Rethinking the Welfare State: The prospects for ... - e-Library

4
Low-income housing
Introduction
Although the modern state has often assumed the responsibility of providing low-income
households with accessibility to basic, reasonably priced housing, poignant statistics
point to its failure in realizing this objective. The most publicized illustration of the
state’s failure in this regard has been the homelessness problem currently plaguing North
America. 1 Homelessness, however, is only one indicator of the absence of affordable
housing. Another is the fact that in the United States, one in two poor households have
housing cost-to-income ratios exceeding the nominally prescribed 30 percent level. 2 In
addition, one in four poor households lives in physically inadequate housing. 3
Nor are such problems confined to North America. Indeed, as McCrone and Stephens
observe of the European context, “in all countries, regardless of the average standard of
living, there is a large section of the population that cannot afford the full economic cost
of what would generally be regarded as an adequate or tolerable standard of housing.” 4
Even in European states which have made a substantial commitment to improving
housing, misguided policy efforts have in some cases made matters worse. Malpass, for
instance, comments on a problem with the basic structure of the United Kingdom’s
housing policy:
By making housing tenure [home ownership] seem a mark of social
success or failure, “tenure policy” has contributed to the emergence of an
acute shortage of affordable housing. The Government’s emphasis on the
virtues of home-ownership, and the subsequent reduction in the supply of
cheap rented housing, has meant that low-income households now find it
difficult to obtain suitable accommodation. 5
Howenstine documents the consequences of a similar policy in the United States, where,
since its inception in 1913, the federal income tax code has allowed home owners to
deduct mortgage interest payments and property taxes from their gross incomes. Indirect
home-ownership subsidies through tax deductions reached an estimated $59.6 billion in
1998, and now apply to mortgages of up to $1 million as well as to second homes,
including cottages and other vacation residences. 6 In fact, households with incomes over
$50,000 received 52 percent of all housing subsidies in 1998. 7 As Howenstine notes:
If—as is generally accepted in principle—housing assistance should go to
those in most need, such favourable treatment of the middle- and upperincome
owners may be regarded as a misdirection of housing subsidies,
and as one major explanation why more progress has not been made in