Vienna’s Affordable Housing Delivery Model: What can we learn from it?

Vienna’s social rental housing schemes stretch back to the 1920s and are recognised internationally for their success, creating a mix of people of all incomes living as neighbours. Vienna has been recognised by UNESCO for its innovative housing development approach and was voted the world’s most liveable city on 10 occasions in Mercer’s Quality of Living Ranking.

Wohnbauinitiative

Vienna’s Wohnbauinitiative (WBI) plays a key role in the city’s success and high quality of life through innovative financing and competitive bidding, all through the existing institutional framework. The scheme aims to encourage multi-apartment construction and social mix through the provision of below-market rents tiered across a range of incomes. In 2013 and 2014, 3,300 dwellings were built as a result of the WBI(1). Today, Vienna’s social housing market consists of approximately 220,000 municipal flats and 200,000 subsidised dwellings, housing about 50% of the city’s population(2).

The competition for development opportunities, whereby consortia of non-profit, limited profit and commercial developers and financial investors bid for city sponsored projects, contributes greatly to the supply of high-quality affordable dwellings. Assessment of tenders is based on a 4-pillar criteria model of social sustainability, architecture, ecology and economy. Successful applications acquire the rights to purchase the plot of land at a fixed price with housing subsidies of up to 35 per cent of total construction costs(3).

The WBI, which is co-financed by the City of Vienna and financial institutions, provides finance, medium-term, low interest and low-cost loans for building land for construction. Building plots are sold to consortia at almost half of the market price. The city utilises beneficial finance conditions as a low risk and highly credited borrower from the Austrian Treasury, which can then be lent to the building consortia in the form of bullet loans. These benefits are then passed onto tenants through below market rents and long-term contracts.

The consortia requirement for tenders’ spreads risk and activates the financial industry, thus encouraging the financing of affordable housing construction. This provision of low-cost finance and cheap land that contribute to construction costs and rents have both been essential to the schemes success in ensuring affordable housing for a range of incomes.

Opportunity awaits cities across Europe to replicate the WBI and enjoy the same success of not only a low-risk stable investment for developers and investors, but for a more socially cohesive population availing of the basic right of affordable housing.

(1) https://www.researchgate.net/publication/328450291_ Wiener_Wohnbauinitiative_a_new_financing_vehicle_for_ affordable_housing_in_Vienna_Austria

(2) https://socialhousing.wien/policy/the-vienna-model

(3) https://socialhousing.wien/tools/developers-competitions