From unitary to dualist? : examining urban housing market convergence in London, Stockholm and Amsterdam

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U

NIVERSITY OF

A

MSTERDAM

From Unitary to Dualist?

Examining Urban Housing Market Convergence

in London, Stockholm and Amsterdam

University of Amsterdam

Robbin Jan van Duijne

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1

BY

Robbin Jan van Duijne

Studentno. 5731887

FIRST READER

Prof. dr. Richard Ronald

SECOND READER

Dr. Christian Lennartz

Word count: ca. 30.000

(chapter 1-7, tables and figures excluded)

This master thesis was written as part of

the research master’s in Urban Studies at

the Graduate School of Social Sciences of

the University of Amsterdam.

University of Amsterdam

August 2014

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Acknowledgements I would like to thank all those that helped me improve my understanding of the complex and evolving dynamics of (urban) housing markets. I am particularly grateful to the people whom I interviewed; special thanks go out to Dick Schuiling and Marja Elsinga for the Dutch case, and Ingela Lindh, Tigran Haas and Dick Urban Vestbro for the Swedish case. Furthermore, this thesis would never have been possible without the help of my supervisor Richard Ronald. His

optimism, energy, flexibility and valuable comments made me want to continuously improve my ideas and writings. Finally, I’d like to thank Christian Lennartz for being my second reader.

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1

CHAPTER

INTRODUCTION

1.1 Unitary and dualist societies

The international differences in the characteristics and the segmentation of housing systems, and in particular rental markets, formed the inspiration for the theoretical research of Jim Kemeny. In his evolving thesis (see Kemeny, 1981, 1992, 1995, 2005, 2006) he developed a theoretical framework which explains the development of two rental markets, unitary and dualist, which he connects to the more general characteristics of the housing system and the welfare state. Dualistic societies tend to reflect privatistic and individualistic hegemonies. They are characterized by major differences between non-profit renting and for-profit renting. Social renting is a small, residual sector, separated from the private market by the government and functioning as a ‘safety net’ for the most deprived households. An important aspect of dualist societies is that they normally feature mass home ownership (e.g., Ronald, 2008; Hoekstra, 2009). The UK is put forward as an example of a dualist model. Unitary societies on the other hand have ‘integrated’ housing systems in which the non-profit housing sector competes directly with the private housing sector, without specific government support for the former and without the social sector being stigmatized or marginalized. Thus, in a unitary market, the non-profit rental sector competes on the housing market with the for-non-profit rental sector and the owner-occupiers’ sector for the favours of broad layers of the population. Unitary societies are characterized by collectivistic hegemonies and often have lower owner-occupancy rates compared to dualist societies. The Netherlands and Sweden are regarded as typical examples of unitary rental systems (Kemeny, 1995). The differences between these two types of society are reflected in the state housing policies and in social outcomes. Following Kemeny’s understanding of relationships among welfare, society and the organization of housing, the role of tenure has been strongly implicated in processes of social divergence.

In brief, in the past scholars thus identified considerable variegation and divergence between housing systems embedded within different welfare states, as there were big differences between the routes that, for instance, economically liberal countries followed (associated with dualist rental models) and the routes that more social democratic or corporatist countries took (associated with unitary rental models). In recent years, however, scholars have identified a number of ‘threats’ to unitary societies (Elsinga et al., 2008). These threats to unitary models are mainly the result of, and can be linked back to, market-oriented housing system transformations. Governments in many European countries have sought to implement more market-oriented, neoliberal housing policies. When we consider neoliberal housing system transformations – processes of privatization, commodification and deregulation – and welfare state roll-back it becomes clear that unitary rental markets in Europe are under mounting pressure (Boelhouwer, 2002; Gruis & Priemus, 2008; Priemus & Gruis, 2011; Elsinga et al., 2008; Elsinga & Lind, 2013). In addition, unitary models appear to be at odds with European laws concerning equal competition. In order to comply with EU-laws, the social rental sector and the providers of social housing in unitary rental markets have to start functioning in a different way, a way that is more characteristic for dualist models (Elsinga et al., 2008; Elsinga & Lind, 2013). Due to these threats, it could be argued theoretically that the unitary rental markets are increasingly being pushed towards a dualism. However, the housing and social outcomes of this theory are still largely ignored.

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It therefore remains unclear whether or not the assumed threats to the unitary societies really have an empirical basis. This explorative study attempts to shed more light on this issue by investigating the apparent convergence of unitary and dualist societies from an urban perspective.

1.2 Social outcomes: reshaping urban social inequalities

Now why is this apparent movement ‘from unitary to dualist’ across different societies so important? How does it change a housing system and how does it affect society? As mentioned, the differences between unitary and dualist society are reflected in the state housing policies, in housing outcomes and in social inequalities (Kemeny, 1995). When unitary rental markets are steered in the direction of dual rental markets it becomes manifest through the transformation of urban housing markets, and more specifically through the expansion of home ownership and undermining and residualization of social rental sectors (e.g., Harloe, 1995; Van Gent, 2010; Atterhog, 2006; Ronald, 2008). Recently,

academics have expressed concerns that these transformations may increase stigmatization of social sector housing and polarization along socio-economic lines (Boschman et al., 2013; Berry, 2014; Uitermark & Bosker, 2014) which leads to exclusionary forms of displacement (Wacquant, 2008, 2009; Slater, 2009; Van Gent, 2013). This reshaping of urban social inequalities became particularly evident in London, where welfare state retrenchment and the rapid increase in home ownership have dramatically changed the city for the worse in terms of socio-spatial inequalities. London is now often regarded as a highly unequal city (Hamnett, 2003; Butler & Lees, 2006; Lees et al., 2008). However, the city has not always been like this as the shift towards a dual rental market and more owner-occupancy only set in around the 1980s. Before that, London’s housing market was to some extent unitary and social democratic in nature. In 1981 London had a regulated housing market and a large social housing sector that accounted for 42% of the city’s housing stock (Hamnett, 2003; Fainstein, 2010). This social rental sector was spread out evenly across the city and was heterogeneous in terms of its tenants as the sector showed a strong social mix. After consecutive rounds of market-oriented, neoliberal reforms like housing market liberalization, privatization and commodification, London rapidly transformed from a city with a social democratic, unitary nature to a highly unequal city (Hamnett, 2003).

