JAMMED BETWEEN HOUSING AND PROPERTY RIGHTS - Statbel

European Journal of Housing Policy 1(1), 2001, 17–39

JAMMED BETWEEN HOUSING AND PROPER TY RIGHTS: BELGIAN PRIVATE RENTING IN PERSPECTIVE1 Pascal De Decker

A B S TR A C T In contrast to many other Western countries, the private rented sector is still of major importance in Belgium. On average its market share is around 28 per cent, increasing to 50 per cent or more in the major cities. Moreover, unlike many other countries, private renting is not subject to tight rent controls. On the contrary, rents are generally set freely and tenure security regulations are weak. This article summarizes the development of housing policy in Belgium in general and the legislation governing the private rented sector in particular. It then presents a pro le of the private rented sector, including its tenant, landlords and dwellings. It goes on to review critically the existing legal framework that governs the sector and highlights the main problems that arise from this framework.

K E Y W O RD S

Housing policy, private renting, free housing market, housing rights, property rights

1 . I N T RO D UC T I O N The Belgian private rental market, with around 28 per cent of the housing stock, is quite large by European standards (Oxley and Smith 1996). Within the countr y, the operation of this housing market segment is not without discussion. Complaints about high and rising rents for often poor accommodation and the lack of secure housing are common. The fact that the most vulnerable groups of the population (one-parent families, the elderly, ethnic minorities) live often in this sector increases the importance of the debate among practitioners and politicians. The combination of the relatively high market share with the problematic functioning of the private rental market, makes the Belgian case an interesting example within the context of an international revival of interest in the private rented sector as a factor in housing policy. The private rental market does not, of course, function separately from the European Journal of Housing Policy ISSN 1461-6718 print/ISSN 1473-3629 online © 2001 Taylor & Francis Ltd http://www.tandf.co.uk/journals DOI: 10.1080/14616710110036409

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housing market as a whole. If what happens on the private rental market is important for the operation of the remaining sections of the market, then what takes place on the market of home owners and social renting is equally relevant to understanding the performance of the private rental market. The next section of this paper therefore sketches the broader housing system within which the private rental market operates. In Section 3 the pro le of the private rental market is outlined and the characteristics of landlords and tenants are investigated. Section 4 covers the legislative histor y, while Section 5 highlights some of the problems that arise from the legal framework. It should be stated that the evidence is mainly drawn from Flanders. This is because since the early 1970s the policies have been increasingly devolved to the regions (Flanders, Brussels Capital Region and Wallonia). Considered strictly constitutionally, housing policy comes under the authority of the regions. In practice, however, important housing matters remain the responsibility of the federal government. This particularly concerns tax legislation, but also private rental legislation.2 Consequently, the regions, which are assumed to carry out housing policy, cannot intervene in private rental legislation or regulate taxes. 2.

T H E D E V E L O P M E N T O F H O US I NG P O L I C Y

Historically the Belgian government has chosen to satisfy housing needs through the construction of single family dwellings and private ownership. Since the rst Housing Act of 1889, a broad range of instruments have been developed. Provision has been made, in uctuating proportions, for cheap loans, free grants, cheap building land, cheap houses for sale, interest subsidies and tax cuts. The three main components of housing policy can be summarized as follows: Housing policy was directed at the construction of new houses by individual households. Renovation has, up to now, only been paid lip-service. The reasoning behind this was that following large-scale new construction, on the trickle-down principle, the lowest incomes would nally be able to rent better-quality accommodation (Peeters and De Decker 1997). Housing policy was characterised by its commitment to a broad target group. Until the 1960s no eligibility rules were laid down. Later, only the highest-income groups were excluded from certain subsidies. After years of narrowing the target groups, the tendency has reversed again and application rules relaxed (to avoid marginalization). No income groups are excluded from tax deductions; there is a ceiling on deductions. Housing policy has been characterized by low nancial interventions in both macro and micro terms. The decision has been the choice to give 18

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many families relatively limited support and not to support a more limited target group more substantially (Oxley and Smith 1996; De Decker et al. 1997). The model for promoting home ownership has had, since its introduction at the end of the nineteenth centur y, a remarkable continuity and has never been a matter for serious discussion. This stability is the result of the combination of the persistent political dominance and the ideological hegemony of the Christian workers’ movement. In a reaction against the collectivist ideas of socialism, and inspired by the principles of the social teaching of the Church, the Christian workers’ movement became the principal advocate of property acquisition. The lack of a feasible alternative on the one hand and, even more, the central social role of the movement on the other, were to lead to its views acquiring hegemony, in other words being de ned and accepted by a broad strata of Belgian society as the best option (after Kemeny 1992). Because the Christian workers’ movement also acquired and retained substantial political power, it has been able to put its policy on housing into practice. In coalition governments the Catholic/Christian Party was always the largest and therefore most dominant faction. This meant, on the one hand, that its opinion could never be ignored, and, on the other hand, that measures in the more collective sphere could be only tolerated ‘en surplus’, in excess of the measures to support ownership. The socialist party has been unable to develop a practical alternative vision. The consequence of this socio-political constellation is that the home ownership sector is now the dominant housing market sector and has been for a long time. The 1961 census showed that a majority of families owned their dwelling. This has increased to 68.8 per cent in Flanders and, respectively, 66.3 per cent and 40 per cent in Wallonia and Brussels. The level of home ownership across Belgium as a whole is approximately 65 per cent (Census 1991). Although its share is declining (Table 1), the private rented sector is still the second largest housing tenure. As stated earlier, in 1991 around 28 per cent of families lived in private rented accommodation. Historically, the sector has been dominated by constitutionally protected property rights. The basis of Belgian rent legislation can be found in the Civil Code. The ‘Code Napoleon’ was introduced in 1804 and did not undergo fundamental changes, notwithstanding an impressive number of ad hoc interventions. Belgian civil law is characterized by a conservative–liberal philosophy. As far as rent legislation is concerned this means: powerful protection of the right of ownership; contractual freedom of the parties; an assumed equality of the parties; and the largely supplementar y character of rent legislation. However, the government has been compelled to intervene regularly. Located between the opposing rights of owners and interests of tenants, a stable regulation has never been achieved. Later, this article turns to the most recent legislative initiatives. 19

