Download Housing Policy Matters for the Poor Massachusetts Institute of Technology

Massachusetts Institute of Technology
Cambridge
April 11, 2011
Housing Policy Matters for the Poor
Latin American experiences with urban housing
Eduardo Rojas
Eduardo Rojas
basic propositions
Everybody needs shelter
Shelter, like food, is a basic need for human beings.
Humans need a constant supply of the services provided by a household to survive
Eduardo Rojas
Housing production and consumption
Shelter is produced and consumed through complex market processes that
involve a wide variety of actors whose behaviours are affected by government
regulations and interventions.
The interaction of supply and demand in formal and informal housing markets in
a country results in a given level of availability of houses and a given quality of
the housing stock
However, not everybody has access to adequate shelter, especially low-income
households in developing countries
Eduardo Rojas
focus on urban housing issues and programs
• The population in Latin America is predominantly
urban
– In 1900,
1 every 4 inhabitants lived in cities
– In 2000,
3 out of 4 inhabitants lived in cities
Eduardo Rojas
Population and households (in millions)
Rates
Year
1985
2000
2015
1985-00
Population
% Urban
Households
Average Size
400.8
70
84.1
4.7
519.1
631.1
75
80
127.3
177.8
4.1
3.5
2000-15
1.7
1.3
2.8
2.7
Eduardo Rojas
RAPIDLY URBANISING
URBANISED
Population growth rate
FULLY URBANISED
Household growth rate
Eduardo Rojas
• In the 1990s the informal sector generated 60% of the new jobs
• 48% of the labor force is in the informal sector
– 32% in subsistence employment
• 24% self employed
• 8% domestic service
– 16% informal micro enterprises
Eduardo Rojas
Inequalities are high and persistent
Gini coefficient of distribution of household per capita income
1970s
1980s
1990s
Latin America and the
Caribbean
48.4
50.8
52.2
Asia
40.2
40.4
41.2
Eastern Europe
28.3
29.3
32.8
OECD
28.3
29.3
32.8
Eduardo Rojas
Lack of adequate shelter: housing shortages
Type of Shortage
Origin of the shortage
Category
Qualitative
Lack of shelter
Qualitative
Neighbourhood
conditions
Lack of
infrastructure
Definition
Households doubling up
Households in non upgradable shelters
Lack of piped potable water
Lack of sanitary disposal of waste waters
Roof made of non permanent materials
Quantitative
Shelter conditions
Poor quality of
Walls made of non permanent materials
materials
Dirt floors
Overcrowding
Tenure status
Tenure
More than three persons per room
Insecure tenure on house or the land
Eduardo Rojas
Estimation of housing shortages based on household surveys
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Eduardo Rojas
the facts
Housing shortages in LAC: the stock
1995
2000
2006
Shortage
%
millions
%
millions
%
millions
9
6.8
9
8.4
8
8.9
16
12.1
14
13.5
11
12.7
Infrastructure
32
24.8
30
28.8
25
27.4
Tenure
9
6.9
10
9.8
9
10.4
Quantitative
Materials
Overcrowding
Qualitative
Eduardo Rojas
Housing shortages by income
A. Quantitative deprivations
B1. Dwellings of disposable materials
or overcrowded
31%
Q IV
QV
B2. Inadequate infrastructure
Urban
QI
Q II
Q III
QI
Q II
Q III
Q IV
06
95
06
95
10% 9% 7%
5% 3%
