Peter Jarrett
Housing in Italy through the Telescope and the Microphone
International Perspectives and Experiences from Housing Project Stakeholders
1. The Italian Housing Sector in International Perspective
Abstract
This chapter compares the housing sector in Italy to its OECD peers. It identifies characteristics that are specific to Italy among advanced OECD economies, such as high home ownership combined with low mortgage borrowing. It documents that Italy shares with many countries an issue of access to housing, which is particularly acute for young households. The chapter underlines the challenge of decarbonising the housing sector. The chapter discusses Italy’s policy settings in areas such as land-use planning, taxation and energy retrofitting against the experience of other OECD countries. It then provides a bird’s eye view of the rental social housing sector, which is characterised in Italy by low supply and, in recent years, a flourishing of initiatives to renew the sector.
Peter Jarrett, consultant for the OECD Economics Department, authored this chapter with statistical analysis and publishing assistance respectively by Manuel Bétin, junior economist, and Nathalie Bienvenu, programme and communication co-ordinator, both in the OECD Economics Department. Boris Cournède, acting head of the Public Economics Division, and Volker Ziemann, economist, both in the OECD Economics Department, provided guidance on and reviewed the chapter. They are grateful to Elisa Guglielminetti and Federica Ciocchetta, Banca d’Italia, and Catherine MacLeod, then head of the Italy desk at the OECD Economics Department, for valuable comments on an earlier version and to Luiz de Mello, Director of Policy Studies, OECD Economics Department, for his guidance. They thank Lillie Kee and Inés Gomez Palacio, all OECD Economics Department, for their technical assistance in support of the project. They express gratitude to Raffaele Capuano, Economic Advisor at the Permanent Delegation of Italy to the OECD, for initiating, designing and leading the project. The Permanent Mission of Italy to the International Organizations supported this project.
Executive Summary
Italy has long had a system that requires many middle-income people to rely heavily on their families for the provision of owner-occupied housing, rather than mortgage financing. Mortgage supply suffers from a bias in favour of borrowers in the foreclosure regime.
Italy’s ownership rate is somewhat above the OECD average, with a small and declining share of social housing, along with a substantial degree of informal occupation. According to OECD data, in part because of the preponderance of ownership and especially outright ownership (with no associated borrowing) in Italy’s family-based social model, there is comparatively little residential mobility. Changing housing policies could be one remedy for this deficiency but might not be effective in the short run since crucial cultural and historical factors evolve slowly over time.
Affordability is an important issue in Italy, but, by contrast with most OECD countries, one that has not worsened over past decades. House price inflation has been unusually limited since at least 2005, safeguarding average affordability. Nonetheless, housing poverty is relatively high among homeowners but near the OECD average among private-sector renters. Housing costs are an important determinant of inter-regional migration. Overcrowding is quite common, albeit with significant improvements since 2012. Other aspects of housing deprivation, unfit housing and energy poverty are all more prevalent in Italy than the OECD average. Urban decay is also important, especially in southern regions. Homelessness, although difficult to measure in a consistent way across countries, seems to be above average and is becoming more commonly long-lasting.
Housing affordability suffers from less elastic supply than elsewhere. Given weak demographics, the housing stock has grown only slowly since 1990. The demographic outlook is weak, but a foreseen rise in the number of people living alone will push up the number of households. Yet predicted slow real income gains may result in modest increases in the stock and higher demand for housing. Policy could focus on the renovation of the existing stock, as well as building more affordable and social housing.
The housing sector has an important role to play in determining environmental outcomes. In Italy, it is responsible for a larger-than-average share of fine particle emissions. Yet residential energy use per capita is near the OECD average, even if it has risen in recent decades and is much higher than in comparator countries like Spain and Portugal. Simulations suggest that retrofitting the housing stock to decarbonise it will incur heavy costs. The Superbonus 110 programme is an ambitious and worthwhile measure to encourage such efforts but may be too generous and has reportedly resulted in a large amount of fraud.
The State has disengaged from involvement in the housing sector, both in terms of direct support to households and provision of social housing. At the same time, it has retained control over policy and programmes but devolved implementation to regions and municipalities, most prominently land-use planning, which as a result is fragmented. This arrangement creates scope for not-in-my-backyard opposition to new construction or deep renovation by incumbent residents. Government spending on housing is fairly low, especially on housing allowances, but large municipalities have adopted some measures to build affordable housing such as Piani di Zona.
The tax system applied to housing is complex, as elsewhere. The personal tax treatment of housing services is one of the OECD’s most generous owing to mortgage interest tax relief, but transaction taxes can be heavy, notably for secondary residences. Tax equity is harmed by the lack of an efficient cadastre.
Social housing suffers from low supply (exacerbated by steady removal from the stock due to the right to buy at well below-market prices), limited targeting on the poor (implying long waiting lists) and a long-standing lack of funds for renovation. Rents are low, sometimes extremely low, discouraging turnover. Public landlords face a less favourable tax regime than their private counterparts. Too few new plots are available in many localities. In recent years the government has launched initiatives to involve more private capital in the sector through programme agreements with regional governments and closed-ended real estate funds.
Introduction
In all OECD countries, housing plays a crucial role. People need a roof over their heads in order to be able to function well and thrive in their daily activities of working, studying, socialising and providing shelter from the elements for themselves and their families. But countries vary in terms of the model they use for developing their housing stock and the urban environments in which most is to be found. They also attribute the powers to govern and regulate the sector – especially its social housing component – to different levels of government, government bodies and non-governmental organisations.
In Italy’s case, the social model of owner-occupied housing has always been family-based, acquired primarily by inheritance. This is unlike that found in northern Europe, where housing units are mostly considered a financial asset to be bought and traded like other such assets by means of long-term indebtedness in the form of mortgages with or without public tax-based incentives or in countries like Austria, Denmark and the Netherlands with their large social housing stocks. The sustainability of the Italian model is underpinned by the fact that the population has only been edging up in recent decades, with low fertility more than offset by net immigration averaging over 200 000 per year (see below), and net investor demand for second homes by non-residents making up the difference. Nonetheless, it has been under increasing pressure and will continue to be so in the coming decades by foreseeable, affordability-related increases in the need for rental housing, especially by those living alone.
Yet, demand trends for housing have long been buttressed by the falling average size of households (from 3.4 in 1971 to 2.4 in 2011), even though young people continue living with their parents far longer than elsewhere, often well into their 30s. Nevertheless, despite the stability in real prices of housing in most parts of the country (see also Figure 1.12and Figure 1.13below), the lack of any real income gains to speak of for the average householder since at least the turn of the millennium (Figure 1.1) has meant that, for the less fortunate among them, affordability has been a constant challenge. Indeed, the problem has been magnified by the shrinking number of units available on the rental market in the form of social housing (subsidised and other so-called “affordable”) units because of a chronic lack of budgetary resources and the long-standing policy of selling many existing subsidised units to their occupants at a fraction of their market values (see below).
