Area: Policy and financing
The discussion on housing regimes dates back to e neo-institutional turn in policy research which occurred during the 1980s. This literature viewed institutions not so much as “formal” entities but more as the culmination of conflicting power relations, market dynamics, and ideology. The study of these dynamics could, in turn, be used to understand the variegated development of post-war welfare states, as exemplified by Esping-Andersen’s seminal Three worlds of welfare capitalism (1990).
Kemeny defined the housing regime as “the social, political, and economic system of housing supply, distribution, and consumption, which determines the housing market opportunities of a certain period” (1981, p. 13). His framework follows the logic of the historical and institutional structure of society. Kemeny (2006) argues that, due to the central role of real estate in modern capitalism, housing systems follow similar paths, albeit with different logics. Studying the emergence of regimes of a different nature between countries, he distinguished between unitary and dualized housing regimes, based on their rental-market systems, that is: (a) countries with an open private sector but with a firmly regulated public sector are characterized by a dual rental market; and (b) societies where the private and public sectors are strictly regulated have a unitary rental market. In dualist countries (primarily the Anglo-Saxon ones), homeownership is commonplace, while in countries with an integrated/unitary system (such as Germany, Netherlands, and Scandinavian countries) renting is a realistic and even competitive alternative to ownership. Kemeny highlighted that the dominance of homeownership is not organically developed but is socially and politically constructed.
The above conceptualization of housing regime based on the functioning of rental market systems does not mirror the (Foucaultian) political and conflictual approach of Clapham, for whom a housing regime stands for a “set of discourses and social, economic and political practices that influence the provision, allocation, consumption [of housing] and housing outcomes in a given country” (2019, p. 24). He views policy as an arena where actors “negotiate and bargain” through discursive processes (Ruonavaara, 2020b). Clapham clearly distinguishes regime types from housing regimes. Regime types are useful for categorization since they can function as a baseline for comparative studies. However, “every housing regime is unique”(Ruonavaara, 2020b). Because of the complexity of the concept, Clapham (2019, p.17) proposes a three-stage analysis for housing policy (Figure 1).
Ruonavaara (2020b) finds Clapham’s approach nuanced but too general and broad, which – according to him - makes it less applicable. On the other hand, Hegedüs (2020) considers Clapham’s (2002) housing pathway reasonable, as it describes housing provision forms as a result of interactions. In line with Clapham, he argues that “interventions within the housing system can only be understood in the context of interactions between different housing market actors” (Hegedüs, 2020, p. 569). Consequently, an analysis that only focuses on the rental sector would lead to narrowed interpretations with low explanatory power.
More recently, Ruonavaara provided a new definition of housing regimes, which combines the elements of previous theories. He defined housing regime as a “set of fundamental principles according to which housing provision operates in some defined area (municipality, region, state) at a particular point in time” (2020a, p. 10). These principles are present in discourses, institutional arrangements, and political interventions. All actors have certain principles when operating in the system of housing provision at a given time and place. Housing regimes can be considered as the “principles of operation” (Ruonavaara, 2020a). In this sense, the housing regime concept faces challenges in its ability to represent an effective analytical tool for today’s housing systems. For Stephens (2020), it is necessary to rethink housing regime as a way to find middle-range theories given that current accounts of neoliberal convergence (Aalbers, 2016; Clapham, 2019) barely manage to explain the role of regime path-dependences in continuing to shape variegated housing outcomes.
References
Aalbers, M. (2016). The financialization of housing: A political economy approach. In Routledge studies in the modern world economy (1st ed.). Routledge.
Clapham, D. (2002). Housing Pathways: A Post Modern Analytical Framework. Housing, Theory and Society, 19(2), 57–68. https://doi.org/10.1080/140360902760385565
Clapham, D. (2019). Remaking housing policy: An international study. Routledge Taylor & Francis Group.
Esping-Andersen, G. (1990). The Three Worlds of Welfare Capitalism. Polity Press.
Hegedüs, J. (2020). “Limits of the Kemeny’s Housing Regime Theory” A Comment to Stephens’ Paper. Housing, Theory and Society, 37(5), 567–572. https://doi.org/10.1080/14036096.2020.1816569
Kemeny, J. (1981). The myth of home-ownership: private versus public choices in housing tenure. In Routledge Direct Editions. Routledge & Kegan Paul.
