Policies to Promote Access to Good-Quality Affordable Housing in OECD Countries

Title Policies to Promote Access to Good-Quality Affordable Housing in OECD Countries
Author Name Organisation for Economic Co-operation and Development
Link https://goo.gl/92aAT1

The Organisation for Economic Co-operation and Development recently published a paper outlining policies that will promote access to affordable housing. 

The report cites a surprisingly high percentage of households across OECD countries as overburdened by housing costs. On average nearly 15% of tenants and 10% of mortgage-payers spend over 40% of their disposable income on housing costs. The incidence of housing cost overburden is much higher among low-income households: 39% both for mortgage-payers and private sector tenants. Middle-class households are not immune: on average nearly 9% of mortgaged middle-class homeowners are overburdened by their monthly mortgage payment. Initial access to quality housing in and of itself is also of paramount concern—roughly one in every eight people in OECD countries lacks regular access to housing. 

One common type of policy to improve housing conditions consists of subsidies to homeowners, who receive considerable public support: reported spending can amount up to 2.3% of GDP. In most reporting countries home-buyers can benefit from grants, financial assistance and public guarantees often reserved for low-income first-time buyers. Homeowners also often benefits from tax relief for the purchase of housing– notably mortgage tax relief – and favorable taxation of residential property. Central government support for the provision of social rental housing ranges between 0.1 and 0.6% of GDP in reporting countries but the amount of public funding has been decreasing in many countries.

Housing support is increasingly delivered through income-related housing-costs subsidies, generally known as housing allowances. Reporting countries spend between 0.6 and 1.8% of GDP on housing allowances. Almost all of the reporting OECD countries use this policy instrument; in half of the countries, allowances are reserved for tenants, and in the other half allowances are granted to both owners and tenants. The report concludes that the favorable treatment of owner-occupied housing is not in line with the principle of tenure neutrality of housing policy nor does it serve households who are most in need.

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