City living means that an ever-increasing chunk of your pay goes towards your housing costs. So your biggest bill, and probably your biggest source of stress, is whether you’ll be able to make rent this month. But not every city is trying to fleece you—in fact, some cities are trying to keep rent prices down.
Later this week, Berlin’s five-year rent freeze comes into effect, making life more affordable for the 1.5 million tenants who live there. The new rules cap most rents at 2019 levels and limits rent hikes based on an apartment’s conditions and amenities. According to Bloomberg, in an article Tuesday titled “No City Hates Its Landlords Like Berlin Does,” that could mean lowering rents by as much as 40 percent.
Besides an epic rent freeze, here are some other ways cities are keeping rents down:
When the city is your landlord
In Vienna, Austria, more than 60 percent of the city’s 1.9 million residents live in 440,000 public housing units that are affordable by design. In fact, the largest landlord in Vienna is… the city of Vienna. It owns about 220,000 rental units and the other half are state-subsidized co-ops.
Vienna’s social housing is widely available, not just to lower-income earners. To qualify, an applicant’s annual salary must be less than $46,000 (or less than $100,000 for a couple). For reference, Vienna’s median income is about $47,500.
Dubbed a “renter’s paradise” in 2018 by the Financial Times and consistently ranked among the world’s most liveable cities), Vienna has a functional system where developers, non-profits, and architects compete to design homes on city land that is attractive and socially integrated. The average apartment size is 750 square feet. Half the city is green space, and transit is extensive and cheap (a single ticket costs $3.50).
Vienna’s progressive housing policy includes inclusionary zoning, sometimes called “fair-share” zoning, which requires new builds to include a percentage of low-rent units. This policy was first developed in Montgomery county, Maryland, in the 1970s in response to zoning that created housing areas segregated by race and income, sometimes referred to as “snob zoning.”
In places where fair-share zoning isn’t mandatory, developers can be incentivized with density bonuses; the size and unit count of its building is bigger in exchange for offering more affordable housing.
California offers developers an increase of up to 35 percent to encourage building affordable homes—that bonus can potentially increase to 80 percent for qualifying projects that are within 800 metres of transit.
According to a recent report by the Association of Community Organizations for Reform Now (ACORN) Canada, the best fair-share zoning in big cities includes 20 to 30 percent for units that will be affordable for at least 99 years. It suggests basing affordability on incomes as opposed to average market rents.
How, when, and where inclusionary zoning is applied dictates how successful it is. A 2015 study of cities in California found that fair-share rules led to 7 percent fewer homes that were 20 percent higher in price than in places without such restrictions. But a separate study of the Bay Area found that inclusionary zoning had an amplifying effect, corresponding with higher house prices when rents are rising, and contributing to lower rent prices when home prices are falling.
In April 2017, Los Angeles approved a law allowing motels to be converted temporarily into housing. It was supposed to be a short-term measure to repurpose existing structures to give low-income or homeless people a roof over their heads while new social buildings were built. Anaheim and Pasadena also started using motels for short-term housing at around the same time.
But these temporary measures aren’t so temporary in some parts of the U.S.
In Provo, Utah, motels are being converted into long-term housing for the most vulnerable as well as people who can’t find anything affordable to rent. In what used to be a Super 8 motel in Provo across the street from Brigham Young University, a fully-furnished room (TV and microwave) with two queen beds and a mini-fridge in place of a kitchen rents for US$495 a month (the average rent in Provo is $1,414).
Technically stays of longer than 30 days in hotels and motels violate Provo City zoning codes but there’s an easy way around that—tenants are given new contracts that they sign every 30 days.
Community Land Trusts
A community land trust is a nonprofit that buys and maintains homes and commercial and green spaces to ensure housing affordability. This model is relatively new to Canada where only a handful operate but it has a longstanding tradition in the U.S. and Europe.
After years of lobbying, the Rural Urban Synthesis Society (RUSS) in London, England, is creating 33 affordable housing units for rent on an old school site in Lewisham donated by the local council. Under the agreement, RUSS will retain the rights to the land for 250 years.
“It has a very diverse population—lots of people who drive buses or work as teaching assistants,” said Ted Stevens, the trustee of RUSS. “Average earnings are about 27,000 pounds ($46,468) a year. There’s no way you can buy a home on that and with rents in London being astronomical, it’s very difficult for people to even afford to rent anything but a property that is tiny and incredibly expensive.”
Average rent in London is $2,885. Rents have increased nearly 34 percent in the past 20 years but incomes haven’t risen nearly as quickly. Two decades ago, the average earner in the U.K. could cover typical rental costs using 17 percent of their salary. Today, making rent takes up 45 percent of the average salary.
To qualify for the Lewisham project, applicants must have ties to the borough and be part of a household making less than $113,000 annually. A couple who are both making the average salary of $51,000 a year would be eligible. Stevens said there were more than 150 hopefuls and they chose the 33 people by drawing names out of a hat.
Tenants will also pitch in to keep building costs down by doing tile work, decorating, and putting finishing touches on the kitchen themselves. The plan is to start construction in the next few months.
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