In recent years, Dutch housing associations have introduced a number of innovative types of sale, having in common that a house is sold to the tenant at a discount. In this way, buying a house becomes affordable for lower-income households. On the other hand the housing association obtains cash, which can be used for (social) housing investment. The innovative types of sales differ in the conditions under which the house is sold.

These conditions range from sharing the profit (or loss) at turnover, repaying the (indexed) discount at turnover or only buying the dwelling and leasing the land. Therefore, even if the discount is the same, the risk – return profile of the different types of social sale can differ. In this paper, we look at the valuation and the risk – return characteristics of three different innovative types of sale from a housing association perspective. We use Monte Carlo simulation to establish the expected cash flows and Net Present Values, and the uncertainties herein measured as Value at Risk.

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