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Area: Policy and financing

The discussion on housing regimes dates back to e neo-institutional turn in policy research which occurred during the 1980s. This literature viewed institutions not so much as “formal” entities but more as the culmination of conflicting power relations, market dynamics, and ideology. The study of these dynamics could, in turn, be used to understand the variegated development of post-war welfare states, as exemplified by Esping-Andersen’s seminal Three worlds of welfare capitalism (1990).

Kemeny defined the housing regime as “the social, political, and economic system of housing supply, distribution, and consumption, which determines the housing market opportunities of a certain period” (1981, p. 13). His framework follows the logic of the historical and institutional structure of society. Kemeny (2006) argues that, due to the central role of real estate in modern capitalism, housing systems follow similar paths, albeit with  different logics. Studying the emergence of regimes of a different nature between countries, he distinguished between unitary and dualized housing regimes, based on their rental-market systems, that is: (a) countries with an open private sector but with a firmly regulated public sector are characterized by a dual rental market; and (b) societies where the private and public sectors are strictly regulated have a unitary rental market. In dualist countries (primarily the Anglo-Saxon ones), homeownership is commonplace, while in countries with an integrated/unitary system (such as Germany, Netherlands, and Scandinavian countries) renting is a realistic and even competitive alternative to ownership. Kemeny highlighted that the dominance of homeownership is not organically developed but is socially and politically constructed.

The above conceptualization of housing regime based on the functioning of rental market systems does not mirror the (Foucaultian) political and conflictual approach of Clapham, for whom a housing regime stands for a “set of discourses and social, economic and political practices that influence the provision, allocation, consumption [of housing] and housing outcomes in a given country” (2019, p. 24). He views policy as an arena where actors “negotiate and bargain” through discursive processes (Ruonavaara, 2020b). Clapham clearly distinguishes regime types from housing regimes. Regime types are useful for categorization since they can function as a baseline for comparative studies. However, “every housing regime is unique”(Ruonavaara, 2020b). Because of the complexity of the concept, Clapham (2019, p.17) proposes a three-stage analysis for housing policy (Figure 1).

Ruonavaara (2020b) finds Clapham’s approach nuanced but too general and broad, which – according to him - makes it less applicable. On the other hand, Hegedüs (2020) considers Clapham’s (2002) housing pathway reasonable, as it describes housing provision forms as a result of interactions. In line with Clapham, he argues that “interventions within the housing system can only be understood in the context of interactions between different housing market actors” (Hegedüs, 2020, p. 569). Consequently, an analysis that only focuses on the rental sector would lead to narrowed interpretations with low explanatory power.

More recently, Ruonavaara provided a new definition of housing regimes, which combines the elements of previous theories. He defined housing regime as a “set of fundamental principles according to which housing provision operates in some defined area (municipality, region, state) at a particular point in time” (2020a, p. 10). These principles are present in discourses, institutional arrangements, and political interventions. All actors have certain principles when operating in the system of housing provision at a given time and place. Housing regimes can be considered as the “principles of operation” (Ruonavaara, 2020a). In this sense, the housing regime concept faces challenges in its ability to represent an effective analytical tool for today’s housing systems. For Stephens (2020), it is necessary to rethink housing regime as a way to find middle-range theories given that current accounts of neoliberal convergence (Aalbers, 2016; Clapham, 2019) barely manage to explain the role of regime path-dependences in continuing to shape variegated housing outcomes.

References

Aalbers, M. (2016). The financialization of housing: A political economy approach. In Routledge studies in the modern world economy (1st ed.). Routledge.

Clapham, D. (2002). Housing Pathways: A Post Modern Analytical Framework. Housing, Theory and Society, 19(2), 57–68. https://doi.org/10.1080/140360902760385565

Clapham, D. (2019). Remaking housing policy: An international study. Routledge Taylor & Francis Group.

Esping-Andersen, G. (1990). The Three Worlds of Welfare Capitalism. Polity Press.

Hegedüs, J. (2020). “Limits of the Kemeny’s Housing Regime Theory” A Comment to Stephens’ Paper. Housing, Theory and Society, 37(5), 567–572. https://doi.org/10.1080/14036096.2020.1816569

Kemeny, J. (1981). The myth of home-ownership: private versus public choices in housing tenure. In Routledge Direct Editions. Routledge & Kegan Paul.

