Work for Repayment of rent arrears? An example from Hungary.

What to do when a tenant owes money to the housing authority?  The question is typical and we face it on a regular basis.  Many times the money spent to collect is more than the actual debt.  In other situations, the tenant is in a bad situation and we want to work around it. If it is a family, going before a judge can be very difficult especially when it means a family may be evicted.  No matter the situation, the solutions are never easy.

In Nagykanizsa, Hungary, the city and the Foundation for the College for Advanced Studies in Social Theory teamed to create a program to help families in rent arrears.  The program is a Social Housing Reconstruction Camp.  While I personally think the program could use a rebranding, the idea is very interesting.  The idea is to help restore housing projects that were in bad shape for a municipality with very limited funds and to help low income tenants with no work repay debts to the city.  The program organized several labor camps that brought together tenant workers and younger volunteers usually from the University.  The increase to property values due to the renovations are credited to the tenants accounts.

The camps varied in the work hours and number of participants. The camps last for two to three weeks with tenants usually working everyday including weekends.  The camps functioned 9 hours a day with a one hour lunch .  The average debt reduction a day is around €20 a day.  That does not sound like much but is not bad for this particular city in Hungary.  Each camp had over 30 employees working on a project.  If a resident had a debt but already had a job, he or she could work on the weekend.  The typical work included thermal insulation for the walls, ceilings and windows to increase energy efficiency.

The project included a mixture of residents and student volunteers.  The idea is residents benefit from contact with the open minded students, while the students could better understand the plight of disadvantaged people in the city.  Other groups helped out including Habitat for Humanity and similar international volunteer groups.  That helped bring an international expertise as well as construction management and supervision to the project.  The mixture of residents, international participants and students was a way to combat prejudice against social tenants and bring awareness.

The benefits are clear.  The city with a lack of funding can see the value of buildings grow without cost.  The mixing of various groups can help foster social networks being developed and create opportunities for the social residents.  The tenants reduce or wipe out debt to the city thus saving eviction.

I see this specific project as an excellent method for combating both rent arrears and social isolation.  We constantly look for methods to help residents build skills, networks and opportunities.  A program like the one in Hungary would allow for these goals to be met with the added benefit of increasing property value and lowering tenant debt.  I admit the skeptic in me comes out from working in the industry in the last five years.  The USA is highly regulated.  With unions and workers compensation insurance, I wonder if this type of project would fit in many US cities?  It is an idea and perhaps a Section 3 project could be built off of this idea.  (Credit to the Directorate General for Internal Policies for writing the article “Social Housing in the EU”- authors Michela Braga and Pietro Palvarini)