Tenure structure: An Introduction
Comparisons of housing sectors or tenures between countries face the fundamental question of whether the tenures are comparable across countries. If a survey on housing tenures carried out in only nine European countries delivered 42 kinds of tenure (Siksiö, 1990), one may consider tenure on content to vary too much across countries for it to be considered the same phenomenon. But according to Ruonavaara (1993), once the essential dimensions of housing tenure are identified, one can distinguish two main types of tenure: owner-occupation and renting. They differ from each other on the right of disposal, which owner-occupiers always have and tenants never do. They differ to a somewhat lesser extent in the security of tenure of the occupier and the right to use and the right to control the dwelling. Owner-occupiers have more security of tenure and have more control over the use of the dwelling as well as more freedom to alter their dwelling than tenants. Ruonavaara (1993) further subdivides the owner-occupancy sector into three subtypes and distinguishes two subtypes of renting: social and private renting.
The usual distinction in cross-country comparisons, however, shows three tenures: owner-occupation, social renting and private renting. A fourth type of tenure is represented by the cooperative sector (see Graph 1, which also shows “other” types of tenure). It is important to understand whether these different types of tenure have the same meaning in different countries. The deviations will be explored for countries in Europe in an ad hoc way. The examples may assist in the interpretation of types of tenure in other countries featured on the Housing Finance Network site. Owner-occupation is the tenure that dominates in most of the 27 countries of the European Union (EU), except for in the Czech Republic, Denmark, Germany and Sweden. Only seven EU-countries do not have a social rental sector, and of those Germany has the largest private rental sector (60%). Five countries have a cooperative sector; it is most prominent in Poland (24%), Sweden (18%) and Czech Republic (17%). Finally, a majority of countries distinguishes other tenures, usually with a small market share of below 7 percent of stock, the exceptions being Cyprus (18%) and Italy (13%).
Graph 1: Housing tenures in the EU-27 (without Bulgaria), 2008 or latest year available.
Sources: Dol & Haffner (2010); Germany: BBR (2007).
Following Ruonavaara’s definition of homeownership, we discuss a few examples of ambiguous interpretations of home-ownership in a number of countries. First, the distinction between ownership and cooperative tenure is often unclear. The Swedish cooperative sector, which originated as a tenant-ownership cooperative sector, nowadays functions more as an owner-occupied sector, although an estimated 1 percent consists of cooperatively owned rental dwellings. Cooperatives own the dwellings, while the occupiers of the dwellings own a share in the cooperative. The right to occupation can be either rented or owned.
The cooperative sector can be regarded as a solution to the legal impossibility in Sweden to own houses in multi-family dwellings, i.e., the absence of a condominium (sectional title) law. While the cooperative organization legally owns the building, the majority of the holders of a cooperative dwelling nowadays have almost the same rights of disposal, use and control as owner-occupiers. Similarly, owner-occupiers of apartments in Denmark are classified as having cooperative tenure. This sector has a market share of 7 percent (Björn & Victorin, 2004; Elsinga & Haffner, 2006; Ruonavaara, 1993, 2005). For the Czech Republic (Hegedüs et al, 2011) and Poland (Dol & Haffner, 2010), cooperative dwellings, which have a 17 percent and 24 percent market share respectively, are also dwellings with an ownership title.
If the share of 18 percent of the Swedish stock of cooperative dwellings is added to the 38 percent of owner-occupiers, the total ownership rate is 56 percent, a much smaller difference with the 66 percent of owner-occupiers in Finland. Importantly, the Finnish owner-occupation sector also consists of two types of owner-occupation: the individual owner-occupation of mostly detached single-family dwellings and the ownership of apartments via joint-stock housing companies. In the latter case, the property is formally owned by the housing company, but in practice the owner-occupiers own, use and control their apartments. Arrangements have to be in place for the maintenance of the commonly used parts of the building. Such legal arrangements are called condominiums and are in existence in the USA, Canada and the Netherlands. In the Netherlands this type of collective ownership is fairly common and is not distinguished in the statistics from ownership tenure, nor are the few ownership cooperatives.
Finland distinguishes another type of tenure in the country statistics (3%). Presumably, these are dwellings under the right of occupancy and shared ownership projects. Both of these tenures can be regarded as between owning and renting, although the shared ownership scheme offers the tenant the option to buy the whole dwelling at some point (Elsinga & Haffner, 2006).
These examples show the complexity of the owner-occupation category as a tenure type. And there are many more such ambiguities. For instance, in Poland, an estimated 5 percent of owner-occupier dwellings are illegally sublet, but these are formally counted as owner-occupation (Dol & Haffner, 2010).
When distinguishing between social and private renting the question is, which are the distinct features of both tenures? Ruonavaara (1993) distinguishes three main differences i) distribution and access, ii) price setting and iii) the landlord-tenant relationship. In other work, the allocation of the dwelling is considered the key distinguishing feature between these rental tenures (Haffner et al, 2009, 2010; Maclennan & More, 1997; Oxley et al, 2010). Social rental housing is allocated according to need, and is designated as socially desirable housing, while private, commercial or market rental housing is allocated according to the household’s ability to pay.
