4. Material i mètode
6.2 Test de força:
In this section we identify the extent to which individuals living in income poor households might benefit from the three policies/ system features that we have identified.
Social and other below market rental housing
There are two countries where we can establish unambiguously what is predominantly social rented housing and other rent controlled housing: the Netherlands and the UK.
These countries contain among the largest social rented sectors among our countries;
unfortunately it is not possible to identify the sector separately in Sweden and Germany.
This is especially important in Sweden where the municipal housing sector is still significant (about one-fifth of housing), but less important in Germany where the ‘social’
sector has shrunk considerably to about five per cent of the stock. However, in Sweden the ‘unitary’ element of the rental sector is emphasised in the way that mainstream municipal housing is identified as ‘market rental’ housing in EU-SILC.
Some 27.7 per cent of individuals are housed in this sector in the Netherlands and 17.7 per cent in the UK. Moreover, more than 40 per cent (42.7%) of people living in poverty in the UK and more than half (55.6%) of those in the Netherlands live in the sector (Table AP2B). The size of the sectors identified as BMR in the other four countries is always under 10 per cent, being largest in Portugal (7.6%), and smallest in Sweden (2%) (Table A2B).
Outright home-ownership
Outright home-ownership is a very important sub-tenure in three of the countries. It plays an important role in some transition countries where large-scale privatisation has taken place, and this is the case in Hungary where it houses almost three-quarters of people and 70 per cent of the poor (Table AP2B). Outright ownership is also a feature of southern European welfare regimes, including Portugal where half the population live in outright ownership and slightly more than half of the poor are housed in this way. It is also significant in the UK, a liberal welfare regime where just over one-quarter of both the general population and the poor live in the sector. The relatively high level of outright ownership in the UK can be attributed to the relatively mature ownership sector and the impact of discounted sales of social housing to tenants. In the five countries where we are able to identify outright owners the sector is greatest among pensioners.
Unfortunately, outright owners are not identified separately from mortgaged owners in Germany in EU-SILC.
Housing allowances
Housing allowances are received by between 2.7 per cent (Germany) and 11.8 per cent (UK) of people in the six countries, although the figure in Germany excludes housing-related transfers paid through the social assistance system, and it is therefore difficult to assess their importance (Table B3). They are most widespread in the northern European countries in both social democratic (Sweden and the Netherlands) and liberal (UK) welfare regimes, where more than 10 per cent of people live in households that benefit from housing allowances. They are a less far-reaching policy instrument in the southern and transition regimes of Hungary (8%) and Portugal (6.5%).
Housing allowances are also an instrument that is almost always targeted on poor households. Between 40 and 45 per cent of the poor live in households in receipt of housing allowances in Sweden, the Netherlands and the UK (Table BP3). Even in Hungary, where only a small proportion of all households receive housing allowances, a quarter of poor people benefit from them. Portugal is the exception as a smaller proportion of poor people live in households receiving housing allowances (2.2%) than the population as a whole (6.5%).
6.3 Affordability
In this section we examine affordability according to two concepts:
Residual income approach: we examine the impact that gross and net housing costs have on the level of poverty.
Housing cost burden: we examine the proportion of individuals living in households whose housing expenditure exceeds a threshold of 40 per cent of net income.
The impact of housing expenditure on poverty rates
Table 6.1 details the impacts of housing costs on poverty rates in the six countries. In the table poverty rates are presented in three stages:
before housing costs;
after gross housing costs; and
after net housing costs.
The purpose of identifying poverty rates after gross housing costs separately from net housing costs is so that the impact of housing allowances can be identified separately from any effects arising from the different tenures. This is different from the other
indicators as the findings cannot be presented in terms of a standard which is not met by varying proportions of poor and non poor people.