06
95
16% 14%
06
95
95
06
Urban
06
22% 21%
QV
B3. Lack of secure tenure
Q IV
QV
Urban
QI
Q II
Q III
Q IV
06
95
06
95
06
95
06
95
06
95
06
12%10% 9% 9% 13% 14% 11% 11% 8% 10% 8%
7% 5% 6%
95
06
22% 18%
95
06
95
32%
31%
24%
06
42% 41%
95
95
06
95
32%
25%
06
55%
95
06
95
06
95
06
Q III
06
Q II
95
06
95
06
QI
95
Urban
95
13% 12% 11% 10% 9%
8% 7% 7% 5%
4%
06
95
9% 8%
16%
11%
QV
Eduardo Rojas
Housing deprivation as % of total
households
Gap in housing shortages in LAC
60%
50%
40%
30%
20%
10%
0%
1995
2000
2006
A. Quantitative deprivation
1995
2000
2006
B1. Dwellings made of
disposable materials or
overcrowded
Quintile I
1995
2000
2006
B2. Lack of infrastructure
Urban
1995
2000
2006
B3. Lack of secure tenure
Quintile V
Eduardo Rojas
Future housing needs in LAC: the flow
• total number of urban households
– 130 million in 2010
– 190 million in 2030
– 230 million in 2050
• approximately 3 million new houses will
be needed annually
Eduardo Rojas
14
• The housing challenge
– Built the 9 million houses required to eliminate doubling up
– Improve the services provided by 40 million houses
– Built 3 million houses per year for new households
Eduardo Rojas
Housing shortages and per capita income PPP
Quantitative
ARG
BOL
BRA
CHL
COL
CRI
DOM
ECU
GTM
HND
MEX
NIC
PAN
PER
PRY
SLV
URY
1
VEN
30
20
10
%
5
0
5000
10000
15000
GDP
Source:
A.Quantitative
0of PPP
000
urban
Own calculations
households
and based
GDP on Household surveys and World Development Indicators.
30
A.Quantitative and GDP
% of urban households
10
20
BOL
PER
NIC
GTM
DOM
ECU
SLV
COL
VEN
PAN
BRA
ARG
PRY
URY CRI
CHL
MEX
0
HND
0
5000
GDP PPP
10000
15000
Source: Own calculations based on Household surveys and World Development Indicators.
Eduardo Rojas
Housing shortages and per capita income PPP
Qualitative materials
ARG
BOL
BRA
CHL
COL
CRI
DOM
ECU
GTM
HND
MEX
NIC
PAN
PER
PRY
SLV
URY
1
VEN
40
30
20
10
%
5
0
5000
10000
15000
GDP
Source:
B.
0of
000
Materials
PPP
urban
Own calculations
households
and GDP
based on Household surveys and World Development Indicators.
40
B. Materials and GDP
GTM
% of urban households
10
20
30
NIC
PER
BOL
SLV
HND
ECU
PRY
VEN
ARG
DOM
COL
CRI
0
URY
BRA
0
5000
GDP PPP
MEX
PAN
10000
CHL
15000
Source: Own calculations based on Household surveys and World Development Indicators.
Eduardo Rojas
Housing shortages and per capita income PPP
Qualitative infrastructure
ARG
BOL
BRA
CHL
COL
CRI
DOM
ECU
GTM
HND
MEX
NIC
PAN
PER
PRY
SLV
URY
1
VEN
50
40
30
20
10
%
5
0
5000
10000
15000
GDP
Source:
C.
0of
000
Infrastructure
PPP
urban
Own calculations
households
and
based
GDP
on Household surveys and World Development Indicators.
C. Infrastructure and GDP
% of urban households
10
20
30
40
50
NIC
DOM
BOL
GTM
SLV
PER
HND PRY
BRA
ECU
PAN
ARG
COL
MEX
VEN
0
URY
0
5000
GDP PPP
CRI
10000
CHL
15000
Source: Own calculations based on Household surveys and World Development Indicators.
Eduardo Rojas
Housing shortages and per capita income PPP
Qualitative tenure
ARG
BOL
BRA
CHL
COL
CRI
DOM
ECU
GTM
HND
MEX
NIC
PAN
PER
PRY
SLV
URY
1
VEN
20
15
10
%
5
0
5000
10000
15000
GDP
Source:
D.Tenure
0of PPP
000
urban
Own and
calculations
households
GDP based on Household surveys and World Development Indicators.
