What is social housing?
Social housing is housing that is let at low rents and on a secure basis to people in housing need. It is generally provided by councils and not-for-profit organisations such as housing associations.
Social housing provides affordable housing
A key function of social housing is to provide accommodation that is affordable to people on low incomes. Rents in the social housing sector are kept low through state subsidy. The social housing sector is currently governed by a strictly defined system of rent control to ensure that rents are kept affordable.
Social housing is allocated on the basis of need
Unlike the private rental sector, in which tenancies are offered according to the free choice of the landlord or existing household in question, social housing is allocated according to need.
Each social landlord operates an allocations policy, stating in advance what factors will be taken into account when deciding who gets preference for the limited amount of social housing on offer. These policies must include ‘reasonable preference criteria’ that are set out in law, but beyond this, allocations policies can be drawn up at the discretion of the social landlord.
Social housing is owned and managed by social landlords
Social landlords are the bodies that own and manage social housing. They tend to be non-commercial organisations such as local authorities or housing associations. Housing associations are independent, not-for-profit organisations that use any surpluses they generate to maintain existing homes and to help finance new ones. It is now possible for commercial organisations to build and manage social housing, although this is not yet common practice.
Social housing is tightly regulated
Social housing and landlords are tightly regulated. The Government department currently responsible for overseeing the social housing sector is Communities and Local Government (CLG). CLG has direct oversight of local authority housing. Housing associations are funded by the Government through the Homes and Communities Agency, which is responsible for the construction of new social homes.
Shelter’s view
Any definition of social housing must include the requirement for all social housing to offer:
- low rents affordable for people working on the minimum wage
- security of tenure for life.
Public housing is a form of housing tenure in which the property is owned by a government authority, which may be central or local. Social housing is an umbrella term referring to rental housing which may be owned and managed by the state, by non-profit organizations, or by a combination of the two, usually with the aim of providing affordable housing. In some countries, e.g. Brazil and Spain, qualifying families may own a social housing property rather than renting it. Social housing can also be seen as a potential remedy to housing inequality.Although the common goal of public housing is to provide affordable housing, the details, terminology, definitions of poverty and other criteria for allocation vary.
Asia
Mainland China
In mainland China, the government provides public housing through various sources, such as new housing, abandoned properties, and old flats which are rented at a very low price and called ‘Lian Zu Fang’ (literally ‘low-rent house’or ‘low-rent housing’, Chinese: 廉租房). Additional housing is built by providing free land and exemption from fees to estate developers: the resulting houses are called ‘Jing Ji Shi Yong Fang’ (literally ‘the economically affordable Housing’, Chinese: 经济适用房). The concept of the low-cost rest house can be traced to a 1998 policy statement, but did not truly take off until 2006 due to limited funding and administrative problems.
Hong Kong Main article: Public housing in Hong Kong
In Hong Kong, the government provides public housing through flats which are rented at a lower price than the markets, and through the Home Ownership Scheme, which are sold at a lower price. These are built and administered by the Hong Kong Housing Authority and the Hong Kong Housing Society. Nearly half of Hong Kong population lives in public housing.[1]
Singapore Main article: Public housing in Singapore
In Singapore, the public housing program, particularly the planning and development of new public housing and the allocation of rental units and resale of existing ownership units, is managed by the Housing and Development Board. Day-to-day management of public housing communities has largely been delegated to Town (local community) Councils.
Most of the residential housing developments in Singapore are publicly governed and developed. Most of the residents in public housing are tenants under a 99 year lease agreement.
Since most Singaporeans reside in public housing, public housing in Singapore is not generally considered as a sign of poverty or lower standards of living as compared to public housing in other countries where land constraint is less of an issue and property pricing may be significantly cheaper. Property prices for the smallest public housing can often be higher than privately owned and developed standalone properties such as townhouses and apartments in other countries after currency correlation.
