«reNtal HousiNg Policy iN tHe uNited states Volume 13, Number 2 • 2011 U.S. Department of Housing and Urban Development | Office of Policy ...»
Olson, Edgar O. 2003. “Housing Programs for Low-Income Households.” In Means-Tested Transfer Programs, edited by Robert Moffitt. Chicago, IL: University of Chicago Press.
U.S. Department of Housing and Urban Development. 2000. Rental Housing Assistance—The Worsening Crisis: A Report to Congress on Worst Case Housing Needs. Washington, DC: U.S. Government Printing Office.
158 Rental Housing Policy in the United States
Renting in the United States:
A Dutch Perspective Hugo Priemus Delft University of Technology Introduction One positive consequence of a credit crisis is that academics and other experts shift their attention somewhat from owner-occupied housing to rental housing. All over the world, the general effects of the financial crisis on housing markets are apparent: less residential mobility, fewer home sales, lower home sales prices, and a shift in demand from expensive to cheaper housing and from owner-occupied to rental housing. Reinhart and Rogoff (2009) showed that home sales prices fell by an average of 35.5 percent during a period of 6 years in the aftermath of credit crises in the postwar era.
Priemus and Maclennan (forthcoming) are preparing to address the theme of the credit crunch and the resilience of housing systems for a special issue of the Journal of Housing and the Built Environment. They argue that, ceteris paribus, the most resilient national housing systems are usually those with a lower percentage of home-owning households. This argument seems a plausible conclusion: when, as a result of a credit crisis, the demand shifts from owner-occupied housing to rental housing, it is important to have a substantially sized, differentiated rental housing sector that is capable of absorbing the increased demand. Relatively speaking, the housing markets in Switzerland, Germany, and the Netherlands are currently faring much better than those in Spain, Ireland, the United Kingdom, and the United States.
The United States and the European Union The European Commission has no direct political responsibility for housing. Conversely, in the United States, the federal responsibilities for housing that were introduced by the New Deal in the 1930s are still in place, albeit changed over time. Housing researchers often criticize American housing policy, but they must acknowledge that the U.S. government is much more active in the area of housing than the European Commission. Of course, most European Union (EU) member states are much more proactive in their housing policies than individual states are in the United States.
The European Commission has the potential to exert a strong indirect influence on housing markets in the EU by adopting EU environmental standards, coordinating national building regulations, and––last but not least––enforcing EU fair competition policy. The European Cityscape 159 Cityscape: A Journal of Policy Development and Research • Volume 13, Number 2 • 2011 U.S. Department of Housing and Urban Development • Office of Policy Development and Research Priemus Commission promotes the operation of markets in general by monitoring a level playing field and by prohibiting unsanctioned state aid (Gruis and Priemus, 2008). In December 2009, the European Commission decided that housing associations in the Netherlands (landlords of socially rented housing with a 32-percent share of the total housing stock) were eligible for state aid. But state aid for housing associations is sanctioned only when they allocate at least 90 percent of all available socially rented dwellings to households with a maximum taxable income of 33,000 euros—which amounts to about 43 percent of all Dutch households. Curiously, the European Commission has currently approved this crucial rule only for the Netherlands, leaving 26 other EU countries without clear guidance.
The United States and the Netherlands Dutch academics and politicians are somewhat bewildered by some of the features of the rental housing system in the United States. U.S. experts undoubtedly feel a similar level of bewilderment about the rental sector in the Netherlands.
The rental sector in the Netherlands covers about 41 percent of the total housing stock: of that, 32 percent is socially rented housing and 9 percent is commercially rented housing. Housing associations are nonprofit, private providers of socially rented housing. They develop and manage a housing stock with far more differentiation, a much more varied social/economic occupancy, and less social segregation and stigma than the U.S. public sector housing stock.
About 95 percent of all rents are regulated, including a substantial part of the commercially rented housing sector.
Housing associations have not received property subsidies since 1995 (Priemus, 1995). Associations still invest in housing, although the economic yield is modest, starting with an upfront loss of 50,000 to 100,000 euros per dwelling. Associations finance their investments with cash flows from rents but also (and increasingly) from the sale of rented dwellings––usually to households that want to own the home and, in exceptional cases, to landlords of commercially rented housing. As a result, the market share of housing associations shrank from 42 percent in 1992 to 32 percent as of January 1, 2011, and will continue to do so in the near future.
In the Netherlands, a wide gap also exists between the opinions and policies of politicians and the findings and recommendations of experts. In 2010, the Social Economic Council (SER) Expert Commission (Priemus, 2010; SER-CSED, 2010) published a report titled Towards an Integral Reform of the Housing Market, which advocated a gradual increase (from 2015 through
2040) toward market rents (also in the socially rented housing sector), a gradual reduction of mortgage interest tax relief, and total abolition of the current transaction tax to make the housing market much more market compliant. To safeguard the affordability of decent housing for low-income households, the Commission argued for housing allowance equity for tenants and owner occupants alike. The Dutch Constitution, more or less, entitles housing to every Dutch household: the demand rationing effect of rent and price equilibrium is not accepted. When a housing need exists, income-related housing support will be supplied as an entitlement. One-third of all tenants are currently eligible for a housing allowance. This fraction may increase when rents rise.
160 Rental Housing Policy in the United States Renting in the United States: A Dutch Perspective Current housing policies in the Netherlands are chaotic and are not moving in the direction recommended by the SER Expert Commission. In the short term, changes to mortgage interest tax relief are not likely because the housing market is still perceived to be weak in the wake of the credit crunch. Landlords of both socially and commercially rented housing are heavily taxed (a combined 750 million euros annually) and their allowable rent increases are capped.
