Housing allowances in Kazakhstan : program design and implementation strategies

The options fall under two distinct models: (1) an income-based formula, which provides housing allowances to those below a specified income level and bases family contribution on family income; and (2) a space-based formula, which reduces fees to everyone for a certain standard amount of space and charges premiums for space above this amount. Contextual issues of the relation of housing allowances to economic reform and the political challenges posed by raising housing fees and redistributing housing subsidies are also reviewed. Key findings are as follows. (1) No single housing allowance formula works best. Program design must be adapted to local circumstances and by local officials, who must also be given the capacity to administer the program locally. (2) The income model targets assistance to the neediest households, but it is administratively complex and requires extensive calculations as well as rules for documenting and verifying income. The space model is easier to administer, yet will not necessarily target households on the basis of need. For this reason, a hybrid model -- i.e., a space model with an income cap -- is suggested. (3) Space norms can greatly affect overall program costs. (4) A housing allowance program is workable provided broader policy issues such as privatization and the ability of local officials to verify income have been resolved. And even if fees charged to residents are raised relatively little, and the government subsidy remains large, this would be a considerable improvement over the current system.