Europe
Austria Main article: Gemeindebau
Gemeindebau (plural: Gemeindebauten) is a German word for “municipality building". In Austria, it refers to residential buildings erected by a municipality, usually to provide low-cost public housing. These have been an important part of the architecture and culture of Vienna since the 1920s
Finland
Finland may have had the first public housing. In 1909, four wooden houses designed by the architect A. Nyberg were built on Kirstinkuja (formerly Kristiinankatu) for the city’s workers. The residents were mainly working-class families with several children. The apartments had an average of five people per room, sometimes up to eight. The tiny apartments were equipped with running water, a pantry and an attic cupboard. Every apartment had its own toilet in the cellar. Electric lighting was installed in 1918.
The homes and lives of worker families in Helsinki from 1909 to 1985 are presented in a museum near the Linnanmäki amusement park.
France Main articles: Public housing in France and HLM
France has a long tradition of state intervention in the housing market. After World War II, the population increased at a rate previously unknown, the rural exodus increased, while war damage had reduced the number of houses in many cities. Rental prices dramatically rose, and the government made a law in 1949 to block them, effectively ending the economic benefits of housing investment. Additionally, construction was strictly regulated which made building very difficult without political support.
The government launched a huge construction plan, including the creation of new towns (“villes nouvelles") and new suburbs with HLM (Habitation à Loyer Modéré, “low-rent housing"). The state had the money, the legal means to acquire the land and could provide some advantages to the companies that built its huge housing complexes of hundreds of apartments. Quality was also effectively regulated, resulting in decent or even top quality housing for the standard of the time (this was in the 1950s and 1960s). Political forces used the HLM weapon effectively, for the family that was given the opportunity to have an HLM could only be thankful to its local mayor; besides, a “communist" mayor was always happy to have as much HLM as possible, for their tenants were poorer and more likely to vote for him, while its “gaullist" neighbour was as much happy to see them leave.
HLM construction was also a major (and illegal) source of political financing: building companies had to pay back the political party of the mayor that launched an HLM program. This resulted in corruption and some scandals.[citation needed]
France still retains this system, a recent law making it an obligation for every town to have at least 20% HLM. Nowadays HLM represents roughly half of the rental market.
While they succeeded in giving lower-income families a place to live, this system also led to the creation of suburban ghettos. There, deprived strata of the population, mostly of immigrant origin and suffering massive under-employment, were left to simmer away from the gentrified urban centres, sometimes becoming rife with social tensions and violence. Tackling this problem at its roots is all but simple, with a lack of success despite many plans, so that a blind “law-and-order" attitude is now common in French internal politics, with few effective results and violent symptoms.[citation needed]
Germany Main article: Modernist Housing Estates
Between 1925 and 1930 Germany was the site of innovative and extensive municipal public housing projects, mostly in Berlin, Hamburg, Cologne and Frankfurt am Main. These Siedlungen (settlements), were made necessary by the dreadful living conditions of pre-war urban tenements. The right to a healthy dwelling was written into the 1919 Weimar Constitution, but few dwellings were built until economic stability in 1925.
These settlements were low-rise, no more than 5 stories, and in suburban settings. Residents were provided access to light, air, and sun. The size, shape, orientation and architectural style of Germany’s public housing were informed by the recent experience of the Vienese and the Dutch, the anti-urban Garden City Movement in Britain, by new industrialized mass-production and pre-fabrication building techniques, by the novel use of steel and glass, and by the progressive-liberal policies of the Social Democrats.
Architect Martin Wagner (with Bruno Taut) was responsible for the thousands of dwellings built in and around Berlin, including the Horseshoe Siedlung (named for its shape), and Uncle Tom’s Cabin Siedlung (named for a local restaurant). But Wagner was second to the city planner Ernst May in Frankfurt. May was responsible for the construction of 23 separate settlements, 15,000 total units, in five years. He ran his own sizable research facility to investigate, for instance, air-flow in various floorplan configurations, construction techniques, etc. The Austrian architect Margarete Schütte-Lihotzky applied the principles of Taylorism to the kitchen workspace and developed the Frankfurt kitchen while working for Ernst May.
