Housing regimes and residualization of the subsidized rental sector in Europe 2005-2016

Residualization refers to the process whereby publicly subsidized rental housing moves towards a position in which it provides only a safety net for low-income households. In this paper we quantify residualization based on the income profile of households in the below market rates (BMR) rental sector. Various residualization indicators for 12 European countries from EU-SILC data are calculated. First, we explore the effect of the size of the BMR sector and the cost of alternative tenure types on residualization. Second, we investigate if there are similar trends of residualization from 2005 to 2016. We find that decreases in the share of the BMR sector are associated with significant increases in residualization. Increases in rent differences between the BMR and market rate rental sector are related to larger degrees of residualization. We further observe a rising level of residualization for most countries. However, countries with allocation systems that aim at broader income groups still display the lowest degree of residualization.