D.Tenure and GDP
% of urban households
10
15
20
PER
URY
SLV
ARG
PAN
MEX
CHL
ECU
HND
NIC
BOL
GTM
PRY
DOM
COL
BRA
5
CRI
0
5000
GDP PPP
VEN
10000
15000
Source: Own calculations based on Household surveys and World Development Indicators.
Eduardo Rojas
Evolution of housing shortages 1995 - 2006
High income countries US$ 12,000 - 10,000 (PPP 2006)
Tenure Infrastructure. Materials Quantitative
Chile
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Eduardo Rojas
Evolution of housing shortages 1995 - 2006
Upper middle-income countries US$ 10,000 - 8,000 (PPP 2006)
Tenure Infrastructure. Materials Quantitative
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Eduardo Rojas
Evolution of housing shortages 1995 - 2006
Lower middle-income countries US$ 8,000 - 4,000 (PPP 2006)
Tenure Infrastructure. Materials Quantitative
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Eduardo Rojas
Evolution of housing shortages 1995 - 2006
Low- income countries less than US$ 4,000 (PPP 2006)
Tenure Infrastructure. Materials Quantitative
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Eduardo Rojas
Formal housing is unaffordable for many
– 40% of the population lives on less that US$2 a day
– 10% of the population gets 50% of the income
Housing price to average income ratios
Africa
Rest of de Asia
Asia Oriental
Meddle East
LAC
Eastern Europe
Developed
0
2
4
6
8
10
Eduardo Rojas
12
Workers in the informal
sector %
Country
46
Venezuela
36
Households that can pay
a mortgage in market
conditions %
Mortgage portfolio as a
percent of GDP (2007)
4
1.4
Argentina
9
1.7
39
Brazil
32
1.4
54
Peru
32
2.5
43
Colombia
37
6.0
40
Honduras
39
4.6
33
Panama
61
27.7
28
Chile
63
14.0
38
Mexico
65
21.0
50
El Salvador
66
19.2
52
Ecuador
74
s/i
Eduardo Rojas
Land prices
supply in
Santiago
1992 - 2002
Residential
and and
is scarce
and
expensive
prices and supply in Santiago 1992-2002
8.00
8,250,000
6.00
5,500,000
4.00
2,750,000
2.00
PRECIO : MEDIA MOVIL
0
0
82-4
83-1
83-2
83-3
83-4
84-1
84-2
84-3
84-4
85-1
85-2
85-3
85-4
86-1
86-2
86-3
86-4
87-1
87-2
87-3
87-4
88-1
88-2
88-3
88-4
89-1
89-2
89-3
89-4
90-1
90-2
90-3
90-4
91-1
91-2
91-3
91-4
92-1
92-2
92-3
92-4
93-1
93-2
93-3
93-4
94-1
94-2
94-3
94-4
95-1
95-2
95-3
95-4
96-1
96-2
96-3
96-4
97-1
97-2
97-3
97-4
98-1
98-2
98-3
98-4
99-1
99-2
99-3
99-4
00-1
00-2
00-3
00-4
01-1
01-2
01-3
01-4
02-1
Eduardo Rojas
PRECIO PROMEDIO (UF/M2)
M2 OFRECIDOS
VARIACION DE PRECIOS Y SUPERFICIE DE TERRENOS OFRECIDOS GRAN SANTIAGO OFERTA TRIMESTRAL PERIODO 19
11,000,000
Private housing finance is not well developed
Mortgage lending for housing in Latin America (selected countries) US and EU
Country
As % of GDP
As % of all
lending
Argentina
4.0
15.0
Bolivia
8.5
16.3
10.8
17.7
Colombia
7.0
25.0
Panama
Chile
24.4
26.4
Peru
2.9
9.5
Mexico
2.1
13.5
Uruguay
7.0
15.7
United States
79.6
87.2
European Union
42.6
41.0
Eduardo Rojas
%
income segment
1-5
5A
Purchase houses with own resources
3 - 10
4B
Savings and private mortgages
15 - 20
3C
Savings and private mortgages
Informal solutions
30 - 35
2D
50 - 30
1E
population
Eduardo Rojas
government intervention
• Response to market failures
– Imperfect information and externalities often lead to a inadequate level of
housing production (quantity and quality)
– Under supply of housing limits individual and social welfare
• Ideological and ethical arguments
– Housing is considered a merit good (a commodity that is judged by society that
an individual should have on the basis of need rather than the ability and
willingness to pay)
– Access to housing is considered a basic human right
• Economic
– Reactivate the economy
– Generate employment for unqualified labourers
Eduardo Rojas
29
housing policy pursues
guarantee minimum standards for all
equal opportunity for those in similar circumstances (horizontal equity),
redistribution to poorer households (vertical equity) and
Eduardo Rojas
30
Political arguments for government intervention
General
principle
Means
Countries
All persons have the right to live in adequate housing
Housing is a merit good
The State will provide
social benefits, including
housing.
