Nonprofit affordable housing developers in the U.K. and the Netherlands don’t have to struggle for funding; they have direct access to significant financial resources. We met one developer who has $77 million in capital available to build projects. In the Netherlands a loan guarantee program, funded by the builders, allows developers to borrow funds from commercial banks at low rates. Moreover, these developers don’t have to submit endless and multiple funding applications. Two other major advantages that affordable housing developers in Europe have are size and strength. In the U.K. and the Netherlands, several large nonprofit housing entities own 50,000 to 70,000 dwellings; many others control more than 20,000 units. This is substantially larger than the largest comparable entity in the U.S., which owns approximately 12,000 low-income units. Because they are larger, European nonprofits are stronger and more politically connected than their U.S. counterparts. Their work usually has the blessing of both local and national governments, and consequently they face less opposition to their plans.

In most European cities, affordable housing is prevalent, an accepted part of the community. A case in point is Tillburg in the Netherlands, whose 165,000 inhabitants make it the nation’s seventh largest city. In Tillburg, 51 percent of the housing is owned by one housing association and is considered affordable. These units rent for one-half to two-thirds of market-rate rents. Another example is London, where developers are required to have 25 to 35 percent of their newly built units affordable.

These European countries have other advantages over the U.S. in providing lower-cost housing. One is “blending”: Affordable housing in Tillburg, London and in most other European cities is mixed with market-rate housing, so that affordable units and the people who live in them are indistinguishable from market-rate housing and their residents. Thus, there is no stigma associated with living in low-income housing.   Continue »

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