Stigmatization of social sector housing, social polarization, sharper socio-spatial segregation and exclusionary displacement have long been evidenced in economically liberal contexts like in London after the 1980s, but even in cities previously characterized as unitary, embedded within social

democratic welfare contexts and corporatist/hybrid1 welfare contexts, like Stockholm and Amsterdam, they are becoming more evident now. Approaches to the provision and allocation of housing are undergoing radical transformations in these latter two cities, as governments have sought to implement a more market-oriented approach to housing policies. The threats to the unitary models appear to erode Stockholm’s and Amsterdam’s unitary housing markets as these cities are now ostensibly beginning to follow London’s previous path. These developments have important social implications for Stockholm and Amsterdam and put current housing market reforms in these contexts into question. Are similar transformations and social effects as in London indeed appearing in Stockholm and Amsterdam? Are the threats and pressures to the unitary rental markets crystallizing in Stockholm and Amsterdam to such an extent that they are reshaping urban social inequalities in a similar way as they did in London?

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The Dutch welfare state is difficult to classify as a certain regime type. Some authors (e.g., Castles & Mitchell, 1993; Ferrera, 1996) argue that the Netherlands comes closest to a conservative/corporatist welfare state regime. Others are of the opinion that the Dutch welfare state is an example of the social democratic type (e.g., Goodin & Smitsman, 2000). The Dutch welfare state is therefore usually regarded as a ‘hybrid’, in between Esping-Andersen’s corporatist and social democratic regime types (Esping-Andersen, 1990; Arts & Gelissen, 2002).

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What would that mean in these contexts, how and in what ways will it change society, their status as ‘just cities’ (Kenn, 1996; Fainstein, 2010) and what are the long-term implications?

1.3 The study

This project is concerned with ongoing housing market restructuring in one city embedded within a liberal welfare state regime (dualist London), one city embedded within a social democratic welfare state regime (‘unitary’ Stockholm), and one city embedded within a corporatist/hybrid welfare state regime (‘unitary’ Amsterdam), and asks whether or not the housing markets of the latter two are likely to develop in the direction of the former. Convergence/divergence theory thus plays a crucial role in this comparative study. Kemeny & Low (1998) have discerned three dominant approaches or ‘schools’ in comparative housing research: juxtapositional analysis, divergence analysis and convergence analysis. The juxtapositional school in comparative housing research considers each housing system as being unique and eschews any attempt to generalize the results of a particular study of housing

systems. The divergence school attempts to discern patterns and typologies of housing systems. Underlying each typology there will often be a thesis that explains how the divergent types comprising the typology are generated and sustained. Esping-Andersen’s (1990, 1999) typology of different welfare state regimes is an influential exponent of a divergence analysis, as well as Kemeny’s (1995) thesis concerning unitary and dualist societies. The convergence school, finally, points to underlying similarities between housing systems. Convergence analyses argue that while all cases are different and variegated, they all appear to be heading in one direction: towards a similar, comparable future (e.g., Castells, 1977; 1983, Harloe, 1995).

Although Kemeny & Low (1998) have argued that the future of housing research lies in the

divergence perspective, it is examined here whether or not this is in fact still the case. Sixteen years have passed since they wrote their paper ‘From Convergence to Divergence’, in which they called for a stronger focus on divergence perspectives. ‘Housing studies’ have thus tried to categorize housing systems within different typologies of welfare states and rental systems. Regarding Kemeny’s (1995) unitary and dualist typology for instance, the UK, Australia and New Zealand are presented as examples of dualist rental systems and Germany, the Netherlands, Sweden and Switzerland are regarded as typical examples of unitary, integrated rental systems. Since the call for a stronger focus on divergence perspectives, multiple studies were also completed in which different typologies of welfare states and housing systems were proposed. Consecutive studies tried to categorize all countries and housing systems within this typology (e.g., Hoekstra, 2003 on the Netherlands, Matznetter, 2002 on Austria, Kristensen, 2002 on Denmark, Allen et al., 2004 on Southern European countries). However, in recent years, governments in many European countries have sought to implement more market-oriented, neoliberal housing policies. When considering the threats to the unitary rental market like welfare state roll-back, commodification, privatization of social housing, the shift towards more owner-occupancy and the European unification (e.g., Priemus & Dieleman, 2002; Doling & Ford, 2007; Elsinga et al., 2008; Priemus & Gruis, 2011; Elsinga & Lind, 2013), the divergence school of comparative housing research appears to fall short. Lennartz (2011), for instance, notes regarding Kemeny’s (1995) dualist and unitary typology that “there is a lack of consideration of the radical changes in the provision of social housing in many European countries (p. 349).” Consequently, the consideration of how housing systems fit with liberal, corporatist or social democratic welfare state regimes has not been particularly productive. It has been difficult to simply reconcile liberal regimes with dualist, home ownership oriented systems and social democratic regimes with unitary,

(social-)renting oriented systems (Kurz & Blossfeld, 2004). These neoliberally driven trends that can be linked back to the threats to unitary models can be witnessed in a great majority of high-pressure urban housing markets, across the boundaries of social democratic, corporatist and liberal welfare state

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regimes (Priemus & Dieleman, 2002; Doling & Ford, 2007; Schwartz & Seabrooke, 2008). They also appear to push unitary societies in the direction of dualist societies, thereby making the distinction between two different rental systems less useful. Thus, these similar trends appear to override traditional categorizations and typologies, as similar processes appear to be affecting London, Stockholm and Amsterdam in a comparable way. This study thus not only sets out to empirically test the threats to unitary models from an urban perspective, it also critically examines this apparent convergence. It asks if there is a tendency towards dualism in unitary models, how these neoliberal processes are transforming the urban housing markets of the cities in question and what this means in terms of reshaping urban social inequalities.

It should be noted that both welfare state retrenchment and neoliberalization processes are highly variegated and contingent across contexts (Pierson, 1996; Brenner et al., 2010a, 2010b) and will not necessarily lead to one converging, uniform regulatory housing regime in the three cities in question. The localized features of a housing system always form a unique combination in each society (Bengtsson & Ruonavaara, 2010). There is considerable path dependency, and cultural, geographic, and historic diversity in housing systems and how they relate to power structures and welfare states. Indeed, many commentators are rightly skeptical of deterministic, convergence based approaches, arguing that nation states have significant choices (e.g., Weiss, 1998; Hay, 2005). This insight into the variegated nature of the processes under study fundamentally complicates the idea of convergence, as the apparent convergence can also be the outcome of variegated responses to neoliberalism. In some respects there could be as much divergence as convergence. Thus, there is not one path of

neoliberalization that all three cities tend to follow. There has not appeared to be a simple, mechanistic process operating in which a single cause, like neoliberalization, has everywhere been leading to an identical effect. Even the privatization paths and privatization strategies of cases embedded within ‘comparable’ integrated rental societies are highly variegated and contingent across different contexts (Stephens et al., 2008; Lennartz, 2011).