The State will guarantee
access to a decent and
proper housing to all
The State will promote
social housing programs
through adequate financing
mechanisms with
preference for low-income,
rural and vulnerable
households
The State will facilitate the
construction of houses and
the development of
financing mechanisms
accessible to the largest
possible number of
households
Argentina
Bolivia
Panama
Ecuador
Brazil
Colombia
Costa Rica
Dominican Republic
Guatemala
El Salvador
Uruguay
Venezuela
No mention to housing
Chile
Honduras
Mexico
Nicaragua
Peru
Paraguay
Eduardo Rojas
government responses
Eduardo Rojas
Institution building
Welfare state
Subsidiary state
Direct provision and financing of finished houses by public entities
Funds
Treasury
Public Housing
Agency
Repayment
of house costs
Contract the
construction
of houses
Private
Contractors
Beneficiaries
Houses
Eduardo Rojas
concentration in the production of finished new houses
Low density single family houses
Apartment buildings
restricted public budgets and high cost of the solutions
Eduardo Rojas
finished houses for a few
poor housing conditions for many
end-up mostly in the
hands of middle-income
households
Eduardo Rojas
Eduardo Rojas
• “Enabling markets” approach to housing policy
–
–
–
–
•
Adopted by Chile 1978
Proposed by United Nations 1987
Adopted by the World Bank 1992
Adopted by the Inter American Development Bank 1995
Premises
– Markets are more efficient than governments in producing and distributing
houses
– Governments should focus on “enabling” housing markets to work
– Low-income households may need government help to access housing
Eduardo Rojas
38
• Enabling markets approach: objectives
– Facilitate the operation of all housing markets
• Housing inputs
• Housing finance
• Household mobility
– Expand the role of the private sector
• Produce and sell new houses
• Finance house purchase
– Pull government out of direct production and financing of houses
Eduardo Rojas
• Enabling markets approach: focus public interventions on
– The development of mortgage financing
– Facilitate low-cost residential land subdivisions
– Improve the efficiency of the construction and real estate development
industries
Eduardo Rojas
40
– Rationalise government involvement in the direct production and
financing of houses
• Intervene only when proven that other mechanisms do not work
• Minimise intervention to mobilise household and community
resources
– Focus public interventions on
• The development of mortgage and micro financing
• Effective low-cost housing solutions
• Improve the efficiency of the construction and real estate
development industries
Eduardo Rojas
The Do’ s an d Don’t s in En ab ling H ousing Mar kets t o Work
Instru me nt
Developing property rights
Developing mortgage f inance
R ationalizing subsidies
P roviding infrastruc ture
R egulating land and housing
development
Organizing the building industry
Developing a policy and
institutional fra mework
Do
Re gularize la nd tenure
Expa nd land re gistr ation
P riva tize public housing stoc k
Establish property taxa tion
Allow priva te sector to lend
Lend a positive /m arket rates
Enforce for eclosure la ws
Ensure prude ntial regulation
Introduce better loa n instr um ents
M ake subsidies transparent
Target subsidies to the poor
Subsidize people, not houses
Subject subsidies to review
Coordina te la nd development
Emphasiz e cost rec over y
B ase provision on dema nd
Im pr ove slum infra structur e
Re duce regula tory c omplexity
Asse ss c osts of regulation
Re move price distortions
Re move ar tificia l shortages
Elim inate monopoly pra ctice s
Encour age small-firm entr y
Re duce impor t controls
Suppor t building researc h
