Tradable building rights and the financing of urban renewal

Because of the reduction of subsidies for urban renewal, Dutch housing associations have to pay for the regeneration of their post-war neighbourhoods from their own capital funds. These actors have reacted to this change of government policy by taking initiatives that compensate for the costs of renewal by transferring revenue from profitable development of expansion areas. One of these initiatives is the introduction of the concept of tradable building rights, obliging developers in attractive areas to buy these building rights from housing associations, which 'free' these rights by demolition of their unattractive estates. Modelling the introduction of tradable building rights in a regional or local housing market, the authors assess the institutional fit of this instrument. Their conclusion is that it can be an attractive instrument and that the crux of it is the required differentiation of property rights between urban-renewal and greenfield areas.