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Access to Social Rights - Access to Housing

 

Guidelines on supply of housing, financing and housing allowance
(as approved at the 5th meeting of CS-HO, 8 June 2006)
  Challenges
  Background
 Definitions: Vulnerability, Housing and Social Cohesion
  Prerequisites for an effective housing policy for vulnerable groups
  Guidelines on housing policy for vulnerable groups
  Need for integrated policy and measures
  Housing policy measures and their contribution to social cohesion
1. Access to housing for vulnerable groups is a challenge facing all Council of Europe member States. Consequently, in November 2004, the Council of Europe set up a group of specialists on housing policies for social cohesion (CS-HO) whose aim was to recommend appropriate measures in some critical areas of housing policies, in order to enable vulnerable groups to access and to live in adequate housing.

2. The purpose of the CS-HO work was to formulate concrete measures and policies within the areas of supply of housing, financing and housing allowances in order to enable vulnerable groups to have access to housing and enjoy the security of tenure.

3. Marginalisation and exclusion of groups due to e.g. poverty, racism and xenophobia are obstacles to social cohesion. Consequently the CS-HO group was instructed to recommend housing policy measures which may contribute to social cohesion.  
 4. The significance of the right to housing has been recognized in a number of international documents., such as the Universal Declaration of Human Rights (Article 25.1), the Council of Europe’s European Social Charter of 1961 (ETS No. 35) (Article 16), its additional Protocol of 1988 (ETS No 128) (Article 4) and the Revised European Social Charter of 1996 (ETS No. 163) (Article 31), and International Covenant of Economic, Social and Cultural rights (Article 11).

5. The present policy guidelines are based on the findings from the research work (which are presented in a separate report, "Housing policy and the vulnerable social groups") and the discussions and proposals of the CS-HO.

6. In May 2002, the European Committee for Social Cohesion adopted recommendations on the ways to improve the access to housing for vulnerable groups  (Report on “Access to Social Rights in Europe”, prepared by Mary Daly). They emerged from the work of the Group of Specialists on Access to Housing (CS-LO) of the Council of Europe and other projects.

7. The recommendations of the CS-HO group build on and complement the recommendations developed by CS - LO.
 8. The concept of vulnerable groups denotes the risk of marginalisation from the socio-economic mainstreams (such as labour market, housing market and basic public services). Vulnerability is connected to regional or economic factors, as well as to individual or social characteristics. Vulnerable groups are typically categorized in social terms according to age, sex, ethnicity, disability or family status, and geographic origin. There is a complex interplay of individual and societal factors, such as discrimination and access to public services. Definition of vulnerable groups varies from country to country, as the existence of vulnerable groups are context dependent - partly influenced by the legal and historical background, partly by the actual social and housing policies.

9. The housing policies aimed at vulnerable groups should target those persons who cannot reasonably be expected to access adequate accommodation on the private market without support.

10. Vulnerability in the housing sector means that there are groups, persons and households who are in inadequate housing situation or are at high risk to lack any element of the adequate housing.

11. Adequate housing is defined by the UN Habitat Agenda (§ 60): “Adequate shelter means more than a roof over one's head. It also means adequate privacy; adequate space; physical accessibility; adequate security; security of tenure; structural stability and durability; adequate lighting, heating and ventilation; adequate basic infrastructure, such as water-supply, sanitation and waste-management facilities; suitable environmental quality and health-related factors; and adequate and accessible location with regard to work and basic facilities: all of which should be available at an affordable cost”.

12. Along these lines the International Covenant on Economic, Social and Cultural Rights, (Article 11, comment 4, item 8) developed a more elaborate definition of the concept of adequate housing, referring to dimensions such as legal security of tenure, affordability, habitability, location and accessibility, which are used for the purpose of these guidelines.

13. Social cohesion is the capacity of a society to ensure the welfare of all its members, minimizing disparities and avoiding polarisation. Social cohesion is not only a matter of combating social exclusion and poverty. It is also about creating solidarity in society so that exclusion will be minimized. At the same time, in so far as poverty and exclusion continue to exist, there is also a need to take specific measures to help vulnerable members of society .