As a result, renting out housing is simply not profitable. Investments in rental housing are expected to sour, inflicting heavy losses to the building industry and employment levels.
When Dutch experts look at the U.S. housing voucher system in relation to European policy (Priemus, Kemp, and Varady, 2005), the first recommendation from a Dutch perspective would be to transform housing vouchers into an entitlement. The housing vouchers would then shed their lottery character (see the observations by Quigley, this issue). Even so, the rental housing sectors in the United States and the Netherlands would still be worlds apart.
The broad scope of Dutch housing associations will never be accepted in the United States.
And a narrowly targeted, small socially rented housing sector will never be introduced in the Netherlands. In the Netherlands, a general desire to disentangle general public responsibilities from specific housing interests turns the focus to providing socially rented housing through private institutions instead of public. The housing markets in both the United States and the Netherlands would function far more effectively if tax benefits and subsidies for owner occupants were gradually phased out over a period of 20 to 30 years and if rents in both socially and commercially rented housing sectors were to reach free-market levels in the same period.
Such a development can occur only if housing vouchers guarantee affordability for every modest-income household. This perspective supports the first recommendation formulated above––transforming housing vouchers into entitlements is the highest priority.
Author Hugo Priemus is a professor emeritus at the OTB Research Institute for the Built Environment, Delft University of Technology.
References Gruis, Vincent H., and Hugo Priemus. 2008. “European Competition Policy and National Housing Policies: International Implications of the Dutch Case,” Housing Studies 23 (3): 485–505.
Priemus, Hugo. 2010. “Housing Finance Reform in the Making: The Case of the Netherlands,” Housing Studies 25 (5): 755–764.
––––––. 1995. “How To Abolish Social Housing? The Dutch Case,” International Journal of Urban and Regional Research 19 (1): 145–155.
Priemus, Hugo, Peter Kemp, and David P. Varady. 2005. “Housing Vouchers in the United States, Great Britain and the Netherlands: Current Issues and Future Perspectives,” Housing Policy Debate 16 (3 and 4): 575–609.
Priemus, Hugo, and Duncan Maclennan, eds. Forthcoming. “Credit Crunch and the Resilience of Housing Systems,” special issue of Journal of Housing and the Built Environment 26.
Reinhart, Carmen M., and Kenneth S. Rogoff. 2009. “The Aftermath of Financial Crisis,” American Economic Review 99 (2): 466–472.
Sociaal-Economische Raad (SER), Commissie van Sociaal-Economische Deskundigen (CSED).
2010 (April). Naar een Integrale Hervorming van de Woningmarkt (Towards an Integral Housing Market Reform). The Hague: Sociaal-Economische Road.
Quigley, John M. 2011. “Rental Housing Assistance?” Cityscape 13 (2): 147–158.
162 Rental Housing Policy in the United States Graphic Detail Geographic Information Systems organize and clarify the patterns of human activities on Earth’s surface and their interaction with each other. GIS data, in the form of maps, can quickly and powerfully convey relationships to policymakers and the public. This department of Cityscape includes maps that convey important housing or community development policy issues or solutions. If you have made such a map and are willing to share it in a future issue of Cityscape, please contact firstname.lastname@example.org.
Visualizing Racial Segregation Differently–– Exploring Changing Patterns From the Effect of Underlying Geographic Distributions Ronald E. Wilson U.S. Department of Housing and Urban Development It has long been observed that minorities are often concentrated in impoverished areas and lack access to resources such as jobs, educational opportunities, good-quality food, life services, and face other disadvantages. As such, racial and ethnic segregation is an important factor to consider when crafting public policy. A first step in many analyses of segregation is the production of single racial or ethnic group percentage maps that show geographic patterns where one group is predominant and the other is not. At lower levels of geography, such as census block groups or tracts, these percentage maps are less problematic because the size of the unit is small enough and can reveal a concentration of single racial or ethnic groups within a small area. When examining trends across the United States at the city and county level, however, the percentage mapping approach becomes disadvantageous for two primary reasons.
First, important patterns are lost when racial or ethnic percentages are the result of summed-up population counts from lower geographies and displayed on a map. This pattern loss is the result of the Modifiable Areal Unit Problem (MAUP), which has adverse consequences for data analysis Cityscape 163 Cityscape: A Journal of Policy Development and Research • Volume 13, Number 2 • 2011 U.S. Department of Housing and Urban Development • Office of Policy Development and Research Wilson because the unit of geography changes but the observation data do not.1 This straight summation of data has a dilution effect that can erase variation in local racial and ethnic settlement patterns in the underlying geography, leaving true levels of segregation more difficult to detect. This is a crucial point, because segregation can be more acute at the local level than across many cities or counties. When these local patterns are not apparent, incorrect assumptions can be made about larger regional segregation patterns associated with social and economic ills.
A second reason the approach is flawed is because maps drawn this way convey the assumption that segregation is the same throughout the region. Just because a racial or ethnic group is concentrated within a region does not indicate homogeneous distribution at the local level. There is a far greater direct spatial disconnect at the local level than at regional or national levels, because the mismatch between segregated populations and needed resources to maintain a certain quality of life is more succinctly separated. At the city and county levels, there is a reduction in the spatial disconnect, but the dynamics of segregation and associated problems become the cumulative result of those local effects that combine with adjacent jurisdictions and can depress the regional economy, making it less vibrant. Thus, simple thematic maps of the presence or absence of one racial or ethnic group at the national level do not depict very well the extent and magnitude of segregation and misguide the formation of questions toward uncovering the true problems associated with segregation at the regional level. Factoring in levels of local segregation within cities and counties can instead give an indication of how integrated racial or ethnic groups are across a region and the nation as a whole.