Social Housing Vs. Public Housing: What's The Difference?

To the common renter, housing advocate or policy layperson, the meaning of social and public housing are frequently used as synonyms. They both create a picture of government-owned apartment blocks, regulated rent, and long queues. Nevertheless, in the context of urban planning and housing policy, these two terms are completely different in terms of philosophy, financing schemes, and experiences. It is not merely an academic exercise but it is important that the voters, policymakers, and residents who desire to promote effective solutions to global housing crisis understand the difference.

Essentially, the difference is reduced to management and ownership. Historically, one of the most common models has been the public housing, whereby the state (local, or national government) is the direct builder, owner, and operator of the properties. Imagine the typical "housing project" or "council estate." Social housing, however, is a more modern and a wider term. It is rented housing which is offered at lower than market rates, though it is usually owned and operated by non-profit organizations, cooperatives, or registered social landlords (such as housing associations), and the government may play the role of a regulator or subsidizer but not a direct landlord.

This difference has changed significantly within the past 4 decades. The social housing model became more popular in Europe as governments ceased to be direct providers of housing (because it was too expensive and stigmatized), but is currently finding popularity in North America. To gain a proper insight into what model fits mixed-income communities and long-term sustainability we need to deconstruct the particular distinctions of ownership, funding, eligibility, quality of life, and global implementation.

Beyond The Core: Structures of Ownership and Management

The basic distinction between the social housing and the public housing is the owner of the deed and the owner of the rent. A pure public housing system is where the government is the landlord. It implies that the land, construction, maintenance personnel and the lease terms are owned by a municipal housing authority (or a federal department of housing and urban development, such as HUD in the US). This means that 100 percent of the financial risk is also passed to the government in case the roofs leak or elevators collide, and this is likely to result in delayed maintenance as a cost-reduction measure.

Conversely, social housing separates ownership and direct state ownership. In this model, the financing is done by the government, usually in the form of grants, low interest loans or tax credits, but the real landlord is a third sector organization. They are housing cooperatives, faith-based charity, or non-profit housing association (including Clarion Housing in the UK or Habitat for Humanity in some instances). These institutions own and control the assets. This is usually afforded by the distance between the social housing providers and day-to-day political intervention and enables them to work more like a business, with long-term planning, and targeted services to the tenants.

There is a great implication of this structural difference. Public housing is at the mercy of political changes; a new mayor may cut maintenance costs. Board-controlled social housing or member cooperative-managed social housing provides a sense of buffer against political flux. Moreover, social housing schemes frequently permit so-called mixed-tenure buildings, with certain units leased at market rate to cross-subsidize the social units.

 The Financing Structures: Tax Dollars and Hybrid Capital

The state of the walls and the duration of the waiting list is determined by money. Public housing is practically dependent on direct government grants. In the case of a public housing estate, a congress or parliament vote is required to disband capital funds. The government subsidizes the continuing operational costs (utilities, repairs, security) once it is built since the rent gathered is insufficient to pay the bills. This has produced an endless financial burden. During governmental recessions, the housing of the poor is usually the first to receive the so-called fiscal starvation, which results in the notorious decline of towers such as those of Cabrini-Green in Chicago or of the banlieues in Paris.

Social housing makes use of more diversified financial toolkit. Although government grants (otherwise known as capital advances) are still significant, social housing providers make use of private debt, philanthropic gifts and cross-subsidization. Since non-profits may provide a stable rate of returns on investment, they are able to get loans with banks. One of the main mechanisms is the so-called mixed-income model: a development may develop 100 units - 70 units which will be occupied by low-income tenants (subsidized) and 30 units by middle-income tenants (at market rate). This profit on the 30 units based on market-rate cover the maintenance cost of the 70 units based on subsidies, which reduces the cost of continuous government bailout.

