Claude Taffin 9th WORLD FORUM February 12 , 2018 ... unemployment). Home-ownership often produces...
21
Claude Taffin 9th WORLD FORUM February 12 th , 2018 Convention Center – Kuala Lumpur 1
Claude Taffin 9th WORLD FORUM February 12 , 2018 ... unemployment). Home-ownership often produces larger urban sprawl. Rental is needed for: Households with low or irregular income,
1 Why Rental Housing is Needed 2 Legal Framework 3 Profitability and Risk Taxation Finance and Subsidies 4 Social Rental Housing
2
Ownership is favored by most governments and households (frequent cultural bias) Rental has long been the forgotten sector of housing policies However A functioning rental sector is necessary to address affordability and mobility
challenges Affordability those that do not have enough income savings or whose income is
irregular informal cannot qualify for mortgage installment loans Vibrant rental markets make workersrsquo mobility easier Economies with small rental
sectors tend to face higher migration costs and labor rigidity Housing costs are more easily adapted to housing needs and financial capacity (life-
cycle unemployment) Home-ownership often produces larger urban sprawl Rental is needed for Households with low or irregular income House starters (young) workers students Those experiencing transitional events in their life and those who simply do not
want to own or prefer to own one unit and live elsewhere
3
Is linked to culture history (industrialization urbanization) availability of long-term credit and other housing policy issues (rent controls taxation etc)
Have no link with the wealth of the country (negative correlation)
Tenure distribution in the European Union ()
4
Source Housing Europe
Graph1
Private rental
Social rental
52
5
10
32
17
23
22
17
19
19
17
17
16
16
14
18
28
2
18
6
6
17
16
6
20
0
12
8
8
12
17
3
14
5
15
0
14
0
11
2
5
6
4
4
3
2
0
3
2
1
1
2
1
2
Taux prop
Taux locpriv
Taux locsoc
Feuil3
Feuil5
Feuil2
Feuil7
Feuil7
Housing stock 39 570 000
Feuil1
Housing stock 3 800 000
Feuil4
Housing stock 30 600 000
Feuil6
Housing stock 6 920 000
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Home-owner
Social rental
Private rental
Other
43
6
51
0
Home-owner
Social rental
Private rental
Other
57
21
19
3
Home-owner
Social rental
Private rental
Other
57
17
21
5
Home-owner
Social rental
Private rental
Other
54
35
11
0
Home-owner
Social rental
Private rental
Other
71
19
10
0
Home-owner
Social rental
Private rental
Other
52
19
26
4
Home-owner
Social rental
Private rental
Other
58
15
16
11
Home-owner
Social rental
Private rental
Other
49
18
21
12
Home-owner
Social rental
Private rental
Other
77
5
18
0
Home-owner
Social rental
Private rental
Other
75
3
18
4
Home-owner
Social rental
Private rental
Other
55
19
7
19
Home-owner
Social rental
Private rental
Other
64
1
27
8
Home-owner
Social rental
Private rental
Other
70
10
3
17
No
Yes financed by
Income limits
households under ceiling
Tableau 3 - Parc locatif social selon le statut du proprieacutetaire
AUSTRIA
State Laumlnder
AUSTRIA
YES
Varies with Land
BELGIUM
X
BELGIUM
YES
Varies with Region
(Logements en milliers)
DENMARK
State Cities
DENMARK
NO
COMMUNES ou REGIONS
ORGPUBLICS
SOCPRIVEES
COOP
TOTAL
REGION or CITY
PUBLIC BODIES
PRIVATE COMPANIES
COOP-ERATIVES
FINLAND
State
FRANCE
YES
70
Avec ou sans but lucratif
Profit or non-profit
FRANCE
State Social budget
GERMANY
YES
40
ALLEMAGNE
2444
2444
GERMANY
X
GERMANY
State Laumlnder
ITALY
YES
AUTRICHE
320
436
756
AUSTRIA
X
X
GREECE
X
NETHERLANDS
NO
Can be local
BELGIQUE
266
266
BELGIUM
X
IRELAND
State
PORTUGAL
YES
DANEMARK
43
468
-138
511
DENMARK
x
X
x
ITALY
Region
SWEDEN
NO
ESPAGNE
114
6
120
SPAIN
X
x
LUXEMBURG
X
UNITED KINGDOM
NO
FINLANDE
312
70
-20
392
FINLAND
X
x
x
NETHERLANDS
State
FRANCE
2435
1785
14
4234
FRANCE
X
X
x
PORTUGAL
X
IRLANDE
100
12
112
IRELAND
X
x
SPAIN
X
ITALIE
66+103(Etat)
662
831
ITALY
X
X
SWEDEN
State Cities
LUXEMBOURG
18
13
1
41
NETHERLANDS
X
UNITED KINGDOM
State
PAYS BAS
0
2464
2464
PORTUGAL
X
PORTUGAL
72+50 (Etat)
122
UNITED KINGDOM
X
X
ROYAUNE UNI
4523
1856
6379
SWEDEN
X
X
SUEDE
927
-682
927
0734057971
Source DGUHC
Newly Rented
New Tenancy
Renewal
Lower tax on rental income
Mortgage interest deductible
Costs deductible
Depreciation allowance
Rental losses offset
Free
Other
Free
Reference
Index
Other
Free
Reference
Index
Other
AUSTRIA
N
Y
Y
Y
N
AUSTRIA
Yes (1)
Yes (2)
BELGIUM
Y
Y
Y
Y
BELGIUM
Yes
Yes
Yes
DENMARK
YN (1)
Y
Y
N
Y
DENMARK
Yes
Yes (2)
Yes (2)
FINLAND
Y
N
Y
YN (1)
Y
FINLAND
Yes
Yes
Yes
FRANCE
N
Y (2)
Y
N
Y (2)
FRANCE
Yes (1)
Yes
Yes (3)
Yes
GERMANY
N
Y
Y
Y
Y
GERMANY
Yes (1)
Yes
Yes
IRELAND
N
Y (2)
Y
Y
N
GREECE
Yes
Yes
Yes
NETHERLANDS
N
Y
Y
Y
Y
IRELAND
Yes
Yes
Yes
SPAIN
Y
Y
Y
N
Y
NETHERLANDS
Yes (1)
Yes (2)
Yes
UNITED KINGDOM
N
Y
Y
N
N
PORTUGAL
Yes
UNITED KINGDOM
Yes
Yes
Yes (4)
Yes (4)
(1) Institutions only
(2) With limits
(1) Except for subsidized dwellings
(2) Reasonable rent calculated
(3) If obviously undervalued
(4) Optional
AUSTRIA
DENMARK
FRANCE
50-70 Commercial loan (1)
91 Mortgage loan
74 CDC loan (2)
20-60 Subsidized loan and grants
7 Interest free loan from municipality
3 State subsidy
5-15 Landlords equity
2 Tenants deposit
2 Employers fund subsidy
0-5 Tenants equity
9 Local authorities subsidies
12 Landlords equity
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) CDC State subsidiary multifunctional financial institution funding by short-term tax free deposits on ldquoArdquo booklets
Role
Key features
Countries
Large housing stock under public control
Denmark
WIDE
Universalistic concept of social housing
Netherlands
Linked to housing allowances for the most vulnerable
Sweden
Market-regulating function
Moderate of social housing
Austria Belgium
MEDIUM
Support to the most vulnerable and some middle-income groups
France Germany
Linked to housing allowances
Finland Poland
Small social housing stock (or none)
Greece Italy Portugal
NARROW
Focus on the most vulnerable
Spain United Kingdom
Housing policy focus on home-ownership policies
Hungary Slovakia
Rented from government or social landlords
1
Rented from government or social landlords
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
60
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
230
na
na
na
na
na
na
na
na
na
Denmark
na
na
na
na
na
na
na
na
na
na
na
na
na
na
210
190
200
190
190
200
200
200
na
na
na
na
na
na
Germany
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
120
na
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
30
na
na
na
40
na
na
na
na
na
na
Greece
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Spain
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
France
na
182
182
182
182
182
182
182
183
184
185
187
190
192
192
191
190
189
189
189
na
na
na
na
na
na
na
na
Ireland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
69
69
70
na
na
na
na
na
na
Italy
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
40
50
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
03
na
na
na
na
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
83
78
33
33
31
32
31
30
21
na
na
na
na
na
na
Luxembourg
na
na
na
na
na
na
na
na
na
na
20
na
na
na
na
na
na
na
19
na
na
na
na
na
na
na
na
na
Hungary
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
35
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Netherlands
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
350
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
230
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
130
130
100
na
na
na
na
na
na
na
Portugal
na
na
na
na
na
na
na
na
46
na
na
na
na
na
na
na
na
na
33
na
30
40
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
65
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
221
na
na
na
na
220
210
140
na
150
70
50
60
na
na
na
na
na
na
na
Finland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
150
150
150
150
na
na
na
na
na
na
na
Sweden
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
UK
20
20
20
20
30
30
30
30
30
30
30
40
40
40
50
50
50
60
60
70
70
80
na
na
na
na
na
na
451
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
00
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
21
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Rented from private landlords
1
Rented from private landlords
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
369
na
na
na
na
na
na
na
324
na
na
na
na
324
na
na
na
na
260
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
240
na
na
na
na
na
na
na
na
na
Denmark
na
na
na
na
na
na
na
na
na
na
na
na
na
na
190
220
210
210
210
210
210
210
na
na
na
na
na
na
Germany
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
440
na
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
90
na
na
na
na
na
na
na
na
na
na
Greece
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
203
na
na
na
na
na
na
na
na
na
Spain
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
France
na
296
291
285
278
272
268
268
267
267
266
263
261
258
256
254
252
251
249
249
na
na
na
na
na
na
na
na
Ireland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
110
110
110
na
na
na
na
na
na
Italy
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
160
150
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
357
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
396
na
na
na
na
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Luxembourg
na
na
na
na
na
na
na
na
na
na
310
na
na
na
na
na
na
na
255
na
na
na
na
na
na
na
na
na
Hungary
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
224
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Netherlands
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
108
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
170
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Portugal
na
na
na
na
na
na
na
na
306
na
na
na
na
na
na
na
na
na
210
na
200
200
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
26
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
220
na
na
na
na
200
200
200
na
130
150
120
130
na
na
na
na
na
na
na
Finland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
170
160
160
160
na
na
na
na
na
na
na
Sweden
363
343
343
340
340
341
341
341
341
336
336
338
338
338
338
322
322
327
327
315
315
na
na
na
na
na
na
na
UK
110
110
100
100
90
90
90
90
90
100
100
100
100
100
100
100
100
100
100
100
100
100
na
na
na
na
na
na
620
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
00
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
239
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
600
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Owner occupied
1
Owner occupied
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
608
na
na
na
na
na
na
na
654
na
na
na
na
654
na
na
na
na
680
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
470
na
na
na
na
na
na
na
na
na
Denmark
550
na
na
na
na
na
na
520
na
na
na
na
na
na
520
510
510
510
510
510
510
510
na
na
na
na
na
na
Germany
na
na
430
na
na
na
na
na
na
na
390
na
na
na
na
409
na
na
420
432
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
850
na
na
na
na
na
na
na
na
na
na
Greece
700
na
na
na
na
na
na
na
757
na
na
na
na
na
na
na
78
na
832
na
na
na
na
na
na
na
na
na
Spain
730
na
793
na
na
na
na
na
780
na
na
na
na
na
na
na
na
813
828
828
829
830
na
na
na
na
na
na
France
na
522
527
533
540
546
550
550
550
549
549
550
550
550
552
555
558
560
562
562
na
na
na
na
na
na
na
na
Ireland
740
na
na
na
na
na
na
na
793
na
na
na
na
800
na
na
na
na
na
769
774
770
na
na
na
na
na
na
Italy
650
na
na
na
na
na
na
na
640
na
740
na
650
na
na
660
na
680
800
800
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
643
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
601
na
735
na
830
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
979
na
na
na
na
na
na
Luxembourg
592
na
na
na
na
na
na
na
644
na
670
na
720
na
na
na
na
na
666
na
670
na
na
na
na
na
na
na
Hungary
na
na
750
na
na
na
na
na
na
na
na
na
780
869
na
na
na
920
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
741
na
na
na
na
741
na
na
na
na
na
na
na
na
na
na
Netherlands
420
na
na
na
na
na
na
na
na
na
na
na
na
na
500
508
520
520
531
542
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
500
na
na
na
na
na
na
na
na
na
570
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
550
550
570
na
na
na
na
na
na
na
Portugal
570
na
na
na
na
na
na
na
648
na
na
na
na
na
na
na
na
na
757
na
750
750
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
669
na
na
na
na
na
na
na
na
na
na
822
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
556
na
na
na
na
560
570
650
na
700
760
820
790
na
na
na
na
na
na
na
Finland
650
na
na
na
na
na
na
668
na
na
na
na
na
na
608
600
590
580
586
577
580
na
na
na
na
na
na
na
Sweden
521
519
519
518
518
517
517
522
522
504
504
507
507
503
503
512
512
498
498
504
488
na
na
na
na
na
na
na
UK
590
600
610
620
630
640
650
660
660
660
660
660
670
670
670
680
680
690
690
698
700
710
na
na
na
na
na
na
5379
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
01
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
682
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
740
na
na
na
na
na
790
na
na
na
na
na
na
760
na
na
na
767
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
313
na
na
na
na
na
na
na
na
na
346
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Germany
Germany
Netherlands
Netherlands
Austria
Austria
France
France
Denmark
Denmark
Sweden
Sweden
Finland
Finland
United Kingdom
United Kingdom
Luxemburg
Luxemburg
Belgium
Belgium
Czech Republic
Czech Republic
Malta
Malta
Greece
Greece
Ireland
Ireland
Poland
Poland
Portugal
Portugal
Italy
Italy
Latvia
Latvia
Cyprus
Cyprus
Spain
Spain
Slovenia
Slovenia
Hungary
Hungary
Lithuania
Lithuania
Bulgaria
Bulgaria
Estonia
Estonia
Romania
Romania
Slovakia
Slovakia
1 Why Rental Housing is Needed 2 Legal Framework 3 Profitability and Risk Taxation Finance and Subsidies 4 Social Rental Housing
2
Ownership is favored by most governments and households (frequent cultural bias) Rental has long been the forgotten sector of housing policies However A functioning rental sector is necessary to address affordability and mobility
challenges Affordability those that do not have enough income savings or whose income is
irregular informal cannot qualify for mortgage installment loans Vibrant rental markets make workersrsquo mobility easier Economies with small rental
sectors tend to face higher migration costs and labor rigidity Housing costs are more easily adapted to housing needs and financial capacity (life-
cycle unemployment) Home-ownership often produces larger urban sprawl Rental is needed for Households with low or irregular income House starters (young) workers students Those experiencing transitional events in their life and those who simply do not
want to own or prefer to own one unit and live elsewhere
3
Is linked to culture history (industrialization urbanization) availability of long-term credit and other housing policy issues (rent controls taxation etc)
Have no link with the wealth of the country (negative correlation)
Tenure distribution in the European Union ()
4
Source Housing Europe
Graph1
Private rental
Social rental
52
5
10
32
17
23
22
17
19
19
17
17
16
16
14
18
28
2
18
6
6
17
16
6
20
0
12
8
8
12
17
3
14
5
15
0
14
0
11
2
5
6
4
4
3
2
0
3
2
1
1
2
1
2
Taux prop
Taux locpriv
Taux locsoc
Feuil3
Feuil5
Feuil2
Feuil7
Feuil7
Housing stock 39 570 000
Feuil1
Housing stock 3 800 000
Feuil4
Housing stock 30 600 000
Feuil6
Housing stock 6 920 000
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Home-owner
Social rental
Private rental
Other
43
6
51
0
Home-owner
Social rental
