In Finland, homelessness has fallen by roughly 40 percent over the past decade — despite a double-dip recession, Bloomberg reported.
As politicians from Berlin to London to New York struggle to solve their affordable housing crises with rent regulations and freezes, temporary accommodation, social housing and public co-financing of reduced-rent apartments, Finland took a more direct approach. The government built more homes and provided them to the people who needed them most.
The country is an outpost — one of a score worldwide — of the Housing First movement, an idea born in New York City in the early 1990s in the brain of Sam Tsemberis. A Greek-born psychologist who grew up in Montreal, Tsemberis had come to the city to work with the mentally ill, many living on the streets between periods of involuntary commitment. The nonprofits and governments struggled to help them climb a staircase that would lead eventually to independent living in a place of their own. To get there, they had to overcome their illness, substance abuse and joblessness.
“It was an impossible quandary,” Tsemberis said in an interview. “Then we started asking homeless people who were mentally ill what they wanted, and they started with housing, instead of making it a prize at the end of a set of steps that had to be navigated first.”
Philadelphia and Burlington, Vermont, followed New York and set up Housing First programs that still exist today. In the US, said Tsemberis, relatively scarce social spending has forced nonprofits to find innovative approaches, but limited their application. Elsewhere, these approaches to chronic homelessness are being applied on a national scale, based on the idea that housing is a human right.
More than 17 countries around the world, from Canada to New Zealand, are adopting similar methods. Sleeping on the streets has been almost eradicated in Finland, a country of 5.5 million, where about 500 people currently have nowhere to go at night. That compares with 52,000 people sleeping rough in Germany, a country of 80 million.
“What the Finns did was they invested in prevention,” Tsemberis said. “They started to subsidize rents before people lost their housing.”
Attaining the goal required considerable investment from the Nordic welfare state. About 7,000 affordable homes have been built across three programs since 2008, recognizing that only rarely do the homeless find apartments on the regular rental market.
‘Duty to help’
“There’s a lot of people with a multitude of problems, including mental health issues, who will never be able to get out of homelessness on their own,” said Sanna Tiivola, managing director of VVA, a nongovernmental organization helping the homeless.
“It’s the duty of society to help those people.”
There are still more than 5,000 people without their own homes — more than eight in 10 of whom sleep on floors and sofas at friends’ or family’s houses. The government’s target is to eradicate homelessness by 2027.
Across Europe, the picture is much bleaker. In England, the number of people registered as statutory homeless rose 48 percent from 2010 to 2017, while Germany saw a 25 percent increase in the 2014 to 2016 period. In France, homelessness increased by an estimated 50 percent during the decade to 2012 — the most recent numbers available. Along with Finland, Norway is a rare example of a country that’s managed to significantly reduce homelessness.
Finland, whose southern tip sits 60 degrees north of the equator (similar to Anchorage, Alaska), has provided affordable homes since the 1940s, when the first housing benefit was established. The system was expanded in the 1970s and 1980s, and now about 15 percent of the population are paid an allowance to help pay for rent. There are about 375,000 state-subsidized affordable rental apartments in the country.
Such policies are more effective in securing housing for people with low incomes than rent controls popular in many countries, according to Juhana Brotherus, chief economist at mortgage provider Hypo in Helsinki. That’s because they push up housing supply, while rent controls tend to discourage investment in rental properties.
That didn’t prevent the New York State legislature from voting in June to tighten rent regulation, making it much more difficult for landlords to raise rents or evict tenants. Such measures tend to deter investors from building such properties and can actually reduce the supply of housing, Brotherus said by phone.
“It makes more sense for many investors to sell the property, or move in themselves,” he said.
“Those who suffer the most are the low-income people without a home.”
Since 2000, Finland has built more apartments than Sweden in absolute terms, even though Sweden has twice the population and a much faster-growing economy. The supply has “helped keep house prices and rents stable and prevent a shadow rental market from forming,” Brotherus said.
Building subsidized housing also evens out the impact of business cycles as the construction of market-based apartments tends to fall during downturns, said Jarmo Linden, a director at the Housing Finance and Development Center ARA. About 14 percent of the country’s existing housing stock is subsidized with wide variance between regions, he said. In the Helsinki area, it’s about 22 percent.
A recent study by the state-funded VATT Institute for Economic Research found that housing allowances don’t push up rents as much as might be expected.
Some studies have even found financial benefit to housing the homeless, as they consume fewer acute resources and emergency services that tend to be more expensive to provide. A study from 2011 put the savings at about €15,000 ($17,000) a year per homeless person, and research in 2013 recorded an 80 percent reduction in days spent in the hospital or rehabilitation, while total costs rose due to rent expenses.
“Taxpayer money has been well invested in these programs,” Tiivola said.
“It’s more expensive not to provide the homes and have people on the streets. And when they’re off the streets, there’s more social harmony.”