Beyond technical research May also published two magazines and embarked on a significant public-relations project, with films and classes and public exhibitions, to make Neues Bauen acceptable to the public. In the late 1920s the principles of equal access to “Licht, Luft und Sonne" and the social effects of a guaranteed “"Existenzminimum" became a matter of lively popular debate all over Germany. One indirect result of this publicity was the American housing movement: a young Catherine Bauer attended one of May’s conferences in 1930, and wrote her seminal “Modern Housing" based on research done in Frankfurt and with Dutch architect JJP Oud.
Increasing pressure from the rising Nazis brought this era to an end in 1933. A majority of the German public housing experts had Social Democrat or Communist sympathies and were forced out of the country.
Netherlands
In the Netherlands, the rent for the cheaper rental homes is kept low through governmental oversight and regulation. These types of homes are known as sociale huurwoningen.
In practice this is accomplished by non-profit private housing foundations or associations (toegelaten instellingen). Due to frequent mergers the number of these organizations dropped to around 430 (2009). They manage 2.4 million dwellings. The majority of the low-rent apartments in the Netherlands are owned by such organisations. Since the policy changes in 1995 the social housing organizations have become financially independent focusing on their role as social entrepreneurs. In most Dutch municipalities there came to exist a certain minimum capacity of social housing throughout the last decades. In many cities such as Amsterdam, The Hague, Rotterdam and Utrecht the percentage of social housing approaches or even passes 50 percent. The public (financial) supervision is done by the central fund for housing (Centraal Fonds Volkshuisvesting).
The Dutch housing policy is based on a concept of universal access to affordable housing for all and the prevention of segregation.
Ireland
In Ireland, public housing and halting sites (sites used by semi-nomadic Traveller communities) have been built by Local Authorities and are known as Local Authority Accommodation. Dublin Corporation and the former Dublin County Council provided the lion’s share of Irish Local Authority Housing, with County Longford having the largest ratio of Local Authority to private housing in the state. Ireland has promoted tenant purchase on favourable terms, and many former social housing areas are now completely or almost completely privately owned.
Former Soviet Union
In the Soviet Union, most of the houses built after World War II were usually 3–5 stories high, with small apartments. In these boroughs, the goal was saving space and creating as many apartments as possible. Construction starting in the 1970s favored 9- and 16-story concrete panel municipal housing in major cities, 7–12 stories in smaller urban areas.
Spain
The aversive mentality of the Spaniards to rental houses and government spending cuts in the 80’s have dropped rented public housing in Spain to a minimum. Rented public houses were relatively common in the Francisco Franco (1936–75) era. With the advent of democracy and the 1978 Constitution, the management of social housing depended mostly on the Autonomous regions. This resulted in a wide variety of laws, which make the issue highly dependent on the region. In spite of this, a scheme for “viviendas de protección oficial” (VPO) has been widely used, consisting of Local Councils allowing for building contractors and developing companies to build in public sites or with public loans on condition that a certain percentage of apartments remain subsidized and under control of the local authorities. This is known as “VPO de promoción privada”, as opposed to the “VPO de promoción pública”, in which the whole property is owned and managed by a government authority. A new plan (“Plan estatal español de vivienda y rehabilitación para el período 2009-2012″) was put forward by the Rodríguez Zapatero government, aiming to make near a million homes available for public housing, relying both on new construction and refurbishment of unused houses.
Sweden Main article: Million Programme
The Million Programme (Miljonprogrammet) is the familiar term for an ambitious housing programme implemented in Sweden between 1965 and 1974 with the aim of building one million new dwellings in 10 years; in the beginning strongly influenced by the “Garden City" developments in England during the 40’s – 50’s, but towards the end the developments were mostly built as single family homes along curving streets and cul-de-sacs and/or as immense tower blocks, similar to many residential districts built in Eastern Europe. Most were built detached from pre-existing neighbourhoods, often some distance from the existing urban areas and connected via mass transit to the older developments and city centre.
A common misconception of the Million Programme is that most (or all) of the residentials are tower blocks of concrete. In fact, the majority of the housing stock consists of apartment buildings with three or fewer floors, terraced houses and one-family homes.