Private rental
Other
57
21
19
3
Home-owner
Social rental
Private rental
Other
57
17
21
5
Home-owner
Social rental
Private rental
Other
54
35
11
0
Home-owner
Social rental
Private rental
Other
71
19
10
0
Home-owner
Social rental
Private rental
Other
52
19
26
4
Home-owner
Social rental
Private rental
Other
58
15
16
11
Home-owner
Social rental
Private rental
Other
49
18
21
12
Home-owner
Social rental
Private rental
Other
77
5
18
0
Home-owner
Social rental
Private rental
Other
75
3
18
4
Home-owner
Social rental
Private rental
Other
55
19
7
19
Home-owner
Social rental
Private rental
Other
64
1
27
8
Home-owner
Social rental
Private rental
Other
70
10
3
17
No
Yes financed by
Income limits
households under ceiling
Tableau 3 - Parc locatif social selon le statut du proprieacutetaire
AUSTRIA
State Laumlnder
AUSTRIA
YES
Varies with Land
BELGIUM
X
BELGIUM
YES
Varies with Region
(Logements en milliers)
DENMARK
State Cities
DENMARK
NO
COMMUNES ou REGIONS
ORGPUBLICS
SOCPRIVEES
COOP
TOTAL
REGION or CITY
PUBLIC BODIES
PRIVATE COMPANIES
COOP-ERATIVES
FINLAND
State
FRANCE
YES
70
Avec ou sans but lucratif
Profit or non-profit
FRANCE
State Social budget
GERMANY
YES
40
ALLEMAGNE
2444
2444
GERMANY
X
GERMANY
State Laumlnder
ITALY
YES
AUTRICHE
320
436
756
AUSTRIA
X
X
GREECE
X
NETHERLANDS
NO
Can be local
BELGIQUE
266
266
BELGIUM
X
IRELAND
State
PORTUGAL
YES
DANEMARK
43
468
-138
511
DENMARK
x
X
x
ITALY
Region
SWEDEN
NO
ESPAGNE
114
6
120
SPAIN
X
x
LUXEMBURG
X
UNITED KINGDOM
NO
FINLANDE
312
70
-20
392
FINLAND
X
x
x
NETHERLANDS
State
FRANCE
2435
1785
14
4234
FRANCE
X
X
x
PORTUGAL
X
IRLANDE
100
12
112
IRELAND
X
x
SPAIN
X
ITALIE
66+103(Etat)
662
831
ITALY
X
X
SWEDEN
State Cities
LUXEMBOURG
18
13
1
41
NETHERLANDS
X
UNITED KINGDOM
State
PAYS BAS
0
2464
2464
PORTUGAL
X
PORTUGAL
72+50 (Etat)
122
UNITED KINGDOM
X
X
ROYAUNE UNI
4523
1856
6379
SWEDEN
X
X
SUEDE
927
-682
927
0734057971
Source DGUHC
Newly Rented
New Tenancy
Renewal
Lower tax on rental income
Mortgage interest deductible
Costs deductible
Depreciation allowance
Rental losses offset
Free
Other
Free
Reference
Index
Other
Free
Reference
Index
Other
AUSTRIA
N
Y
Y
Y
N
AUSTRIA
Yes (1)
Yes (2)
BELGIUM
Y
Y
Y
Y
BELGIUM
Yes
Yes
Yes
DENMARK
YN (1)
Y
Y
N
Y
DENMARK
Yes
Yes (2)
Yes (2)
FINLAND
Y
N
Y
YN (1)
Y
FINLAND
Yes
Yes
Yes
FRANCE
N
Y (2)
Y
N
Y (2)
FRANCE
Yes (1)
Yes
Yes (3)
Yes
GERMANY
N
Y
Y
Y
Y
GERMANY
Yes (1)
Yes
Yes
IRELAND
N
Y (2)
Y
Y
N
GREECE
Yes
Yes
Yes
NETHERLANDS
N
Y
Y
Y
Y
IRELAND
Yes
Yes
Yes
SPAIN
Y
Y
Y
N
Y
NETHERLANDS
Yes (1)
Yes (2)
Yes
UNITED KINGDOM
N
Y
Y
N
N
PORTUGAL
Yes
UNITED KINGDOM
Yes
Yes
Yes (4)
Yes (4)
(1) Institutions only
(2) With limits
(1) Except for subsidized dwellings
(2) Reasonable rent calculated
(3) If obviously undervalued
(4) Optional
AUSTRIA
DENMARK
FRANCE
50-70 Commercial loan (1)
91 Mortgage loan
74 CDC loan (2)
20-60 Subsidized loan and grants
7 Interest free loan from municipality
3 State subsidy
5-15 Landlords equity
2 Tenants deposit
2 Employers fund subsidy
0-5 Tenants equity
9 Local authorities subsidies
12 Landlords equity
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) CDC State subsidiary multifunctional financial institution funding by short-term tax free deposits on ldquoArdquo booklets
Role
Key features
Countries
Large housing stock under public control
Denmark
WIDE
Universalistic concept of social housing
Netherlands
Linked to housing allowances for the most vulnerable
Sweden
Market-regulating function
Moderate of social housing
Austria Belgium
MEDIUM
Support to the most vulnerable and some middle-income groups
France Germany
Linked to housing allowances
Finland Poland
Small social housing stock (or none)
Greece Italy Portugal
NARROW
Focus on the most vulnerable
Spain United Kingdom
Housing policy focus on home-ownership policies
Hungary Slovakia
Rented from government or social landlords
1
Rented from government or social landlords
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
60
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
230
na
na
na
na
na
na
na
na
na
Denmark
na
na
na
na
na
na
na
na
na
na
na
na
na
na
210
190
200
190
190
200
200
200
na
na
na
na
na
na
Germany
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
120
na
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
30
na
na
na
40
na
na
na
na
na
na
Greece
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Spain
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
France
na
182
182
182
182
182
182
182
183
184
185
187
190
192
192
191
190
189
189
189
na
na
na
na
na
na
na
na
Ireland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
69
69
70
na
na
na
na
na
na
Italy
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
40
50
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
03
na
na
na
na
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
83
78
33
33
31
32
31
30
21
na
na
na
na
na
na
Luxembourg
na
na
na
na
na
na
na
na
na
na
20
na
na
na
na
na
na
na
19
na
na
na
na
na
na
na
na
na
Hungary
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
35
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Netherlands
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
350
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
230
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
130
130
100
na
na
na
na
na
na
na
Portugal
na
na
na
na
na
na
na
na
46
na
na
na
na
na
na
na
na
na
33
na
30
40
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
65
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
221
na
na
na
na
220
210
140
na
150
70
50
60
na
na
na
na
na
na
na
Finland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
150
150
150
150
na
na
na
na
na
na
na
Sweden
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
UK
20
20
20
20
30
30
30
30
30
30
30
40
40
40
50
50
50
60
60
70
70
80
na
na
na
na
na
na
451
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
00
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
21
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Rented from private landlords
1
Rented from private landlords
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
369
na
na
na
na
na
na
na
324
na
na
na
na
324
na
na
na
na
260
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
240
na
na
na
na
na
na
na
na
na
Denmark
na
na
na
na
na
na
na
na
na
na
na
na
na
na
190
220
210
210
210
210
210
210
na
na
na
na
na
na
Germany
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
440
na
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
90
na
na
na
na
na
na
na
na
na
na
Greece
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
203
na
na
na
na
na
na
na
na
na
Spain
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
France
na
296
291
285
278
272
268
268
267
267
266
263
261
258
256
254
252
251
249
249
na
na
na
na
na
na
na
na
Ireland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
110
110
110
na
na
na
na
na
na
Italy
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
160
150
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
357
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
396
na
na
na
na
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Luxembourg
na
na
na
na
na
na
na
na
na
na
310
na
na
na
na
na
na
na
255
na
na
na
na
na
na
na
na
na
Hungary
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
224
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Netherlands
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
108
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
170
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Portugal
na
na
na
na
na
na
na
na
306
na
na
na
na
na
na
na
na
na
210
na
200
200
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
26
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
220
na
na
na
na
200
200
200
na
130
150
120
130
na
na
na
na
na
na
na
Finland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
170
160
160
160
na
na
na
na
na
na
na
Sweden
363
343
343
340
340
341
341
341
341
336
336
338
338
338
338
322
322
327
327
315
315
na
na
na
na
na
na
na
UK
110
110
100
100
90
90
90
90
90
100
100
100
100
100
100
100
100
100
100
100
100
100
na
na
na
na
na
na
620
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
00
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
239
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
600
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Owner occupied
1
Owner occupied
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
608
na
na
na
na
na
na
na
654
na
na
na
na
654
na
na
na
na
680
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
470
na
na
na
na
na
na
na
na
na
Denmark
550
na
na
na
na
na
na
520
na
na
na
na
na
na
520
510
510
510
510
510
510
510
na
na
na
na
na
na
Germany
na
na
430
na
na
na
na
na
na
na
390
na
na
na
na
409
na
na
420
432
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
850
na
na
na
na
na
na
na
na
na
na
Greece
700
na
na
na
na
na
na
na
757
na
na
na
na
na
na
na
78
na
832
na
na
na
na
na
na
na
na
na
Spain
730
na
793
na
na
na
na
na
780
na
na
na
na
na
na
na
na
813
828
828
829
830
na
na
na
na
na
na
France
na
522
527
533
540
546
550
550
550
549
549
550
550
550
552
555
558
560
562
562
na
na
na
na
na
na
na
na
Ireland
740
na
na
na
na
na
na
na
793
na
na
na
na
800
na
na
na
na
na
769
774
770
na
na
na
na
na
na
Italy
650
na
na
na
na
na
na
na
640
na
740
na
650
na
na
660
na
680
800
800
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
643
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
601
na
735
na
830
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
979
na
na
na
na
na
na
Luxembourg
592
na
na
na
na
na
na
na
644
na
670
na
720
na
na
na
na
na
666
na
670
na
na
na
na
na
na
na
Hungary
na
na
750
na
na
na
na
na
na
na
na
na
780
869
na
na
na
920
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
741
na
na
na
na
741
na
na
na
na
na
na
na
na
na
na
Netherlands
420
na
na
na
na
na
na
na
na
na
na
na
na
na
500
508
520
520
531
542
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
500
na
na
na
na
na
na
na
na
na
570
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
550
550
570
na
na
na
na
na
na
na
Portugal
570
na
na
na
na
na
na
na
648
na
na
na
na
na
na
na
na
na
757
na
750
750
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
669
na
na
na
na
na
na
na
na
na
na
822
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
556
na
na
na
na
560
570
650
na
700
760
820
790
na
na
na
na
na
na
na
Finland
650
na
na
na
na
na
na
668
na
na
na
na
na
na
608
600
590
580
586
577
580
na
na
na
na
na
na
na
Sweden
521
519
519
518
518
517
517
522
522
504
504
507
507
503
503
512
512
498
498
504
488
na
na
na
na
na
na
na
UK
590
600
610
620
630
640
650
660
660
660
660
660
670
670
670
680
680
690
690
698
700
710
na
na
na
na
na
na
5379
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
01
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
682
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
740
na
na
na
na
na
790
na
na
na
na
na
na
760
na
na
na
767
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
313
na
na
na
na
na
na
na
na
na
346
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Germany
Germany
Netherlands
Netherlands
Austria
Austria
France
France
Denmark
Denmark
Sweden
Sweden
Finland
Finland
United Kingdom
United Kingdom
Luxemburg
Luxemburg
Belgium
Belgium
Czech Republic
Czech Republic
Malta
Malta
Greece
Greece
Ireland
Ireland
Poland
Poland
Portugal
Portugal
Italy
Italy
Latvia
Latvia
Cyprus
Cyprus
Spain
Spain
Slovenia
Slovenia
Hungary
Hungary
Lithuania
Lithuania
Bulgaria
Bulgaria
Estonia
Estonia
Romania
Romania
Slovakia
Slovakia
Ownership is favored by most governments and households (frequent cultural bias) Rental has long been the forgotten sector of housing policies However A functioning rental sector is necessary to address affordability and mobility
challenges Affordability those that do not have enough income savings or whose income is
irregular informal cannot qualify for mortgage installment loans Vibrant rental markets make workersrsquo mobility easier Economies with small rental
sectors tend to face higher migration costs and labor rigidity Housing costs are more easily adapted to housing needs and financial capacity (life-
cycle unemployment) Home-ownership often produces larger urban sprawl Rental is needed for Households with low or irregular income House starters (young) workers students Those experiencing transitional events in their life and those who simply do not
want to own or prefer to own one unit and live elsewhere
3
Is linked to culture history (industrialization urbanization) availability of long-term credit and other housing policy issues (rent controls taxation etc)
Have no link with the wealth of the country (negative correlation)
Tenure distribution in the European Union ()
4
Source Housing Europe
Graph1
Private rental
Social rental
52
5
10
32
17
23
22
17
19
19
17
17
16
16
14
18
28
2
18
6
6
17
16
6
20
0
12
8
8
12
17
3
14
5
15
0
14
0
11
2
5
6
4
4
3
2
0
3
2
1
1
2
1
2
Taux prop
Taux locpriv
Taux locsoc
Feuil3
Feuil5
Feuil2
Feuil7
Feuil7
Housing stock 39 570 000
Feuil1
Housing stock 3 800 000
Feuil4
Housing stock 30 600 000
Feuil6
Housing stock 6 920 000
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Home-owner
Social rental
Private rental
Other
43
6
51
0
Home-owner
Social rental
Private rental
Other
57
21
19
3
Home-owner
Social rental
Private rental
Other
57
17
21
5
Home-owner
Social rental
Private rental
Other
54
35
11
0
Home-owner
Social rental
Private rental
Other
71
19
10
0
Home-owner
Social rental
Private rental
Other
52
19
26
4
Home-owner
Social rental
Private rental
Other
58
15
16
11
Home-owner
Social rental
Private rental
Other
49
18
21
12
Home-owner
Social rental
Private rental
Other
77
5
18
0
Home-owner
Social rental
Private rental
Other
75
3
18
4
Home-owner
Social rental
Private rental
Other
55
19
7
19
Home-owner
Social rental
Private rental
Other
64
1
27
8
Home-owner
Social rental
Private rental
Other
70
10
3
17
No
Yes financed by
Income limits
households under ceiling
Tableau 3 - Parc locatif social selon le statut du proprieacutetaire
AUSTRIA
State Laumlnder
AUSTRIA
YES
Varies with Land
BELGIUM
X
BELGIUM
YES
Varies with Region
(Logements en milliers)
DENMARK
State Cities
DENMARK
NO
COMMUNES ou REGIONS
ORGPUBLICS
SOCPRIVEES
COOP
TOTAL
REGION or CITY
PUBLIC BODIES
PRIVATE COMPANIES
COOP-ERATIVES
FINLAND
State
FRANCE
YES
70
Avec ou sans but lucratif
Profit or non-profit
FRANCE
State Social budget
GERMANY
YES
40
ALLEMAGNE
2444
2444
GERMANY
X
GERMANY
State Laumlnder
ITALY
YES
AUTRICHE
320
436
756
AUSTRIA
X
X
GREECE
X
NETHERLANDS
NO
Can be local
BELGIQUE
266
266
BELGIUM
X
IRELAND
State
PORTUGAL
YES
DANEMARK
43
468
-138
511
DENMARK
x
X
x
ITALY
Region
SWEDEN
NO
ESPAGNE
114
6
120
SPAIN
X
x
LUXEMBURG
X
UNITED KINGDOM
NO
FINLANDE
312
70
-20
392
FINLAND
X
x
x
NETHERLANDS
State
FRANCE
2435
1785
14
4234
FRANCE
X
X
x
PORTUGAL
X
IRLANDE
100
12
112
IRELAND
X
x
SPAIN
X
ITALIE
66+103(Etat)
662
831
ITALY
X
X
SWEDEN
State Cities
LUXEMBOURG
18
13
1
41
NETHERLANDS
X
UNITED KINGDOM
State
PAYS BAS
0
2464
2464
PORTUGAL
X
PORTUGAL
72+50 (Etat)
122
UNITED KINGDOM
X
X
ROYAUNE UNI
4523
1856
6379
SWEDEN
X
X
SUEDE
927
-682
927
0734057971
Source DGUHC
Newly Rented
New Tenancy
Renewal
Lower tax on rental income
Mortgage interest deductible
Costs deductible
Depreciation allowance
Rental losses offset
Free
Other
Free
Reference
Index
Other
Free
Reference
Index
Other
AUSTRIA
N
Y
Y
Y
N
AUSTRIA
Yes (1)
Yes (2)
BELGIUM
Y
Y
Y
Y
BELGIUM
Yes
Yes
Yes
DENMARK
YN (1)
Y
Y
N
Y
DENMARK
Yes
Yes (2)
Yes (2)
FINLAND
Y
N
Y
YN (1)
Y
FINLAND
Yes
Yes
Yes
FRANCE
N
Y (2)
Y
N
Y (2)
FRANCE
Yes (1)
Yes
Yes (3)
Yes
