INVESTING IN SOCIAL HOUSING October 2014 Summary The following paper outlines various means of increasing the supply of social housing in Ireland. Many of the proposals are ready to go and focus on the acquisition of existing units rather than construction - addressing some of the short-term challenges (Part A). As the existing stock of houses is unlikely to be sufficient, different but related suggestions will be needed for greenfield developments (Part B). Overview of Potential Immediate Amendments to Increase Supply Increase in quantum of capital funding to [40%]. Local Authority (LA) to make available (at no cost) to an Approved Housing Body (AHB) void properties that are currently held by the LA. A business case would need to be made to the Comptroller & Auditor General justifying the zero cost transfer. Standardised CAA and PAA covering a programme of properties with multi annual funding agreed. Arrangements for CAA/PAA to be novated in event of AHB collapse. Certainty on CPI and market rent review timing. Mandatory for LA to agree standard CAA and PAA including subordination of any existing/future security arrangements to commercial funders. Direct intervention/communication from the DOE to LA to ensure early buy-in as regards property approval/tenant nomination process. Mandatory timelines to be agreed. CAA funding to be grant funding rather than loan finance. Exemption from LPT for social housing properties. Ideally PAA to continue even in the event of void periods and to be definitively for 30 year period rather than varying up to 30 years.
Deposits should be state funded. CALF payments should be up-front and in advance. CAS funding should be ring-fenced and announced early in the year and realistic timelines given to AHB s to respond. Overview of Action for Funding New Construction in the Longer-Term Ring-fencing some/all guaranteed rental cash flows should form the basis for longterm funding. Capital Markets have generally been unwilling to take on construction risk in any sector. This can be managed by a bank offering a completion guarantee to Bond holders. Bringing down the cost of construction will increase the viability and attractiveness of social housing developments. This could be achieved through reducing or removing Development Contribution levies from social housing developments (this should not, however, result in an increase in the Development Contribution levies for private housing developments), LA s donating vacant sites to enable AHB to use as leverage and introduce a rebate of VAT for social housing development. All of these measures would reduce the cost of social housing to be developed If the cost of construction is below market cost, the banks construction risk guarantee should be capable of being priced conservatively, giving sufficient equity cover for the completion guarantee. More certainty from Government on aspects of the funding model, increasing the upfront funding and giving a commitment to support or at least continue the funding in the event of an AHB failure would improve the attractiveness to the market to fund the capital gap for AHB. This would allow for growth of existing AHB and the attractiveness of the social housing market overall. Social housing output should be segmented by need i.e. unemployed/low-income, elderly, intellectual disabilities etc. and it should be recognised that some of these groups would require additional supports over and above their housing needs. Housing Finance Agency lending criteria is unnecessarily stringent and complicated and should be streamlined. Structure PART A: Reform of Current Funding Arrangements PART B: Funding New Construction of Social Housing in the Longer-Term APPENDIX: The European Experience
Introduction While the presence of recovery in house prices will be welcomed by some homeowners in negative equity, the speed at which prices are growing is putting pressure on the private rental and social housing sectors. Affordability of property, especially in urban areas, has eroded as house prices have increased faster than take-home pay. Housing waiting list figures and the recent increase in homelessness shows the pressure on the social housing sector. The homelessness charity Threshold suggests there are 89,892 households needing social housing support, and an annual need for 6,000 new social houses. There is an immediate requirement of 2,700 units to resolve the current homelessness problem. Providing social housing is not just a tool to remedy homelessness. It is also a vital part of how society houses people on low incomes, including essential key workers such as nurses, firefighters or teachers, who may find it difficult to buy property in the area where they work. Additional, specialist accommodation is needed to provide appropriate accommodation for those with specific types of housing need, including people with disabilities. Reliance by the sector on exchequer financing and Part V contributions have proven unsustainable during a period of low levels of development and a weak exchequer position. The following paper outlines various means of increasing the supply of social housing in Ireland. Many of the proposals are ready to go and focus on the acquisition of existing units rather than construction - addressing some of the short-term challenges (Part A). As the existing stock of houses is unlikely to be sufficient, different but related suggestions will be needed for greenfield developments (Part B).
