Organizational and economic aspects of housing management in deprived areas

Abstract: This dissertation consists of five papers with different objectives. The overall objective is to improve knowledge of effective policies regarding socially deprived large housing estates. All studies deal with the real estate context from a housing company decision-making perspective. The first two papers focus on organisational issues and the following three papers deal with economic issues related to the development of a specific housing area. The research is based on case studies which involve specific methodologies such as interviews, direct observation and collecting data from company accounts.The main message of this thesis is that landlord policies and resources spent on operation and maintenance contribute to local area development. It is also underlined that there is a need for a paradigm shift in Swedish housing, since the regulatory framework appeared to be inadequate. The experience from this study shows that many problems can be solved within the existing laws and through efficient customised property management, but landlords need more effective incentives to improve their policies further.The first two papers address issues about how to organise local management resources in large housing estates. Three different functions were identified: customer service, (e.g. fault-reporting); the letting process; and caretaking (day-to-day management and control over indoor and outdoor areas). The models where more decisions are decentralised lead to better information about the local conditions, make it easier to coordinate work in an area, create more motivation for the staff and make it easier to involve the tenants. This was particularly valuable for socially deprived estates, but the decentralised model raised some moral hazard problems, e.g. the local team create their own agenda, are pressured by certain tenants to give them advantages and that the result is lack of control and consistent housing policy in the company.The third paper deals with Corporate Social Responsibility (CSR) in housing management. Different types of costs are identified and related to the estates’ social condition. The results indicate that a CSR-based management policy leads to approximately 4.5 percent lower annual operation and maintenance costs which improved the company’s profitability, especially if the higher standard of maintenance, made higher rents possible. The study also identified three other benefits of CSR; improved tenant relationship, goodwill and business opportunities and the study is a first step towards a better understanding of the economic consequences of CSR in a real estate-context.The fourth paper analyses the return of the Swedish slumlords, with a focus on a specific area in Malmö. The tenants stayed even though the rent was higher and the quality was lower than in neighbouring areas because of a combination of three factors; rents were paid by different forms of welfare payment, lack of alternatives because of queues to other areas and because some tenants saw an advantage in the “no questions” asked policy that the slumlord followed. It is further argued that the property owners found this slum strategy as profitable either because they hoped to find a “bigger fool” to sell to or because the decision makers in the company had not invested their own money. The study concludes that both tenants and investors were in the end losers, but not the company managers.The fifth paper is an economic evaluation of renovation in socially deprived housing estates. The empirical data indicates that it is profitable to use a clear and active housing management strategy, especially if the rent levels are affected by the standard of management by the landlord. The results also show that the landlord’s policy had positive social effects, both in the form of tenant welfare and in the form of lower costs for Police and the Fire department. The study also indicates that it can be difficult to justify large scale investment purely from a business perspective.