GERMANY
N
Y
Y
Y
Y
GERMANY
Yes (1)
Yes
Yes
IRELAND
N
Y (2)
Y
Y
N
GREECE
Yes
Yes
Yes
NETHERLANDS
N
Y
Y
Y
Y
IRELAND
Yes
Yes
Yes
SPAIN
Y
Y
Y
N
Y
NETHERLANDS
Yes (1)
Yes (2)
Yes
UNITED KINGDOM
N
Y
Y
N
N
PORTUGAL
Yes
UNITED KINGDOM
Yes
Yes
Yes (4)
Yes (4)
(1) Institutions only
(2) With limits
(1) Except for subsidized dwellings
(2) Reasonable rent calculated
(3) If obviously undervalued
(4) Optional
AUSTRIA
DENMARK
FRANCE
50-70 Commercial loan (1)
91 Mortgage loan
74 CDC loan (2)
20-60 Subsidized loan and grants
7 Interest free loan from municipality
3 State subsidy
5-15 Landlords equity
2 Tenants deposit
2 Employers fund subsidy
0-5 Tenants equity
9 Local authorities subsidies
12 Landlords equity
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) CDC State subsidiary multifunctional financial institution funding by short-term tax free deposits on ldquoArdquo booklets
Role
Key features
Countries
Large housing stock under public control
Denmark
WIDE
Universalistic concept of social housing
Netherlands
Linked to housing allowances for the most vulnerable
Sweden
Market-regulating function
Moderate of social housing
Austria Belgium
MEDIUM
Support to the most vulnerable and some middle-income groups
France Germany
Linked to housing allowances
Finland Poland
Small social housing stock (or none)
Greece Italy Portugal
NARROW
Focus on the most vulnerable
Spain United Kingdom
Housing policy focus on home-ownership policies
Hungary Slovakia
Rented from government or social landlords
1
Rented from government or social landlords
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
60
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
230
na
na
na
na
na
na
na
na
na
Denmark
na
na
na
na
na
na
na
na
na
na
na
na
na
na
210
190
200
190
190
200
200
200
na
na
na
na
na
na
Germany
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
120
na
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
30
na
na
na
40
na
na
na
na
na
na
Greece
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Spain
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
France
na
182
182
182
182
182
182
182
183
184
185
187
190
192
192
191
190
189
189
189
na
na
na
na
na
na
na
na
Ireland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
69
69
70
na
na
na
na
na
na
Italy
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
40
50
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
03
na
na
na
na
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
83
78
33
33
31
32
31
30
21
na
na
na
na
na
na
Luxembourg
na
na
na
na
na
na
na
na
na
na
20
na
na
na
na
na
na
na
19
na
na
na
na
na
na
na
na
na
Hungary
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
35
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Netherlands
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
350
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
230
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
130
130
100
na
na
na
na
na
na
na
Portugal
na
na
na
na
na
na
na
na
46
na
na
na
na
na
na
na
na
na
33
na
30
40
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
65
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
221
na
na
na
na
220
210
140
na
150
70
50
60
na
na
na
na
na
na
na
Finland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
150
150
150
150
na
na
na
na
na
na
na
Sweden
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
UK
20
20
20
20
30
30
30
30
30
30
30
40
40
40
50
50
50
60
60
70
70
80
na
na
na
na
na
na
451
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
00
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
21
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Rented from private landlords
1
Rented from private landlords
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
369
na
na
na
na
na
na
na
324
na
na
na
na
324
na
na
na
na
260
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
240
na
na
na
na
na
na
na
na
na
Denmark
na
na
na
na
na
na
na
na
na
na
na
na
na
na
190
220
210
210
210
210
210
210
na
na
na
na
na
na
Germany
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
440
na
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
90
na
na
na
na
na
na
na
na
na
na
Greece
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
203
na
na
na
na
na
na
na
na
na
Spain
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
France
na
296
291
285
278
272
268
268
267
267
266
263
261
258
256
254
252
251
249
249
na
na
na
na
na
na
na
na
Ireland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
110
110
110
na
na
na
na
na
na
Italy
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
160
150
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
357
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
396
na
na
na
na
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Luxembourg
na
na
na
na
na
na
na
na
na
na
310
na
na
na
na
na
na
na
255
na
na
na
na
na
na
na
na
na
Hungary
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
224
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Netherlands
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
108
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
170
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Portugal
na
na
na
na
na
na
na
na
306
na
na
na
na
na
na
na
na
na
210
na
200
200
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
26
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
220
na
na
na
na
200
200
200
na
130
150
120
130
na
na
na
na
na
na
na
Finland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
170
160
160
160
na
na
na
na
na
na
na
Sweden
363
343
343
340
340
341
341
341
341
336
336
338
338
338
338
322
322
327
327
315
315
na
na
na
na
na
na
na
UK
110
110
100
100
90
90
90
90
90
100
100
100
100
100
100
100
100
100
100
100
100
100
na
na
na
na
na
na
620
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
00
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
239
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
600
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Owner occupied
1
Owner occupied
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
608
na
na
na
na
na
na
na
654
na
na
na
na
654
na
na
na
na
680
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
470
na
na
na
na
na
na
na
na
na
Denmark
550
na
na
na
na
na
na
520
na
na
na
na
na
na
520
510
510
510
510
510
510
510
na
na
na
na
na
na
Germany
na
na
430
na
na
na
na
na
na
na
390
na
na
na
na
409
na
na
420
432
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
850
na
na
na
na
na
na
na
na
na
na
Greece
700
na
na
na
na
na
na
na
757
na
na
na
na
na
na
na
78
na
832
na
na
na
na
na
na
na
na
na
Spain
730
na
793
na
na
na
na
na
780
na
na
na
na
na
na
na
na
813
828
828
829
830
na
na
na
na
na
na
France
na
522
527
533
540
546
550
550
550
549
549
550
550
550
552
555
558
560
562
562
na
na
na
na
na
na
na
na
Ireland
740
na
na
na
na
na
na
na
793
na
na
na
na
800
na
na
na
na
na
769
774
770
na
na
na
na
na
na
Italy
650
na
na
na
na
na
na
na
640
na
740
na
650
na
na
660
na
680
800
800
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
643
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
601
na
735
na
830
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
979
na
na
na
na
na
na
Luxembourg
592
na
na
na
na
na
na
na
644
na
670
na
720
na
na
na
na
na
666
na
670
na
na
na
na
na
na
na
Hungary
na
na
750
na
na
na
na
na
na
na
na
na
780
869
na
na
na
920
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
741
na
na
na
na
741
na
na
na
na
na
na
na
na
na
na
Netherlands
420
na
na
na
na
na
na
na
na
na
na
na
na
na
500
508
520
520
531
542
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
500
na
na
na
na
na
na
na
na
na
570
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
550
550
570
na
na
na
na
na
na
na
Portugal
570
na
na
na
na
na
na
na
648
na
na
na
na
na
na
na
na
na
757
na
750
750
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
669
na
na
na
na
na
na
na
na
na
na
822
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
556
na
na
na
na
560
570
650
na
700
760
820
790
na
na
na
na
na
na
na
Finland
650
na
na
na
na
na
na
668
na
na
na
na
na
na
608
600
590
580
586
577
580
na
na
na
na
na
na
na
Sweden
521
519
519
518
518
517
517
522
522
504
504
507
507
503
503
512
512
498
498
504
488
na
na
na
na
na
na
na
UK
590
600
610
620
630
640
650
660
660
660
660
660
670
670
670
680
680
690
690
698
700
710
na
na
na
na
na
na
5379
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
01
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
682
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
740
na
na
na
na
na
790
na
na
na
na
na
na
760
na
na
na
767
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
313
na
na
na
na
na
na
na
na
na
346
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Germany
Germany
Netherlands
Netherlands
Austria
Austria
France
France
Denmark
Denmark
Sweden
Sweden
Finland
Finland
United Kingdom
United Kingdom
Luxemburg
Luxemburg
Belgium
Belgium
Czech Republic
Czech Republic
Malta
Malta
Greece
Greece
Ireland
Ireland
Poland
Poland
Portugal
Portugal
Italy
Italy
Latvia
Latvia
Cyprus
Cyprus
Spain
Spain
Slovenia
Slovenia
Hungary
Hungary
Lithuania
Lithuania
Bulgaria
Bulgaria
Estonia
Estonia
Romania
Romania
Slovakia
Slovakia
Is linked to culture history (industrialization urbanization) availability of long-term credit and other housing policy issues (rent controls taxation etc)
Have no link with the wealth of the country (negative correlation)
Tenure distribution in the European Union ()
4
Source Housing Europe
Graph1
Private rental
Social rental
52
5
10
32
17
23
22
17
19
19
17
17
16
16
14
18
28
2
18
6
6
17
16
6
20
0
12
8
8
12
17
3
14
5
15
0
14
0
11
2
5
6
4
4
3
2
0
3
2
1
1
2
1
2
Taux prop
Taux locpriv
Taux locsoc
Feuil3
Feuil5
Feuil2
Feuil7
Feuil7
Housing stock 39 570 000
Feuil1
Housing stock 3 800 000
Feuil4
Housing stock 30 600 000
Feuil6
Housing stock 6 920 000
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Home-owner
Social rental
Private rental
Other
43
6
51
0
Home-owner
Social rental
Private rental
Other
57
21
19
3
Home-owner
Social rental
Private rental
Other
57
17
21
5
Home-owner
Social rental
Private rental
Other
54
35
11
0
Home-owner
Social rental
Private rental
Other
71
19
10
0
Home-owner
Social rental
Private rental
Other
52
19
26
4
Home-owner
Social rental
Private rental
Other
58
15
16
11
Home-owner
Social rental
Private rental
Other
49
18
21
12
Home-owner
Social rental
Private rental
Other
77
5
18
0
Home-owner
Social rental
Private rental
Other
75
3
18
4
Home-owner
Social rental
Private rental
Other
55
19
7
19
Home-owner
Social rental
Private rental
Other
64
1
27
8
Home-owner
Social rental
Private rental
Other
70
10
3
17
No
Yes financed by
Income limits
households under ceiling
Tableau 3 - Parc locatif social selon le statut du proprieacutetaire
AUSTRIA
State Laumlnder
AUSTRIA
YES
Varies with Land
BELGIUM
X
BELGIUM
YES
Varies with Region
(Logements en milliers)
DENMARK
State Cities
DENMARK
NO
COMMUNES ou REGIONS
ORGPUBLICS
SOCPRIVEES
COOP
TOTAL
REGION or CITY
PUBLIC BODIES
PRIVATE COMPANIES
COOP-ERATIVES
FINLAND
State
FRANCE
YES
70
Avec ou sans but lucratif
Profit or non-profit
FRANCE
State Social budget
GERMANY
YES
40
ALLEMAGNE
2444
2444
GERMANY
X
GERMANY
State Laumlnder
ITALY
YES
AUTRICHE
320
436
756
AUSTRIA
X
X
GREECE
X
NETHERLANDS
NO
Can be local
BELGIQUE
266
266
BELGIUM
X
IRELAND
State
PORTUGAL
YES
DANEMARK
43
468
-138
511
DENMARK
x
X
x
ITALY
Region
SWEDEN
NO
ESPAGNE
114
6
120
SPAIN
X
x
LUXEMBURG
X
UNITED KINGDOM
NO
FINLANDE
312
70
-20
392
FINLAND
X
x
x
NETHERLANDS
State
FRANCE
2435
1785
14
4234
FRANCE
X
X
x
PORTUGAL
X
IRLANDE
100
12
112
IRELAND
X
x
SPAIN
X
ITALIE
66+103(Etat)
662
831
ITALY
X
X
SWEDEN
State Cities
LUXEMBOURG
18
13
1
41
NETHERLANDS
X
UNITED KINGDOM
State
PAYS BAS
0
2464
2464
PORTUGAL
X
PORTUGAL
72+50 (Etat)
122
UNITED KINGDOM
X
X
ROYAUNE UNI
4523
1856
6379
SWEDEN
X
X
SUEDE
927
-682
927
0734057971
Source DGUHC
Newly Rented
New Tenancy
Renewal
Lower tax on rental income
Mortgage interest deductible
Costs deductible
Depreciation allowance
Rental losses offset
Free
Other
Free
Reference
Index
Other
Free
Reference
Index
Other
AUSTRIA
N
Y
Y
Y
N
AUSTRIA
Yes (1)
Yes (2)
BELGIUM
Y
Y
Y
Y
BELGIUM
Yes
Yes
Yes
DENMARK
YN (1)
Y
Y
N
Y
DENMARK
Yes
Yes (2)
Yes (2)
FINLAND
Y
N
Y
YN (1)
Y
FINLAND
Yes
Yes
Yes
FRANCE
N
Y (2)
Y
N
Y (2)
FRANCE
Yes (1)
Yes
Yes (3)
Yes
GERMANY
N
Y
Y
Y
Y
GERMANY
Yes (1)
Yes
Yes
IRELAND
N
Y (2)
Y
Y
N
GREECE
Yes
Yes
Yes
NETHERLANDS
N
Y
Y
Y
Y
IRELAND
Yes
Yes
Yes
SPAIN
Y
Y
Y
N
Y
NETHERLANDS
Yes (1)
Yes (2)
Yes
UNITED KINGDOM
N
Y
Y
N
N
PORTUGAL
Yes
UNITED KINGDOM
Yes
Yes
Yes (4)
Yes (4)
(1) Institutions only
(2) With limits
(1) Except for subsidized dwellings
(2) Reasonable rent calculated
(3) If obviously undervalued
(4) Optional
AUSTRIA
DENMARK
FRANCE
50-70 Commercial loan (1)
91 Mortgage loan
74 CDC loan (2)
20-60 Subsidized loan and grants
7 Interest free loan from municipality
3 State subsidy
5-15 Landlords equity
2 Tenants deposit
2 Employers fund subsidy
0-5 Tenants equity
9 Local authorities subsidies
12 Landlords equity
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) CDC State subsidiary multifunctional financial institution funding by short-term tax free deposits on ldquoArdquo booklets
Role
Key features
Countries
Large housing stock under public control
Denmark
WIDE
Universalistic concept of social housing
Netherlands
Linked to housing allowances for the most vulnerable
Sweden
Market-regulating function
Moderate of social housing
Austria Belgium
MEDIUM
Support to the most vulnerable and some middle-income groups
France Germany
Linked to housing allowances
Finland Poland
Small social housing stock (or none)
Greece Italy Portugal
NARROW
Focus on the most vulnerable
Spain United Kingdom
Housing policy focus on home-ownership policies
Hungary Slovakia
Rented from government or social landlords
1
Rented from government or social landlords
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
60
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
230
na
na
na
na
na
na
na
na
na
Denmark
na
na
na
na
na
na
na
na
na
na
na
na
na
na
210
190
200
190
190
200
200
200
na
na
na
na
na
na
Germany
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
120
na
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
30
na
na
na
40
na
na
na
na
na
na
Greece
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Spain
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
France
na
182
182
182
182
182
182
182
183
184
185
187
190
192
192
191
190
189
189
189
na
na
na
na
na
na
na
na
Ireland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
69
69
70
na
na
na
na
na
na
Italy
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
40
50
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
03
na
na
na
na
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
83
78
33
33
31
32
31
30
21
na
na
na
na
na
na
Luxembourg
na
na
na
na
na
na
na
na
na
na
20
na
na
na
na
na
na
na
19
na
na
na
na
na
na
na
na
na
Hungary
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
35
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Netherlands
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
350
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
230
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
130
130
100
na
na
na
na
na
na
na
Portugal
na
na
na
na
na
na
na
na
46
na
na
na
na
na
na
na
na
na
33
na
30
40
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
65
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
221
na
na
na
na
220
210
140
na
150
70
50
60
na
na
na
na
na
na
na
Finland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
150
150
150
150
na
na
na
na
na
na
na
Sweden