Context Census 2011 provides a snapshot of housing in Ireland: a. Approximately 1.65m households b. 450k households renting (an increase of 50% in 5 years) c. 275k in rental accommodation (55%) in receipt of state support of some sort Local Authorities are the main providers of local housing in Ireland and still own the largest stock of public housing (107k units). Despite reductions in social support for private rentals, 80k units of the private rental sector are financed to varying degrees on rental supplements from the state (NESC 2014). Local Authorities cannot borrow on their own account and are reliant on funding via the Department of the Environment, Community and Local Government. This Government expenditure is included in the General Government Balance (GGB) and hence for EU debt metrics. This had led to a dependence on the private rental sector and Approved Housing Bodies (AHB) in recent years for the provision of social housing. There is a growing demand for both social housing and affordable housing, with long waiting lists for housing supported and maintained by Local Authorities. In the realms of social housing, subsidies generally fall into two categories (a) Capital (Construction) or (b) Rental. With a squeeze on borrowing, the approach has increasingly been for Government to move the funding of social housing off balance sheet and towards rental support. Little appears to have been done to reduce the overall capital cost as a way of addressing financeability but also reducing the drain on future exchequer funds through rentals. A combination of both capital expenditure and rental will continue to be needed at least in the short-term to meet social housing requirements. There are over 300 Approved Housing Bodies (AHB) operating in Ireland with 27k housing units in total. Greater London by comparison has 15 Housing Associations with 500k housing units in total. Although some attempt to make a comparison with the UK would be a natural, there are a number of important differences between the British and Irish models. In the UK, most AHB are solely Housing Associations, whereas in Ireland it is much more common to have an AHB who targets a particular part of society e.g. those with disability or those who are homeless, and often the AHB also provides ongoing social supports in addition to just housing. Furthermore, UK AHB tend to be funded from Government and rents whereas many Irish AHB are also part funded through grants or other donations. These different approaches should be kept in mind when reviewing the policy options available.
A. Reform of Current Funding Arrangements The following recommendations focus largely on providing social housing in the short-term through the acquisition of existing housing stock. A. 1.1 Background Social housing organisations are operating in very different market conditions to those of the last decade - economic conditions have fuelled increased demand for social housing and other related support services at a time when the availability of public funding is limited. Historically, the funding model of social housing in Ireland has been based on the provision of Government funding for up to 100% of approved costs of housing projects via the Capital Assistance Scheme (CAS). The Capital Asset Leasing Facility (CALF) Scheme was first introduced by the Government in 2011 with an available fund of 15m - this scheme encourages the use of private financing alongside Government backed funding. It is expected that the CALF scheme will be the main funding mechanism for that delivery into the future. This section sets out how the current new funding mechanism in Ireland is proposed to work using existing Approved Housing Bodies (AHB) and the challenges and issues that current proposals present. It is targeted at instances of purchase and redevelopment of existing units as opposed to new build but many of the concepts and issues would remain the same. It is also focusing on small to mid size schemes of circa 200 units. Anything larger will need greater structural change in the sector in particular around scale, function and regulation of the AHB. Ideally a twin track approach is needed many AHB have small- to mid-sized schemes identified and close to ready to go if funding issues could be addressed whereas schemes of larger-scale/new build will take a longer time to get implemented. In reality both are needed. A. 1.2 European Experience Countries across Europe employ different funding models for social housing initiatives. For example, finance for social housing can take on a variety of forms, comprising grants, public loans, commercial loans as well as shareholder equity. Appendix 1 sets out a very brief summary of the traditional funding models currently or previously employed for social housing in different European countries.
A. 1.3 UK Experience The UK model is of particular interest as it involves the use of private debt finance alongside public funding and is therefore similar in nature to the proposed CALF Scheme. Similar to the CALF funding model it involves the use of up front funding in the form of a capital grant (known as the Social Housing Grant). Rental revenues make up funding on an ongoing basis and approximately two thirds of the entire rental revenues of housing associations in the UK are paid for through Housing Benefit (a form of social security paid by the Government). Similarly to Ireland, the entities all comment on the reduction in public funding with the opportunity to access grants and other types of funding significantly diminished. This public funding is supplemented by private funding and it is estimated that c. 50bn of private debt finance ( 42bn from commercial banks and 8bn from the capital markets) has been committed to social housing associations in the UK over the last 20 years. This, coupled with the impact of the credit crunch means a smaller lending pool, higher margins and a move towards short or medium term finance. Increasingly, housing associations in the UK are looking to the capital markets alongside bank funding as a new source of liquidity. A. 2 Funding A. 2.1 Funding Sources Overview The proposed sources of funding currently available in respect of future social housing projects include: Capital upfront CALF capital funding from Government matched with commercial finance from private sector funding sources (senior debt, bond financing, equity funding). The upfront capital advance is covered under a Capital Advance Agreement (CAA) where funding is restricted to maximum of 30% of acquisition cost; and Revenue - availability payments (AP) from Local Authorities (LA) and differential rents from tenants: an Availability Payment based on 92-95% of market rents which is a guaranteed income stream from the Local Authority for a period of up to 30 years; and the tenant will also pay a differential rent (assumed to be in the range of 25-40 per week).