The convergence approach has thus been heavily criticized for failing to take sufficient account of political, cultural and institutional differences between countries. However, while keeping in mind this complexity on the variegated nature of neoliberalism, it is investigated here whether or not the

underlying threats to the unitary rental market – e.g., privatization, commodification, welfare state roll-back, increased European influence – lead to a converging, if not comparable future. Considering these issues, the following core research question emerges:

How are housing market transformations restructuring the urban housing markets of Stockholm and Amsterdam, and is there a tendency towards convergence between these two cities and London’s dual rental market model?

From this main research question it becomes clear that there is a certain hierarchy between the three cases in this particular study, as not all cases pull the same weight. Unlike Stockholm and Amsterdam, London is not an empirical case but instead functions as a theoretical model. It is argued here that London is a paradigm, a paradigmatic city, a city that displays earlier and more clearly than other cities the general direction and fundamental features of the wider urban system (Nijman, 2000). The London case is used as an example of what a move ‘from unitary to dualist’ looks like, as it is argued here that London went from a city with a unitary and social democratic nature pre-1980s, to a city with a dualist and unequal nature post-1980s. As mentioned above, sharper urban social inequalities are important indications for, and signal features of, dualist societies which is why this study uses London to see what these social outcomes look like. The London case will thus be integrated in the theoretical

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framework and functions as a benchmark for both Stockholm and Amsterdam.

1.4 Situating the study

The project engages with questions that are central to current theoretical debates in international housing studies and urban studies generally. The contribution of the project is twofold. First, although the threats to the unitary rental markets are identified and theoretically well-developed (e.g., Elsinga et al., 2008; Hoekstra, 2009; Priemus & Gruis, 2011), the housing and social outcomes of this theory ‘on the ground’ are still largely ignored. It remains unclear whether the assumed threats to the unitary societies really have an empirical basis. This study attempts to bridge this gap by investigating the movement ‘from unitary to dualist’ from an urban perspective, taking London as a precursor for understanding variegated changes that have happened in the Stockholm and Amsterdam housing markets. Second, since Kemeny & Lowe (1998) called for more ‘theories of the middle range’, the theoretical focus has been on discerning typologies of housing systems. At a general level, these debates focus on classifying and diversifying countries and cities around the globe around a

comparable set of neoliberal policies and a comparable direction of urban land and housing markets. The focus in this study on the possible convergence of London, Stockholm and Amsterdam will allow for an alternative and critical appraisal of the ‘irresistibility’ of such divergence models and is

expected to shed new light not only on the variegated nature of neoliberalization across the wider urban system but also on the possibility of alternative trajectories, pathways, directions. In this sense, the project is hoped to contribute to the development of new understandings of the role of housing markets and housing policies in urban transformations.

The social relevance of the project to stakeholders and policy makers in Stockholm and Amsterdam is without question. In both cities, the social transformation of recent decades away from traditional egalitarianism – away from a collective form of social structure towards a private form of social structure – is now hotly debated, and particularly the role of housing in these transformations. In both cities, the question as to whether current trends should continue or be reversed is acute and far from resolved and consumes government, political parties, and civil society while it is impacting the lives of many. This concerns general debates on ideological and political grounds but also the formulation and implementation of specific policies (e.g. the share of social housing, mortgage interest deductions, social housing eligibility, and so on). The project is expected to inform ongoing public debate and policy making.

1.5 Structure of the study

The total project consists of seven chapters. Chapter Two will provide a conceptual model that first explains the relationships between welfare states, housing systems and housing tenure. It then specifically goes into the unitary and dualist dichotomy and provides a framework that sums up the different threats to the unitary model. This framework is then applied to the London case, and specifically shows how London’s housing market has reshaped urban social inequalities. The theoretical chapter will later be used to structure and frame the empirical research on Stockholm and Amsterdam, as London is used as a benchmark for the other two cases and as an example of what a move from unitary to dualist looks like in an urban context. In Chapter Three the main research question will be explicated by breaking it down into three, more operational sub-questions. The chapter also provides elucidation on the research design and methodology. Chapters Four and Five represent the empirical chapters, and present the cases of Stockholm and Amsterdam respectively. The study goes on to compare the findings of the empirical chapters in Chapter Six. Statements will be made regarding how much London, Stockholm and Amsterdam’s housing regimes are converging and diverging, and what key factors have mediated such transformations. The chapter will critically

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discuss and complicate the idea of convergence and will also point to alternative trajectories, pathways, directions. Finally, concluding Chapter Seven reflects on the main findings, discusses the limitations of the project, and suggests possibilities for further research.

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CHAPTER

THEORETICAL FRAMEWORK

This chapters aims to provide insight into the relationships between different welfare states, ‘systems’ of housing and housing tenure. It is argued that to understand what is going on in cities, an adequate theoretical understanding of the links between housing markets and welfare states should be integrated in the analysis. The chapter is partly built around the UK context and the London case, as it is argued that London is an example of what a move from a unitary model to a dualist model looks like ‘on the ground’. London can therefore be used as a theoretical point of reference for both Stockholm and Amsterdam, as the London case makes clear how the threats to unitary models are crystallizing in an urban context. Furthermore, the market-oriented, housing system transformations in London that brought about a dualism have substantially reshaped urban social inequalities. The miscellaneous theoretical concepts associated with this transformation – e.g., stigmatization, segregation, polarization and residualization – have all generated a vast body of literature and it is beyond the scope of this project to do justice to the many theoretically and empirically relevant studies available. The aim here is to introduce and define the key concepts associated with dualist societies so that they can be applied in the empirical part of the study.

The next section deals with the linkages between welfare states and housing systems. It will become clear why different countries and cities approach housing questions in different ways. Section 2 then discusses the specific tenure forms associated with different welfare regimes, and will elaborate on the unitary and dualist dichotomy. Section 3 provides a framework that sums up the different ‘threats’ to the unitary model. It is argued that these threats are mainly the result of, and can be linked back to, market-oriented housing system transformations (with the exception of the threat that lurks in the rules of the European Union, see Elsinga et al., 2008). Governments in many European countries have sought to implement more market-oriented, neoliberal housing policies which appears to contribute to a move ‘from unitary to dualist’. It will thus become clear that these threats appear to be transferable to different unitary societies in Europe, but it will also be argued that a great diversity across

developed societies exists. The variegated concept of neoliberalism is at the very heart of

understanding this complexity, which is the focus of Section 4. Section 5 finally links the previous sections to the wider debate on the housing and social outcomes of a move ‘from unitary to dualist’ and is specifically grounded in the London experience.