This chapter will attempt to describe some of the key features of Italy’s housing market, including its recent history leading up to and including the period of the COVID-19 pandemic (Box 1.1) and situate it relative to those of fellow OECD Member countries. It will devote special attention to social housing, the focus of the following chapter, which will describe five local projects around the country that have shown the way and demonstrated how the relevant authorities have worked within the applicable financial constraints to create an environment that is eminently liveable for the people fortunate enough to dwell in them.
Figure 1.1. Growth in real disposable income, house prices and rents
Source: OECD Analytical Database.
Box 1.1. How Italy handled the pandemic’s effects on homeowners and tenants
The Italian authorities gave support to deprived households in many different ways mostly through the general social safety net. Consequently, Italy has been close to the OECD average regarding measures specifically aimed at protecting homeowners and renters from the financial effects of the COVID-19 pandemic. OECD data covering 14 different possible measures applying to ownership costs, renters’ costs, utility bills, emergency shelter and support for the construction sector among 37 OECD and 9 non-OECD countries show an average of 2.2 measures adopted per country. Italy adopted two in particular, forbearing mortgages (the most popular of all, implemented by 20 countries) and suspending foreclosures (adopted by 5 countries). In addition, the option for first-home buyers who are either self-employed or under the age of 36 with mortgages up to 400 000 euros to suspend their mortgage payments (with the government’s so-called Gasparrini Fund – originally established under Law no. 244/2007 to support households in specific and adverse situations (such as job loss, death, …) – picking up the tab for half the interest payments) for up to 18 months, first implemented in 2008, was extended until the end of 2022, thereby partly mitigating downward pressure on house prices. As well, the Guarantee Fund supported first-time buyers seeking loans of up to 250 000 euros through a limited guarantee of 50% of the loan. Recently, the guarantee has been extended to 80% of the loan for some specific borrowers (for instance younger people below 36 years of age). Private-sector renters also benefited from a temporary moratorium on evictions, ultimately extended until mid-2022 (effected by 17 countries), but Italy did not adopt any other measure directed to private renters until 50 million euros was added to a rent-arrears support programme that had begun in 2013 (Housing Europe, 2021[1]). On the other hand, social housing tenants had their rent payments suspended in the second quarter of 2020 if any member of the household had to stop working because of COVID-19. The result was that during the pandemic’s first wave both rent and mortgage arrears surged from 9% to 24% and from 4.1% to 11.9%, respectively (Housing Europe, 2021[1]).
While the initial phase of the pandemic in the spring of 2020 harmed the housing market mainly in terms of the number of transactions and demand for mortgage loans, by 2021 conditions had markedly improved, with rises of 75.4% and 45.2% year on year, respectively, in the second quarter, according to the official statistics office, ISTAT. As for prices, they too picked up slightly, with gains reaching 4.2% year on year in the third quarter of 2021. According to the regular survey by the Bank of Italy of estate agents, a majority said house prices were rising in the autumn of 2021 for the first time since the survey’s inception in 2009, although by the following survey during the winter that had slightly reversed.
A brief description of Italy’s housing stock
Italy had about 29-34 million housing units in 2017 (latest data available) depending on the data source (Cassa Depositi e Prestiti, 2018[3]). ISTAT’s estimate for that year was 31.2 million. A large number of them were officially unoccupied, reaching over 7 million in 2011. The average age of the stock was 47 years, one of the oldest in the OECD (Figure 1.2), and only 13.9% had been built since 1991 and 25.9% since 1981. The incentives to build new housing have been blunted by the rising costs of ownership (maintenance, tax, energy, other), especially relative to falling valuations, which resulted in a rise in the annual cost ratio from 2.3% in 2010 to 3.2% in 2014.
Figure 1.2. Age of the housing stock
Source: EU Buildings database, Canada National Energy Use database, US National Association of Home Builders.
In many respects, Italy’s housing outcomes are similar to those elsewhere
Housing tenure is undoubtedly the primary feature describing a nation’s housing model. The main options are owner occupation (with or without a mortgage) or rental from either a private or public landlord. Though growing, there are still few cooperatives or housing associations in Italy. Over 70% of Italian households are owner-occupiers with or without a mortgage, slightly above the OECD average (67%) (Figure 1.3), but mortgage debt is rather low by international comparison (see below). The explanatory factors behind such a high ownership rate are various policy biases (notably in the tax system; see below)1, the important role of family and other cultural factors in the production/financing and transfer of homeownership and the lack of adequate alternatives in the rental market (Poggio and Boreiko, 2017[4]).
Figure 1.3. Share of housing stock by tenure
Source: OECD calculations based on various national sources.
Not surprisingly, the ownership share is aligned with income levels2 (Figure 1.4). The ownership rate is highest for those over 55,3 university graduates, those living in the North and those in smaller towns. However, the aforementioned paucity of mortgage borrowing among homeowners is a common feature for all income groups (an average of only 10% of all households have outstanding mortgages, compared to around 50-60% in most Nordic countries, for example), no doubt in part because of the supply-limiting effects of the extreme friendliness to borrowers in the foreclosure regime (Figure 1.5). Hence, lenders probably seek to protect themselves by charging wide margins, resulting in mortgage costs that are comparatively more burdensome relative to disposable incomes for those with below-median incomes than among most other countries, especially for those in the bottom income quintile at nearly 40% on average in this group (OECD, 2021[2]). The government recognises the burden of such high mortgage rates, with its Gasparrini Fund providing a reimbursement guarantee for first-time buyers. But the first-best solution would probably be to overhaul the foreclosure regime.
Figure 1.4. Homeownership rates by income quintile, 2020 or latest year available
Source: OECD Affordable Housing Database.
Figure 1.5. The borrower friendliness of foreclosure regulation
Source: van Hoenselaar et al. (2021[5]).
Nevertheless, as in almost all OECD countries, mortgages account for the bulk of household debt: about three-quarters, compared to about two-thirds in the average OECD country. But overall household indebtedness is low (at 91% of disposable income it was the lowest among the G7 in 2020, about half of Canada’s level, for example), mitigating the greater risks to financial and macroeconomic stability that have resulted from the greater mortgage access following the financial market innovations that have occurred in recent decades. However, improved access to mortgages would not be a complete blessing, as there is evidence that greater supply contributes to higher housing prices in Italian cities, especially in the expansionary phase of the housing cycle (Barone and S. Mocetti, 2020[6]).
About 14% of households are private renters, and only 2-3% occupy social housing (see below), with a sizeable residual share that includes those squatting on vacant units, a share that is especially large in the Centre and South of the country (Cassa Depositi e Prestiti, 2014[7]). Indeed, the private rental share has shrunk over time, having been almost 20% in the mid-1990s.
