1. Diego Gil Mc Cawley World Bank Land and Poverty Conference March 2017
LAW AND Inclusive URBAN DEVELOPMENT: LESSONS FROM CHILE’S enabling markets HOUSING POLICY REGIME
Diego Gil Mc Cawley
World Bank Land and Poverty Conference
March 2017

2. The Problem

3. International Trends in Housing Policy
Increasing focus on ”inclusionary housing”
Transition from government to markets: the “enabling markets” housing policy approach

4. Research Question
Is the enabling markets approach a good policy strategy to provide adequate housing solutions to the urban poor?

5. Case Study: Chile’s Market-Based Housing Policy (1973 to Present)
Pioneer of the enabling markets approach
Focused on the delivery of targeted subsidies for homeownership
Expansive social policy
Dramatic reduction of housing deficit in recent decades
Today: small number of families living in irregular settlements

6. Adoption of Chile’s Market-Based Model
Established during dictatorship in the mid 1970s as part of larger package of neoliberal reforms
Rationale was to adopt a regime based on stimulating a competitive market for affordable housing
Core institutional component was the implementation of a complex system of subsidy programs aimed at promoting homeownership
Complemented by policies that deregulated Chile’s urban land market

7. Implementation: No. of subsidies delivered per type of program (1990-2015)

8. Implementation: Amount in dollars spent per type of subsidy program (1990-2014)

9. Outcomes: Reduction of Housing Deficit (OECD 2012)

10. Outcomes: The Spatial Bias
Location of housing projects constructed through the subsidy programs for low-income households between 2006 and 2014 (Techo 2015)
Location of subsidized housing projects constructed between 1980 and 2003 in Santiago (Tapia 2011)

11. Lesson 1: Urban Integration as a Critical Goal
Bajos de Mena, Puente Alto, Santiago, 122,278 inhabitants

12. Lesson 2: Limitations of Strategy Based on Targeted Subsidies
The institutional structure of all subsidy programs has not been able to incentivize the supply of affordable housing in well-located neighborhoods
In the 1990s, government favored the rapid increase in the supply of low-income housing through direct contracts with private sector
Since the early 2000s, the regime has functioned more clearly as a demand-side subsidy regime. However, and despite significant increases in their price, households carrying subsidies are almost never capable of penetrating well-located neighborhoods

13. Lesson 2 (cont.): The Experience of the Special Subsidy for Location
Supplemental voucher implemented in the mid 2000s that the housing market internalized soon after implementation
Problems of institutional design: uniform increase in the price of the subsidy plus most urban areas met the requirements
Lesson: uniform increases in price of vouchers does not necessarily lead to better locations

14. Lesson 3: Linking Housing Policy with Land Use Governance
Exclusive institutional focus placed on subsidy programs has been a good strategy for expanding access to formal housing, but not to promote inclusionary housing
The need of a planning housing markets approach: “So that [generating affordable housing in well-located neighborhoods] no longer has to do, from my point of view, with what housing policy can do on its own, but rather with what, in a larger context, the Ministry is also responsible for, which is urban policy, or land use policy, if you prefer. That [policy], somehow, could have certain regulatory components, I will not say regulating directly the price nor establishing it, but to have some instruments that could allow a more balanced structure of prices, one that could allow housing location alternatives to become more balanced(...).”(Telephone Interview with mid-level official from the Ministry of Housing, April 2013).

15. Diego Gil Mc Cawley World Bank Land and Poverty Conference March 2017
LAW AND Inclusive URBAN DEVELOPMENT: LESSONS FROM CHILE’S enabling markets HOUSING POLICY REGIME
Diego Gil Mc Cawley
World Bank Land and Poverty Conference
March 2017