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Table 1 Belgium, privately rented housing by region, 1981–91 1981 Number Brussels Flanders Walonnia Belgium

1991 Proportion of the stock (%)

Number

Proportion of the stock (%)

240,000 570,000 327,000

53 29 28

237,000 553,000 320,000

52 25 25

1,147,000

32

1,110,000

28

Sources: Own estimation based on the Census (1981, 1991), Anon. (1996) and Nationale Maatschappij voor de Huisvesting (yearly records).

In Belgium, the social rental sector comprises 6 per cent of the housing stock. Historically, investment increases have been prompted, mainly by crises. After the Second World War, the nancing of the sector was structurally regulated by an Act in 1949. Later, following the election victories of an extreme right-wing and racist party, in 1991, the Flemish government suddenly had 30 billion francs available for the construction of 10,000 new social dwellings3 after years of budget cuts. Social rental housing is only available for the so-called low-income groups. But the income limits are drawn in such a way that, for example, in Flanders 48 per cent of all families and 53 per cent of all tenants are eligible for a dwelling4 (1992). The social rented sector offers tenure security and a more than reasonable relationship between price and quality (Meulemans et al. 1996). However, many applicants, especially families, have to wait for years before they are offered accommodation (Anon. 1996). The conditional framework of Belgian housing can now be summarized as follows. Continuing uncertainty, recurring changes in legislation and the factual power relationship between the tenant and landlord imply that the private rental sector does not offer a stable tenure alternative to home ownership. Private letting is only a temporary solution for a majority of households or a solution for individuals and families who have no alternative. Allocation of social housing is impossible for families with aboveaverage income, and for low-income households access is something of a lotter y. This means that home ownership is the only solid and stable tenure device. This status is achieved despite the high and long-lasting down payments that are required. The fact that a majority of Belgian families are owner-occupiers and that for the construction and the purchase of their dwellings they have, by self- nancing and self-building (Peeters and de Decker 1997) taken the initiative themselves, implies that housing in Flanders is indeed very largely privatized. Drawing upon the results of recent research in Flanders it is possible to provide an overview of the current housing situation (Cellen Huisvesting 20


1996; Meulemans et al. 1996). The overall trend, which also applies to Wallonia (Anon. 1996), is that housing quality across all tenures is improving in relative terms. The construction quality, the equipment of the housing and the size of the dwellings have improved considerably in recent decades. The percentage of owners has also continued to rise steadily, while relatively few people are confronted with payment problems. The regulation of the mortgage market and the substantial safety net of social security can be seen to assist in this matter. There is, however, another side to the coin. In relation to both quality and affordability there are clearly some parts of the population categories which lag behind. Broadly speaking, they are situated at the two extremes of the age pyramid. On the one hand, young families with high living costs (principally high mortgage costs); and on the other, elderly tenants who have to tolerate high costs of living in often ver y poor housing conditions. In addition, it is also clear that a division has grown as a result of the number of incomes per family. Families with two incomes are housed in good quality housing, while families with at most one income, especially single and one-parent families, often occupy expensive, poorly equipped rental housing. Another important observation is the (slight) fall in the proportion of young owner-occupiers. The fact that, in the Belgian model, new housing construction for owner-occupation is now entirely aimed at dual earners is crucial. These types of households are no longer increasing in absolute numbers, which, in combination with low construction activity on the part of the government and other investors, means that new production in Flanders has not been suf cient for some time, either to meet new demand or to replace older and poor quality housing. The consequences are noticeable. In Flanders, 300,000 poor quality dwellings remain in use out of necessity. The price of poor housing, in both the owner and rental sectors, is rising. Marginal forms of housing (furnished rooms, caravans, mattress hire – where slum landlords often let poor accommodation to vulnerable tenants) are ourishing. The phenomenon of forced purchase has been created. In order to escape the arbitrary nature of the private letting market, lowincome families buy poor quality housing, knowing that they will probably never have the nancial means to maintain or improve the dwelling (Kesteloot et al. 1996). 3.

P R I V A T E R E NT A L H O US I NG I N P R O F I L E Dwellings

Using the 1991 census, a pro le of the rental market can be developed. Table 2 compares the characteristics of renters with owners. Owing to a lack of differentiated information renters include social rental dwellings (being 21

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Table 2 Belgium, housing indicators by tenure, 1991

Dwelling type Single family house Multi-family house Age Built before 1919 1919–45 1945–71 Built after 1971 Amenities* Not comfortable Rather uncomfortable Rather comfortable Comfortable Size of the dwelling Small Rather small Rather big Big Environment Multi-family house without garden Multi-family house with garden Single family house without garden Single family house with garden

Owner-occupied (%)

Rented (%)

88 12 (100)

47 53 (100)

20 18 34 28 (100)

18 20 36 27 (100)

14 9 28 50 (100)

20 20 31 29 (100)

4 17 39 40 (100)

7 29 38 27 (100)

7 4 10 78 (100)

44 8 13 35 (100)

* Referring to the availability of running water, toilet in the house, bath or shower, central heating, kitchen, telephone and car. Not comfortable : at best 2 of these items are available; rather uncomfortable : 2 to 4 items available; rather comfortable : 5 or 6 items available; comfortable : all 7 items available. Source : Census (1991); own calculations.