Kemeny, J. (2006). Corporatism and Housing Regimes. Housing, Theory and Society, 23(1), 1–18. https://doi.org/10.1080/14036090500375423

Ruonavaara, H. (2020a). Rethinking the concept of ‘housing regime.’ Critical Housing Analysis, 7(1), 5–14. https://doi.org/10.13060/23362839.2020.7.1.499

Ruonavaara, H. (2020b). Rethinking Jim Kemeny’s Theory of Housing Regimes. In Housing, Theory and Society (Vol. 37, Issue 5, pp. 519–520). Routledge. https://doi.org/10.1080/14036096.2020.1827626

Stephens, M. (2020). How Housing Systems are Changing and Why: A Critique of Kemeny’s Theory of Housing Regimes. Housing, Theory and Society, 37(5), 521–547. https://doi.org/10.1080/14036096.2020.1814404

 

Created on 24-02-2022 | Update on 08-03-2022

Related definitions

Housing Governance

Author: T.Croon (ESR11), M.Horvat (ESR6)

Area: Policy and financing

The shift from ‘government’ to ‘governance’ has been debated since the early 1970s. Whilst state interventionism had been widely embraced within western societies during the post-war decades, governments gradually moved from exercising constitutional powers to acting as facilitators and cooperative partners (Rhodes, 1997). Over the course of a few decades, this resulted in governance as ‘interactive social-political forms of governing’ (Nag, 2018, p. 124).  Hira and Cohn (2003, p. 12), influenced by Keohane (2002), define governance as “the processes and institutions, both formal and informal, that guide and restrain the collective activities of a group”. Its decentralised and flexible nature could still include public actors but would also leave space for private and third-sector parties to provide services in hybrid and temporary institutional arrangements. To formulate one single definition of ‘housing governance’ as a particular mode of governance is however difficult due to its multilevel character. Housing could relate to either a family home, a housing association, or a complete local/national housing governance framework. On a household level, Wotschack (2005, p. 2) defines governance as managing “the daily time allocation of spouses by household rules and conflict handling strategies”. The work of Wijburg (2021) indicates that local/municipal governance entails a set of public interventions, strategies, policies and provisions used to provide local needs (e.g. housing supply). On the national level, Yan et al. (2021) define public rental housing (PRH) governance as “a structure of a wide range of government and non-governmental actors that act in all its phases of PRH provision from policy design to implementation and realisation”.[1] This specific definition on PRH combines the domestic definition of governance with Wijburg’s understanding of governance on the local level. Within the Chinese context, the national government provides policies and creates nationwide operational methods, whilst local governments implement and formulate the policies locally (Yan et al., 2021). Critics point out that a more decentralised governance structure complicates the public accountability of housing provision. Peters and Pierre (2006, p. 40) distinguish problems concerning the ‘isolation’ and ‘enforcement’ of accountability. The former refers to demarcation, as it is easier to measure the performance of a government housing agency directly responsible for new build and operations, than those from the private sector in an indirect role trying to stimulate and facilitate other actors and contracting out construction and operations (Shamsul Haque, 2000). The latter relates to the accountability deficit that arises when responsibility is transferred from democratically governed municipal agencies to actors without a representative institutional arrangement, and thus without control mechanisms for tenants or the wider population (Mullins, 2006). Throughout history, understanding of governing has evolved together with the role of government. The state plays a different role in capitalism, corporatism and socialism, which has varying effects on local and/or (inter)national levels. Whilst the above paragraphs describe housing governance within a democratic governance regime, transferring the conceptual debate to autocratic or hybrid regimes would pose difficulties. Thus, finding a unique definition of housing governance applicable in all spheres remains a challenge, and the specific context must be carefully considered. Important challenges remain, and as housing provision mechanisms evolve, further exploration of housing governance, especially on a municipal level, are likely to gain importance (Hoekstra, 2020). [1] “Housing provision is a physical process of creating and transferring a dwelling to its occupiers, its subsequent use and physical reproduction and at the same time, a social process dominated by the economic interests involved” ibid.

Created on 16-02-2022 | Update on 21-02-2022

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Area: Policy and financing

Housing is usually deemed unaffordable when it consumes more than a set percentage of a household's monthly income. The Eurostat (2022) and the OECD (Chung et al., 2018) follow this threshold approach and define households overburdened with housing costs as those that spend more than 40% of their disposable income on housing. However, this indicator fails to capture financial hardship, particularly among lower-income households. In fact, lower-income households may be spending less than 40% of their income on housing and yet failing to meet adequate consumption levels for other goods. As a response, the residual income approach ascertains housing (un)affordability by defining a minimum level of consumption for a set of goods according to particular household types. The residual income approach builds on consumption data to define the minimum level of income necessary for a household to survive after housing costs. The main shortcoming of this approach is that relies on subjective measures of what constitutes the necessary minimal expenses for a household. These two definitions of affordability navigate two tensions 1) between housing and other types of consumption and 2) between the individual conceptions of what is affordable and what the government considers to be affordable (Haffner & Hulse, 2021). More recently, scholars have emphasized the multi-faceted nature of affordability to include commuting and transport costs together with energy costs (Haffner & Boumeester, 2010). Other approaches focus on supply-side measures, for instance on the share of the housing stock that a household can afford (Chung et al., 2018). Evolutions in the measurement of affordability bear witness to the complexity of housing systems. Affordability is not only dependent on housing consumption but also on housing supply, particularly in inelastic markets where providers have considerable power, see for example Kunovac & Zilic (2021). At the same time, displacement pressures and rising energy costs in an older and inefficient stock add pressure on households to access affordable housing.