(Ref. "Revised Strategy for Social Cohesion (2004) Council of Europe").
14. General housing policies should be clearly defined and should include special policies for vulnerable groups. These policies should be integrated with the national economic and social policies. 15. It is necessary to reappraise and upgrade the role of the housing sector within the national development policy, with special attention given to the reviewing of the existing measures helping the vulnerable groups.

16. Effective governance of housing policies is crucial for the implementation of any measures for vulnerable groups. The role of national, regional and local authorities in housing policies should be clearly and legally defined. The institutional and administrative system of local governance should be transparent, efficient, effective, defining the role of civil society/NGO’s. The system should allow participation of stakeholders. The programmes should be designed in order to foster partnerships at local, regional and national levels, as appropriate, in their policies aimed at addressing the housing problems. 17. Government and/or local authorities have the responsibility to ensure sufficient supply of housing for all. General lack of housing aggravates the situation for vulnerable households.

18. An appropriate legal, financial and institutional base is an essential precondition for addressing the problems also of the vulnerable groups. The state should be actively involved in legal regulation of any housing relationships by its compulsory provisions. Governments have to make efforts to develop a functioning housing finance system and establish the legal and regulatory environment as well as achieve macroeconomic stability and to promote sustainable economic growth. The intervention of the state should complement rather than replace a market-based finance systems.

19. The relevant authorities should undertake a regular review of their housing legislation, policies and practices and remove all provisions or administrative practices that result in direct or indirect exclusion of vulnerable groups.

20. The legal environment (rent regulation, tenancy rights, etc.) should provide balanced security both for the tenants and the landlords. In order to prevent evictions the states should provide adequate security of tenure for tenants, either in public or private accommodation. Tenants should be provided adequate protection against premature termination of tenancy and arbitrary increases in rent. In the transition countries special measures are necessary to protect the security of tenure for tenants who live in dwellings previously publicly owned and governed (sitting tenants).

21. Legal regulation of land and housing development should be in place in order to ensure sufficient provision of residential land and infrastructure investment. A legal system is needed, which includes and specifies property, land and secure tenure rights, procedures for legal eviction and legal protection from unlawful evictions.

22. Housing policies should be evidence based, and therefore the knowledge base should be improved through research and regular data collection. Adequate knowledge of housing situation; especially statistical information is a prerequisite for effective housing policy design and implementation. Regular collection of relevant statistical information on housing issues, including housing needs assessment should be carried out.
23. There is a range of potential instruments to improve housing for vulnerable groups, which for the purpose of these guidelines will be considered as:
(1) instruments aimed at increasing the supply of decent and affordable rental housing;
(2) instruments facilitating access to housing finance for vulnerable groups;
(3) making effective use of housing allowances. For different vulnerable groups in a given national context a specific combination of these measures may be appropriate.

Guidelines on increasing the supply of decent and affordable rental housing

24. In designing programmes for the vulnerable groups, governments have to consider different measures used for providing or increasing the supply of rental housing. The programmes have to pass the viability test for measuring the real need for new housing units on the local housing market, where the needs for appropriate housing cannot be met by the existing stock in the prevailing circumstances.

25. Abundant supply of rental housing is an effective way of improving  access to housing for vulnerable groups, who often cannot afford the cost and risks of ownership.

26. Countries with low level of rental sector (below 20 %) should consider ways to increase the supply of housing in the rental sector, especially in urban areas. In such cases, social housing should play an important role. Adequate legal, financial and tax conditions should be created, in order to encourage supply social rental housing.

27. In order to increase the supply of adequate and affordable rental accommodation, the private and non-profit sector should be supported by necessary legal and financial measures. Governments should provide adequate organisational framework and provisions in the national legislation, policies and strategies, designed to increase the supply of rental housing. Provisions should also be made for different means, forms and methods of access to housing, such as social housing, cooperatives, public housing, and innovative forms and tenures of housing. All the relevant elements of the housing models mentioned (financial, social and other) should be clearly defined.