B ala nce public/private sector r oles
Cr eate a forum f or ma na ging the
housing sec tor as a whole
• Develop enabling stra tegies
• M onitor se ctor performa nc e
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Don ’t
Engage in m ass evic tions
Institute costly titling syste m
Nationa lize la nd
Discourage land transactions
Allow interest-rate subsidie s
Discriminate against r ental housing
investm ent
Neglec t resourc e m obilization
Allow high default rates
Build subsidized public housing
Allow for hidden subsidie s
Le t subsidies distor t pr ic es
Use rent control a s a subsidy
Allow bias a ga inst infr astructure
investm ent
Use environme ntal concerns f or slum
clearance
Impose unaffordable sta ndards
Mainta in unenforcea ble rules
Design proje cts without links to
regulatory/institutional re for ms
Allow long perm it delays
Institute re gulations inhibiting
competition
Continue public monopolies
Engage in public housing
Neglec t local governme nt role
Retain fina nc ially unsustainable
Eduardo Rojas
institutions
42
Development of housing finance
• Reduce credit risk
– Leverage savings and payment capacity of families assisting them to
access to private mortgage financing
• One-off direct subsidies
• Loan guarantees
• Micro credit for home improvements and expansion
Eduardo Rojas
• Reduce collateral risk
– Land titling and registration reform
– Improve judiciary procedures and practices to facilitate the recovery of
collateral in cases of default
– Establish extra-judiciary procedures for small and micro loans
Eduardo Rojas
• Mitigate interest rate risk
– Macroeconomic stability
– Indexation of principal and payments in situations of high inflation
(increase credit risk)
Eduardo Rojas
• Reduce term mismatch risk
– Promote long-term savings in local currency
• Private retirement funds
• Insurance industry
– Promote the development of new instruments in financial markets
Eduardo Rojas
Improve the operation of the land markets
the objective is to expand the supply of affordable
serviced land for housing
• revise land use regulations
promote high density, mixed-uses land developments
allow low-cost land subdivisions for housing
• invest in macro infrastructure to expand the supply of serviced land
buy rights of way ahead of future development
capture betterment
Eduardo Rojas
control land speculation
enact mechanisms to generate land for social uses
statutory land extractions
land readjustment
promote public-private partnerships for land development
mixed capital urban development corporations
support for cooperatives and other types of housing
associations to purchase land
Eduardo Rojas
%
income segment
1-5
5A
Purchase houses with own resources
3 - 10
4B
Savings and private mortgages
15 - 20
3C
Savings and private mortgages
Savings, government assistance
and private mortgages (ABC Programs)
30 - 35
50 - 30
2D
Low-income government housing programs
incremental housing
neighbourhood upgrading
1E
population
Eduardo Rojas
The ABC programs
Public funds
Private funds
Developers
Loans
Build
Houses
Funds
C
Loans
B
Private
Banks
Payments
Households
A
Savings
Treasury
Public Housing
Agency
Subsidies
Guaranties
Household
Savings
Eduardo Rojas
ABC-type programs do not reach the very poor
mostly due to lack of access to loans the “C” component
!
Incide nce
(% of households that rec eive d the program)
CO L -I N U RBE (1 9 9 8 -2 0 0 2 )
#'"(
N I C-P R O G V IV (2 0 0 3 -2 0 0 5 )
P A N - P A RVI S (1 9 9 9 -2 0 0 3 )
!"#
!*"#
# ("%
**"#
# % ")
) + "$
$%"%
CH L -F SV (2 0 0 1 -2 0 0 6 )
+ ' "#
( ! ")
$%"&
CH L - RU RA L (2 0 0 2 -2 0 0 6 )
+ $ "&
#'"'
'"$
CR I- BO N O (2 0 0 6 )
CRI- BO N O (2 0 0 1 -2 0 0 7 )
#&"'
#("%
' *"$
$ # ")
' *"!
