intervention strategies for renovation of social housing estates

Social housing renovation Italy: which solutions in Dutch housing management model? Chapter 3
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than the income that housing associations would have received if they had chosen to
continue social rent.
- Indirect support and guarantee structure. There is a substantial indirect
financial support of the rented sector in the shape of the housing allowance system.
About one third of all households in the social rented sector receive an individual
housing allowance to help them pay their rent (in 2001, the average allowance was €
44,- per household (Aedes, 2002)). Furthermore, the financial guarantee structure is
highly appreciated by the lenders, so housing associations have relatively cheap
access to borrowing capital. The interest rate of housing associations’ loans is only
slightly above that of state loans.
- Mergers. Many associations have merged during the nineties. These mergers have
resulted in a reduction of the number of housing associations from 824 in 1990 to
678 in 2000 (Ministry of VROM, 1994-2002) and 476 by January the 1th, 2008.
Improving the financial position has been one of the motivations for mergers,
although in many cases this was certainly not the only, nor the leading motive.
Basically, the financial principle underlying the asset management strategy of many Dutch
housing associations is to match shortages with surpluses within their activities, at various
levels:
- at project level, the (re)development of social housing is combined with development
of commercial rent and owner occupied dwellings, thus the overall financial feasibility
of the projects improve as well as the social/tenure mix;
- at company level, rents are generally sufficient to cover operation costs and interests
on loans. Exploitation surpluses of more expensive dwellings with a good market
position can be used to match operational deficits of other (social rent) dwellings;
- at company level, lucrative project development and sales are combined with costly
housing restructuring activities;
- at sector level, richer housing associations occasionally support poorer housing
associations.
At all levels, housing associations anticipate additional proceedings from sales over the
course of time. In the past, all social rented dwellings were built with the ‘going concern’
perspective of continuing rent over 50 years, followed by investments to extend the lifespan.
Consequently, the net present value calculations of their investments often turned out
negative. Nowadays, housing associations have become aware that they can always sell a
part of their stock after a certain period (say 15-25 years). Thus, a growing number of
housing associations make their investment decisions on the basis of potential sales in the
futures, leading to much more positive financial outcomes. Also, more and more associations
do not calculate their proceedings at the level of individual projects or estates, but anticipate
the proceedings at neighborhood level. For example, if a housing association decides to
demolish and replace ten percent of its stock as part of its strategy to regenerate a
neighborhood, it also takes into account the positive effects on the value of the rest of the
housing stock in the neighborhood. Finally, to make sales more attractive for middle and
lower income households, and to speed up sales and the associated proceedings, housing
associations have begun to introduce various innovative tenures, including discounts on sales
(e.g. Gruis et al., 2005).
3.3) TRANSFERABILITY OF PRACTICE
Social housing in Italy and the Netherlands have been subject to (financial) privatization
policies. Dutch housing associations have been able to survive this process and even came
out of it as relatively solvent institutions. Many Italian social housing organizations, on the
other hand, came out of the process in a poor financial state, particularly in the case of ATER
Roma. Now, we ask ourselves, to which extent can approaches followed by Dutch housing
associations be transferred in support of a housing management strategy for ATER?
DIFFERENCES AND SIMILARITIES
To be able to assess the transferability of practice, it is necessary to reflect on the similarities
and differences between the context in which Dutch housing associations and ATER have to
operate. The relevant similarities that we notice are the following:
14. C
FINANCIAL
PRINCIPLE
DIFFERENCES