Policy Goals

            Housing policy reform is a central component in the fight to end homelessness throughout the world. One of the leading causes of homelessness is a lack of affordable housing for low-income individuals¹. With this in mind Homeless Entrepreneur promotes a series of housing policy measures aimed at preventing homelessness and empowering people within the G7 and the EU to improve their living situation. While some member nations are farther ahead than others when it comes to housing policy, this article is designed to lay out some basic policy goals that all members should strive to meet. These policies include actions designed to: (1) prevent eviction, (2) ensure availability of affordable housing, and (3) assist in the creation of assets for those affected by poverty. By targeting social policy in these areas, we can help provide a wealth of opportunities for individuals to reduce homelessness and find greater financial stability in the future.

(1) Eviction Prevention

          A lack of eviction protection policy can be a fast-track to homelessness. It is essential that we implement a series of reforms to protect those most vulnerable to losing their homes and being forced into insecure housing situations. These reforms should begin with expanding eviction protections for low income individuals and those renting without a formal agreement. In many instances people living in poverty cannot afford the upfront costs of a down payment or security deposit necessary to enter into a formal renting agreement with landlords. As a result, they end up renting through informal month to month payments. Since they are more likely to have no formal lease or renting agreement, people in poverty are often disproportionately subjected to abusive housing practices such as eviction without notice and sudden rent increases. Without a formal lease they are forced to either agree to their landlords demands or be forced out onto the street with no legal recourse. While it is always important for everyone to have secure access to housing, it is even more urgent given the current pandemic. Losing housing could be a death sentence for those who are evicted and forced to live on the street without a place to socially isolate.

However, policymakers can assist in preventing these types of problems in several ways. One way in which they may address these abuses is by extending legal protections to those renting without a formal agreement by making them similar to those renting with one. This would require legislation emphasizing the fact that verbal non-written agreements still provide tenants with protections against abusive housing practices. However, it is possible that expanding protections to informal agreements in this way could prove difficult due to the vague nature of their terms. As such policymakers should also consider making funds available to assist potential tenants in making the down payments or security deposits necessary to enter into a formal lease agreement with their landlord. These funds would in turn be met by obligations on the individual that they care for the property they have been assisted in leasing. By doing so policymakers would provide tenants with the protections of formal agreements without having to adjust existing contract law. Finally, cities should seek to limit no-fault evictions. No-fault evictions are a tool used by landlords to evict tenants without reasonable cause. This practice often results in landlords leveraging tenants into either paying ever higher rent or being forced out of their home when their lease expires. Ending no-fault eviction helps to protect the housing market from becoming even more expensive going into the future.

          While ensuring that everyone has access to the eviction protections allotted to formal renting agreements is important, it is by no means adequate for the prevention of eviction and the homelessness that so often follows. We must also make resources available to those who have formal renting agreements or mortgage agreements but are still in danger of being evicted because of low income. Unexpected medical expenses, family emergencies, or loss of employment can all cause people to suddenly find their financial situation destabilized and make the threat of eviction or foreclosure imminent. Often these situations require immediate intervention to provide short-term economic assistance. As such, crisis intervention funds and low or no interest emergency loans should be made available to those facing potential eviction. An emergency intervention can act as a small individual economic stimulus to provide short-term support. Given the billions of euros that the EU is currently devoting to provide emergency bailouts to corporations it only makes sense that we provide that same assistance on a smaller scale to everyday citizens. The investment in these programs can be thought of as insurance in preventing further expenses in the future. In the United States providing assistance to the chronically homeless through social programs costs an average of $35,578 USD per year². Through the allocation of emergency intervention funds, communities can avoid the costs associated with people relying on social programs after having been evicted. Implementing these changes could have a real positive effect on the stability of the lives of millions.

(2) Creating Affordable Housing

          When it comes to preventing homelessness, one of the areas that social policy can have the largest impact is by ensuring the creation of affordable housing. Although it varies by nation, affordable housing is typically defined as being housing that costs up to 30% of an individual’s income. Since 2007 rent in the EU has increased by an average of 21% while the price of houses has increased by 19% ³. However, some member states like Austria saw house prices go up by as much as 85%. Programs like Homeless Entrepreneur’s Homeless Hostels Work Program, which converts underused tourism infrastructure into temporary housing, help to assist those who cannot afford housing on a short-term basis. However, as the global population continues to increase it is essential that now more than ever we take measures to address the issue of long-term housing affordability. The simple fact is that if people cannot afford adequate housing, our rates of homelessness will only increase going forward into the future. To create a bulwark against this trend we must implement policies that stimulate the construction of affordable housing and that do so in a manner that promotes opportunities for a greater portion of the population. The ramifications of this reality should branch across a broad range of topics beginning with zoning and housing construction. Policy changes in these areas should strive to meet two primary goals: The creation of an adequate number of affordable housing units and ensuring that these units are available in high opportunity areas.

Constructing new affordable housing units is an intuitive first step in expanding the availability of affordable housing. To ensure that developers prioritize the creation, policy makers should incentivize that a portion of all newly constructed housing complexes consist of affordable units. This can be done through the creation of affordable housing grants or through tax breaks for affordable housing development. Programs like the Low-Income Housing Tax Credit in the United States have provided developers with an average of 4-9% tax break in return for an agreement that a percentage of the units constructed will fall within affordable rent guidelines⁴. While creating more affordable housing units is essential, we must also do so in a manner that addresses the underlying problem of those who require low income housing.

