The Austrian housing market is characterised by a high degree of regulation, a bricks-and-mortar-based subsidy system and a substantial role for limited-profit housing associations. A long history of investment into building subsidised good quality rented homes has resulted in one of the highest proportions of social renters in Europe. In Vienna about every second household lives in a social rented home. Living in a housing association home is still a desirable housing option for a broad range of people, including many middle-income households. Despite a shift in recent years towards housing allowances, the majority of public funding that goes into housing is still spent on bricks-and-mortar subsidies (1). Nonetheless, the housing crisis has also been felt in Austria, in particular in urban areas where private sector rents have increased much faster than incomes and where affordable housing construction is lagging behind demand. This has hit low-income households particularly hard. The new plans for housing are set to exacerbate this trend.
With the new Austrian Government coming into office in December 2017, a series of new housing policies have been announced in the Coalition’s work programme. While it may still take months until these policies will have gone through the parliamentary process, it is worth highlighting some of the suggestions and ask what their implications might be for social housing. Good news first. The new Government restates its commitment to limited profit housing associations, which are the backbone of the subsidised housing system in Austria. However, the programme seems to pave the way for a more residualised understanding of social housing and exposes a clear ideological preference for homeownership. Three points are particularly interesting in this context.
First, the proposal states that ‘social housing should primarily be targeted to those who really need it’ (2), without specifying who exactly they mean with that. Is it low-income households or does it concern specific household types such as lone-parent households, for example? However, what does become clear in the work programme is that there should be ‘a regular adjustment of rent levels for households of higher incomes’ (3). In other words, higher income households should pay higher rents in the social rented sector. This proposal is akin to the ‘pay-to-stay’ policy in England, which, although withdrawn in 2016 after heavy critique, would have meant higher rents for households earning above £31k in England or £40k in London. Contrary to other European housing system, one of the unique characteristics of the Austrian systems is its attractiveness and eligibility for a broad range of income groups. In fact, only the top 20% of earners are currently excluded from applying for a social rented home. If introduced, this policy could lead to a residualisation of social housing tenants and to a reduction of its socio-economic diversity.
The second policy suggestion worth mentioning is the extension of the Right-to-Buy (Mietkauf). While the Right-to-Buy has existed in Austrian limited-profit housing associations since the 1990s, the latest proposals include further tax-incentives to promote the take-up of purchases among renters. This proposal needs to be seen within a political mind frame that clearly favours homeownership over renting. Homeownership is seen as the ‘cheaper, more affordable housing option in the long-term which enables an independent life’ (4). However, while the majority of households in home-ownership are still living in single-family houses, especially in rural areas, house prices in urban areas have spiralled, putting homeownership out of reach for many low and even middle-income households. Moreover, in order to exercise the Right-to-Buy, tenants are required to pay a hefty upfront deposit at the start of their tenancy, which makes it hard for many low-income households to benefit from this incentive.
Finally, the third proposal that I would like to highlight is the much-debated deregulation of private sector rents. It is a peculiarity of rent regulation in Austria that private rents are only fully regulated in older housing stock, that is, in houses built before 1945. This is important given that many inner-city areas consist of 19th century apartment blocks and this has ensured relatively affordable rents for many in central urban areas. The new proposals aim to deregulate a part of the housing law so that landlords in these inner-city areas would henceforth be allowed to charge higher rents in ‘better locations’. This is clearly a result of many inner-city areas becoming more attractive places to live for wealthier segments of the population (re-urbanisation). If implemented, this policy could lead to significantly higher rents in the private rented sector and hence accelerate already occurring processes of gentrification and displacement.
Hence, it remains to be seen how exactly these policy proposals are going to crystallise into actual law but the current proposals are likely to benefit those who can afford to buy a house or flat, whilst making it harder for lower-income households to find an affordable home, especially if they are renting privately in more desirable urban areas.
- Christoph Reinprecht: Social Housing in Austria, in Scanlon, K. et al. (2014): Social Housing in Europe. Wiley Blackwell, London.
- ÖVP/FPÖ: Zusammen. Für unser Österreich. Regierungsprogramm 2017 – 2022, available at: https://images.derstandard.at/2017/12/16/Regierungsprogramm.pdf, p. 47
- Ditto, p. 49
- Ditto, p. 47