CH L -SSH (2 0 0 4 -2 0 0 6 )
& ! "$
CH L - L E A SIN G (1 9 9 7 -2 0 0 6 )
&)"&
"#
E x t. P o o r
$"#
P o or
%"#
& "#
'"#
(""#
N o n -P o o r
Eduardo Rojas
51
Government housing programs a typology
Approach
Type of
program
Program
State guarantee access to good housing
Government facilitates the operations of housing markets
Programmes supporting the supply of housing
Direct
provision of
finished
houses by
the Gov.
Very low
Direct
provision of
incremental
houses by
the Gov.
Gov.
provision of
serviced
land for
houses
Gov.
provision of
subsidised
housing
finance
Programs supporting the demand for housing
Barrio
upgrading
and
security of
tenure
Housing
upgrading
Housing
vouchers
Gov.
financing
for
incremental
housing
Regulation
to facilitate
land sub
division for
housing
Promote
private
housing
finance
Low
Leverage of household resources =
High
households savings + payments
government contributions
Eduardo Rojas
Approach
Type of
program
Program
State guarantee access to good housing
Government facilitates the operations of housing markets
Programmes supporting the supply of housing
Direct
provision
of finished
houses by
the Gov.
Direct
provision of
incremental
houses by
the Gov.
Gov.
provision of
serviced
land for
houses
Gov.
provision of
subsidised
housing
finance
Programs supporting the demand for housing
Barrio
upgrading
and
security of
tenure
Housing
upgrading
Housing
vouchers
Gov.
financing
for
incremental
housing
Regulation
to facilitate
land sub
division for
housing
Promote
private
housing
finance
ARGENTINA
BOLIVIA
BRAZIL
CHILE
COLOMBIA
COSTA RICA
DOMINIC REP
ECUADOR
EL SALVADOR
GUATEMALA
HONDURAS
MEXICO
NICARAGUA
PANAMA
PARAGUAY
PERU
URUGUAY
Eduardo Rojas
Three different housing programs under implementation
Argentina
Federal Housing Program
Direct provision of finished
houses
Chile
Housing Solidarity Fund
Incremental housing
Colombia
Programmed Savings Program
Programmed savings and
supplementary subsidy
Target group
Program not aimed specifically at
poorest households.
Key objective the reactivation of the
economy
Target Group
Families living in conditions of
vulnerability (housing, old age,
single parents, disabilities)
Target group
Informal workers with limited
income
Selection mechanism
Vary among provinces: raffles,
scoring systems.
Selection mechanism
Mandatory nation-wide point
system
Social Protection Certificate Score
Housing Shortage Score
Self selection incentive: low
standard of the housing solution
Selection mechanism
Mandatory nation-wide point
system
Social Protection Selection System
SISBEN
Housing needs: household size,
savings amount and time.
Eduardo Rojas
54
Targeting
)'#
'(#
!"#$%&'()%**
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45670#
48789:63#
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&$#
&&#
$%#
&&#
&#
*#+#
*#++#
$"#
$&# $%#
*#+++#
%# %#
*#+,#
%# %#
*#,#
+,-&./%0*1%*-&2#%0"*
Eduardo Rojas
55
new housing programs and approaches
•
Enabling markets programs
–
–
–
–
One-off direct subsidies
Mortgage origination improvement
Second tier markets support
Land use and building regulation
reform
•
Additional programs
Low-cost basic expandable housing
Programmed savings
Micro credit for home improvement
Technical assistance for home
expansion and improvements
– New construction materials
development and commercialisation
–
–
–
–
Pro-poor urban development policies
Eduardo Rojas
New housing products for low income households
Sites and Services
Government financed programs
that supply
minimum size plot of land
sanitary unit
electricity
access roads
water and sewerage services
title to the land
house expansion instructions
Eduardo Rojas
Advantages
reduced cost of providing a housing solution
simplicity and speed of execution
Disadvantages
usually built in the outskirts of cities with minimal
services and difficult access to the city
leave to the beneficiaries to built the houses and
improve the neighbourhoods
Eduardo Rojas
Sites and services - 1965
the starting point
sanitary unit
adjacent lots
Eduardo Rojas
Eduardo Rojas
the objective
sanitary unit
self built home
Eduardo Rojas
Eduardo Rojas
Incremental housing support programs
public support to the ways how people built homes
access land
land invasions
illegal land acquisition
legal land acquisition
gradually
adding space
improving quality of the houses
through
self help
community help
Eduardo Rojas
the incremental housing construction process
years
0-3
occupy in the lot
4-8
9 - 12
expand the house
12 +
rental units?
