Housing and Social Impact

December 4, 2023
minute read

At The Loop co.'s ESG & Impact Week, a crucial topic took center stage – the housing situation in Portugal. Carlos Videira, Administrator for Braga Habit, joined us to talk about “Housing and Social Impact” and delved into the roots of the problem.

Carlos Videira and Ricardo Morgado holding microphones, sitting on a couple of chairs on stage.
Carlos Videira talks about "Housing and Social Impact"

Watch the full video of this insightful conversation on housing and social impact below.

So why have homes become so expensive?

The housing issue we're facing is a complex, longstanding challenge that has been going on for decades. Only now are we beginning to grasp its real dimension, and it's clear that will also take decades to resolve. There are a few key factors contributing to this enduring problem.

Lack of Construction

With half of the world's population currently residing in urban areas and a projected increase to 70% in the coming decades, the lack of construction becomes one of the main issues. There’s virtually no space in the big cities where we must balance housing needs with the imperative for green spaces and smooth mobility.

Change in living dynamics

The dynamics of modern living further complicate the housing landscape. An aging population is a significant factor, with people living longer and continuing to need suitable housing. Also, and unlike previous generations, today's youth prioritize independence, often opting to live alone or with friends before settling down with a partner. A startling 75% of the Portuguese population finds themselves in homes unsuited to their family size, with 12.5% in overcrowded conditions and 66.5% navigating the aftermath of children leaving home.

The Immigration factor

The paradigm shift in family structures is evident in the rising tide of immigration, frequently involving large families. Regardless of whether the overall population is on the rise or decline, the number of households is increasing. This paradox—more houses needed for fewer people—creates a great strain on the housing market.

How can we solve this?

In the short term, subsidies for rentals and loans can alleviate immediate financial burdens. Simultaneously, long-term urban planning, including a revisit of the Municipal Master Plan (PDM), is crucial. The construction of adaptable homes that transform based on evolving needs is a key component. We’re talking about a dynamic construction, allowing one-bedroom units to become two or three-bedroom spaces according to need or even a balcony becoming a garden. Building smarter and sustainably may be a lasting housing solution that aligns with the diverse needs of modern living.

Should this issue be tackled in cities or across the country?

Cities need urgent solutions because that's where people are right now. Even with the rise of remote work, moving to the interior isn't an universal fix, primarily benefiting the younger population. Smaller towns face challenges as people don't see the same access to services, education, health, quality of life, and cultural experiences in small towns as they do in big cities.

But the truth is: despite numerous vacant houses, in and out of the cities, there’s actually a shortage of available rental homes. Renting just isn't a good deal due to ever-changing rental laws. Returning to or selling a rented property is a bureaucratic and slow process. And then there’s the non-payment of rent that prompts landlords to demand unusual upfront amounts. Property deterioration upon vacancy and a sluggish construction market add complexity.

The scarcity in the rental market isn't due to a lack of houses but a lack of incentives for landlords to offer more properties. Having more rental options benefits both landlords and tenants, preventing arbitrary rent hikes and fostering healthy competition.

How does social innovation play a role in housing?

When it comes to Social Housing, Braga Habit implements a three-tiered support system, envisioning a progressive path to autonomy:

  1. Supported Renting with integration into social housing;
  2. Sub-Renting;
  3. Direct Renting with rental support subsidies.

But autonomy requires more than policies, so Braga Habit decided to shifts its role from a "hardware" provider to a "software" enabler. Now it provides, in addition to housing, a set of fundamental literacy ranging from ventilating houses to separating rubbish or even filling out the IRS.

The integration of the Social Innovation Center into their structure signifies a commitment to holistic community development. Success lies in intertwining housing and social innovation policies to break the cycle of intergenerational reliance on scarce public housing, making it a more transient solution with reduced long-term challenges.

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