International Conference on Growth with Stability in Affordable Housing Markets 

ACCESS TO LAND AND HOUSING FINANCE FOR THE URBAN POOR

Technical Session IV: Urban Planning imperative for Affordable Housing 

Michael Slingsby – Urban Poverty Consultant

Discussion on three topics 

1.Improving the management of land and assets already owned by government 2.The provision of rental accommodation in urban areas 3.Financial instruments for incremental and new housing for the urban poor

CURRENT SCENARIO

Urban growth and urban poverty•One third to half of urban growth is increase in population

already living in the city•In Indian cities, urban poor represent 35% of the population

and live on 5% of the land•Slum dwellers are very efficient users of urban land•Focus on improvement of existing slums through upgrading

or redevelopment•Little attention to access to land and housing for the urban

poor in the future•Range of appropriate interventions that bring about mobility

in the housing market for the urban poor•Affordable interventions including rental housing

1. Improving the management of land and assets already owned by government 

•Large areas of land in government ownership – state, ULB

and central government agencies•In UK land owned by railways redeveloped and raised huge

funds in both income and capital•Land for housing (marshalling yards) and stations for

commercial development•Government land used to raise capital and to provide land

for housing and plotted development•Move from urban administration (implementation of

schemes) to urban management (setting strategic objectives

for management of resources and targets for measuring

success)

• 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 others

• Questions?• Is it fit for purpose to deliver the services required• If property no longer required for operational or

investment purposes it is sold according to government guidelines

• Challenge 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 person• Publicising analysis of land a property holdings to

create comparison and competition between urban local bodies

Old ideas that still work for provision of land for

urban poor•Sites and services schemes

•Seen as unsuccessful because not large enough, captured

by better off because of high security of tenure

•World Bank Madras (Chennai) delivered 30,000 plots for

EWS and made impact on local market

•Very poor did not benefit due to construction of core houses

•Captured by better off later on because of lack of supply

•City Improvement Trusts delivered serviced plots of land

•Incremental development scheme in Hyderabad, Sind

supported organised squatting

Arunmbakkam Chennai sites and services scheme

Mogappair sites and services scheme Chennai

2. Provision of rental accommodation in urban areas• A large percentage of urban poor families live in rented

accommodation both within slums and outside slums NSSO survey about 35% Figures for Surat, 36% and Bangalore, 55% renters• Traditional response was Mumbai chawls

Rental Housing

•Many Asian cities have private sector financed and

constructed purpose built rental room blocks

•Largely absent in India

•Often serviced single rooms suitable for single migrants

•High percentage of rooms/houses rented in slumRented rooms in houses are large source of cheap accommodation

• a safety net against uncertain employment

• meeting household expenditure

• funding housing improvements

• a regular source of income when moving from

waged employment to business

• pension after retirement.

Constraints to increase in rental accommodation

•Negative government legislation

•Property tax and rent control

•Planning and building regulations

•Incentives to

• Encourage renting of rooms in existing houses

• Adding rooms with access to separate

kitchens/bathrooms

•Encouraging construction of rental room blocks with

common or individual sanitation facilities

3. Financial instruments for incremental and new housing for the urban poor

4. Majority of urban poor families build houses incrementally and raise funds from their own resources

5. They do not have access to formal finance6. Increase ability to pay by renting part of house and

more family members working7. Sell family assets such as gold to raise capital8. Majority of households with incomes below Rs 8,000 per month are daily wage labourers or self employed• Incomes are largely undocumented and maybe

subject to seasonal fluctuations• Little penetration of financial services on an

individual basis except for short-term productive or non productive purposes• High transaction costs discourage entry into this sector

of the market

Labour and self employed constitute a large part of the excluded households

25% of households

50% of households

75% of households

Least cost affordable home in the market

~ Rs 4 Lakhs

Data Source: NSSO Expenditure Survey, 2010, NCAER How India Earns, Spends and Saves, 2007

• Many urban poor families building incrementally

• They use savings and money from relatives and friends

as well as in this case

• Borrow from a money lender at 10% PER MONTH

and pay

• Rs 1,000 bribe to policeman to “allow” the construction

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 eviction

• 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 include 

•  Thailand’s Community Organisation Development Institute fund

• The Philippines Community Mortgage Programme 

• Cambodia’s Urban Poor Development Fund • Community savings and loans programmes have been established in a number of countries in the region • Some mature enough to lend to communities for housing and land purchase.

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 funds

• Rate of interest depends on purpose of loan• Housing 2% (subsidised) , business 4%; revolving funds 6%

• End user pays 6-8% for housing loans

• Ceiling 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.

Number of houses : 90

Tenure terms : Cooperative land ownership

CODI land loan : US$328,570

Infrastructure subsidy : US$128,570

CODI housing loans : $262,900

Klong Lat Paa Chi Community, Thonburi

Klong Bang Bua3,400 households in 13 communities

1 m. govt 2 m people

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: $2-3 per month, per unit (depending on unit size).Infrastructure costs : US$ 377,150 CODI housing loans : US$ 2.14 m (2007 figures)

• Welfare houses for the destitute• Rental rooms for existing renters

THE PHILIPPINES COMMUNITY MORTGAGE PROGRAMME

• Beneficiaries organised into a community association with minimum of 30 and maximum of 250 members

• Average 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.

• 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.

URBAN POOR DEVELOPMENT FUND (UPDF), CAMBODIATotal 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 6 - 12%).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.

Mittapheap community, Phnom Penh

• 137 houses in Khan Toulkork

• Upgrading 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.

COMMUNITY SAVINGS

Country Coverage Members Savings

Thailand 3,000 urban communities in 225 cities

1.5 million members US$ 44 million

Cambodia 319 communities in Phnom Penh and 12 provincial towns

15,460 members US$240,000

Philippines 26 cities 47,930 members US$ 1.4 million

Nepal 287 communities 6,710 members US$600,000

Vietnam 1,670 communities in 8 cities

29,600 members US$ 974,000

Sri Lanka(Women’s’Bank)

22 cities 50,000 members US$9.09 million

Source: Asian Coalition for Housing Rights“Savings + Funds” ACHR Newsletter, November 2007

ISSUES

• What 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 risks

• City level urban poor development funds bring together money from communities, local government, NGOs and donors

THE ENDING