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
UK
20
20
20
20
30
30
30
30
30
30
30
40
40
40
50
50
50
60
60
70
70
80
na
na
na
na
na
na
451
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
00
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
21
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Rented from private landlords
1
Rented from private landlords
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
369
na
na
na
na
na
na
na
324
na
na
na
na
324
na
na
na
na
260
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
240
na
na
na
na
na
na
na
na
na
Denmark
na
na
na
na
na
na
na
na
na
na
na
na
na
na
190
220
210
210
210
210
210
210
na
na
na
na
na
na
Germany
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
440
na
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
90
na
na
na
na
na
na
na
na
na
na
Greece
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
203
na
na
na
na
na
na
na
na
na
Spain
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
France
na
296
291
285
278
272
268
268
267
267
266
263
261
258
256
254
252
251
249
249
na
na
na
na
na
na
na
na
Ireland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
110
110
110
na
na
na
na
na
na
Italy
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
160
150
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
357
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
396
na
na
na
na
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Luxembourg
na
na
na
na
na
na
na
na
na
na
310
na
na
na
na
na
na
na
255
na
na
na
na
na
na
na
na
na
Hungary
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
224
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Netherlands
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
108
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
170
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Portugal
na
na
na
na
na
na
na
na
306
na
na
na
na
na
na
na
na
na
210
na
200
200
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
26
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
220
na
na
na
na
200
200
200
na
130
150
120
130
na
na
na
na
na
na
na
Finland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
170
160
160
160
na
na
na
na
na
na
na
Sweden
363
343
343
340
340
341
341
341
341
336
336
338
338
338
338
322
322
327
327
315
315
na
na
na
na
na
na
na
UK
110
110
100
100
90
90
90
90
90
100
100
100
100
100
100
100
100
100
100
100
100
100
na
na
na
na
na
na
620
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
00
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
239
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
600
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Owner occupied
1
Owner occupied
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
608
na
na
na
na
na
na
na
654
na
na
na
na
654
na
na
na
na
680
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
470
na
na
na
na
na
na
na
na
na
Denmark
550
na
na
na
na
na
na
520
na
na
na
na
na
na
520
510
510
510
510
510
510
510
na
na
na
na
na
na
Germany
na
na
430
na
na
na
na
na
na
na
390
na
na
na
na
409
na
na
420
432
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
850
na
na
na
na
na
na
na
na
na
na
Greece
700
na
na
na
na
na
na
na
757
na
na
na
na
na
na
na
78
na
832
na
na
na
na
na
na
na
na
na
Spain
730
na
793
na
na
na
na
na
780
na
na
na
na
na
na
na
na
813
828
828
829
830
na
na
na
na
na
na
France
na
522
527
533
540
546
550
550
550
549
549
550
550
550
552
555
558
560
562
562
na
na
na
na
na
na
na
na
Ireland
740
na
na
na
na
na
na
na
793
na
na
na
na
800
na
na
na
na
na
769
774
770
na
na
na
na
na
na
Italy
650
na
na
na
na
na
na
na
640
na
740
na
650
na
na
660
na
680
800
800
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
643
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
601
na
735
na
830
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
979
na
na
na
na
na
na
Luxembourg
592
na
na
na
na
na
na
na
644
na
670
na
720
na
na
na
na
na
666
na
670
na
na
na
na
na
na
na
Hungary
na
na
750
na
na
na
na
na
na
na
na
na
780
869
na
na
na
920
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
741
na
na
na
na
741
na
na
na
na
na
na
na
na
na
na
Netherlands
420
na
na
na
na
na
na
na
na
na
na
na
na
na
500
508
520
520
531
542
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
500
na
na
na
na
na
na
na
na
na
570
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
550
550
570
na
na
na
na
na
na
na
Portugal
570
na
na
na
na
na
na
na
648
na
na
na
na
na
na
na
na
na
757
na
750
750
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
669
na
na
na
na
na
na
na
na
na
na
822
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
556
na
na
na
na
560
570
650
na
700
760
820
790
na
na
na
na
na
na
na
Finland
650
na
na
na
na
na
na
668
na
na
na
na
na
na
608
600
590
580
586
577
580
na
na
na
na
na
na
na
Sweden
521
519
519
518
518
517
517
522
522
504
504
507
507
503
503
512
512
498
498
504
488
na
na
na
na
na
na
na
UK
590
600
610
620
630
640
650
660
660
660
660
660
670
670
670
680
680
690
690
698
700
710
na
na
na
na
na
na
5379
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
01
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
682
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
740
na
na
na
na
na
790
na
na
na
na
na
na
760
na
na
na
767
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
313
na
na
na
na
na
na
na
na
na
346
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Germany
Germany
Netherlands
Netherlands
Austria
Austria
France
France
Denmark
Denmark
Sweden
Sweden
Finland
Finland
United Kingdom
United Kingdom
Luxemburg
Luxemburg
Belgium
Belgium
Czech Republic
Czech Republic
Malta
Malta
Greece
Greece
Ireland
Ireland
Poland
Poland
Portugal
Portugal
Italy
Italy
Latvia
Latvia
Cyprus
Cyprus
Spain
Spain
Slovenia
Slovenia
Hungary
Hungary
Lithuania
Lithuania
Bulgaria
Bulgaria
Estonia
Estonia
Romania
Romania
Slovakia
Slovakia
Graph1
Private rental
Social rental
52
5
10
32
17
23
22
17
19
19
17
17
16
16
14
18
28
2
18
6
6
17
16
6
20
0
12
8
8
12
17
3
14
5
15
0
14
0
11
2
5
6
4
4
3
2
0
3
2
1
1
2
1
2
Taux prop
Taux locpriv
Taux locsoc
Feuil3
Feuil5
Feuil2
Feuil7
Feuil7
Housing stock 39 570 000
Feuil1
Housing stock 3 800 000
Feuil4
Housing stock 30 600 000
Feuil6
Housing stock 6 920 000
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Home-owner
Social rental
Private rental
Other
43
6
51
0
Home-owner
Social rental
Private rental
Other
57
21
19
3
Home-owner
Social rental
Private rental
Other
57
17
21
5
Home-owner
Social rental
Private rental
Other
54
35
11
0
Home-owner
Social rental
Private rental
Other
71
19
10
0
Home-owner
Social rental
Private rental
Other
52
19
26
4
Home-owner
Social rental
Private rental
Other
58
15
16
11
Home-owner
Social rental
Private rental
Other
49
18
21
12
Home-owner
Social rental
Private rental
Other
77
5
18
0
Home-owner
Social rental
Private rental
Other
75
3
18
4
Home-owner
Social rental
Private rental
Other
55
19
7
19
Home-owner
Social rental
Private rental
Other
64
1
27
8
Home-owner
Social rental
Private rental
Other
70
10
3
17
No
Yes financed by
Income limits
households under ceiling
Tableau 3 - Parc locatif social selon le statut du proprieacutetaire
AUSTRIA
State Laumlnder
AUSTRIA
YES
Varies with Land
BELGIUM
X
BELGIUM
YES
Varies with Region
(Logements en milliers)
DENMARK
State Cities
DENMARK
NO
COMMUNES ou REGIONS
ORGPUBLICS
SOCPRIVEES
COOP
TOTAL
REGION or CITY
PUBLIC BODIES
PRIVATE COMPANIES
COOP-ERATIVES
FINLAND
State
FRANCE
YES
70
Avec ou sans but lucratif
Profit or non-profit
FRANCE
State Social budget
GERMANY
YES
40
ALLEMAGNE
2444
2444
GERMANY
X
GERMANY
State Laumlnder
ITALY
YES
AUTRICHE
320
436
756
AUSTRIA
X
X
GREECE
X
NETHERLANDS
NO
Can be local
BELGIQUE
266
266
BELGIUM
X
IRELAND
State
PORTUGAL
YES
DANEMARK
43
468
-138
511
DENMARK
x
X
x
ITALY
Region
SWEDEN
NO
ESPAGNE
114
6
120
SPAIN
X
x
LUXEMBURG
X
UNITED KINGDOM
NO
FINLANDE
312
70
-20
392
FINLAND
X
x
x
NETHERLANDS
State
FRANCE
2435
1785
14
4234
FRANCE
X
X
x
PORTUGAL
X
IRLANDE
100
12
112
IRELAND
X
x
SPAIN
X
ITALIE
66+103(Etat)
662
831
ITALY
X
X
SWEDEN
State Cities
LUXEMBOURG
18
13
1
41
NETHERLANDS
X
UNITED KINGDOM
State
PAYS BAS
0
2464
2464
PORTUGAL
X
PORTUGAL
72+50 (Etat)
122
UNITED KINGDOM
X
X
ROYAUNE UNI
4523
1856
6379
SWEDEN
X
X
SUEDE
927
-682
927
0734057971
Source DGUHC
Newly Rented
New Tenancy
Renewal
Lower tax on rental income
Mortgage interest deductible
Costs deductible
Depreciation allowance
Rental losses offset
Free
Other
Free
Reference
Index
Other
Free
Reference
Index
Other
AUSTRIA
N
Y
Y
Y
N
AUSTRIA
Yes (1)
Yes (2)
BELGIUM
Y
Y
Y
Y
BELGIUM
Yes
Yes
Yes
DENMARK
YN (1)
Y
Y
N
Y
DENMARK
Yes
Yes (2)
Yes (2)
FINLAND
Y
N
Y
YN (1)
Y
FINLAND
Yes
Yes
Yes
FRANCE
N
Y (2)
Y
N
Y (2)
FRANCE
Yes (1)
Yes
Yes (3)
Yes
GERMANY
N
Y
Y
Y
Y
GERMANY
Yes (1)
Yes
Yes
IRELAND
N
Y (2)
Y
Y
N
GREECE
Yes
Yes
Yes
NETHERLANDS
N
Y
Y
Y
Y
IRELAND
Yes
Yes
Yes
SPAIN
Y
Y
Y
N
Y
NETHERLANDS
Yes (1)
Yes (2)
Yes
UNITED KINGDOM
N
Y
Y
N
N
PORTUGAL
Yes
UNITED KINGDOM
Yes
Yes
Yes (4)
Yes (4)
(1) Institutions only
(2) With limits
(1) Except for subsidized dwellings
(2) Reasonable rent calculated
(3) If obviously undervalued
(4) Optional
AUSTRIA
DENMARK
FRANCE
50-70 Commercial loan (1)
91 Mortgage loan
74 CDC loan (2)
20-60 Subsidized loan and grants
7 Interest free loan from municipality
3 State subsidy
5-15 Landlords equity
2 Tenants deposit
2 Employers fund subsidy
0-5 Tenants equity
9 Local authorities subsidies
12 Landlords equity
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) CDC State subsidiary multifunctional financial institution funding by short-term tax free deposits on ldquoArdquo booklets
Role
Key features
Countries
Large housing stock under public control
Denmark
WIDE
Universalistic concept of social housing
Netherlands
Linked to housing allowances for the most vulnerable
Sweden
Market-regulating function
Moderate of social housing
Austria Belgium
MEDIUM
Support to the most vulnerable and some middle-income groups
France Germany
Linked to housing allowances
Finland Poland
Small social housing stock (or none)
Greece Italy Portugal
NARROW
Focus on the most vulnerable
Spain United Kingdom
Housing policy focus on home-ownership policies
Hungary Slovakia
Rented from government or social landlords
1
Rented from government or social landlords
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
60
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
230
na
na
na
na
na
na
na
na
na
Denmark
na
na
na
na
na
na
na
na
na
na
na
na
na
na
210
190
200
190
190
200
200
200
na
na
na
na
na
na
Germany
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
120
na
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
30
na
na
na
40
na
na
na
na
na
na
Greece
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Spain
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
France
na
182
182
182
182
182
182
182
183
184
185
187
190
192
192
191
190
189
189
189
na
na
na
na
na
na
na
na
Ireland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
69
69
70
na
na
na
na
na
na
Italy
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
40
50
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
03
na
na
na
na
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
83
78
33
33
31
32
31
30
21
na
na
na
na
na
na
Luxembourg
na
na
na
na
na
na
na
na
na
na
20
na
na
na
na
na
na
na
19
na
na
na
na
na
na
na
na
na
Hungary
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
35
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Netherlands
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
350
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
230
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
130
130
100
na
na
na
na
na
na
na
Portugal
na
na
na
na
na
na
na
na
46
na
na
na
na
na
na
na
na
na
33
na
30
40
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
65
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
221
na
na
na
na
220
210
140
na
150
70
50
60
na
na
na
na
na
na
na
Finland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
150
150
150
150
na
na
na
na
na
na
na
Sweden
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
UK
20
20
20
20
30
30
30
30
30
30
30
40
40
40
50
50
50
60
60
70
70
80
na
na
na
na
na
na
451
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
00
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
21
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Rented from private landlords
1
Rented from private landlords
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
369
na
na
na
na
na
na
na
324
na
na
na
na
324
na
na
na
na
260
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
240
na
na
na
na
na
na
na
na
na
Denmark
na
na
na
na
na
na
na
na
na
na
na
na
na
na
190
220
210
210
210
210
210
210
na
na
na
na
na
na
Germany
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
440
na
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
90
na
na
na
na
na
na
na
na
na
na
Greece
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
203
na
na
na
na
na
na
na
na
na
Spain
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
France
na
296
291
285
278
272
268
268
267
267
266
263
261
258
256
254
252
251
249
249
na
na
na
na
na
na
na
na
Ireland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
110
110
110
na
na
na
na
na
na
Italy
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
160
150
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
357
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
396
na
na
na
na
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Luxembourg
na
na
na
na
na
na
na
na
na
na
310
na
na
na
na
na
na
na
255
na
na
na
na
na
na
na
na
na
Hungary
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
224
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Netherlands
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
108
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
170
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Portugal
na
na
na
na
na
na
na
na
306
na
na
na
na
na
na
na
na
na
210
na
200
200
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
26
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
220
na
na
na
na
200
200
200
na
130
150
120
130
na
na
na
na
na
na
na
Finland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
170
160
160
160
na
na
na
na
na
na
na
Sweden
363
343
343
340
340
341
341
341
341
336
336
338
338
338
338
322
322
327
327
315
315
na
na
na
na
na
na
na
UK
110
110
100
100
90
90
90
90
90
100
100
100
100
100
100
100
100
100
100
100
100
100
na
na
na
na
na
na
620
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
00
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
239
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
600
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Owner occupied
1
Owner occupied
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
608
na
na
na
na
na
na
na
654
na
na
na
na
654
na
na
na
na
680
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
470
na
na
na
na
na
na
na
na
na
Denmark
550
na
na
na
na
na
na
520
na
na
na
na
na
na
520
510
510
510
510
510
510
510
na
na
na
na
na
na
Germany
na
na
430
na
na
na
na
na
na
na
390
na
na
na
na
409
na
na
420
432
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
850
na
na
na
na
na
na
na
na
na
na
Greece
700
na
na
na
na
na
na
na
757
na
na
na
na
na
na
na
78
na
832
na
na
na
na
na
na
na
na
na
Spain
730
na
793
na
na
na
na
na
780
na
na
na
na
na
na
na
na
813
828
828
829
830
na
na
na
na
na
na
France
na
522
527
533
540
546
550
550
550
549
549
550
550
550
552
555
558
560
562
562
na
na
na
na
na
na
na
na
Ireland
740
na
na
na
na
na
na
na
793
na
na
na
na
800
na
na
na
na
na
769
774
770
na
na
na
na
na
na
Italy
650
na
na
na
na
na
na
na
640
na
