Housing Subsidies

The GHI assessment seeks to determine whether a country has:

  • Transparent and well-functioning housing subsidies
  • Existing subsidies targeting lowest income groups and households in need
  • Housing as a government priority

Often, housing is a family’s largest expenditure. Sometimes more than half of a family’s income will go towards their rent, mortgage payments, or making necessary home repairs and improvements. Many households save for years to build their homes room-by-room or to purchase a new home. 

A housing subsidy should be designed to help poor households obtain decent, affordable housing. While subsidies can help ensure access to housing, they can also be fiscally irresponsible, regressive, or drastically distort the housing market. Subsidy programs should be periodically reviewed to make sure they are targeting the population in need.

Rent control

Housing subsidies sometimes have unintended consequences. Rent control, for example, may be put in place as a “temporary” measure to limit the rise in rents in markets  with high housing demand but restricted supply.  Short-term, it can keep rents affordable and reduce  speculation.  However, once in place, rent control is notoriously difficult  to dismantle, resulting in   price disparities between rent controlled and non-rent controlled units. Landlords are then discouraged from creating more rental units and/or  maintaining their buildings, and a “gray” rental housing market develops. 

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