6 per cent of the total housing market, and, depending on the region, 15 to 20 per cent of the total rental market). Since the quality and equipment in the social rental sector is better than in the private rental market, the actual quality on average will be somewhat lower than stated. The image given is, in other words, a little too rosy. The differences between the tenures are considerable, especially as regards the type of dwelling. Rental housing is less likely to be a single family house and is generally considerably less comfortable, a lot smaller and less likely to have gardens. Rented dwellings are tend to be temporary homes for people who aspire to owneroccupation, or else the permanent homes of householders who have no other choice. 22


Recent research in Flanders and Wallonia highlighted that even when construction characteristics are taken into consideration, the housing quality of rented dwellings is poorer in comparison with owner-occupied dwellings. In Flanders, 18 per cent of the rented dwellings are of poor quality, compared to 10 per cent of owner-occupied dwellings (Cellen Huisvesting 1996). In Wallonia, 39 per cent of the rented dwellings are of a good quality; while over half (51 per cent) of owner-occupiers fall into this category (Direction de l’Observatoire de l’Habitat 1996). From an inquiry by the Overleg van Vlaamse Huurdersbonden (1996), the Flemish umbrella organization of tenants’ associations, a number of serious quality de ciencies were highlighted. This survey, which probably sampled the worst housing in the sector, revealed some shocking conditions:

over a third (35per cent) of dwellings were in a generally poor state; 42 per cent had de cient woodwork; 31 per cent had a leaking roof; 30 per cent had defective guttering; 19 per cent had poor quality ventilation; 37 per cent had unsatisfactor y electrical wiring; 43 per cent suffered from mould; and 57 per cent experienced damp (Overleg van Vlaamse Huurdersbonden 1996). Landlords

Given that recent data on landlords are not available, older data collected by questionnaire5 (data for 1988: Meulemans 1992) has been used for the following results. We can link the rent and the rental returns of dwellings with the professional categor y and income of their owners. In 1988, 11.7 per cent of Belgian families let one or more dwellings. Although all recorded professions have landlords, the greatest share can be found among higher white-collar professions and the self-employed. The self-employed as a group represents about half of the returns (Table 3). Landlords are drawn from all income categories, with higher-income groups comprising a higher proportion of all landlords. An analysis of these data by age unfortunately does not exist but it is assumed that the high participation among lower-income households is due to a preponderance of elderly households6 (Table 4). Table 5 illustrates the decreasing number of landlords from the mid-1980s to the 1990s. According to the Algemeen Eigenaarssyndicaat (AES), a representative national body of landlords (with about 100,000 members in Belgium) this decline has mainly been seen among the smaller landlords, i.e. those with three or fewer properties. Often these small landlords have acquired dwellings through inheritance or the dwellings represent a small 23

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Table 3 Belgium, proportion of landlords and rent income by profession, 1988 % who owns houses for rent

Average rent income per month

Unskilled worker Skilled woker Lower employee Higher employe Self-employed

6.6 5.5 9.5 17.2 23.5

13,300 BEF 13,700 15,600 18,000 23,400

Total

11.7

18,600

Source : Meulemans (1992).

Table 4 Belgium, proportion of landlords and rent income by income deciles, 1988 % who owns houses for rent

Average rent income per month

1 2 3 4 5 6 7 8 9 10

11.5 10.6 9.0 10.3 12.9 8.9 9.0 11.6 12.9 20.1

28,300 BEF 15,300 12,400 14,600 16,800 13,500 14,700 18,300 26,700 24,500

Total

11.7

19,400

Source : Meulemans (1992).

Table 5 Belgium, evolution of the number of landlords, 1985–94 Number of landlords 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 Difference 1985–94

463,027 432,994 441,000 421,169 410,668 402,824 398,590 398,422 394,977 368,684 2 94,343

Source: Estimation of Algemeen Eigenaarssyndicaat (AES) on gures of the Ministry of Finance.

investment, being seen by the self-employed as an insurance against misfortune, given their limited protection by social security. The AES does not exclude the existence of ‘slum’ landlords,7 who own tens to hundreds of dwellings from its membership, but according to their chairman, they are rare. 24


Data from the Huurdersbond Oost-Vlaanderen (1996), a local tenants’ association, indicate that 86 per cent of its members rent directly from the owner; 13 per cent via a real estate agent, 0.3 per cent are sub-tenants and 1 per cent rent from a social landlord. However, these data underestimate the proportion of lettings by estate agents and social landlords (with 17 per cent of all landlords deemed to be ‘social’). Tenants in pro le Using the 1991 census a comparison of tenants’ and owners’ pro les is possible. The tenant population is compared with owner-occupiers. The results are differentiated with respect to socio-demographic (age, type of household) and socio-economic characteristics (education, income and employment situation). The socio-demographic characteristics of owners and renters are presented in Table 6. The most notable fact is that most tenants are single persons, whereas owner-occupiers are predominantly couples. The groups Table 6 Belgium, age and family type by tenure, 1991 Home owners

Tenants

Share of total population

Spread within home owners

Share of total population

Spread within renters

Age Below 40 Between 40 and 64 65 and older (Total)

51 73 69 (68.8)

23 49 28 (100)

49 27 31 (31.2)

43 34 23 (100)

Family type Single old person 2 old persons 1 active and 1 old person Single person/active age Couple Couple + 1 child Couple + 2 children Couple + 3 children or more Single parent Others without children Others with children (Total)

59 77 77 34 63 69 78 74 39 82 80 (68.8)

12 7 12 6 13 12 14 6 2 10 7 (100)

41 23 23 66 37 31 22 26 61 18 20 (31.2)

16 25 7 3 14 10 7 4 7 4 3 (100)

– – –

27 73 (100)

– – –

52 48 (100)

Single person Couple (Total)

Source: Census (1991); own calculations.

