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

Rethinking the selfare state 74
new suppliers from entering the market and may cause existing units to be withdrawn
from the rental market and should be avoided. 91
Conclusion
We believe that the evidence generally supports the conclusions of William Strange in a
recent review of comparative experience with low-income housing policies: 92
1 Construction subsidies or new publicly built (or social) housing should be targeted at
the sort of dwellings used by the most needy. Otherwise, the evidence suggests that
privately supported housing will be crowded out by subsidized supply and the total
stock of low-income housing is unlikely to increase.
2 If vouchers or other demand-side subsidies are to be provided to some low-income
households, they should be provided to the entire population with similar income.
Otherwise the price of housing is likely to rise, leaving a group of low-income
households actually worse off than before the introduction of the subsidies.
3 The temptation to introduce rent-controls should be resisted. While these may improve
affordability in the short-run, they are likely to reduce housing stock in the long-run.
4 Land-use regulations that create barriers to the supply of low-income rental housing
should be repealed.
5 Property tax discrimination against rental housing should be eliminated.
6 Because of the mobility of both low-income families and taxpayers, low-income
housing issues cannot be dealt with only at the local government level but require
regional or central government support.
We also endorse the view of Priemus that in “times of overall housing shortage, property
subsidies [that is, supply-subsidies to developers] are recommended as a temporary
measure to increase supply. Housing allowances are the instrument of choice in normal
situations.” 93