Towards a European Role in Tenancy Law and Housing Policy Christoph - - PowerPoint PPT Presentation

Towards a European Role in Tenancy Law and Housing Policy

Christoph U. Schmid, ZERP, Bremen

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• Comparative dimension:

– Crisis has increased the number of tenant households – Several EU states have reformed their legislation;

• ften unbalanced reforms undertaken with little

comparative expertise State of the field I

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State of the field II

• Growing importance of tenancy law (TL) for the

Single Market – Increased mobility in times of migration – Private market tenancies are mostly the only housing option of immigrants; often informal contracts („black market“)

• Collateral effects of other fields of EU law and policy
• n tenancy law
• European and comparative perspective on TL useful

TENLAW - Tenancy Law and Housing Policy in Multi-level Europe

Institutional options I

• Full harmonisation
• No legal basis, Art. 114 TFEU hardly available - TL

not necessary for the establishment of the Single Market

• Minimum harmonisation
• Legal basis: Art. 169 para. 3 TFEU – consumer law
• Extending the social dialogue, Art. 154f, TFEU

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Institutional options II

• Open method of coordination (OMC) as in other

fields of social policy

• Tools: benchmarking, sharing and spreading of

best practices, peer review

• Tenlaw is about academically preparing such a

process through:

• Assessing good and bad practises in national

systems

• Elaborating principles of good tenancy

regulation

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• TENLAW - Tenancy Law and Housing Policy

in Multi-level Europe

Assessment of good and bad practices

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Frequency of Failure Occurrence by Type

(indicated as total number of countries reporting failure type)

2 4 6 8 10 12 14 Discrimination in housing Divergent intertemporal tenancy law regimes Occupation of social dwellings by non-qualifying tenants Problems related to estate agents Problems regarding restitution of property in former socialist countries Corruption/Lack of transparency Housing poverty/Homelessness Gentrification Squatting Overcrowding Affordability problems/Excessively high rents Problems associated with housing for Roma Supply problems/Insufficient availability in private sector or public sector Tenancy-related tax evasion Ghettoization Black market phenomena Poor-quality living conditions

Bad practices related with private law

• Most failures are less, at best indirectly, related to private tenancy

law, e.g. overcrowding, housing poverty etc.

• Failures clearly related to private law are particularly relevant in

this project, in particular – Excessively high rents – Discrimination in access to housing – Adverse economic and social phenomena directly related to regulation (e.g. landlord prefers to leave dwelling vacant because of strict rent regulation) – Unjust intertemporal splittings among different tenancy laws – Problems related to estate agents – Black market phenomena

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Example of bad practice: black market contracts

• “black market contracts”
• Own definition: unofficial, informal contracts,

which violate legal regulations and therefore remain in an extra-legal, unprotected sphere, typically to the detriment of the tenant

• Generalities:

– Black market contracts increase the private sector dramatically in many states – Black market contracts are generally associated with a lack of legal protection of the tenant and low quality of housing, as in most cases no legally binding obligations exist for the landlord

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Example for good practice: social rental agencies

• Different national models existing – typical common features:
• publicy funded intermediaries between private landlords and

households in need of affordable dwellings

• SRAs source suitable dwellings and negotiate medium term leases with

landlord

• SRA pay or at least guarantee payment by tenant of rent, normally

somewhat 10-30% less than market rent, often also when dwelling not

• ccupied
• SRAs often act as house manager, carry out maintenance works etc.
• Result: very interesting good practice capable of facing housing shortage

in times where social housing has been cut back in many States

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Example of ambivalent practice: energy refurbishment regulation

• Inprovement of energy efficiency of housing stock central goal of EU

policy, in particular Directice 2010/31 on energy performance of buildings – Energy performance certificate to be procided by landlord upon conclusion of contract

• Improvements to be financed by landlord, often supported by public

subsidies

• Consequences of energy refurbishments:

– Possibly higher market rent of apartment – otherwise, no refurbishment measures carried out by landlords – Right of the landlord to increase rent: DE, AU – Regulated rent for apartment is higher (NL, SWE)

• Result may be „energy poverty“ – poorer tenants priced out of the

market

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Elaborating principles of good tenancy regulation I

• Neutrality of tenure as guiding criterion
• Definition: rental tenures should not be treated less favourably than

homeowership in policy and regulation

• For the design of private law rules, this means that these should

enable an adequate balance among landlord and tenant („socio- economic equilibrium), so as to ensure that the parties have positive incentives to enter into tenancy contracts

• If position of landlord too weak, he will not rent out residential

properties on the market but consider alternative uses or leave them empty

• Consequence: State rather than market will have to supply

more dwellings

• If position of tenant too weak, he will be pushed into

homeownership at the risk of overindebtedness

• Consequence: mortgage and financial crisis

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Elaborating principles of good tenancy regulation II

• Functional criteria for the landlord:
• Profitability
• Respect of property rights de iure and de facto
• Functional criteria for the tenant:
• Affordability
• Stability
• Flexibility
• Criteria are mostly colliding (e.g. more profitability for the

landlord means less affordability for the tenant), which stresses the need for an adequate balance

• But the criteria are also influenced by exogenuous factors

independent of party relationship (e.g. profitability also depends

• n rate of return of investments in housing as compared with
• ther competing investments)

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Elaborating principles of good tenancy regulation III

• Concretisation of functional criteria through

general European principles

• duration of tenancy contracts
• colliding principles: balance between respect of property rights
• vs. stability to be achieved
• Most solutions do not achieve a balance:
• Extreme: English assured shorthold tenancy; Swedish and Dutch

„close to impossibility of termination if tenant respects his duties

• Closer to balance:
• Germany: unlimited contracts to be terminated for special

important reasons only respects period; but: balance disturbed when landlord may ask for restitution of dwelling for personal use after short periods of tenancy

• Italy 4+4 years guaranteed period, but no more protection

thereafter

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Elaborating principles of good tenancy regulation IV

• France: 3+3 (6+6) years + right to renewal unless the

landlord invokes imperative reasons (in particular, personal use, intended sale): balance may be distorted in favour of tenant – 6 years waiting time to get back a dwelling for personal use may be eccesscive

• Proposal of general rule for tenant respecting his duties: 3

years guaranteed periods with option for renewal; but landlord may invoke important reaons against the renewal

• derogations possible for elderly tenants, students, tenants with

established transitory housing needs only

• tenant should always be allowed termination within a short period
• f about 3 months to ensure personal and professional flexibility

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Elaborating principles of good tenancy regulation V

• Rent: balance between profitability vs. affordability
• The market rent should be respected by and large in rent

increases but also in the setting of the initial rent

• To be measured with statistical devices such as the

German Mietspiegel or collective negotiations as in Sweden

• Lawful deviations should be limited to ca. 10%
• During the guaranteed 3 year-periods, rent increases should

be limited to inflation rate index or similar index

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European Tenancies (Ets)

• Model contracts for individual tenancy agreements

could be drafted on the basis of the European principles of tenancy regulation just presented

• Ets should not be uniform but should respect

mandatory provisions of national laws

• Ets should contain all stipulations usual in tenancy

contracts at national level

• Ets could be drafted at national level by landlord and

tenants associations

• The notion „European Tenancy“ could work as a label
• f fairness and could have an „advertisment effect“

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