The structure thus has a Government backed income stream, subject to voids, for the duration of the agreement. Under the scheme, commercial finance would then be sought to fund the remaining element of the acquisition cost. A. 2.2 Upfront CALF Capital Funding A. 2.2.1 What is it? The CALF Scheme was first introduced in 2011 as a new funding model for social housing with the objective of ensuring greater supply of housing in very different market conditions. In particular this type of facility is designed to: assist Approved Housing Bodies (AHB) access private finance for the purchase/construction of units that will then be made available for social housing purposes under the leasing initiative; and Provide high quality social housing in the least costly way to the public purse. The documentation for the capital funding is a Capital Advance Agreement which would be signed between the relevant AHB and the Local Authority. The CAA is specific to each individual property so the AHB then also needs to reach agreement with the Department of Environment for an overarching framework to cover a programme of properties. Some AHB have achieved this by means of a signed Memorandum of Understanding which sets out proposed CAA funding quantums to be quasi-ring fenced for a number of years. However that funding is not guaranteed and is still subject to the annual Government budgetary process. A. 2.3 Availability Payments A Payment and Availability Agreement (PAA) will be signed between the AHB and the relevant LA in respect of each property. This agreement will cover up to a 30 year term and will set out the terms and conditions of the payment of the AP in respect of each property. The AP will equate to 92% of market rent for each dwelling (95% in respect of an apartment dwelling). The AP will be adjusted annually by inflation utilising the general CSO Consumer Price Index (CPI) and the market rent of each unit will be reassessed every 7 years. The AHB will also have the option to call for the market rent of each unit to be reassessed more frequently with a minimum of three years between each unit s reassessment. In the event of a vacancy, the AP will continue to be paid for a maximum period of 3 months. AP are payable in quarterly instalments in advance.
A. 2.4 Differential Rents The term differential rent (DR) refers to the rent payable by each tenant. The rent per tenant will be calculated with reference to the relevant LA s differential rent scheme. DRs are collected from tenants on a weekly basis by AHB staff. Tenants do not always meet their obligations in this regard and that risk would have to be borne by the providers of the commercial finance. Many AHB also provide additional support services to tenants. The cost of these services will need to be funded from other AHB resources in line with the current support funding model (other grant sources, donations etc). Tenants rights in private rented accommodation are protected by legislation. These include but are not limited to minimum standards for the accommodation and security of tenure entitlements. Any disputes in relation to these rights are resolved by the Private Residential Tenancies Board. Government has proposed to extend these rights to the voluntary housing (AHB) sector in the Residential Tenancies (Amendment) (No. 2) Bill 2012 with the PRTB s (renamed the Residential Tenancies Board) powers would be extended to this sector. A. 3 Other Structural Aspects A. 3.1 Cost Overview The AHB would have two principal ongoing expenditures under the scheme to be met from its revenue funding sources: Debt service and repayment on the commercial debt; and Property upkeep/service charges. An individual unit maintenance plan will be prepared for each property upon its acquisition, covering the 30 year life. The AHB will be fully responsible for managing the maintenance of the properties and associated costs. It will be important that this sufficiently cover the cost of depreciation over the 30 year life e.g. refurbishment of kitchen/bathroom facilities. One area of cost that could be addressed further is in relation to whether local property tax (LPT) will apply to the new properties. It currently depends on the status of the AHB. Those whose remit is to provide accommodation for those with special needs or disabilities are currently exempt from the LPT but those providing social housing accommodation more generally are still subject to the tax.
