Best practices of the public-private partnership for financing social housing

Abstract

In the current socio-economic environment, the issue of providing vulnerable population with affordable and accessible housing has become acute, requiring the public authorities to invest heavily in this area. This problem is relevant not only for Ukraine, where many residential buildings were destroyed as a result of military aggression, but also in other European countries, as quarantine restrictions have caused significant damage to their economies. Another reason for the growing demand for social housing is urbanization, migration, and growing social inequality. The solution to this problem is complicated by the fact that the growing demand for social housing increases the necessary costs for territorial communities, which they cannot always fully cover with budget revenues. On the other hand, private investors need a return on their investments, so they cannot finance social housing projects on their own. As a result, the public-private partnership model has become one of the ways to finance social housing. The purpose of the article is to analyze various public-private partnership mechanisms to provide financing for the construction and allocation of social housing. Since 1980s, public private partnership (PPP) is gaining global popularity as a viable alternative to public funding for building and financing infrastructure projects. PPP is a means to effectively deliver projects in the public sector because it emerges against the backdrop of financial constraints and management capacity in the public sector to support largescale infrastructure projects. PPP not merely means a way to accomplish financial problems by bringing private capital, but it also aims to bring private sector efficiency and best practices in delivering infrastructure. Although, focus of the current debates is primarily on economic infrastructure, but investment on social infrastructure has received surprisingly little attention and it is predicted to continue growing. Governments have a central role in policies and regulations to provide a transparent and fair 'investment field', as well as providing payments to private parties. In investing, the private sector actually requires stability, predictability and a framework that supports their investment in social infrastructure. Meanwhile, the private sector has a role to provide expertise in building social infrastructure efficiently and has added value in innovation. It is recommended to implement a modified PPP model in Ukraine to include international public and private partners as financial donors to compensate for lack of the national budget resources at the moment.