28. The area- and community-based programmes should be given more emphasis. Area-based grant programmes (e.g. cash subsidy, tax exemption, etc) can efficiently contribute to the rehabilitation of a distressed area and the creation of a mixed neighbourhood.

29. Policy makers should look into possibility to mobilise presently vacant housing for public purposes. They should consider the effect of  mobilisation on social cohesion in the area, which in some cases will be enhanced. Mobilisation could be useful both in the case of rental and owned housing.

30. In cases where supply of new housing units is necessary, a number of different public policies may be used. Typically, specific programmes use a combination of different financial measures and define their institutional framework.

31. The housing strategy using a single or any combination of measures should be accompanied with some targeting mechanism. Targeting aims at vulnerable groups or at distressed areas defined by special indicators.

32. In cases where financial incentives (tax incentive, capital grants, etc.) are used,   responsibilities should be carefully allocated among the stakeholders (capital owners, developers, housing company managers and public sector authorities).

33. The provision of a capital grant is an effective instrument for increasing the supply of housing for vulnerable groups, on the condition it is restricted to bodies that carry out a clearly defined public service obligation. The capital grant has powerful incentives and its costs are predictable.  It should be used in combination with other measures, such as housing allowances, and under specific institutional framework, which guarantees the achievement of the programme objectives. Capital grant is the most effective instrument in cases, where there are severe housing supply and social problems, in order to ensure access to housing for vulnerable groups.

34. Tax advantages for housing providers are very commonly used financial incentives for increasing the supply of housing. The form of tax advantages varies widely, including partial or total exemption from the profit tax, an accelerated depreciation of rental properties, and partial reduction of the VAT. The programmes should provide stable, predictable and long-term advantages for the landlord providing social housing. It may be a measure to increase supply of housing in general, however, it is not necessarily targeted on vulnerable groups. Of all tax advantages, VAT reduction may be the best suited for targeting vulnerable groups.

35. Interest rate subsidy programmes used to have a crucial importance in a high-inflation environment. It could cause undesirable market distortion, if it is used as a general supply instrument. Therefore, it should be well targeted on vulnerable groups. It might have an important role in the transition countries, in cases where inflation is relatively high.

36. Mortgage guaranties for institutions, which supply social housing, have proved to be an efficient instrument for supporting the supply of affordable housing in a well-designed institutional environment.

Housing finance instruments for vulnerable groups, aimed to facilitate housing ownership

37. Considering risks and costs associated with home ownership, policies facilitating access to rental housing may often be preferred to policies, which provide access to finance for private housing ownership. However, in countries and regions where the rental and mortgage market are not well established, or in rural areas, policies providing access to housing finance for home ownership might be a possible solution for facilitating access to housing for vulnerable groups. 38. The government should choose among the demand side instruments which fit into the country’s legal and financial framework and which are tailored to the specific needs of the vulnerable groups. Targeting is also necessary to control fiscal effects.

39. Beyond the provision of an efficient legal and institutional framework, there is a number of specific instruments, which can be used to promote access to housing of vulnerable groups in the owner-occupied sector.

40. Guarantees provided by government agencies or by private guarantee institutions have proved to be an efficient instrument for helping low-cost homeownership programmes in a developed legal and financial environment. With such guarantee schemes, vulnerable groups have better access to credit,  since the guarantees reduce risks of loans given to low-income groups, and thus ease credit-rationing.

41. Housing allowance for home-buyers helps the low-income households to pay their expenditures related to the new unit. This is a means-tested support to vulnerable groups in the owner-occupied sector. The housing allowances are discussed in detail in the next section.

42. Capital grant is considered to be a very efficient instrument to enhance the access to housing of low-income groups in an immature housing finance environment. The advantages of this instrument are its transparency and predictability of its total cost. For well-defined target groups (e.g. first-time buyers) it could be a very efficient contribution even in a developed housing finance system.

43. Interest rate subsidies were very popular methods to increase the purchasing capacity of the beneficiaries, but these instruments became less important in the low-inflation environment. Typically these are not means-tested programmes, which means that they are not targeted unless specific eligibility criteria are used (e.g. families with members with disabilities, first-time buyers, immigrants, etc.). If targeted on vulnerable groups, this may be a useful instrument for facilitation of their access to housing.