Created on 21-04-2023 | Update on 22-05-2023

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Area: Policy and financing

Window guidance is a credit policy allowing central banks to steer bank lending toward certain economic activities. In the post-war period, it was common for both developed and emerging economies to employ various forms of credit control and allocation. However, these policies were virtually discontinued by the 1980s and the mandate of the central banks was reduced to controlling inflation through interest rates. Housing affordability and sustainability are strongly interlinked with monetary policies, particularly because housing prices and supply rely on debt for financing (Muellbauer, 2018). This link is embodied in inflation-adapted interest rates, which are used by central banks to “cool down” the economy and control prices. Currently, high inflation has pushed central banks all over the world to increase interest rates. Increases in interest rates impact the interbank lending rates such as the Euribor or the Libor and ultimately affect the price of credit in an economy. This then influences in particular capital-intensive industries such as housing development and renovation. Social housing organisations (SHOs) which provide social -thus affordable- rental housing, particularly in North-Western Europe, are dependent on credit to finance not only the provision of housing, but also the energy-efficient renovation of their stock. The rise in interest rates resulting from central banks’ monetary policy aimed at curbing inflation puts the financial viability of renovation and new construction in jeopardy. This insight is not new, as the dependence on credit for renovation and maintenance was already foreseen as an issue in the late 90s by the British housing economist Christine Whitehead (1999). Traditionally, governments support social housing providers through grants, subsidies and through the guaranteeing of their debt (Lawson, 2013). For example, publicly owned social housing providers in Germany have their debt rated equally to that of their main owners: municipalities and regions. As a result, their financing costs also benefit from a high rating implying low-interest rates for their debt. This is also the case in France and the Netherlands where ultimately it is public institutions that guarantee SHO debt. For instance, a Dutch social housing provider raises debt at a triple AAA rating, that of the Dutch state. This lowers their interest costs in comparison to that of other companies which may be rated lower, hence have a higher risk premium and pay more for their debt (Fernández et al., forthcoming). In an inflationary environment, where interest rates rise across the board, this means higher financing costs for SHOs despite their risk premium remaining constant. Window guidance is relevant in this context because it would allow central banks to set a lower interest rate for lending to certain activities, thus creating a window. During the period between 1945-1980, advanced and emerging economies alike implemented interventions on credit and capital markets. Central banks would align lending with industries, exports and manufacturing while increasing interest rates for less desirable sectors (Bezemer et al., 2023; Hodgman, 1973). According to Bezemer et al., (2023) based on Hodgman (1973) and Goodhart (1989 pp. 156–158), ‘credit guidance’, ‘credit controls’, ‘credit ceilings’, ‘directed credit’, and ‘moral suasion’ are also common names for these types of policy. More recently, organisations such as Positive Money have been advocating for a sovereign money proposal where banks would obtain funds from their national central bank with limitations on their usage (Youel, 2022). This enhanced control over bank lending opens up the possibility of earmarking private capital for investment in decarbonisation activities. For example, lending for speculative purposes or for highly polluting activities could be curtailed while the financial viability of environmentally friendly activities could be expanded. Ultimately, credit controls offer the possibility to guide credit toward the provision of affordable and sustainable housing and away from sectors such as fossil fuels or speculative bubbles.  