General utility bills are the responsibility of the individual tenant. It is anticipated that the new water charges will form part of general utility bills paid by the tenant. A. 3.2 DOE/LA Returns The CAA capital contribution from the LA/DOE will be legally structured as a loan and remain outstanding for the duration of the 30 year term. Interest will accrue, but not be paid, at a rate of 2% simple interest over the lifetime. On completion of this 30 year term, the AHB and the LA/DOE will need to enter into negotiations on the outstanding balance together with any accrued interest with a view to entering into a new agreement. Possible outcomes of this negotiation process include: The loan being repaid over a new term with a minimum term of 10 years; and/or Loan becoming repayable upon the sale of the property. A. 3.3 DOE/LA Security As the DOE/LA is providing 10-30% of the acquisition cost, this leaves a funding requirement from commercial finance of 70-90%. However, to date it has not proven possible in most instances to raise that level of leverage for social housing. Therefore, the AHB will need to pledge additional properties as security to the commercial funders as new properties are acquired. That assumes that (i) the AHB has additional unsecured properties of sufficient value to pledge but it also means that (ii) new projects cannot be ring fenced from a funding perspective. The latter point therefore brings an additional element of risk onto the existing operations of the AHB which can be challenging for the relevant AHB Board to be comfortable with. In most instances those existing properties have also been previously part funded by Government sources and are subject to an historic charge from DOE that normally wouldn t be released until the property is sold. The DOE, with some AHB, has agreed to release its first charge over the existing properties; however it will retain a second charge over these properties. A. 4. Recommendations on Key Issues under Current System A. 4.1 Summary of Potential Immediate Amendments to Increase Supply Increase in quantum of capital funding to [40%]. LA to make available (at no cost) to the AHB void properties that are currently held by the LA. A business case would need to be made to the Comptroller & Auditor General justifying the zero cost transfer.
Standardised CAA and PAA covering a programme of properties with multi annual funding agreed. Arrangements for CAA/PAA to be novated in event of AHB collapse. Certainty on CPI and market rent review timing. Mandatory for LA to agree standard CAA and PAA including subordination of any existing/future security arrangements to commercial funders. Direct intervention/communication from the DOE to LA to ensure early buy-in as regards property approval/tenant nomination process. Mandatory timelines to be agreed. CAA funding to be grant funding rather than loan finance. Exemption from LPT for social housing properties. Ideally PAA to continue even in the event of void periods and to be definitively for 30 year period rather than varying up to 30 years. Deposits should be state funded. CALF payments should be up-front and in advance. CAS funding should be ring-fenced and announced early in the year and realistic timelines given to AHB s to respond. Flexibility should be introduced for the PAA model of leasing to allow AHB providing support services to tenants to claim an additional percentage of market rent i.e. 105% instead of 92% to cover support costs. A. 4.2 Security The DOE charge on the existing properties which need to be added to the security pool to raise commercial finance needs to be either released or subordinated to the charge of new commercial finance. Whilst accepted in principle by the DOE, it practically needs to be agreed with and then amended on a property by property basis by each individual LA. Any DOE charge on the new properties purchased must be subordinated to new commercial funding. Again whilst accepted in principle by the DOE, it practically needs to be accepted by each individual LA and their law agent. The current structures envisage an obligation to repay DOE funding only if property sold or at the end of the 30 year term. The question could be raised as to why this funding needs to be repayable at all if the property is continually used for social housing. It should be noted that there is a big difference between the value of a property with vacant possession and a property encumbered by a tenant with the latter being worth
substantially less. This differential could be more than 30% and when transaction and other repossession/realisation costs are considered. This would have an impact on the suitability of existing properties as security. A. 4.3 Structure As currently envisaged the CAA and PAA are specific to each individual property and signed by each individual LA with the AHB. That raises 2 issues: The timescale (and legal cost) in getting documentation agreed on a property by property basis; and The uncertainty it presents to investors in that the documentation is with the AHB not the investor. The overarching transaction structure then needs to address scenarios where the AHB needs to be removed/replaced. The AHB need to be able to assign/novate the agreement with DOE/LA consent based on specific criteria. In order to try and achieve the scale which is needed in order to try and fast track delivery of new homes and in order to get the scale needed to attract sufficient levels of commercial finance, projects are not viable on a unit by unit basis but Government funding is currently done on that basis. Some AHB are addressing this issue by agreeing programmes of funding with the DOE under a memorandum of understanding which provides for a multiannual programme of CALF allocation. However that programme is still subject to annual Government budgetary process which leaves some element of residual funding uncertainty for investors and the AHB. It would be preferable to have an agreed programme of multi annual funding agreed in line with each agreed proposal to attract commercial finance. A. 4.4 Other Costs Areas where costs of delivery of a programme of projects could also be reduced would include: Transaction (CAA and PAA) documents to be fully standardised and not subject to individual negotiation with each LA (or else designed to cover a programme of units in each document). Local property tax only certain social housing projects are currently exempt A. 4.5 Property/Tenant Management The current process requires approval on a unit by unit basis from the LA to the property acquisition before the CAA and PAA will be signed. This approval is on the basis of defined