Kemeny, J. (2006). Corporatism and Housing Regimes. Housing, Theory and Society, 23(1), 1–18. https://doi.org/10.1080/14036090500375423
Ruonavaara, H. (2020a). Rethinking the concept of ‘housing regime.’ Critical Housing Analysis, 7(1), 5–14. https://doi.org/10.13060/23362839.2020.7.1.499
Ruonavaara, H. (2020b). Rethinking Jim Kemeny’s Theory of Housing Regimes. In Housing, Theory and Society (Vol. 37, Issue 5, pp. 519–520). Routledge. https://doi.org/10.1080/14036096.2020.1827626
Stephens, M. (2020). How Housing Systems are Changing and Why: A Critique of Kemeny’s Theory of Housing Regimes. Housing, Theory and Society, 37(5), 521–547. https://doi.org/10.1080/14036096.2020.1814404
Created on 24-02-2022 | Update on 23-10-2024
Related definitions
Housing Governance
Area: Policy and financing
The shift from ‘government’ to ‘governance’ has been debated since the early 1970s. Whilst state interventionism had been widely embraced within western societies during the post-war decades, governments gradually moved from exercising constitutional powers to acting as facilitators and cooperative partners (Rhodes, 1997). Over the course of a few decades, this resulted in governance as ‘interactive social-political forms of governing’ (Nag, 2018, p. 124). Hira and Cohn (2003, p. 12), influenced by Keohane (2002), define governance as “the processes and institutions, both formal and informal, that guide and restrain the collective activities of a group”. Its decentralised and flexible nature could still include public actors but would also leave space for private and third-sector parties to provide services in hybrid and temporary institutional arrangements.
To formulate one single definition of ‘housing governance’ as a particular mode of governance is however difficult due to its multilevel character. Housing could relate to either a family home, a housing association, or a complete local/national housing governance framework. On a household level, Wotschack (2005, p. 2) defines governance as managing “the daily time allocation of spouses by household rules and conflict handling strategies”. The work of Wijburg (2021) indicates that local/municipal governance entails a set of public interventions, strategies, policies and provisions used to provide local needs (e.g. housing supply). On the national level, Yan et al. (2021) define public rental housing (PRH) governance as “a structure of a wide range of government and non-governmental actors that act in all its phases of PRH provision from policy design to implementation and realisation”.[1] This specific definition on PRH combines the domestic definition of governance with Wijburg’s understanding of governance on the local level. Within the Chinese context, the national government provides policies and creates nationwide operational methods, whilst local governments implement and formulate the policies locally (Yan et al., 2021).
Critics point out that a more decentralised governance structure complicates the public accountability of housing provision. Peters and Pierre (2006, p. 40) distinguish problems concerning the ‘isolation’ and ‘enforcement’ of accountability. The former refers to demarcation, as it is easier to measure the performance of a government housing agency directly responsible for new build and operations, than those from the private sector in an indirect role trying to stimulate and facilitate other actors and contracting out construction and operations (Shamsul Haque, 2000). The latter relates to the accountability deficit that arises when responsibility is transferred from democratically governed municipal agencies to actors without a representative institutional arrangement, and thus without control mechanisms for tenants or the wider population (Mullins, 2006).
Throughout history, understanding of governing has evolved together with the role of government. The state plays a different role in capitalism, corporatism and socialism, which has varying effects on local and/or (inter)national levels. Whilst the above paragraphs describe housing governance within a democratic governance regime, transferring the conceptual debate to autocratic or hybrid regimes would pose difficulties. Thus, finding a unique definition of housing governance applicable in all spheres remains a challenge, and the specific context must be carefully considered. Important challenges remain, and as housing provision mechanisms evolve, further exploration of housing governance, especially on a municipal level, are likely to gain importance (Hoekstra, 2020).
[1] “Housing provision is a physical process of creating and transferring a dwelling to its occupiers, its subsequent use and physical reproduction and at the same time, a social process dominated by the economic interests involved” ibid.
Created on 16-02-2022 | Update on 23-10-2024
Read more ->Affordability
Area: Design, planning and building
Affordability is defined as the state of being cheap enough for people to be able to buy (Combley, 2011). Applied to housing, affordability, housing unaffordability and the mounting housing affordability crisis, are concepts that have come to the fore, especially in the contexts of free-market economies and housing systems led by private initiatives, due to the spiralling house prices that residents of major urban agglomerations across the world have experienced in recent years (Galster & Ok Lee, 2021). Notwithstanding, the seeming simplicity of the concept, the definition of housing affordability can vary depending on the context and approach to the issue, rendering its applicability in practice difficult. Likewise, its measurement implies a multidimensional and multi-disciplinary lens (Haffner & Hulse, 2021).
One definition widely referred to of housing affordability is the one provided by Maclennan and Williams (1990, p.9): “‘Affordability’ is concerned with securing some given standard of housing (or different standards) at a price or a rent which does not impose, in the eyes of some third party (usually government) an unreasonable burden on household incomes”. Hence, the maximum expenditure a household should pay for housing is no more than 30% of its income (Paris, 2006). Otherwise, housing is deemed unaffordable. This measure of affordability reduces a complex issue to a simple calculation of the rent-to-income ratio or house-price-to-income ratio. In reality, a plethora of variables can affect affordability and should be considered when assessing it holistically, especially when judging what is acceptable or not in the context of specific individual and societal norms (see Haffner & Hulse, 2021; Hancock, 1993). Other approaches to measure housing affordability consider how much ‘non-housing’ expenditures are unattended after paying for housing. Whether this residual income is not sufficient to adequately cover other household’s needs, then there is an affordability problem (Stone, 2006). These approaches also distinguish between “purchase affordability” (the ability to borrow funds to purchase a house) and “repayment affordability” (the ability to afford housing finance repayments) (Bieri, 2014).