2.1 Welfare regimes and housing systems

Habermas (1973) argued that the development of welfare states was a necessary step in many capitalist societies in order to alleviate the negative social consequences of unrestricted competition of private capital. Because of these consequences, the State has often replaced market mechanisms in order to help the realization of private capital, but how welfare states develop in each country has been uneven. Esping-Andersen’s (1990) analysis of different forms of welfare capitalism proposes that the

advancement of welfare states in each society is related to the constitution of different models of post-war capitalist regimes. In determining which policy regime will emerge, three factors are argued to be of prime importance: political coalitions, labour movement mobilization and institutional legacies. In his original model, societies are grouped into three worlds, each with ‘qualitatively different

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state logics’ (Esping-Andersen, 1990: p. 5). These welfare ‘regimes’ generate ‘systems’ that can be described as de-commodified (social democratic), conservative (corporatist) or residual (liberal). Esping-Andersen’s (1990) regime categorization ultimately rests on ideal-types based on the observation that different configurations of class power produce different sets of policies which, in turn, are characterized by different degrees of de-commodification, stratification, and universality. In brief, in the social democratic type, services are most de-commodified as this regime is based on diminishing social division in society. The social benefits in this type are generous and universal in kind, have a re-distributive effect and therefore lead to a relatively low degree of income inequality. The liberal type has more privatized social services and a higher level of commodification. This type relies on the benefits of a free market and thus state intervention should limit itself to facilitate the market process. The third and final type is the corporatist welfare state regime, which stands in between the social democratic and the liberal type. Corporatist welfare states are not fully committed to market efficiency and commodification and the state is fairly active in the provision of welfare services. The corporatist type is, however, based on patronage and maintaining society’s hierarchical structure.

Although housing is a key welfare resource (e.g., Kemeny, 1992), it has largely been missing from the mainstream welfare regime debate. However, housing as a dimension of the welfare state has

increasingly become a concern for scholars in ‘housing studies’ (e.g., Kemeny, 1981, 1992, 1995; Torgersen, 1987; Kemeny & Lowe, 1998; Bengtsson, 2001; Brandsen, 2001; Doling, 1999; Malpass, 2003, 2008). It has been argued that housing systems are influential in patterns of social change, not only because they structure the dependency of providers and users on welfare, but also because of the way housing tenure impacts society’s social structure and social relations (Kemeny, 1992). In his model of housing and society, Kemeny (ibid.) draws a distinction between private and collective forms of social structure. Societies with highly developed, universal welfare states have more collectivized social structures, reflecting a more collectivist hegemony. Residualized welfare states on the other hand tend to be characterized by privatized social structures, reflecting a more individualist and privatist hegemony. Welfare states leaning towards either collectivism or privatism are thought to have a substantial effect on housing policies, on the organization of tenure and on housing outcomes, with privatistic societies being dominated by private home ownership and collectivistic ones being more oriented towards social housing and particularly social renting.

2.2 Housing tenure and welfare regimes

Kemeny (1981, 1992, 1995) predicted that countries where privatist ideologies prevail, rates of home ownership should be higher and relative levels of public spending should be lower compared to countries where ideologies of collectivism dominate. Thus, the type of welfare state is closely related to housing tenure, i.e. specific types of welfare states have a particular share of social or public rental housing versus private forms of tenure such as home ownership (although Kurz & Blossfeld (2004) and Hoekstra (2005) problematize this). Through international comparative studies in a small number of countries, Kemeny (1992) suggested that there is an inverse relationship between welfare spending and the share of owner-occupancy. Later studies by Castles & Ferrera (1996) and Doling &

Horsewood (2003) reinforced Kemeny’s thesis. The Netherlands and Sweden and their respective capitals Amsterdam and Stockholm, for example, have housing markets that are historically built around renting and large, publicly managed and funded housing sectors, which has been associated with universal and expanding welfare states. The UK and its capital London on the other hand can be characterized as more home ownership based, but at the same time the UK has a more residual welfare state regime.

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Kemeny’s (1995) analysis of housing, welfare and social divergence also lead him to the identification of two forms of rental systems: dualist and unitary. In dualist societies, the state aims to decrease its involvement in the housing markets as it is generally believed that government involvement in markets undermines fair competition. Dualist societies can be aligned with privatistic societies which seek to provide a minimal ‘safety net’ for the weakest households or most marginalized groups, while maintaining the integrity of market rule in the mainstream housing sector. To prevent direct competition with the commercial markets, this safety net is set apart and kept away from the free market. Consequently, the social rental sector is reserved primarily for the weakest households or most marginalized groups and has regulated low rents. This gives it a residual character and a certain degree of stigma. Dualist societies are thus characterized by major differences between the state controlled, social rental sector and the private rental sector, as the private rental sector usually charges high rents and offers limited or no tenant protection and rent regulation. It could be argued that dualist rental systems ‘push’ households into home ownership, due to the relatively high costs of the private rental sector (Ronald, 2004). Consequently, the home ownership rate in dualist rental systems tends to be relatively high.

Unitary societies on the other hand have ‘integrated’ housing systems in which the non-profit housing sector competes directly with the private housing sector, without specific government support for the former and without the social sector being stigmatized or marginalized. The unitary model “attempts to construct markets in such a way as to strike a balance between economic and social priorities and thereby ameliorate the undesirable effects of the market from within (Kemeny, 1995: p. 11).” Unitary rental systems are often characterized by universal rent regulations, which put a limit on rent setting and rent increases in both the social and the private rental sectors. Due to these regulations, there are only relatively minor differences between the social and the private rental sectors in unitary rental markets. This makes the rental sector of unitary rental systems attractive (and accessible) to relatively large segments of the population. Unitary societies can be aligned with collectivistic societies as the government is able to maintain control of the housing market and distribute housing on a more equitable, universal basis compared to dualist societies.

The key distinction between the two rental models is thus whether or not renting is segmented into compartmentalized and segregated markets. Table One summarizes the main features of the dual rental market model and the unitary rental market model.

Table One. Main features of dual and unitary rental markets

Dual rental market Unitary rental market

Objective of social housing policy

Separate the non-profit rental sector from the mainstream housing market: no competition between non-profit and for-profit rental sectors

Integrated rental market: direct competition between non-profit and for-profit rental sectors

Function of non-profit rental sector

Safety net, reserved primarily for low-income groups and the most marginalized

Provide housing for broad layers of the population

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Regulation Non-profit rental sector is highly regulated, for-profit rental sector limited or no tenant protection and rent regulation

Initially the entire rental market is regulated. As the non-profit sector matures, regulation is phased out

Subsidies Non-profit rental sector strongly

subsidized

To allow direct competition between non-profit and for-profit, subsidies are phased out as the non-profit rental sector matures

Segmentation of sector Strong market segmentation: the owner-occupied sector is most dominant, for-profit rental sector is for those who do not want to buy, non-profit rental sector for those who are unable to buy