The Swedish public housing is called ‘Allmännyttigt bostadsföretag’ which is mostly made out of flats owned by the local council. There are no economic restrictions for such housing though the majority of the inhabitans are of low-income statues.
United Kingdom Main article: Council house
In the United Kingdom public housing is often referred to by the British public as “council housing" and “council estate", based on the historical role of district and borough councils in running public housing. Local semi-independent non-profit housing Organisations began to operate large numbers of social housing properties since the 1970s in the United Kingdom. Housing Associations are now referred to as “Private Registered Providers of Social Housing" (PRPs). Despite being non-profit based, they charge generally higher rents than council properties. However, in England, the Government[clarification needed] has introduced its rent re-structuring policy, which aims to bring council and RSL rents into line by 2012. Since 1996, public housing has been referred to as “Social Housing" to encompass council and RSLs. Additionally local planning departments may require private-sector developers to offer “affordable housing" as a condition of planning permission. This accounts for another £700m of Government funding each year for tenants in part of the United Kingdom.
Council housing has been around in the united kingdom since around the 1950s tower blocks (allotments)(smeg epps)(council blocks)became very popular and were a great way to house multiple people after world war two, as many houses were to expensive on the uk’s low budget and was proven to be more useful as it would house a lot more people than a house.
Local Authorities have been discouraged from building council housing since 1979. The Parker Morris standard was abolished for those that were built, resulting in smaller room sizes and fewer facilities. And the Right to Buy was introduced, resulting in the move of some of the best stock from public tenanted to private owner occupation.
During the decade of the 2000s, “choice based letting" (CBL)[2] was introduced to help ensure social housing was occupied speedily as tenants moved, but this can still favour the local over the non-local prospective tenant. In a number of local authority areas, due to the shortage of council housing three out of four properties may be designated for priority cases (those living in poor overcrowded conditions, with medical or welfare needs, or needing family support) or homeless applicants in order to meet the councils’ legal obligations to rehouse people in need. The percentage of properties set aside for vulnerable groups will vary dependent on the demand for council housing in the area. All Local Authorities have a Housing Strategy[3] to ensure that council houses are let fairly and fulfil the council’s legal obligations; deal with people in need; and contribute to sustainability of housing estates, neighbourhood regeneration, and social inclusion.
The 1997–2010 Labour Government wished to move Council Housing away from Local Authority management. At first, this was through Large Scake Voluntary Transfers (LSVT)of stock from council’s to Housing Associations (HAs). Not all council property could be transferred, as in some local authorities, their housing stock was in poor condition and had a capital value less than the remaining debts from construction costs—in effect, the council stock was in negative equity.[4] And in some Local Authorities, the tenants rejected the transfer option (e.g., in Camden (London) and Birmingham).[5][6]
The Labour Government introduced a “third way": the Arms Length Management Organisation (ALMO), where the housing stock stays with the Local Authority but is managed by a not-for-profit organisation at arm’s length from the Local Authority. It also introduced the Decent Homes programme, a capital fund to bring social housing up to a modern physical standard. To use this fund, the manager, whether ALMO or HA, had to achieve a 2 or 3 star rating from its inspection by the Audit Commission.[7] This was intended to drive up management standards. Council landlords cannot access this funding, another incentive to transfer management of council housing to an ALMO or HA.
Governments since the early 1990s have also encouraged “mixed tenure" in regeneration areas and on “new-build" housing estates, offering a range of ownership and rental options, with a view to engineering social harmony through including “social housing" and “affordable housing" options. A recent research report[8] has argued that the evidence base for tenure mixing remains thin.
Most UK social housing tenants have the right to swap homes with another tenant even if their landlords are different. This is called a “mutual exchange“.
North America
Canada Main article: Public housing in Canada
The St. James Town high-rise neighbourhood in downtown Toronto. Four towers are public housing, while the rest are private apartments
In Canada, public housing is usually a block of purpose-built subsidized housing operated by a government agency, often simply referred to as projects or community housing, with easier-to-manage town houses. Canada, especially Toronto, still maintains large high-rise clustered developments in working class neighborhoods, a system that has fallen into disfavor in both the UK and US. However, Toronto Community Housing, one of the largest public housing agencies in North America, has a variety of buildings and communities ranging from individual houses to townhouse communities and mid-rise and high-rise apartments in both working class and middle class neighbourhoods. They house low-income Canadians.