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most likely to be tenants include young households and the elderly. More than 40 per cent of these groups are tenants. A smaller, though signi cant, proportion of economically active couples (14 per cent) are also housed in rental accommodation. More than six in ten single-parent households are also tenants. Owner-occupiers as a group are better off than tenants. There is a clear relationship between income and tenure (see Table 7). Household heads among tenants are more likely to have had no primary education (presumably a re ection of the concentration of the elderly in the sector). Renters are also more likely to be members of single-income or workless households. The rented sector has a particularly high concentration of households with a young and low-income head (Table 8). For the period 1985–92, Meulemans et al. (1996) illustrate the relation between tenure and income security. Among permanently secure households, the proportion of tenants is low (19 per cent), while among long-term insecure households it is high (46 per cent). Temporarily insecure households, with 38 per cent of tenants, occupy an intermediate Table 7 Belgium, socio-economic indicators by tenure, 1991

Level of education Primar y school not nished Primar y school Lower secondary school Higher secondary school Higher educaton Number of people at work by family 0 1 2 or more Number of people at work by family 1 More 1 out of work 1 bene t 2 out of work 2 bene ts Combination

Home owners

Tenants

Share

Share

Spread

Spread

58 66 68 67 69 (68.8)

26 14 17 24 20 (100)

52 34 32 33 31 (31.2)

34 13 15 21 17 (100)

55 58 74 (68.8)

36 29 35 (100)

45 42 26 (31.2)

40 37 24 (100)

57 76 (68.8)

32 68 (100)

43 24 (31.2)

55 45 (100)

11 20 23 15 30 (100)

52 44 28 26 25 (31.2)

24 30 17 10 20 (100)

48 56 72 74 75 (100)

Source : Census (1991); own calculations.

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Table 8 Flanders, proportion of tenants by income and age, 1992 Quintile

All families

Families with a head younger than 40 years of age

1 2 3 4 5

40 34 31 30 26

63 46 44 44 45

Total

32

46

Source: Meulmans et al. (1996).

position. For the period 1985–92 the research also investigated the effect of negative family and employment transitions on the ownership situation of the head of the family. Negative employment transitions scarcely have an effect: the number of owners does not fall and the number of tenants does not increase. Negative family transitions give a ver y different picture. Both widowhood and divorce cause marked increases in the numbers of tenants: from 28 per cent to 32 per cent for widowhood; from 48 per cent to 66 per cent on divorce. Renters may be divided into three main groups. Despite the general perception that renting is less desirable than home ownership, 10 per cent of all tenants have concluded a contract of unlimited duration. It is not known who these ‘stable tenants’ are, but it can be assumed that they are individuals or families with a high professional status who can afford to own a house without problems. However, they choose not to purchase for reasons such as the need to be mobile or because renting is a conscious choice. In any case they have the skills and the social assertiveness to negotiate a favourable contract for themselves. A second important group of tenants comprise new entrants to the housing market. Some 61 per cent of the people leaving the parental house rent privately (Meulemans et al. 1996). A large share of this group want to own as soon as possible, indicating that private renting is a transitional tenure. A third group consists of those households who have no choice because their income is too low or too insecure to enter owner-occupation or because they cannot enter the social rented sector. Assuming complete investment of savings and maximum use of social provisions, acquiring a property remains theoretically impossible for 48 per cent of tenants. These are, as pro led, individuals and families with a low level of prosperity (Meulemans et al. 1996).

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4.

P R I V A T E RE NT A L L E G I S L A T I O N I N P E RS P E C T I V E Temporary Rent Acts 1975–93

In the period 1918–83 no fewer than 105 regulations were introduced for leasing and other agreements on the use of property. The ‘modern’ period of rental legislation began with the Act of 10 April 1975 when a series of temporary annual Rent Acts came into force. This 1975 Act established the formula by which rents are allowed to rise. In the period between 1975 and 1983 a new Temporar y Rent Act was voted every year. These were characterized by two main principles: the intention to limit huge rent increases and the renewal of existing leases was regulated. These Temporary Rent Acts were inspired by the government’s desire to keep in ation under control.

From fundamental law to a changing trend: 1983–91 After this period of Temporar y Rent Acts, on 29 December 1983 (M.B. 30 December 1983) a longer lasting act was voted. This Act reversed government regulation and ‘free negotiation of contracts’ was restored. The determination of the initial rent and the terms of the contract were left to the voluntary decision of the contracting parties. Even so, this Act contained certain stipulations that limited contractual freedom: the maximum permitted increase in rents for existing contracts (which were restricted to increases in the retail price index); the control of additional costs and charges; uniform terms with regard to notice and the possibility of extension because of extraordinar y circumstances; the burden of proof at the end of a lease; regulation of the deposit. However, new temporary rental Acts were voted to suspend temporarily ‘the operation’ of this basic Act (between 1985 and 1987, and again between 1989 and 28 Februar y 1991). They reverted to the principles of the previous battery of Temporar y Rent Acts: a statutory extension of leases and moderation of rent increases for current leasing contracts. Finally, the Temporary Rent Act of 22 December 1989 on the protection of family dwelling can be seen as a modest break in the conception of private rental legislation. This Act was no longer inspired by wide economic objectives (such as the control of in ation), but instead was aimed at the protection of the weaker partner, i.e. the tenant. In this way, the stipulations of the Act were of a compulsory nature and no longer of public order. This Act was prompted by steeply rising rents, principally caused by the Brussels property boom. 28