Limited or no market segmentation due to tenure neutrality. All sectors (owner-occupied, non-profit and for-profit rental) compete for the favours of households Households in the non-profit

rental sector

Strong concentration of low income households and most marginalized groups (the sector thus tends to be stigmatized)

No clear concentration of low incomes. Medium and high income households are also found in the sector (and thus a low stigma is attached to non-profit rental residencies) Source: Kemeny (1995), Elsinga et al. (2008)

While Kemeny’s approach to housing tenure and welfare, and Esping-Andersen’s welfare regimes do not perfectly align, a lot has been written about the relationship between welfare regimes and housing systems. In brief, it is easiest to connect Esping-Andersen’s liberal welfare state regime with

Kemeny’s dualist societies dominated by home ownership. Individual responsibility, individual freedom and individual property rights are main elements of classic liberal ideology and they lead to the assumption that in a liberal regime private home ownership will be the preferred form of housing tenure (Lipset, 1991; Kurz & Blossfeld, 2004). Although housing markets in liberal welfare state settings are not truly free as there is often considerable regulatory framing still in place, the main point here is that there is an alignment between privatized social structures, dual rental market models, home ownership and liberal regimes. In social democratic regimes on the other hand collectivist ideology prevails and we can expect less private forms of ownership, and a more unitary nature in the rental market. Essentially, in social democratic regimes, housing should be a de-commodified, merit good so that individuals or households can uphold a socially acceptable standard of living independently of their income or market participation. Within collectivist ideologies there is an assumption that home ownership erodes the solidarity of labour movements (Ronald, 2008), which is why social democratic parties in Europe have historically favoured rental housing over private ownership (Häusermann & Seibel, 1996). Finally, corporatist welfare state regimes are difficult to connect to housing systems and a specific housing tenure as, for instance, home ownership rates vary from 42% in Germany to 70% in France (OECD, 2011a). However, one of the features of corporatist regime types is that they can be located somewhere in between the social democratic and liberal types as neither privatistic nor collectivistic ideologies prevail. Therefore, more state involvement in public and private renting may be expected compared to liberal welfare state regimes (Kurz & Blossfeld, 2004).

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2.3 A framework of threats to unitary models

So far, we have established a link between welfare state regimes, housing systems and housing tenure (NB, albeit with some side notes). From the previous section it can be derived that London is

embedded within a liberal welfare state regime, where privatistic hegemonies prevail and where the housing market is characterized by high owner-occupancy rates and a dualism on the rental market. Stockholm and Amsterdam on the other hand are embedded within social democratic and

corporatist/hybrid welfare state contexts respectively, where more collectivistic hegemonies should prevail, home ownership rates should be lower and the rental market model should be more unitary in nature. Kemeny (1995) also identified this, as he argued that the UK is a prime example of a dualist society and Sweden and the Netherlands are regarded as typical examples of unitary societies. However, in recent decades, the relationships between welfare state regimes, housing systems and housing tenure are becoming more problematic. Governments in many European countries have sought to implement more market-oriented, neoliberal housing policies which appear to create different ‘threats’ to unitary rental models. The overall focus in many European countries has been on rolling back the welfare state, the commodification of housing, expanding and increasing access to home ownership, and on privatizing social housing sectors (e.g., Dieleman, 1999; Lindbom, 2001; Priemus & Dieleman, 2002; Malpass, 2005, 2008; Doling & Ford, 2007; Groves et al., 2007; Ronald, 2008; Schwartz & Seabrooke, 2008). These market-oriented developments in housing are laying the foundations for a change in the direction of housing policies – a move from collectivistic to privatistic hegemonies. This change aligns with a move ‘from unitary to dualist’. In addition, unitary rental systems appear to be at odds with EU-laws concerning state subsidies and competition (Elsinga & Lind, 2013). The European unification thus contributes to the fact that unitary rental systems in Europe are under increased pressure. Taken together, these threats to unitary rental models appear to be ‘forcing’ societies in the direction of a dual model (Elsinga et al., 2008; Hoekstra, 2009; Elsinga & Lind, 2013). The remainder of this section deals with the five different threats to unitary rental market models.

The first threat to the unitary model can be found in processes of housing privatization and the increased focus on home ownership. Kemeny (1995) argues that housing policies in dualist rental systems steer residents more in the direction of the owner-occupancy sector than housing policies in unitary rental systems. However, the general trend across most European countries has been a decrease in social-rented housing and a sharp increasing in individual home ownership. “… anywhere we look at the dynamics of the housing market, we see the share of owner occupation on the rise. Everywhere, the (social) rented sector is on the defensive (Priemus & Dieleman, 2002: p. 191).” While home ownership was the minority tenure among the EU-15 countries before 1970, almost two-thirds of households are now owner-occupiers (OECD, 2011a; Doling & Ford, 2007). Home ownership would offer more freedom, individual responsibility for housing, autonomy, control, economic advantages and security. This neoliberal rhetoric allowed home ownership to be increasingly portrayed as the ‘natural tenure’ (Ronald, 2008).

In addition, it has been suggested that home ownership has gained in importance in the economic structures of a growing number of industrialized societies and has begun to play an increasingly important role in the structure of emerging welfare systems. Malpass (2008) argues that home ownership increasingly emerges as a possible ‘tool or lever of change’ to restructure the welfare state (p. 8). With concern over ageing of the population and diminishing capacity of pension systems, governments have been explicit about home ownership and housing property investment as a means for households to enhance asset wealth that can, for instance, offset smaller pensions in retirement

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(Watson, 2009). The implication is that housing wealth may be used to augment or replace welfare services (Lowe, 2004; Groves et al., 2007; Doling & Ford, 2007; Malpass, 2008; Doling & Ronald, 2010). In the UK, for instance, individual assets are increasingly considered to be a cornerstone of the government’s welfare policy (HM Treasury, 2001). The strategy set out by the government

emphasizes “the crucial importance of saving and asset-ownership in providing individuals with: financial security for a rainy day; greater comfort during retirement and old age; and access to greater independence and long-term opportunity throughout their lives (ibid: p. 1).” Homeowners in the UK are encouraged to see their properties not only as just places to live in, but also increasingly as assets.

However, increased government support for and promotion of owner-occupation may influence people’s choices on the housing market. It may lead to greater interest in home ownership, the selling of social rented dwellings to owner-occupiers and greater concentration of lower income groups in the social rental sector (Elsinga et al., 2008). It can lead to a segmentation of the housing market: the owner-occupied sector is most dominant, the for-profit rental sector is for those who do not want to buy and the non-profit rental sector is only for the lowest income households who cannot afford to buy. In the end, this may result in a dual rental model (Elsinga et al., 2008).