Following the decentralisation of public housing to local municipalities, Social Housing Services Corporation (SHSC) was created in the Province of Ontario in 2002 to provide group services for social housing providers (public housing, non-profit housing and co-operative housing). It is a non-profit corporation which provides Ontario housing providers and service managers with bulk purchasing, insurance, investment and information services that add significant value to their operations.
Recently, there has been a move toward the integration of public housing with market housing and other uses. Revitalization plans for properties such as in the notorious Downtown Eastside of Vancouver, and Regent Park and Lawrence Heights in Toronto, aim to provide better accommodations for low-income residents, and connect them to the greater community. In Toronto, for instance, the aims of the reconstruction plans of RegentPark are to better integrate it into the traditional grid of streets, improve leisure and cultural amenities, and construct mixed-income buildings. However, the residents of these communities have had little effective input in the plans and have had mixed reactions to the construction.
A plan to house Vancouver’s homeless is taking shape on the drawing board of a local architect. It calls for the rapid erection of temporary villages assembled from the same type of modular units that mining companies provide for remote workers. “Stop Gap Shelters" is what architect Gregory Henriquez calls it. “All of us in this community have long been advocates for permanent housing," he said. “But we’ve gotten to the point where the numbers of homeless are so staggering that I’m left wondering if we will ever catch up doing it that way. I don’t think we can. I think there has to be a stop-gap measure. And that’s what this is." Henriquez drew up plans for a motel-like village, with 48 suites clustered around a central courtyard. The colourful compound includes a managers’ office, a covered patio, and a second storey meeting room all within a typical 120-by-200-foot city lot.[citation needed]
United States Main article: Public housing in the United States
Bushwick, Brooklyn‘s twenty-story John F. Hylan Houses
In the nineteenth and early twentieth centuries, government involvement in housing for the poor was chiefly in the introduction of buildings standards. New York City’s First Houses, dedicated in 1935, were the the nation’s first public housing project.[9] Most housing communities were developed from the 1930s onward and initial public housing was largely slum clearance, with the requirement insisted upon by private builders that for every unit of public housing constructed, a unit of private housing would be demolished. This also eased concerns of the establishment by eliminating or altering neighborhoods commonly considered a source of disease, and reflected progressive-era sanitation initiatives. Moreover, public housing along with the Federal Highway Program demolished the older, sub-standard housing of communities of color across the United States. However, the advent of make-shift tent communities during the Great Depression caused concern in the Administration. Public housing in its earliest decades was usually much more working-class and middle-class and white than it was by the 1970s. Many Americans associate large, multi-story towers with public housing, but early projects were actually low-rise, though Le Corbusier superblocks caught on before World War II.
A unique US public housing initiative was the development of subsidized middle-class housing during the late New Deal (1940–42) under the auspices of the Mutual Ownership Defense Housing Division of the Federal Works Agency under the direction of Colonel Lawrence Westbrook. These eight projects were purchased by the residents after the Second World War and as of 2009 seven of the projects continue to operate as mutual housing corporations owned by their residents. These projects are among the very few definitive success stories in the history of the US public housing effort. There are also many New York City Housing Authority (NYCHA) efforts that have provided in-demand and inexpensive public housing for decades, see “Public Housing That Worked: New York in the Twentieth Century" by Nicholas Dagen Bloom for a rigorous examination of the U.S. public housing management agency with the country’s most extensive holdings. Bloom’s “Public Housing" dispels common U.S. public housing myths while detailing advances made by NYCHA, see also NYCHA’s own website “Fact Sheet" [2] for elucidation of the magnitude and scope of their work since 1934.
