Slavica Salihbegovic’s family was growing. So she did what anyone living in Vienna would do: She asked the city for a bigger apartment.
“At that time, I was pregnant with my first kid,” she said. “I lived in a two-room apartment … it was an OK building, but it was small for us.”
Salihbegovic went to an online portal, entered her income and requirements, and was ranked alongside thousands of other residents. Soon, she was assigned a new apartment: a three-bedroom unit in a brand-new building, adjacent to Vienna’s Central Station.
It’s hers for life — she can even pass it down to her children, if she wants.
“I love it. It’s in the middle of Vienna,” she said. “A lot of young families moved in at the same time…. There’s a big campus here, with a kindergarten and primary school. There’s dancing classes, and a boulder bar, and a huge park.”
Salihbegovic wasn’t desperate to find housing. She and her partner earned middle-class incomes. But in recent years, Vienna has become renowned among housing experts for its model of social housing, which provides heavily subsidized rental units to more than half of the city’s two million residents.
And the rent from those units helps power €400 million ($626 million) in new construction annually, amounting to more than 12,000 units built or refurbished every year, according to the city.
While Europe struggles with similar trends to Canada of rising rents and skyrocketing home prices, experts say social housing models like Austria’s are among the best defence against a growing affordability crisis — and are begging governments to continue investing aggressively in such programs.
Could something similar ever come to Canada? It may seem far-fetched, but housing experts across Europe say it’s made possible thanks to a few relatively simple interventions.
Housing without profit
Living around the corner from Salihbegovic is Amila Sirbegovic, an architect and housing project leader for the City of Vienna. She used to own an apartment, but opted to sell and move back into social housing, where she says her unit is more modern and spacious.
Sirbegovic’s story is another example of what makes European social housing different: A generous eligibility criteria.
Roughly three-quarters of Austrians fall under the income threshold, meaning many middle-class families can get geared-to-income housing, too — with rents capped at a reasonable 25 per cent of income.
“It’s the most normal thing in Vienna,” said Salihbegovic.
The diverse mix of tenants means there is little stigma attached to subsidized housing; it also keeps neighbourhoods diverse and ensures urban housing is available for vital workers like nurses, sanitation workers and bus drivers.
“You have people from different groups and different backgrounds living in the same neighbourhood,” said Gerald Kössl, a policy expert with Austria’s Federation of Limited-Profit Housing Associations.
“It’s not seen as … a temporary housing solution.”
Kössl’s organization represents the groups providing all this low-cost housing — non-profit or “limited profit” companies that are required by Austrian law to reinvest all but 3.5 per cent of their profits.
The result is a “virtuous cycle” of community investment, said Samara Jones, an expert with Housing First Europe.
Money that would otherwise go to shareholders is poured back into creating high-quality and affordable homes and neighbourhoods — which, in turn, has a “price-dampening effect” on the wider market, said Kössl.
Austria is not alone in using this model. Across Europe, governments manage a portion of their subsidized housing stock through large, privately managed non-profits.
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In the Netherlands, there are fewer than 300 non-profits across the whole country — but this consolidation doesn’t lead to the problems you might find with the large, profit-oriented real estate investment trusts common in Canada.
On average, it’s better than renting on the private market, said Zeno Winkels, director of the Dutch Tenants Union, which negotiates with the government to set rent limits across the country.
By comparison, most private landlords are “amateurs,” he said.
“That doesn’t necessarily have to be negative. There are lots of people who make great cakes, but, in general, when you want a cake, you go to a bakery.”
Staking space
Of course, these non-profits can’t run on rents alone — they wouldn’t remain affordable for long.
The affordable housing building boom in places like Finland, the Netherlands and Austria has always been powered by substantial government investment. And across Europe, governments have devised clever ways to cut costs.
One of the biggest has been for cities like Vienna and Amsterdam to aggressively acquire land when it comes up for sale, through “right-to-buy” policies that give them first dibs.
Owning the land allows municipalities to mandate that housing in key areas be kept affordable for a century or more, as opposed to the 20 to 30 years often typical in Canada.
Land remains expensive for municipalities to buy. But in some places, like the Netherlands, governments have given themselves the right to deduct the cost of adding additional services, like roads and water, from their purchase price, shaving tens of millions off the cost of land being rezoned for housing.
Government buying is also matched with substantial, long-term, low-interest loans to the non-profits building and managing the stock of affordable housing.
Those investments help keep them accountable — and stable enough to keep investing in more buildings, said Natalia Martinez, an expert with Fundacio Habitat 3, an affordable housing provider in Spain.
It’s an idea Canada appears to be entertaining; Housing, Infrastructure and Communities Canada launched a call for proposals on a “rental protection fund” just last month, aimed at helping non-profits and other partners acquire and maintain affordable rental units.
“Not a lot of communities have the revenue source to impact housing supply from their own pocketbook,” said Adrian Dingle, director of housing development for Raising the Roof Canada, an anti-homelessness non-profit.
Thinking big
Broadening the definition of affordable housing in this way — and backing it with low-interest loans — could have a major impact in Canada, experts say.
“I do believe we’re in a hopeful time when it comes to federal housing policy,” said Dingle.
But when it comes to quickly increasing affordability, those same experts are near-unanimous in saying that more interventionist measures may be necessary — such as rent control, property windfall taxes and steep fees for second properties.
They might be controversial to some, but they can be effective.
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In the Netherlands, the Affordable Rents Act established a mandatory formula for calculating rent, which placed caps on certain tiers of housing, reducing average costs by 50 per cent or more.
Overnight, real estate speculation slowed and house prices dropped.
Like Austria, the Netherlands has also been successful in mandating high percentages of any new development be allocated to affordable housing — “at least 30 per cent,” said Theo Stauttener, a partner with the developer consultancy Stad Kwadraat. That’s applied not only in cities, but in suburbs, where single-family homes make up a large percentage of social housing.
Experts are skeptical that Canadian governments would make similar moves. Figures show Canada is well behind — just 3.5 per cent of Canadian housing is social housing, compared to an average eight per cent across Europe, and closer to 30 per cent in places like Austria and the Netherlands.
“I’m not sure the long-term planning is there, or the political will,” said Sheldon Pollett, executive director of Raising the Roof Canada.
But waiting for someone else to solve the problem hasn’t worked anywhere.
“We’ve been waiting for the private sector to come and fill this gap for a long time — and it hasn’t,” said Jones. “Certainly, one lesson for Canada is this: Don’t wait.”
For the lucky Viennese, like Sirbegovic, who can find an affordable apartment with ease, the first step is a change in mindset. “You really need to believe in social housing,” she said.
Martinez puts it another way.
“How willing are we to consider housing a right that’s up there with health care or education or our pension plans?” she asked. “Once we do that, we see the government as responsible for creating those conditions.”