Housing benefits and minimum income schemes in Austria – an application of the residual income approach to housing affordability of welfare recipients

Abstract

Recently, housing costs have increased considerably in and around the main Austrian cities. For low-income households and vulnerable groups on the housing market, the nine Austrian regions have set up housing benefit schemes as income-dependent monetary transfers to cover housing costs, and, for destitute households, minimum income schemes as a subsidiary safety net of last resort. As the schemes are designed and interact very differently across the regions, it is unclear whether low-income households are protected sufficiently by them to meet housing costs. This contribution applies a comprehensive residual income approach to housing affordability in order to identify market segments and household types where affordability is at risk. This is done by calculating overall benefit levels across four different household types and four different income levels in the nine Austrian regions, and comparing these with typical regional housing costs. Desk research is complemented with 26 qualitative interviews with policy practitioners to scrutinise and discuss the results. We find that especially in and around the capital city, Vienna, and some other main Austrian cities, overall benefits do not cover common housing costs, resulting in insufficient funds for necessary non-housing expenses. Policy recommendations are discussed in an international context.