Owning one’s home has a number of social advantages such as financial stability through wealth accumulation and greater community involvement [Box 1 in Andrews and Caldera Sanchez (2011[8])]. However, there is one obvious downside, which is the impact on residential mobility. When a local labour market or a particular employer is hit by a negative shock and people would be better off seeking employment elsewhere, those with their own homes (especially if they have no mortgage still to pay) are substantially more reluctant to do so than their renting counterparts, particularly those renting at market prices. It is accordingly no surprise that Italy is in a group of a dozen or so OECD countries with shares of people changing their residence of only around 2% per year, compared to a maximum of nearly 10% in Australia, for example (Figure 1.6). Policy settings that encourage residential mobility include lowering transaction taxes, cutting notary fees, enhancing housing supply responsiveness, easing excessively rigid rent regulations (rent controls and landlord-tenant regulations) and boosting social expenditure on housing (both in cash and in-kind forms, that is housing allowances and social housing) (Causa and J. Pichelmann, 2020[9]).
Figure 1.6. The higher is homeownership, the lower is residential mobility
Source: Chapter 6 in OECD (2021[2]),.
A variant of this topic is the impact of real house prices on inter-regional migration, a phenomenon that has long affected Italy as southerners continue to relocate to the north in search of jobs and better living standards (even though such internal migratory flows are smaller than in most other OECD countries at only about 0.5% per year). Recent OECD research that controls for distance, homeownership rates, international migrants and differences in per capita incomes, population and unemployment rates has shown that regional income per capita and housing costs were more important determinants of such flows in Italy in the years 2010-18 than in any other of the 14 OECD countries examined; in most countries, including Italy, prices in the destination region are especially relevant (Causa and J. Pichelmann, 2020[9]).
Affordability is a challenge everywhere in the OECD with important implications not just for social well-being but also for local economic dynamism and competitiveness: low-income households have been under increasing financial pressure from rising housing costs, despite very low borrowing costs. Most are unable to afford to purchase a property, but if they manage it, they almost always need a mortgage. Thus, so-called housing poverty (measured by the “overburden rate”4: the share of population in the bottom quintile of the income distribution spending at least 40% of their disposable income on housing) afflicted such owners in 2019 even more in Italy (42%) than in the average OECD country (25%); indeed, the Italian share was the second-highest among the 32 countries with available data (after Mexico) (Figure 1.7). But among low-income renters, the relevant shares were fairly similar to those seen elsewhere (about a third among those in the private market and 10-15% for those in subsidised social housing). In any case, affordability problems have been frequently decried for many years now and not just among the weaker segments of the population (Cassa Depositi e Prestiti, 2014). They find their roots in the aftermath of post-war rent controls (which reached their most binding state in the 1978 “fair rent” regime), which caused the sector to virtually collapse. It was able to recover only gradually when the system was liberalised progressively in the 1990s, allowing supply to recover but at the cost of much higher rents.
Sensitivity to environmental and energy aspects of housing was initially recognised in Italy’s 2009 National Housing Construction Plan. The degree to which the sector contributes to global warming through its carbon emissions from heating and cooling is the primary concern. In that respect Italy was near the OECD average in 2019 with about 0.5 tonnes per capita. This level of housing-related emissions per capita is substantially above the levels in countries with comparable weather conditions such as Portugal or Spain (Figure 1.9) Housing was also the source of the largest share of fine-particle emissions in Italy in 2017 (latest data available) (Figure 1.10).
Figure 1.7. Share of low-income households spending more than 40% of disposable income on mortgage or rent, %, 2020 or latest available
Source: OECD Affordable Housing Database.
Figure 1.8. Share of social rental stock by type of provider, 2020 or latest year available
Source: OECD Questionnaire on Social and Affordable Housing; for Italy: Federcasa
Figure 1.9. Per capita energy use from residential housing
Source: International Energy Agency, Energy Efficiency Indicators, 2020 edition.
Figure 1.10. Share of fine particle emissions by major sectors
Note: Housing also includes water, electricity, gas and other fuels.
Source: Air emission accounts, OECD Environment Database.
Many countries recognise their need to upgrade the energy efficiency of the housing stock. Italy is no exception, but it will have heavy financial costs to achieve, whether by retrofitting or other financial incentives or tightening building codes. Indeed, the price increase to cover the attendant costs is over half a year’s average disposable income for Italy and the majority of the 27 OECD countries for which illustrative simulations were performed for an assumed 100m2 dwelling but far less than the 1.5 years’ worth for New Zealand, for example (Cournède, Ziemann and De Pace, 2020[10]). This would ultimately shrink the stock by around 8% in Italy, slightly more than the cross-country average (eighth-most out of 27 countries), while raising house prices relative to incomes by around 0.6 (near the median effect across countries) and raising residential investment nearly 2% (third-most across countries) (Figure 1.11). The estimates are surrounded by considerable uncertainty, but they illustrate that the costs of decarbonising housing will be high in countries like Italy, where the rate of heavy renovation will need to rise considerably to bring the housing stock on track with the transition to net-zero carbon emissions.
Figure 1.11. A hypothetical scenario illustrates that tightening building emissions standards and retrofitting might raise prices and lower the number of units
Source: “The Future of Housing: Policy Scenarios”, Cournède, Ziemann and De Pace (2020[10]).
Italy has implemented an innovative incentive programme for households to undertake housing renovation works to enhance residential energy efficiency, reduce seismic risks and provide electric-vehicle charging points called the Superbonus 110. It allows 110% of the costs of such outlays that result in an improvement of at least two energy classes to be set against income tax from 1 July 2020 initially to the end of 2021, but it was then extended into 2023 for single-family homes and to end-2023 (or even end-2025 on a sliding-rate basis) for multi-family buildings of two to four units. It followed a previous measure introduced in 2019 that was less generous. A major challenge facing the scheme in multi-family homes is the difficulty of multiple households coming to an agreement as to what efficiency-enhancing works to undertake.
The scheme is believed to be boosting GDP growth by 0.7% and creating over 153 thousand jobs (Jones and G. Fonte, 2021[11]) but at a full cost of 33 billion euros by 2036. Many professional estate agents recently surveyed by the Bank of Italy believed that it had also boosted the demand for house purchases. Its extreme generosity has led to supply problems in the construction sector, pushing sectoral prices and profits up. There has also been a significant reported problem of fraud associated with the measure (amounting to 4.4 billion euros according to a February 2022 estimate by the Director of the Tax Revenue Agency), at least until a “compliance visa” requirement was imposed in November 2021 at the expense of reduced user friendliness. Finally, the government had implemented an 853 million euro decade-long National Programme to Enhance Housing Quality in the 2020 budget; this was extended by a larger measure worth 2.8 billion euros in the 2021 National Recovery and Resilience Plan (PNNR) implemented in response to the pandemic (PinQua).
While in other dimensions, Italy is something of an outlier
For various reasons housing supply has not kept pace with real income growth in most OECD countries (OECD, 2021[2]): supply “elasticities” (a measure of responsiveness to changes in price) are often quite low, especially in densely populated metropolitan areas in Europe (Bétin and Ziemann, 2019[12]). Available evidence from local-area estimates for Italy is that supply is particularly inelastic, perhaps only around 0.12 (Accetturo and D. Pellegrino, 2020[13]), lower than in any of the other 10 countries for which estimates were recently derived by Bétin and Ziemann (2019[12]). At the national level, Cavalleri, Cournède and Özsöğüt (2019[14])placed Italy in a group of eight countries out of 25 examined with supply elasticities less than unity. Some reasons for such weakness include the important role of public capital (as in some other countries), combined with Italy’s long-standing problems in its public finances, as well as high population density (especially given seismic risks in many areas), regulatory constraints and the high degree of fragmentation in power over land-use decisions, which gives local incumbents extended possibilities to object to new construction or deep renovation (see below). Going forward, supply constraints in the construction sector due to the EU-financed infrastructure programmes may well prove crucial.
Of course, being a key piece of immovable capital and, for many, the most important asset in their portfolio, housing prices are of important interest. And, in real terms (adjusted for overall national goods and services price inflation), Italy’s price increases have been unusually modest, including for rentals. OECD data for the last two decades show Italy in a group including Portugal, Greece and Japan that have experienced almost no increase at all, while the median rise in real selling prices among the others with available data has been cumulatively about 75% (Figure 1.12). Limiting the period to 2015 onward confirms the same result: Italy’s prices for houses have dropped in real terms (Figure 1.13), and rents have stagnated, though they weakened in the major cities in the first year of the pandemic.
Figure 1.12. Increases in house prices and rents in inflation-adjusted terms
Source: OECD Analytical House Price Database.
Figure 1.13. Increases in house prices and rents in inflation-adjusted terms
Source: OECD Analytical House Price Database.
Modest price rises and weak supply responsiveness and real income gains have meant that Italy has experienced fairly slow growth in the number of dwelling units since 1990, an average of about 1% per year (Figure 1.14). It has also resulted in a stable price-to-income ratio since 2000: in 2020 it took about nine years of average household disposable income to pay for an average 100m2 dwelling, almost exactly as it had 20 years earlier, implying that distributional concerns aside, average affordability has not worsened and is now better than average among OECD countries (Figure 1.15). This is in contrast to the majority of other countries, which had experienced booming house prices and a rise in that ratio, many of them substantial (such as Luxembourg – where it rose from 6 to 16 – and New Zealand – from 10 to 21).
Figure 1.14. Growth rate of the housing stock
Source: OECD Questionnaire on Affordable and Social Housing, except for Belgium and Italy where data are sourced from RESH - Structural Housing Indicators - ECB Statistical Data Warehouse (europa.eu).
Figure 1.15. The evolution of house prices relative to disposable incomes, 2000 to 2020
Source: Bricongne et al. (2019[15]); OECD estimates.
It is not only the number of units that has suffered from the lack of average income gains but also the quality of existing units, a multi-dimensional concept to be sure. The usual shorthand measure of housing quality is overcrowding rates, commonly proxied by the number of rooms per resident. In 2020 the share of households deemed to be living in overcrowded conditions was 19.4%, the seventh highest in the OECD (11%) but well behind Latvia’s and Mexico’s near-40% (Figure 1.16). This represents substantial improvement because the corresponding share in 2012 was over 26%, the second-highest in the EU after Greece and an order of magnitude above the EU average of around 10%. Overcrowding is, of course, much more common among renters than owners, and among renters it is more widespread among private renters than those with subsidised rents (Cassa Depositi e Prestiti, 2018[3]).
So-called “severe housing deprivation” combines overcrowding plus at least one other condition, such as a leaking roof or no bath, shower or indoor toilet (FEANTSA and Fondation Abbé Pierre, 2021[16]). One in 20 Italian households suffered from that in 2019 (one in 14 among those on low incomes), while the corresponding proportions in the average EU country were one in 26 and one in 11. “Unfit housing” is defined as dwellings that have a leaking roof, damp walls/floor/foundation or rot in window frames or floors. Fourteen per cent of Italians (16.4% of the poor) lived in such conditions in 2019, compared to 13.1% of EU residents (20.4% of the poor). Finally, some people face energy poverty: financial difficulties in maintaining an adequate indoor temperature. In Italy that represented 11.1% of all households in 2019 even before the latest energy price increases (26.3% of the poor), substantially higher than the EU average of 7.0% (17.8%).
Figure 1.16. Overcrowding rates
Note: Based on the number of rooms. But the cross-country comparability of the data is limited by differing definitions of what constitutes a room.
Q1, Q3, Q5 refer respectively to the first, third and fifth income quintile.
Source: OECD Affordable Housing Database.
The most extreme manifestation of the problem of housing affordability is homelessness. In Italy there have been no official data-gathering exercises for homelessness since November/December 2014 (ISTAT, 2015[17]), which was a follow-up on an initial research effort carried out from 2007 to 2012. In the follow-up a survey was conducted among service users in 158 municipalities and counted over 50 724 homeless people under the narrow definition that includes only those: 1) living rough, 2) living in emergency accommodation and 3) living in accommodation for the homeless. This was 0.08% of the total population but 0.24% of the population in the surveyed localities.
Comparisons across countries are still difficult, but if the surveyed places are typical and thus 0.24% is closer to the mark, then this would be somewhat above the average across OECD countries, many of whom also use a broader definition that includes other types of homelessness (OECD, 2021[18]). In any case the ISTAT effort pointed to a slight increase since the 2011 figure of 0.23% (47 648 in absolute numbers). Not surprisingly, 86% of the homeless were men, 58% were foreigners, their average age was 44, and only a third had a high-school diploma. Most disturbingly, chronic homelessness was becoming more common: the share who had been homeless for more than two years had risen from 27% to 41%, with 21% over four years, up from 16% three years earlier.
A partially offsetting benefit from a slowly growing housing stock is that there has been less urban sprawl than there would have otherwise been. Nevertheless, people have been moving steadily out of many city centres into adjacent municipalities, leaving behind a decayed urban landscape. Over the years 1992-2015 the amount of vegetated land lost in urban areas (nearly 6%) was seventh-highest in the OECD, impinging on biodiversity (Figure 1.17). This story is supported by the fact that Italy’s average commuting times remained among the shortest in the OECD in 2013-14, the latest data available, at 21 minutes per day for working-age adults. On the other hand a somewhat arbitrary indicator for urban mobility (the share of nearby restaurants that can be reached by car in 15 minutes or less) is found to be poor in Italy, 6th worst of 24 (Cournède, Ziemann and De Pace, 2020[10]). Improving urban transport performance lowers house prices by reducing locational rents, tempering the incentive to move further out for affordability reasons, so if Italy moved to the frontier it would lower prices by a predicted 25% (Cournède, Ziemann and De Pace, 2020[10]).
Figure 1.17. Loss of natural and semi-natural vegetated land in urban areas
Source: OECD.
In the area of land-use regulations, the national government does not provide guidance in the form of long-term strategy or goals: most authority over land use lies at the local level [Table 8.1 in (OECD, 2021[2])]. OECD work has linked high fragmentation to low supply responsiveness, because it gives local residents considerable sway over land-use decisions, allowing incumbents to block the development or deep renovation, including densification, of areas in demand. In general, relaxing zoning requirements (notably on density or building height) has been shown to be effective in boosting supply, driving down both the prices of single-family housing and multi-family rents and improving geographic mobility and local labour-market outcomes and growth (Chiumenti and A. Sood, 2021[19]). Land-use planning systems that give authority to the metropolitan rather than the district (or small municipality) level have been found to facilitate the adjustment of supply to demand, improving housing affordability [Chapter 8 in (OECD, 2021[2])].
Italy is also somewhat unusual in terms of some of its policy settings that impact the housing sector. Most prominently, it imposes a tax regime on residential property that, at first glance, is one of the most generous in the OECD in terms of the marginal effective tax rate (METR) (Millar-Powell et al., 2022[20]), especially because of substantial mortgage interest tax relief (Figure 1.19); among OECD countries only the Netherlands, Denmark and Sweden were more generous in 2016, the latest year when the indicator was computed across OECD countries (though the Netherlands has since then steadily phased down of their tax incentives). This has been shown to boost equilibrium house prices and hence long-run rent levels, but OECD calculations show removal of this provision in Italy would have only marginal downward effects on its price-to-income ratio [Chapter 4 in (OECD, 2021[2])]. Distortions are substantial because the incentive does not apply to owner-occupiers without a mortgage (but Italy still offers a comparatively low METR there as well), nor for dwellings built for rent (which face a METR of about 50%). The gap in METRs between debt-financed owner-occupiers and renters – a measure of the distortion – is 73.6 percentage points, the highest anywhere in the OECD area [Figures 7 and 8 in (Millar-Powell et al., 2022[20])]. The gap is somewhat smaller for equity-financed owner-occupiers and renters (about 45 percentage points) but still surpassed only by Australia, Ireland and Luxembourg.
Figure 1.18. Marginal effective taxation of residential property
Source: Millar-Powell et aL (2022[20]).
Other unusual aspects of Italy’s taxation of housing5 are that the recurrent property tax (IMU) applies only to residences classified as luxury homes6 [Table A.1 in Millar-Powell et aL (2022[20]) ]7, and that no personal income tax applies to capital gains on owner-occupied primary residences (other than luxury homes), whereas property for rental is subject to such taxation if it has been held less than five years. Rental income can be included in ordinary income with the appropriate progressive personal income tax with relevant deductions allowed or subject to an optional so-called “dry-coupon” (cedolaresecca) regime with a flat rate of 21% but no deductions. This rate is lowered to 10% (since 2014) for rentals in areas of housing shortage (essentially all major cities). Recurrent property taxes are levied both at national and local level; cumulatively, they represent about 1.3% of GDP, compared to the OECD-country median of about 0.8% (Figure 1.20).
Figure 1.19. Recurrent taxes on immovable property
Source: OECD Global Revenue Statistics Database.
Other housing-related taxes include transactions taxes, of which there are four: the first two are for land registry and the cadastre of between 0.5% and 3% each (though for some transactions the taxes can be just 50-200 euros each); a third, stamp duty, is generally 2% (with a minimum of 1000 euros), except if it is non-primary residence, in which case it is 9% but is only a flat rate of 200 euros if the seller is a VAT-registered entity (i.e. it is newly built), and there are higher rates for luxury homes; finally VAT is due as well at rates that vary from zero if you buy from a seller that is not VAT registered (i.e. a company) or more than five years after construction, to 4% for primary residences, 10% for second homes and 22% for stately and luxury houses.
A general problem with imposing a proper system of recurrent property tax as well as capital gains tax in Italy is the lack of a reliable valuation tool. In 2022 the government implemented a new cadastral system, promising to properly value properties – but not tax them. Yet, even with this first step, by at least understanding property values, it then becomes possible to better illustrate their impact on wealth distribution as well as what might need to happen to tax rates to generate more revenues for social housing and other local public services and to mitigate the potential impact on those low-income owners who cannot afford to pay more.
A regulatory framework allows Italian authorities to put in place instruments to face systemic risks that could stem from the real estate market. The Bank of Italy can impose a number of restrictions on new loans, including capping mortgage amounts relative to house values or the borrower’s income, limiting debt-service payments to a maximum share of income, limiting new loan maturities and requiring minimum amounts of amortisation. In addition to banks, the Bank of Italy may apply borrower-based measures also to other financial intermediaries who, like banks, carry out the activity of granting loans in any form to the public. As of early 2023, the macroprudential authorities were not applying restrictive policy settings, as they assessed risks from the Italian residential real estate sector as low.. Indeed, recent assessments by the ESRB and the ECB have shown that Italy has low risks stemming from its residential real estate sector and that there is no need to introduce any measures targeting borrowers (Lang and C. Schwarz, 2020[21]; ESRB, 2022[22]).
Finally, Italy is somewhat unusual in the paucity of its direct public investment in housing: only just over 0.2% of GDP in 2020, following major declines over recent decades that coincided with shifting responsibilities (but not resources) from the State to regions and municipalities (Figure 1.21). Italy’s public spending on housing allowances is even more clearly below what most OECD countries disburse (Figure 1.22); and that gap has been fairly constant since the year 2000 (when data became available).
Figure 1.20. Public investment in housing and capital transfers for housing
Source: OECD COFOG Database (National Accounts).
Figure 1.21. Government spending on housing allowances
Source: OECD Social Expenditure Database (SOCX).
The key role of social housing
Given widespread housing affordability problems in all OECD countries one obvious policy measure that can provide a partial solution8 (without the disadvantage of housing allowances9 being embodied in housing prices) is to build more social housing. However, like owner-occupied housing, this has serious lock-in effects on job mobility unless coupled with effectively portable eligibility. In Italy the principal social housing model is to subsidise leases10; other European countries have different models (Box 1.2). Subsidised units in Italy represented only 2.4% of the total housing stock in 202011, down from 3.8% in 2011, according to Housing Europe (2021[1]). That would place Italy in the tenth-lowest position among 31 OECD countries with any such form of housing units: the OECD average share of social housing units is around 7%, with over 20% observed in Austria, Denmark and the Netherlands (Figure 1.23). The decline witnessed in recent years has been quite common across OECD countries: it has been observed in all but six. Very little new stock was being built in Italy prior to the pandemic (only about 1100-1200 units per year in net terms), and relatively few existing units were being renovated or rehabilitated either (Housing Europe, 2021). The pandemic cut new building by about 10% from planned levels and renovations by some 20%.
