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Exploration of the income support role of social housing in a selective

housing regimeTITA research meeting, 15-16 September 2016, Turku

Timo M. Kauppinen

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Background

• Housing allowances and social rental housing are two important policy instruments intended to improve access to decent and affordable housing among low-income households (‘demand-side’ and ‘supply-side’ subsidies).

• Housing allowances have been gaining prominence in many countries, while the social housing stock has been decreasing (e.g. Salvi del Pero et al. 2016). Simultaneously, there are signs of increasing housing affordability problems among low-income households (e.g. Dewilde & De Decker 2016).

• Therefore, the affordability aspect of social housing may need to be emphasized more in social policy research on poverty and income support, particularly concerning ‘dualist’ or ‘selective’ housing regimes, where public housing is mostly intended for low-income households.

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Previous research

• Previous research suggests that social rental housing can have an important income support role among the social tenants (Tunstall et al. 2013), although this depends on the institutional arrangements and regulation of the rental sector (Heylen & Haffner 2012).– The overall importance of the income support role of social rental

housing also depends on the size of the social housing stock and on the characteristics of the housing allowance system.

• Previous Finnish research has shown for example that taking housing costs into account increases the ’poverty risk’ of renters much more than the poverty risk of owner-occupiers (Niemelä 2005), but different types of rental tenure were not identified.– It is known, however, that persons in low-income households living in

private rental dwellings have higher housing costs and less disposable income after housing costs than those in municipal rental dwellings (Kauppinen et al. 2015).

* Housing expenditure >40% of household's disposable money income, 18-64-year-old persons in low-income households

0 20 40 60 80

Outright owner

Owner with mortgage

Private rental

Subsidized rental, notmunicipal

Municipal rental

Housing expenditure >40%, (%)*0 20 40 60 80

Capital region

Other large universitycities

Other urbanmunicipalities

Semi-urban municipalities

Rural municipalities

Housing expenditure >40%, (%)*

The prevalence of high housing expenditure share among 18-64-year-old persons living in low-income households in 2011, by housing tenure and urbanicity

Source: Kauppinen et al. 2015

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• A Nordic welfare state with rather selective housing policies (e.g. Ruonavaara 2011). – Subsidies are directed mostly those seen to have the greatest need for

subsidies– However: support for homeownership ends up mostly supporting middle-

and high-income households (Hirvonen et al. 2014)• A majority of state support for housing consists of housing

allowances and they have an important role in the income support of low-income households.

• Rental sector has characteristics of the ‘dualist’ model presented by Kemeny (see e.g. Dewilde & De Keulenaer 2003; Norris & Schiels 2007): social rental dwellings are meant mostly to lowest-income households

• The income support role of social housing is not known clearly, although social housing is an important option for low-income households especially in the largest urban regions.

The Finnish context

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• Analysis of income support role of social rental housing, particularly among households whose pre-housing-cost income is low

• Data: mostly the Finnish Income distribution statistics (Tulonjakotilaston palveluaineisto), at least the years 2011-2014– Around 10,000 households per year, rotating panel (four years)

• Cross-sectional analyses of differences in disposable equivalized income by housing tenure and other background characteristics (region, household type, age) before and after housing costs– After-housing-costs (AHC) income, i.e. ‘residual income’ (see e.g. Stone

2006; Heylen & Heffner 2012)– ‘Housing-cost-induced poverty’ (e.g. Tunstall et al. 2013)

• To the extent that the number of observations in the data allow it, the panel structure of the Finnish Income distribution statistics is exploited by analyzing the association between moves to social rental housing and AHC income.

Planned research

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Challenges• National sample

– Smaller share of social rental housing than in urban regions small number of observations

– Social rental housing can be expected to contribute to income support mainly in the largest urban regions (where market-rate housing costs are high) national sample underestimates the effect on these regions

• Timing of data collection– Housing costs: the dwelling in the end of the year– Housing allowances, housing loans’ repayments and interests, tax

deductions and property taxes: whole year– Income: whole year

• Due to challenges: ”exploration” = exploration of what is possible with available data

Income among the 25-64-years-old in the lowest income decile before housing allowances, after them and after housing costs, private vs. municipal rental dwellings in 2014

Source: Statistics Finland, Income distribution statistics, own calculations

0

100

200

300

400

500

600

700

800

900

1000

Equivalent disposablemoney income

without housingallowances

With housingallowances

After housing costs

Eur /month /

consumptionunit

Private rental housing Municipal rental housing All tenures

Preliminary panel analysis: Change in AHC income among movers1 from other tenures to municipal rental housing in 2012-2014, by quantile of pre-move equivalized disposable income

Figure removed from the public version of thepresentation due to the early phase of the analysis

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Cautionary note• Reasons for apparent increase in AHC income not yet

analyzed– Increased housing allowance receipt seems to have a role (cf.

Kauppinen et al. 2015)– Also increases in other benefits may matter– Housing costs themselves may even increase (not all are moving

from market-rate private rental dwellings)

• Most work for these analyses is scheduled to 2017

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ReferencesDewilde C, De Decker P (2016) Changing Inequalities in Housing Outcomes across Western Europe. Housing, Theory and Society 33:2, 121-161.

Dewilde C, De Keulenaer F (2003) Housing and Poverty: The ‘Missing Link’. European Journal of Housing Policy 3:2, 127-153.

Heylen K, Haffner M (2012) The Effect of Housing Expenses and Subsidies on the Income Distribution in Flanders and the Netherlands. Housing Studies 27:8, 1142-1161.

Hirvonen J et al. (2014) Näkökulmia ara-vuokra-asumiseen. Selvitys ara-vuokra-asuntojen asukasrakenteesta ja asukasvalinnasta ara-asuntoihin. Ympäristöministeriön raportteja 15. Helsinki: Ympäristöministeriö.

Kauppinen TM et al. (2015) Pienituloisten asuinolot. Työpaperi 22. Helsinki: Terveyden ja hyvinvoinnin laitos.

Niemelä M (2005) Alueelliset toimeentuloerot ennen ja jälkeen asumismenojen huomioon ottamista. Janus 13:1, 54-73.

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Norris M, Shiels P (2007) Housing inequalities in an enlarged European Union: patterns, drivers, implications. Journal of European Social Policy 17:1, 65-76.

Ruonavaara (2011) Suomen asuntopolitiikan malli pohjoismaisessa vertailussa. Esitys sosiaalipolitiikan päivillä, Turku 28.10.2011.

Salvi del Pero A et al. (2016) Policies to promote access to good-quality affordable housing in OECD countries. OECD Social, Employment and Migration Working Papers No. 176. Paris: OECD Publishing.

Stone ME (2006) What Is Housing Affordability? The Case for the Residual Income Approach. Housing Policy Debate 17:1, 151-184.

Tunstall R et al. (2013) The links between housing and poverty: an evidence review. York: Joseph Rowntree Foundation.