740
na
650
na
na
660
na
680
800
800
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
643
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
601
na
735
na
830
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
979
na
na
na
na
na
na
Luxembourg
592
na
na
na
na
na
na
na
644
na
670
na
720
na
na
na
na
na
666
na
670
na
na
na
na
na
na
na
Hungary
na
na
750
na
na
na
na
na
na
na
na
na
780
869
na
na
na
920
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
741
na
na
na
na
741
na
na
na
na
na
na
na
na
na
na
Netherlands
420
na
na
na
na
na
na
na
na
na
na
na
na
na
500
508
520
520
531
542
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
500
na
na
na
na
na
na
na
na
na
570
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
550
550
570
na
na
na
na
na
na
na
Portugal
570
na
na
na
na
na
na
na
648
na
na
na
na
na
na
na
na
na
757
na
750
750
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
669
na
na
na
na
na
na
na
na
na
na
822
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
556
na
na
na
na
560
570
650
na
700
760
820
790
na
na
na
na
na
na
na
Finland
650
na
na
na
na
na
na
668
na
na
na
na
na
na
608
600
590
580
586
577
580
na
na
na
na
na
na
na
Sweden
521
519
519
518
518
517
517
522
522
504
504
507
507
503
503
512
512
498
498
504
488
na
na
na
na
na
na
na
UK
590
600
610
620
630
640
650
660
660
660
660
660
670
670
670
680
680
690
690
698
700
710
na
na
na
na
na
na
5379
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
01
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
682
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
740
na
na
na
na
na
790
na
na
na
na
na
na
760
na
na
na
767
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
313
na
na
na
na
na
na
na
na
na
346
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Germany
Germany
Netherlands
Netherlands
Austria
Austria
France
France
Denmark
Denmark
Sweden
Sweden
Finland
Finland
United Kingdom
United Kingdom
Luxemburg
Luxemburg
Belgium
Belgium
Czech Republic
Czech Republic
Malta
Malta
Greece
Greece
Ireland
Ireland
Poland
Poland
Portugal
Portugal
Italy
Italy
Latvia
Latvia
Cyprus
Cyprus
Spain
Spain
Slovenia
Slovenia
Hungary
Hungary
Lithuania
Lithuania
Bulgaria
Bulgaria
Estonia
Estonia
Romania
Romania
Slovakia
Slovakia
Taux prop
Taux locpriv
Taux locsoc
Feuil3
Feuil5
Feuil2
Feuil7
Feuil7
Housing stock 39 570 000
Feuil1
Housing stock 3 800 000
Feuil4
Housing stock 30 600 000
Feuil6
Housing stock 6 920 000
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Home-owner
Social rental
Private rental
Other
43
6
51
0
Home-owner
Social rental
Private rental
Other
57
21
19
3
Home-owner
Social rental
Private rental
Other
57
17
21
5
Home-owner
Social rental
Private rental
Other
54
35
11
0
Home-owner
Social rental
Private rental
Other
71
19
10
0
Home-owner
Social rental
Private rental
Other
52
19
26
4
Home-owner
Social rental
Private rental
Other
58
15
16
11
Home-owner
Social rental
Private rental
Other
49
18
21
12
Home-owner
Social rental
Private rental
Other
77
5
18
0
Home-owner
Social rental
Private rental
Other
75
3
18
4
Home-owner
Social rental
Private rental
Other
55
19
7
19
Home-owner
Social rental
Private rental
Other
64
1
27
8
Home-owner
Social rental
Private rental
Other
70
10
3
17
No
Yes financed by
Income limits
households under ceiling
Tableau 3 - Parc locatif social selon le statut du proprieacutetaire
AUSTRIA
State Laumlnder
AUSTRIA
YES
Varies with Land
BELGIUM
X
BELGIUM
YES
Varies with Region
(Logements en milliers)
DENMARK
State Cities
DENMARK
NO
COMMUNES ou REGIONS
ORGPUBLICS
SOCPRIVEES
COOP
TOTAL
REGION or CITY
PUBLIC BODIES
PRIVATE COMPANIES
COOP-ERATIVES
FINLAND
State
FRANCE
YES
70
Avec ou sans but lucratif
Profit or non-profit
FRANCE
State Social budget
GERMANY
YES
40
ALLEMAGNE
2444
2444
GERMANY
X
GERMANY
State Laumlnder
ITALY
YES
AUTRICHE
320
436
756
AUSTRIA
X
X
GREECE
X
NETHERLANDS
NO
Can be local
BELGIQUE
266
266
BELGIUM
X
IRELAND
State
PORTUGAL
YES
DANEMARK
43
468
-138
511
DENMARK
x
X
x
ITALY
Region
SWEDEN
NO
ESPAGNE
114
6
120
SPAIN
X
x
LUXEMBURG
X
UNITED KINGDOM
NO
FINLANDE
312
70
-20
392
FINLAND
X
x
x
NETHERLANDS
State
FRANCE
2435
1785
14
4234
FRANCE
X
X
x
PORTUGAL
X
IRLANDE
100
12
112
IRELAND
X
x
SPAIN
X
ITALIE
66+103(Etat)
662
831
ITALY
X
X
SWEDEN
State Cities
LUXEMBOURG
18
13
1
41
NETHERLANDS
X
UNITED KINGDOM
State
PAYS BAS
0
2464
2464
PORTUGAL
X
PORTUGAL
72+50 (Etat)
122
UNITED KINGDOM
X
X
ROYAUNE UNI
4523
1856
6379
SWEDEN
X
X
SUEDE
927
-682
927
0734057971
Source DGUHC
Newly Rented
New Tenancy
Renewal
Lower tax on rental income
Mortgage interest deductible
Costs deductible
Depreciation allowance
Rental losses offset
Free
Other
Free
Reference
Index
Other
Free
Reference
Index
Other
AUSTRIA
N
Y
Y
Y
N
AUSTRIA
Yes (1)
Yes (2)
BELGIUM
Y
Y
Y
Y
BELGIUM
Yes
Yes
Yes
DENMARK
YN (1)
Y
Y
N
Y
DENMARK
Yes
Yes (2)
Yes (2)
FINLAND
Y
N
Y
YN (1)
Y
FINLAND
Yes
Yes
Yes
FRANCE
N
Y (2)
Y
N
Y (2)
FRANCE
Yes (1)
Yes
Yes (3)
Yes
GERMANY
N
Y
Y
Y
Y
GERMANY
Yes (1)
Yes
Yes
IRELAND
N
Y (2)
Y
Y
N
GREECE
Yes
Yes
Yes
NETHERLANDS
N
Y
Y
Y
Y
IRELAND
Yes
Yes
Yes
SPAIN
Y
Y
Y
N
Y
NETHERLANDS
Yes (1)
Yes (2)
Yes
UNITED KINGDOM
N
Y
Y
N
N
PORTUGAL
Yes
UNITED KINGDOM
Yes
Yes
Yes (4)
Yes (4)
(1) Institutions only
(2) With limits
(1) Except for subsidized dwellings
(2) Reasonable rent calculated
(3) If obviously undervalued
(4) Optional
AUSTRIA
DENMARK
FRANCE
50-70 Commercial loan (1)
91 Mortgage loan
74 CDC loan (2)
20-60 Subsidized loan and grants
7 Interest free loan from municipality
3 State subsidy
5-15 Landlords equity
2 Tenants deposit
2 Employers fund subsidy
0-5 Tenants equity
9 Local authorities subsidies
12 Landlords equity
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) CDC State subsidiary multifunctional financial institution funding by short-term tax free deposits on ldquoArdquo booklets
Role
Key features
Countries
Large housing stock under public control
Denmark
WIDE
Universalistic concept of social housing
Netherlands
Linked to housing allowances for the most vulnerable
Sweden
Market-regulating function
Moderate of social housing
Austria Belgium
MEDIUM
Support to the most vulnerable and some middle-income groups
France Germany
Linked to housing allowances
Finland Poland
Small social housing stock (or none)
Greece Italy Portugal
NARROW
Focus on the most vulnerable
Spain United Kingdom
Housing policy focus on home-ownership policies
Hungary Slovakia
Rented from government or social landlords
1
Rented from government or social landlords
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
60
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
230
na
na
na
na
na
na
na
na
na
Denmark
na
na
na
na
na
na
na
na
na
na
na
na
na
na
210
190
200
190
190
200
200
200
na
na
na
na
na
na
Germany
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
120
na
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
30
na
na
na
40
na
na
na
na
na
na
Greece
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Spain
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
France
na
182
182
182
182
182
182
182
183
184
185
187
190
192
192
191
190
189
189
189
na
na
na
na
na
na
na
na
Ireland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
69
69
70
na
na
na
na
na
na
Italy
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
40
50
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
03
na
na
na
na
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
83
78
33
33
31
32
31
30
21
na
na
na
na
na
na
Luxembourg
na
na
na
na
na
na
na
na
na
na
20
na
na
na
na
na
na
na
19
na
na
na
na
na
na
na
na
na
Hungary
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
35
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Netherlands
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
350
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
230
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
130
130
100
na
na
na
na
na
na
na
Portugal
na
na
na
na
na
na
na
na
46
na
na
na
na
na
na
na
na
na
33
na
30
40
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
65
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
221
na
na
na
na
220
210
140
na
150
70
50
60
na
na
na
na
na
na
na
Finland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
150
150
150
150
na
na
na
na
na
na
na
Sweden
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
UK
20
20
20
20
30
30
30
30
30
30
30
40
40
40
50
50
50
60
60
70
70
80
na
na
na
na
na
na
451
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
00
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
21
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Rented from private landlords
1
Rented from private landlords
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
369
na
na
na
na
na
na
na
324
na
na
na
na
324
na
na
na
na
260
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
240
na
na
na
na
na
na
na
na
na
Denmark
na
na
na
na
na
na
na
na
na
na
na
na
na
na
190
220
210
210
210
210
210
210
na
na
na
na
na
na
Germany
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
440
na
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
90
na
na
na
na
na
na
na
na
na
na
Greece
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
203
na
na
na
na
na
na
na
na
na
Spain
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
France
na
296
291
285
278
272
268
268
267
267
266
263
261
258
256
254
252
251
249
249
na
na
na
na
na
na
na
na
Ireland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
110
110
110
na
na
na
na
na
na
Italy
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
160
150
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
357
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
396
na
na
na
na
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Luxembourg
na
na
na
na
na
na
na
na
na
na
310
na
na
na
na
na
na
na
255
na
na
na
na
na
na
na
na
na
Hungary
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
224
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Netherlands
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
108
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
170
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Portugal
na
na
na
na
na
na
na
na
306
na
na
na
na
na
na
na
na
na
210
na
200
200
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
26
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
220
na
na
na
na
200
200
200
na
130
150
120
130
na
na
na
na
na
na
na
Finland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
170
160
160
160
na
na
na
na
na
na
na
Sweden
363
343
343
340
340
341
341
341
341
336
336
338
338
338
338
322
322
327
327
315
315
na
na
na
na
na
na
na
UK
110
110
100
100
90
90
90
90
90
100
100
100
100
100
100
100
100
100
100
100
100
100
na
na
na
na
na
na
620
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
00
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
239
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
600
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Owner occupied
1
Owner occupied
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
608
na
na
na
na
na
na
na
654
na
na
na
na
654
na
na
na
na
680
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
470
na
na
na
na
na
na
na
na
na
Denmark
550
na
na
na
na
na
na
520
na
na
na
na
na
na
520
510
510
510
510
510
510
510
na
na
na
na
na
na
Germany
na
na
430
na
na
na
na
na
na
na
390
na
na
na
na
409
na
na
420
432
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
850
na
na
na
na
na
na
na
na
na
na
Greece
700
na
na
na
na
na
na
na
757
na
na
na
na
na
na
na
78
na
832
na
na
na
na
na
na
na
na
na
Spain
730
na
793
na
na
na
na
na
780
na
na
na
na
na
na
na
na
813
828
828
829
830
na
na
na
na
na
na
France
na
522
527
533
540
546
550
550
550
549
549
550
550
550
552
555
558
560
562
562
na
na
na
na
na
na
na
na
Ireland
740
na
na
na
na
na
na
na
793
na
na
na
na
800
na
na
na
na
na
769
774
770
na
na
na
na
na
na
Italy
650
na
na
na
na
na
na
na
640
na
740
na
650
na
na
660
na
680
800
800
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
643
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
601
na
735
na
830
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
979
na
na
na
na
na
na
Luxembourg
592
na
na
na
na
na
na
na
644
na
670
na
720
na
na
na
na
na
666
na
670
na
na
na
na
na
na
na
Hungary
na
na
750
na
na
na
na
na
na
na
na
na
780
869
na
na
na
920
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
741
na
na
na
na
741
na
na
na
na
na
na
na
na
na
na
Netherlands
420
na
na
na
na
na
na
na
na
na
na
na
na
na
500
508
520
520
531
542
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
500
na
na
na
na
na
na
na
na
na
570
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
550
550
570
na
na
na
na
na
na
na
Portugal
570
na
na
na
na
na
na
na
648
na
na
na
na
na
na
na
na
na
757
na
750
750
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
669
na
na
na
na
na
na
na
na
na
na
822
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
556
na
na
na
na
560
570
650
na
700
760
820
790
na
na
na
na
na
na
na
Finland
650
na
na
na
na
na
na
668
na
na
na
na
na
na
608
600
590
580
586
577
580
na
na
na
na
na
na
na
Sweden
521
519
519
518
518
517
517
522
522
504
504
507
507
503
503
512
512
498
498
504
488
na
na
na
na
na
na
na
UK
590
600
610
620
630
640
650
660
660
660
660
660
670
670
670
680
680
690
690
698
700
710
na
na
na
na
na
na
5379
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
01
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
682
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
740
na
na
na
na
na
790
na
na
na
na
na
na
760
na
na
na
767
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
313
na
na
na
na
na
na
na
na
na
346
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Taux locpriv
Taux locsoc
Feuil3
Feuil5
Feuil2
Feuil7
Feuil7
Housing stock 39 570 000
Feuil1
Housing stock 3 800 000
Feuil4
Housing stock 30 600 000
Feuil6
Housing stock 6 920 000
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Home-owner
Social rental
Private rental
Other
43
6
51
0
Home-owner
Social rental
Private rental
Other
57
21
19
3
Home-owner
Social rental
Private rental
Other
57
17
21
5
Home-owner
Social rental
Private rental
Other
54
35
11
0
Home-owner
Social rental
Private rental
Other
71
19
10
0
Home-owner
Social rental
Private rental
Other
52
19
26
4
Home-owner
Social rental
Private rental
Other
58
15
16
11
Home-owner
Social rental
Private rental
Other
49
18
21
12
Home-owner
Social rental
Private rental
Other
77
5
18
0
Home-owner
Social rental
Private rental
Other
75
3
18
4
Home-owner
Social rental
Private rental
Other
55
19
7
19
Home-owner
Social rental
Private rental
Other
64
1
27
8
Home-owner
Social rental
Private rental
Other
70
10
3
17
No
Yes financed by
Income limits
households under ceiling
Tableau 3 - Parc locatif social selon le statut du proprieacutetaire
AUSTRIA
State Laumlnder
AUSTRIA
YES
Varies with Land
BELGIUM
X
BELGIUM
YES
Varies with Region
(Logements en milliers)
DENMARK
State Cities
DENMARK
NO
COMMUNES ou REGIONS
ORGPUBLICS
SOCPRIVEES
COOP
TOTAL
REGION or CITY
PUBLIC BODIES
PRIVATE COMPANIES
COOP-ERATIVES
FINLAND
State
FRANCE
YES
70
Avec ou sans but lucratif
Profit or non-profit
FRANCE
State Social budget
GERMANY
YES
40
ALLEMAGNE
2444
2444
GERMANY
X
GERMANY
State Laumlnder
ITALY
YES
AUTRICHE
320
436
756
AUSTRIA
X
X
GREECE
X
NETHERLANDS
NO
Can be local
BELGIQUE
266
266
BELGIUM
X
IRELAND
State
PORTUGAL
YES
DANEMARK
43
468
-138
511
DENMARK
x
X
x
ITALY
Region
SWEDEN
NO
ESPAGNE
114
6
120
SPAIN
X
x
LUXEMBURG
X
UNITED KINGDOM
NO
FINLANDE
312
70
-20
392
FINLAND
X
x
x
NETHERLANDS
State
FRANCE
2435
1785
14
4234
FRANCE
X
X
x
PORTUGAL
X
IRLANDE
100
12
112
IRELAND
X
x
SPAIN
X
ITALIE
66+103(Etat)
662
831
ITALY
X
X
SWEDEN
