1. European approaches to
financing owner-occupied
housing repair and maintenance
This study examined the systems that underpin the repair and improvement
of homes in France, Germany and the Netherlands. It identifies some features
that could increase owners’ capacity to maintain their homes in the UK. The
study was undertaken by Michael Oxley, Andrew Golland, Sarah Hodgkinson
and Angela Maye-Banbury from the Centre for Comparative Housing
Research at De Montfort University in Leicester. The study found that:
Comparing the need for improvement work across countries is difficult
because of the different ways in which housing ‘quality’ is defined and
measured.
Other countries have established national organisations dedicated to
problems of disrepair and improvement. These national initiatives are
significant but are supplemented by important local co-ordination and
assistance measures.
In most cases, France, Germany and the Netherlands do not target policies
for alleviating poor housing conditions specifically at owner-occupation.
Many programmes, particularly in Germany and the Netherlands, look at the
age of the dwelling rather than tenure.
While grants are available to help finance repair work, financing is heavily
dependent on households borrowing from commercial sources. In France,
state aid amounts to less than 3 per cent of all funds required for
improvement work. In Germany, repair and maintenance works are only
funded by the state where a specific need is identified. In former West
Germany, state assistance is given only in exceptional circumstances. In the
Netherlands, private sector financing is equally significant for the
maintenance and improvement of owner-occupied homes.
Low interest loans, subsidised through central government, are used quite
broadly in Germany and France; central government undertakes to hold the
cost of borrowing below market rates. In Germany, households often obtain
these loans from regional state banks. In practice, the loans are repaid at
subsidised rates for a number of years after which the rate of interest reverts
to the prevailing market rate. This has provided incentives for households to
maintain or improve their dwellings.
Tax relief promotes improvement work in other countries, in contrast with
the UK where tax relief is no longer available on home improvement loans.
Repair and maintenance work often benefits from initiatives targeted at
other objectives, such as urban regeneration and energy saving.
J O S E P H
R O W N T R E E
FOUNDATION FEBRUARY 1999

2. Background
This study, which forms a part of a wider programme
of work on housing renewal in the owner occupied
sector, looked at policies for securing repair and
improvement in France, Germany and the
Netherlands, with the aim of identifying policy
initiatives which might be applied in the UK.
Housing conditions
A range of methodologies, using the concept of
‘comfort’, is applied in assessing housing conditions
in France. In the main, assessments of housing
conditions do not identify the owner-occupied
housing sector as a separate tenure group but rather
highlight poor housing conditions more generally in
‘private’ dwellings. Despite these limitations, surveys
suggest that just under one quarter of properties are
defined as ‘uncomfortable’ with around 6.5 per cent
of principal residences in France recorded as having
no inside toilet or a bath or shower. Most
significantly, there is a specific need for the repair
and maintenance of owner-occupied dwellings, most
notably in rural and older industrial areas.
There is a relatively high standard of housing
conditions within all tenure groups in the
Netherlands compared with other countries in
Europe. This appears to stem from a high level of
post-war construction. During the most recent
official survey of the Dutch housing stock, 80 per
cent of all houses had outstanding repair costs of less
than 10 per cent of a comparable new dwelling.
These houses are classed as ‘good quality’. The 13 per
cent of all houses whose repair costs are between 20
per cent and 30 per cent of the new building value
are classed as ‘reasonable’ and those with relative
repair costs of over 30 per cent are categorised as
‘poor quality’. Over a quarter (29 per cent) of all
owner-occupied homes were built prior to 1945,
compared with 17 per cent of the total stock. Some
owner-occupied properties located in inner city areas,
most notably in Amsterdam, Rotterdam, Den Haag
and Utrecht, have been identified as in need of
extensive repair and improvement works.
The condition of the housing stock in the former
East Germany (DDR) is significantly poorer than in
the former West Germany. The findings of the
Building and Housing Census demonstrated that
approximately 7 million (around 40 per cent)
dwellings in the DDR did not have basic amenities
such as a bath, shower and indoor toilet. This
compares with only 2 per cent in the former West
Germany (BRD). Further, although only 1.3 per cent
of dwellings in the BRD had outside toilets, this
figure was significantly lower than in the DDR where
10 per cent of dwellings have an outside toilet.
Grants: national level
The principal form of grant for the renovation of
owner-occupied dwellings in France is the PAH (Prime
à l’Amélioration de I’Habitat; Home Improvement
Grant), provided for the repair and improvement
works of homes constructed since 1945. As a means-
tested grant, PAH is specifically targeted towards low-
income households. Assessments of the occupier’s
age, income and any disability are relevant in
determining applications for PAH. In 1995, 41 per
cent of owner-occupiers awarded PAH were aged 65
or over, even though this group only represents 29
per cent of all owner-occupiers in France.
The grant represents a proportion of the total
cost of work, and it can be obtained where work
makes a home accessible for disabled or elderly
people, or where the home is in a housing
regeneration area. It can also be used in conjunction
with advantageous government loans. Over 60 per
cent of the PAH grant supports work carried out on
properties constructed over 50 years ago. PAH
represents only about 12 per cent of the assistance
available for home improvements.
Linked to PAH is the SSI (Subvention pour la
Suppression de l’Habitat Insalubre) grant which is
aimed at ‘unhealthy’ housing. This is available to
owner-occupiers who have lived in housing in poor
condition for more than two years. Conditions must
have been assessed by the Department of Sanitation
and Hygiene. The total grant is equal to up to 50 per
cent of the cost of the work.
