Having the private sector build social housing
Notes de la rédaction
This is the press release related to the article from Nicolas Bernard and Edoardo Traversa, published on 24 January 2022. Read the article.
The very long lists of Brussels households waiting for social housing and the importance of having a more energy efficient housing stock are among the major challenges facing the Brussels-Capital Region in terms of housing. However, it has limited financial resources in order to deal with these issues. In the 164th issue of Brussels Studies, Nicolas Bernard and Edoardo Traversa – professors of law at Université Saint-Louis - Bruxelles and UCLouvain respectively – consider other solutions related to taxation. According to the authors, these solutions could boost the production of new social housing, while resolving the current inequalities of the differentiated VAT system between the private and public sectors. But what can the Brussels Region do when this tax falls within the remit of the federal government?
The two levers identified are of a regulatory and a budgetary nature. The first calls for a redefinition of the “social housing policy” as a “social policy in the area of housing” and for an extension of the eligibility for 6 % VAT on the production of new housing for social purposes, in order to encourage the private sector to invest in it. In the same way, these private stakeholders could also be encouraged to invest if the Region would take on the difference in VAT. This would of course be a considerable financial investment for the Region but would cost less than having to produce this housing on its own. However, whether it takes the form of eligibility for the reduced VAT rate or a compensatory regional subsidy, any financial support given to private operators intending to work within the framework of social housing policy cannot be conceived without requirements guaranteeing the effectiveness of this social allocation as well as its sustainability. Nicolas Bernard and Edoardo Traversa have identified three conditions which must be met in order for the private sector to obtain the tax benefit: to sell part of the property produced to a social housing corporation or to the Fonds du logement, to make use of the remainder freely only under certain social conditions (and for a given period of time) and, finally, to locate the operation in a neighbourhood with a shortage of social housing.
For the authors, the proposed mechanisms should make it possible to expand the social housing stock without state intervention (other than financial), to meet environmental requirements more adequately (through the use of new buildings) and to put an end to a double legal irregularity in terms of VAT, while shifting the cost to the federal government (if necessary) and without using coercive measures with regard to private stakeholders. These proposals are part of a process to diversify stakeholders and even hybridise legal principles, which is more necessary than ever in order to respond to the housing crisis.
References
Bernard, Nicolas and Traversa, Edoardo, “Having the private sector build social housing. The unsuspected levers of the Brussels Region in terms of VAT”, Brussels Studies [Online], General collection, No 164, 24 January 2022. URL: https://journals.openedition.org/brussels/5890
Contact
Tatiana Debroux, Editor in chief:
tdebroux[at]brusselsstudies.be