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The Rolls Royce and the Mini cooper Limited Profit Housing in Switzerland and Austria Julie Lawson, OTB Delft ENHR Comparative Housing Policy Working Group, Istanbul October 23-24 2008 Introduction Austria’s and Switzerland’s housing systems are similar in many respects:

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the rolls royce and the mini cooper limited profit housing in switzerland and austria

The Rolls Royce and the Mini cooper Limited Profit Housing in Switzerland and Austria

Julie Lawson, OTB DelftENHR Comparative Housing Policy Working Group, Istanbul October 23-24 2008

introduction
Introduction

Austria’s and Switzerland’s housing systems are similar in many respects:

  • Both are strongly orientated towards the delivery of rental housing
  • Share a tradition in municipal social housing.
  • Host an active municipal, limited profit social and co-operative sector.
  • Despite trends elsewhere, both continue to focus on supply rather than demand side support.
  • Yet both increasingly depend on private investment to finance Limited Profit Housing.
  • Each have designed successful but different bond instruments during the 1990s to channel funds into the sector.

One important difference, the market share of Limited Profit and Municipal housing is far more significant in Austria than Switzerland.

just another case description
Just another case description?
  • Beyond empirical description
  • Revisit debates in comparative housing research
  • Attempt to provide a more strategic explanation
  • Consider both the policy implications and theoretical puzzles raised by the comparison
purpose and structure
Purpose and structure
  • Argue for the careful justification of ontology, causality and epistemology.
  • Compare historical developments two similarly orientated housing systems and postulate key relationships integral to the provision of limited profit housing.
  • Explain what is different about the two systems and why these differences have influenced the position of limited profit housing on the housing markets of Austria and Switzerland.
  • Contribute to the discussion concerning path dependency and housing regimes.
section 1 the choice of housing ontology and epistemology
Section 1 The choice of housing ontology and epistemology

“Debates and indeed misunderstandings in comparative housing research often arise because housing systems can be perceived and therefore analysed from a range of positions”

various streams in housing research
Various streams in housing research
  • Postmodernism and multiple realities
  • Political, cultural and economic meaning of housing action
  • Social construction of housing knowledge and institutions
  • Econometric models
  • State market mixes
  • Chain of provision
  • Housing as a system of economic and institutional relations
  • Spatial differences
  • Social relations and structures of housing provision
choices
Choices
  • Nature of change, singular or multiple
  • Level of analysis – experiences, events, relationships
  • Causal factors
  • Universality
  • Direction
  • Role of time and space
the nature of causality in theoretical work applied to housing
The nature of causality in theoretical work applied to housing

‘Roots’ of causality

  • Human agency, chaos theory and random choice
  • Rational choice theory, personal utility and public choice models
  • Risk and trust in social transactions
  • The influence of multiple agents upon housing provision
  • The relationship between structure and agency
  • The influence of tenure, as a causal power, in social structures
  • The mediated role of the state
  • The political-economy of state, capital and civil society
  • Labour and gender relations
  • Generative mechanisms
  • Crises, coherence, social regulation and modes of capital accumulation
  • Phases of economic and welfare development
where to look for causality
Where to look for causality?
  • Can emerge from the realm of dominant ideologies, such as ideas concerning the benefits of home ownership and the solidarity of co-operative housing, as what is considered rational in context can have causal effects.
  • Can be generated by actual material conditions, such as the presence of high rise building technologies or indeed the absence of appropriate investment.
  • Can also be embedded in long established and powerful social relationships such as those between rates of profit flowing from investment in private rental housing.
section 2 the development of limited profit housing
Section 2The development of limited profit housing
  • How should we perceive different housing systems and account for their differences?
  • First a narrative
limited profit housing in austria
Limited Profit Housing in Austria
  • Economic liberalism, industrialisation, urban housing shortages and poor rental housing conditions
  • Electoral reform, rise of social democracy and municipal socialism
  • Territorial and fiscal control of key resources, utopian housing projects
  • Fascism and subordination of local state, destruction of housing stock
  • Rebuilding using institutions introduced and remnants of the past
limited profit housing in austria cont
Limited Profit Housing in Austria (cont.)
  • Reinstatement of Vienna and acceleration of housing programs, with dedicated federal housing funds and land banking
  • Shift towards renewal in 1970s, by 1990s housing a vehicle for new agendas, social inclusion, sustainability, energy efficiency
  • Devolution and transfer of funds to provinces
  • 1993 additional sources of funds via bonds instrument and Housing Banks
limited profit housing in switzerland
Limited Profit Housing in Switzerland
  • Poor rental housing conditions under industrialisation late 19th century amidst reformist political climate
  • Role of the co-operative movement and municipalities
  • Role of city governments, pension funds and public utilities
  • City loans to co-operatives, municipal shareholding
  • Responsive to market scarcity
limited profit housing switzerland cont
Limited Profit Housing- Switzerland (cont.)
  • Private landlordism dominates, co-operatives contribute to alleviate scarcity
  • Government steps in when adequate finance is not available, later narrowed to LP builders
  • National programmes sporadic, supply subsidies now limited
  • Co-operative financing arrangements within sector and govt guarantee ensure modest flow of funds
section 3 explanations for developments
professional movements in architecture and design

