The Role and Design of Income‐Related Housing Allowances

Abstract

Income-related housing allowance schemes have become a long-term feature of social policy in the advanced welfare states. They are not without disadvantages, however, and a number of countries have recently introduced significant reforms of their systems. The aim of this paper is to examine some key features of, and recent developments in, housing allowance programmes in seven countries. It addresses five main questions: why have income-related housing allowances become so important, what role do they play, what are the essential features of such schemes, how do they tackle concerns about moral hazard, and what are the pressures facing them?

The present and future of income‐related housing support: debates in Britain and the Netherlands

“…Rent controls have gradually been relaxed or abolished, while supply-side subsidies have much diminished in importance or even been removed altogether in many advanced welfare states. Partly in responses to these shifts in housing support and partly because of other socio-economic developments (such as growth in lone parenthood and in disability benefit recipients), housing allowance caseloads and expenditure have increased significantly in many advanced welfare states (Kemp, 2000).…”

“…Moral hazard-the possibility that claimants may manipulate the system by changing their behaviour in ways that increase their benefit entitlement (Barr, 1999)-is a problem with all means-tested social security payments and this is especially true of income-related housing support (Kemp, 2000). Both tenants and landlords have various opportunities to make improper or even illegal use of income-related housing schemes.…”

The Dynamics of Housing Allowance Claims in Sweden: A Discrete-Time Hazard Analysis

“…Compared to other countries (Kemp, 2000;Åhren, 2004;Stephens, 2005), it is apparent that the Swedish government operates a generous housing allowance system. Its generosity interacting with other parts of the Swedish welfare system that is already internationally renowned for its generosity, inevitably invites one to speculate regarding the extent to which the housing allowance may weaken a household's work incentives.…”

“…The past two decades have witnessed an increasing importance of housing allowances in the housing policies of most advanced countries (Fallis, 1993;Ditch et al, 2001;Kemp, 2000;Priemus & Kemp, 2004).…”

“…Knowledge of the dynamics of housing allowance claims is important to economic analysts and housing policymakers for several reasons: First, the funding of housing allowances is generally open-ended funding and driven by demand (Kemp, 2000), hence it is vital for governments to predict expenditure trends. Secondly, explicitly or implicitly, housing allowances are thought to help households only during economically difficult periods (Boverket, 1999;Stephens, 2005).…”