Box 1.2. Social housing in Europe
Social and cooperative housing in Europe comprises about 25 million dwellings. Since 1988 it has been represented by Housing Europe, the European Federation of Public Cooperative and Social Housing, headquartered in Brussels. It encompasses 46 national and regional federations that include some 43 thousand individual providers in 25 countries. As for Italy, FEDERCASA and the Alliance of Italian Cooperatives in the Housing Sector are both members.
The typology of social housing in Italy has recently been called one of “stigmatisation” (Malinskaya and Kholodilin, 2022[23]). The evidence is thin, but the risk is real that lower-income groups with acute needs could be trapped in deteriorating social housing projects that lack the means to pay for necessary upkeep and maintenance. Besides the main Italian model of subsidising leases, European countries follow a variety of social housing models. France’s version is the so-called habitation à loyer modéré (HLM). Denmark uses non-profit housing associations primarily for students and seniors (mostly in buildings with 20-40 units) that feature shared facilities, a model that is just emerging in Italy. Municipally owned public housing is found in Sweden. Germany provides public subsidies to private landlords for offering low-cost units to specific groups, as France does through tax incentives. Austria offers subsidies quite widely, beyond merely to limited-profit and municipally owned providers. Spain acts through low-interest loans to encourage ownership.
Figure 1.22. Social rental dwellings as a share of the total stock of dwellings
Source: OECD Questionnaire on Social and Affordable Housing (QuASH); for Italy: Federcasa and the Tax Revenue Agency.
However, many countries have undertaken major renovation and revitalisation projects to overcome quality gaps with private rental units and mitigate health and safety risks, especially since the COVID-19 pandemic. One example is the European Green Deal of January 2020 to improve the energy efficiency of the building stock and its July 2020 Recovery Package, which included an allocation of 30% to green projects, with details to be worked out in individual EU Member countries. In Italy’s case the national recovery plan includes 2 billion euros to finance energy retrofitting of social housing, which should be sufficient to cover about a fifth of the total stock (Housing Europe, 2021[1]).12 There is little in the way of data on the quality of the social housing stock in Italy or across countries, although 33 000 units are reported to have been renovated in Italy in 2016. Nevertheless, much is written about problems of damp, mould, drafts and poor insulation, noise and safety deficiencies. Recurrent funding constraints have led to a lack of upkeep and repairs, which has led to a problem of units no longer being usable.
A key policy decision associated with social housing provision is how to allocate the limited number of units. Allocation can either be relatively universalist or more heavily targeted. Targeting has obvious advantages with a scarce stock available, but it conflicts with the desirability of achieving social mixing13: a fear of creating ghettos led some countries (such as France and Germany) to fix income ceilings [that apply in 79% of the countries examined by Phillips (2020[24])] at quite high levels. Various eligibility criteria are commonly used: family income, citizenship status [used by 69% of the countries in Phillips’ (2020[24]) sample], current housing situation, household composition and size (35%). Priority is frequently given to households with a disabled member (84%), the household’s current housing conditions, whether anyone in the household is elderly (61%), the length of time it has been on the waiting list (54%) and those on low incomes (52%).
Italy has a points-based system with priority based on many factors, notably on the household’s current housing conditions and the number of dependent children, but it includes an income ceiling and nationality preferences. The lack of targeting and the inequities involved in the allocation system have long been controversial: in 2007, for example, it came to light that in one segment of social housing about 14% of all tenants earned more than 41 000 euros per year, excluding 8% who refused to declare their income (Breca and Liguori, 2007[25]). Fortunately, Italy has moved over time toward greater targeting: the share of low-income households in all social housing trended up over time from 43.7% in 1995 to 57.9% in 2014, but that remains a rather low proportion, even if it mitigates the problem of arrears for the public landlords (Poggio and Boreiko, 2017[4]).
Once the occupants are selected, the next matter to be decided is the amount of rent charged. In principle, this can be based on market rents, costs, household income, dwelling features or the characteristics of the occupants and can be subject to ceilings or not. Italy uses all these factors except provider costs. There is also subjective basic fee, which is a percentage of the basic fee and varies across municipalities according to the household’s socio-economic situation. No data exist covering the whole country, but Breca and Liguori (2007[25]) said that some people were paying as little as 10 euros per month and two-thirds paid less than 100 euros per month. The average in Rome was 100 euros/month in 2016. Data from Milan show an average of 123 euros per month in 2019. Periodic eligibility reviews are conducted in some countries (France, Slovakia and New Zealand); in Italy tenants may have their rent and eligibility reviewed, most frequently based on income and residency, but the rules for such reviews are set locally, and there are no national data on their prevalence. An alternative is to offer only fixed-term tenancies (as in England), but this injects substantial uncertainty and instability. Like the Netherlands, Italy imposes rent increases aligned with occupants’ incomes; but if the locally applicable income ceiling is exceeded, the lease is terminated. However, all these options are challenging to implement and sometimes ineffective.
One feature of Italy’s system is that, initially since the 1950s but most recently embodied in Legge 560 of 1993, social-housing tenants have had the right to buy their dwelling at below-market prices after five years of rental payments. Ownership is often promoted, despite the aforementioned discouragement of labour mobility, on the grounds that fairly scant, mostly older and US-based evidence points to owners being more involved in social and political processes, engaged in less criminal activity and educating their children more intensely. The last major wave of privatisation was in 1993, when about a fifth of the stock was privatised. But privatising is ongoing (some 2700 dwellings were sold in 2016, compared to new builds of 6300), despite a national waiting list of some 650 000 households14 (about 85% of the existing stock) (Poggio and Boreiko, 2017[4]). Hence, there is a periodic withdrawal of stock that really runs counter to equity considerations, since the overarching lack of supply means there are many low-income households who never get a lease in the first place. Otherwise, social housing projects are also allowed various derogations from urban planning instruments and financing rules (Cassa Depositi e Prestiti, 2014[7]).15
Among different countries provision is variously by government (national and devolved16), for-profit companies, non-profit or limited-profit entities and cooperatives. On average, devolved governments are the largest providers across the OECD, holding about half the relevant stock. Even though the responsibility for social housing in Italy has been substantially devolved in recent decades17, provision remains fairly centralised: some 72% of the stock is owned by national authorities and public agencies (see Figure 1.8 above). An indicator devised by Phillips (2020[24]) placed Italy seventh in a ranking of centralisation among OECD countries in 2019 (Figure 1.24). To keep money in the system, several countries have used “revolving funds” that put rental income back into future projects [Box 2.1 in OECD (2020[26])]. Because of the lack of permanent public funding, Italian policymakers have moved to try to involve more private capital in affordable house building in the form of public-private partnerships.
