This AHURI Brief, and the series that follow, draw on themes that emerged from an International Housing Policy Exchange convened by AHURI, in collaboration with the US Department of Housing and Urban Development (HUD) in late 2020. The Policy Exchange opened a dialogue on international COVID-19 housing policy responses, with participants from Austria, Canada, England, Ireland, Scotland, Spain, Germany, Japan, New Zealand, Australia and the United States. It considered emerging evidence about the impact of the pandemic, and how each country was approaching housing issues generated or exacerbated by it.
Overview of the Policy Exchange findings
Overall, the consistency in the policy responses to the pandemic across the participating countries was striking. All countries addressed street homelessness, had eviction moratoria (or limits on forced evictions), and provided additional income support measures. However, due to different systems and pre-existing social conditions the way in which these were implemented and framed varied significantly.
It was also important to note the distinction between policies intended as health interventions (infection control) that related to housing, and interventions that were directly targeted towards the housing system and keeping people housed. For example, providing emergency housing to people experiencing homeless was a strategy intended to prevent the spread of the disease, whereas eviction moratoria and enabling mortgage deferrals were targeted to assist people to maintain their housing.
Income support measures to keep people attached to their workplaces were fairly consistent: Spain instituted a Universal Minimum wage, in Canada, emergency relief is transitioning to employment insurance. The Canadian Emergency Worker Support providing forgivable loans to businesses was effective.
Most countries, particularly those in the northern hemisphere, were not ready to contemplate ‘transitioning’ from the COVID policy settings to settings to support financial recovery as they were focussing on preparing for the second wave of COVID, and anticipated that this will be an ongoing issue throughout 2021.
Economic stimulus targeting housing
Housing stimulus measures, such as social housing spending programs to stimulate the economy, were not yet on the policy agenda in many places because the crisis had not passed, although the urgent need for affordable housing that pre-existed the crisis was even more apparent.
In the UK, developers did not receive additional support, because the construction industry was not considered under threat (compared with during the Global Financial Crisis) and recession hadn’t significantly impacted the housing market. However, during the country’s initial two-month shut down, stamp duty breaks incentivised people to move, leading to house price increases (with second and third time buyers the main movers).
In Canada there was also a perception that the construction sector was not in need of job recovery and stimulus measures. Likewise, in Spain, the housing industry continued through the crisis, however the government did provide stimulus targeted to first home buyers. Monitoring the supply of new housing was on the agenda in some countries, like Ireland.
For most countries the supply of new housing was not the issue; the issue was the supply of affordable housing stock (as it was before the COVID pandemic). The improvement and repair of existing stock (including energy upgrades) was on the agenda in many countries.
Key challenges ahead
There remains substantial uncertainty about the next steps for most countries.
As the moratoria on evictions and mortgage deferrals wind up some anticipated a ‘deferral cliff’ whereby those protected by these measures will no longer supported, leaving tenants with large debts from deferred rent.
Furthermore, moratoriums on evictions and foreclosure do not absolve back rent and accrued mortgage payments, meaning lenders will be affected, which could cause deeper economic problems.
With a dysfunctional rental sector—which in the UK is over 600,000 households— the question will be who, and how, do government’s help in a way that doesn’t add to tenants’ debt? Instruments available include allowances, or subsidies for rents and loans to tenants (which lacked impact in Spain due to lack of tenant uptake).
The Policy Exchange participants also noted that rent arrears were rising in the social housing sector as well as among private rental tenancies, potentially leading to a backlog of evictions once the moratorium ends, which will place additional pressure on homelessness support services.
Home buyers may also be facing concerns with the end of any mortgage payment deferral period (sometimes referred to as ‘mortgage holidays’), as people may still find themselves unemployed while needing to start paying their mortgages again. Any longer-term impacts on people’s ability to repay their mortgages may cause changes in people’s borrowing behaviour, and will need to be understood to restore ongoing confidence in the housing sector.