Furthermore, housing production and, ultimately affordability, rely upon demand and supply factors that affect both the developers and home buyers. On the supply side, aspects such as the cost of land, high construction costs, stiff land-use regulations, and zoning codes have a crucial role in determining the ultimate price of housing (Paris, 2006). Likewise, on the policy side, insufficient government subsidies and lengthy approval processes may deter smaller developers from embarking on new projects. On the other hand, the demand for affordable housing keeps increasing alongside the prices, which remain high, as a consequence of the, sometimes deliberate incapacity of the construction sector to meet the consumers' needs (Halligan, 2021). Similarly, the difficulty of decreasing household expenditures while increasing incomes exacerbates the unaffordability of housing (Anacker, 2019). In the end, as more recent scholarship has pointed out (see Haffner & Hulse, 2021; Mulliner & Maliene, 2014), the issue of housing affordability has complex implications that go beyond the purely economic or financial ones. The authors argue that it has a direct impact on the quality of life and well-being of the affected and their relationship with the city, and thus, it requires a multidimensional assessment. Urban and spatial inequalities in the access to city services and resources, gentrification, segregation, fuel and commuting poverty, and suburbanisation are amongst its most notorious consequences.
Brysch and Czischke, for example, found through a comparative analysis of 16 collaborative housing projects in Europe that affordability was increased by “strategic design decisions and self-organised activities aiming to reduce building costs” (2021, p.18). This demonstrates that there is a great potential for design and urban planning tools and mechanisms to contribute to the generation of innovative solutions to enable housing affordability considering all the dimensions involved, i.e., spatial, urban, social and economic. Examples range from public-private partnerships, new materials and building techniques, alternative housing schemes and tenure models (e.g., cohousing, housing cooperatives, Community Land Trusts, ‘Baugruppen’), to efficient interior design, (e.g., flexible design, design by layers[1]). Considering affordability from a design point of view can activate different levers to catalyse and bring forward housing solutions for cities; and stakeholders such as socially engaged real estate developers, policymakers, and municipal authorities have a decisive stake in creating an adequate environment for fostering, producing and delivering sustainable and affordable housing.
[1] (see Brand, 1995; Schneider & Till, 2007)
Created on 03-06-2022 | Update on 23-10-2024
Read more ->Affordability
Area: Policy and financing
Housing is usually deemed unaffordable when it consumes more than a set percentage of a household's monthly income. The Eurostat (2022) and the OECD (Chung et al., 2018) follow this threshold approach and define households overburdened with housing costs as those that spend more than 40% of their disposable income on housing.
However, this indicator fails to capture financial hardship, particularly among lower-income households. In fact, lower-income households may be spending less than 40% of their income on housing and yet failing to meet adequate consumption levels for other goods. As a response, the residual income approach ascertains housing (un)affordability by defining a minimum level of consumption for a set of goods according to particular household types. The residual income approach builds on consumption data to define the minimum level of income necessary for a household to survive after housing costs. The main shortcoming of this approach is that relies on subjective measures of what constitutes the necessary minimal expenses for a household.
These two definitions of affordability navigate two tensions 1) between housing and other types of consumption and 2) between the individual conceptions of what is affordable and what the government considers to be affordable (Haffner & Hulse, 2021). More recently, scholars have emphasized the multi-faceted nature of affordability to include commuting and transport costs together with energy costs (Haffner & Boumeester, 2010). Other approaches focus on supply-side measures, for instance on the share of the housing stock that a household can afford (Chung et al., 2018).
Evolutions in the measurement of affordability bear witness to the complexity of housing systems. Affordability is not only dependent on housing consumption but also on housing supply, particularly in inelastic markets where providers have considerable power, see for example Kunovac & Zilic (2021). At the same time, displacement pressures and rising energy costs in an older and inefficient stock add pressure on households to access affordable housing.
Created on 21-04-2023 | Update on 23-10-2024
Read more ->Window Guidance
Area: Policy and financing
Window guidance is a credit policy allowing central banks to steer bank lending toward certain economic activities. In the post-war period, it was common for both developed and emerging economies to employ various forms of credit control and allocation. However, these policies were virtually discontinued by the 1980s and the mandate of the central banks was reduced to controlling inflation through interest rates. Housing affordability and sustainability are strongly interlinked with monetary policies, particularly because housing prices and supply rely on debt for financing (Muellbauer, 2018). This link is embodied in inflation-adapted interest rates, which are used by central banks to “cool down” the economy and control prices. Currently, high inflation has pushed central banks all over the world to increase interest rates. Increases in interest rates impact the interbank lending rates such as the Euribor or the Libor and ultimately affect the price of credit in an economy. This then influences in particular capital-intensive industries such as housing development and renovation.
