Vienna advances Social Housing in new EU Urban Agenda

At the end of last year, one of the EU’s first urban partnerships was founded to advance the EU Urban Agenda. In the light of rapidly changing real estate markets and the fact that already 25% of Europeans spend more than 40% of their income on housing, the partnership is dedicated to the important theme of social housing in which Vienna – as Europe’s largest landlord, owning almost 25% of properties – excels as a role model for affordable and sustainable housing.

Given the different approaches to social housing across the continent, the partnership aims at researching best practices, adapting legal and financial frameworks and expanding social housing across Europe. It is one of 12 urban partnerships that will be formed from 2016 on and deal with specific issues for three years. Before the partnership’s first meeting on 16 December 2015, a workshop on “Future Challenges on Social Housing in Europe” took place in the Vienna House in Brussels in November and was co-organised by the City of Vienna.

The workshop gathered 35 high-level experts from the municipal, social and cooperative as well as private housing sector, cities and regions and their associations as well as representatives from the European Commission, the Council, the European Investment Bank and other financial institutions. It dealt with financing models, EU funding, the impact of the country specific recommendations and how state aid rules affect social and affordable housing.

Some take-aways (download the workshop report: Future Challenges of Social Housing in Europe):

• Affordable housing should be seen as a service, an investment with a social return. Guaranteeing affordable housing is one of the basic requirements for the development of opportunities and talent.
• Housing affordability issues have serious ramifications for the health of wide European as well as national economies. High housing costs and associated high debt levels reduce savings and effect investment in other sectors that are essential to the long term growth of the economy.
• An open flank is the narrow target group definition of social housing imputed by the EC, leading to instability and market caution. Countries that make a choice to invest in affordable rental housing not only for the poorest of the poor, but also for low and medium income groups, should be even more supported, e.g. by deleting the 3% deficit threshold for investments in social infrastructure like social rental housing.
• Participants highlighted the need to set an earmarking for social housing in public budgets as well as minimum quota for social rental housing in areas with shortages. The necessity to focus on object subsidies to help increase supply and prevent shifts to subject subsidies only, which results mostly in inflated prices in the rental sector.
• The need for dedicated financial instruments and intermediaries like specialized social housing banks or funds was mentioned as key to strengthen the institutional framework. The instrument of urban development contracts between cities, landowners and investors to avoid speculation and obligations to allocate a certain share for social or affordable housing development were highlighted as practices to lift up the affordable housing sector investment.

Given the rapid increases in rents and apartment prices in recent years in many European metropolises (with the likes of London, Paris, Stockholm or Munich much worse off than Vienna with its significant but still comparably moderate hikes) and the growing urban populations across the continent, it will be interesting to follow this partnership’s progress and see whether social housing models can alleviate the pressure on European real estate markets in the medium to long term.

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More information on the EU Urban Agenda:

The aim of the EU Urban Agenda is to involve cities in the design of policies at EU and national level, as well as to mobilise them in the implementation of European and national policies. It will focus on 12 key priority themes: jobs and skills in the local economy, urban poverty, housing, inclusion of migrants and refugees, sustainable use of land and nature-based solutions, circular economy, climate adaptation, energy transition, urban mobility, air quality, digital transition and innovative and responsible public procurement.

Cross cutting issues are linked to these 12 themes, such as good governance, sound and strategic urban planning or the availability and quality of public services of general interest. Each of the 12 priority themes will be covered by a partnership which will prepare and implement an Action Plan in the 2/3-year timeframe. The aim of the partnership is to develop a multi-level and multi-dimensional approach. The EU Urban Agenda will be advanced by the current Dutch EU presidency by endorsing the Pact of Amsterdam, launching first partnerships and adopting Council conclusions on the EU Urban Agenda.

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