criteria which each AHB would be fully familiar with. However timescales are not defined which introduces the potential for delay and uncertainty. At present the LA is responsible for nomination of tenants for the individual properties. The funding structure allows for a 3 month window from approval of the property for tenants to be nominated and moved into the property i.e. the PAA will cover a 3 month void at the start or between tenancies. Certain AHB have a corporate remit to only address the social housing needs of particular types of tenants e.g. those with disabilities, those who are currently homeless. That again adds a layer of uncertainty and potential delay into the process from an investor perspective. Given the fact that the properties are pledged as security for both commercial funding, appropriate protections need to be addressed in any transaction structure to ensure that the exposure of the tenant to a property being repossessed is minimised. Additional Government intervention could be beneficial here to commit to assist with the replacement of an AHB (and continuation of PAA) in the event of the corporate collapse of the AHB. It should ultimately be in LA interests to work with the AHB to secure properties for tenants on their housing lists promptly and most AHB can overcome the potential for delays through early interaction and communication with the LA. However direct intervention/communication from the DOE might assist to ensure early buy-in together with a mechanism for early escalation to appropriate levels if the agreed support and timelines are not delivered. A. 4.6 Capital Funding The quantum of upfront Government funding can vary between 10-30%. Certainty of the level of funding would be preferable and the quantum does need to be increased to get any programmes of scale up and running. At present the term of the Government funding is up to 30 years depending on the property concerned. Certainty of term would be preferable. That leaves this structure ideally suited to those commercial entities seeking long term stable streams of income. However the commercial returns it will deliver are low. The risk profile of the income stream is also arguably low however often the corporate risk associated with an AHB can prove challenging for investors. Irish AHB in the main tend to not have significant balance sheet strength like their UK counterparts for example. They are also subject to their own individual corporate governance regimes which can vary and present an additional challenge for investors to get comfortable with.
Bank funding which would be the lowest cost commercial funding would be possible but not to a leverage level of 70-90%. Bank funding is also hard to attract to cover a 30 year term which leaves the AHB exposed to refinancing risk after a period which from a corporate governance perspective is hard for them to accept given the possibility of properties being even hypothetically repossessed in the event of a refinancing not being secured. Other forms of commercial funding from institutional type investors are possible but have proven challenging thus far. Again the leverage involved together with low level of commercial returns and the corporate risk of an AHB remain an issue. Institutional investors (e.g. pension funds) tend to still have an over concentration of property exposure in their funds. Typically though in all instances commercial finance could be achieved if the level of Government funding to be made available was higher which would close the leverage gap somewhat. Another alternative would be for the LA to make available (at no cost) to the AHB void properties that are currently held by the LA. This would have 2 immediate advantages - the AHB could then use these properties as additional leverage to raise finance for new properties plus secondly the AHB could progress the process of upgrading/renovating those properties to get them back into use as social housing on a timely basis. A. 4.7 Revenue Funding The PAA outlines that the rents payable by the LA are linked to day one market rents as increased by CPI. However the frequency of adjustment of the rent needs to be addressed: The CPI increase is annual but ideally should be upwards only. The reassessment of market rents is currently at least every 7 years with the possibility of the AHB calling for it to be reassessed more frequently i.e. every 3 years. Again this reassessment should be more frequent than 7 years and ideally should be upwards only. Local Authority/Government support should be provided to ensure/guarantee high occupancy by streamlining the process of allocating social housing through the introduction of timeframes. This will ensure efficient use of existing social housing stock and provide certainty. A supporting system of direct transfers should be
introduced to support AHBs where the timeframes are not met e.g. more than 3 months. A. 4.8 Summary of Challenges A brief summary of some of the other high level key reasons why it has not proven to be a hugely attractive investment proposition to date include: 30 year tenure that term is unattractive for debt providers and certain equity sources who are looking at a 5-7 year time horizon which leaves refinancing risk with the AHB. Perceived lack of enforceable security the challenges/pr issue with enforcing on a property let to a social housing tenant/homeless family due to the non-payment by the AHB landlord. Low return for perceived high risk given non commercial background of the AHB. New asset class with potentially easier property investments to target instead. Not guaranteed the individually small level of uncertainty around Government funding and riskier nature of the AHB sector takes away from the selling point of Government backed income stream.
