Promoting Rental Housing Affordability in European Cities: Learning from the Cases of Milan and Vienna (PoliMI SpringerBriefs) 3031436911, 9783031436918

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SpringerBriefs in Applied Sciences and Technology PoliMI SpringerBriefs Marco Peverini

Promoting Rental Housing Affordability in European Cities Learning from the Cases of Milan and Vienna

SpringerBriefs in Applied Sciences and Technology

PoliMI SpringerBriefs Series Editors Barbara Pernici, DEIB, Politecnico di Milano, Milano, Italy Stefano Della Torre, DABC, Politecnico di Milano, Milano, Italy Bianca M. Colosimo, DMEC, Politecnico di Milano, Milano, Italy Tiziano Faravelli, DCHEM, Politecnico di Milano, Milano, Italy Roberto Paolucci, DICA, Politecnico di Milano, Milano, Italy Silvia Piardi, Design, Politecnico di Milano, Milano, Italy Gabriele Pasqui , DASTU, Politecnico di Milano, Milano, Italy

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Marco Peverini

Promoting Rental Housing Affordability in European Cities Learning from the Cases of Milan and Vienna

Marco Peverini Department of Architecture and Urban Studies (DASTU) Politecnico di Milano Milan, Italy

ISSN 2191-530X ISSN 2191-5318 (electronic) SpringerBriefs in Applied Sciences and Technology ISSN 2282-2577 ISSN 2282-2585 (electronic) PoliMI SpringerBriefs ISBN 978-3-031-43691-8 ISBN 978-3-031-43692-5 (eBook) https://doi.org/10.1007/978-3-031-43692-5 © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Paper in this product is recyclable.

Foreword

According to World Bank estimates, in 2025, about 1.6 billion people will be affected by the current global housing crisis. The lack of adequate and affordable housing is of concern across all continents and has a clear urban dimension. House prices rose much faster than wages, and the situation has become even more acute since the COVID-19 pandemic. A main reason for an increasing unaffordability is the financialization of the housing sector. Over the last decade, investment in housing was driven by speculative games rather than an interest in solid and affordable homes for those who live there.1 Furthermore, the housing crisis is just one sign of a broader affordability problem which worsened with a dramatic increase in global inflation. At a time when the availability of assets (starting with family wealth and property) plays a growing role in shaping people’s destinies, often even more than income from employment, access to affordable housing is an essential condition for a decent life. In this respect, the capability of cities to nurturing inclusive dynamics and fair conditions of access to housing and further social infrastructure and services is fundamental to guaranteeing conditions of broader social cohesion and well-being. This holds all the more for those European cities that stand out in their respective national urban systems as they attract private investment and are confronted with consistent financialization processes. In these cities, affordable housing becomes a scarce, selective, and exclusive good. Due to waiting lists, eligibility rules, and discriminatory practices, especially newcomers have difficulties to find and access accommodation at a reasonable price. Instead, they must turn to expensive market segments and accept often overpriced contracts or informal solutions. High housing costs absorb important shares of income and reduce people’s spending capacity on other aspects of life. Against this background, social housing solutions and secure tenancies would be imperative. But respective policies are limited in scope as financial constraints and a lack of organizational capacity often jeopardize the public sector’s negotiating power and leave it to private businesses to define the agenda. Nevertheless, from the UN to OECD, EU, and World Bank, basically, all relevant 1

See: Keffler, Natalie (2021): Solving the global housing crisis, World Finance, Sept. 7, 2021, https://www.worldfinance.com/infrastructure-investment/solving-the-global-housing-crisis. v

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Foreword

transnational and international institutions have shown a new interest in social and affordable housing and have begun to deliver solutions. In these challenging times, Marco Peverini’s study is topical and relevant. It provides a solid conceptual basis to understand housing affordability, outlines various approaches to measure it, discusses its spatial dimension, and identifies the numerous and complex factors that influence housing costs. The analytical framework is sensitive not only to housing policies but also acknowledges its interplay with social and spatial policies. Consequently, it also focuses on the links between various scales of governance and promises to grasp how European, national, and regional policies relate to each other. The two case studies are well picked: Milan and Vienna are seemingly similar in population and market dynamics but differ with regard to policies and instruments. Most significantly, while Vienna is a “rental city” and the city controls a significant part of the stock, Milan’s tenure structure is dominated by homeownership, and the city’s influence on the housing market is limited. The comparison reveals specificities in each city’s land policies and their “affordability governance.” It traces how these have come about and how they operate today. Thereby, the framework allows to avoid a conceptual localism as it carefully brings in national and European factors. With its focus and methodology, the study is more than a welcome contribution to contemporary housing studies. It holds much inspiration for further encounters with urban development more generally. Finally, the study and Marco Peverini’s engagement in teaching and further academic activities throughout the research process prove the value of a close and constructive transnational cooperation between universities and research institutes that we have been establishing between Milan and Vienna in these years. Prof. Dr. Massimo Bricocoli Department of Architecture and Urban Studies (DASTU) Politecnico di Milano Milan, Italy Prof. Dr. Simon Güntner Forschungsbereich Soziologie TU Wien Vienna, Austria

Preface

The book presents some of the outcomes of a Ph.D. research carried out between 2018–2022. The scholarship was organized by the Department of Architecture and Urban Studies (DAStU) of Politecnico di Milano and fully funded by CCL, a Consortium of Housing Cooperatives in Milan. The scholarship, announced with the title “More than housing. Potentials and challenges in the innovation of housing cooperatives,” aimed at supporting research in the field of housing and at fostering a collaboration between the academic environment and housing cooperatives. It funded autonomous research on possible innovation pathways for housing cooperatives in Italy, leaving the researcher free to choose a focus among a broad range of themes concerning housing provision. Early on, I chose to concentrate on the topic of housing affordability. This was an original way in which I tried to interpret the contents of the call, related to my personal experience of living in European cities while coming from a secondary Italian city. Having lived in Berlin, Barcelona and Milan had an influence on the recognition of the affordability issue and on the choice to make it the object of my research. As for many, entering the rental market meant often spending relatively high sums and relying on parental help, and in all cities, I experienced the pressure to settle in outer locations. Cheaper accommodations were available at the cost of spending more time on transportation and reducing proximity to better locations. Most people around me tended to give the rental market situation for granted, hoping to be able to get a mortgage and buy a flat someday. I could not help reading these situations through a politicized lens and reflecting on the material and power relations that housing shapes on people. Due to a mix of market situations, decline of land policies, and some management problems—inherent to their “insularity,” and sometimes to pathological mismanagement—in the last three decades, Italian housing cooperatives have widely withdrawn from their previously important role in affordable housing production. While market-oriented cooperatives flourished, the socially oriented ones languished. However, making housing affordable is still the field of action of cooperatives, their most aim and reason of existence. In the Italian contingency, stimulating housing cooperatives to take an active part in the debate on housing affordability, especially within the rental sector, seemed a quite promising vii

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task. Therefore, the present work explicitly focuses on housing affordability in the rental housing sector. Recently, attention to the affordability crisis has increased, also in Milan. The housing crisis is now a hot topic, and “affordable housing” is now a buzzword. While prices continuously increase in attractive locations, already stagnating incomes are challenged by inflation and economic crises, and the postpandemic period might even worsen affordability conditions. These phenomena are challenging the prosperity model that has characterized European cities since WWII. For those reasons, the “affordability issue” has been a guiding light of my perspective research work. In the journey of this book, I enjoyed support from many important individuals and collectives. Firstly, I need to thank Simona, that is for me the sweetest person on earth and in my heart, and I love her. Secondly, I am grateful to Massimo and Alessandro, with whom I share the aims and perspectives of a promising ongoing research. They are two amazingly and continuously inspiring heads. I am also thankful to: Simon Güntner for supervision and guidance; Steffen Wetzstein and Christoph Reinprecht for providing careful and honest revisions; Luca Gaeta for the support which went far beyond the duty of the Ph.D. program coordinator; Alessandro Balducci and Gabriele Pasqui for their careful review and support; Paolo Pileri for providing useful critical reflections. During the journey, I learned a lot by exchanging with many amazing people that represent a vast dynamic community active in the housing debate. However, I need to mention Rebecca Cavicchia for the nice exchange during the pandemic and Anna Bajomi, Anna Tagliaferri, Constanze Wolfgring, Federica Rotondo, and Martina Bovo: all of you made it easier to live in a city I did not want to move to. An enormous thank you to the women of my family and my friends in Perugia: coming back to you sometimes makes everything easier. Finally, a thank and farewell to my grandmother, who passed away…you have been a pillar of my life. This is dedicated to you! Milan, Italy

Marco Peverini

Contents

1 The Contemporary Affordability Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Aims of the Book and Research Questions . . . . . . . . . . . . . . . . . . . . . 1.3 Grounded Theory for the Study of Housing Affordability . . . . . . . . . 1.4 Structure of the Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Part I

1 1 3 4 6 7

Making Housing (and Cities) Affordable

2 A New Theoretical Ground for Housing Affordability . . . . . . . . . . . . . . 2.1 The Scientific Debate Around Housing Affordability . . . . . . . . . . . . 2.2 What is Housing Affordability? A Critical Review . . . . . . . . . . . . . . 2.2.1 Below-Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.2 Cost-Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.3 Cost to Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.4 Housing Accessibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.5 Minimum Residual Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.6 Location-Related Affordability . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Towards a Broader (Urban) Understanding of Affordability . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Making Housing Affordable: A Foundational Framework for Policy Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Where and Why is Housing Affordability a Problem? . . . . . . . . . . . . 3.1.1 Housing Affordability and the Housing Question . . . . . . . . . 3.1.2 Housing Affordability in the Contemporary Urban Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.3 Housing Affordability and the Capitalization of Urban Land Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.4 The Urban Geography of Housing (Un)affordability . . . . . . 3.1.5 The Expenses-Quality-Location Conundrum . . . . . . . . . . . . . 3.2 Affordability as a Foundational Character of Urban Housing . . . . . .

11 11 13 14 17 18 20 21 23 24 26 31 31 31 33 35 38 39 41 ix

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Contents

3.3 Realizing the Grounded City: Affordability and Housing Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Opening the Black Box of Affordability Governance . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Part II

43 46 50

Comparing Approaches in Affordability Governance

4 Vienna: A Strategic Welfare and Planning Approach Targeting Housing Affordability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Situating Vienna, from Decline to Growth and Acceleration . . . . . . 4.2 The Viennese Housing Governance System . . . . . . . . . . . . . . . . . . . . 4.2.1 Housing Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.2 Social Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.3 Spatial Planning and Land Policies . . . . . . . . . . . . . . . . . . . . . 4.3 Housing Affordability in the Viennese Governance System . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

57 57 59 61 67 68 73 77

5 Milan: Affordability in a Mix of Fragmented Policies and Market-Led Housing Developments . . . . . . . . . . . . . . . . . . . . . . . . . . 81 5.1 Situating Milan, from Suburbanization to Recentralization and Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 5.2 The Milanese Housing Governance System . . . . . . . . . . . . . . . . . . . . 84 5.2.1 Housing Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 5.2.2 Social Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 5.2.3 Spatial Planning and Land Policies . . . . . . . . . . . . . . . . . . . . . 94 5.3 Housing Affordability in the Milanese Governance System . . . . . . . 101 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 Part III Policies and Conditions For More Affordable Cities 6 Affordability Governance in Vienna and Milan . . . . . . . . . . . . . . . . . . . . 6.1 Housing Affordability in the Two Housing Regimes of Vienna and Milan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.1 The Mix of Policies, Actors and of Conceptualizations of Affordability Involved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Patterns of Institutional Change and Inertia in the Two Governance Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 The Role of Land Policies in Tackling Housing Affordability in the Two Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 How “Grounded” on Affordability Are the Governance Systems of Milan and Vienna . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

111 111 111 122 124 126 127

7 Addressing the Housing Affordability Crisis: Critical Nodes for Urban Policies and Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 7.1 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

Contents

7.1.1 Housing Affordability Between Outcome Indicator and Policy Objective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.2 Conditions and Scales for an Effective Governance of Housing Affordability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Critical Nodes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.1 Shifting the Affordability Issue from the Supply Debate to the Land Question . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.2 The Pivotal Role of Land Policies in Tackling Housing Affordability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.3 Improving the Policy Mix of Housing Regimes to Target Affordability (Broadly Intended) . . . . . . . . . . . . . . . 7.3 Perspectives for Further Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

xi

129 131 132 132 134 137 139 140

Abbreviations

IZ LPH PEEP PH PLB ULR

Inclusionary zoning Limited profit housing Plan for Public and Affordable Housing (Piano di Edilizia Economica e Popolare) Public housing Public land banking Urban land rent

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Chapter 1

The Contemporary Affordability Issue

1.1 Introduction Housing affordability is a widely researched topic and one of the central issues in Housing Studies. It links the housing situation of households (such as tenure, adequacy, distress, exclusion) to their economic situation (such as income, savings, access to credit, debt) and also refers to the conditions of access to housing and to the role of housing in determining conditions of poverty or wealth [1]. Affordability refers in general to the material conditions and power relations that are shaped through the housing situation of people. Since the industrial revolution, with mass urbanization and the development of salaried working classes, affordability has been linked to the emerging “housing question” [2]. Recently, many authors have noticed a re-emergence, as industrialized economies have experienced an unprecedented growth in housing prices, which in most cases outpaced that of incomes [3]. Some explain the current affordability crisis as a contemporary development of the continuous state of crisis that affects housing within capitalist development [4]. Recently, scholars have analytically explored the increasingly urban dimensions and implication of housing affordability, arguing that we are living in a new global urban affordability crisis: Just as the world has become used to the wide-reaching and painful implications of the Global Financial Crisis, there is another global crisis in the making; the Global Urban Housing Affordability Crisis. This term reflects the accelerating trend of housing-related household expenses rising faster than salary and wage increases in many urban centres around the world ([5]: 2). This entails that, while the affordability issue is not a new phenomenon, its characters differ from the past, and there is a need for “fresh” looks at housing affordability: If housing affordability was seen primarily in the twentieth century as a social policy issue centering on the relationships between housing, non-housing expenditures and income poverty, the aftermath of the global financial crisis (2009 onwards)

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 M. Peverini, Promoting Rental Housing Affordability in European Cities, PoliMI SpringerBriefs, https://doi.org/10.1007/978-3-031-43692-5_1

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has seen revival of discussions about housing affordability as a consequence of housing price and rent increases and urban restructuring ([6]: 65). One aim of this book is to explore the urban and spatial character of the current housing affordability crisis, and its dependence on major capitalist dynamics of urban restructuring. While perspectives concentrated on “housing financialization” or on “housing for all” look at the affordability issue from vantage points linked, respectively, to the political economy or to the right to housing, this book aims at reconceptualizing housing affordability in the light of a new role and position of housing in shaping the contemporary urban question. In this sense, it looks at housing affordability mainly as a way for analyzing urban housing systems and their consequences on how cities function, and reverse. In the current historical moment, the housing issue has been de-politicized and increasingly devolved from the state to the (financial) market [7]. In this context, heavily characterized by passive devolution of housing policies in more complex institutional arrangements of welfare and social policies, a central role is played by local (urban) levels of administrations [8]. Accordingly, the idea of successful housing policy has changed and, coherently with a new entrepreneurial role of public administration, urban governors have focused more on inflating housing prices and competing in capital attraction than on controlling housing affordability levels [9]. The connection between housing affordability outcomes and the control of urban land rent (ULR)—the value connected to urban locations and the issues connected to its distribution, a traditional theme of Urban Economics (Chap. 3)—is underinvestigated [10]. Meanwhile, cities have experienced trajectories of increasing inequalities and polarization and challenging issues of spatial justice that are deeply connected to rental housing affordability problems [11]. Attention is increasingly focusing on cities (instead of countries), acknowledging the peculiarity of housing problems in attractive urban contexts [6, 12]. Within a capitalist political economy and national and supranational constraints (e.g., funding, welfare systems), urban governors still have some power (and therefore the responsibility) for assuring justice [13], and local policy instruments in tackling the housing affordability issue should be investigated [14]. This book follows this pathtrying to understand the responsibility and scope of action of local governments in promoting housing affordability. This book is mainly concerned with the issue of affordability in the rental sector: in most countries, poor and vulnerable households tend to live in rental accommodation, which tend to be more exposed to land value toincreases and prone to affordability problems [15]. Moreover, rental housing sees a revival as homeownership appears harder to achieve, especially in attractive cities and for younger generations. Concentrating on the rental tenure allows us to move away from the myth of homeownership [16], as “dominance of homeownership is not ‘natural’ but is socially and politically constructed. Much of this construction has to do with non-decisions: homeownership is made attractive when the state chooses not to provide alternatives to it” ([17]: 7). Rental housing has a key value of urban infrastructure, as a more efficient way of responding to people’s housing needs and demand that is exclusively linked to use value—and not to investment or the creation of owned assets—and allows easier

1.2 Aims of the Book and Research Questions

3

households’ mobility in response to continuously changing needs and opportunities [18]. In conceptualizing rental housing affordability in attractive cities, this book relies on literature by the “Foundational Economy”, the infrastructure for everyday life. It involves all infrastructures, broadly intended, for ensuring decent living conditions and a safe and evolved life to all citizens [19]. From a more urban perspective, foundational economy is central in the idea of “grounded city”, a way to conceptualize the city not as an engine of growth and capital accumulation but as a space where everybody can collectively provide for everyday needs (including housing) [10, 20]. These concepts, further elaborated in Chap. 3, represent a basis for analysing affordability-oriented policies.

1.2 Aims of the Book and Research Questions In this framwerok, the question that drives this book is “how to promote rental housing affordability in European cities?” This leeds to some sub-questions: 1. What are we talking about when we discuss housing affordability or affordable housing? Which housing is affordable and which is not? And for whom? Where? For how long? All those definitional questions hide a complex and variegated understanding of “affordable” and “affordability” that unavoidably impact on decision- and policy-making. Some normative understanding of affordability is necessary to make it operative [6]. The relative aim regards creating new theoretical ground for housing affordability applied to cities and connecting it to recent trends in the housing crisis. 2. What are the causes of affordability problems? Where do they take place? When? How? This book tries to qualify the debate by reflecting on the causes and on the contexts of the affordability issue. Some of the most contemporary normative understandings of affordability have a rather geographical focus and seem to be coherent with the “spatial turn” in social sciences [21]. This book follows this line, contributing to the creation of much-needed new theoretical perspectives on housing affordability that encompass its multiple dimensions and scales and its urban implications, and addressing the under-investigated relation between housing costs and ULR distribution [10]. 3. What is the role of public action? A political issue comes up as a consequent question: is housing affordability a public problem? The inescapable normative understanding of affordability goes hand in hand with a political economy approach—or with the attention for the relation among individuals, markets, governments, and public policies—and with some statement about how things should ideally be. 4. How is affordability governance organized? How to make housing (and cities) affordable? This point is meant to make the previous two streams of thought operational and to give precise indications on how to achieve—through public,

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1 The Contemporary Affordability Issue

private, or collective action—conditions of affordability that may be intended as desirable in the framework of the Foundational economy and the grounded city. The book develops a coherent analytical framework and offers new conceptual avenues for the analysis of urban housing affordability governance, to disentangle the complex network of policies and institutions that ground governance on affordability in the cities of Vienna and Milan. This requires opening the black box of specific housing systems and regimes to both problematize housing affordability and propose possible pathways for policies, tightly linking research to the drafting of policy proposals.

1.3 Grounded Theory for the Study of Housing Affordability In line with the literature on policy analysis this book is mainly based on qualitative research [22–25]. Qualitative methods “aim to answer questions about the “what”, “how” or “why” of a phenomenon rather than “how many” or “how much”, which are answered by quantitative methods”. Qualitative research is a specific branch of research which has its own specificities. Qualitative researchers don’t fully specify methods, theory, or data when they begin their research[…] Not fully pre-specifying these ideas and procedures, as well as being ready to change them when their findings require it, are not flaws, but rather two of the great strengths of qualitative research. ([26]: 548)

Grounded theory is a methodology for conducting qualitative research in social sciences that consists in building a theory which is grounded on qualitative data. It was introduced with the aim of providing a legitimate inductive methodology alternative to recurring “weak” approaches in dealing with empirical material [27]. Grounded theory represents an approach that derives theory directly from data, and was therefore labeled “post-positivist” [28]. Grounded theory is used when there is no existing theory that offers a complete and satisfactory explanation for a certain phenomenon, or when there are theories which do not completely give an answer to a research question [27]. In this sense, it is a promising methodological approach for developing contemporary perspectives on housing affordability as there is some uncertainty on the adequacy of existing theories to understand the effects of more contemporary dynamics (e.g., financialization, welfare restructuring). Grounded theory provides guidelines for gathering, synthesizing, analyzing, and conceptualizing qualitative material for the purpose of theory construction [29]. The process usually starts from posing one or more broad generative questions on some aspects of social life [30]. For this book, the broad generative question which led the first iteration and helped identify a field for observation, is “how to promote affordable rental housing in European cities?”. The empirical part of this book, which represented a continuous back-up to theory construction, is organized in the form of case studies. Case studies are favored when “you want to understand a realworld case and assume that such an understanding is likely to involve important

1.3 Grounded Theory for the Study of Housing Affordability

5

contextual conditions pertinent to your case” ([31]: 45). Considering that this book aims at providing a multidimensional analysis of the response to the affordability issue, contextual conditions are regarded as particularly important in understanding how various factors and actors at stake generate and influence affordability problems. The aim of the case studies are not to create a representative sample of situations and verify the effects of certain policies in determining affordability outcomes, but rather to expand and generalize a specific theory on housing affordability governance grounded on empirical observation. The comparative case study approach is a “heuristic” method characterized by the usual “compare and contrast” logic but also by a “tracing across” sites and scales ([32]: 6). With the aim of expanding and generalizing a grounded theory on housing affordability, a comparative case study approach can be stronger than a single case, especially when the cases are chosen with different contextual settings and outcomes [32]. While the former separates units of analysis from the things around them, defining “boundaries”, the latter looks at connections and linkages across place, space, and time, and requires a careful multi-site and multi-scalar approach that is important to the process. These lenses are used in the elaboration and interpretation of the case studies of this book, for which the reference scale is that of the “city”, takings distance from the traditional approaches used in Housing Studies that concentrate on national levels and shift attention to a more local level. The object of the two case studies are not the cities of Milan and Vienna, but the governance systems that influence housing affordability outcomes in the cities of Milan and Vienna (see Chap. 3). The empirical part of the case studies employed a mixed methodology that moved between the two approaches identified by Burawoy [33]. Vienna and Milan were chosen to simultaneously shed light over the lesser known housing regime of Milan—with Southern European housing regimes being in general less studied—and to provide new knowledge on Vienna, a very fruitful vantage point to study housing affordability policies. Both cities are main economic hubs in their countries, producing relevant shares of the national GDP figures, attracting important population flows, and experiencing strong market pressure in comparison to the rest of their respective country. Most notably, crucial differences are to be found: • in the housing systems of the countries they are part of, with Italy having a dual system (with residual public housing and a big free market sector) and Austria an integrated one (with public housing flanked by a wide intermediate non-profit sector and a smaller free market); • in the tenure structure, with Vienna being mainly a city of tenants and with a very big protected sector (encompassing around half of the housing stock) and Milan mainly a city of home-owners with a relatively small share of protected (public) housing stock; • in the administrative position, since Vienna is a quite self-contained city state while Milan is a Municipality with a huge administratively unrelated hinterland. Vienna is indeed notably regarded as a globally relevant model of interventionist housing policy regime in influencing housing affordability outcomes with over half of the total housing stock being either in the hands of the city or rent-controlled.

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However, as highlighted by many scholars it is a highly peculiar housing system related to a specific socio-political-historical path [34]. The choice of Milan is driven by very different reasons. Milan, differently from Vienna, did not receive much international attention for its housing policies and is regarded neither as a particularly progressive city in the housing field nor as a deeply problematic one. The material gathered from the fieldwork was analyzed according to theory built on a review of the literature. Here, coding of the material focused on understanding which approach to affordability is used by the various actors that populate the governance system and by the policies enacted. Then, the observation of the two housing regimes at work inspired the construction of a conceptual framework for policy analysis that was then applied to both cases. Here, coding and elaboration were based on a different set of information depending on the domain. The coding system is partly inspired by the work of Gluns on housing governance—and with a comparative case study of two cities, as in my case [35]. In this wake, the second phase elaborates how the governance system is developed and how the various elements of the construction process of the governance system help explain how it is today according to the analytical framework.

1.4 Structure of the Book Firstly, the book proposes a review of the literature and builds new analytical ground for studying housing affordability in Chap. 2. Secondly, in Chap. 3, it “questions” housing affordability and examines the main factors and dynamics of the contemporary housing affordability issue by introducing the concept of ULR and its relevance for an accurate and contemporary conceptualization of affordability. Then, Chap. 3 develops a theory-driven conceptual framework for the analysis of policies, addressing housing affordability in cities’ governance systems within a broader multilevel setting. This conceptual framework is used to carry out the empirical part, exposed in part one and developed in the form of a case study of two European cities, Vienna (Chap. 4) and Milan (Chap. 5), providing insights on two relevant and fruitful cases— though very distant from each other under many aspects—of institutional systems that concretely influence affordability outcomes with opposite “approaches” (and different outcomes). The outcomes of the case studies are compared and discussed in Chap. 6. Finally, in part three, this book investigates policies and conditions to make housing (and cities) more affordable. Chap. 7 discusses how to address the housing affordability crisis and explores some critical nodes in the light of the findings from the case studies and addresses some elements of reflection about policies and conditions for simultaneously achieving more affordable housing and cities.

References

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References 1. Anacker KB (2019) Introduction: housing affordability and affordable housing. Int J Hous Policy 19:1–16. https://doi.org/10.1080/19491247.2018.1560544 2. Engels F (2021) The housing question. International Publishers Co 3. Knoll K, Schularick M, Steger T (2017) No price like home: global house prices, 1870–2012. Am Econ Rev 107:331–353. https://www.jstor.org/stable/24911335 4. Marcuse P, Madden D (2016) In defense of housing: the politics of crisis. Verso, London, New York 5. Wetzstein S (2017) The global urban housing affordability crisis. Urban Stud 54:3159–3177. https://doi.org/10.1177/0042098017711649 6. Haffner MEA, Hulse K (2021) A fresh look at contemporary perspectives on urban housing affordability. Int J Urban Sci 25:59–79. https://doi.org/10.1080/12265934.2019.1687320 7. Aalbers MB (2016) The financialization of housing: a political economy approach. Routledge, London 8. Kazepov Y (2010) Rescaling social policies towards multilevel governance in Europe: some reflections on processes at stake and actors involved. In: Rescaling social policies towards multilevel governance in Europe. Routledge, London 9. Harvey D (1989) From managerialism to entrepreneurialism: the transformation in urban governance in late capitalism. Geogr Ann Ser B Hum Geogr 71:3–17. https://doi.org/10.2307/ 490503 10. Bricocoli M, Salento A (2020) Housing and the grounded city: rent extraction and social innovations. In: The foundational economy and citizenship: comparative perspectives on civil repair. Policy Press, pp 129–156 11. Kazepov Y (2011) Cities of Europe: changing contexts, local arrangement and the challenge to urban cohesion, 1° edizione. Wiley-Blackwell 12. Hoekstra J (2020) Comparing local instead of national housing regimes? Towards international comparative housing research 2.0. Crit Hous Anal 7. https://doi.org/10.13060/23362839.2020. 7.1.505 13. Fainstein SS (2011) The just city. Cornell Univ Pr, Ithaca 14. Cucca R, Ranci C (2022) Urban policy in times of crisis: the policy capacity of European cities and the role of multi-level governance. Urban Aff Rev 58:1493–1522. https://doi.org/10.1177/ 10780874211041710 15. Kemeny J (1994) From public housing to the social market: rental policy strategies in comparative perspective, 1st edn. Routledge, London, New York 16. Kemeny J (1981) Myth of homeownership: private versus public choices in housing tenure. Law Book Co of Australasia, London, Boston 17. Ruonavaara H (2020) Rethinking the concept of ‘housing regime.’ Crit Hous Anal 7:5–14. https://doi.org/10.13060/23362839.2020.7.1.499 18. Cucca R, Gaeta L (2018) Ritornare all’affitto. Politiche pubbliche contro la sclerosi proprietaria. Polit Sociali. https://doi.org/10.7389/89917 19. Collective of the Foundational Economy (2018) Foundational economy: the infrastructure of everyday life, 1st ed. Manchester University Press 20. Engelen E, Froud J, Johal S et al (2017) The grounded city: from competitivity to the foundational economy. Camb J Reg Econ Soc 10:407–423. https://doi.org/10.1093/cjres/rsx016 21. Soja EW (2010) Seeking spatial justice. Univ of Minnesota Pr, Minneapolis 22. Fareri P, Giraudi M (2009) Rallentare. Il disegno delle politiche urbane. Franco Angeli 23. Bricocoli M, Gnan E, Marani B (2018) Quartieri immobili. Carriere abitative e gestione dell’edilizia residenziale pubblica: riflessioni a partire da un caso studio Polis. https://doi. org/10.1424/89423 24. Bricocoli M, Peverini M, Tagliaferri A (2021) Cooperative e case popolari. Il caso delle Quattro Corti a Milano. Il Poligrafo 25. Bricocoli M, Savoldi P (2010) Milano downtown. Azione pubblica e luoghi dell’abitare. et al.

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26. Ragin CC, Becker HS (1992) What is a case? Exploring the foundations of social inquiry. Cambridge University Press 27. Glaser B, Strauss A (2017) The discovery of grounded theory: strategies for qualitative research. Sociology Press, Mill Valley, CA 28. Ralph N, Birks M, Chapman Y (2015) The methodological dynamism of grounded theory. Int J Qual Methods 14:1609406915611576. https://doi.org/10.1177/1609406915611576 29. Charmaz K (2001) Grounded theory: methodology and theory construction. In: International encyclopedia of the social & behavioral sciences, pp 6396–6399 30. Charmaz K (2020) With constructivist grounded theory you can’t hide: social justice research and critical inquiry in the public sphere. Qual Inq 26:165–176. https://doi.org/10.1177/107780 0419879081 31. Yin RK (2013) Case study research: design and methods, 5° edizione. Sage Pubns, Los Angeles 32. Bartlett L, Vavrus F (2017) Comparative case studies: an innovative approach. Nord J Comp Int Educ NJCIE 1. https://doi.org/10.7577/njcie.1929 33. Burawoy M (1998) The extended case method. Sociol Theory 16:4–33. https://doi.org/10.1111/ 0735-2751.00040 34. Lawson J (2010) Path dependency and emergent relations: explaining the different role of limited profit housing in the dynamic urban regimes of Vienna and Zurich. Hous Theory Soc 27:204–220. https://doi.org/10.1080/14036090903326437 35. Gluns D (2019) From plans to policies: local housing governance for the growing cities Vienna and Washington, D.C. Springer Fachmedien, Wiesbaden

Part I

Making Housing (and Cities) Affordable

Chapter 2

A New Theoretical Ground for Housing Affordability

2.1 The Scientific Debate Around Housing Affordability In line with an emerging scholarship, the hypothesis driving this book is that available theories fail to deal with housing affordability issues connected to the contemporary urban question and that new reflections around the concept are needed [1, 2]. Housing affordability has a twofold nature: of analytical indicator part of the housing outcomes—a “set of indicators that describe the housing situation in a particular area” ([3]: 80)—and policy framework related to social and political assumptions, such as the right to (afford) housing. Haffner and Hulse distinguish three main phases of the debate on housing affordability. The first phase spans from the late 19th to the first half of the twentieth century, when “early measurement of housing affordability was grounded in research into the cost of living and poverty, with implications for national social policies” ([4]: 61). The second, later in the twentieth century, brought considerable debate on affordability in relation to “budgets”—the total income needed for all relevant necessities—leading to “a new examination of the role of housing expenditures in relation to costs of living and poverty” ([4]: 63) and a new approach based on looking at whether what is left after paying housing costs is enough to live a decent life [5]. In this phase, housing affordability acquired a more central role in housing policies, connected to a “paradigm shift from need to affordability” [6]: if until the 1970s housing policies were built around the paradigm of need—i.e., defining social goals for housing and public sector mechanisms to achieve them, later they shifted attention to providing assistance to private sector and low-incomes to obtain housing in a more market-oriented system. This occurred in spite of the ambiguities contained in the concept of affordability in terms of application and “operationalization”, as widely recognized by international literature [1–6]. This ambiguity has been also attributed to “underlying agendas”: certain conceptualizations can be programmatic to specific policy agendas to widen the target of housing policies:

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 M. Peverini, Promoting Rental Housing Affordability in European Cities, PoliMI SpringerBriefs, https://doi.org/10.1007/978-3-031-43692-5_2

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2 A New Theoretical Ground for Housing Affordability although [housing affordability] still lacks precise and consistent definition, the term has since achieved international stature, and it typically encompasses not only social housing and low-income housing, but also financially assisted housing for middle-income households that find it difficult to purchase houses in the private speculative market. ([5]: 154)

In the light of the paradigm shift from need to affordability, public action in many countries has pursued this new vague concept, enacting policies as disparate as: decreasing the share of new public housing; privatizing the existing public housing stock in favor of homeownership; redirection of public funding from supply-side to demand-side subsidies; providing financial support to the private sector for lower priced housing. As a consequence, an international debate has developed on the ‘affordability issue’ that is still quite active, together with the invocation of new policies to counter it [6–15]. In this phase, the introduction of norms set the scene for the discussion of issues not only about the affordability measurement but also about the normative basis of quality-based housing affordability. On the measurement side, the advancements in data collection and computer power have facilitated the use of budgets which are sensitive to household type and size. ([4]: 64)

According to an increasing number of scholars, housing expenditure could (and should) be coupled with fuel, water, and energy expenditures to understand how these components are related to (and provoked by) poverty, and the residual income concept gained more relevance in the academic debate, though not being much implemented in policymaking. Haffner and Hulse identify the third phase to start at the beginning of the twentyfirst century when, especially in the years immediately following the global financial crisis, some scholars have been questioning again the current knowledge on housing affordability and claiming for new ways of conceptualizing affordability that effectively take the urban dimension into account. Traditional studies on housing affordability had focused on issues like the relation between affordability and poverty, its implication for social policies and the analysis of advantages and shortcomings of the two main concepts (rent-to-income vs residual-income concept). Although most of the literature on affordability had historically originated from the Angloshpere, more recently the issue of affordability is being considered a global one, with affordability scholarship becoming international [16] and entering as protagonist in the European debate [17, 18]. It is worth mentioning that the affordability issue is also getting out of the academia to land in a more general policy debate. In recent years, the United Nation has also become very active in promoting policies for affordable housing, releasing detailed policy documents and promoting their application in the UNECE countries [19]. More recently, however, scholars have gone beyond these themes to analytically explore and problematize its increasingly urban dimensions and explicitly speaking of “urban housing affordability”: If housing affordability was seen primarily in the twentieth century as a social policy issue centering on the relationships between housing, non-housing expenditures and income poverty, the aftermath of the GFC [Global financial crisis] (2009 onwards) has seen revival of discussions about housing affordability as a consequence of house price and rent increases and urban restructuring. This is not primarily a debate about housing and poverty but about

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new types of inequalities in housing assets/wealth; intergenerational and spatial inequities which are the domain of urban policy rather than social policy which is largely aspatial. In fact, arguably, many of the concerns about housing policy across a range of advanced economies have been absorbed into discussions about the role of big cities as drivers of economic growth. ([4]: 65)

Scholars addressing this new stream of literature call for ways of reconceptualizing housing affordability that explore the primarily urban and contextual character of the housing affordability issue. They highlight the need for a reconceptualization of housing affordability that explores the social, urban, and spatial characters of housing affordability, its dependence on capitalist urban dynamics and its devolution to the local competence—and the linkage to local (urban) governance. In the neoliberal era housing issues have been depoliticized and increasingly devolved down from the state to the market and to local (urban) governance [20]. The theme of housing affordability has gained new relevance in the academic debate especially from such urban perspective [4, 16]. A more recent stream of research has mobilized a new concept, that of “affordable city”: emerging literature on this concept addresses the urban consequence of the lack of affordable housing in attractive cities, and actively promotes policies to improve housing affordability from a holistic perspective of state intervention [21, 22]. Additionally, quantitative research has also started addressing the “urban” housing affordability issue: for example, a database of indicator was recently elaborated for a selection of European cities to measure affordability at the city level [23]. This book situates itself in this stream, and aims at contributing to the development of a contemporary urban perspective on the concept of housing affordability. The remainder of this chapter provides a non-systematic review of the conceptualizations of housing affordability.

