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Villy Lopman: There are no solutions to increase the availability of homes in Estonia
Villy Lopman: There are no solutions to increase the availability of homes in Estonia
For a considerable part of people, living in their own home is becoming an increasingly difficult dream. Improving the situation and increasing the availability of apartments is possible, but it requires systemic changes. People's perceptions and their own and public authority's role in solving this problem need to be changed.
Currently, the state and local governments do not have a legal basis to, for example, oblige real estate developers to provide a certain number of affordable housing in their developments compared to market conditions. However, the solution to the problem should be found sooner rather than later.
If we leave aside the always unpleasant commands and prohibitions and focus on guiding measures, it is possible to summarize the experiences of other countries and talk about the following possible models.
Does the home have to be owned by the person?
First, it should be defined whether the accessible housing must be owned by the person using the premises. If not, it is possible to use Austrian, German, Swiss solutions. In a simplified way, it consists in the fact that the state and local government provide financial support and advise on the establishment of housing collectives. It consists in the fact that a certain number of people become shareholders or members of the respective legal entity (eg OÜ, MTÜ) and this legal entity builds or develops an apartment building for its shareholders or members. An analogue of the Estonian legal system would be if an apartment association and its members started developing an apartment building for themselves.
The loan of such a housing association is supported and guaranteed by the state, and the municipality also helps in planning and necessary administration. Corresponding loan packages also exist in banks. However, the peculiarity is that a person can have only one place of residence in such a system, and its residents are not the owners of their own apartment, they are partners or members. As at the present time, people in Estonia are members of an apartment association. Such participation or membership status is not tradable on the free market, i.e. these transactions are carried out only by the respective housing collective – for example, if a person leaves the collective, the respective cooperative buys back this participation (returns the person's contribution) and starts looking for a new member.
Depending on the country, the amount of housing managed by such collectives varies, but in Vienna, for example, it is estimated that about half of the population lives in similar collectives. The idea of such a model is simply a cost-sharing collective, i.e. joining a cooperative or developing an apartment building, and the subsequent rent, so to speak, is cost-based.
When a member leaves, the contribution is refunded, and the new member should pay the same contribution to the cooperative. Therefore, joining a cooperative and its current costs do not directly depend on changes in the real estate market or the Euribor, unless a new cooperative is being established and it is necessary to acquire a plot of land and bear construction costs. As a result, it is possible to join older cooperatives in the aforementioned countries at very attractive prices. When creating new cooperatives, however, financial support from the public authorities alleviates costs.
Fund for creating more affordable rental properties
In Denmark, a large social housing fund has emerged over a long period of time, which with its own assets ensures and supports the construction of new, more affordable rental properties. The construction of such new living spaces is financed partly from the national construction fund and partly from the funds of local governments. If the rents of such living spaces have covered the construction costs, new projects are financed from the current rental income. Sweden and the Netherlands also have a very well-developed housing sector oriented towards more affordable solutions.
In a simplified way, it can be said that models have been found over time in these countries, in which the state and local governments, through consultation and (financial) strength, in cooperation with active cooperatives, have created a sector of their own, where costs arising from housing are shared on an ongoing basis, and additional rental properties are built with ongoing rental income and with the support of the already created real estate portfolio.
All in all, it is possible to learn a lot from the experiences of other countries. The first step, however, is to change the perception of whether housing must be a classic property-based use of housing or can be replaced by other permanent solutions. Nor can we expect a solution to the problem from the developers or through strict orders and bans. As you can see, in other countries, the great importance of improving and increasing the availability of housing rests with the residents themselves, and next to that, municipalities and the state.
The topic was also discussed at the Opinion Festival panel, "A vibrant city needs accessible homes." The panel featured RASK attorney Villy Lopman, Markus Hääl – the leader of the development of Hundipea, Tallinn's deputy mayor Pärtel Peeter Pere, Kristi Grišakov – head of Tallinn's detailed planning service, and Kaja Pae – head of the Ministry of Climate's construction and living environment department.