The integral role of the urban sustainability
programme in implementing repair and maintenance
strategies is significant in the Netherlands. The
government has established an urban sustainability
programme which aims to give additional impetus to
renovation projects. The programme includes a
special budget which applies across the whole
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3. country, but which varies from year to year according
to the number of dwellings to be improved. Central
government allocates funding to municipalities and
municipal housing companies to which owner-
occupiers can apply for a grant. There is a limit of
Hfl 5,000 per dwelling.
There are no specific grants available at a
national level in either former West Germany or
former East Germany for the repair and maintenance
of homes within any tenure groups. However, a
number of initiatives administered at the Länder level
do exist.
Tax reliefs
In France and Germany, in particular, tax relief for
improvement work provides a significant incentive
for the repair and maintenance of owner-occupied
dwellings.
In France, new tax reliefs were introduced in
1997 for the improvement and repair of owner-
occupied housing. These reliefs are aimed at owners
who carry out substantial improvement work on
their main residence. The tax reduction is essentially
20 per cent of the total cost of the work up to a limit
of 40,000F for a couple. The level of tax relief
increases with the number of children in the house.
Tax reliefs are only applicable to buildings over ten
years old. The measure has received a favourable
response, particularly because of its simplicity. In
Germany, tax relief is available in targeted
development areas as well as for homeowners of
conservation buildings or dwellings of historic
interest. A bonus (lump sum) is additionally given to
households who modernise as part of a Bauspar
(house purchase or building savings contract) with a
private lender.
Improvement initiatives at the regional
and local levels
In France, the research also identified some schemes
operational at the regional level for home
improvements alongside initiatives for the general
promotion of owner-occupation. In the main, these
initiatives are part of ‘social action’ rather than
housing programmes. Home improvement and
housing renovation schemes are found in around
four-fifths of the 96 mainland departments in France.
An objective of all these locally specific schemes is to
provide subsidies in the form of both grants and
loans to low-income groups. In most cases, applicants
were subject to a means test. In particular, older
and/or disabled owner-occupiers, and in some
instances agricultural workers, have been targeted by
these regional initiatives.
The FSH Partnership Fund is also a significant
initiative for the repair and maintenance of housing
stock in France. The FSH (Fonds Solidarité Habitat)
provides low interest loans to owner-occupiers and
private landlords who would not normally have
access to credit. It operates within a designated area.
The partnership involves the CDC (Deposit and
Consignment Office - a major French public sector
finance institution which manages the funds), the
local authority, and representatives of the
community. Loans are allocated according to local
priorities. They cover up to 70 per cent of the total
cost of rehabilitation work up to a limit of 85,000F.
In Germany, the Berlin repair and modernisation
programme for older dwellings is one key regional
initiative for financing the repair and maintenance of
owner-occupied dwellings, notably those constructed
before 1919. This scheme is open to all tenure
groups. However, disabled people and older owner-
occupiers are specifically targeted. In addition to the
provision of grants, the renovation of dwellings is
also facilitated by the promotion of guaranteed loans
and by households’ own equity input. A further
example is a scheme in Rheinland-Pfalz, which gives
grants for all tenure groups up to and between 30-60
per cent of the total project costs. The grants cover
sanitary installations, light and ventilation
improvements as well as noise insulation.
In the Netherlands, municipal programmes place
greater emphasis on providing subsidies for the
conservation of older dwellings. One example of a
locally specific scheme similar to Home Improvement
Agencies in the UK is the STONE scheme in
Eindhoven which is funded by the urban renewal
budget but co-ordinated and implemented at a local
level. STONE is an institution that operates
independently although it is subsidised by the
municipality. STONE seeks to identify priority areas
for housing improvement in and around Eindhoven
and to respond to requests by owner-occupiers and
FEBRUARY 1999

4. private landlords for finance. STONE also operates a
quality control function for modernisation, repair
and improvement projects and seeks to ensure that
value for money is achieved in projects.
About the study
This study was undertaken by Michael Oxley,
Andrew Golland, Sarah Hodgkinson and Angela
Maye-Banbury from the Centre for Comparative
Housing Research at De Montfort University in
Leicester using contacts in France, Germany and the
Netherlands. It used structured questionnaires sent to
national housing ministries, regional and local
housing authorities and private sector lending
institutions. Responses were followed through with
further correspondence to identify specific details
about subsidy programmes. In addition to the policy
findings, the full report incorporates a substantial
amount of data on housing quality which helps to
explain why and how different solutions are adopted
in other countries.
FEBRUARY 1999
The full report, Financing homeowners’ repairs:
Learning from Europe by Michael Oxley, Andrew
Golland, Sarah Hodgkinson and Angela Maye, is
published for the Foundation by YPS (ISBN 1 902633
20 2, price £13.95 plus £2 p&p).
More information on this study and the work of
the Centre for Comparative Housing Research can be
obtained by contacting the Centre at De Montfort
University, The Gateway, Leicester, LEI 9BH, Tel: 0116
257 7443; Fax: 0116 250 6264; e-mail
mjoxley@dmu.ac.uk, amaye@dmu.ac.uk or
sah@dmu.ac.uk.
How to get further information