Kauppinen: Exploration of the income support role of social housing in a selective housing regime. Presentation at TITA Annual Research Meeting, Turku 15.-16.9.2016.

1. 27.9.2016 1
Exploration of the income support role
of social housing in a selective
housing regime
TITA research meeting, 15-16 September 2016, Turku
Timo M. Kauppinen

2. Background
• Housing allowances and social rental housing are two important
policy instruments intended to improve access to decent and
affordable housing among low-income households (‘demand-side’
and ‘supply-side’ subsidies).
• Housing allowances have been gaining prominence in many
countries, while the social housing stock has been decreasing (e.g.
Salvi del Pero et al. 2016). Simultaneously, there are signs of
increasing housing affordability problems among low-income
households (e.g. Dewilde & De Decker 2016).
• Therefore, the affordability aspect of social housing may need to be
emphasized more in social policy research on poverty and income
support, particularly concerning ‘dualist’ or ‘selective’ housing
regimes, where public housing is mostly intended for low-income
households.
27.9.2016 2

3. Previous research
• Previous research suggests that social rental housing can have an
important income support role among the social tenants (Tunstall et
al. 2013), although this depends on the institutional arrangements
and regulation of the rental sector (Heylen & Haffner 2012).
– The overall importance of the income support role of social rental
housing also depends on the size of the social housing stock and on the
characteristics of the housing allowance system.
• Previous Finnish research has shown for example that taking
housing costs into account increases the ’poverty risk’ of renters
much more than the poverty risk of owner-occupiers (Niemelä
2005), but different types of rental tenure were not identified.
– It is known, however, that persons in low-income households living in
private rental dwellings have higher housing costs and less disposable
income after housing costs than those in municipal rental dwellings
(Kauppinen et al. 2015).
27.9.2016 3

4. * Housing expenditure >40% of household's disposable money income, 18-64-year-old persons in low-income households
0 20 40 60 80
Outright owner
Owner with mortgage
Private rental
Subsidized rental, not
municipal
Municipal rental
Housing expenditure >40%, (%)*
0 20 40 60 80
Capital region
Other large university
cities
Other urban
municipalities
Semi-urban municipalities
Rural municipalities
Housing expenditure >40%, (%)*
The prevalence of high housing expenditure share among 18-64-
year-old persons living in low-income households in 2011, by
housing tenure and urbanicity
Source: Kauppinen et al. 2015

5. • A Nordic welfare state with rather selective housing policies (e.g.
Ruonavaara 2011).
– Subsidies are directed mostly those seen to have the greatest need for
subsidies
– However: support for homeownership ends up mostly supporting middle-
and high-income households (Hirvonen et al. 2014)
• A majority of state support for housing consists of housing
allowances and they have an important role in the income support of
low-income households.
• Rental sector has characteristics of the ‘dualist’ model presented by
Kemeny (see e.g. Dewilde & De Keulenaer 2003; Norris & Schiels
2007): social rental dwellings are meant mostly to lowest-income
households
• The income support role of social housing is not known clearly,
although social housing is an important option for low-income
households especially in the largest urban regions.
27.9.2016 5
The Finnish context

6. • Analysis of income support role of social rental housing, particularly
among households whose pre-housing-cost income is low
• Data: mostly the Finnish Income distribution statistics
(Tulonjakotilaston palveluaineisto), at least the years 2011-2014
– Around 10,000 households per year, rotating panel (four years)
• Cross-sectional analyses of differences in disposable equivalized
income by housing tenure and other background characteristics
(region, household type, age) before and after housing costs
– After-housing-costs (AHC) income, i.e. ‘residual income’ (see e.g. Stone
2006; Heylen & Heffner 2012)
– ‘Housing-cost-induced poverty’ (e.g. Tunstall et al. 2013)
• To the extent that the number of observations in the data allow it,
the panel structure of the Finnish Income distribution statistics is
exploited by analyzing the association between moves to social
rental housing and AHC income.
27.9.2016 6
Planned research

7. Challenges
• National sample
– Smaller share of social rental housing than in urban regions  small
number of observations
– Social rental housing can be expected to contribute to income support
mainly in the largest urban regions (where market-rate housing costs are
high)  national sample underestimates the effect on these regions
• Timing of data collection
– Housing costs: the dwelling in the end of the year
– Housing allowances, housing loans’ repayments and interests, tax
deductions and property taxes: whole year
– Income: whole year
• Due to challenges: ”exploration” = exploration of what is possible
with available data
27.9.2016 7

8. Income among the 25-64-years-old in the lowest income decile
before housing allowances, after them and after housing costs,
private vs. municipal rental dwellings in 2014
Source: Statistics Finland, Income distribution statistics, own calculations
0
100
200
300
400
500
600
700
800
900
1000
Equivalent disposable
money income
without housing
allowances
With housing
allowances
After housing costs
Eur /
month /
consumption
unit
Private rental housing Municipal rental housing All tenures

9. Preliminary panel analysis: Change in AHC income among
movers1 from other tenures to municipal rental housing in 2012-
2014, by quantile of pre-move equivalized disposable income
Figure removed from the public version of the
presentation due to the early phase of the analysis

10. Cautionary note
• Reasons for apparent increase in AHC income not yet
analyzed
– Increased housing allowance receipt seems to have a role (cf.
Kauppinen et al. 2015)
– Also increases in other benefits may matter
– Housing costs themselves may even increase (not all are moving
from market-rate private rental dwellings)
• Most work for these analyses is scheduled to 2017
27.9.2016 10

11. References
Dewilde C, De Decker P (2016) Changing Inequalities in Housing Outcomes
across Western Europe. Housing, Theory and Society 33:2, 121-161.
Dewilde C, De Keulenaer F (2003) Housing and Poverty: The ‘Missing Link’.
European Journal of Housing Policy 3:2, 127-153.
Heylen K, Haffner M (2012) The Effect of Housing Expenses and Subsidies on
the Income Distribution in Flanders and the Netherlands. Housing Studies 27:8,
1142-1161.
Hirvonen J et al. (2014) Näkökulmia ara-vuokra-asumiseen. Selvitys ara-
vuokra-asuntojen asukasrakenteesta ja asukasvalinnasta ara-asuntoihin.
Ympäristöministeriön raportteja 15. Helsinki: Ympäristöministeriö.
Kauppinen TM et al. (2015) Pienituloisten asuinolot. Työpaperi 22. Helsinki:
Terveyden ja hyvinvoinnin laitos.
Niemelä M (2005) Alueelliset toimeentuloerot ennen ja jälkeen asumismenojen
huomioon ottamista. Janus 13:1, 54-73.
27.9.2016 11

12. Norris M, Shiels P (2007) Housing inequalities in an enlarged European Union:
patterns, drivers, implications. Journal of European Social Policy 17:1, 65-76.
Ruonavaara (2011) Suomen asuntopolitiikan malli pohjoismaisessa vertailussa.
Esitys sosiaalipolitiikan päivillä, Turku 28.10.2011.
Salvi del Pero A et al. (2016) Policies to promote access to good-quality
affordable housing in OECD countries. OECD Social, Employment and
Migration Working Papers No. 176. Paris: OECD Publishing.
Stone ME (2006) What Is Housing Affordability? The Case for the Residual
Income Approach. Housing Policy Debate 17:1, 151-184.
Tunstall R et al. (2013) The links between housing and poverty: an evidence
review. York: Joseph Rowntree Foundation.
27.9.2016 12