Table 6.1 The impact of housing expenditure on poverty rates
MR BMR OO Ave. ORO MO
DE BHC 20.6 24.5 7.8 14.0 -
-AGHC 23.5 24.9 14.2 18.4 -
-ANHC 23.2 24.4 14.1 18.3
HU BHC 19.7 23.7 11.2 12.2 11.6 9.2
AGHC 20.9 25.1 15.6 16.3 15.4 16.4
ANHC 20.5 23.8 15.3 16.0 15.1 15.9
NL BHC 34.1 23.1 4.8 11.5 15.6 3.3
AGHC 58.9 34.6 8.3 18.4 12.8 7.7
ANHC 58.9 29.8 8.1 16.9 10.8 7.8
PT BHC 26.5 27.4 14.1 17.2 18.1 6.0
AGHC 36.9 28.2 16.8 20.1 19 12.2
ANHC 37.1 28.2 16.8 20.2 19.2 11.8
SE BHC 24.5 25.5 5.9 11.6 11.1 4.4
AGHC 41.3 39.2 7.0 17.5 12.7 5.4
ANHC 38.5 37.6 6.6 16.4 12.1 5.1
UK BHC 30.1 47.6 11.7 19.7 20.7 6.7
AGHC 43 58.8 14.8 25.0 19.8 12
ANHC 41 51.1 15.3 23.9 20.3 12.5
MR = market rental; BMR = below market rental; OO = owner occupied; Ave = average; ORO = outright owner; MO = mortgaged owner
BHC = before housing costs; AGHC = after gross housing costs; ANHC = after net housing costs Source: Derived from Tables A4A, A4B and A4C
Social rented and other below market rental housing
The role of social rented housing can be identified in the data for the Netherlands and the UK. To examine its role in poverty we can examine poverty before and after gross housing costs in order to separate the tenure affect from the impact of housing allowances.
The poverty rate having taken into account gross housing costs rises substantially (by more than 10 percentage points) among people living in the sector in both these countries, substantially more than the general rise in poverty caused by gross housing costs (Table 6.1). This holds across every household type in the UK although the rise is smaller (2.7 pp) among Dutch social renters than the average (4.0 pp) and virtually the same among lone parents (about 18 pp) (Tables A5A, A5B).
It is notable however that the general rise in poverty is greater still among Dutch market renters (a rise of 24.8 percentage points), suggesting that social and other below market
rental housing limits the impact of housing costs. This holds across every household type (Tables A5A and A5B). The difference is notably more muted in the UK, although the rise among social renters (11.2 pp) is still greater among market renters (12.9 pp) (although the pattern is reversed among pensioners and the rise is almost the same among singles).
In the other four countries the sectors identified as ‘below market rent’ in the data show some different patterns. The poverty rate after gross housing costs rises by more than 10 per cent in the Swedish BMR sector (but it should be noted that this excludes the mainstream municipal rented sector). In contrast very small rises (of between 0.4 and 1.4 pp) are shown in the German, Portuguese and Hungarian BMR sectors. The rise in Hungary is actually greater than in the market rental sector, but in Portugal it is smaller.
Outright home ownership
As we might expect, in each of these five countries, outright owners experience better than average impacts on poverty rates as a result of gross housing costs. Indeed in two of the five countries (the Netherlands (-2.8 pp) and the UK (-0.9 pp)) the poverty rate among outright owners actually falls after taking into account gross housing expenditure (Table 5.1). The poverty rate rises most in Hungary (3.8 pp) and is also quite close to the overall increase in poverty (4.1 pp); this may be attributed to the prevalence of the tenure among non-poor households as well as among the poor. The increase in poverty arising from gross housing costs is lower than average among outright owners in every household type category in the UK, Sweden and the Netherlands; and also the case in every household type category in Portugal other than singles (where the rates are similar) (Tables A5A and A5B). Pensioner poverty falls in Sweden, Portugal and the Netherlands on this basis and it falls among couples and couples with children in the UK. Only in Hungary is the picture mixed at the household level, but the increase in outright owner poverty is always similar to the average.
Housing allowances
We assess the impact of housing allowances on poverty rates by comparing poverty rates after gross housing costs (AGHC) with poverty rates after net housing costs (ANHC). Housing allowances have the effect of limiting the impact of housing expenditure on general poverty rates in each of the six countries with the exception of Portugal, where there is a very small (0.2 pp) increase in poverty when we compare poverty rates after net housing costs with the poverty rate after gross housing costs. In the other countries, housing allowances overall contribute to a small overall reduction in poverty rates of between 0.1 percentage points (in Germany, where not all housing-related assistance is measured by housing allowances) and 1.5 pp in the Netherlands.
These reductions are not sufficient to counteract the rise in poverty after gross housing costs.
The small reduction in poverty rates arising from housing allowances holds across household types in the four of the five countries where such falls are registered with the sole exception of couples with children in the Netherlands among whom the poverty rate remains unchanged (Tables A5B and A5C). Of note are the larger reduction in poverty rates among lone parents in the Netherlands (-7.5 pp) and Sweden (-6.5 pp). In Germany the impacts at the level of every household type are very small. In Portugal small increases in poverty are registered among every household type other than couples with children.
In the social and other below market sector in the Netherlands and the UK the impact of the housing allowance is much greater than in other tenures. The poverty rate after net housing costs in this sector is almost five (4.8) percentage points lower than after gross costs in the Dutch sector and nearly eight (7.7) percentage points lower in the UK sector. The pattern holds at the level of the household type, with a 14 (13.6) percentage point fall among UK pensioners in the social rented sector, and a 15 (14.8) percentage point fall among Dutch lone parents in this sector (Tables A5B and A5C). Particularly in the UK this implies that it is the combination of social rented housing and the housing allowance that has an impact on affordability.