Social housing organisations (SHOs) which provide social -thus affordable- rental housing, particularly in North-Western Europe, are dependent on credit to finance not only the provision of housing, but also the energy-efficient renovation of their stock. The rise in interest rates resulting from central banks’ monetary policy aimed at curbing inflation puts the financial viability of renovation and new construction in jeopardy. This insight is not new, as the dependence on credit for renovation and maintenance was already foreseen as an issue in the late 90s by the British housing economist Christine Whitehead (1999). Traditionally, governments support social housing providers through grants, subsidies and through the guaranteeing of their debt (Lawson, 2013). For example, publicly owned social housing providers in Germany have their debt rated equally to that of their main owners: municipalities and regions. As a result, their financing costs also benefit from a high rating implying low-interest rates for their debt. This is also the case in France and the Netherlands where ultimately it is public institutions that guarantee SHO debt. For instance, a Dutch social housing provider raises debt at a triple AAA rating, that of the Dutch state. This lowers their interest costs in comparison to that of other companies which may be rated lower, hence have a higher risk premium and pay more for their debt (Fernández et al., forthcoming). In an inflationary environment, where interest rates rise across the board, this means higher financing costs for SHOs despite their risk premium remaining constant.
Window guidance is relevant in this context because it would allow central banks to set a lower interest rate for lending to certain activities, thus creating a window. During the period between 1945-1980, advanced and emerging economies alike implemented interventions on credit and capital markets. Central banks would align lending with industries, exports and manufacturing while increasing interest rates for less desirable sectors (Bezemer et al., 2023; Hodgman, 1973). According to Bezemer et al., (2023) based on Hodgman (1973) and Goodhart (1989 pp. 156–158), ‘credit guidance’, ‘credit controls’, ‘credit ceilings’, ‘directed credit’, and ‘moral suasion’ are also common names for these types of policy. More recently, organisations such as Positive Money have been advocating for a sovereign money proposal where banks would obtain funds from their national central bank with limitations on their usage (Youel, 2022). This enhanced control over bank lending opens up the possibility of earmarking private capital for investment in decarbonisation activities. For example, lending for speculative purposes or for highly polluting activities could be curtailed while the financial viability of environmentally friendly activities could be expanded. Ultimately, credit controls offer the possibility to guide credit toward the provision of affordable and sustainable housing and away from sectors such as fossil fuels or speculative bubbles.
Created on 24-04-2023 | Update on 23-10-2024
Read more ->Social Housing
Area: Policy and financing
A universal definition of social housing is difficult, as it is a country-specific and locally contextualised topic (Braga & Palvarini, 2013). This review of the concept focuses on social housing in the context of the UK from the late 1980s, which Malpass (2005) refers to as the phase of ‘restructuring the housing and welfare state’, to the early 2000s, known as the phase of the ‘new organisation of social housing’.
In response to previous demands for housing, such as those arising during the Industrial Revolution, and recognising the persistent need to address the substandard quality of housing provided by private landlords in the UK (Scanlon et al., 2015), the primary objective of social housing has historically been to enhance the overall health conditions of workers and low-income populations (Malpass, 2014; Scanlon et al., 2015). However, this philanthropic approach to social housing changed after the Second World War when it became a key instrument to address the housing demand crisis. Private initiatives, housing associations, cooperatives and local governments then became responsible for providing social housing (Carswell, 2012; Scanlon et al., 2015).
Social housing in the UK can be viewed from two perspectives: the legal and the academic (Granath Hansson & Lundgren, 2019). Along these two perspectives, social housing is often analysed based on four main criteria: the legal status of the landlord or provider, the tenancy system or tenure, the funding mechanism or subsidies, and the target group or beneficiaries (Braga & Palvarini, 2013; Carswell, 2012; Granath Hansson & Lundgren, 2019).
From a legal perspective, social housing maintained its original goals of affordability and accessibility during the restructuring period in the late 1980s. However, citing the economic crisis, the responsibility for developing social housing shifted from local authorities to non-municipal providers with highly regulated practices aligned with the managerialist approach of the welfare state (Granath Hansson & Lundgren, 2019; Malpass, 2005; Malpass & Victory, 2010). Despite the several housing policy reviews and government changes, current definitions of social housing have maintained the same approach as during the restructuring period. Section 68 of the Housing and Regeneration Act 2008, updated in 2017, defines social housing as low-cost accommodation provided to people whose rental or ownership needs are not met by the commercial market (HoC, 2008; 2017, pp. 50-51). The Regulator of Social Housing, formerly the Homes and Communities Agency, has adopted the earlier definition of social housing and clarified which organisations provide it across the UK. These organisations include local authorities, not-for-profit housing associations, cooperatives, and for-profit organisations (RSH, 2021). In contrast, the National Housing Federation emphasises the affordability of social housing regardless of the type of tenure or provider (NHF, 2021).