State Cities
LUXEMBOURG
18
13
1
41
NETHERLANDS
X
UNITED KINGDOM
State
PAYS BAS
0
2464
2464
PORTUGAL
X
PORTUGAL
72+50 (Etat)
122
UNITED KINGDOM
X
X
ROYAUNE UNI
4523
1856
6379
SWEDEN
X
X
SUEDE
927
-682
927
0734057971
Source DGUHC
Newly Rented
New Tenancy
Renewal
Lower tax on rental income
Mortgage interest deductible
Costs deductible
Depreciation allowance
Rental losses offset
Free
Other
Free
Reference
Index
Other
Free
Reference
Index
Other
AUSTRIA
N
Y
Y
Y
N
AUSTRIA
Yes (1)
Yes (2)
BELGIUM
Y
Y
Y
Y
BELGIUM
Yes
Yes
Yes
DENMARK
YN (1)
Y
Y
N
Y
DENMARK
Yes
Yes (2)
Yes (2)
FINLAND
Y
N
Y
YN (1)
Y
FINLAND
Yes
Yes
Yes
FRANCE
N
Y (2)
Y
N
Y (2)
FRANCE
Yes (1)
Yes
Yes (3)
Yes
GERMANY
N
Y
Y
Y
Y
GERMANY
Yes (1)
Yes
Yes
IRELAND
N
Y (2)
Y
Y
N
GREECE
Yes
Yes
Yes
NETHERLANDS
N
Y
Y
Y
Y
IRELAND
Yes
Yes
Yes
SPAIN
Y
Y
Y
N
Y
NETHERLANDS
Yes (1)
Yes (2)
Yes
UNITED KINGDOM
N
Y
Y
N
N
PORTUGAL
Yes
UNITED KINGDOM
Yes
Yes
Yes (4)
Yes (4)
(1) Institutions only
(2) With limits
(1) Except for subsidized dwellings
(2) Reasonable rent calculated
(3) If obviously undervalued
(4) Optional
AUSTRIA
DENMARK
FRANCE
50-70 Commercial loan (1)
91 Mortgage loan
74 CDC loan (2)
20-60 Subsidized loan and grants
7 Interest free loan from municipality
3 State subsidy
5-15 Landlords equity
2 Tenants deposit
2 Employers fund subsidy
0-5 Tenants equity
9 Local authorities subsidies
12 Landlords equity
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) CDC State subsidiary multifunctional financial institution funding by short-term tax free deposits on ldquoArdquo booklets
Role
Key features
Countries
Large housing stock under public control
Denmark
WIDE
Universalistic concept of social housing
Netherlands
Linked to housing allowances for the most vulnerable
Sweden
Market-regulating function
Moderate of social housing
Austria Belgium
MEDIUM
Support to the most vulnerable and some middle-income groups
France Germany
Linked to housing allowances
Finland Poland
Small social housing stock (or none)
Greece Italy Portugal
NARROW
Focus on the most vulnerable
Spain United Kingdom
Housing policy focus on home-ownership policies
Hungary Slovakia
Rented from government or social landlords
1
Rented from government or social landlords
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
60
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
230
na
na
na
na
na
na
na
na
na
Denmark
na
na
na
na
na
na
na
na
na
na
na
na
na
na
210
190
200
190
190
200
200
200
na
na
na
na
na
na
Germany
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
120
na
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
30
na
na
na
40
na
na
na
na
na
na
Greece
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Spain
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
France
na
182
182
182
182
182
182
182
183
184
185
187
190
192
192
191
190
189
189
189
na
na
na
na
na
na
na
na
Ireland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
69
69
70
na
na
na
na
na
na
Italy
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
40
50
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
03
na
na
na
na
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
83
78
33
33
31
32
31
30
21
na
na
na
na
na
na
Luxembourg
na
na
na
na
na
na
na
na
na
na
20
na
na
na
na
na
na
na
19
na
na
na
na
na
na
na
na
na
Hungary
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
35
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Netherlands
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
350
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
230
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
130
130
100
na
na
na
na
na
na
na
Portugal
na
na
na
na
na
na
na
na
46
na
na
na
na
na
na
na
na
na
33
na
30
40
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
65
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
221
na
na
na
na
220
210
140
na
150
70
50
60
na
na
na
na
na
na
na
Finland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
150
150
150
150
na
na
na
na
na
na
na
Sweden
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
UK
20
20
20
20
30
30
30
30
30
30
30
40
40
40
50
50
50
60
60
70
70
80
na
na
na
na
na
na
451
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
00
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
21
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Rented from private landlords
1
Rented from private landlords
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
369
na
na
na
na
na
na
na
324
na
na
na
na
324
na
na
na
na
260
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
240
na
na
na
na
na
na
na
na
na
Denmark
na
na
na
na
na
na
na
na
na
na
na
na
na
na
190
220
210
210
210
210
210
210
na
na
na
na
na
na
Germany
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
440
na
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
90
na
na
na
na
na
na
na
na
na
na
Greece
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
203
na
na
na
na
na
na
na
na
na
Spain
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
France
na
296
291
285
278
272
268
268
267
267
266
263
261
258
256
254
252
251
249
249
na
na
na
na
na
na
na
na
Ireland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
110
110
110
na
na
na
na
na
na
Italy
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
160
150
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
357
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
396
na
na
na
na
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Luxembourg
na
na
na
na
na
na
na
na
na
na
310
na
na
na
na
na
na
na
255
na
na
na
na
na
na
na
na
na
Hungary
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
224
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Netherlands
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
108
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
170
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Portugal
na
na
na
na
na
na
na
na
306
na
na
na
na
na
na
na
na
na
210
na
200
200
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
26
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
220
na
na
na
na
200
200
200
na
130
150
120
130
na
na
na
na
na
na
na
Finland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
170
160
160
160
na
na
na
na
na
na
na
Sweden
363
343
343
340
340
341
341
341
341
336
336
338
338
338
338
322
322
327
327
315
315
na
na
na
na
na
na
na
UK
110
110
100
100
90
90
90
90
90
100
100
100
100
100
100
100
100
100
100
100
100
100
na
na
na
na
na
na
620
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
00
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
239
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
600
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Taux locsoc
Feuil3
Feuil5
Feuil2
Feuil7
Feuil7
Housing stock 39 570 000
Feuil1
Housing stock 3 800 000
Feuil4
Housing stock 30 600 000
Feuil6
Housing stock 6 920 000
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Home-owner
Social rental
Private rental
Other
43
6
51
0
Home-owner
Social rental
Private rental
Other
57
21
19
3
Home-owner
Social rental
Private rental
Other
57
17
21
5
Home-owner
Social rental
Private rental
Other
54
35
11
0
Home-owner
Social rental
Private rental
Other
71
19
10
0
Home-owner
Social rental
Private rental
Other
52
19
26
4
Home-owner
Social rental
Private rental
Other
58
15
16
11
Home-owner
Social rental
Private rental
Other
49
18
21
12
Home-owner
Social rental
Private rental
Other
77
5
18
0
Home-owner
Social rental
Private rental
Other
75
3
18
4
Home-owner
Social rental
Private rental
Other
55
19
7
19
Home-owner
Social rental
Private rental
Other
64
1
27
8
Home-owner
Social rental
Private rental
Other
70
10
3
17
No
Yes financed by
Income limits
households under ceiling
Tableau 3 - Parc locatif social selon le statut du proprieacutetaire
AUSTRIA
State Laumlnder
AUSTRIA
YES
Varies with Land
BELGIUM
X
BELGIUM
YES
Varies with Region
(Logements en milliers)
DENMARK
State Cities
DENMARK
NO
COMMUNES ou REGIONS
ORGPUBLICS
SOCPRIVEES
COOP
TOTAL
REGION or CITY
PUBLIC BODIES
PRIVATE COMPANIES
COOP-ERATIVES
FINLAND
State
FRANCE
YES
70
Avec ou sans but lucratif
Profit or non-profit
FRANCE
State Social budget
GERMANY
YES
40
ALLEMAGNE
2444
2444
GERMANY
X
GERMANY
State Laumlnder
ITALY
YES
AUTRICHE
320
436
756
AUSTRIA
X
X
GREECE
X
NETHERLANDS
NO
Can be local
BELGIQUE
266
266
BELGIUM
X
IRELAND
State
PORTUGAL
YES
DANEMARK
43
468
-138
511
DENMARK
x
X
x
ITALY
Region
SWEDEN
NO
ESPAGNE
114
6
120
SPAIN
X
x
LUXEMBURG
X
UNITED KINGDOM
NO
FINLANDE
312
70
-20
392
FINLAND
X
x
x
NETHERLANDS
State
FRANCE
2435
1785
14
4234
FRANCE
X
X
x
PORTUGAL
X
IRLANDE
100
12
112
IRELAND
X
x
SPAIN
X
ITALIE
66+103(Etat)
662
831
ITALY
X
X
SWEDEN
State Cities
LUXEMBOURG
18
13
1
41
NETHERLANDS
X
UNITED KINGDOM
State
PAYS BAS
0
2464
2464
PORTUGAL
X
PORTUGAL
72+50 (Etat)
122
UNITED KINGDOM
X
X
ROYAUNE UNI
4523
1856
6379
SWEDEN
X
X
SUEDE
927
-682
927
0734057971
Source DGUHC
Newly Rented
New Tenancy
Renewal
Lower tax on rental income
Mortgage interest deductible
Costs deductible
Depreciation allowance
Rental losses offset
Free
Other
Free
Reference
Index
Other
Free
Reference
Index
Other
AUSTRIA
N
Y
Y
Y
N
AUSTRIA
Yes (1)
Yes (2)
BELGIUM
Y
Y
Y
Y
BELGIUM
Yes
Yes
Yes
DENMARK
YN (1)
Y
Y
N
Y
DENMARK
Yes
Yes (2)
Yes (2)
FINLAND
Y
N
Y
YN (1)
Y
FINLAND
Yes
Yes
Yes
FRANCE
N
Y (2)
Y
N
Y (2)
FRANCE
Yes (1)
Yes
Yes (3)
Yes
GERMANY
N
Y
Y
Y
Y
GERMANY
Yes (1)
Yes
Yes
IRELAND
N
Y (2)
Y
Y
N
GREECE
Yes
Yes
Yes
NETHERLANDS
N
Y
Y
Y
Y
IRELAND
Yes
Yes
Yes
SPAIN
Y
Y
Y
N
Y
NETHERLANDS
Yes (1)
Yes (2)
Yes
UNITED KINGDOM
N
Y
Y
N
N
PORTUGAL
Yes
UNITED KINGDOM
Yes
Yes
Yes (4)
Yes (4)
(1) Institutions only
(2) With limits
(1) Except for subsidized dwellings
(2) Reasonable rent calculated
(3) If obviously undervalued
(4) Optional
AUSTRIA
DENMARK
FRANCE
50-70 Commercial loan (1)
91 Mortgage loan
74 CDC loan (2)
20-60 Subsidized loan and grants
7 Interest free loan from municipality
3 State subsidy
5-15 Landlords equity
2 Tenants deposit
2 Employers fund subsidy
0-5 Tenants equity
9 Local authorities subsidies
12 Landlords equity
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) CDC State subsidiary multifunctional financial institution funding by short-term tax free deposits on ldquoArdquo booklets
Role
Key features
Countries
Large housing stock under public control
Denmark
WIDE
Universalistic concept of social housing
Netherlands
Linked to housing allowances for the most vulnerable
Sweden
Market-regulating function
Moderate of social housing
Austria Belgium
MEDIUM
Support to the most vulnerable and some middle-income groups
France Germany
Linked to housing allowances
Finland Poland
Small social housing stock (or none)
Greece Italy Portugal
NARROW
Focus on the most vulnerable
Spain United Kingdom
Housing policy focus on home-ownership policies
Hungary Slovakia
Rented from government or social landlords
1
Rented from government or social landlords
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Belgium
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
60
na
na
na
na
na
na
na
na
na
Czech Republic
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
230
na
na
na
na
na
na
na
na
na
Denmark
na
na
na
na
na
na
na
na
na
na
na
na
na
na
210
190
200
190
190
200
200
200
na
na
na
na
na
na
Germany
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
120
na
na
na
na
na
na
na
na
na
Estonia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
30
na
na
na
40
na
na
na
na
na
na
Greece
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Spain
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
France
na
182
182
182
182
182
182
182
183
184
185
187
190
192
192
191
190
189
189
189
na
na
na
na
na
na
na
na
Ireland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
69
69
70
na
na
na
na
na
na
Italy
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
40
50
na
na
na
na
na
na
na
na
Cyprus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Latvia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
03
na
na
na
na
na
na
na
na
na
na
Lithuania
na
na
na
na
na
na
na
na
na
na
na
na
na
83
78
33
33
31
32
31
30
21
na
na
na
na
na
na
Luxembourg
na
na
na
na
na
na
na
na
na
na
20
na
na
na
na
na
na
na
19
na
na
na
na
na
na
na
na
na
Hungary
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Malta
na
na
na
na
na
na
na
na
na
na
na
na
35
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Netherlands
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
350
na
na
na
na
na
na
na
na
Austria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
230
na
na
na
na
na
na
na
na
na
Poland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
130
130
100
na
na
na
na
na
na
na
Portugal
na
na
na
na
na
na
na
na
46
na
na
na
na
na
na
na
na
na
33
na
30
40
na
na
na
na
na
na
Slovenia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
65
na
na
na
na
na
na
na
na
Slovakia
na
na
na
na
na
na
na
na
221
na
na
na
na
220
210
140
na
150
70
50
60
na
na
na
na
na
na
na
Finland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
150
150
150
150
na
na
na
na
na
na
na
Sweden
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
UK
20
20
20
20
30
30
30
30
30
30
30
40
40
40
50
50
50
60
60
70
70
80
na
na
na
na
na
na
451
Bulgaria
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Croatia
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Romania
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
00
na
na
na
na
na
na
na
na
Turkey
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
21
NA
NA
NA
NA
na
na
na
na
na
na
Iceland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Norway
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Switzerland
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
RATIOS
Outstanding residential loans as GDP
Outstanding residential and commercial loans as GDP
Outstanding residential loans per capita 000s
Outstanding residential and commercial loans per capita
Outstanding mortgage bonds as GDP
HOUSING STOCK AND TENURE
Total Number of Dwellings (national)
Owner occupied
Rented from private landlords
Rented from government or social landlords
Other
CONSTRUCTION
Housing Starts
Annual change in housing starts
Housing Completions
Annual change in housing completions
Number of Building Permits issued
Annual change in building permits issued
Total Number of Transactions
Annual change in transactions
PRICES
Residential house prices (all dwellings national)
Annual change in house prices
Residential house prices new dwellings (national)
Annual change in new house prices
Building Price for new residential dwellings
Annual change in building prices
LENDING
Total national outstanding residential loans
Annual change
Total national outstanding residential and commercial loans
Annual change
Total national gross residential lending
Annual change in gross residential lending
Gross residential and commercial lending
Annual change in gross residential and commercial
Total national net residential lending
Annual change in net residential lending
Total national net residential and commercial lending
Annual changein net residential and commercial lending
Total number of new loans
Residential
Commercial
INTEREST RATES
Representative interest rate on NEW mortgage loans
Average LTV
First time buyer LTV
Some indicator of bad debt eg possessions arrears
MORTGAGE BONDS
Total Mortgage Bonds Outstanding
Annual change in mortgage bonds outstanding
New Issues of Mortgage Bonds
Annual change in mortgage bond issues
MORTGAGE BACKED SECURITIES
Mortgage backed securities outstanding
Annual change in MBS outstanding
New Issues of Mortgage Backed Securities
Annual change in MBS issues
MACROECONOMIC INFORMATION
Exchange rate 1euro=
