Urban land lease and social housing programmes

Abstract

In central European countries like Austria and Germany local governments typically use upfront public grants to assist private investment in social rented housing. Producer subsidies of this type are often criticised for creating rationing effects, crowding out private investment and other negative externalities. This paper sets out a scheme for unrationed public grants which serves to co‐ordinate investment processes over time and to offer subsequent generations equal access to housing. Drawing on examples of social rented housing in Vienna, the paper compares previous methods of public assistance with the grant scheme recently implemented by the Vienna government. The paper concludes by proposing a model for urban land leasing and derives the minimum size of public grant necessary to secure efficient land provision in the future.