The Housing Rent Act of 20 February 1991 With the Act of 20 Februar y 1991, rental housing legislation was given a separate section in the Civil Code. The parliament wanted to pursue three objectives: 1 Better protection for the tenant and especially more tenure security by introducing statutorily guaranteed leasing agreements for nine years which could only be terminated by the landlord under speci c conditions or reasons de ned by the law. Through this guaranteed security of tenure, the tenant would also be able to implement the rights offered by the rental legislation (for example, with regard to the obligation to carry out repairs) more easily. A more exible alternative was also provided by allowing the parties to conclude (several) short-term contracts, whose total duration could not exceed three years. 2 A control over rising rents, so that the rent for a tenant, with the exception of the permitted increases in accordance with the retail price index, remains constant in real terms. The law accepts that the parties or the judge, under certain conditions and within well-de ned time limits, can review rents at the end of each three-year period. Nevertheless as a rule new lease contracts remain subject to free rent negotiation, so that this principle only affects sitting tenants. 3 Ending the ever recurring temporary Acts, by establishing a stable framework. This would not only bene t legal security, but it was also intended to create a more favourable climate for property investors in real estate. The corner-stone of this reform was undoubtedly the statutorily guaranteed security of tenure. In order not to disturb the market supply, some ‘safety valves’ were introduced. These form exceptions to the principles of security of tenure and rent stability for the same tenant. These safety valves concern (1) the possibility to conclude written short-term contracts; (2) early termination possibilities for the landlord under the nine-year system with the payment of compensation; and (3) the possibility of reviewing the rent ever y three years. These possibilities of deviating would sow the seeds for a new rent Act (Gevers et al. 1993). During the parliamentary debates on the 1991 Act the Minister of Justice, M. Wathelet, strongly resisted a system of objective rent regulation with the arguments that such a system would be (1) too bureaucratic, (2) would distort market pricing and (3) that the regulated rents would diverge greatly over time. According to the minister, this would discourage investment in property, eventually causing a shortage of rental accommodation that would affect, in particular, those groups unable to afford to become owners. One has to stress that the Housing Rent of 1991 introduced for the rst time in the histor y of Belgian rent legislation the principle that a rented 29

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dwelling must satisfy some basic requirements with regard to safety, health and habitability. Although it may sound strange that, in a welfare state, it took until 1991 to include principles with regard to housing quality, the ‘historic’ breakthrough remained theoretical. The government neglected to de ne the elementary quality standards because this was the responsibility of the regions.8 Further, no sanctions against landlords were speci ed in the civil law. This created a controversy in jurisprudence, by which certain legal authorities contended that this article of the act had only symbolic value. It quickly became apparent that this Act would not be de nitive. Five Acts and Royal Decrees amending, supplementing, reintroducing and extending certain leasing agreements followed before a new ‘ nal’ law was voted in 1997. The 1997 Rent Act Unlike most previous attempts, the 1997 Rent Act passed relatively smoothly through Parliament. From the point of view of the tenants, the new law is ver y disappointing. Although it contains some promising principles, such as permitting only one short-term contract and the implementing (minor) quality norms, nothing really changes. New rents remain free and many of the stipulations are dif cult to enforce. The problem remains that there is no formal mechanism by which the state can monitor either the misuse of short-term contracts or the quality norms. Tenants still have to go to court, with the risk that their action leads to rehousing should their current accommodation be in a ver y poor state. The role of regional and local government Since private rental legislation is made at the federal level and private renting is seen as a contractual question between the landlord and tenant, little room is left for the regions and the municipalities to develop their own policies. However, they are entitled to make supplementar y regulations and municipalities do have the authority to declare dwellings un t for habitation, although this drastic measure is very rarely taken. Support for tenants’ associations and social rental agencies For a long time neither the regional nor local government intervened in the housing market. It was principally grassroot and welfare work which rst caused tension between landlords and tenants. Two types of initiatives were founded. The rst arose from the operation of the legal aid centres and led to the creation of tenants’ associations. These were started by progressive lawyers to give basic legal advice to underprivileged and vulnerable people. 30


They advised tenants on rent problems and in some cases they represented tenants before the courts. The second initiative was the foundation of the social rental agencies (SRAs), some ten to fteen years ago (De Decker 1998). These aim to act as a buffer between landlord and tenant. They lease property and re-let it to underprivileged or vulnerable individuals or families. They guarantee the owners the rent and also provide supervision. For problem tenants they organize social support if required. SRAs were founded by a great number of players including: voluntary welfare services, local authorities and statutory social welfare agencies. Notwithstanding their still limited experience and market impact, they have acquired legitimacy among the landlord associations. Although it was unable to impose regulations on price quality rules in the private rented sector, a Flemish government in the 1990s not only recognized some tenants’ organizations and SRAs, but also took some other measures. It nanced social rent of ces, a supporting umbrella organization (VOB) as well as seven tenants’ associations for three years (1994–97). The recognition of the tenants’ organizations was extended very quickly after new housing legislation passed parliament in 1997 until 2000. Owing to a disagreement between the governing political parties on the number, the SRAs had to wait longer for their recognition to be extended. Today, within the framework of the Flemish Housing Law, twenty- ve social rental agencies are recognized. The SRAs have became a success story, and sixtyeight Flemish SRAs now manage approximately 2,100 dwellings. Most of the SRAs have been founded outside the housing law and nd nancial support from different resources, such as the urban policy fund, provinces, initiatives to combat poverty and local authorities (De Decker 1998). Since these new housing initiatives are still very recent, it is not yet possible to make an evaluation of them. However, a number of problems have become apparent. For social rental agencies which do succeed in offering affordable housing to the target group, operating within the framework of the private rental legislation remains their Achilles’ heel. For example, they can only offer short-term contracts: until 1995, 65 per cent of the sublease contracts were for a maximum of three years (Vlaams Overleg Bewonersbelangen 1995). Alhough the responsibilities between the federal and regional governments and the private rental legislation did not alter fundamentally, SRAs now include nine-year contracts with their clients. However, SRAs have now found ways to offer their tenants nine-year contracts. Notwithstanding the increase in the number of members, tenants’ associations still do not reach the most vulnerable population groups: 75 per cent of all requests for advice to the tenant organizations of the province of OostVlaanderen (Huurdersbond Oost-Vlaanderen 1996) come from relatively well-educated people. 31

