Q: What is your personal motivation to deal with housing issues?
Housing is so much more than real estate. Housing can be an oasis, refuge and a stepping stone in life. Every step along the way can be made more safe and secure or, unfortunately, more risky and precarious. There are many aspects of housing that keep researchers busy, but I choose to dedicate the most time to how we can design housing systems that promote more inclusive and adequate housing for all. In most countries housing is typically provided by market actors, operating according to rules shaped by governments. If we are really committed to housing as a human right and want to realise this right, we will need to reform the way we govern the relationships between key housing actors: the landowners, the investors, the builders and housing providers. Like every relationship, this requires purposeful investment.
The pandemic has impacted differently people’s lives and well-being and shown once again that not everyone has access to a safe, secure and affordable home or is able to live, work, learn and play in a well-resourced neighbourhood. For this reason, housing and urban policy will remain firmly on all governments’ agenda throughout and beyond the next decade. Stronger market-shaping capacities, including purposeful investment, will be integral in addressing affordability concerns, post-pandemic recovery and importantly climate change.
Q: You are the content coordinator of “Housing 2030 – Time to Think and to Do Differently”. Who are the founders and people behind this initiative?
Housing2030 is an initiative of 56 countries in the UN European Commission for Europe, together with UN Commission for Human Settlements (Habitat) and Housing Europe, the not for profit federation of 45 public, co-operative and social housing providers.
They recognize the need for an effective, affordable housing policy to ensure access to decent, adequate, affordable and healthy housing for all, as demanded by the UN Sustainable Development Goals by 2030, Geneva UN Charter for Sustainable Housing (2015) and Urban Agenda for the EU Housing Partnership. The importance of these goals have been amplified by COVID-19.
Housing2030’s project team includes people who have been researching housing policy practice for many years, such as Professor Michelle Norris an expert on housing finance, Professor Holger Walbaum an expert on climate-neutral along with myself, who share an interest in land policy, governance and purposeful investment too.
Q: What are the aims of “Housing2030”?
Through a survey of good practices, thematic workshops, podcast series and website, Housing2030 is developing a ‘tool kit’, rather than a universal ‘blueprint’, to respond to the different and changing demands of UNECE member states and regions.
This practical report defines key concepts and policy tools drawn from the experience of over 50 countries. The report zeroes in on four key areas: land policy and planning strategies, funding and financing instruments, and good governance and regulation as well as environmental and energy standards for a more sustainable future. Clear illustrations show how these policies have been implemented, pointing out what makes them best practice and providing useful links to a wealth of contacts and resources.
Q: Why do politicians or policy makers fail to provide their citizens with decent and affordable housing? What are the most considerable obstacles you identified in your research?
The consequences for failure are too costly for all, so its important to focus on how governments can succeed.
Governments can really kick goals for housing if they work together across multi-levels and ensuring that the power, capacity and resources to act are the right places. This often requires legislation, agreements on intergovernmental transfers and the strengthening local capacity. Policy implementation that engages with citizens on housing concerns and empowers them to play a role in managing their housing is also more likely to be effective.
Successful housing reforms certainly require good leadership across political parties and long term commitment far beyond each electoral term. Agreement on long term housing goals often expressed in a national housing strategy, taken at the highest level of decision making, also steers powerful treasury or finance departments, and increases the likelihood of adequate resourcing.
A good strategy is guided by high-level principles, such as the right to housing and the sustainable development goals. It clarifies the purpose of housing policy for all stakeholders and brings together information and expertise. It also informs and stimulates public discussion and debate and defines priorities that give momentum for reform. Importantly, a strategy provides directions for action and sets priorities for legislation, programs and investments.
A capable minister responsible for housing, backed by a national housing strategy, can achieve a lot towards making housing more affordable, adequate and accessible. I would vote for that!
Q: Are there any effective policy tools against speculation and increasing property prices?
Property speculation can be destabilizing for residents, undermine communities, frustrate good planning of urban areas and lockout long term providers in affordable housing. We also know that excessive inflation of housing costs erodes household budgets, diverts investment away from the productive economy, and eventually concentrates wealth in the hands of the few. It also makes most of us heavily dependent on mortgage debt.
There are many ways governments can minimize the harm of speculation and rapid inflation of housing costs. Housing2030 focuses on tools to promote affordable and inclusive housing through purposeful land policy, funding and financing and good governance.
One of the key mechanisms that influence the cost of housing is the flow of investment via the mortgage market into the production and exchange of homes. The volume, conduits and direction of investment are shaped by monetary policy, finance sector regulation, as well as taxation rules. Combined, these market frameworks currently promote investment in homeownership, but the excessive flow of capital into existing housing stock has also pushed up land and housing prices – and this has ultimately defeated the goal of affordable homeownership in some countries.
One rarely discussed policy tool to address this concern is the taxation of capital gains, which is a tax that applies to the increase in price between buying and selling a property. When an investment property is sold for more than it cost to buy, the difference between the low buying and the high selling price is called a capital gain. Governments can choose to tax this income, just as they do other forms of wealth from assets such as shares. However, some countries apply CGT at a lower rate than other forms of capital gains. This discount encourages investors to buy up and speculate on the rising prices of existing houses. It can also accelerate property flipping, evictions and vacancies. Tax favoured investors, such as Real Estate Investment Trusts, are often on a stronger financial footing than affordable housing providers and first home buyers. Overly favourable regulation of REITS can squeeze out long term non-for-profit landlords as well as young first home buyers from the housing market.
The debate about capital gains taxation has been strong in countries such as the UK and Australia, where price rises have negatively impacted first home buyers and private tenants, but speculation is a concern in many other countries too.
To prevent the housing market from overheating and improve access to housing providers and first home buyers, tax incentives for investor buyers (and second homeowners) such as capital gains tax can be curtailed. Germany has a property speculation tax which is levied when a property is sold. The rate of this tax depends on market conditions and can be calibrated and applied selectively to different housing markets. Ideally, the tax should be at its highest on properties bought and sold very quickly and reduced as the purchase-sale period lengthens and where they are managed for public and not for profit purpose. In most countries capital gains taxes do not apply to owner-occupiers of housing, sometimes they only apply to absent owners, overseas investors or corporate buyers and sellers.
To get the balance right, any tax incentive provided should deliver a social dividend. Tax discounts and exemptions for not for profit, affordable housing provision, can also require reinvestment of surpluses in the expansion of affordable rental housing. This is the case in many countries with limited or not for profit housing legislation, such as Finland, Austria and France.
However, more than tax reform and not for profit legislation is required to ensure affordable housing is adequate, available and accessible.
For more ideas on affordable housing tools and their illustration, take a look at the videos and presentations made at the Housing2030 workshops or listen to related podcast series. All are freely available on the Housing2030.org website.
Our next workshop focusses on funding and financing tools, April 14. Why not join in the discussion? Just register via the website, and while you’re there add to the growing list of best practices we are collecting to share in the final report.
This Final Report of Housing2030 will be presented to the Housing Ministers of 56 UN ECE member state in Geneva on October 6, 2021.