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Challenge the future
DelftUniversity ofTechnology
The Dutch business model in social renting:
25 September 2014 – Brazil/EU Dialogue seminar, LSE, London
Marietta Haffner OTB – Research for the Built Environment / TU Delft
A historic perspective
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2Social housing in the Netherlands |
Dutch social rental sector – biggest
Haffner et al. 2012 (diverse sources, most recent year)
0%10%20%30%40%50%60%70%80%90%
100%
Social renting Other Owner-occupation Private renting
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3Dutch business model in social renting
Structure
1. History -1990s in a nutshell2. Revolving fund business model3. Institutional landscape4. Ingredients to remember
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4Dutch business model in social renting
From private initiative…
… to “extension of government”•Roots in 19th century civil society •Providing housing for workers, not the most vulnerable•State involvement: Housing Act of 1901•Government influence increased in the 20th century•Social landlords transformed into semi-public institutions with strong financial and hierarchical ties with central government up until the 1980s
… towards independence•Decentralisation in the 1980s and 1990s•1995, cancellation of outstanding government loans to social landlords in exchange for future owed supply subsidies
Financial independence and social entrepreneurship
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5Dutch business model in social renting
Towards financial independence
Government loans: social renting
Supply subsidies: renting
Rent control:
rental sector
GovernmentGuarantee: social renting
Housing allowance:rental sector
1945-1960
++ +++ +++
60s + +++ +++ +
70s + ++ ++ + +
80s + + ++ + ++
90s + ++ ++
00s + ++ ++
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6Dutch business model in social renting
Towards social entrepreneurship
Housing associations (HAs)
•are private registered organizations with a public task (legal status)
that
•operate within central government framework
•operate in the interest of housing
•should re-invest in social housing any profits made (non-profit)
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7Dutch business model in social renting
Structure1. History2. Revolving fund business model3. Institutional landscape4. Ingredients to remember
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8Dutch business model in social renting
Rent income
Housing sale revenues
New affordable housing
Community investments
Revolving Fund Principle
Housing refurbishment
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9Dutch business model in social renting
Asset management
Sales
•About 15 000 sales per year in the period 2007-2010
Intermediate tenure
•Sector initiative•Instrument to create mixed neighbourhoods•Risk of deterioration is risk for housing association (HA)•Sold dwellings remain tied to housing association• HA guarantees to buy back the dwelling• HA shares value gain/loss• HA can then invest in deteriorated neighbourhood
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10Dutch business model in social renting
Structure
1. History2. Revolving fund business model3. Institutional landscape4. Ingredients to remember
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11Dutch business model in social renting
Housing Housing associationsassociations
GovernmenGovernmentt
Local Local authoritiesauthorities
Tenants
Housing allowance
Rents
BanksBanks
CentralCentral FundFund
WSWWSW
Loans
Guarantee
Subsidy
Performance agreementsRegulation
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12Dutch business model in social renting
Social housing governance
•Tasks
•Supervision by ministry
•Performance agreements between housing associations and local authorities
•Self-regulation
• Governance code
• External performance assessments
•Tenant Participation Act
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13Dutch business model in social renting
Social housing finance
Housing associationHousing association BankBank
Social Housing Guarantee Fund (WSW)Social Housing Guarantee Fund (WSW)
Guarantee bynational and local governments
Guarantee bynational and local governments
Triple A or AA+ credit ratingContribution
LoanLoan
Central Housing Fund (CFV)Central Housing Fund (CFV)
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14Dutch business model in social renting
Bank loans
Mainly provided by two government-related banks:
1. Bank Nederlandse Gemeente (BNG)
2. Nederlandse Waterschapsbank
Not a closed financial circuit
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15Dutch business model in social renting
Central Housing Fund (CFV)
Government agency
which
•supervises the financial viability of housing associations
•can order remedial actions from housing associations if they run into financial difficulties
•provides additional financial support to housing associations while they implement remedial actions
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16Dutch business model in social renting
WSW and its guaranty structure
Primary security:Housing associations
Secondary security:WSW
Tertiary security:State and municipalities
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17Dutch business model in social renting
Structure
1. History2. Revolving fund business model3. Institutional landscape4. Social renting
ingredients to remember
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18Dutch business model in social renting
Social entrepreneurship– what went wrong?
Loss societal support
because of
•Sideline activities• better financial position allowed for taking on more
tasks•Fraud and mismanagement (often in sidelines)
• Supervision not strong enough• Self-regulation did not work
•Towards market rents •Loss of social basis for the societal democratic ideal for a broad ‘social’ rental sector
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19Dutch business model in social renting
Social entrepreneurship– what may be worth remembering?
•Cooperation for achieving public task between state and non-profit organizations to realize
•Benefits created by revolving fund principle involving dwelling sale, dwelling management, new affordable housing, maintenance and refurbishment of affordable housing, community investments, including the neighborhood
•Realization of investment programs for energy efficiency
•Financial safety net created by guarantee structure
•Development of skills in social management and allocation
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20Dutch business model in social renting
Thank you!