# **_Social Housing Reforms_**

The new social rental programs that characterize four of the six studied countries suffer from deep subsidies and insufficient evaluation of costs and benefits, subsidy dependency, and targeting. Most public rental programs are too small and deeply subsidized to launch a significant attack on the problems they intend to address. The Polish TBS system seems to strike a compromise by successfully attracting private equity cofinancing and bank finance; however, a closer look will likely reveal deep subsidy dependency and an intended middle-class target group. A follow-up examination is recommended for this program, within a larger study of the need and form of PPP non-profit rental housing in ECA countries.

Given the low resources at hand, Polish, Romanian, and Russian local governments - independently from central governments - have adopted flexible approaches by buying new social units at the liquid secondary market. This strategy leads to lower housing standards for social tenants than under the socialist housing system, but it maximizes program reach and puts some downward pressure on private rents for the relevant target groups. Support for modernization investments and a tax system conducive to them could lead to similar efficiency gains, especially in the cooperative and private rental sector constituted mostly of old buildings. Programs that contain subsidies should be linked to targeting requirements, rent ceilings, and allocation rights for local governments.

Experience with housing allowances for poor tenants and owners - the favorite brainchild of the early transition years - has been mixed, especially due to often inappropriate administration, frequent program changes, and insufficient budget support. Better funded allowance programs could still fulfill useful purposes if they supported a faster adjustment of rents and housing costs to cost recovery level after investment. This has not been the case so far, leading to expensive dual subsidies (allowances and investment cost subsidies).

# **Future Research Needs**

# **Empirical Research**

Rental housing sector research has not been particularly strong in mature market economies outside the limited circle of countries with high rental sector shares and proactive rental policies (mainly Scandinavia, the Benelux, France, Britain, and Germany). Moreover, during the 1980s the rental sector was pushed ideologically onto the defensive and thus attracted less scholarly attention. Not surprisingly, the first wave of housing sector analysis for transition countries focused on homeownership and mortgage markets.

A second shortcoming lies in detailed monitoring of the housing market by governments and independent analysts. Most census specifications do not provide information about tenure forms and are hard for researchers to access. Surveys are rare, and microcensus analysis that would, for instance, track household moving chains is absent.

Improving the data support, which can sometimes be done simply by adding or reformulating questions in surveys or censuses, should be a first priority for governments interested in enhancing their rental sector policies. Follow-up studies are recommended with existing census and LSMS/HBS material, to differentiate the structure of demand and supply further. This could 64