Towards a European Role in Tenancy Law and Housing Policy Christoph - PowerPoint PPT Presentation

Towards a European Role in Tenancy Law and Housing Policy Christoph U. Schmid, ZERP, Bremen 1

TENLAW - Tenancy Law and Housing Policy in Multi-level Europe State of the field I • Comparative dimension: – Crisis has increased the number of tenant households – Several EU states have reformed their legislation; often unbalanced reforms undertaken with little comparative expertise 2

TENLAW - Tenancy Law and Housing Policy in Multi-level Europe State of the field II • Growing importance of tenancy law (TL) for the Single Market – Increased mobility in times of migration – Private market tenancies are mostly the only housing option of immigrants; often informal contracts („ black market “) • Collateral effects of other fields of EU law and policy on tenancy law • European and comparative perspective on TL useful

TENLAW - Tenancy Law and Housing Policy in Multi-level Europe Institutional options I - Full harmonisation - No legal basis, Art. 114 TFEU hardly available - TL not necessary for the establishment of the Single Market - Minimum harmonisation - Legal basis: Art. 169 para. 3 TFEU – consumer law - Extending the social dialogue, Art. 154f, TFEU 4

TENLAW - Tenancy Law and Housing Policy in Multi-level Europe Institutional options II - Open method of coordination (OMC) as in other fields of social policy - Tools: benchmarking, sharing and spreading of best practices, peer review - Tenlaw is about academically preparing such a process through: - Assessing good and bad practises in national systems - Elaborating principles of good tenancy regulation 5

TENLAW - Tenancy Law and Housing Policy in Multi-level Europe Assessment of good and bad practices Frequency of Failure Occurrence by Type • (indicated as total number of countries reporting failure type) Poor-quality living conditions Black market phenomena Ghettoization Tenancy-related tax evasion Supply problems/Insufficient availability in private sector or public sector Problems associated with housing for Roma Affordability problems/Excessively high rents Overcrowding Squatting Gentrification Housing poverty/Homelessness Corruption/Lack of transparency Problems regarding restitution of property in former socialist countries Problems related to estate agents Occupation of social dwellings by non-qualifying tenants Divergent intertemporal tenancy law regimes Discrimination in housing 6 0 2 4 6 8 10 12 14

TENLAW - Tenancy Law and Housing Policy in Multi-level Europe Bad practices related with private law • Most failures are less, at best indirectly, related to private tenancy law, e.g. overcrowding, housing poverty etc. • Failures clearly related to private law are particularly relevant in this project, in particular – Excessively high rents – Discrimination in access to housing – Adverse economic and social phenomena directly related to regulation (e.g. landlord prefers to leave dwelling vacant because of strict rent regulation) – Unjust intertemporal splittings among different tenancy laws – Problems related to estate agents – Black market phenomena 7

TENLAW - Tenancy Law and Housing Policy in Multi-level Europe Example of bad practice: black market contracts “black market contracts” • • Own definition: unofficial, informal contracts, which violate legal regulations and therefore remain in an extra-legal, unprotected sphere, typically to the detriment of the tenant • Generalities: – Black market contracts increase the private sector dramatically in many states – Black market contracts are generally associated with a lack of legal protection of the tenant and low quality of housing, as in most cases no legally binding obligations exist for the landlord 8

TENLAW - Tenancy Law and Housing Policy in Multi-level Europe Example for good practice: social rental agencies • Different national models existing – typical common features: • publicy funded intermediaries between private landlords and households in need of affordable dwellings • SRAs source suitable dwellings and negotiate medium term leases with landlord • SRA pay or at least guarantee payment by tenant of rent, normally somewhat 10-30% less than market rent, often also when dwelling not occupied • SRAs often act as house manager, carry out maintenance works etc. • Result: very interesting good practice capable of facing housing shortage in times where social housing has been cut back in many States 9

TENLAW - Tenancy Law and Housing Policy in Multi-level Europe Example of ambivalent practice: energy refurbishment regulation • Inprovement of energy efficiency of housing stock central goal of EU policy, in particular Directice 2010/31 on energy performance of buildings – Energy performance certificate to be procided by landlord upon conclusion of contract • Improvements to be financed by landlord, often supported by public subsidies • Consequences of energy refurbishments: – Possibly higher market rent of apartment – otherwise, no refurbishment measures carried out by landlords – Right of the landlord to increase rent: DE, AU – Regulated rent for apartment is higher (NL, SWE) • Result may be „ energy poverty “ – poorer tenants priced out of the 10 market

TENLAW - Tenancy Law and Housing Policy in Multi-level Europe Elaborating principles of good tenancy regulation I • Neutrality of tenure as guiding criterion • Definition: rental tenures should not be treated less favourably than homeowership in policy and regulation • For the design of private law rules, this means that these should enable an adequate balance among landlord and tenant („ socio- economic equilibrium), so as to ensure that the parties have positive incentives to enter into tenancy contracts • If position of landlord too weak, he will not rent out residential properties on the market but consider alternative uses or leave them empty • Consequence: State rather than market will have to supply more dwellings • If position of tenant too weak, he will be pushed into homeownership at the risk of overindebtedness 11 • Consequence: mortgage and financial crisis

TENLAW - Tenancy Law and Housing Policy in Multi-level Europe Elaborating principles of good tenancy regulation II • Functional criteria for the landlord: • Profitability • Respect of property rights de iure and de facto • Functional criteria for the tenant: • Affordability • Stability • Flexibility • Criteria are mostly colliding (e.g. more profitability for the landlord means less affordability for the tenant), which stresses the need for an adequate balance • But the criteria are also influenced by exogenuous factors independent of party relationship (e.g. profitability also depends on rate of return of investments in housing as compared with other competing investments) 12

TENLAW - Tenancy Law and Housing Policy in Multi-level Europe Elaborating principles of good tenancy regulation III • Concretisation of functional criteria through general European principles • duration of tenancy contracts • colliding principles: balance between respect of property rights vs. stability to be achieved • Most solutions do not achieve a balance: • Extreme: English assured shorthold tenancy; Swedish and Dutch „ close to impossibility of termination if tenant respects his duties • Closer to balance: • Germany: unlimited contracts to be terminated for special important reasons only respects period; but: balance disturbed when landlord may ask for restitution of dwelling for personal use after short periods of tenancy • Italy 4+4 years guaranteed period, but no more protection thereafter 13

TENLAW - Tenancy Law and Housing Policy in Multi-level Europe Elaborating principles of good tenancy regulation IV • France: 3+3 (6+6) years + right to renewal unless the landlord invokes imperative reasons (in particular, personal use, intended sale): balance may be distorted in favour of tenant – 6 years waiting time to get back a dwelling for personal use may be eccesscive • Proposal of general rule for tenant respecting his duties: 3 years guaranteed periods with option for renewal; but landlord may invoke important reaons against the renewal • derogations possible for elderly tenants, students, tenants with established transitory housing needs only • tenant should always be allowed termination within a short period of about 3 months to ensure personal and professional flexibility 14

TENLAW - Tenancy Law and Housing Policy in Multi-level Europe Elaborating principles of good tenancy regulation V • Rent: balance between profitability vs. affordability • The market rent should be respected by and large in rent increases but also in the setting of the initial rent • To be measured with statistical devices such as the German Mietspiegel or collective negotiations as in Sweden • Lawful deviations should be limited to ca. 10% • During the guaranteed 3 year-periods, rent increases should be limited to inflation rate index or similar index 15