The second threat to unitary models is connected to the first and has to do with the increased commodification of housing as a product. When we consider processes of commodification, it becomes clear that the traditional differences between welfare state regimes and their approach to housing are no longer in line. Schwartz & Seabrooke (2008) measure the level of owner-occupied housing as an indicator of relative exposure to markets and thus the potential for commodification. They found that the degree of commodification and stratification in some housing markets diverges strongly from the patterns that Esping-Andersen’s (1990) typology into social democratic, liberal and corporatist regimes would predict. “In many countries perceptions of self-interest in relation to housing markets have been dramatically realigned away from communal wealth [collectivistic social structures] and towards increasing individual wealth [privatistic social structures], even within countries in which property was commonly considered a social or communal right (Schwartz & Seabrooke, 2008: p. 240)”. They suggested that intensified housing marketization in social democratic and corporatist countries illustrate a reordering of welfare regime alignments around ‘varieties of residential capitalism’ – their label for, essentially, the political economy of housing. The move away from collectivistic social structures in which housing is a de-commodified, merit good towards privatistic social structures in which housing is a commodified, individualistic good is a key threat to unitary rental societies.

Welfare state retrenchment is a third threat to unitary models. In recent years, increasing pressure has been put on nation states to reduce welfare spending and liberalize markets in order to keep up with the competitive demands of global capitalism (Ronald, 2008). While the welfare state as a whole had proved to be remarkably resilient to rapid reforms, housing appears to be the exception (Forrest & Murie, 1988; Le Grand, 1991; Glynn, 2009). When we look at the state’s budget for housing in the UK, Sweden and the Netherlands it becomes clear that a lot has changed in recent decades. Increased sector marketization, privatization and multiple rounds of deregulation ensured that housing went from a burden on public expenditure to a source of income in the UK and Sweden (Malpass, 2008;

Lindbom, 2001). In the Netherlands, housing is still not a source of income (Conijn, 2008), but compared to the governmental expenditures for housing mid 1990s, reforms have also been substantial (compare e.g., Ministry of Finance, 1992 with Ministry of Finance, 2009).

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This trend of neoliberally driven welfare state retrenchment in the housing sphere appears to steer social democratic and corporatist countries with highly-developed, universal welfare states towards more individualistic and privatistic forms of social structure, which is more characteristic for dualist than unitary models.

A fourth threat to the unitary rental model was identified by Elsinga et al. (2008) and concerns EU-policy towards the rental sector in general and competition EU-policy in particular. Unitary rental systems appear to be at odds with the ‘free market’ envisaged by the European Union. As mentioned, the basis of a unitary rental system is formed by the full competition between the non-profit social rental landlords on the one hand, and the profit-oriented private rental landlords on the other. However, there are indications that this competition is unequal, as the conditions on the housing market are often not the same for both types of landlord and the social sector still appears to enjoy some form of state support. For instance, non-profit providers generally work on a cost-price basis and do not require a market rate of return on their equity. In addition, non-profits can sometimes borrow from the private capital market on special terms or they can acquire land in special deals with local authorities (Priemus & Gruis, 2011; Elsinga & Lind, 2013). The social rental sector thus still enjoys special protection and regulation from the government. This special treatment seems to be crucial for the viability of the sector (see Elsinga et al., 2005). However, the European Commission increasingly receives complaints from countries with unitary rental models, as private landlords argue that competition between non-profit and for-non-profit is not on equal terms (Gruis & Priemus, 2008; Priemus & Gruis, 2011; Elsinga et al., 2008; Elsinga & Lind, 2013). In order to comply with EU-laws concerning state subsidies and competition, the social rental sector and the providers of social housing in unitary rental markets have to start functioning in a different way. The non-profit rental sector either has to start functioning as a state controlled, social rental sector and focus on the lowest income households, or housing

associations as the main providers of social housing have to become more ‘businesslike’ (Elsinga & Lind, 2013). Either way, Elsinga et al. (2008) argue that this means the end of the unitary character of the rental market models.

The fifth and final threat to the unitary rental market concerns the political support for these rental models. In the post-war period there was broad political support for social sector housing, and therefore for the housing associations that provided dwellings in this sector (Harloe, 1995; Elsinga et al., 2008). However, the sector has now become the subject of political discussion, as there are doubts about the performance of, and even need for, a broad social rental sector. There are also doubts concerning the performance and efficiency of housing associations. In the Dutch context, for instance, the government has shown an ever greater interest in deploying the resources of housing associations. The threat to take surplus capital away from housing associations and have the government decide on what to invest in can lead to a reversal of the ‘maturation process’ Kemeny (1995) writes about. This can have a negative impact on the associations’ competitive position on the housing market, and in the end could erode the unitary rental model (Elsinga et al., 2008).

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Table Two. Threats to the unitary rental market model

Threat Outcome

1. Housing privatization and increased

government support for owner-occupied housing

This may lead to the selling of social rented dwellings to owner-occupiers and greater concentration of lower income groups in the social rental sector. The social rental sector will become more residual and start to function as a safety net in the housing market, accessible only to the most deprived households. It also leads to the segmentation of the housing market: owner-occupied housing is most dominant, the for-profit rental sector is for those who do not want to buy and the non-profit rental sector is only for those who cannot afford to buy

2. Increased commodification of housing as a product

Intensified housing marketization may signal the move away from collectivistic social structures in which housing is a de-commodified, merit good towards privatistic social structures in which housing is a commodified, individualistic good

3. Welfare state rollback Neoliberally driven welfare state retrenchment in

the housing sphere appears to steer social democratic and corporatist countries away from collectivistic social structures towards more individualistic and privatistic forms of social structure, which is more characteristic for dualist than unitary models

4. EU competition policy Competition between non-profit and for-profit

renting is not on equal terms. The non-profit sector has to start functioning as a protected, ‘residual’ social sector for the lowest-income households, or the providers of social housing have to start functioning in a ‘businesslike’ way. Either way, it has been argued that this might result in more dual rental systems

5. Political support for unitary rental models The social sector and the providers of social housing have become the subject of political discussion, as there are doubts about the performance of housing associations, and even the need for a broad social rental sector

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To sum up, in recent decades, governments in many European countries have sought to implement more market-oriented housing policies. These similar neoliberal trends are appearing across the boundaries of social democratic, corporatist and liberal welfare state regimes and across unitary and dualist societies. Together with European unification, they appear to be laying the foundations for different threats to unitary rental market models. However, despite the presence of these similar trends across different housing systems and welfare regimes in Europe – which points to a certain degree of convergence – it would be an oversimplification to argue that all welfare states (and thus the contexts in which London, Stockholm and Amsterdam are embedded) are now starting to look more like the liberal type, as in the typology of Esping-Andersen, and thus that unitary rental markets are logically moving towards a dualism because of this. There are also, of course, considerable differences among the countries of the European Union as, for instance, Van der Heijden (2002), Turner & Whitehead (2002) and Elsinga et al. (2007) illustrate. What is clear is that governments are rolling back the welfare state and that they are increasingly implementing market-oriented housing policies. What is also clear, however, is that a great diversity across developed societies exists (Ronald, 2008). The concept of neoliberalism is at the very heart of understanding this complexity, as it ensures that each country (and city) has its own story.

2.4 The ‘rascal concept’ of neoliberalism

It has been argued here that the threats to unitary models are mainly the result of, and can be linked back to, market-oriented housing system transformation processes. To gain a better understanding of the workings and effects of these processes it is important for this project to more rigorously define the concept of neoliberalism. The widespread use of the concept has been accompanied by considerable imprecision, confusion, and controversy. Neoliberalism has become, simultaneously, a terminological focal point for debates on the trajectory of post-1970s market-disciplinary transformations and an expression of the deep disagreements and confusions that characterize those debates (e.g., Glynn, 2009; Harvey, 2005). Brenner et al. (2010b) argue that “Consequently, ‘neoliberalism’ has become something of a ‘rascal concept’ – promiscuously pervasive, yet inconsistently defined, empirically imprecise and frequently contested (p.3)”.

On the most general level, neoliberalization can be conceptualized as one among several tendencies of regulatory change that have been unleashed across the global capitalist system in the aftermath of the crises of the 1970s. It prioritizes market-based or market-disciplinary responses to regulatory

problems; it strives to intensify commodification in all realms of social life; and it often mobilizes speculative financial instruments to open up new arenas for capitalist profit-making (Brenner et al., 2010a; Harvey, 2005). On a more specific level, however, market-disciplinary forms of regulatory restructuring do not generate a worldwide homogenization of regulatory systems. Contrary to what is generally believed, Brenner et al. (2010a) argue that “neoliberalization actually intensified geo-institutional difference (p. 332)”. In their view, the process is a variegated form of regulatory restructuring: it produces differentiation across places, but it does this systemically, as a pervasive endemic feature of its basic operational logic (the extension of market-based competition and commodification processes). Put differently, although neoliberalization processes share certain commonalities, they are affecting different places in different ways: “in so far as they

[neoliberalization processes] necessarily collide with diverse regulatory landscapes inherited from earlier rounds of regulatory formation and contestation (Brenner et al., 2010a: p. 330)”.

Now, how does this locally-specific and variegated process of neoliberalism reforms housing systems and how does this fit in with welfare state retrenchment and a move ‘from unitary to dualist’? First of all, housing has been seen as the area most vulnerable to a neoliberal strategy to roll back the state (Le

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Grand, 1991). Forrest & Murie (1988) and others (e.g., Kemeny, 1995; Glynn, 2009) have gone as far as to describe housing as ‘neoliberalism’s home front’, and stated that housing markets have been affected most by neoliberalization processes of deregulation, privatization and commodification; more than for instance health care and education. The fundamental ideas behind the neoliberally driven deregulation of housing systems and housing privatization policies are in line with more privatistic hegemonies. Home ownership, for instance, is increasingly portrayed as the ‘natural tenure’ (Ronald, 2008). This fits in well with a notion of a more market-oriented approach to housing (and is much more characteristic for dualist than unitary societies).

In short, in line with deregulation, privatization of social housing and the advancement of

homeownership, neoliberalization processes in housing policy – although being highly variegated and context-sensitive – generally put greater reliance on market mechanisms in the provision of housing. Hence, the general tendency to extend market-based competition and commodification processes, which characterize neoliberalism, also applies to the housing market. These processes signal a move from collectivistic to more privatistic hegemonies, a move from unitary to dualist societies. Two core points of this section need to be emphasized. The first is that housing privatization is at the forefront of neoliberally driven welfare state retrenchment and deregulation (Forrest & Murie, 1988; Le Grand, 1991). The second is that although these neoliberal processes have a lot in common across divergent contexts, it is important to understand – from a theoretical point of view – that the profound path-dependency and context-sensitivity of the concept creates locally-specific outcomes and ensures that neoliberalization impacts London, Stockholm and Amsterdam in different ways. This second

theoretical insight fundamentally complicates the idea of convergence.

2.5 Social outcomes of a move ‘from unitary to dualist’: experiences from London

Now, why are these threats to unitary models and this apparent variegated move from unitary to dualist so important? What does it mean for urban housing markets? And how does it change society? This section will elaborate on these questions by using London as a model, as an example of what a move from unitary to dualist looks like in social terms as it is argued here that London’s housing market was to some extent unitary in nature before the housing market transformations of the late 1970s, early 1980s. As mentioned in the introduction, when unitary rental markets are steered in the direction of dual rental markets it becomes manifest through the transformation of urban housing markets and through the reshaping of urban social inequalities (Harloe, 1995; Van Gent, 2010; Atterhog, 2006; Ronald, 2008). Dual rental markets models are characterized by a ‘residual’, stigmatized social rental sector, by major differences between tenures and thus major differences between the socio-economic position of tenants in the non-profit and for-profit sectors, and by high rates of owner-occupied housing. All these housing outcomes of a dual rental market contribute to sharper social inequalities in the city. Market-oriented housing system transformations thus significantly reshaped social inequalities in London for the worse since the beginning of the 1980s (Hamnett, 2003).

The roots of the reshaping of urban social inequalities via the housing market in London lie in three interrelated processes. The first is the growth of the professional and managerial middle classes and the increased demand for attractive housing, which effectively pushed up urban housing prices. London has experienced a dramatic increase in both the size and proportion of its professional and managerial labour force as a result of the transformation of its economic base. The trend of a growing upper middle class, due to an economic transformation from manufacturing industry to services, can be seen in most first and second tier global cities (Sassen, 1991), which lays the foundation for similar processes to occur in Stockholm and Amsterdam. The second process that is at the root of London’s

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housing market transformation is the sharp decline and residualization of the social rental sector, as part of privatization policies introduced under Margaret Thatcher’s leadership. Residualization is the tendency for social rental housing to decline in size, while the sector is increasingly occupied by the weakest, most marginalized segments of the population. The residualization of a housing sector changes its role: non-profit renting is separated from the private rental market by the government and is used as a safety net for the most vulnerable in the form of a small, strongly controlled social rental sector (Robinson & O’Sullivan, 1983). The third process is the inverse of the second: the rapid growth of home ownership in London from the early 1980s onwards. Deregulation, privatization and a freer housing market had a big impact on reshaping social inequalities in the city.

