Distributive and poverty-reducing effects of in-kind housing benefits in Europe: with a case study for Germany

The report “Distributive and poverty‑reducing effects of in‑kind housing benefits in Europe: with a case study for Germany” is an author‑version of a peer‑reviewed article published in the Journal of Housing and the Built Environment (2016). It is authored by Gerlinde Verbist (Herman Deleeck Centre for Social Policy, University of Antwerp) and Markus M. Grabka (DIW Berlin and TU Berlin). The authors examine how social (in‑kind) housing benefits, which are often omitted from income statistics, influence income distribution and poverty across European Union countries, and they provide a detailed case study for Germany.

The authors calculate imputed rent—the market rent that would be paid for a dwelling minus the actual rent—to estimate the value of in‑kind housing benefits. Using the EU‑SILC 2011 micro‑data for 17 EU countries, they apply an opportunity‑cost (rental‑equivalence) approach, employing hedonic regressions and Heckman selection corrections where possible. The analysis excludes countries with insufficient private‑market or reduced‑rent cases (e.g., Denmark, Netherlands). Results are expressed as annual values and as a share of disposable income.

Across the 17 countries, reduced‑rent tenants are heavily concentrated in the lower‑income quintiles. For example, 38 % of individuals in the bottom quintile in France live in social housing, while the top‑quintile share is typically below 2 % (except Austria at ~10 %). Social housing benefits represent on average about 0.5 % of cash disposable income, but for reduced‑rent tenants the benefit raises income by roughly 8 % on average, exceeding 10 % in Belgium, Latvia and Slovenia. The aggregate share of social housing benefits in the poorest quintile is about 35 % of total benefit distribution, rising above 50 % in Belgium and Luxembourg.

Inclusion of imputed rent modestly reduces the Gini coefficient (average decline of 1 % point) and more noticeably lowers the Mean Logarithmic Deviation, especially in France where the MLD drops by over 10 %. Poverty rates, measured at 60 % of median income, fall slightly when in‑kind benefits are accounted for; significant reductions are observed in Ireland (‑10 %) and France (‑18 %). For reduced‑rent tenants alone, poverty risk is roughly twice that of the general population but falls sharply after accounting for imputed rent, with Belgium, France, Ireland and Luxembourg seeing reductions of more than 50 %.

Germany combines cash housing benefits with a substantial stock of social housing. Using the SOEP panel (1984‑2011), the authors find that the mean in‑kind benefit from social housing (€120 per month in 2011) is comparable to the mean cash benefit (€130 per month). However, social housing recipients have higher post‑government incomes and lower poverty risk (31 % vs 65 % for cash‑benefit recipients). Over the study period, the poverty‑reducing effect of social housing remains around one percentage point, whereas cash benefits achieved 2‑5 % reductions, reflecting tighter means‑testing for cash transfers.

The analysis demonstrates that in‑kind housing benefits constitute a significant, yet often hidden, component of household resources, especially for low‑income households. Accounting for these benefits alters the perceived effectiveness of housing policies, highlighting the importance of integrating social housing considerations into broader sustainability and poverty‑reduction strategies across Europe.