The burden of housing expenditure: the ratio approach
Social rented and other below market rental housing
To examine the effects of social rented housing on affordability we examine the proportions of individuals whose gross housing expenditure exceeds the threshold of 40 per cent. This allows us to examine the role of the tenure separately from the housing allowance.
As noted above, what is predominantly social rented housing can be identified clearly in the data in the Netherlands and the UK and we examine the impact of this tenure in these countries separately, and then proceed to examine the ‘below market rent’ sector in the other countries.
Figure 6.1 Percentage with gross housing costs > 40% income
We would expect to see higher levels of affordability in the social rented sector, although we should also note that the ratio indicator is especially vulnerable to an income effect: since the sector houses disproportionate numbers of people with lower incomes lower rents may nonetheless result in a higher proportions of income being taken in housing expenditure compared to tenures housing a higher proportion of higher income groups.
Certainly a higher proportion of social renters as a whole fail the 40 per cent affordability indicator in both the Netherlands and the UK, although the differential is much wider in the UK (Figure 6.1). In the UK the failure rate is higher among social tenants than in any other tenure, but in the Netherlands the failure rate is very substantially higher in the market rental sector. This may be attributable to the high rental threshold at which rents become decontrolled in the Netherlands. The higher than average failure rate among social tenants might in part be explained by differences in household composition in the tenure compared to other tenures. For example both Dutch and UK social rented sectors house half of all lone parents (Table A2). Nonetheless the above average failure rate among social tenants in the UK applies across all household types and in the Netherlands across all apart from lone parents and ‘others’ (Table B5).
The impact of different income profiles in the different tenures on this indicator can be much reduced by examining the poor population separately (Figure 6.1). This indicates an above average failure of the 40 per cent affordability threshold in both countries, but the difference in the Netherlands is small. In the UK this holds across all household types, but in the Netherlands this does not always seem to be the case although sample
sizes are often under 50 (Table BP5). This said it should be noted that the failure rate on this indicator is 75 per cent among poor Dutch social renters and 85 per cent among their British counterparts. Among the poor population, the failure rate in both countries is lower than in the market rental sector, which might be regarded as a suitable benchmark against which to compare the social rented sector. This appears to hold between household types, although sample sizes in the market rental sector are all below 50 (Table BP5).
In the other four countries ‘below market rental’ (BMR) housing produces some mixed results. The proportion of BMR tenants with gross housing costs over 40 per cent of income is below average in Hungary and Portugal and above average in Germany and Sweden (where, it should be remembered, the mainstream municipal housing sector is classified in the data as ‘market’ rental) (Table B5). There are some differences between household types in Germany, but not in Hungary, while analysis at this level is hindered by small sample sizes in Sweden and Portugal. When the poor are examined separately the failure rate in the BMR sector remains the lowest of any tenure in Hungary and below average in Portugal (where it is much lower than in the market rental sector) (Table BP5). In Sweden, where the sample size is below 50, the failure rate among poor BMR tenants is just below the average. Analysis between household types is not possible due to inadequate sample sizes.
Outright ownership
To capture the impact of outright ownership on affordability, we again examine affordability on the basis of gross housing costs, so that we can separate the tenure effect from the impact of housing allowances. It should be noted that the data does not identify outright owners separately in Germany.
In each of the five countries with data the proportion of outright owners facing gross housing costs in excess of 40 per cent of their income is lower than the average, usually substantially so (Figure 6.2). For example, in the Netherlands only 2.4 per cent of outright owners pay more than 40 per cent of their net incomes in housing costs, compared to an average of one-fifth (21.1%), almost a third (31.5%) of social renters and more than 70 per cent of market renters (Table B5). The exception is Hungary where the tenure is large the difference is negligible. In four of the five countries, a smaller proportion of outright owners face gross housing costs in excess of 40 per cent of income than any other tenure or sub-tenure. In Hungary the difference is marginal.
The pattern generally holds between household types.