If they are to meet their goal of helping to support low income families, then affordable housing should be constructed in areas of high socioeconomic opportunity. In the past when developers have created new affordable housing units they have consistently done so in impoverished areas of low economic opportunity. As a result, those who wish to live in the newly available affordable housing are unable to find the employment or education resources necessary to improve their living situation. To combat this practice, cities can implement Inclusive Zoning Ordinances in areas of high economic opportunity. Inclusive Zoning requires that a percentage of housing units in a given area are affordable to those making less than the average median income for the city. This would allow low income individuals to move into areas of higher economic opportunity where jobs are more readily available and expand their possibilities for financial success. If used in combination with subsidies to ensure access to education, these ordinances can vastly improve social mobility. By coupling the practices of incentivizing real estate developers and implementing Inclusive Zoning cities policymakers can expand economic mobility while also providing a greater amount of affordable housing.

            Beyond the construction of new housing, it is important that communities take steps to make existing housing affordable for a larger portion of the population. The most direct way to improve housing affordability is by supporting and expanding housing assistance programs. Housing voucher programs play an important role in preventing homelessness and supporting economic mobility. Households who qualify for housing assistance are typically spending as much as 30 - 40% of their monthly income on housing expenses. In 2014 24.7% of households in Spain spent more than 40% of their income on housing⁵. Housing vouchers allow renters to spend a greater percentage of their income on essentials such as food, clothing, and medicine instead of housing expenses for each month.

This means that unexpected expenses have a reduced chance of making someone choose between buying essentials and being forced into homelessness. Just as importantly, housing vouchers broaden the housing options available to renters. This is important because housing mobility plays an essential role in creating economic mobility. When people are not prevented from moving because of prohibitively high rent, they can take advantage of living in high opportunity neighborhoods where their socioeconomic situation can improve. In this way housing vouchers can help those who qualify become more economically independent in the long run.

 

(3) Accumulating Equity

            At Homeless Entrepreneur we believe in assisting and empowering homeless people to improve their situation and take ownership of their present future. Consequently, we advocate for programs that help create assets for homeless individuals and that personally invest them in building successful communities. One way in which communities have helped to build assets for low income individuals is by supporting investment in Limited Equity Cooperatives (LEC).  Limited Equity Cooperatives can not only provide affordable housing but also build assets for residents and invest them in the well-being of their communities. These programs have shown great success in US cities such as Washington DC and Boston. Rather than paying rent like a traditional housing complex, residents of LECs pay to buy shares in the cooperative that in turn provides them with the right to stay there as well. The difference in these systems being that LECs provide residents with partial ownership in the property that grows over time as more payments are made. This means that those living in LECs are not just making rent payments, they are making real estate investments that accumulate value over time and can pay out in the future. Affording residents partial ownership also gives them a stake in maintaining the property and managing decisions regarding how it should be run. LECs grant people an opportunity to become active working participants in their community while also providing affordable housing and generating financial assets. For these reasons communities should take steps to invest in LECs projects. This could come in the form of offering low or no interest loans to create LECs, creating tax breaks for their development, or providing support to the NGOs that are working to develop LECs within communities. Giving low income individuals the tools to build their assets through active participation in their community is a great way to prevent future homelessness.

How to Help

            The best way you can help to bring about housing policy reform is by showing your government representatives that you support these proposals. While the policies mentioned above are all steps in the right direction, they will not be successful without the active participation of local and national leadership. As Tom Baker, a professor of Human Geography at Auckland University puts it, “Decades of inclusive zoning and developer subsidies have not delivered a great deal of 'properly' affordable housing, both in relative and absolute terms. It is increasingly clear that improvements to affordability cannot be achieved without substantial state involvement in the housing sector”.

            If you are interested in learning more about how you can help, consider lending support to non-profits like Homeless Entrepreneur who seek to advocate on behalf of homeless and low-income individuals. In addition to the Homeless Hostels Work Program mentioned above, Homeless Entrepreneur also operates:

The HELP Program:

The HELP Program works by matching individual participants with nine managers in the key areas of: professional development, education, health, housing, finance, legal assistance, communication, sales, and a mentor. This creates a support structure of individuals all working together to help participants achieve housing and financial independence within twelve months.

https://www.homelessentrepreneur.org/en/help-program

Homeless Voices:

Homeless Voices provides insight into the lives of homeless individuals to connect them with their community along with housing and employment opportunities, so they can grow their income and build their assets. People are given the opportunity to tell their story and expose the ways in which our current system is failing to meet the needs of many.

https://www.homelessentrepreneur.org/en/he-voices

Homeless Helpline:

The Homeless Helpline collects real-time data from and about homeless people or those about to become homeless and connects them to available resources. By acting as an information hub Homeless Helpline aims to prevent and reduce homelessnes.

https://www.homelessentrepreneur.org/en/he-helpline

Noah Thompson,

Homeless Entrepreneur | Policy and Fundraising

noah@homelessentrepreneur.org

References:

¹ U.S. States Conference of Mayors, Hunger and Homelessness Survey: A STATUS ON HUNGER AND HOMELESS IN AMERICA’S CITIES – A 25-CITY SURVEY 2 (Dec. 2014)

² http://endhomelessness.org/wp-content/uploads/2017/06/Cost-Savings-from-PSH.pdf

³ European commission, Eurostat. Housing Price Statistics.

⁴ Congressional Research Service, An Introduction to the Low-Income Housing Tax Credit (Feb. 2017)

⁵ OECD Affordable Housing Database – HM1.3 Housing tenures and HC1.2 Housing costs over income