As mentioned, London’s housing market was to some extent social democratic and unitary in nature, pre-1980s. At the end of the 1970s, London had a regulated housing market and a large social housing sector (i.e., council housing) that accounted for 42% of the city’s housing stock (Hamnett, 2003; Fainstein, 2010). These dwellings were owned and managed by London’s local authorities. Private renting (32%) and owner-occupied housing (26%) were both much smaller sectors. The social rental sector was spread out evenly across the city, and partly by virtue of its very size embraced a whole range of social groups from the unskilled workers and the unemployed to the wealthy upper middle classes (Hamnett, 2003). Housing in London was thus to a large extent de-commodified and regulated; social housing was the dominant tenure owned and managed by the local authorities and home

ownership was the smallest sector; the social sector was heterogeneous in terms of its tenants as the sector provided housing for broad layers of the population. These signal features of London’s housing market show that housing in the city was unitary in nature pre-1980s (see Table One on page 13 and 14 for the characteristics of a unitary/dual rental market model).

As a result of the introduction of Right to Buy policies, the social housing sector rapidly began to shrink during the 1980s and 1990s. The sector decreased from 42% of the city’s housing stock in 1981 to just over 20% in 2012 (UK DCLG, 2013; Copley, 2014). At the same time, social rental housing became increasingly socially residualized when more affluent households moved into owner-occupied housing. The social gap between social rental housing on the one hand and private rental and home ownership on the other began to open up in a dramatic fashion, as Forrest & Murie (1988, 1990), Bentham (1986) and Hamnett (1987, 2003) have shown. This process of tenure polarization has proceeded incrementally, making social renting progressively less attractive as an option to those with any degree of effective choice (Hamnett, 2003). The sector now houses almost entirely the more marginalized groups: the unemployed, the unskilled, single parents and refugees (Watt, 2001). The rental model in London now clearly constitutes a dualist rental model as both social and private rental sectors began to play new roles. London’s housing market is segmented into compartmentalized, segregated markets. Social renting is separated from the private rental market by the government and is used as a safety net for the lowest income households and most marginalized groups. This

residualization of social housing highly contributed to the stigmatization of the sector.

It is evident that the better parts of the housing stock in the most attractive areas of the city have been sold-off, while in neighbourhoods made up of high-rise and high-density blocks, Right to Buy sales have been limited (Hamnett, 2003; Lees et al., 2008). What is now left of the social rental sector is generally bad quality housing, highly concentrated in the least attractive areas of the city (Forrest, 1987; Murie, 1997; Hamnett, 2003; Imrie & Lees, 2014). Besides contributing to territorial stigmatization of these areas, this clear spatial dimension of the Right to Buy policies increased segregation and, thus, sharpened socio-spatial inequalities between different income groups.

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There is another aspect of the privatization policies and its effects on social inequalities which is important to highlight. When a dwelling in the social housing stock was sold, it was heavily subsidized by the UK government, so the price was reasonably low. This policy also allowed low income

households to buy their dwellings with considerable discounts (sometimes dwellings were sold at 60% below market values, see Stephens et al., 2008). However, when these dwellings are brought back to the market, as the first buyers decide to sell, they are part of the free market and prices are set accordingly. Once sold off, these dwellings become out of reach of similar low income households and as a consequence the amount of dwellings available to this group decreased rapidly in the attractive parts of the city (Forrest & Murie, 1994; Williams & Twine, 1993), which leads to

exclusionary displacement. This form of displacement happens when a household is not permitted to move into a dwelling by a change in conditions which affects that dwelling or its immediate

surroundings (Marcuse, 1986; Slater, 2009). When a dwelling is transformed into homeownership or when one household vacates a unit voluntarily and that unit is then renovated or gentrified, so that another similar household is prevented from moving in, the number of units available to the second household in that housing market is reduced. This second household is then excluded from living where it would otherwise have lived, had the changes not occurred. Large scale exclusionary displacement of low income households out of Inner London was a byproduct of the Right to Buy policies. This highly contributed to the social and spatial segregation of low income groups. Meanwhile, home ownership began to increase under the influence of welfare and housing policy reforms (Malpass, 2008), until it reached its high watermark of 60% of the city’s housing stock in 2002. Owner-occupied housing is now by far the most dominant sector, which is another signal feature of a dualist society (Kemeny, 1995). However, in recent years, the share of home ownership is

decreasing in London, while the private rental sector is (unintentionally) growing. A recently published report shows that across London more than 36% of all the homes sold under Right to Buy now appear to be let through the private rented sector (Copley, 2014). Rent seeking investors have increasingly bought up houses to convert to expensive private rental dwellings. In addition, Copley (ibid.) showed evidence of a deregulated private rental sector that is out of control: median private sector rents in London increased by 12% in 2011 and 9% in 2012. As a consequence, as of the beginning of 2013, average rents in London were £1,196 per month, more than double the English average. This development has diminished the stability and security of households and created substantial socio-spatial inequalities. It also shows the segmented nature of the dualist society, with a social and spatial gap between the stigmatized, segregated and regulated social rental sector and the deregulated, expensive private rental market. The owner-occupied sector is still the most dominant sector available to everyone who can afford to, the expensive for-profit rental sector is for those who do not want to buy, and the non-profit rental sector is for the lowest income households who are unable to buy.

Furthermore, welfare and housing reform led to increased commodification of housing as a product. One of the most dramatic effects of the changes in London has been the rise in demand for ownership and the associated rise in prices. The rise in demand for home ownership, and increased flows of capital into real estate investment have continued to push up urban housing prices. This trend is driven by the dramatic increase in both the size and proportion of upper middle class professionals working in the city (Hamnett, 2003), whose territory expanded and pushed into what were traditionally working-class areas of the city. The social consequences of this process of gentrification – understood here as a process whereby a neighbourhood undergoes social upgrading so that the residents over time tend to have more resources in terms of education and income (Lees et al., 2008) – cannot be overstated. In a competitive and highly commodified housing market where access is ruled by price, the expansion of

From unitary to dualist? : examining urban housing market convergence in London, Stockholm and Amsterdam

U

NIVERSITY OF

A

MSTERDAM

From Unitary to Dualist?

Examining Urban Housing Market Convergence

in London, Stockholm and Amsterdam

University of Amsterdam

Robbin Jan van Duijne

BY

Robbin Jan van Duijne

Studentno. 5731887

FIRST READER

Prof. dr. Richard Ronald

SECOND READER

Dr. Christian Lennartz

Word count: ca. 30.000

(chapter 1-7, tables and figures excluded)

This master thesis was written as part of

the research master’s in Urban Studies at

the Graduate School of Social Sciences of

the University of Amsterdam.

University of Amsterdam

August 2014

TABLE OF CONTENTS

1

CHAPTER

INTRODUCTION

CHAPTER

THEORETICAL FRAMEWORK