Public housing was only built with the blessing of the local government, and projects were almost never built on suburban greenfields, but through regeneration of older neighborhoods. The destruction of tenements and eviction of their low-income residents consistently created problems in nearby neighborhoods with “soft" real estate markets. Houses, apartments or other residential units are usually subsidized on a rent-geared-to-income (RGI) basis. Some communities have now embraced a mixed income, with both assisted and market rents, when allocating homes as they become available.
Public housing in the US has been overhauled in recent years[when?] after criticism that neglect and concentrated poverty have contributed to increased crime. HUD’s 1993 HOPE VI program addresses these issues by funding renewal of public housing to decrease its density and allow for tenants with mixed income levels. Projects continue to have a reputation for violence, drug use, and prostitution, especially in New Orleans, New York City, Philadelphia, Chicago, and Washington D.C as well as others leading to the passage of a 1996 federal “one strike you’re out" law, enabling the eviction of tenants convicted of crimes, especially drug-related, or merely as a result of being tried for some crimes. Other attempts to solve these problems include the 1978 Section 8 Housing Program, which encourages the private sector to construct affordable homes, and subsidizes public housing. This assistance can be “project-based", subsidizing properties, or “tenant-based", which provides tenants with a voucher, accepted by some landlords.
Latin America
Brazil
Construction of socialized housing in Campo Grande, Brazil using aluminum concrete formwork.
Minha Casa Minha Vida (My House, My Life),the Brazilian government’s social housing program, was launched in March 2009 with a budget of R$36 billion (US$18 billion) to build 1 million homes[10]. The second stage of the program, included within the government Growth Acceleration Program (PAC – Programa de Aceleração do Crescimento) was announced in March 2010[11]. This stage foresees the construction of a further 2 million homes.
Of the total 3 million homes, 1.6 million are for families earning between 0 and 3 times the monthly minimum wage (R$545); 1 million homes are allocated to families with salaries between 3 and 6 times the monthly minimum wage; and the remaining 400,000 homes are for families earning between 6 and 10 times the monthly minimum wage. All funds for Minha Casa Minha Vida properties are provided by the Brazilian public bank, Caixa Econômica Federal[12]. The bank finances development and provides mortgages for qualifying families.
In April 2011, the Minister for Planning, Miriam Belchior announced that 1 million homes were contracted for the Minha Casa Minha Vida in 2010 and that 500,000 homes would be delivered in 2011. The government budget for the programme was R$39 billion in 2010 and R$40.1 billion in 2011[13]. Obelisk International is an investment company associated with the project and involved in building homes in the state of Rio Grande do Norte.[14]
Mexico
At the end of the Second World War, enriched by US investments and an oil boom, Mexico had its first demographic boom, in which the primary destination for rural immigrants was Mexico City. Mario Pani Darqui, a famous architect at time, was charged to build its first big scale project. The Conjunto Urbano Tlatelolco Nonoalco was meant to develop one of the poorest parts of the city, Santiago Tlatelolco, which was becoming a slum. Unfortunately, after a while, instead of giving the residences to the previous residents of Tlatelolco, corruption took place and most of the dwellings were handed to state employees.
After this, Pani was in charge of the Multifamiliar Presidente Alemán, another states’ men housing, this time in a new suburb south of the city. But after all, Mexico has had experience of housing projects since Porfirio Díaz‘s regime, one of those, still remains and is the Bario of Loreto in San Ángel, Álvaro Obregón, D.F., that was a project for a paper factory workers.
Oceania
Australia Main article: Public housing in Australia
Unlike many other countries, much New Zealand state housing of the 20th century was in the form of detached single-family houses similar to, if not as luxurious as other houses in the nation; this is a 1947 development in Oranga, Auckland
Public housing in Australia is usually provided by departments of state and territory governments, with funding provided by both state and federal governments. There are over 300,000 public housing dwellings in Australia, consisting of low-density housing on master-planned estates located in suburban areas, and also inner-city high-rise apartments in Melbourne and Sydney.
In recent decades, rooming and relief housing for the homeless has been privatised, and in recent years this housing has been sold off to avoid maintenance costs and capitalise on sales in a booming property market. In Melbourne, public housing stocks have been in decline for some time.
