An article in Housing Studies, “The Use of Markets in Housing Policy: A Comparative Analysis of Housing Subsidy Programs,” compares market-based, demand-side rental housing subsidy programs in the Netherlands, United Kingdom (UK), and the U.S. The author, Gregg Colburn, finds the use of demand-side rental housing subsidies in the private market does not guarantee successful program outcomes. Instead, program design and broader contextual factors appear to drive recipients’ housing and neighborhood outcomes.
The Netherlands, UK, and U.S. make significant use of demand-side subsidies in their approaches to affordable rental housing policy. Demand-side subsidies supplement the income of recipients, so they can afford housing in the private market. The primary demand-side housing subsidy in the U.S. is the Housing Choice Voucher (HCV) program, while the Netherlands has a Housing Assistance program and the UK has the Housing Benefit.
Similarities and differences in the subsidy programs are observed at the program level. Housing Assistance in the Netherlands offers a high level of subsidy, while HCVs in the U.S. and the Housing Benefit in the UK offer a comparatively lower level of subsidy. HCV recipients in the U.S. also have a limited amount of time to search for and lease housing with their benefit, while benefit recipients in the UK and the Netherlands have unlimited time. The Netherlands and the UK also do not have unit inspections as a program requirement, while the U.S. does. Housing Assistance in the Netherlands is also structured to incentivize recipients to seek higher cost housing up to an established limit and recipients can utilize the benefit without the knowledge of their landlord.
Each program also has similarities and differences regarding broader contexts. The share of households renting in each country, for example, is roughly similar and many renters in each country must contend with low vacancy rates. Nearly all renter households in the U.S., however, participate in the private market compared to about half in the UK just a quarter in the Netherlands. Housing subsidies are not an entitlement in the U.S., but they are in the UK and the Netherlands. Forty percent of renters in the Netherlands receive demand-side rental subsidies compared to approximately 25% in the UK and less than 10% in the U.S. The Netherlands, moreover, has a constitutional right to housing and some of the strongest tenant protections in the world. The UK and US do not. There is little distinction between subsidized and private housing in the Netherlands, while subsidized and private housing operate in what are effectively separate markets in the UK and U.S.
There is ample evidence of stigma associated with HCVs in the U.S. and a growing stigma associated with housing subsidies in the UK following welfare reform, while there is little evidence of stigma in the Netherlands. There is also strong evidence of landlord discrimination against housing assistance recipients in the U.S. and UK, but not in the Netherlands.
To compare outcomes for subsidy recipients across programs and countries, the author first compared outcomes within each country for subsidized and unsubsidized households renting housing of similar value. Outcomes were measured for both housing and neighborhood quality using different housing survey data in each country. The author controlled for a range of household and demographic characteristics and excluded any households in publicly owned housing from the sample groups representing unsubsidized households.
For housing quality outcomes, HCV recipients in the U.S. fared better than their unsubsidized counterparts; Housing Benefit recipients in the UK fared worse than their unsubsidized counterparts; and Housing Assistance recipients in the Netherlands were statistically indistinguishable from their unsubsidized counterparts. The author suggests the physical inspection requirement in the HCV program likely explains this outcome in the U.S., while the lack of a physical inspection requirement and growing landlord discrimination likely explain poorer housing quality outcomes for Housing Benefit recipients in the UK. The author attributed the housing quality outcomes in the Netherlands to the relative advantage provided by Housing Assistance in the Dutch private market and its widespread acceptance, resulting in part from a lack of stigma and landlord discrimination. All rentals in the Netherlands are also subject to inspections, though the rate of inspections is low.
The author analyzed neighborhood quality outcomes using a range of indicators for physical condition and neighborhood satisfaction from available data in each country. HCV recipients in the U.S. reported poorer physical condition of their neighborhoods than their unsubsidized peers, but there was not a statistically significant difference in terms of neighborhood satisfaction. Housing Benefit recipients in the UK had poorer outcomes for both neighborhood physical condition and satisfaction than their unsubsidized peers. The author suggests HCV and Housing Benefit recipients are more likely to live in lower quality neighborhoods due to purchasing-power constraints inherent in the program, as well as high levels of stigma and discrimination.
Housing Assistance recipients in the Netherlands were statistically indistinguishable from their unsubsidized peers on all measures of neighborhood quality, though data were only available for neighborhood satisfaction. Neighborhood quality outcomes for Housing Assistance recipients were consistent with their relatively strong position in the private market resulting from an overall lack of stigma, strong government policies supporting tenants, and a relatively generous level of subsidy. Housing Assistance recipients in the Netherlands are on even-footing with their unsubsidized counterparts in the private market.
Even though the rental housing subsidy programs in all three countries are market-based and have similar objectives, recipients experience different outcomes for housing and neighborhood quality. The author offers some suggestions for how to improve the market position of HCV recipients in the U.S., including: increasing the generosity of the benefit, creating more flexible payment standards to improve access to more expensive neighborhoods, and establishing and enforcing stronger protections against landlord discrimination. The author also suggests policymakers can create greater incentives for landlord participation by reducing administrative burdens, implementing damage-insurance programs, and ensuring timely payments.
“The Use of Markets in Housing Policy: A Comparative Analysis of Housing Subsidy Programs” is available at: https://bit.ly/2RhAfvB