B. Financing New Construction of Social Housing in the Longer-Term The following proposals represent areas which could used to improve funding social housing in the longer run primarily through funding new construction on greenfield sites. PII remains available to Government to discuss these proposals at further length. 1. Ring-fencing some/all guaranteed rental cash flows should form the basis for longterm funding. On the basis of a robust cash-flow, long-term funding could be raised from the Bond Markets/Pension Funds typically 20 to 30 years. The long-term nature of the loans make such funding unattractive to banks in the current regulatory environment (Basel II Capital Adequacy). Alternatively Banks could provide miniperm funding i.e. the first 10/15 years of a 30 year amortisation schedule. Refinancing risk should be relatively modest after this period. The European Investment Bank has in the past been willing to fund/guarantee such take-outs. However, this may be seen as too risky by AHB without a strong commercial balance sheet unwilling to take a risk if refinancing cannot be secured. Government policy could encourage pension funds to invest a percentage of the fund in social housing. 2. The Capital Markets (Bond/Pension Funds) have generally been unwilling to take on construction risk in any sector. This can be managed by a bank offering a completion guarantee to the Bond holders. The Bond holders carry the risk of the deal being cancelled (interest rate risk) while the bank holds the completion risk (principal risk). 3. Bringing down the cost of construction will increase the viability and attractiveness of social housing developments. This could be achieved through: Reducing or removing Development Contribution levies from social housing developments. Charging Development Contribution levies would otherwise result in a circular payment from the State as the guarantor of social housing rents to itself for the provision of infrastructure. This reduction of Development Contribution levies should not result in an increase in the Development Contribution levies for private housing developments Donation of vacant sites by Local Authorities and also donation of vacant properties needing refurbishment which would be a much quicker solution and enable AHB to leverage up on these too
Rebate of VAT All of these measures would reduce the cost of social housing to be developed. In the case of VAT, site costs and Development Levies, the charging of these costs to LA or AHB is essentially circular if the State provides Rental Support to repay these amounts. This wastes both administrative time and distorts the true cost to the Government. A reduced cost of construction could alleviate or eliminate the equity gap identified by AHB and banks as an impediment to construction. This could additionally incentivise developers/ahb to form private/social partnerships for the delivery of social housing. 4. If the cost of construction is below market cost, the banks construction risk guarantee should be capable of being priced conservatively, giving sufficient equity cover for the completion guarantee. 5. More certainty from Government on aspects of the funding model, increasing the upfront funding and giving a commitment to support or at least continue the funding in the event of an AHB failure would improve the attractiveness to the market to fund the capital gap for AHB. This would allow for growth of existing AHB and the attractiveness of the social housing market overall. 6. Social housing output should be segmented by need i.e. unemployed/low-income, elderly, intellectual disabilities etc. and it should be recognised that some of these groups require additional supports over and above their housing needs. 7. Housing Finance Agency lending criteria should be streamlined as they are unnecessarily stringent and complicated causing delays in providing social housing for some AHB and creating additional costs.
Appendix 1 European Experience Country Model Brief Outline Ireland Public grants model Centrally funded grants to approved providers for construction and operation/ management of units. UK Public grants, Debt & equity Debt finance raised against grant equity (50%), future social rental income, secured by rising rents and a generous housing benefit as well as discounted land and development contributions under Section 106 provisions. France Savings scheme model Tax free household savings scheme financed off market loans to social housing providers alongside state and local subsidies, tax incentives and other loans. Land provided by local authorities and development contributions. Austria Structured finance model Long term low interest public loans and grants, combined with commercial loans raised via Bonds and developer/tenant equity sustains tightly regulated form of cost rent limited profit housing. Promotion supported by municipal land policy and land banking. Switzerland Co-operative finance model Commercial loans, loans from a bond issuing cooperative, revolving loans, and own equity and supported by municipal urban policy and land banking. A liberal rent policy allows landlords to raise rents to recover costs, including changing financing costs. Netherlands Revolving fund model Replaced direct loans and subsidies with guaranteed capital market loans and rent assistance. Dutch Guarantee Fund and Central Fund provide security and assist to reduce financing costs. Associations are free to determine own investment strategy, asset base and surpluses intended to be used as a revolving fund to achieve social tasks. Germany Tax privileged model Federal government has withdrawn from direct supply support and shifted towards demand side subsidies. Municipalities develop their own programs and housing companies are private entities, with a variety of shareholders. Private investment in social housing is promoted via tax concessions. Rents and eligibility depends on level and duration of public subsidy Sweden Capital market model Corporate tax exempt municipal housing companies have always been financed by capital market loans which were sometimes backed by municipal guarantees, grants as well the Ministry of Housing s own resources. In the past interest rates subsidies were provided by the central government but these have ceased.