2.2 What is Housing Affordability? A Critical Review This chapter presents a qualitative non-systematic review of the different conceptualizations of affordability that can be found in policy and literature. It aims to frame the debate around the different concepts and orient researchers and policymakers in this complexity. Some scholars have addressed the complexity of the concept and reviewed the literature around specific themes like: how affordable housing policies interact with other major urban policies, such as growth management and urban containment [24]; how attitudes toward affordable housing are likely shaped by factors that influence other social policy attitudes, particularly ideology and stereotyping [25]. The review by Ezennia and Hoskara [26] adopts a mainly economic approach, while that by Galster and Lee [27] adopts a systematic, holistic perspective and specific structural relationships for a metropolitan area that comprehensively delineate the determinants of housing affordability. Academic and grey literature was reviewed. The review often refers to concrete example from the case studies, that help disentangle the complexity of the concept. As argued, there is no agreement over a unique definition of affordability, but rather there

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are different “conceptualizations” of it. Conceptualization here means a coherent sequence of: definition of affordable housing; metric or standard adopted to measure it; the role of housing affordability (or affordable housing) in housing policies. In this part, a series of housing affordability conceptualizations are reported and critically analyzed. The starting hypothesis is that the relationship between housing and economic conditions depends on how affordability is defined, measured, and represented, and that the different definitions, metrics, and role of affordability affect the design of public policies. The review of academic and grey literature found six main concepts according to which housing is affordable. These conceptualizations are elaborated in the next section. Each concept is presented, elaborated and discussed in detail in the next paragraphs. The logic behind each conceptualization (and the corresponding metric) can be extremely different and there is no claim for comparison. To confront them, the review refers to the way each concept defines affordable housing, according to the following parameters (Table 2.1): local housing market prices; disposable income; non-housing costs (respectively: locational or non-locational).

2.2.1 Below-Market According to the “below market” conceptualization, affordable housing is given when rent or sale price is below the average level on the housing market. There is relatively little academic literature regarding this concept, which is however widely used in policy documents. In the 2019 UK National Planning Policy Framework, affordable housing is defined as: housing for sale or rent, for those whose needs are not met by the market […] and which complies with one or more of the following definitions: […] the rent is set in accordance with the Government’s rent policy for Social Rent or Affordable Rent, or is at least 20% below local market rents (including service charges where applicable); […] is sold at a discount of at least 20% below local market value. ([28]: 64)

A similar though more vague example can be found in the policies for the “social dwelling” (alloggio sociale) in Italy, established by the Ministerial Decree of the Ministry of Infrastructure of 22 april 2008 (Decreto del Ministero delle Infrastrutture del 22 Aprile 2008) and regulated by local contracts for rental housing at moderated rent (“moderato, convenzionato, agevolato”) and for affordable homeownership (“edilizia in vendita convenzionata di tipo agevolato”): the “Edilizia Residenziale Sociale” (ERS) and the “housing sociale” are some of the emanations of this policy: they establish a certain discount, though without specifying exactly how large [18]. The below-market concept usually refers to a housing supply that is defined based on a reduction on the market price or rent. This reduction has various possible reasons. It can be induced by national rule or local zoning (e.g., IZ) or after negotiation with the public administration, in exchange for reduced building taxes or other benefits (obtain a zoning change, a building permission, or an increase in volume), as in

X

= X % of the disposable income – transportation costs (+/– other locational parameters)

Made by the author (Source Elaboration by the author)

X

= disposable income – minimum residual income

X

6. “Location related affordability”

X

5. “Residual income”

X

= X % of the disposable income X

X

Number of dwellings that are “cost to income” affordable for a household

= Land cost + Construction cost * Interest rate

2. “Cost-rent (or price)”

4. “Housing accessibility index

= X % of the Market price

1. “Below-market”

Household’s income

X

Non-locational

X

Locational

Non-housing costs

Demand parameters

Market prices

Production/ maintenance costs

Supply parameters

3. “Cost to income”

Corresponding metric Affordable housing costs =

Conceptualization

Table 2.1 Summary of the review

2.2 What is Housing Affordability? A Critical Review 15

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most cases in the city of Milan, or, as it mostly occurs in Vienna, as a condition to obtain public land for private development at a cheap price/lease and to access subsidies. However, acting below market can be part of the mission of some organizations (as in the case of some associations, philanthropic foundations, or housing cooperatives) which for various reasons renounce to margin or profit. For example, both Italian and Austrian housing cooperatives produce housing that is, most of the times, inherently below market. However, when market prices are exceptionally high (allowing a profit even with lower margins), even market players can have an interest in producing below-market housing (e.g., to intercept a greater demand). Additionally, housing can be below market for other reasons: private assets in poor conditions or in degraded locations are usually below market, as well as rental housing in regime of rent protection. This implies that below-market housing can be considered as a market itself, even though a kind of sub-market, that primarily depends on the real market conditions. As shown by the Italian case, this can have important implications: housing sociale, which is inherently a form of submarket housing, has proven much more feasible in heated housing markets with higher market rents, while in the rest of Italy below-market rents would not be economically feasible. The Italian policy that created housing sociale is based on a certain vision of the housing demand as divided in three parts: households able to afford a house in the free market; households unable to afford a house in the free market but suitable for public housing; households unable to afford a house in the free market (as stated in the UK definitions) but unsuitable for public housing. This last segment has been named “fascia grigia” (grey segment), to identify a part of the housing demand that does not find satisfaction in the free market: to cater them, the state or its emanations has committed to create an accessible sub-market (the housing sociale). Such a concept seems to imply that being affordable is a characteristic of some part of the housing supply, considering the local housing market but regardless of the material condition of the inhabitants and the local income levels. The below market concept matches a particular vision of the housing supply composition as divided into three segments: public housing (publicly owned and managed housing at very low rents), below-market affordable housing, and free market. In other words, on an ideal line in which the rules for determining the rents and eligibility of the inhabitants decrease from left to right, affordable housing can be seen as an intermediate segment of the entire housing stock placed between public housing and the free market [18], which is also assumed by international institutional actors [17, 29]. Neither income nor other individual material factors are considered, with the consequence of possible distortions regarding local income levels: especially where market prices are particularly high, below-market housing can be still quite expensive and even quite profitable.

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2.2.2 Cost-Rent The “cost rent” conceptualization can be considered a sub-definition of the belowmarket one. According to this conceptualization, housing is affordable when price or rent is calculated as a mere sum of the cost of housing production factors (such as cost of land, construction, and money borrowing) and of its maintenance by the time. It implies giving up profits (completely or in part) and surplus value (e.g., not filling the “rent gaps”, see [30]). Cost renting was deeply investigated by Jim Kemeny as it was the constitutive principle for the integrated rental market in some European countries, in which also public housing followed this rule [31]. In this sense, it can occur as a natural strategy in the economic-financial model of some kind of housing developers: like housing cooperatives in Italy, where housing policies do not actually include costrent metrics with few exceptions [32], or can be controlled by specific regulations, or as in the Austrian and Swiss cases. For example, the Austrian Limited-Profit Housing Act (Gesamte Rechtsvorschrift für Wohnungsgemeinnützigkeitsgesetz) is a regulation that binds housing cooperatives and limited profit developers, among other limitations, to determine rents based exclusively on production and maintenance costs (see Fig. 2.1). This part of the supply falls almost by definition into the below-market segment. For example, in the Austrian limited profit system rents are calculated on the basis

Fig. 2.1 Essential representation of the cost rent calculation (Source Elaboration by the author)

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of costs, maintenance and renovation (GBV, 2016), bringing rents 20–25% belowmarket. But this specific conceptualization is stricter when it comes to leaving the space to extract value from affordable housing even where housing market conditions would allow it in a below-market sense. Kemeny identified some criticalities in defining the boundary between cost and profit rent, since It can be argued that without local competition for households between different cost rental housing organizations there is little incentive for managers to economize on the costs of their own contributions. These will still show up as legitimate costs in the accounts but could well be grossly inflated. ([31]: 35)

The cost rent conceptualization is still indirectly affected by a dependence on the cost of production, of money and especially of land. In this sense, policies relying on the cost rent concept usually involve some support to reduce these components and therefore the final rent or price. For example, in the Austrian system the cost of money is limited with public subsidies, while dependence on the land market is reduced by providing land for public housing at a reduced and capped price (see Chap. 4). Through this regulatory system of public building and land policies, it is, therefore, possible to politically control the final housing costs and keep them attached to socially defined income and material conditions.

2.2.3 Cost to Income The “cost to income” conceptualization, also referred to as the “rule of thumb” for its simplicity of application and widespread use, is often used as a metric of housing affordability. It is based on direct comparison between the rent (or housing costs or expenditure, see below) and the household disposable income, establishing a normative standard: a ratio or proportion below which housing is affordable for that household (see among others: [11, 13, 15, 33–36]). In short, it is a parameter of the acceptable burden of the housing cost on the income. At present, a widely accepted formulation of the cost to income conceptualization prescribes that households should pay maximum 30% or one third of their incomes on housing. In comparison to the previous supply-oriented conceptualizations, the cost to income one is also linked to the demand, since it takes into account the available income of a certain household. It is widely applied in a variety of ways: the “social rent” (canone sociale) adopted in the Italian public housing (Edilizia Residenziale Pubblica) is calculated on the basis of a maximum ratio on the tenant’s income (see Chap. 5). Even private actors, including landlords, cooperatives banks and real estate operators, use the 30% rule to calculate the sustainability of mortgages and rents for households and to decide whether they will be able to pay. It is also used to assess the outcomes of the housing market at the local, national, and supranational levels, and also to make comparisons. Its apparent simplicity, however, hides multiple complications, regarding:

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• the elements that compose housing costs or housing expenditures. Some (like EUSilc by Eurostat) include energy expenses, maintenance and repair costs, insurance costs. Other measurements only take rent into account. • the acceptable ratio between income and housing costs. Even if now many of the policymakers and practitioners set the acceptable affordability ratio at around 30%, the acceptable ratio has changed over time. This formula has long historical roots “in the commonly used turn-of-the-century expression ‘one week’s pay for one month’s rent’”, but “Through the decades the housing expenditure-to-income ‘rule of thumb’ deemed to tie an appropriate indicator of ability to pay gradually shifted upward” ([1]: 471). Hulchanski concluded that, as a rule of thumb, the cost to income method had no scientific basis, regardless the ratio chosen, and that its use must be considered a value-based political decision [1]. Hulchanski insists on the arbitrariness of any ratio, and propose at least to have a differentiated ratio for different income ranges and types of households, which would avoid the “comedy of errors” of using only one standard regardless of income and type of the household [1]. • the inelasticity of housing demand. The housing demand has low elasticity since housing is a basic need for everybody [37]. This is especially true for rental housing [38]. This means that, compared to other goods and services for which the demand decreases when prices go up, the demand for (rental) housing does not decrease significantly even when prices and rents rise high. In other words, people are ready to spend on housing more than their income might support and determining the acceptable ratio based on how much people are willing to pay runs into a vicious circle [5]. A fourth problem regards the relation between this conceptualization of affordability and income inequality. As many scholars have highlighted, there is a relevant issue in the cost to income concept. Figure 2.2 shows an example inspired by Padley and Marshall [36] that compares one hypothetic household with low income and paying affordable housing costs with a higher income one paying unaffordable housing costs. It would be natural to support household B, whose housing costs impact heavily on income, but emphasizing what remains after housing costs (in dark gray) shows that it has greater residual income than household A. Supporting household B would therefore exacerbate income inequality. In other words, the costto-income concept tends to accentuate income inequality and replicate and reinforce it in the field of housing. This results in a risk that this conceptualization of affordability might supports policies that would be relatively regressive. The critical issues presented above have fueled widespread academic criticism over the cost to income concept, and a considerable effort on the development of alternative concepts that could overcome these critical issues [1, 2, 5, 11, 33, 36].

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Fig. 2.2 An example of measuring affordability for households with different incomes: on the left, using only the ratio of housing costs on income for each household; on the right, comparing the different incomes and the housing costs on an absolute basis (Source Elaboration by the author on [36])

2.2.4 Housing Accessibility The “housing accessibility” conceptualization refers to the ability of certain households (usually defined based on income ranges, wealth, or even specific job chategories) to access affordable housing within a certain market [39]. “Accessibility refers to the ability of households to enter the housing market” ([40]: 85) and is an evolution of cost to income conceptualization. It is concretely calculated by measuring the quantity of housing that is affordable for certain incomes and is related to the concept of housing need. Many scholars have embraced housing accessibility as a better alternative to other affordability metrics. Neuteboom and Brounen [41] define accessibility as a notion covering simultaneously the demand side and the supply side, comparing the distribution of economic capacity of households (demand) and that of housing costs of the available stock in the market (supply). Usually, one can use a reference household and count how many dwellings are affordable for that type of household in the market. One concrete example is the “nurse index” adopted to measure housing affordability and accessibility in Norwegian cities. It measures the number of dwellings in an urban market that would be potentially affordable with a nurse’s salary, which is close to the average median national one [42]. Some use it for homeownership, while others for the rental sector [43]. Despite some difficulties— e.g., the number of dwellings available at a certain price is a very instable datum and requires extensive market analysis with a relatively short validity—housing accessibility is very useful to “locate” affordability within a housing market and for its linking demand and supply.

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2.2.5 Minimum Residual Income The “minimum residual income” conceptualization has been proposed as a new way of conceptualizing affordability to overcome the critical issues exposed for the cost to income concept, starting from the assertion that the essence of affordability is asking “what has to be foregone in order to obtain housing and whether that which is foregone is reasonable or excessive in some sense” ([1]: 129). It looks at what remains once the housing costs are paid (residual income) and measuring affordability by comparing it to a defined minimum residual income to live a decent life [5, 10, 13, 34]. Affordability is measured by comparing actual residual income— for a specific household paying certain housing costs—with the required minimum residual income. Taking the example in Fig. 2.2 and adopting the residual income concept it is possible to see how, by setting a minimum residual income as threshold and measuring affordable housing costs from that threshold, the result could be reversed (Fig. 2.3): the housing costs paid by Household A are now considered unaffordable, because they leave less residual income then the minimum, while those paid by Household B, even if very high in percentage, are considered affordable. For a hypothetical household C with an income lower than the minimum residual income, the only affordable housing cost for it would be zero (instead, income support would be needed). The residual income concept overcomes most of the critical issues exposed for the cost to income concept, representing its ideal evolution; however, it also poses some different application problems: Fig. 2.3 Applying the residual income concept to the previous example and using the minimum residual income to assess affordability for each household (Source Elaboration by the author on [36])

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• determination of the minimum residual income. This problem belongs to a broad social and political debate on what is a decent life. Additionally, this threshold could hardly be significant if determined on a large scale, as many factors contribute to determining the minimum residual income for living a decent life, including spatial and location related factors. A recent application of the residual income to Italian public housing tenants has considered the official absolute poverty threshold provided by the national statistical institute (Istat) as the minimum residual income (see Chap. 5). • Higher-income distortion. For higher incomes, the acceptable ratio could tend to 100% and would make no sense according to the cost to income concept: this concept is then significant only for low and middle-income groups. This is a minor problem because these group are those who most suffer from affordability problems. King argues that once a cost-to-income ratio and a minimum residual income are set, it is possible to combine the two concepts to have a more accurate description of individual affordability problems [44]. He shows four different housing affordability conditions: (1) affordable outright (typical of well-off households); (2) unaffordable cost-to-income but affordable residual income (typically for high-middle income households living in expensive housing); (3) affordable cost to income but unaffordable residual income (typically for poor households even when living in inexpensive or social housing); and (4) unaffordable outright (typical of lower-income households in market housing). These distinctions allows more effective policy design, especially when affordability policies are combined with income support schemes. Housing costs tend to weigh more heavily on lower-income households, as they cannot squeeze their share of housing costs beyond a certain threshold. Compression of residual income has the effect of pushing low-income groups into poverty after housing costs: households with a sufficient income once they have paid their rent or mortgage find themselves below a threshold of material dignity. Palvarini calculated that adopting a minimum residual income corresponding to the absolute poverty lines calculated by Istat and considering housing costs, the percentage of poor households would climb from 10.8 to 15.6% [45]. Typically, housing deprivation is motivated by income compression and inequality and persistent income poverty, which is reasonable. However, the residual income conceptualization allows to reverse the reasoning: in the face of structural income weakness, it is likely that housing costs are themselves a cause of increased residual income poverty. These data make it possible to make a conceptual inversion: in a significant number of cases, it is not low income or poverty that makes access to housing difficult, but rather they are high housing costs that increase the number of people in poverty.

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2.2.6 Location-Related Affordability Some literature has started considering location-related factors into affordability. Primarily and mostly, the literature has tried to include transportation costs [46, 47]: the availability of affordable rental housing in locations served by fast and frequent public transportation enables low-income households the access to more opportunities, including jobs, without the costs of owning and operating automobiles. ([47]: 23)

A spatially blind concept to affordable housing would overlook the “geographies of affordability”, the peripheralization of affordable housing, and the mismatch between transit and lower-income areas [48]. To address the interrelation between housing and transportation costs, around 2010 the Center for Neighbourhood Technology has developed the Housing + Transportation Affordability Index,1 with the aim of “moving land use and development decisions away from sprawl and informing individual family choices by emphasizing the transportation costs associated with lower priced exurban homes” ([49]: 116). It is a complexification of the cost to income concept, based on spatially distributing housing prices at the metropolitan level and adding the presumed transportation costs [34]. The index has also been tested outside of the US [50] and can give more in-depth insights into the interrelation between housing prices and urban dynamics and growth [24, 27]. Interrelations between housing affordability and the quality of the urban environment and urban life can be understood even more broadly. Some scholars linked the lack of affordable housing to segregation [51], put in relation health-related outcomes and housing-induced financial burdens for renters [52], stressed the benefits that the provision of quality affordable housing can have to the larger community, in terms of health and education [53]. In this direction, efforts have been made to propose conceptualizations that link housing affordability to a broad set of local determinants. Bogdon and Can [7] developed measures of the spatial distribution of affordability problems, looking at the mismatch between the demand and supply of affordable housing for the lowest-income households. Some other concepts proposed in the literature try to develop indexes that are “amenity-based” [54] or to consider determinants such as “location efficiency” and “walkability” [55] or the number of jobs accessible within a 30’ transit ride.2 Other attempts have been made to be more comprehensive, as the one by Cai and Lu [56], who proposed a broader “housing appropriateness” that include, among others, affordability, accessibility, amenity, or the one by Mulliner and Maliene [57], who proposed an analysis with twenty criteria that, on a neighborhood level, include housing market parameters with safety, housing quality, waste management, and environmental problems, access to leisure and services. At an advanced frontier of affordability measurement, a new tool has been conceived to take into account multiple spatial and locational factors related to affordability. In 2012, the US Department of Housing and Urban Development 1

The index is available for most of the US territory at the neighborhood level: https://htaindex.cnt. org/ 2 The index is available for the city of New York: https://alltransit.cnt.org/new-york/

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(HUD) upscaled the Housing + Transportation Affordability Index into a specific policy tool, the Location affordability index (LAI). It is essentially a database and online portal that combines data about local incomes and housing prices with transportation and access to opportunities. This tool is used as an element of information and support for decision making, both for the population and for planning.3 The index has the merit to elevate the level of the debate on housing and seems useful to sharpen the understanding of intertwining urban and housing dynamics [58]. Both indexes refer to a conceptualization that we may call location affordability as they include location-related opportunity costs, such as the cost of transportation, into the calculation of the cost-to-income ratio. As such, they represent a complexification of the cost to income concept—since their core philosophy is still comparing housing-related costs to the household’s income—that includes the logic of the residual income concept of looking at the opportunity cost of housing in terms of non-housing expenditures on a spatial basis. These broader interpretations suggest that housing affordability on an urban level could have effects that go beyond the individual opportunity costs and become collective externalities, affecting the population on an urban basis—and therefore the city. These attempts are coherent to the “spatial turn” in social sciences [59] and the new attention to housing affordability as an urban problem characterized by a spatial organization. This way of conceptualizing affordability is very promising, as it highlights a strong connection between individual supply and demand housing characteristics with the urban dimension. This direction will be deepened in Chap. 3.

2.3 Towards a Broader (Urban) Understanding of Affordability The non-systematic review found six main conceptualization of affordability, together with a number of relative operational criteria that take different factors into account (Table 2.1). Accordingly, housing is defined affordable when: 1. prices and rents are below the market price of a particular property class (below market); 2. prices and rents are the mere sum of production costs (cost rent); 3. for a specific household, the share of disposable income spent on accommodation is below a certain level (cost to income); 4. in a given market, a high-enough number of dwellings are cost-to-income affordable for particular income categories (housing accessibility); 5. for a specific household, the residual income after accommodation costs have been deducted is above a minimum (minimum residual income);

3

See the HUD web page relative to the Location affordability index: www.hudexchange.info/pro grams/location-affordability-index/

2.3 Towards a Broader (Urban) Understanding of Affordability

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6. for a specific household, in a specific place, the share of disposable income spent on accommodation and transport is below a certain level or, more generally, if one takes into account other location-related expenditures (location affordability). The first two concepts—below market and cost rent—only consider parameters linked to housing supply (market price, production or maintenance costs, qualitative factors) and could be considered “supply-side” concepts. The last four concepts— cost to income, residual income and location affordability—take into account parameters linked to the demand, such as the household’s income and the non-housing costs connected to the housing (locational or non-locational) and could be considered “demand-side” concepts. As noted by Neuteboom and Brounen [41], housing accessibility is instead a notion covering both sides of the market (demand and supply). Finally, within the demand side conceptualizations, only the location affordability conceptualizations take the spatial dimension into account. Different conceptualizations can be simultaneously satisfied or not: a below-market dwelling could be cost-to-income affordable for a certain household but not for a different one; costto-income affordable dwellings could become unaffordable when considering their location and transportation costs; a city can have an affordable but inaccessible housing market, with the result of creating a gap between insiders and outsiders of a protected housing segment [43]. Despite the richness of the theoretical panorama, the concept of housing affordability is often condensed in merely “affordable housing”, a segment of the housing stock—either intermediate publicly owned housing and full market housing, or also comprising the public housing segment (see for example: [19, 29]). The distinction made through the review is useful in the construction of a more precise framework for the analysis of housing affordability problems and policies: drawing on all the different conceptualizations allows for a wider view of affordability problems. The review shows an evolution in affordability metrics and that the exposed conceptualizations could be put in an order of “complexity”: how each concept deals with reality in its multiple dimensions. The concept of housing affordability is operatively translated into analytical indicator and policy framework through certain interpretations of the concept. The use of a certain concept to affordability has a big impact on how housing problems are conceptualized and, consequently, on how policies are designed. Choosing a supply-side or a demand-side concept to affordability could be considered programmatic for housing policies that act either on the supply (IZ, supply-side subsidies, etc.) or demand side (housing vouchers, housing allowances, etc.). To overcome the distinction between supply-side and demand-side and enrich the capacity to analyze the affordability of a local market, some claimed the need to shift the emphasis from housing affordability to housing accessibility [39, 41, 43, 60]. However, as the last conceptualizations show, focusing only on merely quantitative and spatially blind measures (e.g., increasing the overall number of affordable houses in a city) overlooks the spatial implications of affordability. All the conceptualizations shown above are useful, but while the last one explicitly acknowledges an urban and spatial dimension, the other need further effort to be related to space and to become effective in an urban perspective.

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Since every conceptualization has pros and cons, ideally one shall combine them to have a comprehensive description of affordability outcomes in a certain area or market. Drawing on the review, one could argue that housing affordability should not only be intended as a mere part of the supply (which and how much housing is affordable?), but rather as a multidimensional outcome produced by the housing market and the local housing system which needs to be contextualized for specific income profiles, spatialized with relevant geographical factor and connected to other welfare measures. In this sense, affordability is an outcome indicator of a housing system and shall be intended not only as an assessment of the ability of an individual or a household to access and maintain housing but also as a determinant toward a broader set of living conditions, e.g., to access housing: in a specific place, paying a fair share of income for it, having enough left to live a decent life, etc. Thus, affordability also refers to the conditions of access to the housing supply for certain socio-economic conditions and to the socio-economic consequences of access to housing [4]. Operationally, housing affordability can be measured as an assessment of the capacity of a broad range of individuals and households (and especially low-income ones) to access and maintain housing within the housing system, with good quality and in accessible locations, paying a fair share of income for housing and having enough left to live a decent life. On the contrary, unaffordability triggers housing exclusion, conditions of poverty (residual income poverty, commuting poverty, energy poverty, etc.) and spatial injustice (segregation, gentrification, poverty suburbanization, etc.). In this sense, housing affordability especially refers to housing supply access conditions for households in certain socio-economic conditions (and especially low- and middle-income households) in an urban housing system and to the social and spatial consequences of the geographies determined by affordability: from this perspective, “affordability” is a measurable character of housing of any kind (being it public, social, or private) connected to its quality and location [21], and thereby is a character of a housing system. Chapter 3 discusses from this perspective the relevance of the concept of affordability in the current housing and urban question and in the design of the mix of policies to promote it in a city in the theoretical (and practical) framework of the Foundational Economy.

References 1. Hulchanski JD (1995) The concept of housing affordability: six contemporary uses of the housing expenditure-to-income ratio. Hous Stud 10:471–491. https://doi.org/10.1080/026730 39508720833 2. Anacker KB (2019) Introduction: housing affordability and affordable housing. Int J Hous Policy 19:1–16. https://doi.org/10.1080/19491247.2018.1560544 3. Hoekstra J (2020) Comparing local instead of national housing regimes? Towards international comparative housing research 2.0. Crit Hous Anal 7. https://doi.org/10.13060/23362839.2020. 7.1.505 4. Haffner MEA, Hulse K (2021) A fresh look at contemporary perspectives on urban housing affordability. Int J Urban Sci 25:59–79. https://doi.org/10.1080/12265934.2019.1687320

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29. Urban Agenda for the E.U. (2016) Urban Agenda for the E.U 30. Smith N (1979) Toward a theory of gentrification a back to the city movement by capital, not people. J Am Plann Assoc 45:538–548. https://doi.org/10.1080/01944367908977002 31. Kemeny J (1994) From public housing to the social market: rental policy strategies in comparative perspective, 1st edn. Routledge, London, New York 32. Bricocoli M, Peverini M, Tagliaferri A (2021) Cooperative e case popolari. Il caso delle Quattro Corti a Milano. Il Poligrafo; Padova 33. Kutty NK (2005) A new measure of housing affordability: estimates and analytical results. Hous Policy Debate 16:113–142. https://doi.org/10.1080/10511482.2005.9521536 34. Jewkes M, Delgadillo L (2010) Weaknesses of housing affordability indices used by practitioners. J Financ Couns Plan 21 35. Napoli G, Trovato MR, Giuffrida S (2016) Housing affordability and income-threshold in social housing policy. Procedia—Soc Behav Sci 223:181–186. https://doi.org/10.1016/j.sbspro.2016. 05.345 36. Padley M, Marshall L, Valadez-Martinez L (2019) Defining and measuring housing affordability using the minimum income standard. Hous Stud 34:1307–1329. https://doi.org/10.1080/ 02673037.2018.1538447 37. Poggio T (2011) The housing pillar of the Mediterranean welfare regime: relations between homeownership and other dimensions of welfare in Italy. In: Beyond homeownership. Routledge 38. Cucca R, Gaeta L (2018) Ritornare all’affitto. Politiche pubbliche contro la sclerosi proprietaria. Polit Sociali. https://doi.org/10.7389/89917 39. Sendi R (2014) Housing accessibility versus housing affordability: searching for an alternative approach to housing provision. Sociol Space 52:239–260. https://doi.org/10.5673/sip.52.3.1 40. Kadi J (2015) Recommodifying housing in formerly “red” Vienna? Hous Theory Soc 32:247– 265. https://doi.org/10.1080/14036096.2015.1024885 41. Neuteboom P, Brounen D (2011) Assessing the accessibility of the homeownership market. Urban Stud 48:2231–2248. https://doi.org/10.1177/0042098010385155 42. Cavicchia R (2021) Are Green, dense cities more inclusive? Densification and housing accessibility in Oslo. Local Environ 26:1250–1266. https://doi.org/10.1080/13549839.2021.197 3394 43. Kadi J, Musterd S (2015) Housing for the poor in a neo-liberalising just city: still affordable, but increasingly inaccessible. Tijdschr Voor Econ En Soc Geogr 106:246–262. https://doi.org/ 10.1111/tesg.12101 44. King A (1994) Towards indicators of housing stress. Australian Government Publication Service 45. Palvarini P (2010) Cara dolce casa. Come cambia la povertà in Italia dopo le spese abitative. In: Terza conferenza annuale ESPAnet Italia. Paper in conference proceedings 46. Bieri DS, Dawkins CJ (2016) Quality of life, transportation costs, and federal housing assistance: leveling the playing field. Hous Policy Debate 26:646–669. https://doi.org/10.1080/105 11482.2016.1188844 47. Revington N, Townsend C (2016) Market rental housing affordability and rapid transit catchments: application of a new measure in Canada. Hous Policy Debate 26:864–886. https://doi. org/10.1080/10511482.2015.1096805 48. Kramer A (2018) The unaffordable city: housing and transit in North American cities. Cities 83:1–10. https://doi.org/10.1016/j.cities.2018.05.013 49. Mueller E, Tighe JR (2012) The affordable housing reader, 1st edn. Routledge, London, New York 50. Isalou AA, Litman T, Shahmoradi B (2014) Testing the housing and transportation affordability index in a developing world context: a sustainability comparison of central and suburban districts in Qom. Iran. Transp Policy 33:33–39. https://doi.org/10.1016/j.tranpol.2014.02.006 51. Anderson LM, St. Charles J, Fullilove MT et al (2003) Providing affordable family housing and reducing residential segregation by income: a systematic review. Am J Prev Med 24:47– 67.https://doi.org/10.1016/S0749-3797(02)00656-6

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Chapter 3

Making Housing Affordable: A Foundational Framework for Policy Analysis

3.1 Where and Why is Housing Affordability a Problem? 3.1.1 Housing Affordability and the Housing Question The roots of the housing affordability issue can be at least in part found within the housing question, and considered one of its manifestations. Friedrich Engels wrote The housing question almost 150 years ago [1], but scholars explicitly speak of a return of the housing question especially after the 2008 Global Financial Crisis, which spoiled some of the mainstream myths regarding housing [2, 3]. This is interpreted by some as a confirmation that housing problems are rooted in the class structure of the capitalist society and can hardly be solved without subverting it: Madden and Marcuse argue that the contemporary housing question is shaped by a continuously changing set of phenomena that influence the (already unbalanced) capitalist housing system and induce a state of permanent housing crisis [4]. The housing question can still be quite confidently based on one of the foundations of Capitalism: the dichotomy between market value and use value of housing. This can be considered one of the main conceptual pillars of the line of thought that originated from Engels and has continued up to today through Neo-Marxists (e.g., [5, 6]), Critical Urban Scholars (e.g., [7–9]), and Radical Housing Scholars (e.g., [10–12]). The main bottom line of these streams of thought are that in market economies housing has assumed an increasingly commodified nature (though being a very peculiar commodity, as acknowledged by most economists) connected to the fact that real estate (and consequently the urban space) has represented an expansion room for the accumulation of capital [13, 14]. The nature of housing problems regards especially the conditions of increased commodification of housing, the expansion of the centrality of the exchange value at the expense of the use value [4]. Housing affordability links the housing situation of households to their economic situation, representing a link between the use value and the exchange value of housing. Commodification of housing is then considered one of the main reasons why housing can be unaffordable. In this framework, some important shifts © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 M. Peverini, Promoting Rental Housing Affordability in European Cities, PoliMI SpringerBriefs, https://doi.org/10.1007/978-3-031-43692-5_3

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are recognizable in the development of housing policy under capitalism: commodification has been one of the core-aims of the strategies pursued during the neoliberal turn, for example through the privatization of public housing stock and the liberalization of rent control in the private rental sector, while European housing policy has shifted from focusing on “access”—i.e., guaranteeing access to some housing to everybody—to “quality”—i.e., assuring the fulfillment of some standards, e.g., through increasingly strict building norms1 [15]. This has often happened at the expense of policies that favor access to housing and, thereby, affordability of housing. Additionally, housing plays a key role in the transition from public welfare, primarily based on public or collective pension and insurance schemes, to private asset-based welfare based on ownership of one real estate [16]. Homeownership has therefore represented a vehicle of saving and investment for the equity of a broad group of single citizens, with the aim of offsetting declining public welfare resources. More recently, commodification dynamics have been exacerbated by the strengthened ties between the housing market and financial institutions, the process known as housing financialization [17]: the increasing dominance of financial actors, markets, practices, measurements and narratives, and the resulting structural transformation of economies, firms, states and households. Housing financialization, mostly driven by state institutions, poses housing as asset class in the over-growing financial market and increases the weight of the exchange value of housing by tying it to global financial dynamics. This also entails the continuous expansion of “non-housing” uses for the housing stock: second homes [18], short-term rental housing related to the tourism industry [19], “not for housing” housing [20], empty housing used as an investment [21]. Financialization, as the next step of commodification, has exacerbated the affordability crisis. Even after the Global Financial Crisis, the weight of housing costs (including utilities) on the overall panel of consumption expenditures has grown substantially on average [22, 23]. All these transformations in the meaning of housing have contributed to enlarge the gap between use and exchange value of housing and to change the forms of social and political divide around housing. During the 19th and part of the twentieth century there was a clearer polarization among tenants and landlords, corresponding to a clear class divide with tenants-workers demanding more affordable housing against landlords-capitalists. At the turn of the twenty-first century, transformations in the rules of the housing market determined a more subtle tri-polarization among: “players” of the housing market that see price and rent increase as a benefit, “benchwarmers” that are negatively affected by unaffordable prices but try to take part to the game of the market (e.g., through mortgages), and “excluded” ones that have no chance to take part to the market game and are negatively affected by a growth in housing prices [24]. This creates some friction in how to consider the indicators of success of a housing regime in relation to low or high housing costs, and therefore 1

This was suggested by Italian sociologist Antonio Tosi during a roundtable discussion in Milan on October 14th 2019 I organized jointly with Martina Bovo titled “Trovare casa e abitare. I bisogni abitativi tra accesso e qualità dell’offerta” (To find a house and to dwell. Housing needs between accessibility and quality of the offer).

3.1 Where and Why is Housing Affordability a Problem?

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to affordability. In this configuration, the political spectrum of those who advocate for housing affordability is reduced to those excluded (mainly tenants, migrants, homeless), while a large mixed group favors higher housing costs: financial actors, developers, landlords, homeowners and even first-time buyers who hope for a good investment. In this framework, housing affordability is a contested and pressing political issue. While the expansion of homeownership has enlarged the consensus for growing housing prices and rents, recent trends have impacted the most attractive agglomerations by increasing housing values to unprecedented levels, thereby enlarging the spectrum of those excluded or affected by unaffordability to the lower middle classes and destabilizing (at least in part) this consensus. The next section assumes a more urban perspective and, delving into the contemporary demographic dynamics, characterizes affordability as a predominantly urban phenomenon.

3.1.2 Housing Affordability in the Contemporary Urban Restructuring The dichotomy between the exchange and use value of housing has reached an apex in today’s dynamic global cities. Problematizing the affordability issue means understanding that today it is primarily (but not exclusively) an urban phenomenon [25]. Some scholars have recently underlined how the affordability crisis is primarily an urban one and established research pathways to explore the urban (and spatial) dimension of affordability [26, 27]. These efforts fit with the “spatial turn” in social sciences and the increased focus on housing affordability as an urban issue with specific spatial characteristics [28]. Housing affordability problems tend to be higher in attractive and growing metropolises, where the divergence between rents and incomes is accelerated by the impetuous re-urbanization of capital and people [10, 29]. Land and housing are desirable assets for both short- and long-term financial investment in attractive cities because of the potential for future returns and the practically limitless demand, driving up land and housing prices to unprecedented levels [30]. After the 1980s most cities worldwide have experienced a substantial growth in housing prices, while some global and growing cities have observed a true explosion of housing prices. These trends have contributed to the emerging “global urban housing affordability crisis”, meaning that middle-income groups—normally those that could climb the housing career ladder by accessing homeownership— are increasingly unable to afford decent housing in cities, even for rent [27]. In those contexts, middle classes (together with lower incomes) are facing the risk of displacement and expulsion [31]. The localization of affordability problems tends to mirror urban population growth which in turn concentrates in some urban regions and not in others [32, 33]. Even though there is a clear overall trend toward increased urbanization, some urban regions are much more attractive than others, while some can even decrease and shrink, depending on the continuous rearrangement of the “spatial fixes” of contemporary capitalism [28]. This is the case for Europe, where

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traditionally powerful industrial regions—in some cases stimulated by Fordist type of equalizing state investment—are shrinking, while urban regions that have managed to attract tertiary economy and real estate investment are growing [34]. Processes of concentration of private and public investment [35], changes in cultural preferences [36], and the territorial rescaling of the State objectives toward attractive cities [34], laid the foundation for the “triumph of the city” [37]—or, better, of few cities—over the rest of the territories. Scholars describe how, more recently, the geography of investment, real estate values, employment, wages, and skills determine shrinkage and migration in marginal and inner areas—the “places that don’t matter” [35]. A spatial “mismatch” between housing and job opportunities that triggers internal migrations and differential population change can also be seen at the national and regional levels. Referring to the case study, this can be seen in both cities. In Austria, few cities are absorbing important population movements [38], especially the city of Vienna, which has gained around 300,000 new inhabitants in three decades (See Chap. 4). In Italy, during the last decades an increasing group of marginal territories and medium cities have been affected by shrinkage trends, while some main urban regions have grown significantly [39]. The metropolitan area of Milan—which weights 5.4% of the total Italian population—in the last decade has grown by approximately 15,000 inhabitants per year (the majority of whom are in the core municipality). As acknowledge by economists, housing prices are affected by both the income level and the dispersion of income: the inelasticity of housing supply and the dispersion of income levels generates significant price appreciations in “superstar cities” (i.e., cities with unique characteristics preferred by the majority of the population) because wealthy households are willing to pay more to live there, bidding up prices in the face of a relatively inelastic supply of houses [40]. Trends of concentration and shrinkage are deeply linked with the unfolding of urban growth and inequalities through housing [41]: the dominant model of polarization of opportunities and resources generates a paradoxical situation, in that people living in cities with the most dynamic labor markets appeared to face difficulties in locating adequate housing at a reasonable price, whereas in those cities where housing was relatively easy to find, the local labor market was often depressed. ([42]: 48)

In this sense, the “urban housing affordability” crisis can be seen as part of a wider process of territorial rearrangement of the economy as well as of statehood. In this process, some attractive urban regions gain population and resources from a broader catchment area that goes well beyond their hinterland to encompass the country and somehow also the whole world. Housing is at the core of this process since it has become a major node of value accumulation: while still being a necessary good for people to enjoy the value generated through the urbanization process, it becomes increasingly scarce and out of reach in these attractive contexts. Therefore, unaffordability problems shall also be described as issues related to value creation and distribution of value generated in cities through and during these growth and concentration processes.

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3.1.3 Housing Affordability and the Capitalization of Urban Land Rent This section delves into the literature of urban economics and the traditional theme of ULR to explore this interpretation of housing affordability as an issue of social and spatial distribution of value created through urbanization processes. Cities are typically regarded as engines of economic growth. National GDP figures are largely produced by cities, which are also the hubs of employment and opportunity, the primary creators of information and innovation, and the heart of a globalizing world economy, particularly for the real estate industry [37]. The metropolitan area of Milan is estimated to produce around 10% of the Italian GDP [42] and attracts around 40% of the national investment in real estate [43]. Vienna produces around 25% of the Austrian GDP [38]. Cities, however, could also be seen as “public goods”, as they gain from jointly produced tangible and intangible assets and values, such as agglomeration, closeness, and accessibility, to name a few. According to Italian urban economist Roberto Camagni a city is a great collective good created through investments and decisions both public and private. It produces collective advantages—externalities of various kinds that enhance the well-being of citizens and the efficiency of production activities. Therefore, the economic value of a city’s individual parts—places or urban spaces—is not determined by individual action, but by collective action external to the individual actor. ([44], unpaginated)

However, “cities have often been described as engines of economic growth, but neither all cities, nor all residents within a given city, necessarily benefit from the potential dividends of urbanization” ([45]: 1). Access to adequate and conveniently accessible housing is unquestionably one of the intrinsic factors that determine one’s ability to profit from the collectively created value of cities. The use value of housing is decisive for meeting contemporary basic values, such as privacy, comfort, and hospitality [46]. The potential to access particular facilities and urban economies, which are frequently capitalized by the market through house prices, is another benefit of “dwelling” in a particular location. In this sense, housing has two conflicting natures: firstly, it is a foundational infrastructure of everyday life with a use value that is also related to its location; secondly, it is an exchangeable good whose market value depends on its quantity and quality but also on the specific urban location, reflected in the ULR. The concept of ULR is central in the discipline of Urban Economics, and is intended as the monetary counterpart of the advantages of urban locations: Urban land rent represents the objectivation in economic and price terms, and the assignment to each site, of the value that single economic actors implicitly or explicitly attribute to each spatial “situation” in their processes of definition of locational choices, productive or residential. Put otherwise, it is the value of a scarce land resource, characterized by particular specificities in terms of proximity, accessibility, context conditions, that appears as a market price when a market exists, or only as a “shadow price” when it implicitly arises from locational and mobility decisions. ([44], unpaginated)

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According to the famous interpretation by Marx, “it is the ground-rent, and not the house, which forms the actual object of building speculation” ([47]: Vol. III Part VI, Chap. 46). The traditional theory of localization and ULR, originally defined as the “price paid for land use” was initiated by Von Thünen in 1826 for agricultural land and mainly linked ULR with the distance of the location to a center. Given the center, accessibility to it becomes a scarce resource and prices of accessible locations tend to rise, generating a tradeoff: different functions are profitable only in certain locations, generating a concentric model which is a sort of abstract ‘economic space’ [48]. This theory was developed in a very early stage on rural capitalism and was later applied to urban environments by Alonso [49] in the “bid-rent” theory: in urban areas, different uses and functions compete for localizations around a central business district and tend to ‘stratify’ according to the ULR, a factor that is therefore assumed to be determining the most rational and orderly spatial organization. Several researchers have taken on the issues of ULR and “landed property” into urban development problems in capitalist economies and especially housing, stressing the challenges faced by urban planning and State intervention in dealing with them [10]. In capitalist urban development, ULR appears in development gains, “the surplus value assigned as an urban premium for transformation of land uses, and in particular for the transformation from agricultural uses to urban—residential, office and commercial—ones” ([44]: 9). Urban land is an essential resource—spatially fixed and scarce—for the production and consumption of housing. Accessible land (and housing) becomes rare due to the availability of positive spatial externalities, such as proximity to employment, services, amenities, and social interaction, leading to uneven geographies of land and housing prices. The housing market is mostly shaped by the land market and therefore by ULR. The assumption by Marx that ULR is the main factor determining housing prices—actualized by further studies applied to cities—is still relevant since, as shown by Knoll and colleagues, the steep surge observed in housing prices since the 1980s is mostly due to skyrocketing land prices [30]. While in the recent period construction costs have risen significantly, housing prices growth in the last thirty years has predominantly depended on the appreciation of the underlying land assets ranging from 40% to over 77% of the total [30]. Much literature has focused on the role of financialization in affecting the housing outcomes in local markets [12, 17, 50, 51]. According to this literature, financialization is intended as the dependence of housing and land prices not only on the local housing demand and market but also on global financial trends. The issue of ULR was the focus of the “rent theory”, a branch of economic and geography that looks at ULR as a social relation which entails power relationships and social control. Land prices and housing prices are highly related, as the rent theory explains, and the housing question is connected to the “land question”, i.e. to the distribution of ULR [52]. Rent theorists stressed how the underlying costs of location—and therefore, of the value of the city—is being transferred to housing prices and charged to the inhabitants. Among others, David Harvey [13], Roberto Camagni [44] and Anne Haila [52] have focused on ULR as a crucial element in determining how the value of the city is distributed among various actors and users

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through housing. They called for a more equal redistribution of development gains according to more equal principles that could be done by public bodies, especially through land policies, with the argument that without specific regulation or taxes, ULR is typically appropriated by developers or landowners and transferred into housing prices [53]. In market economies, the market mostly determines who gets to live where. Given a certain distribution of ULR (transferred to housing prices), the opportunities for localization are typically determined by both the disposable income and the income share that one decides and is able to allocate to housing. As a result, having a certain income or asset is critical to accessing housing (in certain quality and location) and thereby the corresponding values generated by urbanization. This is a relationship between ULR and housing outcomes, particularly housing affordability, that can become tense in specific circumstances—as with expansion, attractiveness, and housing shortage—and determine unjust urban geographies of housing (un)affordability. In fact, the costs of accessing housing in the market, which we can simplify in sale price for accessing homeownership or monthly rent for accessing rental housing, usually includes the capitalization of ULR. In this sense, a link can be foreseen between the spatiality of housing affordability and the geography of ULR, which are expected to be related and descending [52]. Haila ([52]: 72–73) highlights the following forms or “rent” that determine housing prices: • absolute rent, or the rent of the “marginal” (the least valuable, barely usable) piece of land; • differential rent, reflecting the different qualities of land and can be further distinguished into horizontal (subdivision and extended use of land) and vertical (intensified use of land); • monopoly rent, when demand exceeds supply and monopoly prices are created; • fiscal rent, or the revenue that state and municipalities receive from their landed property; • global rent, that emerges when global flows (of capital, of people, etc.) raise real estate prices; • derivative rent, which refers to financial speculation and is a yield from land titles. The dynamics described at the beginning of this chapter affect these different components of ULR. In absence of redistribution, and especially when the market tends to exacerbate the exchange value of housing over its use value, landowners “extract” this value from inhabitants’ incomes [44, 52, 54]. As “in the past two decades preceding the 2008 global financial crisis, real house price growth outpaced income growth by a substantial margin” ([30]: 15), the trends are reflected in increasing affordability problems, mainly because of diverging trends in rising housing prices and stagnating incomes (see among others: [55–58]). The “value of the city”—what in Urban Economics is referred to as ULR, is transferred to housing prices, determining in part affordability problems in attractive cities. This process has also been described as one of “value grabbing” through housing prices, meaning that the value generated by the city is extracted from inhabitants and appropriated by landlords [54]. Thus, ULR appropriation is one of the primary causes

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of the developing “global urban housing affordability crisis”, which refers to lowand middle-income populations’ rising inability to afford good housing in cities and their risk of eviction [27]. This involves a series of consequences that generate a “geographical” dimension of housing affordability which is tightly connected to that of ULR and in which the distribution of ULR by public policies has a crucial role.

3.1.4 The Urban Geography of Housing (Un)affordability There is a link between the spatiality of housing affordability problems and the geography of ULR. The costs of accessing housing in the market, which we can simplify in sale price for accessing homeownership or monthly rent for accessing rental housing, usually includes the capitalization of ULR. Combining the geography of ULR with some affordability metrics can intuitively lead to determining some spatial arrangement of affordability. Figure 3.1 represents (with a considerable degree of abstraction) a hypothetical low-income household in search for housing and the typical process of spatial ‘filtering down’ of low income households that are pushed out of the city: assuming a radial distribution of prices (depending to that of ULR of Fig. 3.1a) and fixed income, the household settles where housing costs represent an affordable share of its income, and if its income is low, this would probably lead it in outer parts of the city (Fig. 3.1b). There, better affordability conditions (according to the cost to income approach) might result in additional costs and trade-offs, as shown in Fig. 3.1c, such as additional transportation costs [59]. There are other opportunity costs besides transportation that balance affordability, such as a lack of services in peripheral and suburban locations that might result in additional cost, or reduced quality of life. This would increase the minimum residual income to live a decent life [60–62], as well as generating externalities for the local context—e.g., overcrowding of schools, traffic congestion, etc. Finally, we can also imagine that households may choose to settle in an intermediate location, even if their housing costs are above the affordable share (for example, up to 2/3 of the income, as hypothesized in Fig. 3.1d): this eventually affects the household’s residual income. Housing affordability is a determinant for households to profit from and enjoy the value of the city. There is a strong fundamental relationship between housing affordability and ULR, as a key component in the (re)distribution of the value that a city generates dependent on policies and housing system. The explanation provided thus far is “static” but there are also dynamic aspects to take into account. Housing prices fluctuate over time primarily because of changes in ULR, linked to economic trends and reflecting the value produced by urban agglomerations. “Rent gaps” are created in this process, which can lead to rising housing costs and gentrification [5]. In this sense, many cases of urban regeneration can be interpreted as processes of “filtering up” of upper-middle classes that may cause gentrification, and displacement [63, 64]. Incomes may increase or decrease, and their distribution may become more polarized and unequal. The spatiality of housing affordability is constantly shifting outwards under conditions of urban growth and

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Fig. 3.1 Capitalization of ULR in housing prices in the conventional monocentric city model, the negative residential rent gradient and examples of the consequent geographies of affordability (Source Elaboration by the author)

attraction, stagnant incomes, and rising income disparity (as is the case in the majority of Western agglomerations).

3.1.5 The Expenses-Quality-Location Conundrum The geography of ULR establishes the potential spatial geographies of affordability in a scenario where land and housing are commodities, thus determining an affordability-location tradeoff: households settle where market prices are affordable. Otherwise, when possible, they spend more than “what they should” to access better locations, but this potentially affects their living conditions. In this sense,

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housing choices are not entirely determined by (un)affordability, as preferences still play some role—especially for middle-income households. The final outcome can be interpreted as suggested by Soja as the relation between “geographies of choice and geographies of privilege” ([28]: 55). Low-income households are often spatially filtered out of the most desirable areas of cities or are required to pay a significant portion of their income on housing in order to access them. Affordabilitydriven constraints may also impact on choices regarding the “quality of housing”. As Hancock already noticed early on, the essence of the concept of affordability is the opportunity cost of housing, or “what income has to be foregone in order to obtain housing and whether that which is foregone is reasonable or excessive in some sense” ([65]: 129). This applies not only to the residual income, but also to housing quality (e.g., number of square meters, energy efficiency). The relation between norms that regulate housing quality and affordability is increasingly acknowledged as a “tensed one” which requires continuous updates [66]. The expenses-quality trade-off is a complex one to disentangle, and most approaches to affordability tend to overlook it. However, “affordability is not only about money, but also about housing quality” ([25]: 30): affordability is concerned with securing a certain standard of housing at a price or rent that does not, in the perspective of a third party (typically the government), place an unfair burden on households [26]. If one under-consumes housing (in the sense that gives up some level of housing quality), that housing might look affordable. If the standard is not granted, and income is low, households will have to choose. Stone stated that while housing affordability is arguably only one dimension of housing deprivation (along with housing standards, security of tenure, lack of safety and inaccessibility) and logically distinct from these, in reality, most households who experience one or more of these problems ‘do so because they cannot afford satisfactory housing and environments’. ([67]: 40, cited in [26])

Based on the spatial argument, we can extend this reasoning to encompass location choices. People tend to make do with what they have, balancing the triangle between not spending too much and choosing good qualitative standards and the best available location. However, in situation of strong constraints, (e.g., very low income) a compromise must be found by reducing some of the other parts of the triangle (e.g., bad quality housing or remote locations). We can see a trade-off between housing expenses, housing quality and location that shapes a more complex and multidimensional relation between housing affordability and housing deprivation: based on [68] we can call it the expenses-quality-location conundrum (Fig. 3.2). It works also on the other way round: minimizing quality or choosing worse locations are strategies often adopted by households with the aim of maximizing affordability. Old and decayed private rental housing often represents the most important stock of housing that is affordable to lower incomes while still being in a central location. Commuting is also a frequent choice for low income households (or for middle-income who look for bigger or better houses).

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Fig. 3.2 The housing expenses-quality-location conundrum (Source Elaboration by the author on [68])

3.2 Affordability as a Foundational Character of Urban Housing Chapter 2 has exposed the various approaches for measuring housing affordability and defining which housing is “affordable”: we can see this as an indicator of outcome of housing markets. However, in market economies affordability shapes relevant social and spatial dynamics, ultimately distributing (through ULR capitalization) the value generated through urbanization. This becomes relevant since housing is a fundamental “building block” of any city. The affordability crisis happening in attractive cities is generating consequences that challenge the principles of social and spatial justice that ultimately bases the idea of European city [69, 70]. In economic language, affordability is one of the expressions of a failure of the housing market. Dynamics of unaffordability are not only shaped by the behavior of market actors (developers, inhabitants, landlords), but also by public and collective decisions that can radically change the market situation. This has been fruitfully conceptualized through the concept of “public action”, “a way of looking at housing issues and housing policies as the outcome of a system of relationships among the different actors involved” that “involves looking at both direct and indirect forms of action” ([71]: 157). In this framework, affordability is not only an outcome indicator of the market but also a call to public and collective action on establishing satisfactory levels of affordability. The fact that land and housing are treated as tradable and financial commodities (the main determinant of the urban affordability issue) is a collective decision enforced by institutions and policies. Therefore, it is worth exploring the role of housing affordability in a general renewal of public action in the various sectors of the economy. Such an approach is adopted by the Foundational Economy Collective [72], a collective of mainly European researchers that challenges mainstream economic policy regarding basic goods and services that are basis of citizenship. The foundational economy is the material and providential infrastructure for daily life, which includes all infrastructures broadly intended to ensure all citizens have decent living conditions and a safe and developed life, is the cornerstone of the foundational economy [72]. Foundational Economy scholars argue that the well-being of citizens of current and future generations depends less on individual consumption and more on social consumption of essential goods and services in the foundational economy. The distinctive, primary role of public policies are to secure the supply of

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basic goods and services for all citizens in a socially responsible way and not boosting private consumption to deliver economic growth. The foundational economy includes housing, healthcare, education, utilities, food supply and other basic utilities and services, conceived as “infrastructure of the daily life of citizens”. Housing is then considered an infrastructure consisting both of a material component (the housing stock) and a providential one (concerning ownership, tenure, regulation). In other words, it is a partly material and partly providential infrastructure, widespread and articulated (social housing, private housing, self-building, squatting, etc.), that people use according to their desires and possibilities to satisfy their housing needs, realizing its use values [15, 46]. Although there may be different individual preferences, unlike other goods or services housing is consumed socially rather than individually: everyone needs an adequate house in an accessible location, on a daily basis, just as he or she needs food, transportation, healthcare, access to electricity, internet, etc. It is part of the articulated group of needs that must be met so that everyone’s life can be lived to its full potential. Housing affordability is part of the constitutive characters of housing as a foundational infrastructure, together with housing quality, availability, satisfaction, housing-related capabilities, and tenure security. The infrastructural and foundational character of housing is especially clear from an urban perspective. By proposing the concept of the “grounded city” which reframes the city as a place where everyone may jointly and easily meet the basic demands of the foundational economy, Engelen and colleagues expanded the original foundational theory to the urban scale [73]. In line with the critique of neoliberal urban governance [14] and of urban justice [70], they identify a dichotomy between the mainstream vision of competitive cities, interpreted “like firms, as machines that combine inputs to produce outputs while they are engaged in competitive struggle” ([73]: 408) and “grounded cities”, a dimension where we may collectively and easily meet basic requirements by raising the number and standard of socially produced basic products and services. They contend that urbanization and financialization, which have increased property prices, serve as economic growth accelerators for cities while allowing value extraction from citizens by more powerful elites. To move away from such a widespread condition and realize the grounded city, Engelen and colleagues propose to shift the emphasis from competitiveness and real estate indicators to “a dashboard of tangible welfare indicators (like social housing new builds and housing waiting lists) as a part of a policy reset and a new language for thinking about good cities, which invokes values like security, robustness, protection and inclusion” ([73]: 417–418). Housing affordability, connecting local incomes and the local housing supply, could be considered a tangible indicator of how grounded a city is on its socio-economic conditions and of how equally the city is redistributing its collectively produced value. The grounded city is therefore based on public action constructing and maintaining a strong foundational infrastructure, which acts as a stabilizer of the competitive acceleration: “the welfare of the city population always depends on reasonably priced access to goods like decent housing and utility support” and “on a broad distribution of affordable foundational necessities of decent quality” ([73]: 417). In an era of austerity, cities struggle to provide enough basic goods and services, and real estate development—which depends on

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rising housing prices—is seen as the only means by which municipalities can maintain the flywheel of internal revenues for overhead costs. So, “growing and successful cities often generate unequal access to foundational goods instead of providing every resident with a minimum standard that is good enough” ([73]: 418). Housing has a specific function in determining how competitive or grounded a city is depending on how relevant the exchange or use value is [74], being either an accelerator or a stabilizer of growth. Allowing low- and middle-income citizens to afford decent housing in good locations, a is a strong stabilizer of the bad consequences of urban attractiveness and competitiveness.

3.3 Realizing the Grounded City: Affordability and Housing Systems Housing affordability is usually regarded as part of the housing outcomes of a certain context and situation ([75]: 75). Most research on housing outcomes is based on two main concepts. First, that of housing system, “a typically vague but convenient shorthand expression to encompass the full range of inter-relationships between all the actors (individual and corporate), housing units and institutions involved in the production, consumption and regulation of housing” ([76]: 26). The mix of material and immaterial elements that connotes housing in a certain context tends to constitute a “system”, or a playing ground in which the public and private action is constrained and the outcomes are determined. Housing affordability can be regarded as a defining character of market based housing systems, inducing constraints to action, and shaping the playing field for households and actors. Secondly, the concept of housing regime, inspired by the well-established notion of welfare regime introduced by Esping-Andersen [77] who wanted to capture the provision of welfare more broadly than focusing on social policies alone. The idea of regime is one an “ordered way of doing things”, and a concept that cuts across different social policies and also involves aspects of society other than just social policy: the organisation of labour markets, cultural matters such as gender roles, and matters of political power relations and ideology. ([78]: 6)

The introduction of the regime idea triggered a massive body of comparative research on the organization of different housing regimes. According to the interpretation by Jim Kemeny, the housing tenure is central in the definition of housing regime. Kemeny especially distinguished between regimes dominated by homeownership and others dominated by renting [79]. Renting is regarded by Kemeny as a crucial element of the housing regime since housing is deeply embedded in the social and cultural structure of the society. The key point from Kemeny’s work is to concentrate on the rental sector and rental housing affordability, as a crucial element defining the welfare or non-welfare character of housing provision in a certain housing regime. An additional defining feature of housing regimes is the kind of rental market system: dual or integrated/unitary. Regimes dominated by

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homeownership tend to have a “dual” rental market, with a large unregulated profitseeking private sector and a small and tightly regulated public rental sector [79]. The dual system tends to marginalize the rental sector, which shrinks in favor of homeownership while low-income households tend to remain renters. On the contrary, in countries with an “integrated” rental market the private and the public sector operate within similar institutional regulations—known as “cost-renting”—and that the social rental sector competes with the private sector. This distinction is crucial in situating the case study of Milan and Vienna, the former belonging squarely to dual housing systems, while the latter being much closer to an integrated housing system thanks to an important public housing sector flanked by a broad and heavily regulated limited profit one [80]. While mainstream economic approaches see a growth in homeownership as an indicator of a growing and more affluent society, from the perspective of the Foundational Economy rental housing is considered an especially critical infrastructure for everyday life [74]. Similarly, growing rent levels are sometimes indicated as an indicator of a city’s success, while a foundational approach would prioritize rental housing affordability as a tangible welfare indicator of a grounded urban economy. Expanding the work on housing regimes, Clapham focused on the “neoliberal regime”, the one in which state intervention is kept to a minimum, the function of housing policy is only to increase efficiency by regulating and steering the market, and privatization of the housing system is favored [81]. Traits of the neoliberal regime is present in most existing housing regimes after the neoliberal turn in global economy and politics. In both Vienna and Milan one can see the neoliberal regime operating in the housing system and influencing affordability outcomes, but the extent to which neoliberal tendencies affect the housing regime is very different. From a foundational perspective, a grounded city is one in which the neoliberal traits of housing systems are kept marginal, or at least confined to marginal tenures. As for social policy research, traditional housing research has tied the concept of housing regime to the national level. However, housing markets and housing policies can be regional or local—company towns are a clear example—or can differ by state within a federal state system—the case of Vienna testifies it clearly [78]. This book embraces a new emerging approach that shifts attention from national housing regimes to local—urban or regional—ones. In doing so, it parallels a more traditional approach of Urban Studies to remain within the scale of the “city”—a strangely defined object which goes often well beyond the administrative municipal borders and encompasses metropolitan and regional areas. In this sense, it is useful to introduce the concept of local housing regime, or “the configuration of actors and institutions that is responsible for the provision, regulation, allocation, and consumption of housing in a particular administrative entity (a city or a region)” ([75]: 79). This book relates this idea with the concept of local housing governance, “an analytical guideline or “alternative lens” for empirically analyzing the particular mix of different modes of coordination in local housing systems” ([82]: 4). The concept of local housing regime becomes a particularly important analytical lens for investigating the role of cities in a period of increasing polarization between few attractive poles and the rest of their countries. Looking at local housing regimes also means

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understanding the degree of importance and freedom of action that the “local” scale has in relation to other scales: “local housing regimes are largely subject to similar external forces, but they have some degree of freedom in choosing a response to these forces)” ([75]: 81). Without entering in the system-regime debate, this book embraces the idea of “system” as inter-relationships between actors, housing stock and institutions involved in the production, consumption and regulation of housing, as translated to an urban scale. This reflects the fact that cities are sometimes referred to as “collective actors” [83] and their housing outcomes are the result of the various households and actors on the playing field that is created by the local housing configuration. In this framework, public administration always has a central role—even though they can avoid playing. Housing systems are not created by default but are shaped by specific processes that occur over a certain time frame. The process itself, together with other local specificities, helps explaining why a system has certain features and not others [82]. Recently, a substantial body of literature in Housing Studies has embraced neoinstitutionalism, exploring how institutional structures, rules, norms, and cultures constrain the choices and actions of individuals and actors [84]. Housing scholars, by acknowledging that “institutions matter” are focusing on how the organization and functioning of housing markets are influenced and shaped by other social institutions [53, 85–89]. Housing regimes, from an institutional perspective, can be fruitfully characterized with three interdependent elements [90]: housing policy, the form of government intervention in housing; housing market structures, the available supply, type and tenure of housing; and housing outcomes, relating to how different social groups are served according to criteria such as affordability. Part of the case studies is therefore dedicated to understanding how the housing systems of Vienna and Milan were shaped. Andre Sorensen [91] has provided useful reflections on the application of historical institutionalism to the field of planning and especially of the two concepts of “path dependence” and “critical juncture”. Path dependence entails that a bundle of decisions, organizations, procedures, actors that are fixed at some point in time limit the available future choices for any political actor or institution: “a particular policy helps to generate a political coalition that works toward the continuation of the policy” ([91]: 25). Path dependence showed a certain explanatory power when applied to housing policies [92]. Regarding institutional change, there are two main approaches to understand how (and why) institutions take certain developmental pathways instead of others. The first approach focuses on rapid change determined by certain sudden events, in which political actors have more possibilities to trigger a certain institutional change than otherwise: “critical junctures” are “moments of major change when new institutions are established […] triggered primarily by exogenous forces, and new institutional arrangements and new developmental pathways are created” ([91]: 30). A second approach describes changes that happen gradually and incrementally. Mahoney and Thelen [93] identify four modes of incremental institutional change which are applied for the analysis: layering (the creation of new policies on top of existing ones); drift (the transformation of the contextual situation which implicitly transform the meaning and effects of unchanged policies);

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displacement (the reform of existing policies, corresponding to a “normal” form of policy change); conversion (the implicit change of policies through changes of its implementation). Gradual change can also follow pathways of “institutional complementarity”, in which change in some institutions is counterbalanced by change of other institutions in an opposite direction, preserving a certain overall balance in the system [94].

3.4 Opening the Black Box of Affordability Governance Part of the research agenda aimed at providing contemporary perspectives on housing affordability regards “opening the black box” of specific housing systems to both problematize the issue of affordability and propose pathways for policies. It means looking “within” the housing system (and its evolution) and trying to explain how its various parts affect housing affordability outcomes and why they took that specific shape. This section sheds light on how public action affects affordability levels by relying on the concept of “affordability governance” [95]. The dimension of governance is usually introduced when dealing with complex issues which, by their very nature, do not fall completely within the sphere of a single decision-maker. Historically, the recognition of the failures of both hierarchical form of top-down government and of the deregulated market has led to a turn toward governance [96], a concept which broadens the idea of government to include a variety of non-public actors in policymaking or implementation [97]. We can talk about affordability governance as affordability does not depend on “command and control” functions by some public or private actors, as would be on a publicly controlled system, but is the result of a mix of decisions and policies in a predominantly market-based system. When there is constant and consistent interaction between many different players, and this interaction is thematized, recognized, codified, and nurtured, it is possible to speak of a governance system, referring to the broader system of relationships and interactions within which different decisionmakers and actors implement their actions based on some sort of cooperation in order to pursue goals identified as common. For Le Galès and Lequesne [98] governance is the capacity to put together diverse interests, actors and organizations, and to express them in a place, giving form to the various local interests, organizations, social groups, developing strategies which are more or less unified in relation to the state, the market, other cities and levels of government. For Pasqui [99], it is the effect of government generated by the action of a plurality of actors with different interests and resources and in a context of policy, therefore considered as a product of local collective action, a government de facto which has different borders that the institutional government. Traditionally, government and governance have been analyzed at the national level, but recent scholarship has also situated governance at the urban scale, identifying cities as prominent and relevant collective actors within European governance and global dynamics [69, 83, 100]. Danielle Gluns investigated

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something that she called “local housing governance”, in the sense of “an analytical guideline or “alternative lens” for empirically analyzing the particular mix of different modes of coordination in local housing systems” ([82]: 4). This book takes these attempts to conceptualize complexity in housing systems as a starting point, and focuses them to the specific aspect of housing affordability, by opening the black box of “affordability governance”: the particular mix of different modes of coordination in local housing systems targeting affordability. The analytical framework of this book, used in the next chapters, adopts a specific perspective for the analysis of affordability governance that focuses on effects on housing affordability outcomes [101], by looking at the nexus among different policy domains. A similar approach was adopted for the analysis of local influence on the housing system of the cities of New York and London by Whitehead and Goering [102]. The aim of this is to establish an analytical framework to understand, from a foundational perspective, how “grounded” a city is on housing affordability. The scheme (Fig. 3.3) is articulated into two main dimensions: 1. one situates it within a multilevel framework. 2. the other highlights the influence of different policy domains of affordability governance; Concerning the first dimension, all relevant domains of policies are situated in a multilevel interplay that encompasses the micro- (metropolitan, municipal), meso-

Fig. 3.3 The conceptual framework for the analysis of housing affordability governance (Source Elaboration by the author on [95])

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(national, regional, metropolitan), and macro-level (national, supranational). City administrations are embedded within multilevel governance arrangements that can take various forms [100, 103]. The policy capacity of urban governments in dealing with social challenges is strongly shaped by institutional multilevel governance setting. Coherently, most decisions that impact on affordability are taken outside of the local level. While discussing the position of cities in a multilevel framework and the conditions and possibility for enacting policies that promote housing affordability, it is important to interrogate the scale(s) at which affordability problems are tackled. The multilevel administrative arrangement is in many cases given and hard to modify, but the coherence of its scale to that of the affordability issue can be discussed, as “scales are not independent entities with pre-given characteristics. Instead, they are socially constructed strategies to achieve particular ends” ([104]: 1–2). The issue of scale becomes an important factor in the analytical framework in the elaboration of the two case studies. Concerning the second dimension, the integration in a policy mix is crucial to understand the set of policies that can act complementarily, counterbalancing each other and generating different affordability outcomes in different systems. There is here an attention to the issue of policy mix. Research on organizations usually connotes the organizational structure of public administration as a “silo” structure, in which any branch of the local political power has a certain responsibility and acts rather independently from the others. This vertical structure was a typical effect of the increased specialization and division of labor within an increasingly complex society which was regarded as more effective. Usually, the responsibility for housing is located in a certain branch of the division of power. However, within housing systems, affordability is not only influenced by housing policies. Some policies directly target housing affordability. Usually housing policies are distinguished in supply-side— e.g., social and affordable housing provision, rent control—and demand-side—e.g., housing allowances, tax incentives on mortgages. Some others do so only indirectly (as income support or transportation policies). Therefore, it is important to understand how different policy domains contribute to determining affordability outcomes and how their interrelations are shaped. This requires looking at how different policy domains are structured and understanding whether these interrelations are involuntary (e.g., as a casual result of more “silo” organizations) or designed in a policy mix. In this light of the complex interpretation of affordability provided in Chap. 2, there are at least three interesting policy domains in the analysis of affordability governance: housing policies, social policies, and spatial planning. The housing domain is obviously relevant, comprising policies that directly affect the housing system, such as: public housing provision, housing subsidies or rent regulation. Housing policy comprise: Rent control: mainly intended as a form of regulation on the existing housing stock to reach socio-political objectives of affordability and protect tenants by excessive market rents. Currently, propensity for regulating the rental market has declined in most developed countries as liberalization was favoured as a way to incentivize

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housing construction and renovation. Commodification has been one of the coreaims of the strategies pursued during the neoliberal turn, for example through the privatization of public housing stock and the liberalization of rent control on the private rental sector; Social housing: social housing refers to the broad aim of supply-side policies aiming at increasing the supply of housing with a certain social orientation. This means that there are often some advantages in terms of market price or rent, and some eligibility and/or allocation criteria, as well as some rules of management and re-sale. However, it is a broad domain and can be split into two sub-parts, as done by Czischke and van Bortel [105]: • Public housing: is the public rental sector, which is owned and rented out by public authorities, often allocated based on means-tested eligibility criteria prioritizing low-income households and on the basis of a waiting list, often with types of leases that are very protective to tenants; • Affordable housing: a much broader segment between public housing and market housing, which often has below-market rules of price and rent determination and less strict eligibility criteria than public housing (often linked to solvability issues), working based on a cost-rent and limited-profit business model. Despite the rich literature presented in Chap. 2, most policy frameworks conceptualize “affordable housing” as a segment of the housing stock that is within the responsibility of housing policies [22, 105]. This simplification somehow escapes the expenses-quality-location tradeoff as it does not involve quality—the fulfillment of certain standards for decent housing—and location—the ability of housing to foster spatial justice—and especially it does not relate to how housing affordability shapes urban dynamics. Supply-side subsidies: monetary support in form of grants or loans to the builder/ developer/manager of housing; subsidies are often targeted to social housing schemes, but also home-ownership has received considerable subsidization. Demand-side subsidies: monetary support in form of grants or loans targeted to households; subsidies are often targeted to low-income tenants but homeownership—also in this case—has received considerable subsidization (e.g. in the form of discounts on mortgages). Spatial planning has a crucial role in shaping the spatial dimension of affordability. Governance that is “grounded” on housing affordability also depends, as explained, on the redistribution or dispossession of the value that is collectively generated within a city and that, through ULR, is transferred to housing prices and rents [52, 74]. Clark [106] suggests that “good” urban governance involves “making the rent gap theory not true”, which means controlling ULR to avoid the exclusion and expulsion of lower-income households. This domain is conceptualized with Land use and planning instruments: a pivotal policy tool to promote affordable housing, in the form of inclusionary zoning (IZ) requirements, direct land provision to suppliers (land subsidies), or in other forms (e.g. land tax) [107, 108].

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Social policies is a label meaning policies that impact on housing affordability without directly supplying or regulating housing, such as income transfers, housing allowances, and other welfare services somehow connected to housing. Social policies fill the gap of housing policies and planning through measures of income support and local welfare policies that impact on life quality in relation to households’ residual income. Their position depends on the multilevel arrangements and on the fiscal and political autonomy of the local level. I consider these three domains as the most relevant while other domains could also be considered relevant depending on a country’s specificities. Labor policies, for instance, are purposefully left out of this framework even though they have a demonstrable impact on earnings since they typically fall under the context in which a municipality must operate and are only partially under local control. Although local governors occasionally emphasize job creation in the formulation of urban strategies, the potential to actually affect salaries and the labor market locally is unclear and fairly troublesome. Additionally, relevant policies are situated at the intersection of these domains (Fig. 3.3). This analytical framework is used in the next part of the book to investigate the case studies, with the aim of analyzing housing affordability governance in Vienna and Milan, concentrating on the role of affordability governance in a multilevel system and considering the interplay of different policy domains.

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Part II

Comparing Approaches in Affordability Governance

Chapter 4

Vienna: A Strategic Welfare and Planning Approach Targeting Housing Affordability

4.1 Situating Vienna, from Decline to Growth and Acceleration Vienna is the capital of the Federal Republic of Austria. The municipality of Vienna coincides with a single Bundesland, one of the nine federal states that constitute the Federal Republic of Austria, and is situated in the Northeastern part of the country (Fig. 4.1). After having been at the earth of one of the main European empires, with the end of the Austro-Hungarian Empire after WWI the role of Vienna changed dramatically [1]. The political turmoil that followed the war paved the way for the rise of a Social Democratic local government, known as the “Red Vienna” period, which lasted fourteen years until Austrofascism and then National Socialism came to power [2]. The city was administratively separated from the State of Lower Austria in 1922 and became a separate federal state (Bundesland). This was an important condition for the subsequent fifteen years of socialist local government. The Red Vienna administration, pushed by social movements’ squatting in response to desperate housing conditions, engaged in an intense intervention on the housing field: social movements were supported, and large new public housing estates were built as a vehicle for a socio-economic, political, and cultural uprising of the working class. The idea of a new society was translated into urban planning with the construction of wellpositioned high quality residential buildings equipped with services and featuring a symbolic architecture, such as the renowned Karl Marx Hof. This phase made Vienna a significant example for social housing policies on the international debate [2]. In the turbulent times before and after WWII, housing policies were less relevant, and the city experienced further population decline that stabilized in 1951 at around 1.6 million inhabitants (to remain constant until the beginning of the 1970s). In the 1950s and 1960s reconstruction occurred together with important expansion in the suburban areas of the city’s territory, especially with new modernist public housing complexes to accommodate young families with better living standards, while an inflow of international migrants—mainly from former Yugoslavia and Turkey—occupied the © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 M. Peverini, Promoting Rental Housing Affordability in European Cities, PoliMI SpringerBriefs, https://doi.org/10.1007/978-3-031-43692-5_4

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Fig. 4.1 Vienna in Austria and the Vienna municipality, which coincides with the Bundesland, or the federal state (Source Elaboration by the author)

abandoned dwellings in the city [3]. After WWII, the former housing system was reinstituted in Vienna and commitment on housing policies reprised strongly at the local level, together with the establishment of the federal social housing policy, supported by the main ruling political parties. Since 1945, the Vienna federal state and city council was stably governed by the Social Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ). On the contrary, the federal government was mostly held by coalitions led by the Austrian People’s Party (Österreichische Volkspartei, ÖVP)— a Christian-democratic and liberal-conservative party. While historically these two parties were divided by deep class and religious cleavages, after WWII they developed a balanced system of partnership which allowed the construction of coalitions at the federal level [3]. During the process of creation of the Second Austrian Republic, the foundations of the new social housing policies were established, including strong intervention by the public in housing welfare and a relevant role of the limited profit housing (LPH) sector in the framework of what is known as the “social partnership” [4]. The social partnership served as the cornerstone of the new social housing policies, built on a national agreement that featured robust public participation in housing welfare and support to LPH associations. Matznetter argues that Austria featured a social housing policy in a conservative welfare state marked by a social insurance-based fragmentation of welfare entitlements, a pro-family slant in welfare provision, and corporatist forms of interest intermediation [4]. In this system, labor unions (traditionally closer to SPÖ) and business associations (closer to ÖVP) have an important role in bargaining reforms and in the implementation of policies and welfare. In this framework, housing is one of the pillars of the Austrian welfare state. Political negotiation determined a corporatist housing system which subsidized owner-occupation for the ÖVP and public and limited profit rental housing for the SPÖ [4]. In the 1970s the city of Vienna found itself in a situation of relative stagnation due to the ill-fated position of the city in the new geopolitical order, being only fifty kilometers away from the borders of the iron curtains. This, together with

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a structural industrial decline and the consequent job loss, made population decline. This situation “shifted the policy focus from the enlargement of the housing stock to its qualitative upgrading” ([5]: 128). The fall of the iron curtain repositioned Vienna from one of the most peripheral cities of Western Europe to “a gateway between East and West” [6, 7], attracting capitals and migration flows. The industrial decline is compensated by the growth of the office and service sectors [8]. The international role of the city was boosted by becoming a seat of the United Nations. This phase saw an important role of the real estate sector boosted by a more “entrepreneurial” attitude of the administration and a shift to more market-oriented attitude [9]. This period saw a strong inversion of the population trends, and in twenty years the city attracted around 400,000 new inhabitants (Fig. 4.2), mostly due to inward migrations both from the former Soviet bloc and from Western Europe. Since then, Vienna’s population has been constantly increasing, from under 1.5 million in 1990 to more than 1.9 million in 2019. As of today, Vienna is by far the most important urban agglomeration of Austria and its main economic hub, beside becoming an increasing tourist attraction. An extraordinary housing scarcity is being brought on by these circumstances together to global patterns of accelerating real estate investment, which have exposed land and house prices to tremendous upward pressure. Land costs increased from 575 to 961 e/m2 of realized living space between 2000 and 2010, average rentals increased by 37%, and average prices reached 4.500 e/m2 , with outrageous peaks between 17.000 and 30.000 e/m2 for luxury housing in the inner city [10]. After the global financial crisis, the acceleration of real estate showed a boost comparable to other European global cities. In 2015, average land prices reached 600 e/m2 in disinvested areas, 1.200 e/m2 in good locations and 2.000 e/ m2 in invested areas [11]. Between 2013 and 2017, the average gross market rent increased by 14%, rising to roughly 9 e/m2 per month, while market rents in new buildings now range from 12 to 25 e/m2 per month [12]. According to recent forecasts the population of Vienna will grow by over 250.000 inhabitants between 2020 and 2040, increasing the pressure on the housing market.

4.2 The Viennese Housing Governance System It is against these background conditions that the current housing governance system operates in Vienna. The rental sector is by far the most relevant tenure, comprising over 40% of households in Austria and almost 80% of all households in Vienna. According to Gluns: “[in Austria] Housing is viewed as part of services to the public (Daseinsvorsorge), based on the assumption that the market itself will not be able to cater to the needs of all households. Competition with the private market was encouraged to achieve a price-attenuating effect also on private rents and purchase prices” ([5]: 138). In Vienna the issue of housing affordability in the rental sector has historically been at the forefront of the local political discourse. The city features a complex policy structure aiming at improving affordability levels, thereby maintaining comparable good levels of rental affordability while experiencing significant

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Fig. 4.2 Population dynamics and housing policies in Vienna, in red the most relevant measures regarding rent control, in grey the most prominent supply-side policies (Source Elaboration by the author)

dynamics of demographic expansion and real estate acceleration. Overall mean and median rentals in Vienna are around 50% less than those in London, about 50% less than those in Munich or Copenhagen, 30% less than those in Paris, and less than those in Hamburg and Berlin [13]. Good and affordable housing conditions are acknowledged for being a primary reason of the city’s high quality of life, as stated in the motivation for classing Vienna as the most livable city in world rankings. The local housing system of Vienna is based on the historical development described in the previous section and has taken the present shape since the 1980s on. One of the main characterizing features of this system is the already mentioned fact that the municipality and the federal state of Vienna coincide, giving relatively high margins of decision making and financial autonomy. Above the municipal level, there is the federal government and, since the 1995 annexation of Austria in the European Union, the EU level. The federal level is responsible for general regulations (e.g., the rental law) and for tax collection and subsidies distribution. The distribution of subsidies is based on the above-described corporatist welfare system, with policies and funding allocations are designed in order to satisfy the political aims of the two main ruling parties, SPÖ and ÖVP. It means subsidizing (respectively) affordable rental housing provided via collective ownership by limited-profit housing

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association as well as individual homeownership via self-provision by single households. LPH associations are private actors (cooperatives, corporations, or limited liability companies) that comply with rules designed at the federal level. They were mostly formed after WWII as extensions of social organizations, political parties, workers’ unions and also municipalities, and became key actors in its implementation and in the Austrian housing market and especially in Vienna. The European Union, instead, introduced constraints for its members that had controversial effects on this system. “State aid” regulations hinder housing policies that are not targeted exclusively to lower incomes, while both LPH associations and also the Viennese municipal housing (MH) body have very broad target groups (as a reflection of the conception of housing as a service of public interest). In reaction to this conflict of interests, an employee of Wiener Wohnen launched a Citizens’ Initiative to lobby for an interventionist European legislation on housing that would abolish the state aid constraint. The various actors and policies that influence housing affordability in the local housing system of Vienna operate within these multilevel constraints.

4.2.1 Housing Policies For most of the twentieth century, the primary housing policies in Vienna were MH production and rent control on the private market. Then within the post WWII social partnership the LPH increased in importance and various changes occurred. The relevant population growth that followed the fall of the iron curtain, together with the city’s repositioning on a global scale, put an important pressure on the housing market, generating an increasing demand and acting as an accelerator of the city’s economy. Meanwhile, rent control declined and MH production was gradually reduced and devolved to private actors. The unfolding of these policies is traced separately. Rent control: still an important housing policy, from introduction to gradual deregulation Rent regulation and tenant protection were established in Austria during WWI due to a critical housing situation. A large proportion of households lived in private housing stock that was typically built for speculative reasons between 1890 and 1915. In this period, an average of 10,000 dwellings per year were realized with peaks of 15,000 per year, entirely by private developers. The Mietkaserne, literally rental garrisons, were filled with standard 25 m2 dwellings with external shared services, organized around small courtyards to maximize profit with an intensive residential use. In this period, six or seven people often lived in a one-bedroom apartment, sometimes also subletting space to day roomers, leading to social unrest. In 1917 a Survey stated 73% of housing in Vienna was unhealthy and overcrowded [2]. As a response to it, in two years (1917–18), three Tenant Protection Decrees were introduced by emperor Karl I, mainly aiming to protect families from high war inflation and to avoid the

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eviction of the families of the soldiers at the front. The first decrees established a first generation rent control and permanent rental contracts. With the end of WWI and of the Austro-Hungarian empire, between 1918 and 1920, critical housing conditions pushed the formation of squatters’ movements that provided housing by self-construction on squatted land plots around the city, followed by the requisition of about 44.800 dwellings enforced by the Social Democratic municipal administration to house homeless people in the city [2]. Meanwhile, the Republic of Austria established a new Rental law (Mietengesetz) in 1922 regulating rents in four components: basic rent, maintenance rent, administrative and service fee and tax fee. With inflation, the actual ‘basic rent’ decreased significantly and while Social democrats adopted the slogan ‘Wohnen ist gratis’ (housing is for free), landlords were highly frustrated [2]. The savings realized by the tenants with rent control were progressively taxed with the first version of the ‘housing tax’ (Wohnbausteuer), with which the municipality financed a public housing program. Moreover, rent control caused land prices to drop to 10% compared to pre-war ones, which allowed the municipality to acquire a vast land bank for the purpose of public housing construction, which eventually turned out to be a key factor for the city’s future housing policies [1, 2]. In the post-WWII era and in a context of heavy housing crisis, housing policies mainly focused on the urgent need for reconstruction, with MH and LPH playing a substantial role in the overall housing stock [14]. However, a rent freeze (Zinsstoppgesetz) was enforced in 1954 for dwellings built after 1917 that were not subjected to the Mietengesetz. This represented a fairly high level of tenant protection but made rental housing an unattractive investment for landlords [10]. With the rental law of 1967, rents of new contracts were partly again freely negotiable. The rental law of 1981 based rent control on a dwelling’s equipment standard with four categories [10]. It also regulated the conditions and types of flats for which rents could be set freely. The main rationales included incentivizing maintenance of built stock by allowing rises in rents. In 1981 a new rental law confirmed this attitude, allowing rent increases by steps up to close to today’s moderate market level, combined with housing initiatives at province level. The idea was that rent control was a social instrument to get through hard times, but afterwards, the housing stock started needing very urgent repairs, to be paid with the now higher rents. In this wake, in 1984 the city created the Vienna Land Procurement and Urban Renewal Fund, then renamed Vienna Housing Fund (Wohnfonds_Wien). The fund coordinated programs and managed subsidies for the so-called “gentle urban renewal” (Sanfte Stadterneuerung), a place-based intervention program on the existing private housing stock which subsidizes a large part of renovation costs. The program has involved around 345,000 dwellings with 5.34 billion e of total subsidization, targeting “underprivileged” residential area—mainly neighborhoods built at the turn of the twentieth century—where most of the rent controlled and old private rental housing stock is located [15]. It is a public private partnership model that combines incentives with social sustainability measures, introduced after the first urban renewal projects that had resulted in expulsion of residents. To apply for these subsidies landlords have to guarantee not to convert rented apartments into private

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properties and not to increase the rents of inhabited apartments for the upcoming fifteen years or offer convenient alternatives to sitting tenants: “The primary goal of the Vienna model of ‘gentle urban renewal’ has been and remains not to force out the resident population, but rather to renovate and improve the old buildings in a way that the apartments remain affordable for their tenants after renovation” ([16]: 2). This policy has managed to significantly reduce the number of substandard dwellings without significantly increasing the costs for the tenants, even though signs of tenants’ replacement were found in some cases [16]. With the rental law of 1993 there was a definitive shift toward deregulation of rent control. Time-limited contracts are since allowed (with a minimum of 3 years), and a benchmark system was introduced for rent setting (Richtwertmietzinssystem): “[i]n the new system, a unit is compared to a fictive “standard home” and premiums can be added if the unit is “better” than this home. The criteria for the comparison encompass apartment-related but also location-related aspects” ([10]: 255). From this time onwards, rent control practically only applies to dwellings built before 1945 with old contracts and “in a stepwise process, the federal government has liberalized rent regulation in the private rental market” ([10]: 248). Despite this deregulation process, a relevant part of the private rental sector in Vienna was still subject to rent control—a share relatively bigger than in most other European countries and cities—featuring average rents close to subsidized housing [13]. Municipal housing and hybridization of housing production MH has been a cornerstone of the city’s social housing policy since the Red Vienna period, when 64.000 municipal dwellings were built in expansion areas in the immediate surrounding of the nineteenth century city, in medium size complexes characterized by a highly symbolic architecture. However, the biggest part of the MH stock was built in the 1950s and 1960s, both as infill redevelopment of bombed buildings in the inner city and as new modernist public housing complexes in the suburban areas. By 1981 around 200.000 municipal dwelling had been built. Afterwards, MH production reduced, also due to the impact of measures that accompanied Austrian accession to the European Union, and only around 20.000 new municipal dwellings were built until 2004, when production basically ceased. Municipal dwellings are allocated to eligible tenants at cost-rent levels—low and stable, but not dependent on incomes—with unlimited contracts, therefore directly stabilizing the housing situation of over 22% of the population. It is a pepper-potted and well-maintained stock allocated to a broad range of low- and middle-income households. The public agency Wiener Wohnen currently manages this stock, which has practically never been sold. Eligibility criteria reflect the tendency of integrated rental markets to encompass broad parts of the population, and the income threshold is so high (in 2021, it is 47.740 e annual income for a single, 71.130 e for a couple) that in principle around 80% of the Vienna population is eligible [17]. Allocation has been done since 2015 via a centralized service called Wohnticket. Formal requirements are also quite broad, since third country citizens with equal status have also been granted accession by an EU directive, while “housing need” criteria (e.g., overcrowding or special needs) have become crucial in the allocation of a stock which, despite its being very large,

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could not fit the demand. Therefore, in the last two decades the municipal stock has shown some tendencies to residualization, though maintaining a relatively high social mix [17]. Without enlarging the municipal stock, in 2012 the “smart housing” subsidization scheme was introduced, with rents and allocation criteria that are similar to those of MH. Moreover, since 2019 a new investment program has been in place which aims at the creation of 4.000 new municipal units by 2025 [18]. Since the 1970s, there has been a major change in the city’s housing regulations, consistent with a transition from public housing to the “social market” [19]. Without direct production, the city strengthened the already relevant hybridization process triggered by the post-WWII social partnership with LPH associations. In an intermediate and partially regulated sector of the housing market, hybridization refers to achieving housing goals through public–private partnerships and private actors like housing associations, housing cooperatives, and other non- or low-profit third sector actors [20]. Since the 1970s in Vienna housing has been increasingly produced by the strongly controlled mechanism of public–private-partnerships involving LPH associations (Fig. 4.2). The LPH sector is represented by cooperatives, corporations, and limited liability companies united into an umbrella organization, the Austrian Federation of LPH Associations (Österreichischer Verband Gemeinnütziger Bauvereinigungen—Revisionsverband), or GBV—managing a stock of around 1 million dwellings and constituting almost 30% of the total yearly housing construction in Austria. In Vienna there are 57 LPH associations managing over 200.000 dwellings (around 20% of the total stock and 40% of the share in yearly housing production) [21]. They operate within a very restrained and controlled federal law framework (Wohnungsgemeinnützigkeitsgesetz, WGG 1940/1979) with historical routes in legal acts of 1910 and 1912 that were cemented in the post WWII social partnership. It is a sector-specific law that sets out the governance structure and the business model of LPH associations. The public administration grants them full exemption from corporate tax in exchange for: restricted business activity and obligation to build; limitation of profits, with return on investments (ROI) statutorily capped at 3.5%; asset commitment (equity has to be reinvested in new construction works); cost-rent and basic rent rules (see below): rents are estimated based on construction and maintenance costs, and then limited to a specific amount; auditing and compliance rules through the umbrella organization GBV [21]. These actors primarily act in accordance with below-market and cost-rent affordability metrics. Vienna’s LPH Association rents are between 15 and 35% cheaper than in the city’s unregulated private market rents [12]. They mostly serve middle-class families within an idea of a unitary rental system [22]. In order to fulfill social policy objectives, even on a system now oriented to private actors, a mix of integrated policies and institutions is linked to the hybridization of affordable housing production by LPH association. Their “state-directed” incorporation into housing policies (particularly at the local level) through subsidies and land allocation increases the affordability levels of the low-profit housing stock [20]. LPH organizations can be considered the “lengthened arm of housing policy”, working on a social market basis for objectives significantly affected by the general public, but the municipality maintained a protagonist and steering role with subsidies and land regulations [23]. Subsidies for housing construction (Wohnbauförderung)

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are represented by a revolving fund that supported by a housing tax on income (Wohnbausteuer, administered independently by federal states since few years) and provided as grants and long-term low-interest loans. According to GBV, a typical financial plan for LPH associations in Austria would rely on a bank mortgage loan for only 30–40% of the funding, with the remaining 30–40% coming from public subsidies (mostly long-term repayable loans), 10–15% coming from owned equity, and a small portion coming from the tenant’s contribution in terms of down payment (a quasi-loan by the tenant) [21]. Housing subsidies can be seen as a type of public investment aimed at constructing a fundamental infrastructure for housing that is both economically viable and rent-affordable. Vienna’s housing subsidies totaled about 533 million e in 2018 (a little over half from housing tax and the remaining from repaying previous loans), of which 300 million e went toward subsidized housing construction, 164 million e went toward subsidized rent-controlled renovation and 70 million e went toward housing allowances. LPH associations act on this operative framework determined by the legal framework at the federal level and by local policies in terms of access to subsidies and land provision. The concrete aim of these policies is to create a feasible business model for LPH associations to operate within very restrained conditions and stabilize rent levels through large new construction activity. One key aspect of the involvement of the private LPH sector in affordable housing policies is rent control. LPH associations are required to adhere to statutory rent caps (annually indexed) fixed for various subsidization schemes in order to receive housing subsidies and cheap land [12]. Additionally, they are required to preserve the stock in order to prevent the commodification of the newly created affordable housing. The statutory net rent cap for normal subsidization models is now set at about 5 e per square meter per month, which results in a total rent level of about 8.0 e per square meter per month when taxes, utilities, and expenses are taken into account (see Fig. 4.3), from 30 to 60% lower than market rents [12]. State laws limit rents charged by a LPH associations to a cost-rent level, mainly according to the three steps described in Fig. 4.3: after the construction and until the repayment of the bank loan; after the repayment of the bank loan and until the repayment of the public loan; after both have been repaid. For any LPH initiative, until the repayment of the investment, rents are calculated according to the ‘cost-rent’ rule, based on the costs of construction and maintenance and some other components which are regulated by the law. Cost rents are calculated at a building level, meaning that each building is a separated accounting unit. During the period of repayment of the loans, all the components of the rent repay certain costs, with the possibility to add up to 3,5% interest for the equity directly invested by the LPH (usually around 10–20% of the total investment). Once the investment repaid, rents are limited to a “basic rent” (Grundmiete) level—a reminiscence of rent control laws: this basic rent represents a deviation from regular cost rent regime and, though resounding traditional rent control regulation, it aims at generating a surplus that is then accumulated in equity for future investments into affordable housing. The basic rent is set by the government: at the time of writing the rent rate is set at around 1.87 e/ m2 , and adjusted every two years on the Consumer Price Index. To this adds a maintenance fee (from 0.53 e/m2 for new buildings up to 2.13 e/m2

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Fig. 4.3 Simplified scheme of the cost rent and basic rent rules in the LPH sector in Austria (Source Elaboration by the author)

for buildings older than 30 years). Cross-building subsidization is not allowed, and funds collected for repairs or renovation works that are still unused 20 years after their collection must be repaid to tenants. Additionally, a 2% fee is charged for a reserve fund to mitigate risks as well as and a flat rate of around 250.0 e per year and per household to cover administrative costs [24]. This form of rent control rule applies permanently to all the dwellings of LPH associations: therefores a continuously increasing segment of the housing stock falls into a de facto rent-controlled housing segment. Along with cost-renting rules, the affordability outcomes of this segment are also controlled through subsidies. With the explicit aim of meeting the needs of a broad range of households, cost-renting is “strengthened” via supply-side subsidies provided by the City of Vienna with a layering of subsidization schemes which limits the initial cost rent level to specific brackets [23]. Additionally, access to subsidies is also possible to private owners outside of the LPH sector. Conversely, LPH associations also operate outside the subsidization schemes, in the so-called “free-financed” sector: here cost-renting reachs a higher level compared to subsidized projects, on average around 9–12 e/ m2 , but is still much lower than in the private commercial sector [12]. It must also be considered that LPH associations provide higher quality standards than the commercial sector due to the quality control mechanism that is imposed by local authorities at the moment of application for subsidies, which include competitive tenders [12].

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The LPH sector is directed mainly to middle income households especially due to high initial down payment that could go up to 500 e/m2 , thereby excluding those who are unable to provide the sum or get a loan [25]. Since 2012 a new policy layering has been introduced to make the LPH sector more inclusive, mandating a share of “Smart” housing program in new developments: these are dwellings which have similar rents to MH and require much lower down payment (capped at 60.0 e/ m2 ). Plans currently call for the production of 2.000 to 3.000 new Smart dwellings per year and from 2019 in any developer competition half of subsidized dwellings should comply with regulations for Smart housing [18, 26].

4.2.2 Social Policies The regulated market created through the subsidizations schemes follows a cost-rent affordability criterion, in which final rents are statutorily controlled by compressing the final costs through a mix of financial support (subsidies) and land policies (see the next section). Rent levels, even in MH, are charged independently from the households’ incomes. Affordability conditions for lower-income households are then influenced by additional demand-side complementary policies that are here described. Households residing in Vienna, depending on their income, can access the minimum income support (Mindestsicherung), provided by the Fond Soziales Wien a “quasi public” company (a private one that carries out services of public interest). The minimum income support is a tested support scheme based on a federal law that aims at bringing households above the monthly poverty line (in Vienna it is 949.46 e for singles, 712.10 e per person for couples and additional 256.35 e for each child).1 Up to 237.36 e for singles and 178.02 e for couples are specifically allocated to housing costs and may be deducted from normal housing allowances if necessary. From 283 million e in 2003 (of which 26% went toward housing) to 690 millione in 2017 (19% toward housing), Vienna’s total income support increased: 649 million e were given out in 2019 to 155,747 individuals, or around 8.2% of the population, for an average of 9.5 months [27, 28]. The municipality additionally offers subsidies for energy expenditures, as well as payments for travel, entertainment, and education (in the form of the “mobile pass”). These metrics are particularly important for housing affordability outcomes because many lower-income households would instantly lose their ability to pay MH if income support for poor households were eliminated or reduced. As a matter of fact, recently a spokesperson of Wiener Wohnen stated that over 20% of municipal tenants pay housing costs that exceed 35% of their net household income.2 Overall, these social policies are an essential component of the mix of policies that aim to control urban expansion and address housing affordability. 1

Data is extracted by the statistics website of the city of Vienna (accessed on August 2, 2021). Christian Schantl, responsible for the international relations of Wiener Wohnen. The citation refers to a speech that he delivered during a public online talk on May 12th , 2021. The registration is

2

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Housing allowances (Wohnbeihilfe) are managed by the municipal department for housing, MA50, the same department that manages housing subsidies, and are funded in the same framework. Based on reference qualitative norms of square footage (50 m2 for singles, 70 m2 for couples, and 15 m2 for each additional person), they are estimated. With a peak of 67,615 users and a budget of 100 million e in 2010, the average housing allowance was around 1.500 e per year. By 2019, that number had dropped to 39.655 recipients and 59.5 million e. In addition, the city offers a variety of nearby services at reasonable prices, including nursery schools and “mobility points” (places where bikes, cargo cycles, and cars can be rented as needed). Although these services do not directly support incomes, they reduce other expenses and raise life quality while maintaining the same residual income.

4.2.3 Spatial Planning and Land Policies The relationship between ULR and housing affordability in Vienna is significantly influenced by spatial planning and active land policies. Land costs for subsidized housing cannot legally exceed e188/m2 for realized living space, which is three to ten times less expensive than market prices for urban land, limiting land prices is essential to enabling the production of affordable housing as well as allowing the social orientation and hybridization of LPH associations [18]. One main component for this system to work and produce affordable, de-commodified, and rent-controlled housing is public control on land. The policy system that enables affordable housing production “lands” materially on the city depending on planning and active land policies. The main tool for providing land for affordable housing in Vienna has historically been strategic PLB. Government agencies assemble land property through the process of PLB for a variety of uses, primarily to enable infrastructure and housing development for current and future needs, but also to prevent land speculation, and get rid of oligopolistic prices. It mainly involved purchasing greenfield suburban plots in advance. PLB enables the public institution to give up part of its capitalization to build public or affordable housing at below-market rates, even though it does not entirely abolish ULR. It can be viewed as a strategic tool because acquisitions will mostly benefit businesses in the long run. PLB has been performed almost continuously since the Red Vienna period [22], exploiting some economic advantages the city had over the market and, until the 1980s, essentially controlling the purchase of greenfield property in new development areas ([12]: 14). It was dependent on certain factors, such as the ability to use planning and zoning laws to make rational acquisition decisions, the results of circumstances like rent control, and particular events (like the collapse of the real estate market following WWI), which led to a period of time when private competition was low and land was less expensive [22]. Rent control introduced during WWI had caused land prices to drop to around 10% available here (from 37:35 to: https://fondazionefeltrinelli.it/eventi/citta-e-territori-12-14-maggioper-il-ciclo-citta-visibili-finiti/, Retrieved 02/15/2021).

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compared to pre-war prices, allowing the municipality to cheaply bank land [2]. In the words by Lawson, “[t]aking advantage of a collapse in the land market in the early twentieth century, Vienna eventually rose to become a key player in the provision of development sites and has since been able to dominate the land market to fulfill its social democratic housing ambitions” ([22]: 215). During the Red Vienna period, housing development in banked land mainly took the form of direct intervention and MH construction, that in 1926 reached the highest level ever. During the turbulent period of Fascism and Nazism, social and affordable housing policies were radically curtailed and MH production stagnated, but after WWII, “[w]ith the City of Vienna reinstated and the social democrats at the helm, public land banking expanded the accumulated assets of the past and once again promoted the development of affordable rental housing, this time via both MH companies and limited profit housing cooperatives” ([22]: 212). Vienna has created land funds that serve as significant government backed participants in the regional private land market. In 1984 the city established the Vienna Land Procurement and Urban Renewal Fund, then renamed Vienna Housing Fund (Wohnfonds). It is a non-profit company acting in the land market as a socially responsible land developer, with two main tasks: acquiring and providing land for affordable housing and operating as land developer according to social and political objectives. It can be regarded as a “quasi public” company [5], politically controlled by the deputy mayor for housing ([22]: 215). Land previously banked was transferred to Wohnfonds, which also started performing PLB, or “land procurement” (Bodenbevorratung). Regarding acquisition schemes the Wohnfonds has “the following areas are of interest: undeveloped land in all locations with or without building land designation; agriculturally used areas; former company areas or company objects free of inventory”.3 While operating in an environment of limited competition and close cooperation with the Vienna City of Vienna Department of Spatial Planning (MA18 Stadtplanung), Wohnfonds has no exclusive purchasing power. The agency acquires land as a normal player in the land market, as in the usual PLB systems, but since the planning department is responsible for granting land development permits, Wohnfonds is a player with a relatively high power to capture an important part of the development gains [29]. The Vienna municipality was able to sustain affordability thanks to PLB when housing speculation may have allowed for extraordinary ULR extraction. Wohnfonds can be considered a “quasi-public agency” that exercise a de facto outsourced power in land use planning in relation to housing policy objectives of affordable housing production: “When a developer approaches the City with an application to change land use regulations for a privately owned parcel, the planning department will contact the housing department and the Wohnfonds. The latter enters into negotiation with the developer regarding the construction of affordable housing in exchange for e.g., higher densities” ([5]: 265).

