A risk analysis model for a social housing sector

Social landlords own more than one third of the housing stock in the Netherlands. Especially in the decades after World War II, social landlords were both strongly controlled and strongly subsidised by the government. In the 1990Ìs, the government relaxed her hold on the social landlords but also ended all subsidisation. It was assumed that the social housing sector as a whole could make enough money by exploiting and partly selling the social housing stock to achieve all housing policy objectives. Those social landlords that are not able to make ends meet should be assisted by other social landlords. This paper describes a risk analysis model that we developed to determine the financial risks for the Dutch social housing sector as a whole. The development of the financial position of the social housing sector depends on a large number of uncertain factors. These factors can mainly be grouped in political uncertainties, macro economic uncertainties and housing market uncertainties. Our model uses Monte Carlo simulation to assess the risk caused by macro economic and housing market uncertainties. It can also be used to determine the consequences of different government policies. The results of the model show that with the current government policy, the social housing sector as a whole is not at risk. However, there are large differences between different regions. The most important uncertainty is in the house price development.