French affordable housing: a Royale menu, prix fixe?
Back-bearings, as we learn in John Le Carre’s The Russia House, are the counterintelligence discipline of deducing what someone doesn’t know by the questions she asks — for who asks a question when already knowing the answer? [A rhetorical blogger? — Ed.]
You think I ask questions when I don’t know the answer?
In the same vein, the housing proposals a candidate offers provide a window into not only the candidate’s policy objectives and political calculations but also the country’s housing finance ecosystem. So it was with no little interest that I read the 100-point plan (English language link in .pdf)
Wilt scored a perfect 100
for revitalizing
Ms. Royal contemplates
Elsewhere I’ve posted at length about France’s dreadful riots, their connection to the deplorable slums-inside conditions in French public housing (see in particular French urban policy: fixing jobs and houses, and Fixing French housing policy: tear down the high-rises) and the so-far-meaningless promises offered by the incumbents (see France: riots, jobs, and housing and French urban policy: watch the feet, not the hands) and the fears I have for France.
Fight against expensive housing, housing security for life.
But the key element in the high cost of living is the cost of housing: there is total agreement on the seriousness of the situation. There is not enough housing, and it is too expensive. The Solidarity and Urban Renewal law must be better enforced.
A form of inclusionary zoning, the SRU imposes on towns with less than 20% public housing to take steps to provide more. (
We must adopt an active building program and put in place a public guarantees service. This is to act against the dictatorship of estate agents and property dealers.
Even allowing for the florid nature of French political broadsides, Ms. Royal here succumbs to cheap shots. ‘Dictatorship of estate agents and property dealers’?
Take that, estate agents and property dealers!
Sounds like railing against the market. But I forget! Markets reek of l’anglo-saxonisme, and hence no French politician, especially a Socialist politician, will lose political capital by deploring markets.
Let us go then, you and I, and see what Ms. Royal has on offer:
1. Increase housing allowances so as to limit to 25% of income the amount spent on housing for low income families.
Means-testing rents, as this proposal contemplates, has been a cornerstone of
2. Build 120,000 social dwellings per year financed by a more attractive popular tax-free savings scheme (Livret A). The government to have the power to enforce the Loi SRU where mayors do not take action.
Livret A (Booklet A) is a personal savings scheme, whereby the government pays patriotic depositors a small rate, and uses the cheap deposits to finance, among other things, social housing:
Put your savings to good use
As of Aug. 1 [2003], nearly 46 million Livret A accounts will earn interest at a rate of 2.25%, down from 3%. In the future, Livret A rates will be updated by the independent Bank of France based on inflation and short-term interest rates in order to depoliticize the rate-setting process. But the 4.25% rate for special low-income accounts, as well as the 15,000 euro ceiling per Livret A, will stay in place. […]
The reforms should have a positive, if small, influence on the economy. Some deposits will be withdrawn and spent. In addition, borrowing expenses for low-cost housing loans that use Livret A deposits will fall. That should spark additional investment in housing.
I can’t evaluate whether the Livret A flows will be sufficient to support 120,000 new homes; if we assume €100,000 apiece, and lending rates that match Livret A depositors’ payment rates, the government will need 800,000 new savers a year contributing the maximum €15,000 into Livret A accounts. I suspect that Ms. Royal fully expects to be cramming SRU development on recalcitrant mayors.
Here comes that social housing
3. Create a public guarantee service for rented property, so that the absence of financial guarantees are not a block on the access to rented housing, while at the same time the owner of the property is protected…
Sounds basically like FHA mortgage insurance.
4. The procedures for the expulsion of unsatisfactory tenants will be simplified.
A genuine operational reform, probably modeled on the
5. Organize tax advantages and subsidies with a view to keeping rents low.
Sounds like soft equity making an appearance.
6. Make available for renting vacant, speculative property. Local authorities to be allowed to acquire them through compulsory purchase in exceptional circumstances.
Don’t forget to add rehab costs
Compulsory purchase is Euro-speak for eminent domain (good! it’s needed), and the idea of using tax-lien foreclosures to create affordable housing has been proven in Chicago, New York, and many other
7. Encourage owner occupation by the increased use of loans without interest.
Whether you see this as the most favorable form of hard debt, or soft debt by another name, a country that lacks it will have enormous difficulty creating affordable housing, because it always costs money.
8. Tenants who have rented council property for 15 years be able to buy them.
Paging Margaret Thatcher!
Whatever you’re thinking, I thought of it first
This is right-to-buy!
It’s certainly a measure of how far the debate has come that even the left-wing candidate is embracing a homeownership society.
9. Penalize local authorities who do not provide emergency accommodation in the ratio of one to one thousand inhabitants.
A form of inclusionary zoning targeted specifically to the homeless.
10. Establish wardens in all social housing.
Sounds like a basic security measure, probably long overdue.
Except for the right-to-buy, the whole package, including its emphasis on the strong Federal role in stimulating housing creation, is straight out of Lyndon Baines Johnson’s Great Society playbook.
“Come, let us reason together.”
Nothing wrong with that — when LBJ proposed to remake American affordable housing, he had a US ecosystem that we would now see as underdeveloped, with public housing only, no Federal role in housing and urban development. As I wrote when reviewing
In 1956, about the only form of affordable housing, as we today use the term, was public housing — direct government ownership of low-cost housing.
Pruitt Igoe, 1956
There was no HUD, almost no urban renewal, no state housing finance agencies (New Yorl’s was founded in 1960, Massachusetts’ opened its doors in 1966, no CRA (enacted in 1977), few if any hard-debt sources (FHA mortgage insurance did not really begin until the 1962 enactment of now-venerable Section 221(d)(3), and even New York’s precursor, the Mitchell-Lama program, only got its start in 1955), virtually no soft debt, and no soft equity.
Compared with today’s explosively diversified ecosystem, that first environment was a primordial ooze of unicellular animals.
From the foregoing, we can infer that
In short, a long way to go — and a very ambitious menu.
Just pay once, enjoy
Which raises a few questions:
Is it prix fixe or a la carte? Should Ms. Royal be elected, will she see the reforms as a package, to be implemented simultaneously, or will she pick and choose?
What will it all cost? The program is massive — and it’s just one of 100 points, at least 75 of which also involve spending more public money, directly or indirectly, on
As Keynes said, more or less, “in the long run, we are all broke.”
The more ‘dignified’ old-school restaurants used to provide two menus, one with dishes and prices, the other just the delicacies.
It was known as the ladies’ menu.
Let’s hope Ms. Royal has been reading not just the dishes but also the prices.
“Make mine a Royale with cheese.”