3

Source http://www.wohnfonds.wien.at/grundstuecksankauf (Retrieved 02/15/2021).

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At present, the City of Vienna owns approximately half of the total land of the municipal surface4 (194 million m2 ) while Wohnfonds holds around 3.2 million m2 (Wohnfonds_wien, 2021), acquired by direct transfer from other public agencies or previously bought upon on the land market and stored for future development. Wohnfonds serves also as a public land developer, working in accordance with anticipated housing demands and municipally focused urban development objectives. Wohnfonds divides developable land into plots that are leased or sold to LPH associations along with subsidies for regulated housing development, all based on master planning, and directly negotiates operational details with the planning department (such as green areas, density, and urban forms) [29]. The city emphasizes the strong connection between land acquisition and strategic planning, meaning that land acquisition should always occur in compliance with the Urban Development Plan (Stadtentwicklungsplan, STEP) elaborated by the municipal department MA18, to achieve a harmonious housing development. According to the Urban Development Plan, the banked land is connected to various facilities and an extensive and effective public transit network [29]. In this regard, transportation is a component of the measures taken to increase affordability by reducing residual income. The annual public transportation pass is offered at the “political” rate of 356 e (1 e/day). LPH associations are allowed to access this land for subsidized residential development at a moderated price, capped at e188/m2 realized living space, by applying for subsidized schemes by the municipality [22]. According to the limited-profit housing act and the subsidy schemes that includes detailed rent control, economic parameters are controlled during the development process to balance the publicly established social objectives of housing development and the economic viability for the LPH associations. New requirements, like income eligibility standards and direct city allocation, were recently introduced. Since 1995, a competitive mechanism for the allocation of land plots and subsidies was introduced with the explicit aim of fostering innovation in the LPH sector by introducing some sort of market dynamics in an otherwise corporatist allocation system [5]. Developer competitions (Bauträgerwettbewerbe) are processes of competitive applications for a land plot, jointly elaborated by teams of LPH associations (as developer) and architectural practices. Evaluation is made by a mixed jury composed of public officials and external experts on the basis of fixed guidelines known as “pillars”: the architectural one regards aesthetic and typological aspects; the economic one regards the cost-efficiency regards construction costs and final rents; the environmental one regards the environmental quality of the structure and installation (increasingly including green infrastructures); the “social sustainability” one, introduced in 2009, regards the diversification of the housing and service offer to respond to emerging needs and integrate vulnerable persons [30]. According to the guidelines, all those criteria have the same weight in the evaluation, which makes developer 4

Private landowners own 103.5 mln m2 , other legal persons own 59.6 mln m2 , the federal republic owns 14.55 mln m2 , the railway company (ÖBB) owns 11.1 mln m2 , exactly like churches, and foundations own 3 mln m2 . The City of Vienna also owns 386 mln m2 outside of the municipal borders ([11]: 74).

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competition different from architectural competitions. At the same time, land price is fixed, which means it is not a tender based on an economic offer. Competition is based on the overall quality and the advantages for the user, including low rents, while corporative distribution is still present. Land control is therefore a key element in the governance system to influence affordability conditions. Due to a decrease in the overall amount of land available and an increase in land prices, purchasing land has recently become more challenging and expensive. However, the city has kept buying land and has additionally developed important greenfield and brownfield plots. Land has been still purchased on the private market, but, as finding available and cheap land has become increasingly difficult, Wohnfonds has rather bought land wherever possible, with urban development somehow “chasing” the available plots in suburban areas and often pushing density up to allow economic feasibility of the development [31]. Additionally, land has also been purchased that was released by public sector agencies or public companies, which represents the biggest new developments. The most significant example is the former airport site of Aspern, dismissed in 1977 with the construction of the new Schwechat airport and acquired in 1992 by the City of Vienna from the federal airport agency. According to an officer of Wohnfonds, this was an unmissable opportunity for cheap land procurement: “who would buy an airport?”. The site was afterwards rezoned according to a masterplan for a new satellite town and one of Europe’s biggest urban development projects. Aspern Seestadt, planned for around 25.000 inhabitants and around 10.500 dwellings, around 37% of which in subsidized rent tenures, is located in the northwest suburban area of the municipality, along the railway line to Bratislava and at the end of metro line U2, which was purposely extended. After the approval of the masterplan by the City Council and its transformation into a land use plan in 2007, construction began in 2008 to be completed in three phases by 2028. Here, the municipality has created a specific agency in charge of the implementation of the masterplan and special rules were experimented to attract business and enterprises, avoid car congestion—with a reduction in the minimum requirement of parking lots (from 1 to 0.7 per dwelling) and their concentration on silo parking buildings—and coordinate the mix of activities that occupy the ground floor spaces. The “development chain” and the actors involved are the same as in other PLB developments: the Municipal Department for Urban Development and Wohnfonds, coordinating land use policy, master planning and the mix of subsidization schemes; and private and LPH associations applying for the purchase of land plots via developer competitions. Moreover, through Wohnfonds the city has had a primary role also in the development of land assets owned by public companies, such as the former railway yards owned by the federal railway company, ÖBB. The most prominent cases are those of Nordbahnhof and Sonnwendviertel, brownfield redevelopments in very dense and well-connected locations. Here, the zoning was a compromise between market-rate owner occupation and office buildings—allowing development gains for the railway company directed at infrastructural investments—and affordable rental housing (comprising respectively 74% and 58% of the newly built stock). Through these large developments, the city has been able to increase the affordable housing stock in relatively central and well-served locations through these innovative

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kinds of land purchase (Fig. 4.4). However, PLB and development of greenfield plots in peripheral areas combined with massive transportation infrastructures remain one of the main land policies. As in the example of the Rothneusiedl development, a new residential development located on a 124 hectare agricultural plot in the southern border of the city in the framework of the Südraum Favoriten plan, in which 70% of the surface is held by Wohnfonds and a connection of the U1 is planned to become operational upon completion of the residential developments. Recently, housing subsidies became much less relevant in the business model of LPH associations, which can obtain similar financing conditions from banks. Also the high housing demand generated by demographic growth and attraction generates favorable conditions for private housing production ([5]: 263). In this phase of growth, the main leverage for public actors is exercised with land use planning and PLB: in a situation of increasing scarcity of well-located developable land, the municipality can rely both on a huge land stock and on a powerful position in land use. Control on land exercised by Wohnfonds creates the condition for a stable collaboration between the housing department and the LPH associations (and increasingly also with commercial developers) around affordable housing production [32].

Fig. 4.4 Mapping of selected areas of transformation in Vienna since 2010, by percentage of affordable dwellings (Source Elaboration by the author on [25])

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After having long relied on PLB and on the cooperation with public companies, recently “land politics” (Bodenpolitik) for affordable housing in Vienna started targeting also privately owned land. An IZ plan was adopted by the city in the new construction rule in 2018, and it went into force in 2019 and began to be implemented in 2020 [26]. It is a planning rule that imposes a new zoning category called “subsidized housing” on newly rezoned areas over 5.000 m2 of residential surface, where around two thirds of units have to be reserved for subsidized housing. The new zoning category “should always be used when somebody’s rights are upgraded by a modification of the zoning and land use plan” and when “the permitted building density is raised” [33]. It has a twofold aim: providing land for subsidized housing, which is developed by Wohnfonds and sold at the capped price of e188/m2 realized living space; and preventing land prices from skyrocketing for LPH associations ([33]: 57). This new policy is meant to be a new tool for stabilizing the real estate market in a situation when land is limited, expensive, and consequently less likely to be purchased. It is considered by many actors a key policy to maintain municipal control over land which is pivotal to the application of subsidized housing policies. The expected result is a significant increase of Wohnfonds’s negotiating power for high shares of subsidized housing in new developments, including for privately owned land. The first application of the new zoning category occurred in 2020.

4.3 Housing Affordability in the Viennese Governance System Vienna has experienced major acceleration processes, and it is not immune to the global affordability issue. However, it is still far more affordable than the majority of international cities, and it has been successful in establishing a solid foundation of affordability for its expansion [10, 17, 18, 34]. The city bases urban expansion in a complex mix of housing and social policies, spatial planning, and particularly active land policies, all while working within the confines of federal reforms (tax redistribution, rent regulation, etc.). Rental rates are maintained and based on political decisions that consider local circumstances, ensuring that lower income groups enjoy a good portion of the value generated by the city. For long the two main pillars of housing policies in Vienna were rent control and MH. MH, with low rents and unlimited contracts, still represents the main stabilizer for the affordability conditions of sitting tenants and for new lower incomes tenants. Rent controlled private contract are still a relevant stabilizer for sitting tenants. But rent control has been gradually deregulated since the 1990s and today comprises a limited (and diminishing) number of contracts that since 2010 were subject to steep rent increases (see next section), with an overall much less relevant effect on affordability [10]. In this trajectory of institutional change toward recommodification of the private rental sector, institutional complementarity can be observed in the promotion of an important stock of LPH, promoted by LPH associations. Supply-side subsidies, collected through a tax

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on incomes, guarantee a continuous inflow of resources that are invested mostly on the promotion of the limited profit sector. Cost rent is imposed to this sector by a federal legal framework, which makes it much more affordable than new construction dwellings in the for-profit market. Additional regulation at the “maturation” of the housing stock—i.e., when construction costs are repaid according to the “basic rent” rule—and an attitude to keep the dwellings under collective ownership make this stock a quasi-permanently rent controlled one. These characteristics, together with unlimited rental contracts and the huge size of the stock, makes it a crucial policy to maintain affordability levels for the middle classes. This is reflected in the segments that compose the rental housing system in Vienna, characterized by a rather minoritarian role of market rental housing over the various protected segments of the housing stock, where rents result from institutional regulations that entail some supply-side affordability metric—mainly cost-rent and below-market (Fig. 4.5). Supply-side policies implemented through subsidies by LPH associations, in the context of increasing land prices also in Vienna, are actually feasible thanks to the longstanding tradition of PLB made by Wohnfonds according to social democratic land politics. PLB, conversely, works thanks to a powerful legal framework which assigns land use decision-making and a potential veto power on building permits to the municipality. IZ, introduced to face increasing land cost and higher competition, represents the last metamorphosis of such land politics that are so crucial for the functioning of supply-side housing policies [33]. However, most supply-side policies—including MH—are based on cost rent, which makes it more affordable than what is offered by the market, but this does not assure affordability for lower incomes. Thereby, social policies in the Viennese housing system “fill the gap” of affordability for lower income, by providing direct support in the form of cash benefits, income support, housing allowances and proximity services (Fig. 4.6).

Fig. 4.5 Segments of the rental housing system in the municipality of Vienna (Source Elaboration by the author)

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Fig. 4.6 The governance framework of housing affordability in Vienna (Source [32])

The minimum income support scheme introduces the minimum residual income affordability concept into the system. Something similar can be said for housing allowances, which cater for those who do not qualify for the minimum income scheme but still face high housing costs. The number of recipients of these two measures (around 200.000 in total) accounts the relevance of this measure for the overall system. These are important measures to keep good affordability levels under a housing system based on cost-renting. Overall, the connections between and coordination of housing and social policies outline the existence in Vienna of a strong housing welfare, which generally means combining supply-side policies and a broad social housing offer—not residual and broad enough—with an articulated system of social safety nets and “very social” policies to respond to more specific situations [35]. These are the main traits of the governance system which influences affordability outcomes in Vienna, producing relevant effects: between 2008 and 2016, rents increased by 20.5% in MH, 25,8% in the LHP sector and by 53,3% in the private rental sector (average 38%; nominal terms) [36]. This highlights the price dampening effect of the regulated segment on one hand and the noticeability of market dynamics on the other. The prerequisites for this system is inter-sectoral cooperation and political stability. As we have seen, the system’s numerous components are highly interdependent. The entire system would be disrupted or require restructuring if one component failed. Most attempts to overthrow this system have been thwarted by historical political stability at the local level (with the relative autonomy of being simultaneously

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a federal state) and the social partnership at the federal level. However, institutional changes at the federal and supra-national level have lately been implemented that could jeopardize Vienna’s affordability governance. One example is the right of tenants to purchase subsidized dwellings. Another issue that has facilitated public production has been low competition. IZ needed to be included in the municipal urban planning legislation in 2018 to “keep the machine running” since rising pressure on the land market is testing the PLB system. While PLB is still the primary land policy, in the coming years the long-term effects and efficacy of the implementation of the IZ policy will become clearer. Housing policies and spatial planning play a crucial role in stabilizing housing prices and coordinating public–private partnerships, and land policies are a key trait of the Vienna affordability governance system (Fig. 4.6). The city of Vienna engaged in strategic PLB during periods of demographic stability (and pessimistic tendencies), which proved to be a useful and effective policy tool to support public action during periods of expansion. Greenfield agricultural land purchased before distributing planning gains has typically been covered by the extensive PLB program. This allowed the municipality to purchase land at low price and reduce overall expenditures of housing policy. With less land available and higher land prices, the economic viability of purchasing property has been pushed to increase density and tenant contributions, which has led to very densely developed residential neighborhoods and decreased accessibility. Moreover, now housing and urban development occasionally have a tendency to “run after” PLB because available land is not always in line with other strategic planning directions (like public transportation lines or brownfield redevelopment). This results in a municipally-directed sprawl of dense estates that contributes to the very bad national performance on soil consumption [37]. Additionally, new affordable housing is largely found in suburban areas, with the exception of redevelopments of former railway yards, though generally well served by a diffused and efficient public transport network (improved to cater for new developments). In light of this, there are indications that, although having much stricter standards than most other cities, Affordability and the control of ULR are two sides of the same coin in the Viennese policy framework. Affordability is still one of the local administration’s primary topics of the 2020 elections, and social housing construction is heavily promoted. The Viennese governance system of affordable housing depends on its ability to reach a significant portion of society, not just the poorest households, and forge political consensus in an era of rapid population increase. With the housing program launched in 2017 and aptly named Wohnbauoffensive (the housing offensive), the housing department has expanded the range of subsidies on the middle class in addition to strengthening the social component of subsidized housing [12]. This program’s name refers to its goal of making a significant number of new homes available quickly. In Vienna, the affordability governance system has accommodated over 50% of households in the regulated municipal or subsidized and LPH stock (often with unlimited contracts), which means that their affordability conditions are made stable in comparison to the ongoing real estate acceleration trends, despite being legitimately blemished for excluding newcomers and overshadowing the poorest

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ones. As a result, the subsidization programs have primarily served middle-class households with a wide range of incomes, obscuring the more urgent housing needs of other more disadvantaged groups (particularly immigrants and newcomers): the eligibility criterion of two years of continuous residence is still a big barrier to access housing welfare measures [28]. The waiting list for MH has also grown significantly in the years since the financial crisis, and the stock created through public–private partnerships is more expensive than MH [10, 25]. In the wake of these criticalities, the Vienna municipality has recently introduced new initiatives to address lower income households, such as “Smart housing” and new MH. These measure, while significant in the international panorama, represent “a drop in the ocean” when compared to population growth forecasts, and would not even be enough to keep the share of council housing in the housing stock constant ([18]: 14). In conclusion, the approach resulting from the housing governance system of Vienna could be labeled a strategic welfare and planning approach targeting housing affordability: • strategic in the sense that affordability problems are tackled at the root of the ULR issue through land policies in strong connection to strategic urban planning (e.g., regarding transportation) to realize a long-term supply of affordable housing; • Welfare in the sense that supply-side measures are strongly integrated with a broad and rich system of social safety nets that fill the gap of the social housing offer. Finally, it should be noted that the system shows both a remarkable stability but also a certain capacity of adaptation to the changing socio-economic context, though showing some signs of weakening in the face of unprecedented acceleration trends.

References 1. Förster W, Menking W (2016) The Vienna model: housing for the twenty-first century city, Bilingual. JOVIS, Berlin 2. Tafuri M (1980) Vienna Rossa. La politica residenziale nella Vienna socialista, 1919–1933. Electa 3. Reinprecht C (2014) Social housing in Austria. In: Social housing in Europe. Wiley Blackwell, pp 61–73 4. Matznetter W (2002) Social housing policy in a conservative welfare state: Austria as an example. Urban Stud 39:265–282. https://doi.org/10.1080/00420980120102966 5. Gluns D (2019) From plans to policies: local housing governance for the growing cities Vienna and Washington, D.C. Springer Fachmedien, Wiesbaden 6. Kampschulte A (2006) New perspectives for Vienna: repositioning between East and West. In: Schneider-Sliwa R (ed) Cities in transition: globalization, political change and urban development. Springer, Netherlands, Dordrecht, pp 209–249 7. Lengauer L, Swiatek DC (2012) Vienna between East and West: the construction of a new transborder Central European region. In: Urban and regional development trajectories in contemporary capitalism. Routledge 8. City of Vienna (2021) Wien in Zahlen, 2021 9. Novy A, Redak V, Jäger J, Hamedinger A (2001) The end of red Vienna: recent ruptures and continuities in urban governance. Eur Urban Reg Stud 8:131–144. https://doi.org/10.1177/096 977640100800204

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10. Kadi J (2015) Recommodifying housing in formerly “Red” Vienna? Hous Theory Soc 32:247– 265. https://doi.org/10.1080/14036096.2015.1024885 11. Fitz A, Mayer K, Ritter K (2020) Boden für Alle. Park Books, Zürich 12. Mundt A, Amann W (2018) “Wiener Wohnbauinitiative”: a new financing vehicle for affordable housing in Vienna, Austria, pp 187–208 13. Baron DH, Doan TBN, Kadi DJ et al (2021) Wohnungspolitik und wohnversorgung. Arbeitkammer Wien Stadtpunkte 37 14. Förster W (2019) The Vienna model 2: housing for the city of the 21st century. JOVIS, Berlin 15. Bauer S (2019) Gentle urban renewal in Vienna 16. Hatz G (2021) Can public subsidized urban renewal solve the gentrification issue? Dissecting the Viennese example. Cities 115. https://doi.org/10.1016/j.cities.2021.103218 17. Friesenecker M, Kazepov Y (2021) Housing Vienna: the socio-spatial effects of inclusionary and exclusionary mechanisms of housing provision. Soc Incl 9:77–90. https://doi.org/10.17645/ si.v9i2.3837 18. Kadi J, Vollmer L, Stein S (2021) Post-neoliberal housing policy? Disentangling recent reforms in New York, Berlin and Vienna. Eur Urban Reg Stud 28:353–374. https://doi.org/10.1177/096 97764211003626 19. Kemeny J (1994) From public housing to the social market: rental policy strategies in comparative perspective, 1st edn. Routledge, London, New York 20. Mullins D, Milligan V, Nieboer N (2018) State directed hybridity? The relationship between non-profit housing organizations and the state in three national contexts. Hous Stud 33:565–588. https://doi.org/10.1080/02673037.2017.1373747 21. GBV (2016) Festschrift. Anlässlich des 70. Jubiläums der gemeinnützigen Bauvereinigungen 22. Lawson J (2010) Path dependency and emergent relations: explaining the different role of limited profit housing in the dynamic urban regimes of Vienna and Zurich. Hous Theory Soc 27:204–220. https://doi.org/10.1080/14036090903326437 23. Amann W, Jedelhauser J (2005) The Austrian system of social housing finance. In: Proceedings of the European real estate society (ERES) 24. Plouin M, Cavassini F, Clarke C et al (2020) Policy actions for affordable housing in Latvia. Study afford Hous Latv June 25. Franz Y, Gruber E (2018) Wohnen „für alle“ in Zeiten der Wohnungsmarktkrise? Standort 42:98–104. https://doi.org/10.1007/s00548-018-0533-1 26. Wohnfonds_wien (2021) Tätigkeitsbericht 2020 27. Statistik Austria (2021) Mindestsicherung Bericht 28. Wolfgring C, Peverini M (2021) Housing the poor? Access and exclusion in the local housing systems of Vienna and Milan. Paper presented at the ENHR 2021 conference 29. Pamer V (2019) Urban planning in the most liveable city: Vienna. Urban Res Pract 12:285–295. https://doi.org/10.1080/17535069.2019.1635728 30. Güntner SA, Dangschat J (2019) Soziale Vielfalt als Thema der Wohnungs-und Stadtentwicklungspolitik. In: Wohnungsgemeinnützigkeit in Recht, Wirtschaft und Gesellschaft. LexisNexis Verlag ARD Orac, pp 307–314 31. Seiß R (2007) Wer baut Wien? Hintergründe und Motive der Stadtentwicklung Wiens seit 1989. Pustet Anton, Salzburg München Wien 32. Peverini M (2021) Grounding urban governance on housing affordability: a conceptual framework for policy analysis. Insights from Vienna. Partecip e Conflitto 14:848–869. https://doi. org/10.1285/i20356609v14i2p848 33. Kinschner M (2022) The new zoning category “subsidised housing” as an instrument of land policy. In: New social housing. Positions on IBA_Vienna 2022, Berlin. Jovis, pp 54–57 34. Ritt T (2015) Gutes Wohnen in einer wachsenden Stadt. Stadtpunkte Wien Wächst Wien Wohnt 27–45 35. Tosi A (2017) Le case dei poveri. È ancora possibile pensare un welfare abitativo? Mimesis, Milano 36. Tockner L (2017) Mieten in Österreich und Wien 2008 bis 2016. Arbeiterkammer Wien

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37. Getzner M, Kadi J (2020) Determinants of land consumption in Austria and the effects of spatial planning regulations. Eur Plan Stud 28:1095–1117. https://doi.org/10.1080/09654313. 2019.1604634

Chapter 5

Milan: Affordability in a Mix of Fragmented Policies and Market-Led Housing Developments

5.1 Situating Milan, from Suburbanization to Recentralization and Acceleration Milan is the capital city of the Lombardy Region, in the north of Italy. The Municipality of Milan has 1.392.500 mln inhabitants (in 2020) and a surface area of around 181 km2 . It is part of the Metropolitan City of Milan (Città Metropolitana di Milano, hereafter MCM), an administrative level which puts together 133 municipalities for a total of 3.241.813 inhabitants and 1.620 km2 (Fig. 5.1). Milan highly depends on a vast hinterland for the localization of functions (e.g., residential, productive, commercial) which is not limited to the MCM but encompasses a larger urban region [1]. The Milanese housing system has followed a path-dependent trajectory that is related to the economic and political developments of Italy and its specific territorial role as the “economic capital” of the Country and one of the main urban agglomerations. Milan is acknowledged as the “economic capital” of Italy the main pole of the “Industrial Triangle” (Triangolo industriale), a highly industrialized territory thanks to investment concentration policy of the main Italian banks [2]. At the turn of the twentieth century migration to Milan grew together with demand for cheap housing surpassing supply [3]. Unprecedented growth pushed for the elaboration of an urban development plan like in other major European cities [4]. Expansion of the city out of occurred without a plan for most of the nineteenth century and was first regulated by the Beruto Plan (approved in 1889) [5], designing a concentric expansion organized in big blocks and a green ring road in place of the rampart [4]. Continuous variations to the Beruto Plan allowed wide expansions in the northern areas outside the existing urban fabric—considered healthier than the southern wetlands. Later plans confirmed concentric expansion, mainly by private developers. Similarly to Vienna, housing for the working class was mostly provided in the form of rental tenements. The typical tenement typology was the “hallway house” (casa di ringhiera), a multistory residential building organized around a courtyard (often the place of production activities) around which small dwellings are accessible via external hallways. The demand of © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 M. Peverini, Promoting Rental Housing Affordability in European Cities, PoliMI SpringerBriefs, https://doi.org/10.1007/978-3-031-43692-5_5

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Fig. 5.1 Milan and the MCM area, in red the core municipality (Source Elaboration by the author)

cheap dwellings for immigrant workers was much higher than the stock and housing conditions of workers were quite poor [3]. First initiatives to alleviate them took the form of housing cooperatives and philanthropic entities, only later followed by public policies. The realization of infrastructures and parks in this phase was hindered by a lack of public land assets in a moment of intense building speculation and rising land values: many public projects were either abandoned or downsized, like the green ring road and some parks, and infrastructures (e.g. railways) were merely superimposed over the urban fabric [6]. At the turn of the century Milan was a hub for the socialist movement, which ruled the municipality between 1914 and 1922. Utilities and public transport were municipalized and the first forms of public intervention on housing for the workers appeared. The turbulent post-WWI period of turmoil and factory occupation known as the “red biennium” (biennio rosso) was followed by the rise of fascism. Both demographic growth and Public Housing (PH) construction continued and intensified as part of a project for autarchic industrialization and urban plans foresaw a gigantic urbanization to accommodate an unrealistic population growth of over 3 mln inhabitants. Meanwhile, the city was also expanding outside of its borders and the center of Milan started to experience a process of substitution of existing functions with tertiary activities [4]. The most intense population growth occurred during the post-WWII period (Fig. 5.2), when the heavily bombed housing stock was reconstructed in parallel with intense new expansion and housing construction. In the 1950s and 1960s, Milan was considered the most dynamic urban region in Italy and the “economic capital” of the country [7]. In this period, private housing construction was complemented by the PH programs fostered by land policy tools. However, the private rental and heavily rent regulated to prevent excessive social unrest [8]. After WWII the city was ruled by wide socialist-led coalitions and the 1960s were also a decade of political mobilization and conflict. From the 1970s, the city’s industrial role began to decline, with factories and the working-class population delocalizing. A growing number of Milanese relocated in the suburban hinterland, mainly due to: high housing costs in the core municipality; change in housing preferences and

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congestion of the central areas; labor market restructuring with decreasing manufacturing (blue collars in the municipality reduced by around 40% between 1961 and 1981), and an increasingly tertiary-oriented local economy. In two decades, the core municipality lost almost half million inhabitants, most of which moved to the suburban areas. The increased importance of the hinterland, however, was only recognized by the planning system as a voluntary-based form of cooperation among municipalities, the Milanese Intermunicipal Plan (Piano Intercomunale Milanese, or PIM), established in 1959. Despite the absence of a proper plan, the PIM became an interesting point for debate on urban planning in Milan [9]. In 1982, the “Housing plan” (Progetto casa) designated new land for public and affordable housing through purchase, higher densities, and conversion of land for services [10]. The 1990s saw important changes in urban planning and housing policies, both at the national and local level. Gradually, the expansion of PH was abandoned in favor of regeneration plans, while site-specific variations of the General Regulatory Plan (Piano Regolatore Generale, or PRG) were allowed and systematically adopted, becoming de facto the new planning praxis [4]. With many factories relocating out of Milan, redeveloping brownfields and vacant industrial sites became a central theme. In this process, differential ULR accumulated during the city expansion by now well-located industrial sites could be exploited by public authorities and real estate actors through transformation into residential, commercial, and tertiary use [11, 12]. The most prominent example of this time is the conversion of the former Pirelli factory into the new Bicocca neighborhood [13]. Public housing was not a main aim in the conversion of former factory sites, also because municipalities could still count on the remaining greenfield land of the existing PH plans in peripheral areas. A huge scandal within the locally ruling socialist party in 1993 paved the way for fifteen years of rightwing local government, when real estate growth was incentivized in the framework of the booming real estate cycle of the 1990s and early 2000s [14]. Most of the urban expansion took place in the hinterland, but planning integration was still lacking [15] and growth entailed urban sprawl and suburbanization of middle classes on one side [16], and the expulsion of lower income families from the core municipality [17]. The dependence of the central municipality on its hinterland continued to increase as employment growth mostly concentrated in the core municipality and population growth was mostly hosted in the hinterland, producing a relevant commuting inflow [16, 18]. In the 2011, 475.000 workers and students entered daily the core municipality of Milan representing half of the total workers (49,2%), mainly using cars (55%) and taking averagely 57 min for the average trip ([19]: 52–53). In Milan there is “a constant process of disarticulation between place of residence and workplace: more than 50% of employees work in a different municipality than that were they live” ([1]: 41, translation by the author). In this panorama, recently the Law 56/2014 introduced a new metropolian administrative level, the MCM. However, this government level has very small power, especially regarding housing. While the metropolitan dimension continued to grow, at the turn of the twenty-first century housing prices grew rapidly in Milan, determining polarized conditions of access to housing [14]: homeownership increased, due to processes common to Southern European welfare systems (mainly: an increased role of the market in housing provision;

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a huge growth of mortgage lending), while households in the rental sector suffered from rising rents. Additionally, Milan was increasingly affected by important internal inequalities, both in terms of incomes and real estate values [20]. The consequences of social exclusion provoked by polarized conditions of access to housing were exacerbated by the financial crisis and the application of neoliberal policy recipes imposed during austerity and the unleashed housing need in the aftermath of the crisis [21]. The number of eviction notices due to rent arrears doubled in the MCM between 2009 and 2010 ([22]: 61). Despite these dynamics, the city saw important acceleration trends following its international repositioning during the 2010s, and especially following the momentum produced by the International Exhibition Expo 2015. In this decade, the urban agglomeration of Milan experienced a new attractiveness for people and capital, especially due to a new role of finance and tertiary, tourism and real estate sectors [18]. Population started to grow again, both in the core municipality and the hinterland (Fig. 5.2). The housing market has since then recorded skyrocketing prices in central locations and strongly hiking prices in former peripheral neighborhoods subject to requalification [23].

5.2 The Milanese Housing Governance System Milan has a remarkably high share of PH for Southern European cities—around 10% of the total stock when in the core municipality—compared to the Italian average of 4% [24]. In 2011, in the Milan municipality 29% of households were living in rental housing, a share that had reduced significantly by the time (it was 44% in 1991). Recently an unprecedented growth happened in the share of households in the rental sector, which in Lombardy passed from 18,1% in 2012 to 23,4% in 2019—at the national level in the same period it grew from 18,2 to 21,2% [25]. However, the rental sector in Milan has become increasingly unaffordable [23, 26, 27]: one households with an average working-class income (around 25.000 e per year, gross) cannot afford a mean rental dwelling within the core municipality [23], and there is a lack of rental stock in the range of 50–80 e/m2 per year—which corresponds to 4–6,6 e/m2 per month—that would be affordable for households with income ranging between 1.000 and 1.500 e/month (around 20% of all households) [27]. Average rent for a one-bedroom apartment is higher than the monthly median equivalised income of young people [27]. The Italian administrative system is based on the following levels: municipality, province, regions, central government. Italy, differently from Austria, is not a federalist system (and differently from Vienna, Milan is not a city-state). Competences are divided among the various levels according to constitutional indications. Regions, established at the beginning of the 1970s and are in charge of important competences, have a central role in housing policies and urban planning, especially through the Regional PH company ALER (Agenzia Lombarda per l’Edilizia Residenziale) and its territorial divisions. On the contrary, provincial authorities were gradually hollowed out, and the reform that established the Metropolitan Areas left many issues

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Fig. 5.2 Population dynamics and relevant housing policies in Milan (Source Elaboration by the author)

unsolved [1, 18]. At the central government level, housing is under the competence of the Ministry for Infrastructures and Transport, MIT (Ministero delle Infrastrutture e Trasporti), elaborating the National Housing Plan (Piano nazionale di edilizia abitativa), proving funds and tax incentives for housing production and regulating rental contracts. The European Union mainly regulates “state aid” funding and has a marginal competence in housing promotion. The main non-administrative actors involved in housing policies are locally founded housing cooperatives—which after WWII were organized around umbrella associations linked to the main political parties—institutional investors, such as Cassa Depositi e Prestiti—the main state bank in Italy—organized in the so-called Integrated System of Funds, or SIF (Sistema

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Integrato di Fondi) since the 2008 National Housing Plan, private developers, private landlords—representing the vast majority of landlords—and tenants’ union.