Figure 1.23. Decentralisation of social housing across countries, 2019
Source: Phillips (2020), based on 2019 OECD QuASH Survey data.
These interventions have taken two forms. First, there have been programme agreements between the State and regions for a certain number of dwellings, including both unrestricted housing and permanently leased units. In 2011-12, for example, the State leveraged 378 million euros of its own funds to create some 17 000 units (of which 80% was new construction) at a total cost of around 3 billion euros by calling forth private capital and additional public funds from regional governments and other public entities.
A second approach has taken the form of closed-end real estate funds, which came into legal existence in the National Plan for Housing Construction of 16 July 2009 and was implemented in 2011 for 35 years with 140 million euros in seed money from the State, combined with a billion euros from the Cassa Depositi e Prestiti and 888 million euros from private investors. By March 2016 32 local funds managed by nine asset management companies were involved in 255 projects to build 20 000 social housing units and 8500 student housing beds, mainly in the north of the country; 84 had been completed and 27 others nearly so.18
Lombardy is considered to be best practice in terms of the ability to combine public-private partnerships aimed at promoting social innovation in welfare and housing initiatives (Costarelli, Kleinhans and S. Mugnano, 2019[27]). For example, the Lombardy Real Estate Fund (FIL) has assets of some 500 million euros in 23 separate developments comprising around 6000 apartments and 1900 student beds along with 21 000 square metres of commercial space. A key player is the Fondazione Housing Sociale (FHS), established in 2004 in Lombardy, which advises the fund system and promotes the social-housing sector by trying to maximise the share of moderate-rent, conventional or social-rent housing.
Other major challenges facing the viability of social housing besides the simple lack of public budget, the steady privatisations at windfall prices and the widespread problem of squatting include the relevant tax system, which is less advantageous than that applied to private landlords, and a lack of plots for new construction, as local authorities often fear encouraging low-income people to move there, even though land for social housing may be subsidised under the Plans for Private Social Housing (PEEP) programme.
The outlook for housing demand in the coming decades
In the decade ending in 2024 official forecasts for the structure of new housing demand are for most (57%) to be from households in middle-income groups (those on 18 000-47 000 euros per year), with 23% from those less affluent than that and 20% among those with higher incomes. The national statistics office, ISTAT, recently published its most recent long-term demographic outlook. Italy’s population is projected to shrink from 59.6 million at the beginning of 2020 to 58.0 million in 2030, 54.1 million in 2050 and 47.6 million in 2070, a cumulative decline of over 20% in the half-century, despite net migration averaging about 140 thousand (0.2%) per year. A similar outlook is also provided by the United Nations, but Eurostat is more optimistic, mainly regarding the net migration balance. The demographic decline occurs despite a projected recovery in the total fertility rate from around 1.27 to 1.51 by 2050 – nonetheless, childless couples will come to outnumber those with children by the mid-2040s – and despite a further rise in life expectancy at birth of about three years. More than half of this depopulation will occur in the south of the country, which will experience a cumulative reduction of almost a third. A large majority of municipalities are expected to experience shrinkage, especially the more rural amongst them. The demographic decline will be slightly shallower among those aged 15-64, but the process of ageing will continue, and the mean age will rise from 45.7 to 50.7 in 2050, at which point it should stabilise.
However, the number of households is forecast to edge up in the period to 2040 because of an increase in the number of people living alone. The scenario is based on continuously positive net migration as both immigration and emigration are expected to decline after the late-2020s, but the level of the former remains at a higher level. Internal migration is expected to involve over 13 million people in the current decade, a quarter of which would entail inter-regional movement.
According to the OECD, the combination of such weak demographics and predicted slow real income gains [Chapter 4 in OECD (2021[2])] imply the OECD’s third-weakest housing stock growth (after Japan and Germany), third-weakest real house price change (after Japan and Latvia) and seventh-weakest price to income change). Overall, even before the current Ukraine crisis, the pace of new housing construction was set for only around 120 thousand units per year in the current decade, compared to annual average net household formation of about 170 thousand. This is expected to lead to some price appreciation, as well as a rapid rise in the demand for social housing, which has already had lengthy waiting lists in recent years (see above) (Housing Europe, 2021[1]).
References
[13] Accetturo, A. and D. Pellegrino (2020), “Housing supply elasticity and growth: evidence from Italian cities”, Bank of Italy Working Papers.
[8] Andrews, D. and A. Caldera Sánchez (2011), “Drivers of Homeownership Rates in Selected OECD Countries”, OECD Economics Department Working Papers, No. 849, OECD Publishing, Paris, https://doi.org/10.1787/5kgg9mcwc7jf-en.
[6] Barone, G. and S. Mocetti (2020), “How do house prices respond to mortgage supply?”, Bank of Italy Working Papers.
[12] Bétin, M. and V. Ziemann (2019), “How responsive are housing markets in the OECD? Regional level estimates”, OECD Economics Department Working Papers, No. 1590, OECD Publishing, Paris, https://doi.org/10.1787/1342258c-en.
[25] Breca, P. and A. Liguori (2007), “Seven thousand rich in public housing: low rents, some pay only 10 euros per month”, La Repubblica.
[15] Bricongne, J. and P. Pont’uch (2019), Assessing House Prices: Insights From “Houselev a Dataset of Price Level Estimates”.
[3] Cassa Depositi e Prestiti (2018), Smart Housing: The New Dimension of Living, Cassa Depositi e Prestiti.
[7] Cassa Depositi e Prestiti (2014), Social Housing -- The real estate market in Italy: focus on social housing, Cassa Depositi e Prestiti.
[9] Causa, O. and J. Pichelmann (2020), “Should I stay or should I go? Housing and residential mobility across OECD countries”, OECD Economics Department Working Papers, No. 1626, OECD Publishing, Paris.
[14] Cavalleri, M., B. Cournède and E. Özsöğüt (2019), “How responsive are housing markets in the OECD? National level estimates”, OECD Economics Department Working Papers, No. 1589, OECD Publishing, Paris, https://doi.org/10.1787/4777e29a-en.
[19] Chiumenti, N. and A. Sood (2021), How to Reduce Housing Costs? Understanding Local Determinants to Building Multi-Family Housing.
[27] Costarelli, I., R. Kleinhans and S. Mugnano (2019), Reframing social mix in affordable housing initiatives in Italy and in the Netherlands. Closing the gap between discourses and practices?.
[10] Cournède, B., V. Ziemann and F. De Pace (2020), “The Future of Housing: Policy Scenarios”, OECD Economics Department Working Papers, No. 1624, OECD Publishing, Paris, https://doi.org/10.1787/0adf02cb-en.