Population 000s
Number of Households 000s
Population density popkm
GDP euro mill
Annual GDP Growth
Gross fixed Capital Formation euro mill
Inflation (HICP)
Unemployment rate
Feuil3
Feuil5
Feuil2
Feuil7
Feuil7
Housing stock 39 570 000
Feuil1
Housing stock 3 800 000
Feuil4
Housing stock 30 600 000
Feuil6
Housing stock 6 920 000
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Home-owner
Social rental
Private rental
Other
43
6
51
0
Home-owner
Social rental
Private rental
Other
57
21
19
3
Home-owner
Social rental
Private rental
Other
57
17
21
5
Home-owner
Social rental
Private rental
Other
54
35
11
0
Home-owner
Social rental
Private rental
Other
71
19
10
0
Home-owner
Social rental
Private rental
Other
52
19
26
4
Home-owner
Social rental
Private rental
Other
58
15
16
11
Home-owner
Social rental
Private rental
Other
49
18
21
12
Home-owner
Social rental
Private rental
Other
77
5
18
0
Home-owner
Social rental
Private rental
Other
75
3
18
4
Home-owner
Social rental
Private rental
Other
55
19
7
19
Home-owner
Social rental
Private rental
Other
64
1
27
8
Home-owner
Social rental
Private rental
Other
70
10
3
17
No
Yes financed by
Income limits
households under ceiling
Tableau 3 - Parc locatif social selon le statut du proprieacutetaire
AUSTRIA
State Laumlnder
AUSTRIA
YES
Varies with Land
BELGIUM
X
BELGIUM
YES
Varies with Region
(Logements en milliers)
DENMARK
State Cities
DENMARK
NO
COMMUNES ou REGIONS
ORGPUBLICS
SOCPRIVEES
COOP
TOTAL
REGION or CITY
PUBLIC BODIES
PRIVATE COMPANIES
COOP-ERATIVES
FINLAND
State
FRANCE
YES
70
Avec ou sans but lucratif
Profit or non-profit
FRANCE
State Social budget
GERMANY
YES
40
ALLEMAGNE
2444
2444
GERMANY
X
GERMANY
State Laumlnder
ITALY
YES
AUTRICHE
320
436
756
AUSTRIA
X
X
GREECE
X
NETHERLANDS
NO
Can be local
BELGIQUE
266
266
BELGIUM
X
IRELAND
State
PORTUGAL
YES
DANEMARK
43
468
-138
511
DENMARK
x
X
x
ITALY
Region
SWEDEN
NO
ESPAGNE
114
6
120
SPAIN
X
x
LUXEMBURG
X
UNITED KINGDOM
NO
FINLANDE
312
70
-20
392
FINLAND
X
x
x
NETHERLANDS
State
FRANCE
2435
1785
14
4234
FRANCE
X
X
x
PORTUGAL
X
IRLANDE
100
12
112
IRELAND
X
x
SPAIN
X
ITALIE
66+103(Etat)
662
831
ITALY
X
X
SWEDEN
State Cities
LUXEMBOURG
18
13
1
41
NETHERLANDS
X
UNITED KINGDOM
State
PAYS BAS
0
2464
2464
PORTUGAL
X
PORTUGAL
72+50 (Etat)
122
UNITED KINGDOM
X
X
ROYAUNE UNI
4523
1856
6379
SWEDEN
X
X
SUEDE
927
-682
927
0734057971
Source DGUHC
Newly Rented
New Tenancy
Renewal
Lower tax on rental income
Mortgage interest deductible
Costs deductible
Depreciation allowance
Rental losses offset
Free
Other
Free
Reference
Index
Other
Free
Reference
Index
Other
AUSTRIA
N
Y
Y
Y
N
AUSTRIA
Yes (1)
Yes (2)
BELGIUM
Y
Y
Y
Y
BELGIUM
Yes
Yes
Yes
DENMARK
YN (1)
Y
Y
N
Y
DENMARK
Yes
Yes (2)
Yes (2)
FINLAND
Y
N
Y
YN (1)
Y
FINLAND
Yes
Yes
Yes
FRANCE
N
Y (2)
Y
N
Y (2)
FRANCE
Yes (1)
Yes
Yes (3)
Yes
GERMANY
N
Y
Y
Y
Y
GERMANY
Yes (1)
Yes
Yes
IRELAND
N
Y (2)
Y
Y
N
GREECE
Yes
Yes
Yes
NETHERLANDS
N
Y
Y
Y
Y
IRELAND
Yes
Yes
Yes
SPAIN
Y
Y
Y
N
Y
NETHERLANDS
Yes (1)
Yes (2)
Yes
UNITED KINGDOM
N
Y
Y
N
N
PORTUGAL
Yes
UNITED KINGDOM
Yes
Yes
Yes (4)
Yes (4)
(1) Institutions only
(2) With limits
(1) Except for subsidized dwellings
(2) Reasonable rent calculated
(3) If obviously undervalued
(4) Optional
AUSTRIA
DENMARK
FRANCE
50-70 Commercial loan (1)
91 Mortgage loan
74 CDC loan (2)
20-60 Subsidized loan and grants
7 Interest free loan from municipality
3 State subsidy
5-15 Landlords equity
2 Tenants deposit
2 Employers fund subsidy
0-5 Tenants equity
9 Local authorities subsidies
12 Landlords equity
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) CDC State subsidiary multifunctional financial institution funding by short-term tax free deposits on ldquoArdquo booklets
Role
Key features
Countries
Large housing stock under public control
Denmark
WIDE
Universalistic concept of social housing
Netherlands
Linked to housing allowances for the most vulnerable
Sweden
Market-regulating function
Moderate of social housing
Austria Belgium
MEDIUM
Support to the most vulnerable and some middle-income groups
France Germany
Linked to housing allowances
Finland Poland
Small social housing stock (or none)
Greece Italy Portugal
NARROW
Focus on the most vulnerable
Spain United Kingdom
Housing policy focus on home-ownership policies
Hungary Slovakia
Feuil5
Feuil2
Feuil7
Feuil7
Housing stock 39 570 000
Feuil1
Housing stock 3 800 000
Feuil4
Housing stock 30 600 000
Feuil6
Housing stock 6 920 000
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Home-owner
Social rental
Private rental
Other
43
6
51
0
Home-owner
Social rental
Private rental
Other
57
21
19
3
Home-owner
Social rental
Private rental
Other
57
17
21
5
Home-owner
Social rental
Private rental
Other
54
35
11
0
Home-owner
Social rental
Private rental
Other
71
19
10
0
Home-owner
Social rental
Private rental
Other
52
19
26
4
Home-owner
Social rental
Private rental
Other
58
15
16
11
Home-owner
Social rental
Private rental
Other
49
18
21
12
Home-owner
Social rental
Private rental
Other
77
5
18
0
Home-owner
Social rental
Private rental
Other
75
3
18
4
Home-owner
Social rental
Private rental
Other
55
19
7
19
Home-owner
Social rental
Private rental
Other
64
1
27
8
Home-owner
Social rental
Private rental
Other
70
10
3
17
No
Yes financed by
Income limits
households under ceiling
Tableau 3 - Parc locatif social selon le statut du proprieacutetaire
AUSTRIA
State Laumlnder
AUSTRIA
YES
Varies with Land
BELGIUM
X
BELGIUM
YES
Varies with Region
(Logements en milliers)
DENMARK
State Cities
DENMARK
NO
COMMUNES ou REGIONS
ORGPUBLICS
SOCPRIVEES
COOP
TOTAL
REGION or CITY
PUBLIC BODIES
PRIVATE COMPANIES
COOP-ERATIVES
FINLAND
State
FRANCE
YES
70
Avec ou sans but lucratif
Profit or non-profit
FRANCE
State Social budget
GERMANY
YES
40
ALLEMAGNE
2444
2444
GERMANY
X
GERMANY
State Laumlnder
ITALY
YES
AUTRICHE
320
436
756
AUSTRIA
X
X
GREECE
X
NETHERLANDS
NO
Can be local
BELGIQUE
266
266
BELGIUM
X
IRELAND
State
PORTUGAL
YES
DANEMARK
43
468
-138
511
DENMARK
x
X
x
ITALY
Region
SWEDEN
NO
ESPAGNE
114
6
120
SPAIN
X
x
LUXEMBURG
X
UNITED KINGDOM
NO
FINLANDE
312
70
-20
392
FINLAND
X
x
x
NETHERLANDS
State
FRANCE
2435
1785
14
4234
FRANCE
X
X
x
PORTUGAL
X
IRLANDE
100
12
112
IRELAND
X
x
SPAIN
X
ITALIE
66+103(Etat)
662
831
ITALY
X
X
SWEDEN
State Cities
LUXEMBOURG
18
13
1
41
NETHERLANDS
X
UNITED KINGDOM
State
PAYS BAS
0
2464
2464
PORTUGAL
X
PORTUGAL
72+50 (Etat)
122
UNITED KINGDOM
X
X
ROYAUNE UNI
4523
1856
6379
SWEDEN
X
X
SUEDE
927
-682
927
0734057971
Source DGUHC
Newly Rented
New Tenancy
Renewal
Lower tax on rental income
Mortgage interest deductible
Costs deductible
Depreciation allowance
Rental losses offset
Free
Other
Free
Reference
Index
Other
Free
Reference
Index
Other
AUSTRIA
N
Y
Y
Y
N
AUSTRIA
Yes (1)
Yes (2)
BELGIUM
Y
Y
Y
Y
BELGIUM
Yes
Yes
Yes
DENMARK
YN (1)
Y
Y
N
Y
DENMARK
Yes
Yes (2)
Yes (2)
FINLAND
Y
N
Y
YN (1)
Y
FINLAND
Yes
Yes
Yes
FRANCE
N
Y (2)
Y
N
Y (2)
FRANCE
Yes (1)
Yes
Yes (3)
Yes
GERMANY
N
Y
Y
Y
Y
GERMANY
Yes (1)
Yes
Yes
IRELAND
N
Y (2)
Y
Y
N
GREECE
Yes
Yes
Yes
NETHERLANDS
N
Y
Y
Y
Y
IRELAND
Yes
Yes
Yes
SPAIN
Y
Y
Y
N
Y
NETHERLANDS
Yes (1)
Yes (2)
Yes
UNITED KINGDOM
N
Y
Y
N
N
PORTUGAL
Yes
UNITED KINGDOM
Yes
Yes
Yes (4)
Yes (4)
(1) Institutions only
(2) With limits
(1) Except for subsidized dwellings
(2) Reasonable rent calculated
(3) If obviously undervalued
(4) Optional
Feuil2
Feuil7
Feuil7
Housing stock 39 570 000
Feuil1
Housing stock 3 800 000
Feuil4
Housing stock 30 600 000
Feuil6
Housing stock 6 920 000
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Home-owner
Social rental
Private rental
Other
43
6
51
0
Home-owner
Social rental
Private rental
Other
57
21
19
3
Home-owner
Social rental
Private rental
Other
57
17
21
5
Home-owner
Social rental
Private rental
Other
54
35
11
0
Home-owner
Social rental
Private rental
Other
71
19
10
0
Home-owner
Social rental
Private rental
Other
52
19
26
4
Home-owner
Social rental
Private rental
Other
58
15
16
11
Home-owner
Social rental
Private rental
Other
49
18
21
12
Home-owner
Social rental
Private rental
Other
77
5
18
0
Home-owner
Social rental
Private rental
Other
75
3
18
4
Home-owner
Social rental
Private rental
Other
55
19
7
19
Home-owner
Social rental
Private rental
Other
64
1
27
8
Home-owner
Social rental
Private rental
Other
70
10
3
17
No
Yes financed by
Income limits
households under ceiling
Tableau 3 - Parc locatif social selon le statut du proprieacutetaire
AUSTRIA
State Laumlnder
AUSTRIA
YES
Varies with Land
BELGIUM
X
BELGIUM
YES
Varies with Region
(Logements en milliers)
DENMARK
State Cities
DENMARK
NO
COMMUNES ou REGIONS
ORGPUBLICS
SOCPRIVEES
COOP
TOTAL
REGION or CITY
PUBLIC BODIES
PRIVATE COMPANIES
COOP-ERATIVES
FINLAND
State
FRANCE
YES
70
Avec ou sans but lucratif
Profit or non-profit
FRANCE
State Social budget
GERMANY
YES
40
ALLEMAGNE
2444
2444
GERMANY
X
GERMANY
State Laumlnder
ITALY
YES
AUTRICHE
320
436
756
AUSTRIA
X
X
GREECE
X
NETHERLANDS
NO
Can be local
BELGIQUE
266
266
BELGIUM
X
IRELAND
State
PORTUGAL
YES
DANEMARK
43
468
-138
511
DENMARK
x
X
x
ITALY
Region
SWEDEN
NO
ESPAGNE
114
6
120
SPAIN
X
x
LUXEMBURG
X
UNITED KINGDOM
NO
FINLANDE
312
70
-20
392
FINLAND
X
x
x
NETHERLANDS
State
FRANCE
2435
1785
14
4234
FRANCE
X
X
x
PORTUGAL
X
IRLANDE
100
12
112
IRELAND
X
x
SPAIN
X
ITALIE
66+103(Etat)
662
831
ITALY
X
X
SWEDEN
State Cities
LUXEMBOURG
18
13
1
41
NETHERLANDS
X
UNITED KINGDOM
State
PAYS BAS
0
2464
2464
PORTUGAL
X
PORTUGAL
72+50 (Etat)
122
UNITED KINGDOM
X
X
ROYAUNE UNI
4523
1856
6379
SWEDEN
X
X
SUEDE
927
-682
927
0734057971
Source DGUHC
Feuil7
Feuil7
Housing stock 39 570 000
Feuil1
Housing stock 3 800 000
Feuil4
Housing stock 30 600 000
Feuil6
Housing stock 6 920 000
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Home-owner
Social rental
Private rental
Other
43
6
51
0
Home-owner
Social rental
Private rental
Other
57
21
19
3
Home-owner
Social rental
Private rental
Other
57
17
21
5
Home-owner
Social rental
Private rental
Other
54
35
11
0
Home-owner
Social rental
Private rental
Other
71
19
10
0
Home-owner
Social rental
Private rental
Other
52
19
26
4
Home-owner
Social rental
Private rental
Other
58
15
16
11
Home-owner
Social rental
Private rental
Other
49
18
21
12
Home-owner
Social rental
Private rental
Other
77
5
18
0
Home-owner
Social rental
Private rental
Other
75
3
18
4
Home-owner
Social rental
Private rental
Other
55
19
7
19
Home-owner
Social rental
Private rental
Other
64
1
27
8
Home-owner
Social rental
Private rental
Other
70
10
3
17
Feuil7
Housing stock 39 570 000
Feuil1
Housing stock 3 800 000
Feuil4
Housing stock 30 600 000
Feuil6
Housing stock 6 920 000
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Feuil1
Housing stock 3 800 000
Feuil4
Housing stock 30 600 000
Feuil6
Housing stock 6 920 000
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Feuil4
Housing stock 30 600 000
Feuil6
Housing stock 6 920 000
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Feuil6
Housing stock 6 920 000
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Feuil8
Housing stock 26 150 000
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Feuil9
Housing stock 2 620 000
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Housing stock 2 670 000
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Housing stock 4 400 000
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Housing stock 2 055 000
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Housing stock 5 500 000
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Housing stock 12 870 000
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Housing stock 4 200 000
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Housing stock 6 000 000
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Home-owner
Social rental
Private rental
Other
Social rental
Private rental
Private rental
Social rental
Austria
56
23
17
4
Germany
5
52
57
Netherlands
32
Germany
52
5
Belgium
76
6
18
0
Netherlands
32
10
42
Austria
23
Netherlands
10
32
Bulgaria
97
3
0
0
Austria
23
17
40
Denmark
20
Austria
17
23
Cyprus
68
0
14
18
France
17
22
39
United Kingdom
18
France
22
17
Czech Republic
60
10
13
17
Denmark
19
19
38
France
17
Denmark
19
19
Denmark
54
19
19
8
Sweden
17
17
34
Sweden
17
Sweden
17
17
Estonia
96
1
2
1
Finland
16
16
32
Finland
16
Finland
16
16
Finland
65
16
16
3
United Kingdom
18
14
32
Poland
12
United Kingdom
14
18
France
58
17
22
3
Luxemburg
2
28
30
Czech Republic
10
Luxemburg
28
2
Germany
43
5
52
0
Belgium
6
18
24
Belgium
7
Belgium
18
6
Greece
74
0
20
6
Czech Republic
10
13
23
Ireland
7
Czech Republic
6
17
Hungary
92
4
4
0
Malta
6
16
22
Malta
6
Malta
16
6
Ireland
75
8
12
5
Greece
0
20
20
Slovenia
6
Greece
20
0
Italy
80
5
14
1
Ireland
8
12
20
Germany
5
Ireland
12
8
Latvia
85
0
15
0
Poland
12
8
20
Italy
4
Poland
8
12
Lithuania
95
2
3
0
Portugal
3
17
20
Portugal
4
Portugal
17
3
Luxembourg
70
2
28
0
Italy
5
14
19
Hungary
3
Italy
14
5
Malta
75
6
16
3
Latvia
0
15
15
Spain
2
Latvia
15
0
Netherlands
58
32
10
0
Cyprus
0
14
14
Slovakia
2
Cyprus
14
0
Poland
66
12
8
14
Spain
2
11
13
Luxembourg
1
Spain
11
2
Portugal
76
3
17
4
Slovenia
6
5
11
Estonia
1
Slovenia
5
6
Romania
96
2
1
1
Hungary
4
4
8
Greece
0
Hungary
4
4
Slovakia
92
2
1
5
Lithuania
2
3
5
Latvia
0
Lithuania
3
2
Slovenia
82
6
5
7
Bulgaria
3
0
3
Cyprus
0
Bulgaria
0
3
Spain
85
2
11
2
Estonia
1
2
3
Bulgaria
0
Estonia
2
1
Sweden
66
17
17
0
Romania
2
1
3
Lithuania
0
Romania
1
2
United Kingdom
68
18
14
0
Slovakia
2
1
3
Romania
0
Slovakia
1
2
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Social rental
Private rental
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
Private rental
Social rental
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
Security
Country
Typical lease term
Reasons for eviction
Belgium
9 years
Exceptional circumstances
HIGH
Germany
Unlimited
Unpaid rent misbehavior personal use
Netherlands
Unlimited
Unpaid rent misbehavior personal use
Finland
1 year then month-to-month
Unpaid rent misbehavior
MEDIUM
France
3 yrs (individual) 6 yrs (company)
Before expiry Unpaid rent misbehavior
Upon expiry Personal use sale of unit
Ireland
6 month then 3 12 years
First 6 month Any reason
LOW
After 6 month Personal use sale of unit refurbishment
Spain
5 years
Unpaid rent misbehavior
UK
6 month then m-t-m or week-to-week
Before expiry Unpaid rent misbehavior
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
2181
2069
1876
1871
13663
13400
13608
14062
Germany
4474
3652
4050
3512
4536
4800
5000
4200
Netherlands
528
776
889
600
1562
1670
1598
1635
Slovakia
153
147
177
177
19
18
11
2
Sweden
163
151
170
171
1659
1580
1578
1167
UK
4979
4941
6520
6885
18835
18400
18993
19328
Supply-side
Demand-side
2002
2003
2004
2005
2002
2003
2004
2005
France
1543
1588
1656
1718
1543
1588
1656
1718
Germany
2132
2148
2196
2224
2132
2148
2196
2224
Netherlands
465
477
491
513
465
477
491
513
Slovakia
26
30
34
39
26
30
34
39
Sweden
267
279
292
298
267
279
292
298
UK
1710
1647
1772
1834
1710
1647
1772
1834
Supply-side subsidies
Demand-side
All
2002
2003
2004
2005
2002
2003
2004
2005
2002
2003
2004
2005
France
014
013
011
011
089
084
082
082
103
097
094
093
Germany
021
017
018
016
021
022
023
019
042
039
041
035
Netherlands
011
016
018
012
034
035
033
032
045
051
051
044
Slovakia
059
050
052
046
007
006
003
000
066
056
055
046
Sweden
006
005
006
006
062
057
054
039
068
062
060
045
UK
029
030
037
038
110
112
107
105
139
142
144
143
Demand-side subsidies
2002
2003
2004
2005
France
089
084
082
082
Germany
021
022
023
019
Netherlands
034
035
033
032
Slovakia
007
006
003
000
Sweden
062
057
054
039
UK
110
112
107
105
All
2002
2003
2004
2005
France
103
097
094
