The Taipei Department of Urban Development last week informed prospective tenants of the Minglun Social Housing project that they could move into their new homes in March. The recently built project is an 11-story complex with two basement floors on an 8,639m2 plot in Taipei’s Datong District (大同).
However, the project’s high rents — the monthly rent for a three-bedroom apartment is up to NT$40,500 — have stirred debate about housing justice. The complex is built on the site of the former Minglun Elementary School, which was shuttered in 2013 after the school merged with nearby Dalung Elementary School. The project is the first of its kind to be designed, constructed and completed under the administration of Taipei Mayor Ko Wen-je (柯文哲), and was touted by the city government as a step toward realizing housing justice and offering housing units that Taipei residents can afford.
The monthly rent for the most expensive three-bedroom units with an extra-large balcony has certainly raised eyebrows. However, the rent of NT$36,000 for a three-bedroom apartment designated for low-income households has also triggered discussion whether those units are affordable for the residents the city government targeted and whether the project is truly in the spirit of promoting housing justice. Even with rent subsidies, low-income households still cannot afford such apartments.
Ko’s remarks about the high rents have only sparked further controversy, as his reactions to criticism clearly discriminate against poor residents. For instance, he said that the city did not want social housing to accommodate just poor people. On another occasion, he said that low-income households should not aim to live in three-bedroom apartments.
Social housing is not only to provide homes to people at affordable rents, it also serves as a social safety net. Therefore, social housing should focus first on low-income people and gradually be opened to those with higher incomes when sufficient housing is built. In most social housing programs around the world, rents are calculated based on household income, rather than on the rental market.
The project’s rents were set based on the cost of construction, 55 years of management and operational costs, replacement costs, housing and land value taxes, and other fees, Taipei city councilors have said. Clearly, the city develops social housing with returns on investment in mind — whether social housing will be “self-liquidating,” as people call it here — and therefore it stresses fiscal discipline and sets the rents based on market mechanisms.
This touches upon some important points: First, the city seems intent on running the project like a business, as it places more attention on profits, losses and other financial metrics than on social value. Second, consumer protection regulations stipulate that property owners, not tenants, should pay housing and land value taxes, but in the case of Minglun, the city has included them in the total cost and wants all tenants to share the burden. Third, high rents coupled with the scarcity of social housing is likely to exclude low-income households from the city’s housing justice considerations.
Taiwan lags behind other advanced nations in building housing for poor people, and such projects are much fewer than regular housing developments. As of June last year, social housing accounted for just 0.18 percent of the nation’s total housing, statistics compiled by the Organization of Urban Re-s showed.
Building social housing is crucial to achieving housing justice, but more importantly, policymakers at local and central government level must understand social housing as part of the social safety net and calculate rents based on the income of the targeted group of residents.
To keep social housing development sustainable, real-estate-related tax reforms and the reallocation of public resources are the necessary next steps.
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