Social Housing in Albania, not effective according to the audit of Albanian Supreme Audit Institution

26.07.2019

ALSAI completed the performance audit on the topic "Effectiveness of Social Housing Programs" conducted in the municipalities of Tirana, Korça, Shkodra, Vlora and the Ministry of Finance of Economy; This audit was approved by the Chairman’s Verdict no. 11 dated 22.07.2019.

Taking into account the various social and economic factors, including financial fluctuations, from the European social housing experiences, two main models have been synthesized:

• Long- tradition countries in social housing programs have developed innovative mechanisms, creating cooperation with the private sector, in order to address the housing of the poorest;

• Countries with modest tradition in social housing programs, where public funds are even more limited, are committed to the most fragile social categories.

In the case of Albania, the social housing scheme is a combination of the both social schemes, focusing in the most fragile social categories followed also with the compensation model.

The audit focused also in the “affordability” of a house in relation to the annual income. As a conclusion, including the average wage, buying a house is completely unaffordable and in the context of social housing poses the greatest risk of increasing the contingent of the homeless. A person must have an income of 1,166 euro in order to afford a proper house. In other statistic, only 1.3 % of the employees, in high administrative and commercial work position can afford buying a house.

According to Albanian Supreme Audit Institution, the regulatory framework and the analyzes made in this regard do not take into account the factor of affordability of housing, but also the other problems associated with housing in Albania, which are evidenced by international organizations. For example, according to a survey conducted by Eurofound, Albania ranks last in Europe due to the lack of home space. Compared to the European average, only 17% of respondents stated that they have insufficient space in houses. In Albania, about 43% of respondents answered that they have problems with lack of home space.

The audit found that social housing programs are not fully implemented as social policies, addressing only individual cases, but not the homeless phenomenon. There is no national register on the number of homeless people and investments in social housing, whose stock is inexistent in most municipalities and insufficient in some others.

Access to social programs is quite limited. The municipalities do not provide full information to citizens, feared by potential high rate of the applicants.

The new law no. 22/2018 "On social housing", though follows good European models, has a high risk to not offer a realistic solution to the full implementation of social housing programs, as it extends beyond the capacity of the municipalities. In the context when the financial resources available for the previous housing scheme with 3 programs were limited, the dynamics provided by the law on the implementation of a housing scheme with 5 programs increases the level of risk in achieving the objectives of these programs.

More concretely, given the fact that the old legislation was comprehensive in the social housing programs, the cause of the ineffectiveness was not the law, but the failure to implement the law itself.

The main issues identified by this audit performance are:

• Defining the objectives of the Central Government and Local Government Units for social housing, beyond the financial and human capacity of the municipalities;

• Lack of real statistics on the number of homeless people;

• Lack of a consolidated structure dedicated to housing issues in most municipalities;

· Insufficient human capacities of municipalities to absorb and exercise fully the competencies attributed by the law;

• positioning of social housing on the periphery of exercised functions by municipalities and central structures.

The full and effective implementation of social housing programs is difficult, as it is realized without having defined the basis of the profit formula which is the average income at national and local level. INSTAT does not have data on what is the average income and the lack of this element hinders the full implementation of social housing programs.

Regarding the implementation of the new law, it is important that municipalities engage actively to obtain the 3% of the building area as social house, for building permits over 2000m 2, which will be in favor of social housing programs.

Over the past 10 years no municipality has built its own social housing or purchased from the market to offer as low-cost housing. Moreover, this social function of the municipality is not included in urban planning for the construction of social housing, to include the concept of the Areas of Social Interest.

The same expenditure level is planned for the entire 2018-2020 period. The housing budget is 550 million ALL each year. Nevertheless the funds have been increased respectively 13 and 10% for 2017, 2018, still the allocated of funds fails to cover the immense financial needs for social housing programs under the social housing strategy.

In the Verdict of the Chairman of ALSAI for the Performance Audit "Effectiveness of Social Housing Programs", 38 recommendations were made to the central and local government bodies that address the elimination of shortcomings and aim for future improvement of the social housing system in Albania.

Note: In the ALSAI web site it is published the full Verdict no. 11, dated 22.07.2019 of the Chairman of ALSAI, regarding this audit.