44. Tax exemption has been a popular housing subsidy given to the home-buyer. This instrument is not suitable for helping low-income vulnerable groups, because of its regression attribute (the higher income groups benefit more from the subsidy). Persons who do not pay taxes do not benefit from this instrument.

45. Contract saving systems are voluntary saving products which offer some financial incentives for the savers in the form of premium, preferential loans, or tax advantages. This instrument is less appropriate in the high-inflation environment and for the low-income households. Such policy instrument is not recommended for helping vulnerable groups to gain access to housing, considering limited possibilities for people on low incomes to benefit from it and the risk of high expense for the public budget.

46. For the social groups with low access to the conventional credit instruments it might be advisable to consider the use of the microfinance schemes, which make possible access to loans of small amounts to be used for refurbishing of housing or self-help housing schemes.

47. Shared ownership, where a partial owner gradually can become a full owner, could decrease the financial burden of the targeted group combining the advantages of the owner-occupation and the rental scheme. This scheme can be combined with other instruments, e.g. interest-free loans. However, shared ownership schemes require special legal background and a well-developed practice.

Guidelines on effective use of housing allowances

48. The goals for a housing allowance system should be to improve the access to decent, affordable housing for all households on low incomes and to function as a safety net for these households against increases in housing expenditure or decreases in income.

49. Housing allowances is a means-tested demand side support to low-income households, which enables them to consume more housing than without the subsidy. Most countries in Europe have some type of housing allowances. This instrument has to a large extent supplemented or replaced supply side subsidies. Housing allowances are often considered to be more cost efficient than supply side subsidies, because they can be easily and better targeted and are more flexible, automatically adjusting to changes in household income, housing expenditure, etc.

50. When there is a shortage in the supply of adequate housing for low income households, a combination of housing allowances and supply side subsidies should be considered. The housing allowances themselves will have a minor or no effect on the housing supply.

51. In order for an efficient housing allowance system to work, the following prerequisites, concerning the data, have to be in place or developed:

- reliable data on household income level should be available as a basis for the means test.
- data on household expenditure on housing should be available. Such data is used for determining the necessary expenditure for reasonable housing consumption for households in different situations.
- reliable data on household composition should be available, as a basis for assessing the need for allowances for households, according to household income, size and other indicators of need.
- data should be updated continuously.
- if these data are not available, proxies or indicators can be used in the design of housing allowances.

52. A system for housing allowances should include the following elements:

- acceptable income levels after payment of housing expenditure should be defined for different types of households, tenures, locations etc. These income levels will indicate the need for housing allowances for different reasonable housing expenditures. In this way the allowances will decrease the need for support through social welfare payments.
- the amounts of allowance should be based on the needs of vulnerable households.
- a system where benefits are an increasing function of housing expenditure and a decreasing in income. The system should minimize poverty traps and other negative effects.
- definition of maximum eligible housing expenditures for different types of households for the calculation of the allowances.

53. All tenures and types of households should be eligible, in order to avoid segregation and distortions in the housing market.

54. There should be neutrality in tenures, unless the government has a reason to favour a specific tenure, e.g. to enhance social cohesion by having larger housing allowances in tenures with relatively few low-income households.

55. The housing allowance system should be coordinated with social policy and transfer systems.

56. The system should be transparent both to consumers and administrative bodies. The design of the system should avoid unnecessary complexity.

57. Allowances should be large enough to affect behaviour of the targeted households and should be controlled effectively.

58. Risk for “leakages” should be minimized. For example, in a situation with shortage of housing for low income households, housing allowances may result in higher rents, which means that mainly the landlords will profit from the allowances.

59. The allowances system should not encourage over consumption, i.e. should not cover 100% of the housing expenditure.
60. Housing policies for vulnerable groups should be designed and implemented taking into account general housing policies, and policies in related sectors, such as education, health, employment, transport, urban planning and social protection. For example, social rental housing should be well connected to areas with employment and training opportunities, in order to facilitate the integration of households on low incomes to the labour market. It is important to coordinate efforts of the relevant authorities, to find and exploit synergies between different sectors, and to encourage the public authorities at all levels to adopt comprehensive approaches and policies.