From an academic perspective, Malpass (2005) explains that during the restructuring phase, social housing was defined as a welfare-supported service – although it did have limitations, which meant that funding principles shifted from general subsidy to means-tested support for housing costs only, which later formed the basis for the Right to Buy Act introduced by the Thatcher government in the early 1980s (Malpass, 2005, 2008). The restructuring phase, however, came as a response to the housing 'bifurcation' process that began in the mid-1970s and accelerated sharply from the 1980s to 1990s (Kleinman et al., 1998; Malpass, 2005). During this phase, the role of social housing in the housing system was predominantly residual, with greater emphasis placed on market-based solutions, and social housing ownership concerned both local authorities and housing associations (Malpass & Victory, 2010). This mix has influenced the perception of social housing in the 'new organisation' phase as a framework that regulates public housing intervention for specific groups and focuses on enabling non-municipal providers (Malpass, 2005, 2008; Malpass & Victory, 2010). Currently, as Carswell (2012) explains, social housing plays an important role in nurturing a variety of initiatives aimed at providing ‘good-quality’ and ‘affordable’ housing for vulnerable and low-income groups (Carswell, 2012). Oyebanji (2014) sees social housing as any form of government-regulated housing provided by public institutions, including non-profit organisations (Oyebanji, 2014). Additionally, Bengtsson (2017) describes social housing as a system that aims to provide households with limited means, but only after their need has been confirmed through testing (Bengtsson, B, 2017 as cited in Granath Hansson & Lundgren, 2019).
To a great extent, social housing in the UK can be seen as a service system that is intricately linked to the welfare state and influenced by political, economic, and social components. Despite being somehow determined by common factors and actors, the relationship between social housing and the welfare state can sometimes be complex and subject to fluctuations (Malpass, 2008). In this context, the government plays a vital role in shaping and implementing the mechanisms and practices of social housing.
While the pre-restructuring phase focused on meeting the needs of the people by increasing subsidies and introducing the right to buy (Stamsø, 2010), the aim of the restructuring phase was to meet the needs of the market by promoting economic growth (privatisation, market-oriented policies and reducing the role of local authorities) (Stamsø, 2010; Malpass, 2005) . The new organisational phase, on the other hand, works to meet and balance the needs of all, with people, politics and the economy becoming more intertwined. Welfare reform legislation passed in 2010 aims to enable people to meet their needs, but through 'responsible' subsidies, leading to a new policy stance that has been described as 'neoliberal' thinking (Hickman et al., 2018). However, there are still no strict legal requirements for the organisation and development of social housing as an independent service system, and most of the barriers to development are closely related to the political orientation of the government, rapid changes in housing policy and challenges arising from providers' perceptions of existing housing policy structures (Stasiak et al., 2021).
Created on 17-06-2023 | Update on 23-10-2024
Read more ->Path Dependence
Area: Policy and financing
Path dependence (or historical institutionalist approach) refers to the idea that the outcomes of a particular situation or process depend on the historical path taken to reach that point. In other words, the current state or future developments of situations are influenced by past decisions, events, or processes, even if those may no longer be the most efficient or rational choices. As a concept, it provides a valuable framework for analysing historical events, which is primarily concerned with elucidating responses and outcomes in the area of policy change and institutional persistence (Bengtsson & Jensen, 2020).
A simplified interpretation of the concept of path dependency states that developments at a specific juncture create inertia in economic, institutional, social and technological progress. Bengtsson & Jensen (2020, p. 15) interpret this concept as the "fundamental causal mechanism in historical versions of institutional theory." In practise, this approach says that a development at a certain point in time sets a direction that either blocks alternative paths or makes them more difficult to achieve at a later point in time.
The difference between path dependency analysis and mere "what if" speculation is the understanding of contextual mechanisms that govern historical development, rather than general social theories. In literature, the idea that "the past influences the future" is often only touched upon, leading to misunderstandings. Mahoney (2000) emphasises that a "proper" analysis of path dependency involves understanding change processes, tracing historical events while recognising mutual contingent relationships, and elucidating causal effects that cannot be explained by other events. Contingency refers to the inability of a theory to deterministically or probabilistically predict or explain a particular outcome (Mahoney, 2000, p. 513). In essence, a contingent event has not been predicted within a theoretical understanding of a particular process. Mahoney (2000) emphasises that path dependence should not be confused with a historical explanation that emphasises temporal causal sequences.
In the application of path dependency, certain historical outcomes are traced back to relevant earlier events, which are often themselves contingent. There are three key concepts in every path dependence analysis:
A single event that is not the product of social forces can significantly affect social outcomes.