5.2.1 Housing Policies The housing regime of Milan has followed a specific trajectory that is related to the national one, mediated by its local specificities. Rental housing, mainly owned by private landlords, was the predominant tenure form for most of the twentieth century, and rent control had a crucial role in keeping rents affordable until complete deregulation in the 1990s. PH grew in absolute numbers—though not in share— throughout most of the twentieth century, and acquired an increasingly important role in housing lower income households. However, a powerful process of tenure restructuring has taken place since the post-WWII period, in which the rental sector (both private and public) was led to residualization by the generous policies that fostered homeownership, in the context a general disinvestment in rental housing policies. Some forms of hybridization with private actors were always present, though relatively weak in numbers [28]. However, nowadays, with the suspension of PH construction, private developers represent the main providers of new rental housing [29, 30]. The unfolding of these processes is traced separately. Rent control: deregulation and demise of a previously crucial policy The private rental sector was very important in the early twentieth century Milan, housing most of the working class during the industrialization phase. However, rental housing was quite expensive, and workers suffered from housing shortage and bad housing conditions [3]. A temporary rent control law was enacted during WWI and repealed during the early fascist period to incentivize housing construction [5]. Despite promotion of homeownership, in the post WWII period the private rental sector was still accounting over half of the population and “various rent control laws had put on the private rented stock the burden of offering housing at very low rents, sometimes for long periods” ([8]: 202). This period was characterized by unlimited contracts and rent limits that exasperated landlords [8]. The 1970s saw the last phase of intense regulatory intervention on private rental housing, also pushed by the role of tenants’ unions after the social movements of the late 1960s. The “Fair Rent” law (Equo canone) was introduced in 1978: “the aim of this law was to overcome the excessive segmentation of the rented market (partly free, partly under control) and to act as a regulator of rent prices” ([8]: 193). The law introduced two forms of regulation: the first was on rent levels, which were determined through an institutional procedure (3.5% of the “rental value” of the dwelling, based on the construction cost of PH multiplied by a set of coefficients): the second was on the length of the lease, established at four years, after which the landlord (or the tenant) was free not to renew. The Fair Rent law established a comprehensive rent control over the whole rented stock, but it introduced a short tenancy frame and therefore actually caused a massive

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wave of evictions, which became a real emergency all over Italy and especially in Milan. According to Padovani The problem of eviction may be considered an unexpected consequence of the Fair Rent Act of 1978 […]: The first unforeseen result—at least in the numbers involved—was that at the end of the first four-year period a large number of landlords did not renew rent contracts. ([8]: 193)

In turn, the reaction to the eviction problem had the effect of engulfing the allocation system of PH: Many local governments, especially those in the larger urban areas with high incidences of evictions, had to face acute problems and ended up utilizing almost all the public-sector resources in housing families evicted from the rented sector. This further weakened the already low capacity of the public sector to satisfy the growing demand from the areas of severe housing stress. ([8]: 194)

Rent control was deregulated in the 1990s, when the funding source for PH was gradually reduced and funding decreased significantly [31]. The fifty years that followed 1970 saw a process of profound tenure restructuring in Milan: rental housing passed from around 44% in 1991 to less than 29% in 2011 [26]. The promotion of homeownership was supported through tax discounts, land provision and subsidies increasingly diverted from PH to homeownership, and extensive right-tobuy schemes in the PH stock. Mainly lower income households remained in the rental sector, in which poverty has been highly overrepresented since then [32]. The reform of the Italian rental sector with Law 431/1998 eventually abolished rent control in the private market and introduced the “Agreed Rent” (canone concordato), a voluntary-based incentivized contract on the private rental market, in which rents must be kept within a maximum range set by an agreement among tenants’ unions and landlords’ associations in exchange for tax reliefs. Such a measure was regarded as a promising one to keep rents low in contexts such as Milan, where ownership in the rental sector was becoming increasingly fragmented. In Milan (2017 data), 50% of rental households had a private person as landlord, 29% lived in PH and 17% lived in dwellings owned by corporate landlords [29]. Agreed Rent was very unsuccessful in Milan [33]. While private rental housing has been typically offering affordable housing solutions, especially in under-maintained dwellings—something that could be called “Naturally Occurring Affordable Housing” [34], it offers very short tenure and no stability. Recently, the attractiveness of Milan for the creative class has triggered, especially in some neighborhoods, with a steep rise in rental levels [23] which has put a strong pressure on lower income tenants. Rise and decline of public housing, between hybridization and marketization of housing production Until the beginning of the twentieth century, the main initiatives for workers’ housing in Italy were private (cooperatives, saving banks, charitable organizations, factory employers). In 1903, the national government released Law 254/1903, the first one concerning state intervention in housing in Italy and defining the category of

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Public Housing (case popolari, hereafter PH) and the establishing the condition its implementation [35]. According to Poggio and Boreiko, a public policy for social housing was developed at the beginning of the twentieth century as a conservative response to mutual aid and local initiatives promoted by labor movement organizations and socialist-led municipalities. The explicit aims were: (a) improve living conditions: (b) subtract housing as an area of consensus for the labor movement; (c) promote homeownership as a solution to the ‘social question,’ aimed at building a petty proprietors society. ([36]: 114)

The Law fostered an active role both of public administrations and the nonprofit sector, through the creation of Public Agencies for coordinating subsidies and production. In Milan, the most prominent example was the Humanitarian Society (Società Umanitaria), a philanthropic entity that built the first PH complexes of the city— a European wide example—which were later absorbed in the municipal housing stock. In 1908 the Institute for Public Housing of Milan (Istituto Case Popolari) was founded and immediately started an important building campaign under the political regency of socialist mayors and the technical direction of architect Giovanni Broglio. PH was mainly seen as a response to the hard conditions of slum dwellers in the old town but also to accommodate evicted households due to urban gutting in central neighborhoods. In the first decade of the twentieth century, around 7.000 rooms were built within this framework in Milan, amounting to less than 7% of new housing production (approximately 14.000 new rooms each year). PH production reduced to cease during WWI, but the new socialist local governments launched a relevant program of debt-financed PH construction to improve living conditions of the population, which was reflected in increasing PH production throughout the 1920s (Fig. 5.2): in 1930 there was a total of 56.000 PH rooms in Milan, but huge private housing production kept the share of PH at around 7% of the total housing stock, which remained more or less unchanged until WWII [5]. The activity of the Institute continued and intensified during fascism, when some of the most important PH neighborhoods of Milan were built on greenfield land on the borders of the expanding city [37]. After WWII, reconstruction of the heavily bombed PH stock was complemented by relevant PH production on greenfield areas at the city border and—in smaller quantities—also in some neighboring municipalities willing to attract public investment [5]. The 1950s and 1960s were the most intense period of PH production in Italy (and of housing production in general). Between 1949 and 1963, PH production in Milan ranged in from 5 to 28% of the yearly new housing production. Overall, 18.4% of the newly produced housing stock in these fifteen years was public, mostly in the framework of the INA-Casa plan [5], implemented to foster employment and economic recovery while providing massive production of affordable housing for the working class [38]. Since the 1960s, an intense regulation activity changed the juridical panorama of housing production, reorganized around three main forms [8]: PH, for rent (edilizia sovvenzionata); subsidized owneroccupied housing (edilizia agevolata); and special programs including subsidized rental housing (edilizia convenzionata). New laws introduced land provision mechanisms for public and affordable housing as well as a new financing mechanism [8]. Law 167/1962 mandated municipalities to elaborate a Plan for Public and Affordable

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Housing (Piano di Edilizia Economica e Popolare, hereafter PEEP) and gave them the authority to implement compulsory purchase of private land. Legislation mandated to reserve land for PEEP that could satisfy between 40 and 70% of the expected total housing demand in the planned period, aiming to reduce land speculation to a minimum. Law 60/1963 introduced an income tax for funding PH, known as Workers’ Housing Management (Gestione Case per i Lavoratori, or GESCAL). Funding is granted by the central government via mandatory contributions by employees and employers and PH companies and municipalities are responsible for the production and management of the stock, which is rented to workers. Financing, planning, implementation, and management of the PH sector, as well as the institutions and the procedures involved, are defined by national housing legislation ([8]: 201). PH production was especially intense in Milan, contemporarily to a population boom in the period in which the agglomeration of Milan had its most relevant industrial role. During the 1960s in Milan PH represented 20% of new housing production, mainly in the new framework of the Gescal law and thanks to the PEEP plan introduced in 1963. It was also a period of intense political mobilization on the housing issue, to which PH represented an important political response. In this period, PH production was also taking place outside the core municipality of Milan, to find cheaper land and meet the housing demand following the massive population growth. Some neighboring municipalities saw an intense demographic growth due to the localization of PH investment. Land and subsidies were provided also for privates (often cooperatives) through an official agreement, which triggered forms of hybridization of housing policies. Subsidies were directed to individual developers and households or, more frequently, to cooperatives gathering them. Subsidized homeownership (edilizia agevolata) was especially incentivized through grants and loans (particularly low-interest loans and mortgage assistance). Housing cooperatives could access those together with subsidized land by complying to revenue limits. In addition, homeownership was supported by tax relief measures: fiscal welfare has since then played an important role in the promotion of homeownership [39], while taxation for social landlords is less favorable than the one applicable to private landlords and homeowners [36]. Additionally, special programs were promoted providing no- or low-cost land in exchange for provision of rental housing based on local agreements (convenzioni) with developers or cooperatives, with various rental schemes often entailing a purchase option and a time limit after which marketization is possible. These subsidization mechanisms triggered relevant forms of hybridization, which especially took place on land plots purchased via the compulsory PEEP plans. These policies created the conditions for a relevant growth of the housing cooperative sector in Milan. Between 1962 and 1971, around 20% of the overall construction activity was either PH or subsidized housing ([5]: 100). Cooperative umbrella associations were created to coordinate cooperatives both with public administrations, facilitating access to land and subsidies, and with workers’ unions. In the 1980s the housing cooperative sector in Lombardy accounted for 26.100 dwellings— more than 10% of the total housing production, 18.400 of which were subsidized ([28]: 45). In the whole Lombardy, by 1991 53.600 dwellings were produced by the cooperative sector,

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half of which for rent. As for PH, housing production by cooperatives was especially important in the hinterland of Milan, concentrating in few municipalities where local coalitions were more prone and where cooperatives represented the most important tenure form, such as (2011 data, extracted from [26, 40]): Novate Milanese (57.9%); Bollate (39.8%); Settimo Milanese (35%); Paderno Dugnano (32%). Despite this growth of public and cooperative housing, intense free market activity accounted for about 80% of the total production. Additionally, purchase options allowed the progressive marketization of big parts of the stock produced through subsidies and land provision: often PH programs in Italy entailed extensive non-market ways to homeownership (around 70% of the 355,000 dwellings realized with the INA-CASA program were privatized through a purchase option [8, 38]). In the 1990s, the Italian PH stock was composed of around one million dwellings, while around 850,000 dwellings built with public subsidies had already been privatized [8]. Most cooperatives provided housing in homeownership (edilizia agevolata), while rental cooperatives often sold their dwellings to ameliorate their budgets, also because rents were not calculated to cover management costs. In this sense, homeownership should be considered an important goal embodied in PH policies as well as a non-choice—or an absent regulation of the rental sector. In addition to this drain of affordable rental housing, the subsidization mechanisms were gradually weakened. Efficacy of the compulsory land purchase at below-market price of PEEP plans was jeopardized by the Constitutional Court in 1980, declaring that land had to be bought at market rate, and PH investment was reduced and channeled somewhere else, as “during the 1980s the central government repeatedly tried to erode, under the pressure of public debt, the funds allocated to public housing” ([8]: 194). The disinvestment on PH occurred simultaneously to the regionalization of housing policies, started in the 1970s and culminated in 2001. Devolution of competence was not followed by devolution of funding sources in a typical process of “passive subsidiarization” [41]. Since then, the gradually decreasing reserves of the GESCAL fund started to be allocated to urban regeneration programs and the refurbishment of existing PH with poor quantitative results. Finally, in 1998 the GESCAL was abolished. PH became not only financially unfeasible, but also increasingly politically undesired: while in the 1950s and 1960s municipalities were sometimes willing to attract public investment in housing and to accommodate the working class population, management problems and residualization deteriorated the image of PH neighborhoods and the consensus on PH construction. As a consequence, the only attempt to balance the loss in funding and maintenance was represented by the introduction, in 1993, of a right-to-buy scheme on PH stock, which in the first formulation was to be introduced mandatorily on at least 50% of the stock [42] in a political attempt to withdraw from the sector and dismiss the stock. However, this measure had controversial effects. According to Belotti and Arbaci, The sale of more than 120,000 social rental housing homes in the first ten years was instrumental to the national increase in mortgage-driven owner occupation, a process supported through the mortgage tax deduction for primary residency and the liberalization of the credit market. ([30]: 421)

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To provide PH tenants an affordable way toward homeownership the amount of PH reduced all over Italy by one fifth in twenty years, from 1 million dwellings in 1991 to less than 800,000 in 2001 [43]. Privatization has occurred to the advantage of sitting tenants, being on the long run a questionable policy that undermines the capability to provide a crucial welfare service, while sale prices and revenues were quite low. In Milan, around 25,000 dwellings were privatized [26]. The PH system, that in 1998 was devolved to the regional level, was left in a state of chronic lack of funding by the reforms of the 1990s, despite remaining the most important policy instrument to house the most vulnerable parts of the population ([43]: 68–69), also in the light of the massive pressure coming from a deregulated private rental sector [8]. While new PH construction became unfeasible in an increasingly market-oriented urban planning system, management of the existing stock became financially problematic: the reduced PH stock went through residualization as higher-income tenants could buy the dwelling and lower-income tenants pay very low rents. As a result, high shares of the stock—which in many cases is over 50 years old—cannot be allocated due to lack of maintenance and remains empty: in 2020 in Milan, the percentage was as high as 14% [25]. The complex phenomenon of squatting, due to the interaction between a large critical need (testified by high evictions) and the existence of empty dwellings—and marginally also to criminal organizations, became a structural issue and an informal channel of allocation [44]. Privatization targeted also the hybrid stock. In the past, insurances and banks also had a role in affordable rental housing policies, due to their being obliged by law to invest a share of their assets in the sector. However, when this obligation was canceled, most of this stock was soon sold (mostly to tenants), thus enlarging owner occupation. Today, after this privatization process, in Milan there are only 4.818 dwellings owned by banks, insurances and pension funds [29]. At present, in Milan there are 57.841 PH dwellings [25], managed partly by a municipally owned private company—Metropolitane Milanesi, with 23.342 dwellings—and partly by the local division of the regional PH company—ALER Milano, with 34,498 dwellings. The stock is allocated by the housing and social department of the municipality with the same rules set by regional regulations based on central government’s guidelines. Some margin of discretion in the allocation is allowed to the municipalities through the housing emergency policy (emergenza abitativa), consisting of allocation of PH dwellings to individuals and households that are not included in PH waiting lists but are in a situation of critical need [45]. This is an effective public and housing-led instrument for preventing the worst situations but cannot be considered a long-term solution for housing exclusion, and it tends to be much less cost-effective than traditional PH [46]. In the rest of the MCM (excluding the core municipality), there are 29.159 PH dwellings [25]. Allocation is done by the single municipalities with no specific forms of coordination. The calculation of “social rent” (canone sociale) for PH is regulated by Regional Laws based on national legislation and resounds the Fair Rent rule (Fig. 5.3): first, a fictive value for the dwelling is calculated on the basis of its objective characteristic (e.g., location, age of the building, etc.): the standard rent is set to 5% of the fictive value, a calculation similar to that of the 1978 Fair Rent in the private sector; then, the

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Fig. 5.3 Scheme of the calculation of social rent in Lombardy (Source Elaboration by the author on [47])

standard rent is reduced to a percentage depending on a standardized measure of the household’s income and is multiplied by a coefficient that depends on the income range, and ranges between 0.36 for the poorest and 1.5 for the upper income tenants. There are four income ranges: “protection” (0–9.000 e ISEE-Erp), “access” (9.000– 14.000 e), “permanence” (14.000–35.000 e), “relinquishment” (above 35.000 e). Then, the standard rent is reduced to the “affordability limit” (limite di sopportabilità), a percentage of the standardized measure of the household’s income which is set on a variable percentage between 14 and 24% depending on the income range in which the household falls. Finally, a minimum rent applies ranging from 20 to 200 e per month, depending, again, on the income. The average social rent in the MCM in 2010 was 149 e/month [25]. The unstable phase of devolution and defunding of PH triggered by the 1990s reforms was followed by the important housing policy and subsidy reform of 2008, which introduced the definition of “social dwelling” (alloggio sociale) as a new category for subsidies required by the European State Aid law. “Housing sociale” was then created based on the vague definition of social dwelling [30]: it is a sort of affordable housing segment conceived to be produced through public–private partnerships, for which dedicated funding and incentives are available. Initial funding was then organized by the Ministry of Infrastructures and Transportation and by Italian State Bank as part of an Integrated system of funds (SIF) involving local asset management companies [30]. This reform paved the way for a new season of public intervention on an extended variety of tenure forms—with very limited space for traditional PH—centered on the role of privately managed financial vehicles created ad hoc mainly through postal deposits incentivized via planning systems. Housing sociale projects, which often benefit from housing subsidies and public land, include small amounts of traditional PH dwellings, but most dwellings are in a very broad category encompassing a mix of tenures which are mainly: affordable homeownership sale; moderated rent; moderate rent (canone convenzionato); moderate rent with purchase option; temporary lease; and student housing. While a part of these are immediately sold, most rental tenures only allow the sale at market price after a negotiated period between 5 and 30 years [48]. The largest part of the subsidized stock that has remained in controlled rent— besides PH—is the one built by undivided housing cooperatives, which today

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includes 7.243 dwellings in Milan [29]. Due to their statute and governance, undivided housing cooperatives are very reluctant to raise rents, which generally remain very low, and despite having privatized parts of the stock to counterbalance low rents, rental housing has remained their core activity [49].

5.2.2 Social Policies In Italy there is a monetary support scheme for households in situations of poverty or hardship; it is managed by the central government. The Minimum Income Support scheme (reddito di cittadinanza, literally “citizen income”, and pensione di cittadinanza, “citizen pension” for those older than 67 years) was introduced in 2019 and in being currently dismantled in 2023. It has been available for Italian citizens and those who have an equivalent status (EU citizens, recognized refugees, longterm residents) with ten years of residence. It addressed households with an annual income below 6.000 e, or 9.360 e for household in the rental sector (multiplied per an index depending on households’ composition). The amount depended on income, family size, and housing situation, and was capped at 1.050 e. Households that are in rental accommodation or pay a mortgage received up to 280 e more for the rent and 150 e for the mortgage, irrespective of their housing costs and their place of residence. This “spatially blind” approach was criticized for neglecting the extreme difference in market rents throughout the country [50]. In 2019, 36% of beneficiaries in Italy received the rental benefit, with an average of 203 e of rental benefit. However, the rental benefit has a less significant impact on the final amount received than the benefit for paying a mortgage: “[…] from April 1, 2019, to June 30, 2020, almost 3,5 million individuals benefited from the measure, for a total of almost 1,5 million families, who received on average a monthly amount ranging from 525 e (income only) to 561 e (income and rent supplement) to 641 e (income and mortgage supplement)”. This apparent innovation does not fully affect the housing condition of households, because it does not tie the disbursement of the benefit to the payment of the rent and therefore does not accompany the household along the path to housing autonomy. ([25]: 27, translation by the author)

According to a monitoring by Caritas, the Reddito di Cittadinanza had a take-up of 80% of potential beneficiaries and allows 57% of the recipients to get out of the poverty threshold [51]. However, only 44% of Italian poor households benefitted from this measure, while over half of the poor households (mainly larger households with foreign origins residing in the North of Italy) were excluded [51]. Among the eligibility criteria stands out that of ten years of residency (with continuous residency in the last two years) in Italy, which excluded 40% of poor households with foreign origins [51]. In the MCM, 39.752 households (2.4% of the total) received the reddito di cittadinanza or pensione di cittadinanza in 2020, for an average monthly amount of 481,17 e/month. In 2019, in Milan, 15.723 households received it (around 2% of

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the total). The share of households that receive the rental benefit in Lombardy is 60%, with an average support of 149 e. However, only a few years after its introduction, the current far right government is dismantling the Minimum income scheme in favor of new instruments with highly reduced targets. Housing allowances (Fondo sostegno locazioni) were introduced in Italy in 1999 as a dedicated fund to offer a one-time support for the housing expenditures of poor households in the rental sector, in parallel with the deregulation of rent control through the abolition of the Fair Rent. It is a means tested measure, including both an income limit. Support is provided based on municipal lists, up to exhaustion of the fund, which depends on resources allocation but is not hooked to measures of housing need. Initially financed with around 380 million e for the whole of Italy for 1999, its financial weight declined until 2012, when no more funding was dedicated to it. After the financial crisis, it was refinanced on an irregular basis and with less funding (50 million e per year on average for the whole Italy). Funding of housing allowances depends on the momentary priority of the central government. Moreover, many experts and tenants’ unions have highlighted the ineffectiveness of the distribution of resources linked to this measure. Additionally, available funding for housing allowances is usually only spent partially [52]. Though data are not systematically surveyed and made available, recent municipal tenders of the Fondo sostegno locazioni all over Italy have made explicit the existence of a large population that is in housing distress due to affordability problems, which the resources available (and the modalities) cannot tackle. The tendering in Milan in 2020—therefore after the outbreak of the Covid-19 pandemic—received 16.995 applications, for which 6,8 million e were available, serving 1800 households with an average allowance of 3.700 e in one year ([25]: 70). In sum, the social policy pillar in Milan is very precarious, corresponding to a mediterranean welfare system that increasingly becoming asset-based.

5.2.3 Spatial Planning and Land Policies At the turn of the twentieth century, the land issue was already a crucial one for housing outcomes in Milan. With the Beruto Plan, only small portions of land were acquired by the Municipality of Milan for public functions: 50 ha for the Sempione park and 200 ha overall in the periphery, which were not extended by the subsequent plans [5]. With this rather small land acquisition, no specific active land policy for affordable housing was enacted. Cooperatives often bought rural land on the market or received it via bequests. The realization of infrastructures and parks in the early twentieth century Milan was hindered by the lack of public land assets in a moment of intense building speculation and high land prices, and many public projects—e.g., the green ring road—were either abandoned or downsized [5]. Housing development was mainly located in greenfield sites that allowed the extraction of marginal ULR, while the absence of rent control allowed landlords to raise rents to exploit growing differential ULR thanks to the growth of the city. Something similar also occurred for

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PH before the adoption of PEEP plans in the 1960s [12]. There is evidence that the Ina-Casa neighborhoods in Milan, which were built in the 1950s on marginal areas, over time have acquired a much higher value that was transferred to former tenants thanks to low priced purchase options, showing how the growth of ULR in the two metropolises has also passed through privatized PH complexes [53]. PH was often localized in marginal areas in order to find cheaper land, sometimes in neighboring municipalities. PH complexes were not infrequently built far from existing urban areas (leaving a buffer zone ready for private development), which made it convenient to build new private developments in the in-between sites, thanks to the infrastructures provided for the new PH neighborhoods: this mechanism served to the extraction of ULR through colluded PH localization choice [54]. Additionally, while urban plans increasingly allowed new expansion many inner plots that were left empty increased their value thanks to differential ULR and could be converted to more expensive residential functions or, often, to tertiary functions [4]. With the approval of Law 167/1962, municipalities had a mandate to elaborate PEEP plans according to the measured and forecasted housing need (Fabbisogno abitativo), and were required to earmark between 40 and 70% of new residential developments for PH programs. The law, which represented an historical turn in planning instruments for urban development in Italy, had the twofold aim of providing land for public and affordable housing programs and to mitigate the privatization of ULR [55]. For its implementation, the law empowered municipalities to acquire land by compulsory purchase at below-market prices, to be provided at low cost for housing programs. The first PEEP in Milan was released the following year, in 1963, planning the realization of 160.000 rooms in public and affordable housing, around one fourth of the estimated housing demand ([5]: 102). PEEP was a powerful tool for municipalities to plan public and affordable housing despite skyrocketing land prices: compulsory purchase was established at the price of rural land, thereby allowing municipalities to avoid paying ULR to landowners. However, according to critics the Milanese PEEP did not fully exploit the potential for expropriation of ULR the law entailed, since PH was mostly located in marginal and rural areas (Fig. 5.4), mainly on already publicly owned land and far from where infrastructural investment was concentrating. The result was the creation of satellite neighborhoods, far away from the existing urban fabric and services. In 1965, the provincial prefecture of Milan created the Consorzio Intercomunale Milanese per l’Edilizia Residenziale, or CIMEP, a provincial consortium in charge of coordinating municipalities for the PEEP, endowed with the power for compulsory land purchase and elaborating development agreements (convenzioni) on the PEEP plans. The CIMEP criticized the 1963 PEEP plan for segregating new public and affordable housing neighborhoods in marginal and peripheral locations [5]. Nevertheless, with these policies the PH sector and the housing cooperative sector saw an important growth not only in the core municipality but also in the hinterland. This helps explain why some municipalities in the MCM have high concentrations of PH. For example, the neighbouring municipality of Rozzano (southern to Milan) passed from 6.000 inhabitants in 1961 to over 30.000 inhabitants in 1971, mostly due to a

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Fig. 5.4 Map of the new PEEP plans in Milan in the 1969 planning instrument and after Progetto casa of 1986 (Source Elaboration by the author on [5]: Tav. 19, 20)

massive urbanization made through PH buildings commissioned by the Municipality of Milan (see Fig. 5.5). The period of national reforms in the 1970s included: the Housing Law 865/ 1971, which provided some new operative instruments for the PEEP plans; the Land Regulation Act of 1977, which introduced a local tax on development gains; the Ten Years Plan of Law 457/1978, which provided the last large funding allocation for PH and introduced large space for private actors in urban redevelopment. Additionally, developers could negotiate the construction of shares of subsidized housing (edilizia convenzionata) in exchange for partial or total exemption from the development tax. This created good conditions for the growth of the cooperative housing sector, especially for divided cooperatives that could offer financial stability to private investment by providing housing in homeownership [28]. At the turn of the 1970s, under the pressure of the political mobilization on the housing issue, the local government produced an integrative plan approved in 1975 (Piano Velluto). It used the new instruments provided by Law 865/1971 and for the first time earmarked inner plots of the city, including thousands of existing buildings in decay, for the expropriation, in order to restore and destine them to public and

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Fig. 5.5 Public and subsidized housing in the neighboring municipality of Rozzano (Source Territorial Government Plan of the municipality of Rozzano, 2010)

affordable housing. However, the Velluto Plan remained largely on paper due to lack of funding and subsequent restrictive judicial interpretation of the expropriation measures [4]. Some articles of the law on compulsory land purchase for residential development were weakened by a constitutional court decision already in the 1960s [5], but especially in the 1980, when judgement no. 5/1980 declared that land had to be bought at market price. Feasibility of compulsory land purchase by municipalities (or CIMEP in the case of Milan) was therefore undermined [56]. The decision jeopardized PH construction and in part also the previous hybridization mechanisms for housing cooperatives. Consequently, local governments had serious difficulties in programming housing development plans. In 1982 the municipality elaborated the Housing

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Project (Progetto Casa), which complemented the existing PEEP plans with new land policy instruments—mainly new purchases, higher densities—and conversion of land for services to achieve additional land for public and affordable housing [57] (Fig. 5.4). In the wake of the deindustrialization, housing development in Milan took increasingly (though not exclusively) place on brownfield sites, and land provided by the PEEP was gradually exhausted. In this period, a huge part of the population moved to the hinterland, where the most intensive housing development took place, and new policy layerings had a relevant impact on housing cooperatives’ activity. Firstly, the intervention programs on existing PH neighborhoods—such as the Programs of Urban Redevelopment (Programmi di Riqualificazione Urbana)—offered some spaces to cooperatives to operate. Secondly, the Integrated Intervention Programs (Programmi Integrati di Intervento), or PII, were introduced to foster renovation in the existing private urban fabric. The PII could be proposed by privates and entailed changes in the zoning of limited and localized areas, usually involving an increment in the buildable volume in exchange of public services and the provision of new affordable housing. Housing cooperatives were deeply involved in the design and development of these programs in Milan, especially divided cooperatives since they provided favorable conditions for operating the reserved quota for subsidized housing (convenzionata). The “season” of PII was linked to the coincidence of a huge availability of abandoned former industrial plots and of a phase of return of middle classes to the cores of cities after a phase of intense suburbanization [11, 58]. At the same time, one of the most intense phases of construction boom in the history of (especially the North of) Italy occurred during the 1990s which only ended with the financial crisis of 2008, driven by migration fluxes and speculative housing demand, which triggered high increases in land costs and housing prices [14]. In 2005, to spend the last remaining GESCAL funds for new PH between but without the possibility to purchase land the municipality of Milan launched a program for PH as an “integration of the municipal planning document” that was based on a policy layering, first in the Regional legislation and then upscaled in the national one. This entailed two main changes: • an expanded definition of public intervention on housing, that with the term “social” housing, after the 2008 reform, comprises different tenure forms than traditional PH; • the classification of social housing as a service, therefore included by planning regulations among the set of public facilities (Standard) that can be located on reserved plots of land [46]. The 2006 Territorial government plan therefore mapped plots of land owned by the municipality that could be used for the development of this now expanded “social” housing sector, which encompassed a wide variety of different situations. With Municipal Deliberation 26/2005, the municipality made 46 publicly owned plots of land, for a total of 1,2 mln m2 of land, available for various housing programs (Fig. 5.6). Part of the program, named Abitare Milano (Dwelling Milan), funded PH projects led by the municipality and delivered the last newly constructed four PH

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Fig. 5.6 The plots of the municipal deliberation 26/2005, mapped together with the main urban regeneration programs (Source Territorial Government Plan of the Municipality of Milan 2006, Tav. 2.1)

complexes in Milan, consisting mainly of social rent and partly of moderate rent. The initiative was similar to the classical PH ones (edilizia sovvenzionata) and it was developed by the Municipality. The program featured a scheme of coordination of the urban and architectural project that was unprecedented in PH production and required extraordinary and innovative procedures in an otherwise very standardized process. Before, architects were directly assigned the design of housing projects on the PEEP plots based on a consolidated production chain, while this program had a rather dialogic approach and a much less standardized design. However, the program faced serious problems in its realization. Eight plots were destined to this program, for a total of 97.000 m2 and estimated 1.200 new dwellings, but only five plots were built. The other thirtythree plots (including most of the available land) were redestined to private actors in a new framework of public–private partnership aimed at fostering private investment in “social” housing: In this context, the mobilization of public land (as undeveloped plots, brownfield sites or disused properties) became ‘the’ public leverage for local governments to lead public–private negotiations in the SRH [social rented housing, author’s note] sector and promote urban growth in general. ([30]: 423)

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This allowed private actors to realize new developments on quite cheap land, sometimes granted free of charge. Housing cooperatives and the newly created Integrated System of Funds, under the umbrella of housing sociale, could apply for the plots with projects of residential developments that included dwellings in affordable homeownership, moderate rent, and social rent. The Municipal Deliberation 26/2005 is the last active land policy instrument for affordable housing adopted in Milan. After that, land for social housing was delivered via passive land policy instruments, mainly IZ schemes on private developments. The current IZ rule applied in the Territorial Government Plan requires a share of the realized living space in new developments above a certain size (usually 5.000 m2 ) to be reserved for social housing. According to the current amended version of the rule, 20% of units are reserved for dwellings in affordable homeownership, 20% to moderate rent and 5% to social rent. For the moderate and social rent, land must be provided free of charge. Between 2010 and 2019 around one third of new housing in Milan was subsidized, only 35% of which for rent with rents between 6,7 and 10 e/ m2 per month [27]. However, there is no clause requiring these dwellings to remain in the rental sector, since sale is generally allowed after some years of completion. In Milan, and in Italy in general, land policies were based on compulsory purchase for the realization of PEEP plans (which however became soon legally and economically unfeasible), and a comprehensive policy to accumulate a public land bank explicitly directed to affordable housing policies was never activated. However, public sector agencies or public companies have often accumulated vast land assets, especially for infrastructures, which remained kept when the functions that were hosted there were no longer needed and could be destined to housing programs. A very important issue regards the use of land assets by corporatized public companies, such as the railway yards owned by the Italian Train Company, Trenitalia. With the adoption of a private-law and market-led approach for the company, a daughter company (FS Sistemi Urbani) was created for the valorization of the unused land assets. In the context of austerity, this has led to a process of privatization of land assets with limited possibility to impose housing objectives for their redevelopment [59]. In Milan, redevelopment of former railway yards has a critical importance in establishing the future housing development pathway, representing most of the developable surface within the dense core city with around 1.1 mln m2 of surface area. The transformation of the former railway yards is regulated by an Agreement Program between public institutions (Accordo di Programma) signed in 2017, which indicates a total of 674.460 m2 of realized space and establishes that a share of 30% of it must be reserved to social and subsidized housing (edilizia convenzionata), 40% of which in rental tenure. According to the official project report, as also confirmed during a public presentation,1 the Agreement Program articulates “social” rental housing among a variety of tenures, which include moderate rent with purchase option (89.060 m2 ), moderate rent, student housing and “cohousing” (44.756 m2 ) and social rent (22.682 m2 ). Therefore, housing in moderate rent without a purchase 1 Data were presented by a representative of FS Sistemi Urbani, during the event “Dagli scali, la nuova città. Tre anni dopo” held on the 01/20/2020 in Milan.

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option accounts for about 7% of the total, social rent for only about 3% of the total. Finally, while social rent is calculated as an affordable share of tenants’ incomes, the moderate rent is defined by a municipal deliberation as a share of construction costs: at the moment, moderate rent is set at 5% of the final cost, which according to experts determines a net rent of 10.4 e/m2 per year (current construction costs are estimated at around 2.500 e/m2 ). In a similar way to the former railway yards, the Municipality of Milan has put valorization on top of its agenda for the mobilization of municipally owned land assets. In the framework of the international network Reinventing cities, the Municipality of Milan has issued two tenders on land plots mostly coming from unused or unrealized public functions (e.g., the former slaughterhouse). They are developed with is a mosaic of different schemes entailing sale or land leasing for up to 90 years, in exchange of a price decided in a public auction which combines a price bid and a project proposal, with quite high land price (e.g., around 1.000 e/ m2 of realized space as a base of auction for the former slaughterhouse) and can be raised during the procedure. Shares of social tenures depend on the IZ policy of the current Territorial Government Plan mentioned above. Finally, it is important to note that while these land policies concentrate in the core municipality, the metropolitan dimension is still missing. While it is not easy to grasp how housing policies connect to the supralocal territory, one may easily affirm that they are rather small when compared to the scale of MCM. It means that the potential of the metropolitan dimension is not exploited by developing a land policy that coordinates the development in the municipalities of the hinterland (e.g. in the regeneration of former factory sites) with transportation policies and affordability goals.

5.3 Housing Affordability in the Milanese Governance System The housing system of Milan is highly influenced by the composition of an homeownership oriented tenure system, in which the rental sector is minoritarian— accounting for 29% of registered households (only 16% in the rest of the MCM, with municipalities ranging from 7 to 29%). The PH segment represents around one third of rental housing (Fig. 5.7), being a very relevant measure to stabilize affordability levels of tenants, especially considering the cost-to-income calculation of social rent. On the contrary, the role of the intermediate housing segment is quite unclear, characterized by a patchwork of various actors with different business model and is regulated by a very vague definition. The private rental sector is prevalent, with individual landlords representing the vast majority of landlords. Given the marginal role of rent control, the biggest part of the rental sector has no regulation regarding affordability levels and most tenants are exposed to affordability problems with acceleration trends.

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Fig. 5.7 Segments of the rental housing system in Milan (Source Elaboration by the author)

The housing system in Milan has followed in many aspects the national pathway, determined by highly centralized policies and partly mediated by local institutions and actors. In the 1990s, the overall withdrawal of the state from direct housing provision and rental housing policies in general highly affected the housing conditions in Milan. The choices made by the central governments in this period “were for the most part based on the implicit assumption that housing was no longer a priority item on the agenda of the public sector” ([8]: 206): Widespread availability and the good average quality of the housing stock led housing specialists to believe that the time when government had to address issues either of net housing shortage or of severe lack of maintenance was now at a close. The areas of housing stress still existing were considered to be of a residual character. The public sector, or specific local-government initiatives, would take care of them. ([8]: 206)

It is a crucial step for Italian housing policies and for the definitive shift toward a private- and market-led dual housing system. The reforms of the Italian housing system enacted in the 1990s led to uneasy consequences. Since the 1990s housing affordability problems have grown both in private and in the public rental sector, though for different reasons. On the private side of the supply, deregulation paved the way to a relevant climb of the rental level, which reflected the massive increase in housing prices during the last construction boom in the period 1995–2008—also a period of important migration flows that invested above all northern cities like Milan [14]. On the PH side, while the right to buy allowed social tenants that were more better off to exit the rental sector and enter homeownership, many poor households under eviction notice had a privileged way into PH through emergency allocations. In the private sector, however, affordability problems became pervasive: the share of those who paid more than 20% of their income in rent grew from 37% in 1995 to 73.7% in 2014 in the private rental sector, from 10 to 20% within PH tenants [36].