Villy Lopman and Markus Hääl also addressed the issue in the Vikerraadio Uudis+ program:
Currently, the state and local governments do not have a legal basis to, for example, oblige real estate developers to provide a certain number of affordable housing in their developments compared to market conditions. However, the solution to the problem should be found sooner rather than later.
If we leave aside the always unpleasant commands and prohibitions and focus on guiding measures, it is possible to summarize the experiences of other countries and talk about the following possible models.
Does the home have to be owned by the person?
First, it should be defined whether the accessible housing must be owned by the person using the premises. If not, it is possible to use Austrian, German, Swiss solutions. In a simplified way, it consists in the fact that the state and local government provide financial support and advise on the establishment of housing collectives. It consists in the fact that a certain number of people become shareholders or members of the respective legal entity (eg OÜ, MTÜ) and this legal entity builds or develops an apartment building for its shareholders or members. An analogue of the Estonian legal system would be if an apartment association and its members started developing an apartment building for themselves.
The loan of such a housing association is supported and guaranteed by the state, and the municipality also helps in planning and necessary administration. Corresponding loan packages also exist in banks. However, the peculiarity is that a person can have only one place of residence in such a system, and its residents are not the owners of their own apartment, they are partners or members. As at the present time, people in Estonia are members of an apartment association. Such participation or membership status is not tradable on the free market, i.e. these transactions are carried out only by the respective housing collective – for example, if a person leaves the collective, the respective cooperative buys back this participation (returns the person's contribution) and starts looking for a new member.
Depending on the country, the amount of housing managed by such collectives varies, but in Vienna, for example, it is estimated that about half of the population lives in similar collectives. The idea of such a model is simply a cost-sharing collective, i.e. joining a cooperative or developing an apartment building, and the subsequent rent, so to speak, is cost-based.
When a member leaves, the contribution is refunded, and the new member should pay the same contribution to the cooperative. Therefore, joining a cooperative and its current costs do not directly depend on changes in the real estate market or the Euribor, unless a new cooperative is being established and it is necessary to acquire a plot of land and bear construction costs. As a result, it is possible to join older cooperatives in the aforementioned countries at very attractive prices. When creating new cooperatives, however, financial support from the public authorities alleviates costs.
Fund for creating more affordable rental properties
In Denmark, a large social housing fund has emerged over a long period of time, which with its own assets ensures and supports the construction of new, more affordable rental properties. The construction of such new living spaces is financed partly from the national construction fund and partly from the funds of local governments. If the rents of such living spaces have covered the construction costs, new projects are financed from the current rental income. Sweden and the Netherlands also have a very well-developed housing sector oriented towards more affordable solutions.
In a simplified way, it can be said that models have been found over time in these countries, in which the state and local governments, through consultation and (financial) strength, in cooperation with active cooperatives, have created a sector of their own, where costs arising from housing are shared on an ongoing basis, and additional rental properties are built with ongoing rental income and with the support of the already created real estate portfolio.
All in all, it is possible to learn a lot from the experiences of other countries. The first step, however, is to change the perception of whether housing must be a classic property-based use of housing or can be replaced by other permanent solutions. Nor can we expect a solution to the problem from the developers or through strict orders and bans. As you can see, in other countries, the great importance of improving and increasing the availability of housing rests with the residents themselves, and next to that, municipalities and the state.
The topic was also discussed at the Opinion Festival panel, "A vibrant city needs accessible homes." The panel featured RASK attorney Villy Lopman, Markus Hääl – the leader of the development of Hundipea, Tallinn's deputy mayor Pärtel Peeter Pere, Kristi Grišakov – head of Tallinn's detailed planning service, and Kaja Pae – head of the Ministry of Climate's construction and living environment department.
Villy Lopman and Markus Hääl also addressed the issue in the Vikerraadio Uudis+ program: