Social housing accounts for 48% of housing in Vienna and 25% of housing in Austria. Austria’s social housing system began with “Red Vienna,” a Marxist program established in 1918 that began a period of mass housing construction, public education, and public healthcare. Vienna’s city government owns and manages 220,000 housing units which represent 25% of the city’s housing stock. The city also controls 200,000 units that are built and owned by limited-profit private developers but developed through a city-regulated process.
Housing Communities
Social developments include various housing types to ensure housing accessibility for people of all backgrounds and income levels. Most complexes include typical subsidized rental housing for lower-income workers, ownership-focused homes for families, apartments reserved for refugees, and low-cost housing for students. Many also include amenities such as shops, restaurants, kindergartens and daycare centers, office spaces, and leisure facilities which enhance the quality of life for residents and encourage social integration, creating prosperous communities.
Development Process
Austria’s social housing development process is rooted in adequate public funding and a competent and dedicated limited profit sector. To initiate new projects, cities buy land in areas deemed desirable near transit, job centers and schools, soliciting proposals from private developers who want to build and own the housing complexes. Cities then sell the land at an affordable price and grant the developer a favorable loan with a low interest rate and an extended repayment period to ensure the financial viability of the project. To keep up with demand, the Austrian government builds thousands of new social housing units each year which mitigates rent fluctuation and keeps prices in an affordable range.
Rental Terms
Social housing programs provide their residents with financial support and daily amenities which promote long-term occupation and social integration. For instance, residents’ rent never increases from their initial agreement, regardless of if their income levels increase, and they are never required to move out. This alleviates the cost-burden and financial pressure that often comes with home rental, making housing accessible for all people in Austria. As a result, many higher-income residents choose to remain in subsidized housing rather than purchase more expensive homes, promoting mixed-income communities with people from a variety of backgrounds. The desirability and affordability of Austria’s social housing encourages more residents to stay in public housing regardless of their income level or social status.
Financing
Austria’s social housing is financed by all parties involved in the projects to ensure that the financial burden does not fall too heavily on one sector. It is important to note that Austria’s housing system is effective because of the nation’s strong voluntary sector and its commitment to a social obligation. For instance, municipalities are legally encouraged to contribute to social housing by providing land for affordable prices, eliminating land acquisition costs for builders. Developers receive low-interest, long-term loans from housing banks whose purpose is to raise money for social housing. New construction is also partially funded by a fixed proportion of income tax, corporation tax, and “housing contributions” paid by Limited Profit Housing Associations which include public and private builders and housing cooperatives who own and operate about 700,000 units each. Housing cooperatives are associations that involve tenants, builders and municipalities who plan developments together, negotiating lot locations, financing, and construction layouts. Around one third of Austria’s total subsidies go to LPHAs and cooperatives, but altogether, 80% of all new constructed housing units are co-financed by the public which alleviates the government’s financial burden. On a ten year average, 51% of all completed projects are built by private individuals, 28% by housing associations, 19% by private housing developers and 2% by municipalities. This system is effective because of the adequate private and public funding for each sector.
What can the United States learn?
Public housing policy in the United States lags far behind Austria as no federal sector exists to actively plan and build desirable public housing. For instance, in 2019, 42% of public housing properties finished their last construction before 1975, and a 2010 HUD-sponsored assessment of the nation’s public housing capital needs determined that approximately $21 billion was needed for unmet maintenance and repairs. This financial burden is left entirely on the federal government, whereas Austria acquires funding LPHAs, housing banks, and municipalities together.
The United States provides homeowner and renter assistance in the form of Section 8 housing vouchers, and almost all public housing is built through the Low Income Housing Tax Credit, a subsidy for private developers. Unlike Austria, however, public housing accounts for less than 1% of the U.S.’s total housing stock compared to Austria’s 25%. In addition, the U.S. provides no security for its residents; tax-credit properties are only required to remain affordable for thirty years, meaning landlords can raise rent prices out of the affordability range of their tenants as they wish, after the property is thirty years old. The United States has no mechanism for collecting adequate funding for housing, does not communicate with municipalities for sufficient land, and leaves nearly the entirety of financing up to developers who prioritize their own profits over creating affordable housing stock.
What keeps the United States from being able to provide long-term affordable housing is its lack of correspondence between private developers and local governments, which is rooted in a lack of a social obligation for affordable construction. Local governments are not active in creating a dialogue between prospective tenants, Public Housing Associations, and developers, allowing developers to continue to drive home prices up. Even when private developers use LIHTCs in an affordable project, they are faced with strict zoning restrictions and minimum funding leading many to prioritize higher-end construction for profit and skimp out on affordable units. In contrast, a 2013 article in Governing magazine states that “the Viennese have decided that housing is a human right so important that it shouldn’t be left up to the free market.” The U.S.’s capitalistic housing market encourages homeownership for those who already have strong financial backgrounds but leaves behind those who don’t. While the majority of those in U.S. public housing are cost-burdened, meaning they pay more than 30% of income on housing, Austrian city governments regulate rent so that none of the residents pay any more than 20% to 25% of their household income on housing. Alleviating the financial burden of housing allows residents more money for basic necessities such as healthcare, child care, and food, promoting more prosperous, equitable, and healthy communities.