New Zealand Main article: State housing
In New Zealand, public housing, known as state housing, was introduced by the Government in 1937 for citizens unable to afford private rents. Following WWII, most local authorities also started providing social housing, mainly for elderly people with low incomes.
Affordable housing
Affordable housing is a term used to describe dwelling units whose total housing costs are deemed “affordable" to those that have a median income. Although the term is often applied to rental housing that is within the financial means of those in the lower income ranges of a geographical area, the concept is applicable to both renters and purchasers in all income ranges. This article focuses on the affordability of owner-occupied and private rental housing as social housing is a specialised tenure.
In the United States and Canada, a commonly accepted guideline for housing affordability is a housing cost that does not exceed 30% of a household’s gross income. Housing costs considered in this guideline generally include taxes and insurance for owners, and usually include utility costs. When the monthly carrying costs of a home exceed 30–35% of household income, then the housing is considered unaffordable for that household.
In India,70% of the population lives below the poverty line and there is huge demand for affordable housing.A lot of developers are developing low cost and affordable housing for these population and leading the pack is Tata Housing Development Company,they are developing affordable and low cost housing under the brand name Shubh Griha and New Haven Vasind. The Government of India has taken up various initiatives for developing properties in low cost and affordable segment.They have also looked at PPP model for development of these properties.
Supply and demand
In the United States, a key element in determining affordable housing is acceptable commuting time/distance. In Southern California, for example, a household’s inhabitants must decide whether to pay more for housing to keep commuting time and expense low, or to accept a long and/or expensive commute in order to obtain “better" housing.
Household income
A primary factor in housing affordability is household income. The most common approach is to consider the percentage of income that a household is spending on housing costs.
Another method of studying affordability looks at the regular hourly wage of full-time workers who are paid only the minimum wage (as set by their local, regional, or national government). The hope is that a full-time worker will be able to afford at least a small apartment in the area that he or she works in.
Other countries look at those living in relative poverty, which is usually defined as making less than 60% of the median household income. In their policy reports, they consider the presence or absence of housing for people making 60% of the median income.
Costs
The other major factor is the measurement of housing costs.
Some organization and agencies consider the cost of purchasing a single-family home; others look exclusively at the cost of renting an apartment.
Many U.S. studies, for example, focus primarily on the median cost of renting a two-bedroom apartment in a large apartment complex for a new tenant. These studies often lump together luxury apartments and slums, as well as desirable and undesirable neighborhoods. While this practice is known to distort the true costs, it is difficult to provide accurate information for the wide variety of situations without the report being unwieldy.
Normally, only legal, permitted, separate housing is considered when calculating the cost of housing. The low rent costs for a room in a single family home, or an illegal garage conversion, or a college dormitory are generally excluded from the calculation, no matter how many people in an area live in such situations. Because of this study methodology, median housing costs tend to be slightly inflated.
Costs are generally considered on a cash (not accrual) basis. Thus a person making the last payment on a large home mortgage might live in officially unaffordable housing one month, and very affordable housing the following month, when the mortgage is paid off. This distortion can be significant in areas where real estate costs are high, even if incomes are similarly high, because a high income allows a higher proportion of the income to be dedicated towards buying an expensive home without endangering the household’s ability to buy food or other basic necessities.
Furthermore, the absolute availability of housing is not generally considered in the calculation of affordable housing. In a depressed or sparsely settled rural area, for example, the predicted price of the canonical median two-bedroom apartment may be quite easily affordable even to a minimum-wage worker – if only any apartments had ever been built.
Right to build
An article in the November 2007 issue of Atlantic Monthly reported on a study of the cost of obtaining the “right to build" (i.e. a building permit, red tape, bureaucracy, etc.) in different U.S. cities. The “right to build" cost does not include the cost of the land or the cost of constructing the house. The study was conducted by Harvard economists Edward Glaeser and Kristina Tobio. According to the chart accompanying the article, the cost of obtaining the “right to build" adds approximately $600,000 to the cost of each new house that is built in San Francisco.[1]
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