Rental housing as a key to housing crises

At the successful first Housing Forum ECA in Budapest in April 2011 we learned much about insufficient housing and the need for improving existing housing, but also of best practices and of stories where residents participated for the common good. Most cases were from the ownership sector, the dominating tenure form in Central and Eastern Europe. But a market with merely homeownership is often not sustainable.

A housing block.

Rental housing is still in its infancy in the CEE-region and considered today by the most to be ‘emergency housing´, and often the last resort for those without enough resources to buy a home. This concept is clearly understandable in an environment where ownership is King and renting is only for those who can’t afford to buy.

Also, the preference between different forms of tenure and the level of security and just rents is clear to see. Renters are common in countries with a high level of security of tenure, with fair systems for rent setting and often with rent tribunals. Renters, of all income brackets, are common in Germany (57%), the Netherlands (41%), Austria (45%), Denmark (46%) and in Switzerland (64%).

In the CEE-region, why should anyone sensible go for rental housing in an environment where rents can legally be increased by 10%-50% annually with one months’ notice and where many landlords have a limited social conscience, or are invisible?

Still, homeownership can also be insecure, money wise. The property market now sees a clear downturn, and prices decline. Residential property prices in Slovakia fell by 8% in 2011, according to the Global Property Guide, and flats in Dublin, Ireland, are 62% lower today than in 2007. In Spain the average price of a home has fallen by 35% since 2008, according to the country’s economy minister Luis de Guindos. The result is that many new homeowners, often young families, have been forced to sell with a great loss.

Several countries in Europe with a high rate of rental housing, e.g. Germany and the Netherlands, have had a much less volatile housing market and rental housing has served as a stabilizing factor. An increase of affordable rental housing is thus one key to the crisis.

By Magnus Hammar
Secretary General International Union of Tenants

Speak Your Mind