Presentation on theme: "ACCESS TO LAND AND HOUSING FINANCE FOR THE URBAN POOR"— Presentation transcript:
1 ACCESS TO LAND AND HOUSING FINANCE FOR THE URBAN POOR International Conference on Growth with Stability in Affordable Housing Markets ACCESS TO LAND AND HOUSING FINANCE FOR THE URBAN POORTechnical Session IV: Urban Planning imperative for Affordable Housing Michael Slingsby – Urban Poverty ConsultantAnd don’t forget my sister and I
2 Discussion on three topics Improving the management of land andassets already owned by governmentThe provision of rental accommodation in urban areasFinancial instruments for incremental and new housing for the urban poor
3 CURRENT SCENARIO Urban growth and urban poverty One third to half of urban growth is increase in population already living in the cityIn Indian cities, urban poor represent 35% of the population and live on 5% of the landSlum dwellers are very efficient users of urban landFocus on improvement of existing slums through upgrading or redevelopmentLittle attention to access to land and housing for the urban poor in the futureRange of appropriate interventions that bring about mobility in the housing market for the urban poorAffordable interventions including rental housing
4 1. Improving the management of land and assets already owned by government Large areas of land in government ownership – state, ULB and central government agenciesIn UK land owned by railways redeveloped and raised huge funds in both income and capitalLand for housing (marshalling yards) and stations for commercial developmentGovernment land used to raise capital and to provide land for housing and plotted developmentMove from urban administration (implementation of schemes) to urban management (setting strategic objectives for management of resources and targets for measuring success)
5 UK local governments now have estates and assets management departments Reviews not only land and buildings in government ownership but also land and buildings rented or leased from othersQuestions?Is it fit for purpose to deliver the services requiredIf property no longer required for operational or investment purposes it is sold according to government guidelinesChallenge the basis for holding or acquiring property in the traditional way, exploring partnerships and new ways of working (PPP)Efficiency in use of property, i.e. space per personPublicising analysis of land a property holdings to create comparison and competition between urban local bodies
6 Old ideas that still work for provision of land for urban poor Sites and services schemesSeen as unsuccessful because not large enough, captured by better off because of high security of tenureWorld Bank Madras (Chennai) delivered 30,000 plots for EWS and made impact on local marketVery poor did not benefit due to construction of core housesCaptured by better off later on because of lack of supplyCity Improvement Trusts delivered serviced plots of landIncremental development scheme in Hyderabad, Sind supported organised squatting
10 Provision of rental accommodation in urban areas A large percentage of urban poor families live in rented accommodation both within slums and outside slumsNSSO survey about 35%Figures for Surat, 36% and Bangalore, 55% rentersTraditional response was Mumbai chawls
11 Rental HousingMany Asian cities have private sector financed and constructed purpose built rental room blocksLargely absent in IndiaOften serviced single rooms suitable for single migrantsHigh percentage of rooms/houses rented in slumRented rooms in houses are large source of cheap accommodationa safety net against uncertain employmentmeeting household expenditurefunding housing improvementsa regular source of income when moving from waged employment to businesspension after retirement.
12 Constraints to increase in rental accommodation Negative government legislationProperty tax and rent controlPlanning and building regulationsIncentives toEncourage renting of rooms in existing housesAdding rooms with access to separate kitchens/bathroomsEncouraging construction of rental room blocks with common or individual sanitation facilities
13 Financial instruments for incremental and new housing for the urban poor Majority of urban poor families build houses incrementally and raise funds from their own resourcesThey do not have access to formal financeIncrease ability to pay by renting part of house and more family members workingSell family assets such as gold to raise capitalMajority of households with incomes below Rs 8,000per month are daily wage labourers or self employedIncomes are largely undocumented and maybe subjectto seasonal fluctuationsLittle penetration of financial services on an individualbasis except for short-term productive or non productivepurposesHigh transaction costs discourage entry into this sector of the market
14 Least cost affordable home in the market Labour and self employed constitute a large part of the excluded households25% ofhouseholds50% ofhouseholds75% ofhouseholdsLeast cost affordable home in the market~ Rs 4 LakhsData Source: NSSO Expenditure Survey, 2010, NCAER How India Earns, Spends and Saves, 2007
15 as well as in this case and pay Many urban poor families building incrementallyThey use savings and money from relatives and friendsas well asin this caseBorrow from a money lender at 10% PER MONTHand payRs 1,000 bribe to policeman to “allow” the constructionThis man wanted to improve his family’s living conditions by adding another floor. He couldn’t get a regular loan and had to borrow from a money lender at 10% per month. He also had to pay Rs1,000 to a policeman to be allowed to carry out the construction. He was doing the construction work himself.