In practice the main distinction is one based on ownership of the dwelling: social landlords (usually public or non-profit organizations) versus private landlords. The boundaries between both types of tenure are fuzzy, since some social landlords provide dwellings according to ability to pay. This is the case in the Netherlands and the UK, for example. On the other hand, there are private landlords who will provide rental dwellings that are allocated according to need. This is the case, for example, in Germany, France and Ireland. In Germany, private landlords have for many years supplied social rental housing in return for bricks-and-mortar subsidies. Tenants with recognised needs are allocated housing that is privately owned. In Ireland, private sector landlords can contract with local authorities to provide accommodation to low-income households, with landlords receiving a market rent from local authorities and tenants making income-related (social) rental payments to local authorities. The tenants are selected on the basis of need by the local authorities. In the Flanders region of Belgium, there is a similar scheme. Intermediary organizations called Social Rental Agencies, which are not part of government, rent dwellings from market landlords and allocate them to vulnerable households. In Ireland, these dwellings are considered part of the social rental sector, but not in the other countries. The question remains whether the statistics follow this policy distinction.
Another often unclear distinction is the one between private renting and “other” tenure. Slovenia, for instance, categorizes 7 percent of the stock as “other”. This tenure refers to rent-free dwellings. On the other hand, in the UK and to a lesser extent in the Netherlands, rent-free tenure is included in private renting. In England, private rental housing also includes accommodation tied to jobs, such as tenanted farms and shops; dwellings supplied by the armed forces and health authorities; and student housing. It comprised around 14 percent of the housing stock in 2008 (ODPM 2005).
Lastly, in Germany it is known that tenant-owning cooperatives are categorized as private renting. Their share of the stock was 5 percent in 2006. These housing cooperatives let dwellings to people who buy a share in the equity of the housing cooperative. This share usually amounts to about 1 percent of the cost of building the dwelling. This share (which is clearly lower than for the Scandinavian ownership cooperatives described above) makes the tenant part-owner of the dwelling, ruling out any conflict of interest between the occupant and the owner.
Housing tenure to be used with care as a unit of comparison
Even though there is great international variation in tenure forms, it is still possible to construct a typology of housing tenure that uses categories that are similar enough to allow comparison across countries. The size of these categories cannot necessarily be identified, but the different types of policy that apply can. The allocation criterion is specifically useful in this context. In a country like the USA, for example, where there is a small proportion of social or publicly owned housing, the share of social housing will be higher when privately owned housing that has allocation restrictions is included, i.e., private rental housing that is let to voucher recipients (a type of housing allowance) and Low Income Housing Tax Credit rental housing that is subsidized via the tax system and is also subject to social allocation criteria and rent limits (Oxley et al, 2010).
BBR (2007) Wohnungs- und Immobilienmärkte in Deutschland 2006, Bonn: BBR.
Dol, Kees & Marietta Haffner (eds.) (2010) Housing Statistics in the European Union, The Hague: Ministry of the Interior and Kingdom Relations, Link>>.
Elsinga, Marja, & Marietta Haffner (2006) Kopen in een coöp. Coöps op Zweedse en Finse woningmarkt. Een quickscan, Rotterdam: SEV, SEV-programma Wat beweegt de woningmarkt? Link>>.
Haffner, Marietta, Joris Hoekstra, Michael Oxley & Harry van der Heijden (2009) Bridging the gap between market and social rented housing in six European countries, Amsterdam: IOS Press BV.
Haffner, Marietta, Joris Hoekstra, Michael Oxley & Harry van der Heijden (2010) Universalistic, Particularistic and Middle Way Approaches to Comparing the Private Rental Sector, International Journal of Housing Policy, 10(4) 357-377 .
Hegedüs, József, Martin Lux & Petr Sunega (2011) Decline and depression: the impact of the global economic crisis on housing markets in two post-socialist states, Journal of Housing and the Built Environment, 26(2) 315-333.
Karlberg, Björn & Anders Victorin (2004) Housing tenures in Nordic countries, in: Lujanen, Martti, Housing and Housing Policy in the Nordic Countries, Copenhagen: Nordic Council of Ministers, pp. 57-78.
Maclennan, Duncan & Alison More (1997) The Future of Social Housing; Key Economic Questions, Housing Studies 12(4) 531-547.
ODPM (2005) Housing in England 2003/04, Part 3: Social renters and private renters, December, London, Office of the Deputy Prime Minister.
Oxley, Michael, Ros Lishman, Tim Brown, Marietta Haffner & Joris Hoekstra (2010) Promoting investment in private rented housing supply. International policy comparison, London: Department for Communities and Local Government, Link>>.
Ruonavaara, Hannu (1993) Forms and types of housing tenures, Scandinavian Housing & Planning Research 10(1) 3-20.
Ruonavaara, Hannu (2005) How Divergent Housing Institutions Evolve: A Comparison of Swedish Tenant Co-operatives and Finnish Shareholders’ Housing Companies, Housing, Theory and Society, 22( 4) 213-236.
Siksiö, O. (1990) Learning from tenure; an international comparison on the meaning of tenure in nine European countries–East and West, Housing Evaluation, Rotterdam: CIB proceedings, Publication 118.
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Marietta Haffner is a housing economist with more than 20 years of experience in comparative housing research, usually from a housing finance, housing economics or housing policy point of view. She has published widely in scientific journals on such topics as housing affordability, housing taxation anad subsidization, and housing policy. Haffner is a member of the Management Board of Housing Studies and the Scientific Editorial Board of Tijdschrift voor de Volkshuisvesting.