The European city famous for being home to Mozart, Beethoven, and Sigmund Freud. Also, it is famous for being the 2nd largest German-speaking city in the world. Though, what Vienna is most famous for, and don’t argue, is the fact that 60% of its almost 2 million residents live in social housing units. Ok, maybe not that big of a claim to fame, but for those who have an interest in social housing, it is somewhat interesting. Now, I realise that quoting social housing inhabitant percentages isn’t as romantic a marketing point one can find for the “City of Music”, but it certainly begs the question; why is it so high?
To understand this, we must first understand the supply model of social housing, again, sounding exciting… The European or Vienna model, is something discussed when suggesting possible solutions to the housing crisis. But why is it needed? Well as of late, public policy has shifted from the view that supplying housing is a social and needs-based activity. This shift has meant that it is now viewed as an investment activity driven by profit and capital gains. Thankfully this may be reversing, recent budget announcements indicate that focus is shifting back to a needs-based view. I wrote a blog on this as well, another page-turner! Self-promoting finished. This view, when combined with a non-interventionist approach, in relation to the availability of land has strengthened the market power of investors, much to the expense of society. Cutting a long story short and massively simplifying it, this resulted in a housing crisis.
Obviously, these are not the only factors that have allowed the housing crisis to reach such levels, just a few of many. So what have other countries, or in particular the city of social housing (Vienna) done so well? What is the Vienna model? Get to the point!
OK, I hear you, the Vienna or cost rental model is a means of supplying social housing in which rent is calculated by calculating the amount of money required to deliver, maintain and manage the units. Rent is allocated by assessing the amount each person can pay, through income assessment. The basic underlying principle is that no person should pay more than 1/3 of their income on housing. Think of what it is like in Dublin! The idea is to make pricing stable, and not to be decided by the increasingly turbulent market forces. The model suggests that “off the book” funding of public enterprises, funding which doesn’t add to government debt, should be used. Another possible issue surrounding the reclassification of AHBs (I wrote another blog on that too…). Admittedly this model is geared towards middle-income families, though in Vienna, well-designed neighbourhoods result in mixed income social housing units. Here, tenants can buy their properties if they are in a position to do so.
Now, this is not some far-flung thinking of someone in a software company but something which is actually happening here in Ireland. Take the Enniskerry Road project, which is being delivered by Respond and Tuath housing associations in partnership with Dun Laoghaire-Rathdown County Council. This project aims to deliver 105 social homes and 50 two-bedroom cost rental homes. The AHBs will manage the homes, funding has been delivered through the Housing Finance Agency and the Department of Housing, Local Government, and Heritage. Similar projects are being delivered, these include St Michael’s Estate in Inchicore.
The implementation of a cost rental model in Ireland will not happen overnight. However, it does seem that it will be included more and more in the government’s plans to deliver social housing. It is likely that the benefits will take a long time to become apparent, perhaps a decade. Obviously, this is just a brief account of what exactly cost rental is, like I said this is more the ramblings of a software company employee than a comprehensive guide to solving the housing crisis. Though something needs to be done, and who knows one day we as a country may have the same claim to fame as Vienna, and yes it is a claim to fame.
Healy, T., and Goldrick-Kelly, P. (2018). Ireland’s housing crisis – The case for a European cost rental model. Administration 66, 2, 33-57,