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From local regulations to a decree The measures discussed so far are aimed at (1) relieving the tensions between landlords and tenants and (2) empowering tenants. At the local level, and especially in the larger cities, councils have tried to deal with marginal letting. In particular to bring the letting of (un)furnished rooms under control with so-called ‘police regulation’. The lack of a statutor y framework, at either federal or regional level, weakened these measures to a great extent. They are scarcely enforceable if an affected owner appeals to a higher authority or to a court against a decision of a municipal authority. The Flemish Parliament has passed legislation in an attempt to reinforce the attempts of the local government to regulate the quality of furnished rooms. This Act has been in force since 1997. In addition the already mentioned general Flemish housing law (in force since the end of 1997) sets quality norms and requires a certi cate for the letting of dwellings. Nevertheless, despite its good intentions, the implementation of these measures has been problematic and slow. 5 . C U RR E N T I S S U E S I N T H E P R I V AT E R E N T E D S E C T O R This section will consider some barriers to the successful functioning of the private rental market. Namely, (1) the limited knowledge of the law, (2) discrimination, (3) the non-take-up of subsidies, (4) the dominance of short-term contracts and (5) rising rents. Limited knowledge The Belgian rent legislation attributes enforcement to the judge. It is known that access to the courts for many social groups is problematic. Both psychological and nancial factors play a role. Neither are the costs always proportional to the bene ts. Flemish government intends to strengthen the tenants’ associations in response to this problem (see above). Problems arise not only in accessing the court but in accessing rental law. Before people can demand their rights, they have to be aware of the rights they do or do not have. Research in Antwerp has indicated the extent to which the tenants are aware of the rental law (Van Houtte et al. 1995). More than 500 tenants were presented with eighteen scenarios. These questions concerned security of tenure, responsibility for repairs, rent money and guarantees and various myths which circulate widely about the relationship between tenants and landlords. The results of the research were disconcerting with the average respondent scoring 6.9 out of 18, in other words ver y unsatisfactor y. Simple questions were reasonably well answered, but 32


more technical questions were not. The Rent Act is not well known to the tenants. It is also evident from the research that level of education plays an important differentiating role, since people with higher educational quali cations are better able to understand complex information and apply it. Given that the scenarios presented occur frequently in ever yday life it can be assumed that, in practice, many illegal situations exist, and continue to exist, because of lack of knowledge on the part of tenants. From the Antwerp research, it is also apparent that tenants in disputes prefer to turn to the ‘traditional’ mediators in legal con icts; despite their expertise, tenants’ associations or legal aid centres, are used only to a limited extent. Some 45 per cent of those questioned use a barrister in rent disputes, 40 per cent a notar y, and trade unions are approached by 25 per cent of tenants. Legal aid centres and tenants’ associations are used by only 18 per cent and 8 per cent of tenants respectively9 (Van Houtte et al. 1995). Discrimination A study in Ghent in the early 1980s established that 75 per cent of landlords (in a survey of 156) refused to let their properties to Turks. Of the properties that were let to Turks, about half were slums. A few years later the situation had, if anything, deteriorated with almost 90 per cent of landlords (in a survey of 233) refusing to let to Turks. Consequently many migrants in Ghent were, sometimes with government support, forced to buy cheap and usually low quality houses. Kesteloot et al. (1996) found that 80 per cent of Turkish families are owner-occupiers. Overt discrimination in the housing market is now much less pronounced than in the 1980s. Nevertheless, in a recent interview with the author, the chairman of the landlords’ association AES admitted that members would reveal their reluctance to let their properties to groups that they believe to be risky. The groups include single persons, single mothers, asylum seekers and people living on social allowances. Non-take-up of subsidies In order to increase the quality of housing, subsidy systems have long since existed in Belgium’s regions and cities. Traditionally, landlords have made little use of them (even though about half of the poor housing is rented). This is shown in Table 9 which shows the participation levels of the municipal improvement scheme in the city of Ghent. Short-term contracts From the annual report of Huurdersbond Oost-Vlaanderen (1996), it is evident that, of the rental of lease contracts concluded after the Wathelet 33

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Table 9 Gent, participation to the city renovation grant by tenure, 1988–91 (%) Applicant Home owner in owner-occupation Home owner for a rented dwelling Tenant Total (%)

1988

1989

1990

1991

1992

59.6

66.9

84.3

75.8

78.9

39.9 0.5

32.1 0.9

14.6 1.1

22.8 1.4

21.1 0.0

100

100

100

100

100

1993

1995

1996

79

85.3

94.2

78.5

20 1

14.7 0.0

5.2 0.7

20.8 0.0

100

100

100

Total

100

Source : Luna (1997); own calculation.

Rent Act (28 Februar y 1991), 41.3 per cent of these come under the nine-year system; 53 per cent of the leases are short-term contracts.10 The short-system was intended in the spirit of the Wathelet Act, as an exceptional system in order to meet speci c situations; for example, where a landlord intends to sell a property within three years, or where tenants intend to move on to owner-occupied housing in the near future. In theory the landlord and tenant are equal parties freely entering a contract. But, in reality, power is weighted in favour of the landlord during contract negotiations. The unequal power relationship is derived from the scarcity of rental housing, the landlords’ access to professional letting services, and the tenants’ ignorance of their rights and inexperience in contract negotiations. The landlords’ association (AES) also advises its members to use short-term contracts, and this they can do within the letter of the law. For the landlord, the conclusion of short-term contracts has clear advantages. In the rst place, the landlord can terminate the short-term contract without justi cation and without compensation at the end of the period. They can then re-let the same property under a new contract often on more advantageous terms, perhaps with a higher rent. Some legal authorities argue that a landlord can do this even with the same tenant. In such cases the landlord is in a particularly strong negotiating position because they can threaten the tenant with eviction, for which no justi cation need be given. Further, short-term contracts circumvent the usual requirement for a Justice of the Peace to become involved should tenants break the contract or otherwise misbehave. With short-term contracts, the landlord becomes judge and jur y and can use this power to impose a series of de facto probationar y tenancies. The landlord can demand from the tenant that the agreed duration is ful lled. He can be sure that he will suffer less disadvantage than the tenant if the latter wishes to break the contract. Agreements have to be ful lled, according to the AES. A short-term contract cannot be unilaterally terminated prematurely. In principle, the landlord has the right to choose between compulsor y enforcement of the lease agreement or the 34


