Inclusionary housing policies in Gothenburg, Sweden, and Stuttgart, Germany

Abstract

Affordable housing shortage and concerns about social and income segregation have become a focal point of housing policy debate in many Western countries, and inclusionary housing policies (IH) have become widespread. IH is a term that summarizes municipal ambitions to spur the inclusion of affordable housing in otherwise market-rate projects through development restrictions. This article investigates IH policy objectives and outcomes of policies applied by the German city of Stuttgart and a Swedish pilot project in the city of Gothenburg. Although IH policies in the two countries generally have very similar objectives and incentive structures, underlying slow-moving institutions decide fundamental traits of the fast-moving institution of IH. In the Swedish case, allocation methods of low-rent apartments under the unitary housing system might prevent targeted polices such as IH from functioning as intended. In the German case, IH is integrated into the existing social and affordable housing system. Therefore its social objectives are not contested, although the limitation of private property rights and the incentive structures of developers are bound to be discussed. Irrespective of the housing system, the extent of public land ownership might also be a decisive factor in whether to implement IH policies or not. In Stuttgart, where public land ownership is limited, IH policies might be an effective way to produce affordable housing, as alternatives, including finding inexpensive land for public production, are limited. As Gothenburg municipality owns most of the land available for housing development, has a planning monopoly and public housing companies with good financial standing, it might find other, quicker and possibly less costly, ways to develop affordable housing than applying IH, especially if it is implemented mainly through public investors.