17 People take enormous risks in investing in permanent construction as evictions can take place at any time. Most have a temporary roof so it can be carried away at the time of demolitionPeople take enormous risks in investing in permanent construction as evictions can take place at any time. Most have a temporary roof so it can be carried away at the time of eviction
18 In South and South East Asia a number of models have been developed based on wholesaling loans to organised and registered communities, who then retail the loans to members.These includeThailand’s Community Organisation Development Institute fundThe Philippines Community Mortgage ProgrammeCambodia’s Urban Poor Development FundCommunity savings and loans programmes have been established in a number of countries in the regionSome mature enough to lend to communities for housing and land purchase.
19 THAILAND’S COMMUNITY ORGANISATION DEVELOPMENT INSTITUTE (CODI) Gives loans and grants to organised member communities for housing, land purchase, slum upgrading, group businesses and community revolving fundsRate of interest depends on purpose of loanHousing 2% (subsidised) , business 4%; revolving funds 6%End user pays 6-8% for housing loansCeiling for land and housing loans put together is $9,000 (Rs 4,00,000) per family.Average loan in about US$ 6,000 (Rs 2,70,000). All loans are made collectively to the community cooperative, not to individual families.
20 Klong Lat Paa Chi Community, Thonburi Number of houses : 90Tenure terms : Cooperative land ownershipCODI land loan : US$328,570Infrastructure subsidy : US$128,570CODI housing loans : $262,900Klong Lat Paa Chi Community, Thonburi
21 3,400 households in 13 communities Klong Bang Bua3,400 households in 13 communities1 m. govt2 m people
22 Number of units : Total of 3,400 households (in 13 communities) Land owner : Treasury DepartmentTenure terms : 30 year renewable lease to the Bang Bua community cooperative.Land rental rate: $2-3 per month, per unit (depending on unit size).Infrastructure costs : US$ 377,150CODI housing loans : US$ 2.14 m(2007 figures)Welfare houses for the destituteRental rooms for existing renters
23 THE PHILIPPINES COMMUNITY MORTGAGE PROGRAMME Beneficiaries organised into a community association with minimum of 30 and maximum of 250 membersAverage amount per community was US$440,000 (Rs 198,00,000)Community Mortgage Programme funds informal settlers, slum dwellers or tenants of blighted areas or areas for priority development to buy land that they are living on, or where they will be relocated.
24 A maximum amount of USD 2,890 (Rs 1,30,000) for the three stages is for individual beneficiaries residing in highly urbanised areas.The loans are given to the Community Association.The loan is payable in equal monthly amortisations for a maximum of 25 years at a fixed interest rate of 6 percent per annum.The same land, which is subject of purchase, serves as the collateral for the loan.
25 URBAN POOR DEVELOPMENT FUND (UPDF), CAMBODIA Total capital in fund : US$ 1.92 millionSource of capital : Contribution from savings group members, grant from Municipality of Phnom Penh, Prime Minister’s monthly contribution, Cambodian Red Cross, donors (Selavip, Homeless International, Misereor, ACHR-TAP)Purpose of loans : Housing, land purchase, livelihood, environmental improvement, food production, emergenciesInterest charged : 8% annually (for housing and land loans); 4% annually (for bulk income generation loans to communities and networks, which on-lend at %).How it works : UPDF makes housing, land purchase, food production and income generation loans directly to communities with active savings groups (not to individuals), which manage collection and repayment of loans.
26 Mittapheap community, Phnom Penh 137 houses in Khan ToulkorkUpgrading project, people straightened and paved the settlement’s main lane, laidan underground drainage system and improved houses using an upgradinggrant of $6,587.56 families who had to break parts of their houses to “re-block” and make room for the straightened roadtook housing improvement loans totalling $23,500.
27 COMMUNITY SAVINGS Country Coverage Members Savings Thailand 3,000 urban communities in 225 cities1.5 million membersUS$ 44 millionCambodia319 communities in Phnom Penh and 12 provincial towns15,460 membersUS$240,000Philippines26 cities47,930 membersUS$ 1.4 millionNepal287 communities6,710 membersUS$600,000Vietnam1,670 communities in8 cities29,600 membersUS$ 974,000Sri Lanka(Women’s’Bank)22 cities50,000 membersUS$9.09 millionSource: Asian Coalition for Housing Rights“Savings + Funds” ACHR Newsletter, November 2007
28 ISSUESWhat are appropriate “financial services” for the urban poor that support their needs for incremental housing, new housing, upgrading, productive and non productive purposes and emergencies?Community savings groups have demonstrated their “bankability”?Financial instruments need to build on and compliment traditional ways of raising finance – individual or group savings, loans or grants from friends and relatives, renting rooms etc.Many community funds are multi-purpose with a mixture of short-term loans (for business) and long term loans (for land and housing) with different interest rates which can offset risksCity level urban poor development funds bring together money from communities, local government, NGOs and donors