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Management, financing and taxation of housing stock in the shrinking cities of aging societies

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  • Bogataj, David
  • McDonnell, Diego Ros
  • Bogataj, Marija

Abstract

More than 11 million homes lie empty across Europe. More than 2 million homes are empty in each of France and Italy, 1.8 million in Germany and more than 700,000 in the UK. These figures show that a large share of the housing stock in Europe is not in use. The problem has arisen because policymakers did not develop proper tools to balance long-term supply and demand for housing. The article describes why this problem appeared and provides an answer to the question of what type of incentives policymakers should apply to housing stock management, financing and taxation to achieve a better utilization of the built environment. A housing stock is a form of inventory of a built environment. The value of housing stock represents the major part of inventories in each society. Such stock currently is not managed properly because the management of housing stock does not include the methods for forecasting demand according to the dynamics of age cohorts for different housing needs, preferences and purchasing power. The goal is to develop such tools. Therefore, the actuarial reverse mortgage approach to financing is combined with a graph of a multiple decrement-competing risk approach to achieve better forecasting of supply and demand and to show how tax policies influence the housing market and the inventory of empty homes. The article also shows how taxation of real estate transactions is eating into the housing equity of the elderly when the latter must change their residential property due to decreased functional capacity. Therefore, we conclude that taxation of transactions is not an age-friendly instrument and should be replaced by property taxes that are paid annually. A better taxation policy is also suggested for Spain.

Suggested Citation

  • Bogataj, David & McDonnell, Diego Ros & Bogataj, Marija, 2016. "Management, financing and taxation of housing stock in the shrinking cities of aging societies," International Journal of Production Economics, Elsevier, vol. 181(PA), pages 2-13.
    • Handle: RePEc:eee:proeco:v:181:y:2016:i:pa:p:2-13
    DOI: 10.1016/j.ijpe.2016.08.017
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    References listed on IDEAS

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    1. Paul Cheshire & Stephen Sheppard, 2001. "The Welfare Economics of Land Use Planning," Department of Economics Working Papers 2001-03, Department of Economics, Williams College.
    2. Flavin, Thomas J. & Sheenan, Lisa, 2015. "The role of U.S. subprime mortgage-backed assets in propagating the crisis: Contagion or interdependence?," The North American Journal of Economics and Finance, Elsevier, vol. 34(C), pages 167-186.
    3. Brueckner, Jan K. & Calem, Paul S. & Nakamura, Leonard I., 2012. "Subprime mortgages and the housing bubble," Journal of Urban Economics, Elsevier, vol. 71(2), pages 230-243.
    4. Cheshire, Paul & Sheppard, Stephen, 2002. "The welfare economics of land use planning," Journal of Urban Economics, Elsevier, vol. 52(2), pages 242-269, September.
    5. Åsa Johansson & Chistopher Heady & Jens Matthias Arnold & Bert Brys & Laura Vartia, 2008. "Taxation and Economic Growth," OECD Economics Department Working Papers 620, OECD Publishing.
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    Cited by:

    1. Dieudonné Tchuente & Serge Nyawa, 2022. "Real estate price estimation in French cities using geocoding and machine learning," Annals of Operations Research, Springer, vol. 308(1), pages 571-608, January.
    2. Valerija Rogelj & David Bogataj & Marija Bogataj & Francisco Campuzano-Bolarín & Eneja Drobež, 2023. "The Role of Housing in Sustainable European Long-Term Care Systems," Sustainability, MDPI, vol. 15(4), pages 1-27, February.
    3. Bev Dahlby & Braeden Larson, 2019. "Should Alberta Adopt a Land Transfer Tax?," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 12(5), February.
    4. David Bogataj & Marija Bogataj & Samo Drobne, 2022. "Long-Term Care Sustainable Networks in ADRION Region," Sustainability, MDPI, vol. 14(18), pages 1-23, September.
    5. Bogataj, Marija & Bogataj, David & Drobne, Samo, 2023. "Planning and managing public housing stock in the silver economy," International Journal of Production Economics, Elsevier, vol. 260(C).
    6. Simon Colnar & Vlado Dimovski & David Bogataj, 2019. "Knowledge Management and the Sustainable Development of Social Work," Sustainability, MDPI, vol. 11(22), pages 1-20, November.
    7. Hazrati, Manochehr & Bafandeh Zendeh, Alireza & Aali, Samad, 2020. "Modeling of Real Estate Income Tax: System Dynamics Approach," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 15(4), pages 463-487, October.

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