Young people lose out in the allocation of public housing

Repost from vogon.nl

The Dutch system for allocating public housing matches homes to tenants’ preferences reasonably well on average. But the average hides clear differences. Older and larger households live in relatively spacious homes, while young people, single-person households and house seekers from outside the region have to make do with less space.

This is the conclusion of Jennifer Buurma-Olsen, Jort Sinninghe Damsté, Hans Koster and Jos van Ommeren in the article ‘De verdeling van schaarse corporatiewoningen’ (‘The allocation of scarce public housing’), published in Real Estate Research Quarterly (RERQ). The underlying study appeared in the Journal of Public Economics as ‘Quantifying misallocation of public housing’. The authors compare the actual allocation of public housing with a hypothetical allocation in which households’ willingness to pay decides who lives where.

On average, the match is quite good
In the Netherlands, public housing is mainly allocated through regional waiting lists. House seekers can apply for vacant homes themselves and can turn down an offer without losing their waiting time. According to the researchers, this freedom of choice probably helps explain the relatively good match between homes and residents.

On average, the actual allocation deviates by about 7 to 9% from an allocation based on willingness to pay. That is about 8 m² of floor space, or €20K in assessed property value (WOZ value). Overall, the public housing sector does a reasonably good job of matching households to homes that suit their preferences.

Older people and families live relatively spaciously
Not all groups fare the same. Older households, larger households, and households in which at least one adult was born in the region live in larger and more valuable public housing than their willingness to pay would predict.

By contrast, younger households, single-person households and households from outside the region get relatively less space. A single-person household lives in a home that is on average 8.5 m² smaller than in the alternative allocation. For a household aged 25 to 35, the gap grows to about 13 m².

When these characteristics combine, the disadvantage can be large. According to the calculations, a young single-person household born outside the region lives in a home that is on average about 22 m² smaller.

More space for one group means less for another
According to the researchers, steering the allocation towards particular groups always involves difficult choices. More space for young people, for example, may come at the expense of families, single parents or other households with an urgent housing need.

Policymakers should therefore decide not only which groups deserve more space, but also, explicitly, which groups will get less of the scarce stock. Urgent-need priority status and additional allocation criteria can help vulnerable groups, but they also limit the freedom of choice of other house seekers.

Encouraging moves can free up space
Older tenants benefit from their long registration time, but they may also stay in a large home longer than is desirable. One reason is that, over time, the rent of a current home is often much lower than the rent of a newly allocated, smaller home.

Measures that narrow this rent gap and make moving more attractive could get more tenants to move on. This could free up space for younger households and other house seekers. Allocation policies aimed at young people can also help, but again at the expense of other groups.

Local priority conflicts with equal opportunity
Municipal policies and regional waiting lists give households with a local background a small advantage. The measured difference is relatively small, but priority based on local ties can reduce newcomers’ chances and hamper labour mobility.

According to the authors, a national waiting-list system, or rethinking municipal priority for house seekers with local ties, could help create a more level playing field.

The analysis covers only how the existing public housing stock is divided among current tenants. It leaves out young people and other house seekers who do not get a public housing unit at all. Their real disadvantage may therefore be larger than the results show.