Renovation without rent increases – the Hammarkullen experience

Description

Hammarkullen is an area of Angered, one of ten city districts in Gothenburg, the second largest city in Sweden. Angered is home to a number of large housing estates, including a number of public housing developments typical of the “Million homes program” period of Swedish publicly supported housing development from the late 1960s to early 1970s.

By working with the local Tenants’ Union, the municipal housing company – Bostadsbolaget – has been able to provide renovated homes to residents, without the need for unaffordable rent price increases. This has been achieved by offer tenants greater choice, finding the renovation that works for them. Having proved its worth, we will see the tenant choice model scaled-up in Sweden in the coming years.

Context

In Sweden, the urban hierarchy dictates that central, mixed-use districts are at the top, and the post-war suburbs are at the bottom. Hammarkullen, as with many other housing areas built under the “Million homes program”, is stigmatized as a neighborhood with large-scale buildings and social problems. Today more than 80% of the population in Hammarkullen has an immigration background and about 57 % of the inhabitants are born abroad. Many have come here as refugees. The middle income in Hammarkullen is about 54% relative to the average income of Gothenburg, and 29% of the families have social benefits.

One of the largest challenges faced by the providers of public housing and other stakeholders in the area is to break the stigma of the area so that people want to stay there even when they have the opportunity to move somewhere else. Another is to find ways and finance models to renovate the building stock without large rent increases so that those who live here can afford to live here also after renovation (e.g. to avoid the risk of so-called ‘renoviction’). It is also of great importance to find and add ‘aesthetical’ qualities to the buildings and the outdoor areas.

The issue faced by providers of public housing is that while necessary maintenance of a building must be covered by standard rent payments, larger renovations are not. This means that efforts to upgrade and rehabilitate older public housing developments typically necessitate rent increases for tenants. If these rents cannot be afforded by sitting tenants, then in some instances, they will be obliged to move. This is clearly an unwanted outcome, both from a social and environmental sustainability perspective, with the former issue making the latter more difficult.

Issues tackled

The pilot project offers tenants greater choice, allowing them to ‘customise’ their renovation to better meet their needs and means.

A basic upgrade was provided for all residents in the 57 pilot apartments in the scheme, focusing mainly on the electrical system. Above this minimum level, tenants were given the right to choose the level of renovation that was right for them. For example, a bathroom remodelling could be added for an additional 800SEK per month (c.€80), while a new kitchen could be added for 700SEK per month (c.€70).

Actors involved

• Bostadsbolaget (Municipal housing company)

Results

Of the 57 apartments in the pilot scheme, 34 have chosen the cheapest maintenance option, five a new bathroom, 13 the cheapest bathroom option, but a new kitchen, and five tenants both a new bathroom and kitchen.

– This shows that most people are satisfied as long as there apartments meet certain minimum standards, and will choose to avoid higher rents.

Why it works

Tenants can choose the level of renovation that is right for them, based on their needs and means. This avoids the potential for so-called ‘renovictions’. While most tenants in the pilot scheme chose only the minimum level of renovation, those who did go for the optional additions can benefit from economies of scale, and therefore renovate their homes more affordably.

Scale

local