the interplay between market dynamics and key state institutions

the role of a benevolent state, using housing supply as a countercyclical economic tool

the responsiveness of supply to demographic developments

financial, market and political position of social housing amidst broader developments of Austria’s conservative welfare regime

the relationship between national and local regulation amidst a tradition of corporatism and modes of development

evaluating recent non-profit housing developments

outlining policy concerns and developments

Explaining the low rate of home ownership and the nature of the rental market

historical narratives on the Swiss housing system

the role and relationships between municipal, cantonal and Federal state roles and related policy regimes

Section 3 Explanations for developments

Austria

Switzerland

applying proposed approach
Applying proposed approach
  • Critical realist ontology
  • Comparative historical analysis
  • Abstraction and contingent definition of key relations
  • Build on existing work, refine explanations
  • Policy implications
  • Theoretical puzzles to be solved
contingently defined system of property rights
Municipalities integral to the planning, provision of development sites

Amidst freehold property rights, most populous city of Vienna holds a historically strong market position via Land Fund

Municipalities integral to the planning, provision of development sites

Amidst freehold property rights, most populous cities of Zurich and Geneva hold a modest market position

Contingently defined system of property rights

Austria

Switzerland

contingently defined circulation of finance
Consistently significant supply subsidies supported across political-corporate spectrum

LP housing finance mechanism and tax privileges sustained by financial sector

Favourable financing position of LPHA gives competitive market advantage

Tightly regulated cost rent limited profit associations, promotes affordable supply

Sporadic supply subsidies legitimised in times of relative housing crises

LP housing finance mechanism external to financial sector, tax exemptions

Liberal cost rent regulation sustaining profitability of private landlords

LPH supply insufficient to address demands, in a market dominated by private RH, although more prominent in urban areas where political support is greatest

Contingently defined circulation of finance

Austria

Switzerland

contingently defined mode of consumption
Mainstream housing choice

Broad access, wide choice, some targeted

Tight cost rent regulation

Modest demand assistance

Marginal housing choice

Broad access, narrow choice, some targeted

Liberal cost rent regulation

Minimal demand assistance

Contingently defined mode of consumption

Austria

Switzerland

section 4 summary and explanation
Section 4 Summary and explanation

Summary of Key differences:

  • Strong vs weak market position of municipal land developers
  • Long term vs sporadic supply side intervention by national governments
  • Main stream vs marginal housing choice as a housing tenure

Explanation in brief:

  • Variable capacity of city governments to intervene in land markets, stemming from past practice and market crises
  • Variable support for assistance to supply, stemming from corporatist alliance and familial welfare regime, liberal landlordism, urban rural and direct democracy divide governing redistributive issues
  • Variable availability of private investment for rental housing, stemming from rent regulation and severe market interruptions
summary and explanation cont
Summary and explanation (cont.)

Policy issues

  • comprehensive vs. reactive strategies
  • Appropriate governance structures
  • social housing a safety net vs. mainstream option
  • Demand vs. supply side strategies amidst inelastic markets
  • strong vs. liberal cost rent cost capped regulation – site of intervention
  • tax privileged protected circuit bonds vs. state guaranteed capital market loans
  • EU or nationally defined social tasks, residualisation and inclusion

Theoretical puzzles

  • Role of meta theory in case study explanation
  • Process of generalisation and prediction from individual explanations
  • Increasing the complexity of housing theory, beyond convergence divergence and welfare state theory
  • Path dependence the role of crises and adaptation
  • Comparison of strongly and weakly integrated rental housing markets
  • Complexity of state structures and their path dependent role in promoting housing strategies
thank you
Thank you

Comments and questions?

Julie Lawson

[email protected]

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