access, affordability and quality of life€¦ · current approach: central govt. slum...
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Housing for all by 2022
Access, Affordability and
quality of life
A few suggestions
Rakesh Ranjan,
Adviser
Housing and Urban Affairs Division
Planning Commission, India
New Delhi, Dec 17, 2014
Housing is a
private good. Should
ordinarily supplied and
demanded through
Market.
1
Scheme of presentation
• Extent and nature of housing shortage
• Current approach and challenges
• Way forward
2
Extent of shortage
Types 2012
Million unit
Household living in non-serviceable Kutcha houses 0.99
Household living in obsolescent houses 2.27
Household living in congested houses requiring new
houses
14.99
Household in homeless condition 0.53
Total 18.78
Homeless
0.53 million
Exclusion error
Congestion: Married couples
Do not have
Separate rooms.
India has
more than
10 million
vacant houses
3
Urbanization Fact sheet
• Contrary to popular perception, so far rural migration has contributed just 20-22% in urban growth.
Source: Isher Ahluwalia HPEC Report (2011)
4
Urbanization: Structural imbalance: Implication
• One can reasonably expect large number of people moving out from
agriculture sector.
• A large number of urban dwellers are in unorganized sector and
affordability of shelter is of great importance.
5
Conclusion:1
• Housing shortage largely due to congestion factor.
• Homeless household 0.53 million.
• Rural urban migration may accelerate.
• Most demand in affordable housing segment.
Current approach and challenges
6
Responsibility of different layers of governments
• State subjects: ( Schedule 7 of the Constitution)
Provision of housing + Land
• Concurrent Subject
• Transfer of property other than agriculture land
• Registration of deeds and documents.
• Municipal subject ( 12th schedule of the Constitution)
• ‘Regulation of land use and construction of buildings’
• Slum rehabilitation
Central Govt: Model Legislation,
reforms, Target setting
Financial inclusion.
Central Govt:
Funds &
facilitator
Current Approach: Central Govt.
Slum Rehabilitation/shelter
Policy/ Model Legislation
Flow of credit
Affordable Housing
Central Govt part - funded
slum rehabilitation/shelter projects
Property
Rights
Subsidy for construction of
Affordable Housing
Rent
Control Act Pro Poor
reforms
5% interest subvention
on housing loan
Reforms Promote
PPP
Develop
Land Markets Planning
Reforms
8
Challenges
1-1.2 million D.U
JNNURM, RAY
Results Lessons to be learnt/ challenges
Major delay in
execution of project
Construction
led approach.
Reluctance to move
In situ rehabilitation is preferred.
Up fronting reform reduces readiness
of state Govts to take up projects
Land is an issue, required to
be sorted out through planning reforms.
Govt neither have the fund nor capacity
to directly address housing problem.
Construction led approach
Implied taking up very less
Number of slums at a time.
19 million x $ 8000
=
152 billion USD
9
Limitations
Interest subsidy
Based schemes
Didn’t work in past
Results Lessons to be learnt/ challenges
Should loan size be expanded
+ incentive to bank increased??
Bank employees face risk in
Sanctioning loans due to procedure
Conventional risk profiling
Is document based. Banks not interested
to provide loans to
Poorer households..
Housing finance
Companies
Found it unattractive..
Appetite for loan in poor
segment high. Default rate in this
segment is low.
10
Limitations
Scheme of Affordable
Housing in Partnership
Didn’t succeed
Results
Lessons to be learnt/ challenges
Land for affordable housing a constraint
Land for shelter required in busy
places. Shelter made away
from markets remained vacant.
People preferred slums. Ahmedabad
Median Income rose 2.7 times in 10 yr.
Slum population rose by 18%. Poor response to
shelter to homeless
Despite 75% of Capital
+ O&M charges available.
Central issue in supply side
intervention is to ensure
Availability of land.
11
Conclusion: 2
• An impressive array of programs.
• Results less than expected.
• Perceptible improvement in slums
• Demand and supply of affordable housing weak
• Land for affordable housing challenge
• Interest subvention scheme yet to take off.
