Alice Pittini, Dara Turnbull, Diana Yordanova & others
Housing Agency of Ireland
2022
🏢 Context and Authors This report, titled "Cost-based Social Rental Housing in Europe," was prepared by Housing Europe, the European Federation of Public, Cooperative and Social Housing, in collaboration with the Housing Agency of Ireland. Authored by experts Alice Pittini, Dara Turnbull, and Diana Yordanova, the report draws contributions from housing specialists in Austria, Denmark, and Finland. Published in 2022, it provides insights into sustainable housing practices across these nations. 📊 Key Findings The report highlights the existence of cost-based social rental housing systems in several European countries, with Austria, Denmark, and Finland being exemplary cases of large-scale implementation. In these systems, rents are determined by the actual costs of providing and maintaining housing, as opposed to being driven by market rates, which helps ensure long-term affordability. 🇦🇹 Austria In Austria, social housing constitutes 24% of the housing stock, provided by Limited-Profit Housing Associations (LPHAs) and municipalities. Rents are based on individual building costs, and once loans are repaid, a fixed "basic rent" (Grundmiete) is charged. The funding for these housing initiatives comes from a combination of public loans, bank loans, provider equity, and tenant contributions, ensuring affordability in perpetuity. 🇩🇰 Denmark Denmark features non-profit housing that makes up 20% of its housing stock, managed by over 500 housing associations. Similar to Austria, rents are set based on individual costs, and after loan repayment, rents remain stable with any surpluses reinvested. The primary funding sources include mortgage loans with state guarantees and municipal loans, along with a strong emphasis on tenant democracy in governance. 🇫🇮 Finland In Finland, social housing accounts for 11-20% of the stock, depending on the definition. It is mainly provided by municipal housing companies, where rents can be equalized across a provider's entire portfolio. After a 40-year restriction period, homes can exit the social sector, although many remain affordable. Financing comes from private loans with state guarantees and a limited number of public grants, allowing flexibility in rent-setting. 🔑 Common Strengths and Challenges The report identifies common strengths across these systems: long-term financial sustainability, guaranteed affordability, and a diverse social mix of residents, with rents significantly below market rates. However, challenges persist, including high land and construction costs in urban areas, balancing affordability with quality standards, and adapting to changing demographics and housing needs. 📈 Conclusion In summary, this report provides a comprehensive overview of how cost-based social rental housing operates in Austria, Denmark, and Finland, demonstrating that the model can be adaptable to different national contexts while maintaining financial sustainability and long-term affordability.
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.