Rental Housing - UN-Habitat

Despite this proximate relationship between city size and the incidence ofrenting, the real explanation of why rental levels are high in some cities andlower in others has to do with the supply of land and housing. Where land andproperty is expensive, it puts ownership beyond the ability of many familiesand the incidence of ownership generally falls. The level of homeownershipseems to be more related to variations in state policy than to the operation ofmarket forces.I.F.2. State policyThe fact that national policy profoundly affects the incidence of homeownershipcan be demonstrated by comparing most of the English speaking countriesof the world with most of the non-English speaking countries of NorthwestEurope. Most governments in the United Kingdom, United States of America,Australia and New Zealand have pushed homeownership very hard since the1950s and all of these countries had rates of homeownership of at least 60 percent in the 1990s. Households in these countries were rewarded generously ifthey moved into homeownership. In the United States of America, a successionof governments have pushed homeownership as part of the “American Dream”(see appendix 7) and “the US government attaches great importance to edgingup ownership levels by even a few percentage points”. 74By contrast, government policy in Denmark, Germany, Sweden andSwitzerland has tended to be more tenure neutral and income-tax relief is notconfined to those buying with a mortgage. Large subsidies for social andcooperative housing are given in the Netherlands and France, and in Swedensuch subsidies amount to an estimated 4.1 per cent of GDP. 75In many parts of the world, Northwest Europe, Singapore and Hong Kongand in most communist countries, there was a further reason why rentingremained significant; the state constructed large numbers of public housingunits for rent. In the former Soviet Union, public housing for rent dominatedthe housing stock, particularly in the cities. In 1990, public rental housingaccounted for 65 per cent of the housing stock in Estonia and 51 per cent inLithuania. 76In developing countries, the construction of public housing tended to beless influential because the amount of public rental housing relative to the totalhousing stock was much more limited. After the 1970s, indeed, few governmentsin developing countries ever built for rent (see section II.B), and thatwhich had been was quickly sold to the tenants. Insofar as most governments inpoorer countries had explicit housing policies, they sought to encourage homeownership.77 Such a policy was introduced both formally and informally.Formally, most governments offered tax incentives to the middle classesChapter I: Introduction 19