Investing in social housing in post-socialist Europe

In all Eastern European countries the future, purpose, and form of social housing are being questioned with a focus on city-wide initiatives to encourage private and non-profit provision to increase its supply in order to minimize ‘poverty trap’ effects.

Figure 1: The social housing continuum.

Social housing provision can be presented as a continuum of non-market and market alternatives ranging from emergency and transitional shelters through social housing, regulated entry-level market housing and affordable homeownership (Figure1). New social housing projects strengthen social integration through supply of housing to low-income groups, assistance to homeless persons and other vulnerable groups (minorities, Roma, refugees, single-parent families, the elderly, young families). Such people can be accommodated in transitional shelters (in cases of natural disasters, displacement and refugee crisis), or in social housing. Other market-based options bridging the affordability gap, with more limited assistance, are presented by private entry level rental housing and assisted homeownership. Such options, financed by governments in a number of post-socialist countries, are available to a broader group of households facing affordability constraints.

Figure 2: New social housing in Tirana.

Two major types of social housing providers—municipalities and non-profit housing organizations—have become important in the region. Two examples illustrate these new models build on partnerships and fiscal responsibility. In Albania, the government with a € 15 million loan from the Council of Europe Bank (CEB) supports the provision of 1,100 social rental apartments in the large urban centers (Figure 2). The co-financing is as follows: municipalities – 26%, State budget – 14%, CEB loan – 60%. The implementation of the project maintains a decentralized management structure with the active involvement of municipalities. They are responsible for: i) loan repayments; ii) provision of land and infrastructure; iii) effective management of the social rental housing. In accordance with the Law on Social Housing of 2004, apartments are allocated to victims of violence, people with disabilities, orphans and low income young families. Prospective tenants are expected to pay 4% of the construction costs annually, provided that the monthly payment does not exceed 30% of their gross income.

Figure 3: New non-profit housing in Warsaw.

Poland has invested over € 360 million in new social housing, providing 12,346 dwellings since 2004 (Figure 3). The apartments are built and managed by 192 non-profit housing societies (TBS) and cooperatives. CEB provided half of the capital through a low-cost loan, complemented by government funds (23%) and another 30% by non-profit and cooperative housing providers, often through tenant contributions. The new model of social housing targets middle-income households and is expected to be sustainable in fiscal terms. In addition to subsidized credits for capital costs, municipalities (gminas) contribute through land and infrastructure.

By Dr. Sasha Tsenkova
Professor of Planning specialized in housing policy in post-socialist countries
University of Calgary

Speak Your Mind