working papers for CHRUS report to the Housing Corporation

Stephens M, Bennett A, & Smith F (1996) European Funding: The Independent Social Housing Sector and the European Structural Funds in England, The Housing Corporation and National Housing Federation

1. This country review was prepared by Duncan Maclennan from sources provided by the Danish Ministry of Housing (which provides an exemplary set of statistical and policy reviews).

2. This paper is based on information provided by Simpa Tulla, the Ministry of the Environment, the National Housing Board and the OECD.

3. This review was prepared by Mark Stephens.

4. This sub-section is based on the Joseph Rowntree Foundation report "Innovations on Social Housing No. 1" (1991), The Foyer Project Part I.

5. This review was prepared by Professor Peter Kemp.

6. This section is based on a paper by Nicholas Pirounakis, Consultant.

7. This review was prepared by Professor Duncan Maclennan based on extensive material provided by the Department of Environment, Dublin.

8. This review was prepared by Professor Duncan Maclennan, based on published sources.

9. This section is based on McCrone and Stephens (1995) and Peter Boelhouwens chapter in Paul Balchin (ed.) (1996).

10.This sub-section is extracted from a paper by Fiona Smith and Alison Urquhart.

11. This section is based on a paper by Vitor Neves, University of Coimbra.

12. "Diário da República", n o 106, I Série - A, 7 de Maio de 1993.

13. Opções Estratégicas para o Desenvolvimento do Pais no periodo 1994-1999, Lei n o 69/93, de 24 de Setembro.

14. AECOPS, Relatório AECOPS da Construção, 1994.

15. Decreto-Lei n o 226/87, 6 June 1987.

16. Dwellings whose prices are limited to a certain maximum amount established by the central government.

17. Programa Especial de Realojamento nas Áreas Metropolitanas de Lisboa e Porto (PER), established by the Decreto-Lei n o 163/93, 7 May 1993.

18. Having in view a more effectiveness in the application of the Plan, it is possible to widen the limit of the loans conceded to the totality of the price of acquisition not covered by grants in case of dwellings at "controlled costs" that were in construction or already built in July 1994 ( Decreto-Lei n o 199/94, 22 July 1994).

19. Caixa Geral de Depósitos, the most important Portuguese bank.

20. Programa de Construção de Habitações Económicas, established by the Decreto-Lei n o 163/93, 7 May 1993.

21. Newspapers reported conflicts between the parts involved in the first project approved (IGAPHE, LNEC and the builder) mainly associated with the certification of quality of the project by the LNEC (see Público, May 23, 1995).

22. See Público, October 2, 1995.

23. Incentivo ao arrendamento por jovens, Decreto-Lei n o 162/92, 5 August 1992.

24. This section is based on a paper by Pere Rieva.

25. Review prepared by Professor Peter Kemp based on material provided by Bouerket, Karls Krona.

26. Review prepared by Professor Duncan Maclennan.

European Parliament: 12/1996