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Part I
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1 The Transformation of the Social Housing Sector in Eastern Europe
A Conceptual Framework
József Hegedüs
HOUSING IN THE NEW ECONOMIC AND SOCIAL SYSTEM
The tradition of social housing in Europe goes back to the social conflicts related to urbanization in the nineteenth century, and it became a determining factor in the housing system after World War I, largely because of the introduction of rent control regulations. Social housing in different European countries developed independently for the most part, following the political and historical traditions of individual countries. The creation of the EU made the question of divergence and convergence highly relevant, despite the fact that housing is not an EU-level competency (Priemus 2004; Doling 1997; Gibb 2002; Oxley 2000; Priemus and Dieleman 2002; Scalon and Whithead 2007). The European social housing sector is undergoing changes that point towards both convergence and divergence (Harloe 1995; Kemeny 1995, 2006). However, convergence tends to dominate: “we would expect all advanced capitalist countries to be experiencing the same sorts of pressures and to be responding in similar ways and we might expect to find superficial evidence of similarity and a vulnerability to the advancing hegemony of the neo-liberal economic model” (Malpass 2008, 24).
Post-socialist countries went through a radical transition process that has led to the dissolution of the original Eastern European Housing Model (EEHM) and the creation of a new housing system. Our goal is to describe the housing system that emerged and, more particularly, the role of social housing within the new system. We start out by summarizing the main elements of the EEHM, and argue that it constitutes one model with several submodels (Hegedüs and Tosics 1996; Hegedüs 2011) rather than different models with no common core element (Kemeny and Lowe 1998). Our next step is to develop a conceptual framework for the analysis inspired by a special reading of the Varieties of Capitalism literature (Hall and Soskice 2001) and the Welfare Regime (Esping-Andersen 1990) literature. This will help us to describe housing in its interconnectedness with economic institutions (such as the finance system, construction industry, etc.) and with the social welfare system (housing subsidies, social programs, etc.). We describe those factors of the political and economic transition that we consider to have had an effect on the formation of the new social housing system. This was not an easy task, because the transition process in these countries is not over.
The second section of the chapter deals with the transformation of the housing system in the region, focusing on the changing role of social housing. Although the countries differed in terms of economic development and housing conditions, large-scale privatization of the state-owned housing stock took place across the region. Affordability emerged as a central problem for all of the new housing systems, which is why our discussion of the social housing programs focuses on the ability to pay the cost of housing and the cost of access to housing.
In our conclusion, we return to the question of convergence and divergence. We do not support ready-made typologies of the transitional countries; we believe that the differences are the result of conflicts between different interest groups and organizations that reach a consensus and stabilize the institutions from time to time, which then again leads to new conflicts and a new consensus. Social housing policy is a result of these conflicts and their solutions or, as we will show, the lack of a solution. Just as “cracks” in the EEHM distorted the existing institutional structures, new social “cracks” have emerged in the process of transformation from state socialism to a market society, and the responses to these new “cracks” shape the social housing system.1 Consequently, we cannot promise to offer a clean picture or describe well-defined models; we will instead concentrate on trends, problems, and alternative solutions in different countries, which can sometimes be contradictory.
INTRODUCTION: A BROAD DEFINITION OF SOCIAL HOUSING
In this volume, we will try to adopt a broad concept of social housing. According to mainstream approaches, social housing is generally defined as housing provided on a not-for-profit basis, managed either by the state or by various permutations of not-for-profit or community agencies that range from housing associations to cooperatives (Burke 2004). This focus hinders mainstream approaches from accounting for the effects of income distribution, the tax system, and other income support programs on the housing system. John Hills is one of the theorists to suggest that the concept must include all benefit programs that have a bearing on housing: “in designing social housing finance and housing benefit systems, potential reforms should be judged in terms of the fundamental aim of the system—to support those who would not otherwise be able to afford an acceptable standard of housing” (2000, 1).2 Economics-based theories also use a broader concept of social housing; they generally consider its definitive feature to be the combination of a lower-than-market price or rent with a need-based allocation system. For instance, Maclennan and More (1997) describe social housing policy as a field that may include “provision in owner occupation as well as private and non-private rental units and the term relates to the purpose of policy rather than the means” (535).