activities
Eduardo Rojas
incremental housing construction process
Eduardo Rojas
Attributes
Activities
Eduardo Rojas
Land subdivision
Secure tenure documents
Fiscal cadastre
Land registration
Access road construction
Road paving
Community water supply
In house water supply
Individual waste water disposal
Sewerage
Activities required for a house to
incrementally acquire all the attributes
of a finished house in a
fully serviced subdivision
Natural hazard protection
Drainage systems
Public lighting
Neighbourhood
Education infrastructure
Heath infrastructure
Sports equipment
Parks
Initial shelter
In house bathroom
Expanded house area
Shelter
Improve roof quality
Improve flooring quality
Improve wall quality
Improve doors and windows
Improve bathroom and kitchen
Eduardo Rojas
Responsibilities
Public sector
Eduardo Rojas
Households
Chile: incremental housing support program
After a few years
The houses have sufficient
space to accommodate
household needs
Later the grow to have space
for rent
Eduardo Rojas
Eduardo Rojas
• Many actions can only be executed by the public sector
–
–
–
–
Provision of access roads
Potable water
Drainage
Natural hazard protection
• Home improvements can be executed by households if
assisted
– Technical assistance
– Legal assistance
Eduardo Rojas
• Areas of public support for the incremental home-building
– Access land
• Turn land invasions and illegal land acquisition into affordable legal land purchases
– Support the families to gradually add more space and improving quality
• By making the self help and community help methods more efficient
• Providing micro-credit
Eduardo Rojas
Macro Housing Subdivision
Soacha
Bogotá
The city entered in a partnership
with land owners to service lands
in the expansion area of the city
in exchange of serviced land for
low-income housing
Eduardo Rojas
Quinta Moroy, Iquique, Chile. Redevelopment of illegally occupied land to build
high density incremental houses
Eduardo Rojas
Eduardo Rojas
The government supplies a core expandable unit
Households complete the houses with their own resources
Eduardo Rojas
Eduardo Rojas
conditions for success
•
Mechanisms to access low cost land for residential uses
•
Availability of financial intermediaries with capacity to handle micro credit for home
expansion and improvement
•
Existence of organisations capable of providing technical assistance to
communities and households
•
Urban regulations allowing progressive housing construction and completion of
infrastructure and services in neighbourhoods
Eduardo Rojas
Incremental housing program, Guyana
The program offered beneficiaries several initial options
cost considerations influence the choice as beneficiaries must pay a 20% of the cost
Serviced Lot Only:
Eduardo Rojas
Sanitary Core
Eduardo Rojas
Core Starter House
Eduardo Rojas
1
Incremental Expansion
Possibilities
Core Starter House Op.on (by contractor)
Eduardo Rojas
2
Expansion by Owner
Eduardo Rojas
3
Other Possible Expansions by Owner
Eduardo Rojas
incremental housing programs
•
Hold the promise of reaching the poor with affordable new housing
•
Mobilise households savings and sweat equity contributions expanding the
reach of scarce public resources
•
Support home improvements by low income households expanding the range
and quality of services they receive from their dwellings
Eduardo Rojas
Scale up neighbourhood upgrading programmes
Eduardo Rojas
government approach to illegal settlements
changed over time
1960´s
considered a temporary anomaly
1970´s
eradication and resettlement in new houses
in the outskirts of cities
1980´s
in situ solution to the infrastructure and land
tenure problems
1990´s
efforts to integrate the settlements to the
physical and social fabric of the city
2000´s
efforts to expand the interventions to integrate
settlers to the economy of the city
Eduardo Rojas
Eduardo Rojas
evolution of the neighbourhood improvement programs
first generation
second generation
third generation