Way forward
12
Different segments need different response.
Homeless + those too poor to participate in
housing market
Direct intervention by Government
Can participate in rental and ownership
based market with little bit of nudging
• Encourage affordable housing: Ensure cheap land
• interest based subvention • improvement in rental
markets
Middle+ HIG Group Also uses real estate as
investment
• Remove info. asymmetry • Improve rental laws
13
Rental Housing
India has 10 million+ vacant houses.
Owned by richer household: scarcity at low income end.
Only way to bring these houses to use is through rental markets.
Currently, Indian rental laws are loaded heavily in favor of tenants.
Resolution of property dispute through courts are expensive and time taking.
An oft repeated advice to an owner is to not to rent a house to a lawyer, police officer, politicians and
doctors.
Ministry constituted a task force: its recommendations need
considerations.
14
Securing land for affordable housing
Use less land
Reduce norms regarding
• Minimum area/unit
• Set back area etc.
Planning led reforms
Rationalise FSI
Earmarking of land
for affordable housing
Mixed land use pattern
Integrate land use & transport.
Work with markets while
deciding land use.
Transit Oriented Development: area close to Rly Station etc. may be
developed as centre of economic activity and affordable housing .
15
Transit oriented Development
Singapore
strategically
uses
high FSI
along
trunk
transport. 8
Singapore : variations in FSI are linked to the location
of metro stations and to the network of main streets
Coupled with strict policy on vehicle, handles congestion even if city roads are
narrow.
Source: World Bank
16
FSI and infrastructure: Manhattan
Manhattan
Granular FSI:
Plot to plot
variation for
efficient
landscape.
Economic efficiency,
municipality citizen’s interface
important in deciding land use.
Source: World Bank
17
FSI and infrastructure- Mumbai
Low FSI
with little
variation
rigid land use.
Citizens are
not consulted.
Granular FSI
variation needs a strong
administrative structure to prevent rent
seeking behaviour.
.
Source: World Bank
18
Energy intensity
• TOD reduces energy footprint.
Less trip, better ridership of public transport
Makes non-motorized transport viable.
• Discourage inefficient land use.
• Need a policy on encouraging local building material: Major role of Government in promoting innovation and affordable technology.
• Regulation regarding green technologies and conservation: especially MIG + HIG households.
•
19
Financing of Shelters
• Is money a constraint????
• Its not:
• Land based instruments
• Rentals
• Own savings of households.
20
Sources of finance
Government Private
Land/policy
based Budgetary
Land/policy
based Household
So far, subsidy through
Central budgetary support
Has dominated any discussion
On financing
JNNURM/RAY/IAY/AHP
RRY
Large potential to generate
Resources through
a) Land based instruments
b) Channelising individual
contribution
States reluctance to
take beneficiary contribution.
Singapore: + 70% through
Household.
21
Examples of land based instruments
• Govt Housing: New Moti Bagh, Delhi: Auctioned 4 acre land out of 144 acres. Has saving of Rs. 200+ cr.
• Govt Housing: East Kidwai nagar: Financed through advance lease money
• Gujarat affordable housing and slum rehabilitation Programme : Use of FSI + TDR.
22
Way forward
• RAY:
• Use Govt funds for improvement in basic services.
• Stop demolition and construction led approach
• Reconsider subsidy based govt housing. Promote rental housing.
Restructure interest subvention schemes:
• change risk profiling method
• Stop entering into retail loan market.
• Encourage finance companies through easy refinancing.
The key to address financing issues
is to address non-financial issues
23
Way forward
• Planning Related Reforms is key to success.
• Land is the main issue and Govt has a big responsibility.
• Integrated land and transport use policy.
• Earmark land for shelter & affordable housing.
• Rationalise standards.
• Develop land market and use land based financing instruments.
Housing for all 2022
Partnership between centre
and states a must.
24
People are aspiring for change. They need enabling environment to change their lot. Policy support is far cheaper and effective.
Thank You