Kemeny's (1981) highly influential housing theory also implicitly identifies the social sector with the public rental sector. Kemeny's typology distinguishes between the residual and unitary rental regimes as the two basic options of the social housing model. The analyses involve explicit and implicit judgments that imply that the unitary model is superior to the residual model because the latter results in the stigmatization and territorial concentration of the poor, and thus contributes to the poverty trap. Kemeny claims that the size of the social rental sector (whether residual or unitary) is itself an important symptom of existing social structures and social values. For instance, in The Myth of Home Ownership (1981), Kemeny describes Australia as a society that does not take responsibility for providing its poor with housing, as the size of the sector was only 5 percent. However, if we want to use a truly broad concept of social housing, then categories such as the size of the public rental sector are not an adequate gauge of a social housing regime. Instead, we need to take the effects of income distribution, income benefit programs, and the tax system into account to establish whether the private rental sector is affordable for a broad swath of the population, particularly low-income households.
The weakness of mainstream approaches is that they necessarily omit two important issues that influence the housing situation of low-income groups, particularly in less-developed countries. The first of these is the question of income inequality if we factor in income benefit programs. Certain income benefit programs enable low-income households to find housing in the private sector. However, benefit programs that effectively achieve the same goals as social housing do not show up in analyses of the social housing sector. The second issue concerns homeownership programs for low-income households (so-called social homeownership; see Oxley 2009). Although such programs have a significant effect on housing provision in countries that do not have a highly developed rental sector (such as Spain, Greece, Portugal, and the Eastern European countries discussed in this volume), they are seldom discussed in the context of social housing because of the lack of a public ownership component. We will attempt to take the influence of these two issues on social housing into consideration in the course of our analyses.
SOCIAL HOUSING IN THE EASTERN EUROPEAN HOUSING MODEL
The main characteristics of the EEHM (Hegedüs and Tosics 1996) were single-party political control over the housing sector, the subordinate role of market mechanisms, a lack of market competition among housing agencies (bureaucratic coordination), and broad control over the allocation of housing services (huge, nontransparent subsidies). However, several versions of this model emerged as individual countries responded differently to problems within the socialist economy (Turner, Hegedüs, and Tosics 1992). Thus, structural explanations form the main features of the model, whereas the divergences can be characterized as “policy options” taken by individual governments.3
From an economic point of view, the housing system was part of the shortage economy (Kornai 1992). In this system, bureaucratic coordination rather than market mechanisms integrated the various parts of the economy. Resource allocation to the housing sector (investments, loans, etc.) was controlled by the state,4 decoupled from supply and demand factors. The vast majority of services were provided “in kind” or below the market price, allocated according to “merit”. The artificially low, subsidized housing prices resulted in constant shortages, which led to the development of a dual housing market. This meant that an informal economy existed side by side with the state-controlled housing sector, consisting of self-help buildings, private transactions in the rental sector, private real estate market transactions, a market for subtenancy, and a small entirely private rental sector (Alexeev 1988, 1990; Hegedüs and Tosics 1996).
In sociological terms, the problems in the socialist housing system were caused by the disparity between housing policy aims and reality. The rapid process of industrialization and urbanization confronted the socialist housing system with insurmountable difficulties. This resulted in “cracks” (Hegedüs 1992) in the housing model: in order to circumvent the problems with the system, the behavior of the agents in the housing system no longer corresponded to centrally planned state policy, and the institutional and legal framework could not easily hinder this process. Countries responded differently to the appearance of these “cracks”: they could either implement strict control mechanisms (Bulgaria, Russia, East Germany) or allow quasi-market processes (Yugoslavia, Hungary). Thus, Yugoslavian guest workers brought home their earnings from Western Europe and invested them in private housing. Similarly, in Hungary, income from the informal economy, mainly from agricultural production, was used to improve housing conditions. As there was a shortage in construction materials, the state could have attempted to intervene in both cases, but it chose not to. Uncontrolled private transactions in the public sector, such as apartment exchanges, provide another example: they also forced the system to either allow these transactions in a controlled framework or use tough sanctions in order to minimize the scope of the private sector.
It is difficult to establish a concept of social housing for the EEHM, because it was clearly not identical to public rental housing. State housing included housing provision of different tenure types (rental, cooperative, and owner-occupied), which were all under strict state control in terms of investment, housing standards, costs, and prices. There was no special subsector or sphere that could be called “social housing”. Thus, there was no need for...