Contingent events may be temporally distant from the outcomes.
The sequence of events is of historical importance and requires a chronological order in the analysis to trace the sequence of outcomes.
When applying path dependency as an analytical tool, three core elements are considered: an event (A) that is preferred to an alternative ("critical juncture"), a subsequent decision (B) that connects to A ("focus point"), and the mechanism(s) that explain(s) the impact of A on decisions at B. To identify these mechanisms, it is usually necessary to trace events where no plausible alternatives were chosen.
There are two types of path dependence: self-reinforcing sequences and reactive sequences, the latter involving events that are temporarily ordered and causally linked (Mahoney, 2000).
In the case of self-reinforcing sequences, the detection of the beginning of the sequence could occur just before a critical turning point. In the phase preceding the critical turning point, different options become viable and processes that influence decisions at that juncture begin to operate. If the conditions in this phase can predict or clarify the outcome of the critical juncture's outcome, the sequence should not be considered dependent on the preceding events.
In the case of reactive sequences, it is difficult to determine a point in time that corresponds to the initial conditions because the outcome under investigation may follow an extensive chain of causally related events that can be traced back in time. In other words, it may be difficult to find a starting point of the sequence, as the researcher keeps on going back in time (Mahoney, 2000).
The concept of path dependence is of great importance for housing research, especially in the context of housing policy development of post-socialist countries that radically transformed the institutional framework and changed the tenure composition from dominantly public to private homeownership, affecting the future pathways of social housing policy efficiency and wealth distribution (Lux & Sunega, 2020). Despite its potential, path dependency is still underused in housing studies (Bengtsson & Ruonavaara, 2010; Malpass, 2011). It is often applied at the national level, but can also be extended to the municipal and local levels where housing policies are implemented.
Created on 31-08-2023 | Update on 23-10-2024
Read more ->Framework
Area: Design, planning and building
The definition and value of Framework
The term "framework" is frequently used in academic and practical contexts. Despite its widespread use, the concept of framework remains highly contextualised and closely tied to specific domains and narratives (Partelow, 2023). This overview, therefore, attempts to provide a definition of the term and rather than focusing on typologies such as theoretical, conceptual or practical frameworks, this review examines the understanding of the term itself. The discussion begins with a broad overview, followed by a focused summary of various fields, including policy, ecology, social studies, and architecture. A review of current challenges follows, and we conclude with a proposed definition of what constitutes a framework.
Broad Narratives
Before delving into the meaning of framework, it is essential to distinguish between three key terms: Model, Framework and Meta-Framework (Partelow, 2023). A "model" is a detailed structure that supports or explains the conceptual thinking of a framework. A "framework" is an overarching structure that argues for or achieves a particular agenda. A "meta-framework" is a higher-level structure that encompasses multiple secondary frameworks.
Linguistically, the term framework has two primary meanings. The first interpretation defines a framework as a particular set of rules, ideas or beliefs used to address problems or make decisions (Partelow, 2023). Examples include the constitution of a country, a philosophical manifesto or an organisational structure. This conceptual use provides a structured approach to guiding thought processes and actions. The second interpretation refers to a physical structure that supports something built upon it. An example of this is the structural skeleton of a building, which consists of beams, columns and other elements that provide the necessary strength and rigidity to withstand loads and stresses and ensures the stability and integrity of the building (Eilouti, 2018).
Specific narratives
From a policy-centred perspective, Schlager (2007) explains that a framework provides a foundational process for enquiry. However, given their very nature, frameworks cannot explain or predict outcomes. Their purpose is to provide a "metatheoretical" language for comparing and distinguishing between theories. McGinnis and Ostrom (2014) share the same view, adding that the purpose of a framework is to organise, diagnose and prescribe the elements of a particular phenomenon. From a socio-ecological perspective, however, Binder et al. (2013) clarify that the purpose of a framework is to establish a common language and provide guidance to achieve sustainable development goals. Although their objectives, backgrounds and applications differ considerably, it is important to distinguish between frameworks that address socio-ecological perspectives. Pulver et al. (2018) add that within the environmental realm, frameworks help scholars and practitioners analyse the complex, non-linear interdependencies that characterise the interactions between biophysical and social domains. They also aid in navigating new epistemological, ontological, analytical and practical horizons for integrating knowledge for sustainability solutions.
From a social studies-oriented viewpoint, Cox et al. (2016) explain that frameworks define conceptual objects and their non-causal relationships. In architectural design, a framework is a structured approach that provides guidance and support for the study design process (Cox et al., 2016). From an architectural perspective, a framework helps architects create continuous connections between architectural elements and events and reveal the architectural context's complexity. Eilouti (2018) states that a framework nature in architecture is to systematically initiates concept generation, approaches, design problem-solving, and stimulates innovative ideas. Mollinga (2008) further adds that frameworks are comprehensive tools that enable connections between different levels of knowledge.