dissolution with compensation chargeable to the tenant. In theor y, it is the Justice of the Peace who rules on the right of choice when the tenant invokes ‘abuse of right’. In practice, a clause is included in many leases, by which the tenant undertakes to continue paying the rent until a new tenant is accepted, and moreover to pay compensation. The level of compensation has not been regulated by the legislator, so that the legal principle of ‘voluntar y agreement’ applies. In this way, the landlord is assured of a strong negotiating position when negotiating a new contract; if their terms are not accepted by the tenant they remain assured of the rental income. The only material disadvantage that short-term leases have for landlords is that they cannot be terminated prematurely by the landlord for any reason, whereas nineyear leases may be terminated on speci ed grounds. A carousel of rising rents The main dif culties facing the sector have already been reviewed. They concern the marked increases in prices for rented accommodation, the poor quality of rented housing and the role of temporar y contracts, combined with the lack of security of tenure. In the circumstances of a tight housing market, it is the combination of these three phenomena which creates the core problem. General market conditions, with too little new construction to cover the replacement of outdated dwellings, mean that poor housing necessarily remains in use. At the same time, short-term contracts offer the owners the possibility of a high turnover which gives them the opportunity of raising rents with every new contract. It has been established that this turnover effect is in operation: in the period 1988–92, 60 per cent of the rented housing was subject to free rent negotiation. It has also been established that turnover increases in 40 per cent of the cases where rents have been raised. The remaining 60 per cent is explained by an improvement of the comfort of the dwellings (De Decker et al. 1996). Table 10 shows that the greatest increase in prices is for dwellings without a bath or shower and without central heating (+57 per cent ) or in housing Table 10 Flanders, rent evolution by amenities of the dwellings, 1976–92 Total population Dwelling has no central heating nor a bath or shower Dwelling has either central heating or bath/shower Dwelling has central heating and bath or shower

+24% +24% 2 3%

Lowest quintile Dwelling has no central heating nor a bath or shower Dwelling has either central heating or bath/shower Dwelling has central heating and bath or shower

+57% +41% 2 9%

Source : Meulmans et al. (1996).

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lacking one of these (+41 per cent). For better housing amenities the prices have even fallen slightly because they face competition from the owneroccupied market. The fall in the price of comfortable housing occupied by low-income groups is attributable to social rental housing (De Decker et al. 1996). 6.

C O N C L U SI O N S

Although its share is decreasing, with 25 per cent of the housing stock private renting is still an important housing market segment in Belgium. This is due to the historic low levels of investment in social renting and due to the market-led approach concerning home ownership, with the dominance of self- nancing by families and therefore high levels of selfpromotion and self-building leading to low production levels. The private rental market in Belgium is in itself neither without problems nor without social debate. In this sector the worst living conditions are found. Considering that the market is tightening (De Decker 2000b), it is unlikely that any improvements will occur in the near future. Since the early 1980s, all levels of Belgian government are obliged to economize as a consequence of huge debts on the one hand and pressure from the requirements of the European single currency on the other. Consequently no substantial house building and rehabilitation programme has been started. Despite the 2001 budget being more generous than in the past, housing will still be neglected as the new funds are channelled to, amongst others, a large tax deduction, pensions and public works. This means that the conditions for ‘more of the same’ will continue: a strong pressure on the lowest sections of the housing market that will lead to price increases and consolidate the conditions within which marginal forms of accommodation are created and function. Moreover, high tax rates in combination with more pro table and liquid investments available elsewhere, investment in rental housing will be limited. If we consider the private rental sector ‘in itself ’, changes are unlikely. First, there is no political agreement concerning the legislation. The tension between property rights and housing rights, constitutional since 1830 and 1993, respectively, cannot be resolved. Second, the private rent legislation at a political level still is not seen as a housing matter, but only as a question of a contract between landlords and tenants. Although the sector, with its many and frequently changing users and providers, can be managed only by the introduction of legislation, such measures are not on the political agenda. This applies equally to the observation that the leasing of good, affordable housing for those on low incomes with suf cient pro t for the landlords on market conditions is structurally impossible without state support. For this reason, integration of (federal) rental legislation (and therefore private rental policy) in (regional) housing 36


policy remains impossible and as a consequence no ef cient anking policy can be carried out. Moreover, the effects of measures of a regulatory nature (for example, a minimum quality standard) or of a scal nature (for example, a tax on the actual rents), can be passed on to the tenant. The government has reached stalemate. A third element is the condition of inherent conict. By permitting freedom of negotiation of rent and other contractual matters, the government is also responsible for the creation of a con ict situation between landlords and tenants. The situation is exacerbated by the lack of any formal mediation system to settle disputes. It is to be hoped that with the professionalizing of the social rental agencies – from which we are still a long way off – the situation can be defused. Last but not least, there is the institutional problem. As long as private rental is only considered as a question of contract between tenant and landlord, and therefore remains the responsibility of the federal government, an integration of rent legislation (a federal responsibility) and housing policy (a regional matter) will not be possible. This means that, for example, the social rental agencies, which now fall under the private rental legislation, cannot fully develop their role as an intermediar y between the landlord and (principally vulnerable) tenants. Pascal De Decker, Antwerp University, Prinsstraat 13-D330, 2000 Antwerpen, Belgium e-mail: [email protected] NOTES 1