[22] ESRB (2022), Vulnerabilities in the residential real estate sectors of the EEA countries, European Systemic Risk Board.
[16] FEANTSA and Fondation Abbé Pierre (2021), Sixth Overview of Housing Exclusion in Europe, FEANTSA and Fondation Abbé Pierre.
[1] Housing Europe (2021), The State of Housing in Europe, Housing Europe, https://www.housingeurope.eu/resource-1540/the-state-of-housing-in-europe-in-2021.
[17] ISTAT (2015), Homeless People, ISTAT.
[11] Jones, G. and G. Fonte (2021), “Analysis – Superbonus! Italian green growth gambit makes homes and pockets”, Reuters, https://www.reuters.com/markets/commodities/superbonus-italys-green-growth-gambit-lines-homes-pockets-2021-12-09/.
[21] Lang, J. and C. Schwarz (2020), “Trends in residential real estate lending standards and implications for financial stability”, Financial Stability Review, European Central Bank.
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[20] Millar-Powell, B. et al. (2022), “Measuring effective taxation of housing: Building the foundations for policy reform”, OECD Taxation Working Papers, No. 56, OECD Publishing, Paris, https://doi.org/10.1787/0a7e36f2-en.
[18] OECD (2021), Affordable Housing Database, HC3.1 Homeless Population.
[2] OECD (2021), Brick by Brick: Building Better Housing Policies, OECD Publishing, Paris, https://doi.org/10.1787/b453b043-en.
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[4] Poggio, T. and D. Boreiko (2017), “Social housing in Italy: old problems, older vices, and some new virtues?”, Critical Housing Analysis, No. 4.
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Notes
← 1. Recent empirical research for the G7 countries has confirmed that government policies help determine homeownership rates (Malinskaya and Kholodilin, 2022[23]). More generally, that work shows the significant effects of age, income, household size, race, prices/affordability, mortgage availability, urbanisation, interest rates, inflation, tax factors and a proxy for the propensity of the country to provide public support. The authors also cite a majority of the literature that shows that the presence of rent controls leads to higher ownership rates as they deter the supply of rental housing. Earlier work by ndrews and Caldera Sánchez (2011[8]) had already pointed to a similar set of causal factors as well as immigrant status (as in Switzerland, Luxembourg and Denmark, immigrants had lower ownership rates), tertiary educational attainment, household structure (ownership was much greater for couples without dependents than for those with dependents and single people) and the importance of down-payment constraints, especially where no mortgage interest tax relief is offered, and rental market regulation.
← 2. According to Cassa Depositi e Prestiti (2014), it varied from 34.7% for the poorest income quintile to 91.3% for the most affluent. Homeownership among the bottom income quintile fell sharply after 2000 – when it had been 51.7% – in favour of both private rentals and social housing (Poggio and Boreiko, 2017[4]). However, Andrews and Caldera Sanchez (2011[8]) found that the elasticity of ownership rates with respect to household income in Italy was comparatively low. Rather, homeownership was found to be comparatively heavily influenced by falling household size and changing structure, notably a rise in the number of single-person households, in part related to the trend increase in separations and especially divorces.
← 3. Andrews and Caldera Sanchez (2011[8]) showed that from 1995 to 2004 Italian ownership rates had risen for all age groups over 55 for all income groups but especially for the bottom quintile.
← 4. Some observers also refer to the extreme overburden rate using a 60% cut-off (FEANTSA and Fondation Abbé Pierre, 2021[16]). By this measure Italy stood sixth worst in the European Union in 2019 with 24% subject to that cut-off, well behind Greece at 68%.
← 5. Each municipality establishes the tax rate (within guidelines set by the central government of 0-0.6%). The rate applies to the cadastral value but is adjusted by the type of property. There are also other tax benefits (reduced property taxes, VAT or registration fee on the property’s price) when a property is acquired as a primary residence.
← 6. Such dwellings including stately homes, villas, castles and palaces. However, the luxury classification does not align well with property market values, resulting in a lack of both progressivity and horizontal equity.
← 7. Non-luxury, primary residences are not subject to IMU. All non-primary residences are also subject to IMU, though a slight rate reduction is available if it is rented under the controlled-rent regime.
← 8. Building more social housing cannot solve all the problems faced by households in great precarity, but the “housing first” approach argues that is the right place to start. Such funds were first provided (from the European Union) in 2016.
← 9. Italy first introduced a national housing allowance scheme in 1998, with total outlays of about 300 million euros in the early 2000s, but it was temporarily eliminated in the aftermath of the euro crisis and reborn only in around 2014 with limited coverage and generosity. However, the State did give one-off payments of as much as 8000 euros in 2013-15 to help families to pay down debt.
← 10. Italy’s social housing actually has three segments: the largest is the traditional public social housing at very low rents, called Edilizia Residenziale Pubblica (ERP); then there is Housing Sociale, financed by integrated funds, which aim to serve more middle-income households with mixed public and private financing and subsidies of 20-60%, called SIF (Sistema Integrato di Fondi) (see below), which is largely in the large metropolitan areas of the centre and north of the country; and finally there is an emerging non-profit sector (foundations, cooperatives and social enterprises), mainly in the north and designed to deal, for example, with the specific problems of immigrants (Poggio and Boreiko, 2017). It is this last category that is the focus of the following chapter. Some have criticised the lack of coordination among the different forms, which results in a lack of social mixing.
← 11. Most social housing providers are part of the Federcasa, whose 74 associated entities manage some 850 thousand units including 2.2 million occupants using around 7000 employees.
← 12. This follows on an earlier intention to retrofit 12 000 units in the 1.8 billion euro housing plan of 2014.
← 13. Social mixing to counter socio-spatial segregation is not much discussed in the Italian context. But it is achieved indirectly by the right-to-buy law and more directly by the public-private partnership system discussed above (Costarelli et al., 2019). Some leading projects have also sought it by requiring tenants to engage in a minimum amount of community building activities in exchange for their lower rents.
← 14. These waiting lists are compiled by local authorities. In Rome they are estimated to comprise 13 000 households.
← 15. Italy also has a number of “agreed upon tenancies” (contratti a canone concordato), as specified by Law No. 431 of 1998, which are private-sector rentals at a bit below market prices in return for tax incentives for both landlords and tenants. While their prevalence varies across provinces, they are believed to be quite numerous.
← 16. Regional and municipal governments in Italy mostly act through their Territorial Residential Building Companies (ATER).
← 17. The Law of 31 March 1998 transferred responsibility for housing to the regions, but this was partially reversed by the Law of 8 February 2007 and the implications of an important court decision of 21 March of that year.
← 18. Another fund was launched in February 2017 with 100 million euros in state financing targeting one billion euros in total capital to invest in housing, smart infrastructure and urban renewal in 14 metropolitan areas.