Methodological challenges
When discussing the structure and purpose of frameworks, it is essential to emphasise the methodological challenges associated with their use and approach. Partelow (2023) explains that frameworks are a "black box", and despite the diversity of frameworks and their use, it remains unclear how a framework can be developed and applied. Furthermore, it is often unclear why certain concepts and relationships are selected for integration into frameworks, and others are not. Moreover, it is difficult to anchor framework concepts in a theory of science and to relate their contributions to other scientific tools such as models, specific theories and empirical data. Schlager (2007) adds that comparing frameworks to determine their use and paradigm is challenging as there are no well-developed criteria for such comparisons. Cox (2017) further explains that despite their widespread use, their scientific role is hardly discussed, apart from providing a common scientific language. Binder et al (2013) add that due to the wide variety and diversity of frameworks, even within a single discipline, it is very difficult for researchers entering the field to get an overview of the available frameworks and select the appropriate one to answer their research questions.
Proposing a definition
To summarise, a framework is a multifaceted concept that serves as an essential tool across various disciplines. At its core, a framework can be understood as an overarching structure that supports, guides, and organises thought processes, actions, and research in a particular context. The primary function of a framework is to provide a structured approach to investigations and analyses. Frameworks frequently face challenges related to their development, application and comparison. Due to the "black box" nature of frameworks, their structure and the rationale behind the selection of specific concepts and relationships often remain unclear. In this sense, a framework is a dynamic and comprehensive tool that provides the structure needed to support complex investigations and facilitate interdisciplinary collaboration. By providing a common language and a structured approach, they enable researchers and practitioners to navigate the complex landscapes of their respective fields, foster innovation and expand knowledge.
Created on 19-06-2024 | Update on 23-10-2024
Read more ->Related cases
ESG finance and social housing decarbonisation
Created on 05-02-2024
Over the last decades, ESG debt issuance, through green, social or sustainability-linked loans and bonds has become increasingly common. Financial markets have hailed the adoption of ESG indicators as a tool to align capital investments with environmental and social goals, such as the decarbonisation of the social housing stock. According to the Climate Bonds Initiative (CBI), the green debt market has experienced a 50% growth over the last five years (CBI, 2021). However, the lack of clearly established indicators and objectives has tainted the growth of green finance with a series of high-level scandals and accusations of green-washing, unjustified claims of a company’s green credentials. For example, a fraud investigation by German prosecutors into Deutsche Bank’s asset manager, DWS, has found that ESG factors were not taken into account in a large number of investments despite this being stated in the fund’s prospectus (Reuters, 2022).
To curb greenwashing and improve transparency and accountability in green investments, the EU has embarked on an ambitious legislative agenda. This includes the first classification of environmentally sustainable economic activities: the EU Green Taxonomy (Regulation 2020/852). The Taxonomy is directly linked to the European Commission’s decarbonisation strategy, the Renovation Wave (COM (2020) 662), which relies on a combination of private and public finance to secure the investment needed for the decarbonisation of social housing.
Energy efficiency targets have become increasingly stringent as the Energy Performance of Buildings Directive (EPBD) and its successive recasts (COM(2021)) have been incorporated into national legislation; see for example the French Loi Climate et Resilience (2021-1104, 2021). Consequently, capital expenses for SHOs are set to increase considerably. For example, in the Netherlands, according to a Housing Europe (2020) report, attaining the 2035 energy efficiency targets set by the Dutch government will cost €116bn.
Sustainable finance legislation constitutes an expansion of the financial measures implemented by the EU in recent decades to incentivise energy efficiency standards as well as renovations in the built environment. For more detail on prior EU policies, see Economidou et al. (2020) and Bertoldi et al. (2021). The increased connections between finance and energy performance raise specific questions regarding SHOs’ access to capital markets in light of the shift toward ESG.
The rapidly expanding finance literature on green bonds draws from econometric models to explore the links between investors’ preferences and yields (Fama & French, 2007). This body of literature on asset pricing relies on the introduction of non-pecuniary preferences in investors’ utility functions together with returns and risks to explain fluctuations in the equilibrium price of capital. Drawing from a comparison between green and conventional bonds, Hachenberg and Schiereck (2018) find evidence of the former being priced at a premium. Similarly, Zerbib (2019) also shows a low but significant negative yield premium for green bonds resulting from both investors’ environmental preferences and lower risk levels. The European Commission’s Joint Research Centre (Fatica & Panzica, 2021) documents the dependency of premiums on the issuer with significant estimates for supranational institutions and corporations, but not for financial institutions. While these econometric approaches offer relevant insight into the pricing of green bonds and the incentives for issuers and investors, they do not account for the institutional particularities of social housing, a highly regulated sector usually covered by varying forms of state guarantees and subsidisation (Lawson, 2013).