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Overall, households in the rental sector that paid more than 30% of their income passed from 16% in 1993 to 35% in 2014 and the share of Italian lower income households paying more than 40% of their income for housing grew from 27,6% in 2009 to 34,8% in 2019 [60]. Milan has seen high proportions of the population shifting from rent to homeownership, even with a higher share of households that still live in the rental sector than the Italian average. Deregulation of the private rental sector implemented by the central government had a direct impact on the Milanese housing system, destabilizing the housing situation of most households, and exposing them to steep rent increases in a moment of rising housing prices and risk of eviction [8]. At present, rents in Milan have become unaffordable, not only for the poor or those with precarious incomes, but also for the lower professional categories and the salary of an average blue and white collar employee allows neither purchase nor rent at sustainable costs within the municipal perimeter. The main income support scheme, Reddito di cittadinanza, directly controlled by central government structures and targeting mainly poor households, is currently being dismantled. Even if the dimension of the support measure is not very big in Milan, covering only around 2.4% of households, it has the potential to profoundly affect housing affordability for lower income households, both in the public and private rental sector—though excluding recent immigrants and the many who live in informal or “black” accommodations (without a regular contract). However, the current institutional pathway is moving away from such measure. Similarly, funding for housing allowances is decided at the national level and distributed by the regions but it does not represent a stabilizing factor due to insecurity of funding and low level of take up and is currently being defunded. These policies are mainly designed at the national level, sometimes with the mediation of Regions. Active land policies, instead, since Law 167/1962—in the form of compulsory purchase at below-market price—have represented the main instrument for public administrations to promote public and affordable housing and mitigate the impact of ULR on housing costs. However, since compulsory purchase at below-market price had become unfeasible, active land policies weakened. For some time, a “scraping” activity from undeveloped PEEP plans and other municipal land assets allowed a small production of PH and affordable housing production through hybridization with nonprofit actors (mainly cooperatives and investment funds). However, the fact of concentrating active land policies on publicly owned plots—often the remaining of unfinished urbanization and localized in peripheral areas—and not on privately owned developable land, confirmed that active land policies in Milan have a small influence on ULR redistribution. Recently, passive land policy instruments in the form of IZ policies have become the most prominent instrument for the municipality to promote affordable housing. Meanwhile, new construction of PH has de facto disappeared from the panorama: IZ in Milan only mandates to reserve 5% of new development for PH (social rent), but this share can be “monetized”, or substituted with a transfer of money to the municipality. Additionally, the halt in the direct provision of PH coincided with the unfolding of a broader process of valorization of land assets, especially from the railway

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and defense sectors [59] but even from municipalities and other public administrations. This process is triggered by complex national law-making processes entailing the creation of the state’s Asset Management Agency (Agenzia del Demanio) and other policies to incentivize public authorities to dismiss public assets that do not take housing objectives into account [30]. Municipalities are pushed to sell out the available assets to meet yearly budgets, and space for housing policies is highly compressed in the process of negotiation of the sale price. In Milan, consequences of national decisions have been sharpened by some local specificities. One is represented by the significant real estate acceleration trends observed over the very last years. While most of Italy has seen a general decline of housing prices, some parts of the city have seen a strong increase in land and housing prices, coherent to that of other global cities. The withdrawal of national housing policies motivated also by declining housing prices and the weakening of active land policies have considerably reduced the margins of action of local authorities. Milan is also characterized by an important metropolitan dimension, which can be seen as an “escape valve” of the housing system: commuting has made it possible for significant parts of the population to find cheaper and more adequate housing out of the core municipality. However, if the spillover effect has been partly induced by the emergence of a middle-class characterized by suburban housing preferences and car ownership, for many lower income households it has become a necessity induced by high housing prices which entails an undesired commuting cost. In the preliminary document for the Territorial Government Plan of 2006, it is observed that: [between 1984 and 2006, note by the author] commuting made by residents outside Milan moving into the city increased 55% due to people who have moved their residence to the hinterland while keeping their jobs in Milan. […] The main reason for the shift in demand away from the core is the prices per square meter recorded in Milan, with an increase in prices per square meter from 2003 to 2004 of more than 10% almost everywhere. It is evident from the above that the continuous exchange flows between Milan and its urban region and its urban region require a broader view beyond the municipal boundaries to understand and, consequently, govern many of the phenomena affecting Milan. ([19]: 13–14; translation by the author)

Despite this call, since the end of CIMEP there has been no specific actor to coordinate land policy instruments at the intersection between housing policies and spatial planning at the level of MCM, and the absence of a competent housing authority at the metropolitan level has led to rather uncoordinated spatial planning of local housing policies (Fig. 5.8). Although improved by the extension of the local railway system, public transport is still mainly concentrated in the core municipality. After the experience of the CIMEP—in any case limited in dimension—there is no form of “transcalar governance” in housing policies at the metropolitan level [1]. In conclusion, the governance system of Milan is characterized by a fragmented approach to housing affordability, composed of a fragmented systems of policies based on a national policy framework that is not always able to tackle local conditions, with an indirect impact on affordability and no strong connection to strategic urban planning (e.g., regarding transportation) to realize a long-term supply of affordable housing—especially when considering the metropolitan level. In the Milanese

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Fig. 5.8 The governance framework of housing affordability in Milan (Source Elaboration by the author)

system, affordability problems are not directly tackled at the root of the ULR issue through land policies. Moreover, the integration between housing supply and other demand-side welfare measures (e.g., Reddito di cittadinanza or housing allowances) is quite weak and currently being dismantled by national governments. In this respect, it is useful to notice that PH in Italy is in fact a demand-side welfare measure, assuring cost-to-income affordability to tenants, and not a cost-rent one. While this entails quite affordable conditions for PH tenants, without compensation it jeopardizes the economic model of PH management. A similar problem affects undivided cooperatives, in which rents are negotiated with tenants (in the absence of a framework legislation) and tend to be too low to allow the sector to be maintained, not to speak of making it flourish in the context of high land prices. A historically strong tradition of PH policies and hybridization with the nonprofit (mainly cooperative) sector in the post-WWII period has left rather small heritage, due to privatization mechanisms inherent to the policy design or introduced later. The cutback of subsidization mechanisms and the weakening of active land policies have practically dried out social housing policy and only few actors have been able to survive undertaking market developments. The decision to create a new set of actors, the Integrated System of Funds, has further fragmented housing policy. Finally, a completely liberalized private rental sector, dominated by short term contracts (with a very limited amount of canone concordato contracts), puts Milanese tenants at risk of rent hikes and eviction.

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Part III

Policies and Conditions For More Affordable Cities

Chapter 6

Affordability Governance in Vienna and Milan

6.1 Housing Affordability in the Two Housing Regimes of Vienna and Milan 6.1.1 The Mix of Policies, Actors and of Conceptualizations of Affordability Involved Following the scheme by Czichke and Van Bortel [1], we can identify similarities and differences in the two housing systems and in the affordability conceptualization involved the different segmentation of rental housing (Figs. 4.5 and 5.7). Firstly, the relevance of rental housing in the two cases represents a clear difference (80% in Vienna and 29% in Milan). Within rental housing, we can notice a similar relative weight of public and municipal housing which in the two systems, representing around one third of rental housing. However, there is a big difference in the conceptualization of affordability in the determination of rents in public housing: this regards the “social dimension” of public housing, its role in the housing regime and its relation with other policy domains in the welfare system—such as housing allowances and income support. The operationalization of housing affordability has a constitutive influence on the attitude of housing policies to target beneficiaries with measures that are proportionate to their need and distributed in an effective and equal way [2]. Considering PH in Milan and MH in Vienna—though overlooking important differences in the income structure and the situation of housing need in the two cities—allows to trace important differences (Table 6.1). PH in Italy provides housing at a “social rent” (canone sociale) regulated by Regional Laws which operationalize some general principles based on national legislation, including that of cost-to-income affordability (see Chap. 5). The mean social rent for ALER (one of the two relevant providers) in the city of Milan in 2019 was 144 e/month, the median was 121 e/month [3]. The price difference between the public and the private rental markets is substantial (and significantly larger than in Vienna, the average rent (without utilities) of a public apartment in Lombardy is © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 M. Peverini, Promoting Rental Housing Affordability in European Cities, PoliMI SpringerBriefs, https://doi.org/10.1007/978-3-031-43692-5_6

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Table 6.1 Comparison of MH and public housing in the two systems, at present (Source Elaboration by the author) Policy

Main actors involved

VIENNA Municipal housing

Dimension/scale and space

Affordability approach

Effect on the local housing system

Wiener Wohnen Big—220.000 dwellings (22% of total) Pepper potted

Cost-rent affordability (7,64 e/m2 gross)

Stabilization of sitting tenants (unlimited contracts), accessible to low income households in housing need

VIENNA (policy layering) New municipal housing

Wiener Wohnen, Small—Few thousand Wohnfonds_ dwellings Wien Only in recent developments, well connected

Cost-rent affordability (7,64 e/m2 gross)

Accessible to low income households in housing need (no down payment, unlimited contracts)

MILAN Public housing

Municipal department for housing (but management by Metropolitane Milanesi) ALER Milano

Rent calculated via cost to income (share from 14 to 25% depending on tenant’s income) On average 0,9 e/m2

Stabilization of sitting tenants (unlimited contracts), accessible to low income households in housing need but low allocation rate in comparison to waiting lists

Big in the core municipality: 57.841 dwellings (10% of total), managed by: Metropolitane Milanesi (23.342) dwellings and ALER Milano (34.498 dwellings) Less relevant in the rest of the MCM: 29.159 dwellings (with significant concentration in some municipalities)

around 0,9 e/m2 per month, compared with an average market rent of 6,1 e/m2 per month—a value that is much higher in Milan [4, 5]—and also well below rents in the affordable housing segment [6]. The median incidence of housing costs on the income of tenants is then respectively 16% and 21,4% [6]. If this procedure theoretically produces cost-to-income affordable outcomes, it has two kinds of implications. The first implication regards the economic sustainability of PH providers—framed as “public economic entities” and shaped as companies with autonomously balanced budgets, in charge of the PH stock. Without economic compensation, the procedure jeopardizes the economic sustainability of PH providers, mainly due to allocation criteria and structural housing needs of the most vulnerable parts of the population. As of today, ALER Milan calculates that 43% of the tenants are in the “protection” area, paying a rent that is averagely 60 e per month, with a burden for the agency— calculated as the difference between the average rent in the “permanence” area—of 56,6 million e per year ([7]: 4). Privatization is adopted to compensate this burden: ALER Milano planned to receive a revenue of around 54,4 millione from the sale of

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part of its owned asset in the same year ([7]: 57). In 2007 the Italian Court of Audit (Corte dei Conti) stated that: the public housing system as a whole […] has not yet identified solutions to some fundamental problems, relative above all to the necessity to identify the subjects who must take on the “social cost” of public housing, and of predisposing the means to do so, within management criteria aimed at ensuring the financial sustainability of management. ([8]: 68, translation by the author)

Notwithstanding the calculation method of social rent, there is an uneven distribution of the incidence of housing costs on incomes that penalizes lower incomes. Tenants in PH have particularly low incomes—in 2021 40,5% of tenants of ALER Milano were in the area of “protection” (0–9.000 e income), 30,2% in the area of “access” (9.000 e–14.000 e). For them, the sum of minimum rent and condominium fees represents a very high amount ([3]: 51). In the absence of a residual income affordability metric, the mitigation of the housing cost burden is still partly transferred to public policies of housing allowances and income support. The main affordability concept adopted in the Viennese governance system is instead clearly connected to the supply in terms of cost-rent approach. Municipal housing is no exception: rents are charged regardless of the income. The calculation of rents in MH in Vienna has a similar procedure to that of rent controlled private rental housing in Austria. Different rent control rules apply to municipal dwellings according to the date of contracts (which are time-unlimited), following the partial deregulation of rent control that happened in Austria in the 1980s and beginning of the 1990s [9]. Rent calculation in MH is based: for older contracts on a dwelling’s equipment standard—an indicator of the quality of the dwelling with four categories from highest to lowest quality; and for newer contracts on a benchmark rent setting system (see Chap. 4) [9]. Average rents for MH in Vienna are around 7 e/m2 per month (including condominium fees, such as water and waste and 10% VAT), comparable to rents in the subsidized housing segment and are lower than market rents—average rents in the private rental market range between 8,5 and 11 e/m2 per month [10, 11]. Rents in MH in Vienna are not adjusted to the income of beneficiaries and affordability is supposedly considered in the allocation of MH. A spokesperson of Wiener Wohnen stated that over 20% of municipal tenants pays housing costs that exceed 35% of their net household income.1 The reduction of the rent burden in those cases is left to social policies for income support, received by around 8% of the population, or housing allowances. On the website of Wiener Wohnen one can read the dwelling category we offer you depends on the rent you can afford to pay. On average, you can expect the following costs: for a single room dwelling, at least 300 e rent; for a two-rooms dwelling at least 450 e rent; for a three-rooms dwelling at least 650 erent; for a four-rooms dwelling at least 750 e rent […] The City of Vienna supports low income people through housing allowance. (translation by the author) 1

Christian Schantl, head of international relations at Wiener Wohnen. The citation refers to a speech he delivered at a public online talk on 05/12/2021 (Source https://fondazionefeltrinelli.it/ eventi/citta-e-territori-12-14-maggio-per-il-ciclo-citta-visibili-finiti/, from 37:35 on, accessed 02/ 15/2021).

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A relevant share of municipal tenants in Vienna pays a rent that is over 30% of the income. On the contrary, the Italian PH sector is based on a cost-to-income affordability measure—charging percentages which are adjusted to the income—and acts more as a demand-side measure than as a supply-side one. In the Milanese PH, rents are generally proportioned to the incomes of tenants. In other words, PH in Milan shall be considered a demand-side affordability measure—in the context of rather weak measures of demand-side support to the payment of rent—that entails a social cost for the PH providers: due to the process of residualization and the relatively low incomes of tenants, rents of PH in Milan end up being much lower than the market and economically unsustainable for the providers. Instead, MH rents in Vienna are related to supply-side affordability operationalization—rents are calculated according to a rent control and below-the-market approach but are similar to cost-covering rents— that do not provide a reduction of rents proportioned to the income of tenants. This is coherent with the fact that the Viennese rental market tends to be an integrated one where differences in rent levels between the segments of social and affordable housing are blurred [12] and long-term policies aimed to also enhance social mixing within MH which usually tends to oppose a (although incomplete) against the residualization process [11]. In other words, MH follows a supply-side concept of affordability, while demand-side affordability is operationalized somewhere else in the housing regime, i.e., in demand-side social welfare measures. This entails that MH tends to be more economically sustainable for the providers, but tenants with lower incomes can have a high incidence of rents. Concerning hybrid actors (Table 6.2), for the Austrian LPH sector, cost rent is regulated in a strict way by a federal law, and is supervised by a unique umbrella organization, GBV. The constellation of Italian affordable housing actors does not actually have a clear operative framework or a unique umbrella organization. Additionally, these actors are characterized by partly diverging views over priorities and instruments. The category of social dwelling (alloggio sociale) is considered too broad, referring to the below market concept rather than the cost rent one, and it does not set a rent calculation mechanism, while each actor has a different financing and business model reflected by different policy priorities. The competence to define tenure and rents of subsidized housing projects lays on locally based instruments, such as the public–private development agreement (convenzione), leading to multiple configurations. The maximum subsidized rent in Milan is quite high (net rent of 10.4 e/m2 per month), and in most cases this rent control expires after some years and dwellings can usually be privatized and later marketized. A big part of the subsidized housing stock produced in Italy is nowadays commodified, either in homeownership or in the market (for sale or rent at market level). The Austrian federal law for LPH, instead, creates the condition for permanent decommodification of the subsidized housing stock, so that rents remain by the time below the market. Concerning rent control (Table 6.3): rent control on the private rental sector in Vienna is not hooked on incomes and has the result of creating a large below-market segment that tends to be quite affordable for sitting tenants, also thanks to unlimited contracts. The only form of rent control on the private sector in Italy, the agreed rent (canone concordato), is based on local agreements among various stakeholders

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Table 6.2 Comparison of subsidized housing in the two systems, at present (Source Elaboration by the author) Policy

Main actors involved

Dimension/scale and space

Affordability approach

Effect on the local housing system

VIENNA Limited profit housing

LPH associations and GBV (mainly), Housing dpt. (MA50), Wohnfonds_Wien

Big—200.000 dwellings (20% of total) Spread in peripheral and suburban districts, well connected

Cost-rent affordability (7.73 e/m2 per month gross)

Stabilization of sitting tenants (unlimited contracts) accessible to middle income households (high down payment)

VIENNA LPH associations (policy layering) and GBV “Smart” housing (mainly), Housing dpt. (MA50), Wohnfonds_Wien

Small—Few thousand dwellings Only in recent developments, well connected

Cost-rent affordability (7.73 e/m2 per month gross)

Accessible to low income households in housing need (low down payment, unlimited contracts)

MILAN ERS for rent, Subsidized housing via development agreements (Convenzionata) and Housing sociale

In Milan Municipality small—exact dimension unknown: –Divided housing coops. have 7.000 dwellings (1% of total) –Around 2.192 rental dwellings produced between 2010 and 2019 In Metrop. City of Milan—exact dimension unknown, important in some municipalities Spread in peripheral and suburban districts, not always well connected

Below market for old contracts (rents are seldom updated), Cost rent for new contracts (usually moderate or agreed rents) Moderate rents in new contracts between 6,7 and 10 e/m2 per month net

Stabilization of sitting tenants, accessible to low- and middle-income households (small down payment) but: –for coops., low allocation rate in comparison to waiting lists (unlimited contracts) –for new subsidized housing, limited contracts and often purchase option

Multiple actors: Municipality (Planning dept. in coordination with Housing dept.) Housing cooperatives, commercial developers, Integrated system of funds (SIF)

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which generally result in a below-market segment; however, it is on a voluntary basis and at present in Milan it has a negligible quantitative impact on the general housing outcomes. Social welfare policies in both cases are dimly connected to housing conditions. In both cases income support schemes (Table 6.4) include an additional benefit with a capped amount for those who can demonstrate rental expenses, but this is not hooked on cost-to-income share of residual income. Housing allowances in both cases include some cost-to-income affordability metric in the calculation, but the allowance is capped to some “reasonable” level in the case of Vienna and due to scarce funding in the case of Milan. In general, housing welfare policies tend to be more coordinated in Vienna, where more services and benefits are simultaneously granted to those that qualify for housing support, than in Milan, where services and benefits are separately managed and accessible via separate mechanisms—and housing allowance is as a one-time emergency measure. Concerning income support, it is a social welfare policy managed in Vienna by a municipally owned company, the Vienna Social Fund (Fond Soziales Wien) while in Milan it is distributed directly by the central government. In Vienna, income support represents a structural pillar of the governance of affordability—as shown, cost-rent pricing in municipal housing requires demand-side support to reduce the cost burden for lower incomes. In Milan, income support was recently adopted by the central government and is currently being dismantled. Residual income affordability is not directly employed in policies Table 6.3 Comparison of rent control in the two systems, at present (Source Elaboration by the author) Policy

Main actors involved

Dimension/scale and space

Affordability approach

Effect on the local housing system

VIENNA Rent control

Federal government

Big—220.000 dwellings (22% of total) Mainly between the Ring and the Gürtel

Below market, controlled (8,6 e/m2 per month gross)

Stabilization of sitting tenants (unlimited contracts) but in practice inaccessible to new tenants

MILAN Agreed rent (Canone Concordato)

Negotiation between local tenants’ unions and landlords’ associations Tax benefits and incentives by central government and municipality, coordinated by the agency Milano Abitare

Small—in 2020 only 1.626 dwellings rented in canone concordato

Averagely 9 e/ m2 per month gross

Accessible to low-medium income households in (no down payment, unlimited contracts) but limited contracts (3 years + 2 years renewal)

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in neither of the two cities, even though the idea that housing costs should leave enough resources to live a decent life is generally present. This work did not analyze in detail the panel of foundational goods and services and the relation between housing expenditures and the possibility of accessing them in adequate quantity and quality. However, there is some evidence that high housing costs in Italy induce a big part of absolute poverty [13], and that due to low income of tenants also social rent calculation in PH—based on cost-to-income metrics—does not actually guarantee a minimum residual income corresponding to the absolute poverty line [3] (Table 6.5). Rent control still has a quantitatively important weight in the private rental sector of Vienna, where it stabilizes the housing conditions of many sitting tenants with old contracts, while it is a very marginal instrument in Italy (and especially in Milan). In both cases, rent control depends on regulations at the national level. Both cities have created agencies—Wohndrehscheibe in Vienna and Milano Abitare in Milan— to foster the integration of lower income households in an increasingly unaffordable private rental sector. However, in both cases these agencies have very weak financial and policy instruments to improve affordability in the private rental sector. Both systems have introduced housing allowances as a politically more feasible policy instrument to mitigate affordability problems in the private rental sector. The relation between housing and transportation costs is in general more difficult to analyze, since there are no ready-made analytical sources collecting and elaborating these data in the two contexts. Some qualitative considerations can however be done based on the two case studies. Residential development has been led by public and subsidized housing throughout most of the twentieth century in Vienna, which resulted in a pepper potted distribution of public and affordable housing quite strongly integrated with the public transportation system. Then, the city of Vienna has contained affordable housing within the city borders and, with a powerful and diffused public transit network, it has implemented an effective policy of transportoriented development through which affordable housing is planned together with metro lines extension. Milan, instead, has grown extensively toward becoming a city-region, with important population transfers to outer municipalities. Public and affordable housing development in Milan that took place in the post-WWII period was mostly located in peripheral areas of the city and spread in the municipalities of the MCM. By the time, the residential weight of the hinterland increased strongly. The development of the Milanese public transportation network, despite major improvements and increased extensions to the hinterland municipalities, could not keep the pace of housing development [14]. Further development of the public transportation network during the late twentieth century could only partially recover this disadvantage. Additionally, there is an important difference regarding the infrastructural network of the two cities: while the core public transportation network of the two cities is comparable in dimension, the suburban railway of Milan network seems under-dimensioned, also considering higher inward commuting (Table 6.6). These figures open important questions on the dimension of housing and transportation affordability in the MCM. This work has not investigated this dimension, but the pieces of information collected allow to pinpoint the criticality of this predominantly spatial dimension of unaffordability for the Milanese context. There is wide

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Table 6.4 Comparison of minimum income support schemes in the two systems, at present (Source Elaboration by the author) Policy

Main actors Dimension/ involved scale and space

Affordability approach

Effect on the local housing system

VIENNA Minimum income support scheme (Mindestsicherung), with Mobile pass

Vienna social fund (Fond Soziales Wien)

Minimum income (monthly poverty line: 949,46 e for singles, 712,10 e per person for couples and additional 256,35 e for each child) + Households that are in rental accommodation receive a rental benefit (up to 237,36 e for singles, 178,02 e per person)

Stabilization of the income situation of low income households below the poverty line which includes a part for rental expenses + Allowances for public transportation, leisure, and education

MILAN Minimum income support (Reddito di Cittadinanza)

Central Medium—in government 2020 39.752 households (2,4%) received it the MCM In 2019, 15.723 households received it (around 2%) in the core municipality of Milan Exact budget unknown The share of households that receive the rental benefit in Lombardy is 60%, with an average support of 149 e

Minimum income (monthly poverty line: below 6.000 e or 9.360 e for household in the rental sector) Households that are in rental accommodation or pay a mortgage receive a maximum of 280 e more for the rent

Accessible to low income households, especially when live in the rental sector (the rental benefit is excluded in case of informal housing situation)

Big—155.747 recipients and 649 mln e budget (2019)** Aspatial

acceptance that the issue of commuting in Milan has increasingly been caused by high housing prices [14]. Additionally, this entails a probably growing phenomenon of affordability-driven commuting poverty, poverty mixed or induced by commuting time and cost (to reach the workplace or school), in turn induced by the search for more affordable housing. The administrative level that could govern commuting in Milan, the MCM, has no direct competence on housing: this can be highlighted as one of the main critical points in the affordability governance system of Milan in

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Table 6.5 Comparison of housing allowances in the two systems, at present (Source Elaboration by the author) Policy

Main actors involved

Dimension/scale and space

Affordability approach

Effect on the local housing system

VIENNA Housing allowances (Wohnbeihilfe)

Housing dpt. (MA50)

Medium—39.655 recipients and 59,5 mln e budget (2019)** Aspatial

Cost to income, based on a benchmark standard Av. 1.500 e/year

Reduction of the housing expenses of lower middle income households not eligible for Mindestsicherung

MILAN Housing allowances (Fondo sostegno locazioni)

Managed by the Small—in 2019 Regions, 1.800 recipients, distributed on 6,8 mln e budget tendering by the municipalities (Housing dept. in coordination with Social dept.)

Cost to income, based on a benchmark standard Av. 3.700 e/year

Reduction of the housing expenses of lower middle income households (no cross check with Reddito di Cittadinanza) With regular rental contract

Table 6.6 The public transportation networks of Milan and Vienna (Source Elaboration by the author on [15, 16]) Vienna*

Milan**

km2

181 km2

Surface (core municipality)

414

Surface (larger network)

Unknown

Over 1.575 km2 (MCM)

Metro network (n. lines)

5

4 (+ 1 under construction)

Metro network (km)

87 km

96,8 km

Tramway network (n. lines)

28

20

Tramway network (km)

175 km

181,8 km

Bus network (n. lines)

131

134

Bus network (km)

860 km

1200 km

Cost of yearly ticket (regular adult): only core municipality

365 e

330 e

Cost of yearly ticket (regular adult): largest network

915 e

761 e

Suburban railway network (km)

650 km

403 km

Inward daily commuters (no. of people)°

275.000

475.000

* Source

Wiener Linien, Betriebsangaben 2019; **Source ATM, Carta della Mobilità 2017. °Includes students

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comparison to Vienna. Large scale public-led development in Vienna on banked land is programmatically linked to investment in the public transit network, e.g.: for the satellite town of Seestadt Aspern, a metro line was extended by around 10 km; the ongoing public-led greenfield development of Rothneusiedl, situated at the southern administrative border of the city, is also planned jointly with the extension of a metro line. In contrast, the recent Milanese land policies—limited to the municipal border—of “scraping” the reserve of undeveloped municipal land for new public and affordable housing development show a rather scattered pattern with no coherence to the provision of efficient public transportation. Only randomly some plots are already well served. Spatial filtering of low-income households has happened quite extensively in Milan, where the localization of public housing and the geography of ULR has exacerbated the expenses-location tradeoff and determined a peripheralization of poverty. In Vienna, instead, land policies and a pepper-potted localization of public and affordable housing has lowered the expenses-location tradeoff, even though ULR still has a considerable effect through a liberalized private rental sector. Concerning housing accessibility, in planning and housing policies in Vienna, there is a strong stress on rent levels but also on the quantity of new subsidized dwellings supplied. Indeed, Vienna is facing a much stronger immigration pressure than Milan. In the past, PEEP plans in Milan were also strongly focused on quantitative objectives but for various reasons goals were never met and actual production was always much smaller [17, 18]. However, since the last comprehensive national PH program, quantitative objectives for affordable rental housing were drastically cut. The active land policy program enacted in 2005 by the Municipality of Milan aimed at creating around 15.000 new dwellings, but its quantitative implementation reached a much lower number. The last important national investment in new affordable housing, with the creation of the Integrated System of Funds kickstarted in 2008, called for 20.000 new dwellings throughout Italy, only part of which in rental tenures. This small program compared to previous levels of public and affordable housing production testifies how public administrations’ involvement on the topic was gradually reducing in Italy. The biggest difference lies probably in the domain of spatial planning and especially land policies for affordable housing (Table 6.7). In Vienna, land policy is managed by the quasi-public agency Wohnfonds, which has the mandate to implement PLB and organize the development. It does this by exercising direct and indirect powers: land procurement is done as other actors in the land market, but with a privileged position thanks to the connection to the spatial planning department. The IZ rule it has extended this influence to private developments. In Milan, municipal departments for housing and urban planning have been responsible for finding land for affordable housing with the PEEP law. However, as the law was judicially displaced few years later, acquisition of land (now at market rate) depended on decreasing funding availability for the municipality and no spatial strategy was in place. Firstly, land was bought in marginal areas with cheaper land value, and then, since the 1990s, no purchase was done anymore. With the end of CIMEP, additionally, no coordination for urban plans for affordable housing happens at the metropolitan scale. Recently, the Municipality of

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Table 6.7 Comparison of land policies in the two systems, at present (Source Elaboration by the author) Policy

Main actors involved

Dimension/scale and space

Affordability approach

Effect on the local housing system

VIENNA Land procurement, or land banking

Wohnfonds_ Wien

Big—3,2mln m2 of developable land Mainly in suburban areas

Cost-rent and transportation affordability

Provision of land capped at 188e/ m2 realized living space to LPH associations and MH

VIENNA (Policy layering) Inclusionary zoning and requirements on private development

Spatial planning department (MA18), Wohnfonds_ Wien

Big—exact dimension unknown Mainly in peripheral and suburban areas

Cost-rent and transportation affordability

Provision of land capped at 188e/ m2 realized living space to LPH associations and MH

MILAN Inclusionary zoning and requirements on private development (e.g., Reinventing Cities program)

Municipality (Planning dept. in coordination with Housing dept.) Housing cooperatives, commercial developers, Integrated system of funds (SIF)

Exact dimension still unknown 20% moderate rent, student housing and “co-housing” 5% social rent. Possibility to “monetize” the share

Cost to income As above for the social rent part Cost rent for the rest, around 10,4 e/m2 per month net

MILAN (policy layering) Agreement program (e.g., redevelopment of Railway Yards)

Municipality (Planning dept. in coordination with Housing dept.) FS Sistemi Urbani, Commercial Developers, [Housing coops., Integrated system of funds (SIF) for part of the affordable housing]

Small—moderate rent, student housing and “co-housing” (around 750 dwellings) and social rent (around 400 dwellings). Possibility to “monetize” the share

Cost to income for the social rent part Cost rent for the rest, around 10,4 e/m2 per month net

MILAN (conversion of previous policy, now inactive) PEEP Plans (Piani di Edilizia Economica e Popolare

Municipalities and CIMEP, Public agencies for PH, housing coops

Big (between 40 Cost-rent and and 70% of the cost-to-income expected housing affordability demand), but now exhausted

Accessible to low incomes households in housing need but low allocation rate in comparison to waiting lists As above for the rest

Provision of land free of charge for PH and at low price for affordable housing

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Milan implemented active land policy by scraping municipally owned undeveloped plots. Since then, the Milanese municipality has only been present with passive land policies of IZ, and private landlords and developers have a relevant influence in the negotiation of housing objectives. In Vienna, housing policies and spatial planning can be considered strategically connected—with a relevant actor, Wohnfonds, “occupying” the in-between space, whereas in Milan they are rather weakly connected. This is crucial for the hybridization of private actors. As the case study shows, the nonprofit housing sector is deeply embedded in the Viennese governance system, with LPH acting as a major principle of housing provision. Housing governance in Vienna is based on a corporatist mode, where LPH associations represent a strong part of the policy implementation system and can be considered a “lengthened arm of housing policy”—working on a social market basis for goals established by public action ([19]: 11). The involvement of LPH associations in housing policies—i.e., obtaining land and subsidies—has acquired some characteristics of a more market based model since the 1990s, but the city maintains a leading and steering role in a “hybrid model where hierarchical, corporatist and market modes of governance are intermingled” ([20]: 262). In Milan, PH languishes and the absence of active land policies allows neither corporatist nor market modes of direct involvement of the nonprofit sector in urban development: nonprofit actors rely face a very heated land market and the influence of the municipality on determining the amount of affordable dwellings is quite low. Finally, in Vienna, since 2009 the developer competition has included the criterion (or “pillar”) of social sustainability, strengthening the connection between social policies and spatial planning. Under this umbrella concept, the municipality of Vienna has tried to foster innovation in housing production aiming at including, among other things, social spaces and services in affordable housing neighborhoods.

6.2 Patterns of Institutional Change and Inertia in the Two Governance Systems In both cities, path dependence has a role in shaping the governance system of housing affordability. In Vienna, the trajectory of strong public intervention into the field of housing was established with the Red Vienna and influenced the subsequent development of the Viennese policy system. Here path dependence is clearly present and helps explain the actual arrangement of actors and policies. One of the key instruments of the actual Viennese housing governance system, municipal PLB, was kickstarted at the beginning of the Red Vienna period and laid the basis for MH construction and subsequent hybridization of the LPH sector. The City of Vienna could have in many different moments withdrawn from PLB and sold its land stock to private developers. Instead, it created the agency Wohnfonds in 1984, a crucial actor to manage and enlarge the stock of banked land, and therefore produce affordable housing. This perseverance can be explained by the positive feedback that PLB provided to

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the municipality in terms of room for maneuver for the implementation of housing policies strongly based on a public and hybrid sector. The historical marginalization of private housing developers also established a path dependent trajectory, in that the municipality could act as the major—and rather undisturbed—actor in the land market. Finally, the high share of households in the rental sector has ì also created a path dependent trajectory: similarly to a pension scheme, high numbers of citizens see affordable rental housing provided by the City of Vienna or by LPH associations as a service that they can access now or in the future, also intergenerationally. Given that this possibility depends on the ability to keep high shares of public and subsidized housing on the total of new production, high responsibility is conferred to public and hybrid actors to make affordable housing available to a high number of people and gives them a strong political justification to intervene. The mandate to maintain good levels of rental housing affordability also creates path dependence in the local political arena, with the ruling social democratic party relying and simultaneously depending on its ability to deliver affordable housing [21]. However, it should be noted that the Viennese system also creates increasingly exclusionary mechanisms that tend to privilege long term residents and “insiders” over newcomers and “outsiders” [11]. These mechanisms depend on change of external conditions—e.g., immigration, accession to the EU, deregulation of rent control—but also on the local political system and its capacity to adapt and enlarge housing welfare to new social groups with emerging needs. In Milan, housing cooperatives and PH agencies have relied on quite stable subsidization mechanisms provided by the state, including vast amounts of cheap land provided by PEEP plans, which fostered provision of affordable rental housing— even if marginal in comparison to homeownership. As in Vienna, this system was dependent on the continuous expansion of the stock, which actually occurred until the early 1990s. The diffusion of homeownership—also pushed by purchase schemes of public and subsidized housing and fiscal welfare—gradually eroded and marginalized the social base that supported these policies, breaking existing path dependencies and dualizing the system while Vienna remained an integrated rental market [12]. Purchase options on public dwellings established a trajectory that led to a sharp reduction of the number of affordable rental dwellings in Milan. This and other tenure-biased policy mechanisms created the conditions for a sharp divide among those who own one house (or more than one), rather protected against rent hikes, and those who are exposed to rent hikes [22]. Public and hybrid actors traditionally involved in housing policies in Milan are still struggling with those trajectories of institutional change, having seen a reduction of their “guaranteed market share” after political displacements of direct funding sources and judicial conversion of active land policies by the Constitutional Court which made the planning mechanism of compulsory land purchase at below-market price legally unfeasible (and increased substantially the financial burden to buy land for public and affordable housing). Those changes “were for the most part based on the implicit assumption that housing was no longer a priority item on the agenda of the public sector” ([23]: 206). Instead, the main subsidization channel for the Viennese public and affordable housing sector, the housing tax, was never displaced [11]. The accession of Austria

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into the EU, however, provoked a critical juncture related to European state aid regulations, which contrasts with the traditional generalist character of the public and social housing offer. PLB in Vienna was also never displaced, but a drift occurred gradually with the reduction of available land and the increase in price expectation by the landlords due to increased competition by the private commercial sector. Additionally, the gradual deregulation of rent control of the private rental sector in Austria was partly complemented in Vienna by the investment into subsidized rental housing production, which is de facto permanently rent controlled. To sum up, the main difference in path dependencies are related to the tenure structure—with higher share of renters supporting interventionist policies in the rental sector—and to the land regime—a traditionally strong role of the City of Vienna in the land market provides a power to influence housing production that the municipality of Milan has lost. The main difference in institutional change is the reaction to important changes in the overarching context (political, economic, geographical) and to new policy conditions and housing needs. Both cities had to face the trends of retrenching and weakening welfare states that heavily destabilized housing policies. During the neoliberal turn, interest in providing affordable housing for the urban working class declined and the whole political economy of housing changed: housing provision started then to be increasingly shaped by market-oriented actors (often global and financial ones), and many government interventions to improve housing often fall short [24]. The neoliberal reconfiguration strongly affected both urban housing markets, with a reduction of the quantity of housing affordable to low-income households [25, 26]. The political demise of “quantitative” housing policy schemes (more affordable houses) in favor of “qualitative” measures (e.g., the upgrading of the stock, higher standards) explains some developments both in Vienna and Milan, but the reaction to it shapes a crucial difference. In Vienna, it was followed by a layering of new qualitative policies (i.e., urban renewal) to existing quantitative measures of affordable housing provision, while in Milan this has led to a displacement of the main policies enhancing access to housing.