It is a hybrid financing mechanism that allows social housing to be more scaled during constrained fiscal periods. A government may initiate a social housing fund by a one-time appropriation, which is recycled with loans and repayments. This dependency on privately raised funds or even market rents however presents a weakness. The market-rate cross-subsidy is eliminated in case of a financial crash, which can cause social landlord instability.

Eligibility, Rents and the Welfare Trap

Who is allowed to live there, and how much is he charged? The two models have below-market rents, yet the process of such calculation is quite different. In most jurisdictions (such as the US) the traditional public housing is directly proportional to income. The 30% rule is the rule of thumb: a tenant makes a 30 percent contribution to his rent on his adjusted gross income.

When a tenant gets out of employment, his or her rent reduces to almost zero. Although this provides a safety net, it forms a famous discouragement to work. When a tenant receives an increase in wages, the increase in rent is nearly increased on a dollar-to-dollar basis. This is commonly referred to as the notch effect or the welfare trap where it would not actually be financially beneficial to the tenant to make more money.

This trap is usually circumvented through the use of social housing through the application of social housing rent or cost rent. A social housing unit rent is pegged on the expenses of running the building rather than the income of the tenant. It is typically determined at a pre-determined proportion of the local market rate (e.g. 60% of market rent). When a social housing tenant receives a promotion, he/she retains the same rent. They are left with the additional revenue.

On the other hand, when they lose their job, they will find it hard to afford such fixed rent, and they will need a separate housing benefit under the welfare system. This decoupling of housing expenses and earnings is economically effective--it promotes labor supply and economic advancement.

The eligibility is also different. Waiting lists in public housing are frequently means-tested; one has to be less than a certain poverty line to be eligible. Middle-income eligibility is often available in social housing. Even doctors and lawyers can afford social housing in such cities as Vienna (which is widely known as the capital of social housing) since the system is supposed to be universal, and avoid ghettoization.

The US public housing system is only focused on the poorest, which is concentrated on the disadvantage. The social housing model tends to seek a social mix and is based on the assumption that stable and working families will act as role models and informal social control and reduce criminality and result in better outcomes on the very poor.

Design, Stigma and Quality of Life

The difference in the models in terms of visual appearance is harsh, but not unavoidable. The modernist architecture of the mid-20th century had a significant impact on public housing, especially in the Anglosphere (the USA, the UK, Canada). The consequence was towers in the park; isolated, high-rise buildings with windswept plazas surrounding them. These designs were simple to construct inexpensively, yet they eliminated the eyes on the street which Jane Jacobs argued were necessary in order to ensure safety. As a result, numerous public housing estates have come to be associated with crime, social isolation and physical degradation. The mere term the projects is stigmatized with a sense of failure on the side of government.

In Northern Europe, social housing is more towards development on human scale. Social housing providers invest in superior architecture due to their long-term commitment to the neighbourhood as they are frequently local and consequently, non-profit-making organisations. In Germany or the Netherlands, however, it is difficult to distinguish between social housing and private condominium: the two are even part of the same city block. This design option is a vigorous combat of stigma. In the case where housing is exactly the same as that of the market, the resident does not feel like being branded as a public charity case. It gives rise to what sociologists refer to as tenure blindness.

Nevertheless, social housing is not all that ideal. The large post-war council estates (which had been public housing) in the UK were subsequently privatized to the social housing associations. There were several victims of bad transfer deals where they failed to pay their repair debts. On the other hand, there are the finest public housing in Singapore where the Housing and Development Board (HDB) is a state agency which constructs aspirational, high-end, and mixed-income public housing.

An International illustration: Two Systems and a Tale

To base this theory on facts, consider the case of the United States vs Austria. The ideal example of the pure model of public housing is the US (however, it is declining). In 1937, the US built the public housing system that constructed huge estates such as Pruitt-Igoe in St. Louis (torn down) or the Queensbridge Houses in NYC. These properties became deteriorated because of long-term underfunding by the Congress and a prohibition of mixed-income tenants. US has not been doing much to construct new public housing these days. Rather, they have turned to a voucher system (Section 8) that places tenants in the housing of the private market which is an entirely different model neither social nor state owned.