ESG-labelled debt instruments & Related Legislation
Throughout the last two decades, the term ESG finance has evolved to include a large number of financial vehicles of which green bonds have become the most popular (Cortellini & Panetta, 2021). In the social housing sector, ESG comprises a broad array of tools from sustainability-linked loans to less conventional forms of finance such as carbon credits. When it comes to bonds, there is a wide variation in the sustainability credentials among the different types. Broadly speaking, green and social bonds are issued under specific ‘use of proceeds’, which means the funds raised must be used to finance projects producing clear environmental or social benefits. The issuance of these types of bonds requires a sustainable finance framework, which is usually assessed by a third party emitting an opinion on its robustness.
Sustainability-linked bonds (SLBs) are an alternative to ‘use of proceeds’. Funds raised in this manner are not earmarked for sustainable projects, but can be used for general purposes. SLBs are linked to the attainment of certain company-wide Key Performance Indicators (KPIs), for example an average Energy Performance Certificate (EPC) rating of “C” in an SHO’s housing stock. These indicators and objectives usually result in a price premium for Sustainable Bonds, or a rebate in interest rates in the case of SLBs or sustainability-linked loans (SLLs) (Cortellini & Panetta, 2021).
While there are international standards for the categorisation of green projects such as the Green Bond Principle or the Climate Bonds Strategy, strict adherence is optional and there are few legally-binding requirements resulting in a large divergence in reporting practices and external auditing. To solve these issues and prevent greenwashing, the EU has been the first regulator to embark on the formulation of a legal framework for green finance through a series of acts targeting the labelling of economic activities, investors, corporations and financial vehicles.
First, the EU Green Taxonomy (Regulation (EU) 2020/852) is the cornerstone of this new legislation since it classifies economic activities attending to their alignment with the objectives set in the European Green Deal (EGD). When it comes to housing, the EU Taxonomy requires specific energy efficiency levels for a project to be deemed ‘taxonomy aligned’. Second, the Sustainable Finance Disclosure Regulation (SFDR) (Regulation (EU) 2019/2088) mandates ESG reporting on funds, which tend to consist of exchange-traded collections of real assets, bonds or stocks. Funds are required to self-classify under article 6 with no sustainability scope, ‘light green’ article 8 which incorporates some sustainability elements, and article 9 ‘dark green’ for funds only investing in sustainability objectives. Under the SFDR, which came into effect in January 2023, fund managers are required to report the proportion of energy inefficient real estate assets as calculated by a specific formula taking into account the proportion of ‘nearly zero-energy building’, ‘primary energy demand’ and ‘energy performance certificate’ (Conrads, 2022). Third, the Corporate Sustainability Reporting Directive (CSRD)(COM(2021) 189) increases disclosure requirements for corporations along Taxonomy lines. This legislation, which came into effect in 2023, will be progressively rolled out starting from larger and listed companies and expanding to a majority of companies this decade. Provisions have been made for charities and non-profits to be exempt. However, one of the key consequences of disclosure requirements over funds through the SFDR is its waterfall effect; that is the imposition of indirect reporting requirements as investors pass-on their reporting responsibilities to their borrowers. Fourth, the proposed EU Green Bonds Standards (EU-GBS) COM(2021) 391 aims to gear bond proceedings toward Taxonomy-aligned projects and increase transparency through detailed reporting and external reviewing by auditors certified by the European Security Markets Authorities (ESMA). The main objectives of these legislative changes is to create additionality, that is, steer new finance into green activities (see Figure 1).
While this new legislation is poised to increase accountability and transparency, it also aims to encourage a better management of environmental risks. According to a recent report on banking supervision by the European Central Bank (ECB), real estate is one of the major sources of risk exposure for the financial sector (ECB, 2022). This includes both physical risks, those resulting from flooding or drought and, more relevant in this case, transitional risks, that is those derived from changes in legislation such as the EPBD and transposing national legislation. The ECB points to the need for a better understanding of risk transmission channels from real estate portfolios into the financial sector through enhanced data collection and better assessments of energy efficiency, renovation costs and investing capacity. At its most extreme, non-compliance with EU regulations could result in premature devaluation and stranded assets (ECB, 2022).
In short, the introduction of reporting and oversight mechanisms connects legislation on housing’s built fabric, namely the EPBD, to financial circuits. On the one hand, the EU has been strengthening its requirements vis-à-vis energy efficiency over the last decades. The Energy Efficiency Directive (EED) suggested the introduction of Minimum Energy Performance Standards (MEPS) by Member States (Economidou et al., 2020), a rationale followed by France and the Netherlands for certain segments of the housing stock. Currently, policy-makers are debating on whether the EPBD’s recast (COM/2021/802) should incorporate MEPS and make decarbonisation an obligation for SHOs across the EU. On the other hand, legislation on green finance aims to produce incentives and oversight over investments in energy efficient renovation and new build, mobilising the private sector to cater to green projects (Renovation Wave (COM(2020) 662)).