6.3 The Role of Land Policies in Tackling Housing Affordability in the Two Systems Active land policies represent one of the main differences in the two governance systems. In Vienna, active land policies are the cornerstone of affordability governance: the vast PLB gives the municipality the power to actively influence affordability outcomes through a strict control on big parts of new housing development and avoiding commodification of big part of the new housing stock. Control is achieved through the subsidization rules combined with the stature of the limited profit sector, which guarantees permanent adhesion to the cost-rent rule, thereby prioritizing use value and treating housing as a foundational infrastructure of the city. The agency

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created by the City of Vienna to manage and enlarge the PLB, Wohnfonds, is a key actor in the governance system and a major player in the land market. PLB have never been developed in Italy, probably also because planning legislation relied on compulsory land purchase before it was declared unconstitutional. With its judicial displacement, municipalities lost the main available instrument to simultaneously govern affordability outcomes and ULR distribution in conditions of urban expansion. In Milan, there is no specific actor managing a PLB and practically no active land policy connected to housing is carried out. This major deficiency in the Milanese governance system hinders the possibility to actively influence affordability outcomes and jeopardize the actors that relied on land-related subsidization mechanisms. Land policies allow to curb ULR speculation from housing production even on market-based systems, leaving only a certain profit margin (this makes housing development more like other traditional industrial sectors and reduces rent hikes) and redistributing the captured value to low- and middle-income households through lower and controlled rents [27, 28]. Strong land policy allows the City of Vienna the capture of part of public value created by urban expansion and attractiveness—as infrastructural investment (e.g., on public transport) is channeled on public land. In Milan, compulsory land purchase at below-market price with PEEP plans allowed ULR capturing: the municipality used it extensively during the 1960s and the private sector started actively participating in affordable housing objectives. However, land purchase was rarely able to capture the ULR created through public investment, since purchased land was often situated in marginal areas far from infrastructures. Additionally, in Milan a shift can be observed from comprehensive planning—where the local authority could set a strategy combined with ULR capture and housing policies—to a negotiated “market-oriented” and “developer-driven planning with state support” ([29]: 6), where landowners and private commercial developers have a leading role. This also increasingly occurs in publicly owned land plots, as the former railway yards, sold to a private developer on auction aimed at maximizing the sale price. Big parts of the development gain is captured by the railway company and the developer with poor IZ requirements. Weak levels of decommodification of housing production and maximization of ULR have the effect of jeopardizing the possibility of influencing housing affordability levels. In this wake suburbanization to the hinterland acts as a “shadow” affordable housing policy in the absence of a planned provision of land for affordable housing in the core municipality.

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6.4 How “Grounded” on Affordability Are the Governance Systems of Milan and Vienna Milan and Vienna main economic hubs in their respective countries, producing relevant shares of the national GDP figures, attracting important population flows and public and private investment and experiencing strong market pressure in comparison to the rest of their respective countries. In other words, they experience strong dynamics of acceleration [30] reverberated in strong housing price and rent hikes, reflecting the growth of ULR. In both cities one can see neoliberal market-led trends operating in the housing system, but the extent to which they affect the housing regime and affordability outcomes is very different: the two cities differ in how “grounded” their governance systems are in the theme of housing affordability as their fundamental operating principles differ. The city of Vienna is keeping neoliberal trends away from a big part of the housing tenure (much more than Milan), becoming a globally relevant model of interventionist housing policy regime that succeeds providing affordable housing with over half of the total housing stock being either in the hands of the city or rent-controlled. Funding sources are important to maintain a stable affordability-oriented governance system. Vienna invests important sums of its self-governed budget in housing subsidization. However, policy integration is even more important. Policies tackling affordability according to different concepts (e.g., demand side vs supply side) tend to be more integrated in Vienna than in Milan, producing overall stronger stabilization effects. Above all, cost rent is implemented in public and affordable housing in a much more structured way in Vienna than in Milan, stabilizing a broad range of households with a sustainable financial model for providers. Cost-to-income metrics are (at least partly) integrated in housing allowances and income support. Through this two-tier mechanism, affordability conditions for Viennese tenants are much more stable than for Milanese tenants. This is achieved through a comprehensive strategy that integrates land policies and spatial planning with housing objectives, while social welfare policies fill the gap on the demand side. Milan, though featuring a relatively high share of PH for Italian standard (around 10% against a national share of 4%), does not show a comprehensive strategy such as that of Vienna, that unites planning to housing and social policies—pivoted around land policies—to control rents and affordability level. In Vienna there is a strategic welfare and planning approach explicitly (and effectively) targeting housing affordability. This reflected in actual housing outcomes and a much better “performance” in terms of lower rents and better affordability levels than other European cities [31] and in a more extensive safety net accompanying housing policies. Instead, Milan features a fragmented system of policies dominated by a market-led housing development within a fragmented net of housing, social and urban policies: fragmentation of policies—together with a general weakness of rental policies—exposes more directly the conditions of tenants to acceleration trends. Policy fragmentattion is a product of institutional change— displacement and conversion of policies in a process of disinvestment from rental housing [23]—but also of a shifting multilevel arrangement, involving socio-spatial

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stratification and spillover to the hinterland. This scalar process, however, is not mirrored by a coherent multilevel administrative arrangement. While Vienna is a rather self-contained city state with a municipal territory of 414 km2 , Milan is a small municipality (181 km2 ) with a large hinterland (1.394 km2 ) composed of 132 municipalities that are formally independent in administrative terms but substantially interdependent with the core. In this context, the hinterland tends to act as a clearinghouse, absorbing the segment of the demand that find the housing market of the core municipality unaffordable. This happens without enacting a coherent housing, social, transportation, and land-use policy that could rebalance and organize this phenomenon.

References 1. Czischke D, van Bortel G (2023) An exploration of concepts and polices on ‘affordable housing’ in England, Italy, Poland and The Netherlands. J Hous Built Environ 38:283–303. https://doi. org/10.1007/s10901-018-9598-1 2. Tosi A (2017) Le case dei poveri. È ancora possibile pensare un welfare abitativo? Mimesis, Milano 3. Polis Lombardia (2021) Supporto all’analisi e allo sviluppo delle politiche abitative ai fini del completamento della riforma dei servizi abitativi. Costo della locazione sociale. Research report 4. Federcasa, Nomisma (2020) Seconda edizione dell’Osservatorio di Edilizia Residenziale Pubblica; Unpublished presentation 5. Wolfgring C, Peverini M (2021) Housing the poor? Access and exclusion in the local housing systems of Vienna and Milan. Paper presented at the ENHR 2021 conference 6. Nomisma (2021) Milano inclusiva. La produzione di case in locazione a costi accessibili; Unpublished presentation 7. Lombardy Regional Observatory on the Housing Condition (2021) Rapporto Annuale Al Consiglio Regionale—Anno 2020 (Ai Sensi Dell’art. 46—Clausola Valutativa, Comma 2 Della Legge Regionale 8 Luglio 2016, N. 16—Disciplina Regionale Dei Servizi AbitativI 8. Italian Court of Audit (2007) Relazione sulla gestione dell’edilizia residenziale pubblica, Deliberazione n 10/2007 9. Kadi J (2015) Recommodifying housing in formerly “red” Vienna? Hous Theory Soc 32:247– 265. https://doi.org/10.1080/14036096.2015.1024885 10. Tockner L (2017) Mieten in Österreich und Wien 2008 bis 2016. Arbeiterkammer Wien 11. Friesenecker M, Kazepov Y (2021) Housing Vienna: the socio-spatial effects of inclusionary and exclusionary mechanisms of housing provision. Soc Incl 9:77–90. https://doi.org/10.17645/ si.v9i2.3837 12. Mundt A, Amann W (2009) Indicators of a unitary rental market in Austria. Housing Finance International, Winter: 35–44 13. Palvarini P (2010) Cara dolce casa. Come cambia la povertà in Italia dopo le spese abitative. In: Conference proceedings of the Terza conferenza annuale ESPAnet Italia 14. Camagni R, Gibelli MC, Rigamonti P (2010) I costi collettivi della città dispersa. Alinea, Firenze 15. City of Milan (2012) Analisi del pendolarismo per studio e per lavoro a Milano; Report 16. City of Vienna (2021) Wien in Zahlen, 2021 17. Oliva F (2002) L’urbanistica di Milano. Quel che resta dei piani urbanistici nella crescita e nella trasformazione della città. Con sei itinerari. Hoepli, Milano

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18. Campos Venuti G, Boatti A, Canevari A et al (1986) Un secolo di urbanistica a Milano. CLUP, Milano 19. Amann W, Jedelhauser J (2005) The Austrian system of social housing finance. In: Proceedings of the European real estate society (ERES) 20. Gluns D (2019) From plans to policies: local housing governance for the growing cities Vienna and Washington, D.C. Springer Fachmedien, Wiesbaden 21. Kadi J, Vollmer L, Stein S (2021) Post-neoliberal housing policy? Disentangling recent reforms in New York, Berlin and Vienna. Eur Urban Reg Stud 28:353–374. https://doi.org/10.1177/096 97764211003626 22. Annunziata S (2014) A quale titolo (di godimento)? In: Città tra sviluppo e declino. Un’agenda urbana per l’Italia. Donzelli, pp 149–168 23. Padovani L, Balchin P (1996) Italy. Housing policy in Europe. Routledge, London, pp 188–208 24. Jacobs K (2019) Neoliberal housing policy: an international perspective. Routledge, New York 25. Scanlon K, Whitehead C, Arrigoitia MF (2014) Social housing in Europe, 1st ed. WileyBlackwell, Chichester, West Sussex, United Kingdom 26. Kadi J, Musterd S (2015) Housing for the poor in a neo-liberalising just city: still affordable, but increasingly inaccessible. Tijdschr Voor Econ En Soc Geogr 106:246–262. https://doi.org/ 10.1111/tesg.12101 27. Camagni R (2016) Urban development and control on urban land rents. Ann Reg Sci 56:597– 615. https://doi.org/10.1007/s00168-015-0733-6 28. Haila (2015) Urban land rent: Singapore as a property state, 1. edizione. Wiley-Blackwell, Southern Gate, Chichester, West Sussex, UK 29. Lind H (2002) Market-oriented land-use planning: a conceptual analysis. Plan Mark 5 30. Engelen E, Froud J, Johal S et al (2017) The grounded city: from competitivity to the foundational economy. Camb J Reg Econ Soc 10:407–423. https://doi.org/10.1093/cjres/rsx016 31. Baron DH, Doan TBN, Kadi DJ et al (2021) Wohnungspolitik Und Wohnversorgung. Arbeitkammer Wien Stadtpunkte 37

Chapter 7

Addressing the Housing Affordability Crisis: Critical Nodes for Urban Policies and Research

7.1 Summary 7.1.1 Housing Affordability Between Outcome Indicator and Policy Objective Cities around the world are facing a particularly acute housing affordability crisis, with implications ranging from sharpening inequalities to spatial stratification of households. The rental sector is crucial in determining how inclusive or exclusive a housing regime is [1, 2], being it more inclusive to lower income households [3]. The affordability crisis affects especially households in the rental sector, generally more vulnerable and exposed to the acceleration of real estate values [4, 5]. Generally speaking, housing affordability is a concept that links the housing situation of households to their economic situation, referring to conditions of access to housing and the role of housing in determining poverty or wealth [6]. Affordability has the nature of outcome indicator [7] but also of policy framework. A critical review of academic and gray literature has found six main conceptualization of housing affordability, and relative metrics according to which housing is affordable (see Chap. 2). While much literature has debated which conceptualization should be used in research and policymaking, this book adopts a broad lens which encompasses all these conceptualizations of affordability. This broad conceptualization served as a theoretical basis for developing a reflection over the causes of affordability problems and creating a conceptual framework for the analysis of affordability-oriented policies. Affordability problems are mainly shaped by: • the dichotomy between market and use value of housing, exacerbated by a political economy in which housing is increasingly seen as a commodity and a financial vehicle rather than a foundational infrastructure for everyday life; • the contradictory position of attractive cities in the present territorial organization, in which people are attracted by better opportunities while generated value is appropriated through high housing costs; © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 M. Peverini, Promoting Rental Housing Affordability in European Cities, PoliMI SpringerBriefs, https://doi.org/10.1007/978-3-031-43692-5_7

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• the organization of national and local housing systems—characterized by tenure and ownership structure, specific modes of housing provision, cultural specificities—and of governance systems—the interplay of policies and actors which influence the above-mentioned factors. While highlighting the role of the scales and political economy in housing problems, this book has concentrated on the last point and has developed a reflection on how local housing systems and governance arrangements shape housing affordability outcomes. Building on the Foundational Economy [8] and the “grounded city” concept [4, 5], we can say that: • due to their role in the territorial organization, attractive cities produce a “value” that is collectively generated (ULR); • this value is transferred to housing prices and rent levels and charged on citizen and inhabitants; • depending on economic conditions, housing systems produce a distribution of ULR by creating certain conditions of affordability. As affordability issues are typical of market-oriented systems, public action is needed to mitigate unaffordable housing markets and “ground” cities on diffusely affordable housing conditions. Promoting rental housing affordability is not only about enlarging the supply of affordable housing, but also means coordinating a mix of policies and actors sometimes not directly associated with housing affordability, e.g., transportation or income support schemes. The analysis has concentrated on housing policies, social policies and spatial planning, and their intersections in Vienna and Milan, showing that policy instruments for the promotion of rental housing affordability are much more developed and stable in Vienna than in Milan. These two cities differ significantly for history, scale, and multilevel arrangement. Being aware the relevance of context, promoting affordability means to: • shift attention from the expansion of the supply to the redistribution of ULR and the implementation of an affordability-oriented land regime in the redevelopment of brownfield land; • enhance the policy mix by simultaneously targeting the various dimensions of affordability and improving mechanisms of integration of different affodabilityoriented policies; • create a clear and stable affordability-oriented policy framework for the hybridization of private actors housing policies, e.g., regarding cost-rent rules and permanent decommodification. A remarkable difference between the two cities regards land policies and their integration with housing policies and spatial planning. The Viennese agency Wohnfonds is an actor operating between housing policies and spatial planning that creates the conditions for an effective implementation of supply-side affordable housing policies connected to other spatial domains (e.g., transportation policies) while welfare instruments complement demand-side affordability outcomes. This actor implement the land regime conditions for promoting housing affordability and coordinating

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hybrid actors in the creation and management of affordable housing. A similar actor is completely absent in Milan, where the geography of ULR acts as a hidden mechanism of spatial distribution of households by incomes.

7.1.2 Conditions and Scales for an Effective Governance of Housing Affordability Even though housing remains a wobbly pillar of many European welfare states, institutions have increasingly targeted the affordability issue with (among others): an action plan by the Urban Agenda for the EU [9]; reports released by the OECD [10]; the work by the United Nations on effective policies for affordable housing [11]. Many of these reports point at best practices and good “models”, among which the city of Vienna (and the Austrian system in general) is always regarded as a good example. Researchers pay attention to both theoretical nodes of housing affordability [12] and practical ways to foster better housing affordability conditions, analysing concrete actions that could improve affordability [13–15]. Knowledge transfer regarding urban and housing policies is useful, but requires attention as “there are also many dangers involved where this becomes crude imitation and the policy transplant does not fit the local context, or needs disproportionate effort to adapt and apply it” ([16]: 3). Among the alleged category of the “European city”, which includes cities with many commonalities as well as many differences [17, 18], Vienna and Milan are two very specific cases both in multilevel governance and the position of the “local level” of the two cities within other levels of administration. Vienna is a case of “supported localism”, being a city state in a federal country able to enact housing policies with considerable decisional and fiscal autonomy, while Milan of “unsupported localism” due to a very limited room of maneuver and relatively less decentralized funding responsibility [19]. Nevertheless, within their respective country both cities have such an important economic role [20] that, sometimes, decisions taken at the local level could be “upscaled” to the national level. The issue of scales as “socially constructed strategies to achieve particular ends” ([21]: 1–2) also emerges as highly relevant: Vienna has had a rather self-contained development while Milan is embedded in a strong metropolitan and suburban dimension that is not sufficiently addressed in its multilevel arrangement. In Milan, housing dynamics tends to spill over out of the core municipality. While the Lombardy Regional Authority is far too big to respond to the city dynamics (Lombardy is comparable to Austria in population) and the Municipality is too small, the intermediate governmental level between the Region and the Municipality—the MCM (Città metropolitana) has not reached a substantial role in planning and decision making regarding housing. Moreover, attractiveness of people and capitals that produces affordability problems—intertwined with a very contradictory political-economic role of housing in a highly financialized capitalism [22]—can be connected to the position of cities within a rescaling of the territorial organization of the economy and

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of the state, which tends to privilege certain urban agglomerations over the rest of the territories [20]. Vienna and Milan represent clear examples of spatial concentration of capital and people on a national and international scale. In this sense, it is important to raise awareness on the dangers of the “local trap” that could nest in research and practice that advocate for more affordable cities: a tendency to assume something inherently positive about the local scale, which pervasively affects neoliberal critique [21]. Considering that the urban is “perhaps a more strategic front at this particular time and place” ([21]: 1–2), it can be argued that affordability problems ultimately lay on a contradictory position of attractive cities in the present territorial organization capitalism and that its solution passes through urban policies but also on higher scales of government (e.g. territorial redistribution). Politicization of the affordability issue is also relevant [23, 24]: in Vienna, policies that tackle housing affordability lay on stability of the social democratic party and on political support by a large number of voters that favor public intervention on the field of housing, while in Milan we can see a process of “depoliticization” housing and the alignment of political and economic actors (including small landlords) on the promotion of the city’s attractiveness. The two opposite attitudes toward housing prices and rent levels, producing alternative pressures on the sides of acceleration and stabilization, seem to be more balanced in Vienna than in Milan, where the conditions for implementing policies that promote rental housing affordability has much less political feasibility.

7.2 Critical Nodes 7.2.1 Shifting the Affordability Issue from the Supply Debate to the Land Question While supranational institutions frequently recommend enlarging the supply of affordable housing, smaller attention is given to ULR redistribution or rent control. Additionally, supply expansion is often recommended using a vague and often market-oriented understanding of “affordable”. This has the implicit effect of fostering governments to incentivize market-based mechanisms to expand the supply of housing without requiring strict affordability covenants. While economists consider positively supply expansion, critics argue that market-rate supply expansion is reproducing a status-quo without really improving affordability [25, 26]. Phillips [13], posing himself between these two lines, argued that intervention should simultaneously increase the supply of housing, strengthen affordability covenants through increased subsidies and enhance stability of tenure. However, without capture and redistribution of ULR, in attractive cities the benefits of supply expansion and subsidization can easily be jeopardized by housing prices and rent hikes. One key point resulting from the case studies is the role of land policies in the governance system of housing affordability and in determining housing outcomes.

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Land, meant as buildable surface in a specific location that is subject to ULR, has been the main driver of housing prices and of the affordability crisis [27]. Generally, development gains generated by value increases in the land market are transferred to final housing costs, thereby worsening general affordability conditions. In market economies land and housing are a tradable commodity, and land is a main accelerator of cities’ growth. However, its actual use and value are partly shaped by institutions and policies some control on land, fostering development that follows affordability objectives, is an essential stabilizer of a city’s economy. There is a wide literature about the connection between land policies and the promotion of affordable housing (see for example: [14, 28–31]. However, scholars have highlighted how urban development has increasingly been driven by land financialization and how the state has increasingly played a role in land financialization through publicly owned assets [32–35]. One key point of financialization of public land has been the paradigm of economic “highest and best use” of public assets introduced by entrepreneurialism and the adoption of “policies of attraction” [4]: “state agencies and public policies are increasingly steered into facilitating financial investments into land, real estate, and infrastructure, thereby triggering changes in organizational culture and transforming urban planning from providing public goods to facilitating the creation of financial assets” ([22]: 7). In this sense, there is a clear trade-off between the maximum commodification of ULR and housing affordability outcomes. Land use policies have a critical influence on the geography of affordability. Haila [36] suggests that “the housing question is essentially a land question” and introduces “land regimes”, characterized by the position of land as mediator of economic and social relations, the justification of ownership and the modes of urban development: “Land can be used either for the public good or to maximize rental income, and its use, management and ownership necessitate justification” ([36]: 208). Land regimes are related to housing outcomes and considered as a constitutive part of affordability governance. Land policies connect land uses, planning, and property, and have a pivotal role in delivering and maintaining affordable housing. The case studies show how policies that redistribute ULR make a key difference in driving long term affordability levels on the new supply, and that even when subsidies are present the land market can prevent effective affordable housing policies. While policy recommendations from supranational institutions increasingly include more effective land provision and land mobilization indications, they hardly tackle the issue of ULR distribution through land policies. The land regime, especially through land policies, plays a pivotal role in affordability governance, and an effective land regimes is needed to redistribute ULR in the transformation of the existing urban fabric and for providing affordable housing without consuming greenfield land.

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7.2.2 The Pivotal Role of Land Policies in Tackling Housing Affordability The case studies highlighted the role of land policies in land value capture and redistribution through affordable housing, and their relation to the possibility of controlling affordability outcomes [14]. Generally, we can distinguish passive (when the public grant building rights but leave development to private stakeholders) and active land policies (the public is involved in buying and developing the land) [37]. More in general, planning can feature land-value capture by local administration and its reinvestment through housing production with controlled prices and rents to affordable levels [31, 38]. Within the conditions created by the geography of ULR, actors and policies have a certain influence in determining affordability outcomes. Nonprofit and public developers which mainly act according to below-market and/or cost-rent metrics shape differently the geography of affordability already in a purely market system (Fig. 7.1a). Hybridization of housing production is often implemented through land policies [39]. The case studies in Vienna and Milan identify two land policy instruments as the main relevant ones for affordable housing policies PLB and IZ. PLB does not eliminate ULR, but the public institution owning it can decide to give up its capitalization and develop it autonomously or transfer (or lease) it at a low price, or no price at all, for public or affordable housing development (Fig. 7.1c). A PLB gives local authorities a big power to influence the affordability level: Producing affordable housing for the majority of people is possible. The key is preventing land speculation, which can be done when land is in public ownership and not used on the basis of its market value or rent from alternative use” […] Public landownership makes it possible to prevent speculation and render housing affordable. Whether a land owning government makes use of such conditions is a matter of policy choice. ([36]: 214)

The city of Vienna develops “in house” PLB to foster affordable housing production (use value) and obtain revenues by its sale to finance infrastructures (exchange value). The City of Vienna directly owns around 50% of land within its municipal borders and the Wohnfonds controls directly 3.2 mln m2 of land reserved for housing policies and PLB is still considered the main land policy for affordable housing. Publicly owned land in Milan, i.e., land owned by public authorities and companies—there is no official PLB, is mostly sold to private developers at the highest prices (mainly exchange value), overlooking affordability objectives. It can be considered a strategic and long-term policy tool, since today’s acquisition could bring comparative advantages only in the future. Building a PLB is not easy, especially if prices are high. In any case, unused assets (e.g., brownfield from infrastructures) could be acquired from other public entities for a cheap price and banked for future redevelopment. Additionally, local administrations have a potential competitive advantage in PLB due to their planning and zoning powers which they could use to foresee or influence future rent dynamics and to make coherent acquisition choices. The city of Vienna often directs transportation infrastructure investments toward banked land.

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Fig. 7.1 Land policies and housing affordability (Source Elaboration by the author)

IZ is instead a fair-weather tool, as the planning gain is possible only under good market conditions. It affects ULR and affordability, depending on the actual affordability requirement for the affordable share: if based on a below-market metric, then its effect will be similar to that of no- or low-profit housing developers, and rent will still affect affordability (Fig. 7.1b); if it is based on a cost-rent metric, and the land price is controlled to target a certain cost-to-income metric (Fig. 7.1d), then its effects are similar to PLB. IZ is the main land policy in Milan, where, however, the terms for negotiating the shares dedicated to affordable housing bring much less effective results. Additionally, while Vienna imposes strong constraints on the rezoning of land to be transformed, in Milan the transformation of brownfield land follows the extraction of the maximum ULR with rather weak effects on the provision of affordable housing. The rather exclusionary zoning policy of Milan creates a vicious circle, in which the unsatisfied

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affordable housing need pushes new land consumption into more distant areas and outer municipalities of the hinterland—with the effect of creating new demand for private transportation. Land price is a critical node for the realization of the use value of housing. While in Vienna acquisition is done at market price, the municipality holds a veto on making land buildable, a very powerful tool of negotiation, and the price usually does not reflect a huge unearned increment: land procurement is performed before development is chosen and much before infrastructures are planned and realized. This is possible thanks to the active role of developer that the city retains through Wohnfonds and its coordination with the planning department. This value capture is in turn redistributed to inhabitants via lower rents. In Milan land acquisition price rewards the development gain of already buildable land, making housing policies very costly for public authorities. Similarly to what Haila did for Singapore, it is possible to outline the differences in the land regimes in Vienna and Milan (table 7.1). Ultimately, it can be considered a matter of priority regarding use or exchange value of land, and redistribution of development gains. The history of judicial conversion of compulsory purchase at below-market prices, which strongly limited the possibility to enact active land policies for affordable Table 7.1 The land regimes of Milan and Vienna (Source Elaboration by the author) Land regimes

Land Forms of prevalently property treated as

Relationship

Justification Rent

Prevalent development modes

Milanese Market Mostly value, private commodity and asset

Municipality, PH agencies, housing cooperatives, private developers, integrated system of funds

Economic growth, investment attraction

Plans of compulsory land purchase until 1980s; since 1970s: negotiated development; lately corporatization and selling out of public land; IZ is residual

Viennese Use value Mostly (affordable municipal housing) and asset

MH, Wohnfonds, LPH associations, Publicly owned companies

Population Public growth and revenues affordability (limited to reduce housing costs)

Private revenues, with small tax on development gain (4–8%; [38]) and some affordable housing requirement

Successive rounds of land acquisitions, MH, developers’ competitions; highly IZ; imposition of affordability goals on redevelopment of public land

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housing in Italy, raises the critical point of the political and cultural feasibility of ULR redistribution. The Italian land policy history seems to confirm the “georgist” thought that long history of private ownership makes it too difficult to confiscate land (although it would be just), and makes it easier to confiscate rent, for example through taxation. While Vienna’s history of land policies shows a different perspective on this dilemma, economic feasibility of PLB in a context of increasing land prices and the sustainability of a policy that contributes to very bad performances of soil consumption [40]. In the local trap perspective, the latter issue challenges not so much the land regime adopted in the City of Vienna, but rather the dynamics of concentration of population and resources in attractive cities. If urban population and housing need grow, new supply is demanded either by public or private development, the main difference being in affordability levels. While affordability problems ultimately lay on a contradictory position of attractive cities in the current market-based political economy and polarized territorial organization, they can be alleviated or worsened through the distribution and redistribution of ULR by the land regime. In a situation in which greenfield land should be preserved as much as possible, the critical node of affordability promotion is the redistribution of the differential ULR in urban transformations in private and (especially) public land. In conclusion, the promotion of housing affordability in attractive cities could simultaneously pass through mitigation of the housing demand via a rescaling of housing problems—e.g., mitigating migration to attractive cities by redistributing resources and investments—and implementation of affordability-oriented land regimes for brownfield plots to tame land valorization. This should occur at a scale which is coherent to that of real housing problems, encompassing the important metropolitan and regional dynamics of contemporary cities.

7.2.3 Improving the Policy Mix of Housing Regimes to Target Affordability (Broadly Intended) One issue raising from both the theoretical and empirical parts is that housing affordability has no unique interpretation. The literature identifies various conceptualizations of housing affordability and real-world policies adopt different approaches in influencing it. According to the analysis, the use of different affordability concepts in an integrated policy mix helps tackling its different dimensions and produce better affordability outcomes than individual measures on a silo-like setting. This occurs because while individual policies can have positive effects, these effects can be unequally distributed or produce undesired consequences, e.g.: the allocation of PH dwelling to poor families on cost-to-income basis results in economic unfeasibility for the provider, as in Milan. Even with relevant public and subsidized housing and of rent controlled apartments, as it is in Vienna, many low-income households outside those protected sectors still face relevant affordability problems, and income support

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and housing allowances are indispensable for a good covering of affordability problems. Simultaneously, the provision of affordable housing should have a spatialized logic, in order to avoid location-related affordability problems (e.g., high transportation costs). In general, policies targeting affordability problems should, satisfy the following conditions: 1. be multiple and diverse to target the wide range of affordability problems. 2. target affordability as a manifold concept, operationalizing the various conceptualizations and metrics of affordability. 3. be integrated among each other and with policies that are not primarily targeting affordability (e.g. transportation planning, since its relation with affordability is less explicit but critical). Integration can pass through two complementary strategies (Fig. 7.2): • the adoption of affordability metrics into the policymaking and implementation process. For example, by integrating housing affordability metrics in income support schemes or transportation planning. • the improvement of policies and actors that integrate different policy domains, such as Wohnfonds, that integrates supply-side housing policies and spatial planning by coordinating them via active and passive land policies. Actors and policies that integrate affordability in the different policy domains should be coordinated at the scale that best fits their competences for tackling the various affordability.

Fig. 7.2 Strategies for improving the integration of policies and affordability in the mix that constitute the governance framework of housing affordability (Source Elaboration by the author)

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7.3 Perspectives for Further Research This book opens three main avenues for further research: (1) Making sense of housing affordability and its connections to social and environmental challenges. Understanding housing affordability requires looking broadly at its urban implications and articulating an ì mix of integrated policies. Conceptually, this book enforces a direction for further policy-oriented research on housing affordability toward the concept of “affordable city”. This is an emerging approach to housing affordability careful to urban dimensions and explicitly directed at shaping imaginaries for policy design and concrete action. However, research focused on housing affordability risks to overlook its connection with other urgent challenges, such as the environmental one. As housing affordability tends to be strongly linked to the land regime, there is the risk of possible tradeoffs between current efforts for a sustainable use of soil and the promotion of socially equal forms of transformation of the built environment. Traditional policy instruments that promote housing affordability with extensive urbanization jeopardize reduction of environmental impact of housing policies, and the zeroing of soil consumption [40]. Conversely, environmentally-oriented policy agendas can have negative impacts on housing affordability, as in the case of “green gentrification” [41, 42] or socially unsustainable densification [43]. This opens a twofold pathway of interdisciplinary and policy-oriented research that is simultaneously focused on mitigating and improving the environmental impact of housing affordability policies and integrating housing affordability metrics in environmental policies. (2) Offering policy-oriented research on housing affordability in contemporary cities. Housing affordability problems can be considered “the illness of successful places” [25], determining the fragility1 of territories that are otherwise economically attractive and rewarded by the territorial organization. Research should addres the “policy-outcome” gap in policy making concerning housing addressing the analysis of urban policies and of housing affordability outcomes, tracing relations and connections among them and suggesting evidence-based improvements to the policy system in certain cities. This book offers a broad theoretical and analytical ground for the analysis of housing systems of contemporary cities needs new conceptual instruments. The critical affordability issue in is related to the weakness of the housing affordability governance system but can also be connected to a general lack of knowledge of the phenomenon and its impacts on the local society. Extending knowledge on housing affordability and reinforcing its use in the policy debate and policymaking could create more transparent and socially-effective conditions for the involvement of private and hybrid actors in the implementation of housing policies and in urban development. This opens the opportunity to offer more in-depth 1

“Territorial fragilities”, meaning the study of territorial gaps and of policies that could reduce them, is one of the main branches of research within the Department of Architecture and Urban Studies of Politecnico di Milano. See the website: https://www.eccellenza.dastu.polimi.it/.

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policy-oriented research on housing affordability that tackles simultaneously outcomes and policies from an evidence-based perspective. (3) Developing a transcalar view of affordability problems and policies. Affordable housing has become an important claim and policy objective. With the withdrawal of nations and states from housing and the rising importance of local welfare, local housing systems are becoming crucial in ensuring housing affordability conditions [7]. Literature on housing affordability has started shifting the scale from national to local housing policies and the role of cities [12, 25]. However, in doing so one should carefully address the scale issue and the conceptual risk of falling into the “local trap”. Deals with housing affordability problems and policies by linking multiple territorial scales and the various government levels appears as a promising ground. This means looking at housing affordability problems as a result of territorial dynamics at multiple scales and thinking at shrinking and attractive territories as an interconnected geography of housing. To do so, housing affordability should be treated with an approach that looks at the overall territorial dynamics and as factors connected to, if not explained by, polarization and marginalization processes and dynamics on a wider scale. A similar approach could be very useful in the light of connecting the research on territorial inequalities and fragilities with Housing Studies.

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