093
Germany
042
039
041
035
Netherlands
045
051
051
044
Slovakia
066
056
055
046
Sweden
068
062
060
045
UK
139
142
144
143
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Austria
17
22
23
23
23
Denmark
14
17
19
19
19
Finland
12
14
16
16
16
France
15
17
18
17
17
Ireland
13
10
9
8
8
Italy
5
6
6
5
5
Netherlands
34
38
36
34
32
Sweden
24
22
19
18
17
United Kingdom
31
25
21
20
18
1980
1990
2000
2004
2009
Austria
43
41
41
41
40
Denmark
43
40
39
38
39
Finland
30
25
32
33
31
France
41
39
39
40
39
Ireland
21
18
20
21
20
Italy
36
25
20
19
19
Netherlands
58
55
47
44
42
Sweden
45
44
40
38
37
United Kingdom
42
35
31
31
32
1980
1990
2000
2004
2009
Austria
26
19
18
18
17
Denmark
29
23
20
19
19
Finland
18
11
16
17
16
France
26
22
21
23
22
Ireland
8
8
11
13
12
Italy
31
19
14
14
14
Netherlands
24
17
11
10
10
Sweden
21
20
18
17
17
United Kingdom
11
10
10
11
14
1980
1990
2000
2004
2009
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
1980
1990
2000
2004
2009
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Cas type en PLUS prix de revient 138 000 euro TTC
ndashTVA agrave taux reacuteduit
18400 euro
ndashSubvention de lrsquoEtat (subvention fonciegravere incluse)
4500 euro
ndashExoneacuteration de TFPB (25 ans) 9 700 euro
ndashAvantage de taux du precirct CDC (1) 13 900 euro
ndashGratuiteacute de la garantie financiegravere des collectiviteacutes locales ( CGLLS)
2000 euro
Sous-total
24900 euro
~ 48 500 euro
Aide moyenne du 1 Logement
3000 euro
Aide moyenne des collectiviteacutes locales 12 700 euro
Are diverse Small private landlords renting one or a few units or rooms in their home Medium scale owners (between 10 and 50-100 units) Institutional investors in housing (pension funds insurance companies) Other professionals developers property management companies Employer housing For low-income or special groups Non-profit housing associations foundations and cooperatives Public entities (governments) and PPPs Have different needs Individuals (ldquomom-and-poprdquo) - Need security (payment default can be a disaster for small savers) - Have a limited time horizon (need quick ndash and fair- procedures to solve conflicts) - Must be able to recover the property (for themselves or relatives) Large scale landlords are preferable - Long-term equity investors help avoid bubbles - Professional management economies of scale - But prefer financial assets (easier to manage) or commercial property (higher profit (small share of housing in REITs) 5
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
6
Most often a majority of individuals - France (95) United Kingdom (70-75) New-Zealand (70) Germany (60-65) Switzerland (55-60) - Exceptions Austria Denmark Sweden
Institutional landlords (insurance companies pension funds REITshellip) in diverse proportions - Finland and Netherlands (37) United Kingdom (25) Switzerland (20) Germany (17) France (3)
GERMANY
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Graph1
0585
0097
0124533107
01871816638
0006
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Private small landlords
Cooperatives
Public housing companies
Private companies
Other entities (churches)
Germany
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Private small landlords
13791
05853565365
05853565365
14507
Cooperatives
2288
00971137521
00971137521
2079
Municipal housing companies
2744
01164685908
01164685908
2120
Public housing companies
190
00080645161
01303480475
206
Private housing companies
2597
0110229202
0110229202
4059
Religious bodies
137
00058149406
00058149406
233
Other
1813
00769524618
00769524618
453
Total
23560
0
23657
23560
Private small landlords
585
Cooperatives
97
Public housing companies
125
Private companies
187
Other entities (churches)
06
Total
1000
Germany
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Feuil2
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Feuil3
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Build a functional private rental market able to accommodate low-middle income by - Creating or restoring balanced rights of tenants amp landlords
- Ensuring adequate financial returns to incentivize investors by reviewing the tax system and providing appropriate lending
- Professionalize rental property management (if necessary) Develop rental supply for lower income groups - A low rent with minimum quality standards requires subsidies - Tenants need more protection
Two reasons why investors should be kept under control - Try direct rental subsidies to tenants - If market solutions do not work public rental housing only in last resort
7
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Ensure that the rights of landlords and tenants are balanced - Hard to change the law a politically sensitive issue - What it means precisely depends on the country - Excessive tenant protection discourages landlords Rent controls results in lack of new investment poor maintenance and high vacancy rates key money phenomenon
Main items to be in the law
- A definition of the type of housing unit the rental of which is covered by the law (main residence unfurnished hellip) - Duration amp termination of the contract (fixed term renewal termination) - Initial rent setting and rent increase - Required written documents (contractinventorynotice to pay to quit) - Processes for solving conflicts Fair dispute resolution and alternatives to the judicial process (mediation conciliation arbitration)
A good law is not enough it has to be enforced by local authorities
8
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
9
Security of Tenure Country Typical lease term
Reasons for eviction
Failure to pay rent Renovation of dwellings
Occupation by the landlord Sale of dwelling Other
HIGH
Germany Unlimited Yes No Yes No Yes
Netherlands Unlimited Yes Yes Yes Yes Yes
Sweden Unlimited Yes Only if renovation is extensive No No Yes
MEDIUM
France 3 years (individual) 6 years (company) Yes No Yes Yes Yes
Spain 3 years Yes No Yes No Yes
LOW
Ireland 6 month then 3 12 years Yes Yes Yes Yes Yes
UK 6 month then m-t-m or week-to-week Yes No Yes Yes Yes
Source OECD NB In France eviction prohibited from November to April and substitute dwelling to be provided if tenant is above 70 and low-income
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
First tenant Free New tenant (since 2012)
- Limited to the rise in the ldquoreference rent indexrdquo (average of the last twelve consumer price indexes) in 28 high pressure areas - Possible higher increase only if rent is far below market level (half of the gap) or in case of improvement works - Free elsewhere
Renewed rent - Rent pegged to the benchmark - Possible higher increase same as above in HPA full gap elsewhere
During the lease (3 or 6 yrs) - Rent pegged to the benchmark New law in 2014 the German
model now applied in Paris
First contract - Rent set based on the local reference rent (Average for similar units limited to rents agreed upon or raised in the last four years Rent tables available in the bigger cities) - Maximum rent 20 above the reference rate if housing shortage 50 above in other cases - Tighter regulation since 2015
Ongoing contract (unlimited) - No increase allowed as long as the rent is higher than the reference - No increase by more than 20 in three years
Extra rules apply after modernization in particular energy conservation works
10
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
(Risk return) couple must be comparable with other investments (real estate and financial products)
- Privilege taxation to make the necessary adjustments (if it makes sense) - Provide low-interest loans to investors to produce leverage effect Rental income amp capital gains need a fair tax treatment
- Does not mean a level playing field between rental and ownership (no capital gain tax on owner-occupied units) - A good tax model should include main expenses deductible economic depreciation and losses offsetting taxes on other income andor carried forward for a few years
Risk mitigation - Develop insurance products covering the risks of default and damages to the
property - Public guarantees for social housing finance (beware of long-term commitments)
11
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Schemes launched in 1984 in order to increase - The supply of private rental housing - And production of new housing in general to support building activity
Consist of tax incentives for individuals only Two types of mechanisms - A proportion of the investment deductible each year from income tax - Or a proportion of the investment deductible from rental income (ldquoAccelerated
depreciationrdquo) Commitments
- Unit must be rented during a minimum period (6 9 or 12 years) - Rent ceiling (80 market rent) - Income ceiling above median income (none at the origin) - Maximum purchase price limit (total unit price and price per square meter)
Proved efficient to increase developersrsquo production - Since 2015 more than 50 of units have been sold to investors - But many investors resell after the required rental period - And perverse effects due to price ceiling (mismatch between supply and
demand)
12
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Provides incentives for private sector production of affordable housing (1986 Tax Reform Act)
Generated in the order of 70000 new affordable units annually total over 30 years in excess of 2 million units
Provides a present value tax credit of 70 of the cost of new construction (9 annually over a 10-year period) or 30 of the cost of acquisition of existing low income housing (4 annually)
Two options for developers bull Either 20 of units rented to households with income less than 50 of the county
median income bull Or 40 of the units rented to households with income less than 60 of the county
median income bull Maximum gross rent including utilities not to exceed 30 of maximum qualifying
income bull Unit to be maintained as low income for a 15 year period (or tax credits recaptured)
13
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Different financing needs for different ownersinvestments (individual small or large corporate)
Small owners capital or micro-finance for renovation improvement or expansion
Medium to long term capital both debt (loans or bonds) and equity (investment funds including REITs when tax structure makes them feasible)
Long-term debt for rental housing not available in most emerging countries - No leverage to boost rental return (if interest rates are low enough)
- Reduces capacity of individuals and small companies to invest in formal rental housing
When available underwriting closer to commercialproject finance than mortgage need to evaluate the borrower the market the legal framework (ex in England small Housing Associations use a debt-aggregator THFC)
14
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Direct subsidies to tenants most effective (better targeted amp more flexible) but - Entail heavy fiscal commitments (applicable rents to be capped) - Require the collection and update of information on beneficiaries - Limited impact on quantity and quality - May have inflationary effect
Subsidies to investors more efficient to increase the supply of housing and can be a counter-cyclical instrument to boost economy but - Less transparent - Targeting issues - Compliance with commitments to be monitored
Investors subsidies may be given in several forms including tax rebates grants soft loans free or discounted land and guarantees - Soft loans most efficient (with leverage) - Long-term non-capped commitments to be avoided - Cross-subsidies (with free rental or non-residential) to be considered
15
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
16
000
020
040
060
080
100
120
140
160
Government spending as of GDP (2015)
Source Housing Europe 2017 Source OECD
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Many examples of Governments building and managing social housing - Because of emergency (reconstruction after war natural disaster) and private sector not able or willing to do it - To control tenant choice (military and civil servants)
Rarely successful - Costly to build - Poor rent collection and lack of maintenance made it turn
into ghettos Global trend towards reducing its role in Europe from East
(mass privatization) to West (sales to sitting tenants in UK)
rArr Last resort solution if others do not work at least management should be outsourced to private companies
17
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Definition laquo A kind of shortcut for different types of housing provision which responds to administrative procedures as opposed to market mechanisms raquo (Housing Europe)
18
Source Housing Europe
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Providers can be specific (public entities non-profit bodies) or not (institutional investors or individuals)
Trends towards non specific actors (including commercial developers and private landlords) and end of public corporations
Germany end of specific status (tax privileges) for Social Housing providers any landlord gets public support (tax privileges) in exchange for the use of a unit for social purposes on a temporary basis
A the opposite French HLM status only ends when the building is demolished or sold to tenants French government uses not only carrot but also stick in large urban areas social rental housing must reach 20 or 25 of the stock otherwise municipalities pay a penalty
(1) From commercial or housing banks refinanced by housing construction convertible bonds
(2) State subsidiary multifunctional financial institution Loan funded by tax-free short-term deposits on ldquoArdquo booklets
7 Interest free loan from municipality 1 State subsidy
5-15 Landlords equity 2 Tenants deposit 1 Employers fund subsidy
0-5 Tenants equity 7 Local authorities subsidies
15 Landlords equity
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Most difficult (technical amp political) but top priority = create or improve the legal framework - must be clear and stable - must allow (some) rent increase accelerated procedure for conflict
resolution (arbitration committee) property recovery - must be enforced
Next come financial issues - compare (risk return) couple with other investments (real estate and
financial products) - make the necessary adjustments through taxation and guarantees - provide finance (long-term credit) For low-income - look for reliable non-profit investors - provide subsidies (soft loans and guarantees etc) - make sure they comply with agreed commitments - public housing only in case of emergency (better local than central)
20
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
Finance
Subsidies
The Growing Role of Housing Allowances
Public Housing
Social Rental Housing A great variety
Providers and Funding Arrangements
Conclusion
Thank you for your attention
Claude Taffin +33 6 73 01 01 55 ctaffin23gmailcom
21
How to Develop a Sustainable Rental Housing Market
Contents
Need for Rental Housing
The Size of the Rental Housing Stock
Potential Landlords
Private Rental Who are the Landlords
How to Develop Affordable Rental Housing
Private Rental Market Landlord and Tenant Relationship
Private Rental Market Examples of Duration and Termination of the Contract
Rent Setting Examples France Germany
Profitability and Risk
France Tax Incentives for Investorsin Newly-Built Rental Housing
United States The Low Income Housing Tax Credit (LIHTC)