61. A legal framework supporting the system of housing policy should be set up or revised in order to give transparent contractual agreements between the different actors,  legal provisions regarding security of tenure and security of ownership, a legal framework for financial laws, land and mortgage laws, bank regulations, administrative and procedural laws including laws on forced evictions, rental laws, laws on various forms of planning, partnerships, and housing types (as condominiums and cooperatives).

62. Integrated housing measures have to be developed for specific vulnerable groups. The definition and social composition of vulnerable groups differs from country to country, thus it is important that the governments develop specific programmes addressing the housing problems of these groups.

63. The housing measures of these programmes should use a combination of the methods developed under the previous headings and should include the building or development of the entire physical and social infrastructure that is needed for adequate and sustainable housing.

64. Beside the central level, regional and local authorities should also develop housing policies, strategies and action plans,  coping with special local housing problems and taking into consideration the possible roles of the private sector and non-governmental agencies.

65. An efficient and transparent institutional structure, including administrative procedures on all levels and defining the role of all actors of the housing policies should be developed.

66. Non-governmental organisations, especially those working with or representing the interests of vulnerable groups, should be involved in the process of conceiving, designing, implementing and monitoring policies and programmes aimed at improving their housing situation.
67. The objective of housing policy should be to ensure access to affordable housing with an adequate standard and to ensure the security of housing for all, and to enhance social cohesion. The design of new and the evaluation of the existing housing policies should be also done from the perspective of social cohesion. The importance of social cohesion should be acknowledged among all stakeholders.

68. There has not been much focus on social cohesion in the discussion and implementation of housing policies in the past. There are some housing policies that might even be damaging to social cohesion or involve conflicts. Some housing policies may lead to polarisation or stigmatisation of certain groups.

69. Strategies for promotion of social cohesion should include housing policy, which should give special consideration to vulnerable groups.

70. Besides housing market factors, the extent and the nature of the housing problems depends also on the efficiency of the existing welfare system. With poorly functioning welfare system and inefficient safety net, less people will be able to afford adequate housing, thus the housing policy will have more tasks to solve. On the other hand, an efficient welfare system might partially reduce the tasks of housing policies. Housing policy is connected to other public policies (such as employment policies or urban development policies), and its potential contribution to social cohesion depends partly on how much is solved by those other policies.

71. In order to promote social cohesion, all housing policies should give special attention to vulnerable groups:

- Housing policy instruments should provide for measures ensuring effective access to housing policy benefits by vulnerable groups.
- The public policies should be designed in a way which increases the supply of housing for vulnerable groups and facilitates the creation of socially mixed neighbourhoods.
- Housing policies should include provision of information and counselling to vulnerable groups, in order to draw the most of benefits from the available programmes. Housing assistance programmes may fail because low-income households, who are target beneficiaries, may either lack information of wider options.
- Segregation of people with special needs should be avoided and they should be provided  with appropriate social services in order to facilitate their participation in the community.

72. Housing policies aimed at the special needs of vulnerable groups have to contribute to the formation of healthy/inclusive neighbourhoods that provide access to the basic services for all groups of society.

73. Area-based targeting may be necessary, in order to increase the quality of life of people living in these areas, limit the segregation processes, and to allow for a mixed neighbourhood. Creation of mixed neighbourhoods is desirable as long as it does not lead to exclusion of persons on low incomes.

74. Measures to counteract discrimination on an individual basis when planning and managing housing estates, neighbourhoods and areas should be implemented and monitored.

75. Whenever housing policies in general and housing measures for vulnerable groups in particular are designed, a prior assessment/evaluation of the consequences for social cohesion should be made.

76. Monitoring and evaluation of housing policies for vulnerable groups, should include an assessment of effects on social cohesion. For this purpose appropriate indicators should be developed, statistical information should be collected on a regular basis, and research on this issue should be carried out.