2

3 4

5 6 7

This is a revised version of a paper presented with Geert Inslegers at the seminar ‘The Operation and Regulation of the Privately Rented Sector in Europe’, 20–24 November 1996, organised by CURS (Centre for Urban and Regional Studies) at Birmingham University. The federal tax reductions within the framework of the promotion of owneroccupation are higher than the combined regional investment credits (De Decker 2000a). This apparently spectacular number is equivalent to an increased stock of only 0.5 per cent. Because ever yone who satis es the income and property conditions could apply for one, some 227,000 additional social rental dwellings would be required (Meulemans et al. 1996). This concerns a general household survey. As a consequence no information is available on professional landlords. Con rmed in an interview with Hubert Moriau, Chairman of the AES, 26 November 1999. It is worthy of note that the occupation of estate agent, with the aim of avoiding abuses, is legally protected by the Royal Decree (RD) of 13 October 1994. Anyone who wants to establish an estate agency is now obliged to register with the Professional Institute for Estate Agents (BIV).

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9 10

In the meantime the Supreme Court has determined that the federal government of the region can also introduce housing standards. Note that this does not imply that the regions can introduce and impose quality-related (reference) rents. The respondents could formulate several answers, so the total adds up to more than 100 per cent. These gures are based on the registration of advice for tenants who in 1995 asked for advice on renting. The leasing system under which the tenant’s lease fell at the time that he approached the tenants’ association was also registered. The gures do not count up to 100 per cent, since no information is available on all clients.

REFERENCES Anon. 1996. Le Logement des Personnes Socialement Exclus. Rapport de la Belgique pour la réunion des Ministres du logement de l’Union Européene, Dublin, 24–25 October. Cellen Huisvesting 1996. Een Uitwendig Onderzoek Naar de Kwaliteit van de Woningen in Vlaanderen. Verslag van de Survey 1994–1995 [A Survey of the External Housing Quality of Dwellings in Flanders, 1994–1995 ]. Brussels: Ministerie van de Vlaamse Gemeenschap. De Decker, P. 1998. The Rise of Social Rental Agencies in Belgium. Brussels: FEANTSA. —— 2000a. ‘Who Bene ts from Housing Subsidies in Flanders?’ Paper prepared for the ENHR Conference ‘Housing in the 21st Century: Fragmentation and Reorientation’, Gälve, Sweden, 26–30 June. —— 2000b. ‘De Kostprijs van Woningen en Bouwgronden’ [The costs of dwellings and plots of land]. Presentation to the Flemish Parliament, Brussels, 19 October. —— B. Meulemans and V. Geurts. 1996. ‘Huurprijzen in Dynamisch Perspectief ’ [Rents in Perspective]. Planologisch Nieuws 16(1): 6–21. —— B. Meulemans and V. Geurts. 1997. ‘Trouble in Paradise? On Increasing Housing Problems in Flanders’. Netherlands Journal of Housing and the Built Environment 12(3): 281–305. Direction de l’Observatoire de l’Habitat. 1996. Enquête sur la Qualité de L’Habitat en Wallonie 1996. Ministère de Région Wallonne, Direction générale de l’Aménagement du Territoire, du Logement et du Patrimoine, Jambes. Gevers, L., F. Migeotte, J.-F. Huart and P. De Donder. 1993. Logement et Exclusion Sociale. Un État des Lieux en Région Wallonne. Brussels: Fondation Roi Baudouin. Huurdersbond Oost-Vlaanderen. 1996. Annual report, Gent. Kemeny, J. 1992. Housing and Social Theory. London: Routledge. Kesteloot, C., P. De Decker and A. Manço. 1996. ‘Turks and their Housing Conditions in Belgium, with Special Reference to Brussels, Ghent and Visé’, in: S. Ozüekren and R. Van Kempen (eds) Housing Condition and Housing Careers of Turkish Immigrants in European Countries. Rotterdam: ERCOMER. Luna. 1997. Atlas Kansarmoede. Basisgegevens [Poverty Map. Basis Indicators]. Report for the City of Gent, Gent. Meulemans, B. 1992. ‘Inkomensongelijkheid en Vermogensinkomsten. Een Tipje van de Sluier Opgelicht’ [Income Inequality and Income Out of Wealth. Some rst indications]. De Gids op Maatschappelijk Gebied 83(6–7): 527–57. —— V. Geurts and P. De Decker. 1996. Wonen in Vlaanderen. Onderzoek naar de Doelgroepen van het Woonbeleid (Housing in Flanders. Determining the Target Groups of a Housing Policy]. Brussels: Ministerie van de Vlaamse Gemeenschap.

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Oxley, M. and J. Smith. 1996. Housing Policy and Rented Housing in Europe. London: Spon. Peeters, L. and P. De Decker. 1997. Het Woonbeleid in Vlaanderen op een Tweesprong [Housing Policy in Flanders at the Crossroads]. Berchem/Antwerpen: EPO. Van Houtte, J., W. Van Wambeke and E. Delanoeije. 1995. Rechtshulp en Rechtsinformatie [Legal Assistance and Legal Information]. Brussels: Federale Diensten voor Wetenschappelijke, Technische en Culturele Aangelegenheden. Van Vlaamse Huurdersbonden, O. 1996. Jaarverslag [Year Report]. Berchem: VOB. Vlaams Overleg Bewonersbelangen (VOB). 1995. Annual report, Berchem/ Antwerpen: VOB.

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