Social Housing in Europe

What is social housing?

In Austria, there is no official definition of social housing but there are different forms of housing provision “beyond” the market. Municipal housing (or public housing) is rental housing provided by municipalities. Limited profit housing is rental and owner-occupied housing provided on a non-profit basis by investors, which are regulated by the Non-Profit-Housing-Act and have access to public subsidies (Limited Profit Housing Associations). The Federal Provinces provide funding through the housing promotion schemes, which define the type of housing and providers, which can access funding as well as rent limits and income limits for (future) residents. The social housing stock currently represents about 23% of the total housing stock in the country.

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Who provides social housing?

Out of the total social housing stock, 60 % is owned by municipalities and public companies, but municipalities have withdrawn from new construction over the last decade. The main sector is currently the Limited-Profit sector, which includes cooperatives and companies. A smaller part of subsidized housing is provided by for-profit providers.

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How is social housing financed?

Austria has a very structured system for financing provision of social housing. It combines long-term public loans at favourable conditions and grants defined at the level of federal provinces, with commercial loans raised via HCC Bonds and developer/tenant equity. Promotion of social housing is also supported by municipal land policy. Rents are calculated on the basis of costs combined with rent limitation defined by the subsidy schemes. A typical project comprises the following elements of finance:

• 20-60%: conditional subsidies (grants, low cost loans) with limits to keep construction and financing costs down.
• 5-15%: equity of developer
• 0-15%: equity of future tenants (right to buy in some circumstances)
• 50-70%: commercial loans today financed by commercial bonds and via Housing Banks, which refinance by housing construction convertible bonds (HCCB) with very favourable conditions.

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Who can access social housing?

All providers must apply income limits defined by the different Promotion Schemes of the federal provinces. Limited-Profit Providers also have to apply additional social criteria determining priority in the allocation of dwellings. Furthermore, Federal Provinces as well as public owners of housing companies can claim a certain number of dwellings to allocate them themselves.

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Recent Developments

Public housing promotion has undergone a substantial reform within the last three years. Until 2008 it was the central state which distributed a defined total out of the federal budget to the federal provinces for the purpose of housing promotion. From 2009, the central state withdrew from financing. The former budget dedicated for housing promotion is integrated in the overall budget of the provinces, and it is up to the provinces to decide how much of it to spend on housing promotion. Following the economic and financial crisis, the federal provinces have to face financial restrictions which will also affect housing. The number of housing units receiving public grants has decreased by 25% in 2010.

Due to a high housing demand caused mainly by a comparatively high level of immigration to Austria – and especially to the big urban centres - it is doubtful whether the supply of affordable housing will be sufficient in the forthcoming years.