physical integration
physical and social integration
physical, social and economic
potable water
sewerage
drainage
roads and sidewalks
public lighting
electricity
sanitary units in houses
secure tenure
potable water
sewerage
drainage
roads and sidewalks
public lighting
electricity
sanitary units in houses
secure tenure
community centres
parks and recreation areas
nurseries
health centres
community development
potable water
sewerage
drainage
roads and sidewalks
public lighting
electricity
sanitary units in houses
secure tenure
community centres
parks and recreation areas
nurseries
health centres
community development
skills training
employment placement
micro enterprise promotion
Eduardo Rojas
Houses and workshops
for samba artists
Potable water
tank
Water pumping
station
Cultural centre
and open air theatre
Paved roads
Paved sidewalks
Parks and recreation areas
Resettled households
Schools
Cultural activity areas
Nursery and
school improvements
Eduardo Rojas
Parque Royal, Favela Bairro Program, Rio de Janeiro
Macumba practice area
Eduardo Rojas
adding components
increases the cost of the projects
greatly complicate execution
Eduardo Rojas
maximum investment cost
selected programs (in US dollars)
Country
Maximum cost per
household US$
Colombia
2,000
Chile
4,000
Bolivia
4,300
Argentina
6,800
Brazil Favela Bairro Rio de Janeiro
5,000
Brazil Habitar Brazil
4,300
Uruguay
7,300
Ecuador
1,200
Eduardo Rojas
decisions on costs
Maximum public investment per households is
usually determined with the assistance of some
form of economic cost-benefit analysis
Project components are usually selected with
the involvement of the community within a fixed
set of eligible investments and a tight budget
constraint
Eduardo Rojas
economic analysis and the project cycle
Eduardo Rojas
community participation helps to select the most
needed investments within a strict budget constraint
Eduardo Rojas
adopting pro-poor city-wide urban
development policies
Eduardo Rojas
Direct public resources to solve critical problems of the settlements
access to and from the city
promote employment and services
improve health, education and recreation services
Eduardo Rojas
Medellín, Colombia
Eduardo Rojas
Eduardo Rojas
improve transportation to and from the slums
Eduardo Rojas
Integrated improvement of the infrastructure
and public spaces
Eduardo Rojas
provide good health and education services
Eduardo Rojas
promote employment in manufacturing
activities and local services
Eduardo Rojas
Eduardo Rojas
In sum
Housing policy matters for the poor
if well designed and executed housing policy can help households
access good housing
Housing policy must focus on two major areas
Expand the production of new houses to levels compatible with
the growing demand coming from the formation of
new households
Improve the quality of the existing housing stock
Eduardo Rojas
The Latin American experience indicates that
to attain these objectives, housing policy must:
Ensure that all segments of the population have access to housing
solutions according to their resources, needs and (if possible)
their preferences
Mobilise all the resources available to
individuals
households
community
Treat housing as a merit good not as an entitlement
households are primarily responsible for housing themselves
governments should help those households facing severe
difficulties in accessing adequate shelter
Eduardo Rojas
To reach this objective, housing policy must go beyond the
the individual house
In urban areas, the policy must even go beyond the neighbourhood
and confront the issues of adequate shelter as a city-wide
urban development policy concerns
In rural areas, the policy must focus on the needs of the community
as well as those of the individual households
Eduardo Rojas
• Housing policies cannot be implemented in isolation from other
development policies
–
–
–
–
Economic development
Income redistribution
Financial markets development
Urban development
Eduardo Rojas