The Dutch business model
in social renting:
A historic perspective
Marietta Haffner
OTB – Research for the Built Environment / TU Delft
25 September 2014 – Brazil/EU Dialogue seminar, LSE, London
Delft
University of
Technology
Challenge the future
Dutch social rental sector – biggest
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Social renting
Other
Owner-occupation
Private renting
Haffner et al. 2012 (diverse sources, most recent year)
Social housing in the Netherlands
2|
Structure
1.
2.
3.
4.
History -1990s in a nutshell
Revolving fund business model
Institutional landscape
Ingredients to remember
Dutch business model in social renting
3
From private initiative…
… to “extension of government”
• Roots in 19th century civil society
• Providing housing for workers, not the most vulnerable
• State involvement: Housing Act of 1901
• Government influence increased in the 20th century
• Social landlords transformed into semi-public institutions with
strong financial and hierarchical ties with central government up
until the 1980s
… towards independence
• Decentralisation in the 1980s and 1990s
• 1995, cancellation of outstanding government loans to social
landlords in exchange for future owed supply subsidies
Financial independence and social entrepreneurship
Dutch business model in social renting
4
Towards financial independence
Government
loans:
social renting
Supply
subsidies:
Rent control:
renting
rental sector
Government
Guarantee:
social renting
Housing
allowance:
rental sector
19451960
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60s
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+
70s
+
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+
+
80s
+
+
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+
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90s
+
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00s
+
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Dutch business model in social renting
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Towards social entrepreneurship
Housing associations (HAs)
• are private registered organizations with a public task
(legal status)
that
• operate within central government framework
• operate in the interest of housing
• should re-invest in social housing any profits made
(non-profit)
Dutch business model in social renting
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Structure
1.
2.
3.
4.
History
Revolving fund business model
Institutional landscape
Ingredients to remember
Dutch business model in social renting
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Revolving Fund Principle
New affordable housing
Rent income
Housing refurbishment
Housing sale revenues
Community investments
Dutch business model in social renting
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Asset management
Sales
• About 15 000 sales per year in the period 2007-2010
Intermediate tenure
• Sector initiative
• Instrument to create mixed neighbourhoods
• Risk of deterioration is risk for housing association
(HA)
• Sold dwellings remain tied to housing association
• HA guarantees to buy back the dwelling
• HA shares value gain/loss
• HA can then invest in deteriorated neighbourhood
Dutch business model in social renting
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Structure
1.
2.
3.
4.
History
Revolving fund business model
Institutional landscape
Ingredients to remember
Dutch business model in social renting
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Government
Regulation
Performance
agreements
Local
authorities
Subsidy
Housing
allowance
Housing
associations
Central Fund
WSW
Guarantee
Tenants
Rents
Loans
Banks
Dutch business model in social renting
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Social housing governance
• Tasks
• Supervision by ministry
• Performance agreements between housing
associations and local authorities
• Self-regulation
• Governance code
• External performance assessments
• Tenant Participation Act
Dutch business model in social renting
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Social housing finance
Housing
association
Loan
Contribution
Central Housing Fund
(CFV)
Bank
Triple A or AA+ credit rating
Social Housing
Guarantee Fund (WSW)
Guarantee by
national and
local
governments
Dutch business model in social renting
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Bank loans
Mainly provided by two government-related banks:
1. Bank Nederlandse Gemeente (BNG)
2. Nederlandse Waterschapsbank
Not a closed financial circuit
Dutch business model in social renting
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Central Housing Fund (CFV)
Government agency
which
• supervises the financial viability of housing associations
• can order remedial actions from housing associations if
they run into financial difficulties
• provides additional financial support to housing
associations while they implement remedial actions
Dutch business model in social renting
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WSW and its guaranty structure
Primary security:
Housing associations
Secondary security:
WSW
Tertiary security:
State and
municipalities
Dutch business model in social renting
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Structure
1.
2.
3.
4.
History
Revolving fund business model
Institutional landscape
Social renting
ingredients to remember
Dutch business model in social renting
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Social entrepreneurship
– what went wrong?
Loss societal support
because of
• Sideline activities
• better financial position allowed for taking on more tasks
• Fraud and mismanagement (often in sidelines)
• Supervision not strong enough
• Self-regulation did not work
• Towards market rents
• Loss of social basis for the societal democratic ideal for a
broad ‘social’ rental sector
Dutch business model in social renting
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Social entrepreneurship
– what may be worth remembering?
• Cooperation for achieving public task
between state and non-profit organizations to realize
• Benefits created by revolving fund principle
involving dwelling sale, dwelling management, new
affordable housing, maintenance and refurbishment of
affordable housing, community investments, including the
neighborhood
• Realization of investment programs for energy efficiency
• Financial safety net created by guarantee structure
• Development of skills in social management and allocation
Dutch business model in social renting
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Thank you!
Dutch business model in social renting
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