Figure 6.2 Percentage with gross housing costs > 40% income
0 10 20 30 40 50 60 70 80
DE HU NL PT SE UK
Percentage
Outright owner (all) Mortgaged owner (all) All tenures (all) Outright owner (poor) Mortgaged owner (poor) All tenures (poor)
Source: Tables B5, BP5
The pattern remains clear when people living in poverty are examined separately and therefore the compositional effects arising from income distributions between tenures is reduced. In four of the five countries the proportion of poor outright owners facing gross housing costs in excess of 40 per cent of income is substantially lower than their counterparts in any other tenure. For example, in Portugal about 15 per cent (16.8%) of poor outright owners have gross housing costs above the 40 per cent threshold, compared to half (50.6%) of poor mortgaged owners and a quarter (24.6%) of all tenures. In the Netherlands some 15 per cent (14.8%) of poor outright owners exceed the 40 per cent threshold, compared to 70 per cent (71%) of the whole population in poverty and two-thirds (66.5%) of mortgaged owners. This pattern is replicated in the UK and Sweden (where it is less pronounced though still substantial). Only in Hungary is the position of poor outright owners less clear: the proportions are almost identical to all people living in poverty and five percentage points lower than among poor mortgaged owners. This reflects the arithmetic consequence of the preponderance of outright ownership in Hungary (75% of people live in outright ownership). Analysis between household types is limited by small sample sizes, but where they are sufficient these patterns remain consistent (Table BP5).
Housing allowances
The impact of housing allowances on affordability is demonstrated by comparing the proportions whose net housing expenditure exceeds 40 per cent of income with the proportions whose gross housing expenditure exceeds this threshold (Table 6.2).
Table 6.2 Percentage with net housing costs >40% income
ALL MR BMR OO Ave. ORO MO
DE 40% GHC 26.4 27.1 21.2 23.1 -
-40% NHC 25.5 26.2 21.1 22.7 -
-Change -0.9 -0.9 -0.1 -0.4 -
-HU 40% GHC 9.8 4.4 7.4 7.5 7.4 7.2
40% NHC 9.7 4.3 7.2 7.3 7.2 6.9
Change -0.1 -0.1 -0.2 -0.2 -0.2 -0.3
NL 40% GHC 72.3 31.5 13 21.1 2.4 14.6
40% NHC 71.7 20.7 13 18 2.4 14.5
Change -0.6 -10.8 0 -3.1 0 -0.1
PT 40% GHC 25.3 5.2 6.6 7.9 4.9 10.1
40% NHC 24.4 4.4 6.3 7.5 4.9 9
Change -0.9 -0.8 -0.3 -0.4 0 -1.1
SE 40% GHC 30.5 26.7 2.5 12.1 4.2 2
40% NHC 21.2 17.5 1.9 8.5 3.3 1.6
Change -9.3 -9.2 -0.6 -3.6 -0.9 -0.4
UK 40% GHC 50.5 52.6 11.9 22 7.6 14.3
40% NHC 41.7 25.3 11.9 16.6 7.6 14.3
Change -8.8 -27.3 0 -5.4 0 0
GHC= gross housing costs; NHC = net housing costs
MR = market rental; BMR = below market rental; OO = owner occupied; Ave. = average; ORO = outright owner; MO = mortgaged owner
Source: Tables B5, B6
In all of the countries the proportion of people in households whose housing costs exceed 40 per cent of their incomes is reduced by housing allowances, but overall these reductions are small. In Germany, Hungary and Portugal the reduction is less than one percentage point, and this applies across all tenures. The reduction in the Netherlands (3.1 pp), Sweden (3.6 pp) and the UK (5.4 pp) is larger. There is a distinct tenure pattern to these impacts. In the Swedish rental sector the proportion exceeding the threshold is reduced by around 9 pp (9.3 pp), similar to the reduction the Dutch social rented sector (10.8 pp). There is an 8.8 pp reduction in the UK market rental sector, but the largest reduction in any of the tenures in the countries is in the UK social rented sector. The proportion of UK social tenants where housing costs exceed 40 per cent of income is reduced from more than half (52.6%) to a quarter (25.3%). Reductions are also seen using the 30 per cent threshold: a 10 pp (9.4 pp) reduction among Swedish tenants and a 25 pp (24.8 pp) reduction among UK social tenants.
Figure 6.3 Impact of housing allowances on affordability
Percentage point reductions in individuals living in poor households with housing costs > 40% income arising from housing allowances
Source: derived from Tables B5, BP5, B6, BP6
The potential for housing allowances to reduce the cost burden of poor households is demonstrated when they are analysed separately in the three countries where they play a major role. There is more than a 20 pp reduction in the proportions of individuals in poor households with a housing cost burden in excess of 40 per cent in Sweden and the UK, and a 14 pp (13.8 pp) reduction in the Netherlands. The reduction among UK social tenants is almost 45 pp (44.9 pp), and among poor Swedish tenants 29 pp.
The evidence suggests a clear impact of housing allowances on affordability in
The evidence suggests a clear impact of housing allowances on affordability in