2022
Alice Pittini, Dara Turnbull, Diana Yordanova, and others
This report by Housing Europe explores cost-based social rental housing in Austria, Denmark, and Finland, highlighting key features and findings. In these countries, rents are determined by the actual costs of providing housing, ensuring long-term affordability. Austria's social housing comprises 24% of its stock, with funding from various sources and a fixed "basic rent" after loan repayments. Denmark has 20% non-profit housing, governed by strong tenant democracy, while Finland's social housing ranges from 11-20% of stock, primarily managed by municipal companies. Common strengths include financial sustainability and affordability, while challenges involve high urban land costs and adapting to demographic shifts. The report emphasizes that while principles are similar, each country tailors its model to fit local contexts, demonstrating the flexibility of cost-based systems in promoting affordable housing.
Context and Authors: This report was prepared by Housing Europe (the European Federation of Public, Cooperative and Social Housing) in partnership with the Housing Agency of Ireland. It was authored by Alice Pittini, Dara Turnbull, and Diana Yordanova from Housing Europe, with contributions from housing experts in Austria, Denmark and Finland. The report was published in 2022.
Key Findings:
- Cost-based social rental housing systems exist in several European countries, with Austria, Denmark and Finland providing some of the best examples of large-scale implementation.
- In these systems, rents are set based on the actual costs of providing and maintaining the housing, rather than market rates. This helps ensure long-term affordability.
- Austria:
- Social housing makes up 24% of the housing stock
- Provided by Limited-Profit Housing Associations (LPHAs) and municipalities
- Rents based on costs at the individual building/estate level
- After loans are repaid, a fixed "basic rent" (Grundmiete) is charged
- Funding comes from a mix of public loans, bank loans, provider equity, and tenant contributions
- Affordability guaranteed in perpetuity
- Denmark:
- Non-profit housing is 20% of the housing stock
- Provided by over 500 housing associations
- Rents based on costs at the individual building/estate level
- After loans are repaid, rents remain at previous levels with surpluses reinvested
- Funding primarily from mortgage loans with state guarantees and municipal loans
- Strong tenant democracy in governance
- Finland:
- Social housing is 11-20% of stock depending on definition used
- Provided mainly by municipal housing companies
- Rents can be "equalized" across a provider's entire stock
- After 40-year restriction period, homes can leave the social sector but often remain affordable
- Funding from private loans with state guarantees and some public grants
- System allows flexibility in rent-setting
- Common strengths across the three systems:
- Long-term financial sustainability
- Affordability guaranteed for extended periods
- Providing housing for a social mix of residents
- Rents significantly below market rates
- Common challenges:
- High land and construction costs in urban areas
- Balancing affordability with quality standards
- Adapting to changing demographics and housing needs
- The report concludes that while the basic principles are similar, each country has adapted the cost-based model to its own context. This demonstrates that the system can be flexible and tailored to different national circumstances.
- Key takeaways are the importance of long-term planning, stable funding mechanisms, and structures that allow reinvestment of surpluses to reduce reliance on ongoing public funding.
In summary, this report provides a comprehensive overview of how cost-based social rental housing operates in three European countries, offering potential lessons for other nations looking to expand affordable housing options. The systems described demonstrate how social housing can be provided at scale in a financially sustainable way while maintaining long-term affordability.