Selling Eastern Europe's social housing stock: Proceed with caution

Abstract

As the countries of Eastern Europe begin to reorient their housing sectors toward the private market, many quarters are advocating selling the units in the social sector—typically about one‐fourth of the housing stock—to the tenants. Whether purchasing their units is attractive to tenants depends on the sales price, current and expected rent levels, availability and terms of financing, and the strength of tenant rights of occupancy. Drawing lessons from the experiences of three countries—China, Hungary, and the United Kingdom—in selling social sector rental units, this paper concludes that too much emphasis has been placed on lowering the sales price compared with changing other conditions. This practice results in a substantial loss of revenue to government and a questionable distribution of the nation's wealth.