Compare this with Vienna, Austria. Vienna has the most effective social housing system in the world with more than 60 percent of its population residing in subsidized social units. Vienna is not based on the American model of people. The city rather owns the land (leased cheaply) but pays non-profit developers and cooperatives to construct the buildings. The rents are charged at cost-recovering rates. No gates, no guards, no apparent poverty. Due to the presence of the middle class in the system, the political will to ensure that the buildings are maintained beautiful exists. When a resident of Vienna transfers into social housing, it is not a project that they are being transferred into; it is an ordinary apartment.

There are other hybrids. The word council housing (public) has been widely used in the UK instead of the social housing (housing association). Following the sale of the stock of the public housing by the Margaret Thatcher policy of the Right to Buy, the non-profit housing associations took the lead in terms of building new low-cost housing. In Canada, social housing is an official term to denote all the non-profit co-ops (such as those in Vancouver) to the remaining units of public housing (such as Toronto Community Housing).

The Future of Affordable Housing: Intersection and Criticism

With 2030 and further, the strict distinction between social and public housing is starting to be blurred. According to many progressive policymakers, the discussion on who the landlord is makes one lose sight of the actual problem de-commodifying housing. Regardless of the city or co-op ownership of a unit, the intention is to take housing off the speculative market. A third pillar is the emergence of the so-called Community Land Trusts (CLTs).

A CLT is a non-profit which holds the land (indefinitely) though the structure above it may belong to a resident cooperative (social) or rented out by a municipality (public). This hybrid is the better of the two worlds, as this hybrid is more stable than just non-profit and more agile than just ownership of the land.

The right however criticizes it by saying that social housing is merely just public housing by other names. They argue that, any subsidy misaligns the free market and that, social housing waiting lists (which are usually years long) demonstrate that rationing housing is not a success. At the same time, left opponents claim that the social housing model has been neoliberalized - that is, compelled to behave like banks and work towards efficiency metrics, with the understanding of the social-work nature of public housing lost. They cite cases of eviction by social housing landlords of tenants as often as in private situations, yet historically public housing had been characterized by better tenure security (the right to permanent stay).

After all, it is probably going to be a mosaic of models in the future. The tragedies of 20 th century public housing (stigma, bad design, concentrated poverty) were not predetermined; they were political decisions. The achievements of social housing (mixed-income, non-profit stewardship) cannot be magic; they need strict control. In the case of the renter who wants to have a safe and affordable home, the difference is less than the result. It is necessary to know the difference to the voter:

Conclusion

By the end of the day, social and public housing have one thing in common the for-profit private rental market that locks out the working classes. The two models are geared towards security of tenure and affordability. However, their working DNA is dissimilar. Public housing is a direct government service, such as the police or fire department - vulnerable to budget pressures and political caprice, but in theory to the voter. Social housing is a state-subsidized social enterprise, which is more nimble and less politicized, and not always directly responsible to the people.

The replacement of the public by the social housing in the past 50 years represents a greater change in the governance: the state as a provider to the state as a facilitator. To the resident, the difference will be in the fact that their rent is going to change when they receive a raise (social housing will better here), or the fact that the hallways will be painted when the mayor is re-elected (public housing may be better here). To the city planner, either he/she can attract the attention of the private capital (social) or he/she has to wait till there is an increase in taxation (public).

There is no proper, universal answer. Singapore demonstrates that public housing can be of world standard. Vienna demonstrates that social housing can be universal. Detroit demonstrates that public housing is not effective. London demonstrates that social housing can still be in a long queue. What is important is that the brand is not as important as the political will to maintain, integrate and dignity. Be it social or be it public, it is still necessary to make housing homes--and homes do not need only cheap bricks; they need respect.

Also read: Lessons from Singapore's Public Housing Model