Created on 24-04-2023 | Update on 22-05-2023

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Area: Policy and financing

A universal definition of social housing is difficult, as it is a country-specific and locally contextualised topic (Braga & Palvarini, 2013). This review of the concept focuses on social housing in the context of the UK from the late 1980s, which Malpass (2005) refers to as the phase of ‘restructuring the housing and welfare state’, to the early 2000s, known as the phase of the ‘new organisation of social housing’. In response to previous demands for housing, such as those arising during the Industrial Revolution, and recognising the persistent need to address the substandard quality of housing provided by private landlords in the UK (Scanlon et al., 2015), the primary objective of social housing has historically been to enhance the overall health conditions of workers and low-income populations (Malpass, 2014; Scanlon et al., 2015). However, this philanthropic approach to social housing changed after the Second World War when it became a key instrument to address the housing demand crisis. Private initiatives, housing associations, cooperatives and local governments then became responsible for providing social housing (Carswell, 2012; Scanlon et al., 2015). Social housing in the UK can be viewed from two perspectives: the legal and the academic (Granath Hansson & Lundgren, 2019). Along these two perspectives, social housing is often analysed based on four main criteria: the legal status of the landlord or provider, the tenancy system or tenure, the funding mechanism or subsidies, and the target group or beneficiaries (Braga & Palvarini, 2013; Carswell, 2012; Granath Hansson & Lundgren, 2019). From a legal perspective, social housing maintained its original goals of affordability and accessibility during the restructuring period in the late 1980s. However, citing the economic crisis, the responsibility for developing social housing shifted from local authorities to non-municipal providers with highly regulated practices aligned with the managerialist approach of the welfare state (Granath Hansson & Lundgren, 2019; Malpass, 2005; Malpass & Victory, 2010). Despite the several housing policy reviews and government changes, current definitions of social housing have maintained the same approach as during the restructuring period. Section 68 of the Housing and Regeneration Act 2008, updated in 2017, defines social housing as low-cost accommodation provided to people whose rental or ownership needs are not met by the commercial market (HoC, 2008; 2017, pp. 50-51). The Regulator of Social Housing, formerly the Homes and Communities Agency, has adopted the earlier definition of social housing and clarified which organisations provide it across the UK. These organisations include local authorities, not-for-profit housing associations, cooperatives, and for-profit organisations (RSH, 2021). In contrast, the National Housing Federation emphasises the affordability of social housing regardless of the type of tenure or provider (NHF, 2021). From an academic perspective, Malpass (2005) explains that during the restructuring phase, social housing was defined as a welfare-supported service – although it did have limitations, which meant that funding principles shifted from general subsidy to means-tested support for housing costs only, which later formed the basis for the Right to Buy Act introduced by the Thatcher government in the early 1980s (Malpass, 2005, 2008). The restructuring phase, however, came as a response to the housing 'bifurcation' process that began in the mid-1970s and accelerated sharply from the 1980s to 1990s (Kleinman et al., 1998; Malpass, 2005). During this phase, the role of social housing in the housing system was predominantly residual, with greater emphasis placed on market-based solutions, and social housing ownership concerned both local authorities and housing associations (Malpass & Victory, 2010). This mix has influenced the perception of social housing in the 'new organisation' phase as a framework that regulates public housing intervention for specific groups and focuses on enabling non-municipal providers (Malpass, 2005, 2008; Malpass & Victory, 2010). Currently, as Carswell (2012) explains, social housing plays an important role in nurturing a variety of initiatives aimed at providing ‘good-quality’ and ‘affordable’ housing for vulnerable and low-income groups (Carswell, 2012). Oyebanji (2014) sees social housing as any form of government-regulated housing provided by public institutions, including non-profit organisations (Oyebanji, 2014). Additionally, Bengtsson (2017) describes social housing as a system that aims to provide households with limited means, but only after their need has been confirmed through testing (Bengtsson, B, 2017 as cited in Granath Hansson & Lundgren, 2019). To a great extent, social housing in the UK can be seen as a service system that is intricately linked to the welfare state and influenced by political, economic, and social components. Despite being somehow determined by common factors and actors,  the relationship between social housing and the welfare state can sometimes be complex and subject to fluctuations (Malpass, 2008). In this context, the government plays a vital role in shaping and implementing the mechanisms and practices of social housing. While the pre-restructuring phase focused on meeting the needs of the people by increasing subsidies and introducing the right to buy (Stamsø, 2010), the aim of the restructuring phase was to meet the needs of the market by promoting economic growth (privatisation, market-oriented policies and reducing the role of local authorities) (Stamsø, 2010; Malpass, 2005) . The new organisational phase, on the other hand, works to meet and balance the needs of all, with people, politics and the economy becoming more intertwined. Welfare reform legislation passed in 2010 aims to enable people to meet their needs, but through 'responsible' subsidies, leading to a new policy stance that has been described as 'neoliberal' thinking (Hickman et al., 2018). However, there are still no strict legal requirements for the organisation and development of social housing as an independent service system, and most of the barriers to development are closely related to the political orientation of the government, rapid changes in housing policy and challenges arising from providers' perceptions of existing housing policy structures (Stasiak et al., 2021).

Created on 17-06-2023 | Update on 20-06-2023

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