Beating the housing finance conundrum

Despite the valiant efforts of our secretary for housing, we have failed by a long shot to meet our housing targets for the year. And the reason for this is beyond the capability of the housing sector: in a word, lack of affordability.

We have fallen into the housing finance conundrum: affordable houses are inadequate but adequate housing is unaffordable.

This is particularly true for those who are most in need of our housing assistance: the poorest 40 percent of family incomes. These are families who earn less than P500 a day, barely enough to cover daily necessities. With no assets to pledge, unable to borrow funds and therefore subject to usurious rates of borrowing to cover emergency needs.

Moreover, lack of legal security of tenure bars them from any kind of housing improvement loan. Thus they continue to occupy poor makeshift houses without critical basic services. In self-protection they have banded together to form slums.

Thus they fit the UN Habitat’s definition: A slum household is one who suffers from one or more of the following deprivations: 1. lack of access to improved water sources, 2. lack of access to improved sanitation facilities, 3. lack of sufficient living area, 4. lack of housing durability and 5. lack of security of tenure.

This definition in the same breath gives you the most welcome assistance desired by the urban poor: the removal of deprivations which endanger human life. It is also the most cost efficient and most welcome form of aid. It removes unhealthy and ugly slum elements and provides encouragement to slum dwellers for greater uplifting efforts to improve their surroundings.

UN Habitat believes that the failure to correct these deprivations constitutes a violation of the family’s right to a safe dwelling and peaceful existence – the bare minimum housing right they are entitled to as human beings.

If successfully implemented, the removal of the elements that created the slums will automatically remove the slum areas. This will result in similar upgrading of adjoining communities and development of support areas. The new mantra suggested: Don’t build unaffordable houses, instead make inadequate houses livable. Don’t build new homes, upgrade existing ones.

Indonesia’s elimination of slums

Our neighbor, Indonesia, has strongly adopted this position and decreed that the first priority of its housing program shall be the elimination of all slums. This is a major massive undertaking, considering the size of their problem: 3,236 slum locations, with 2,906,00 households in 37,407 hectares. The thinking is simple: eliminate the deprivations that constitute slums and you eliminate slums.

To quantify the cost of this massive undertaking, Indonesia has the advantage of complete data on the basic services to be supplied per year for the next five years: 800,000 households without potable water; 450,000 households without sanitation; 300,000 households with weak construction materials, etc;

Our proposed program

It is proposed that the housing assistance for the poorest 40 percent of family incomes be the provision of basic services instead of new housing construction. This includes potable water source, safe and easy access to homes and work places, adequate sanitation facilities, durable construction materials and adequate living space.

While we do not have comparative data like Indonesia, we have something better: a network of dedicated NGOs who have been working for over 20 years on housing for the urban poor through the Community Mortgage Program (CMP) and assisting informal settler families in presidential proclamation areas.

The first task for them will be to undertake a complete profiling of the basic services to be provided in the communities they are serving. To quantify the costs of the these, these NGOs will be assisted by government and private sector technicians. Following this will be determining the cost of such services and their funding source.

The proposed scale of this undertaking will require a complete re-thinking of the basic directions, operations and funding requirements of the CMP and the presidential proclamation issuances. To illustrate, the poorest 40 percent of urban families is five million, addressing this need over a 10-year period is 500,000 houses per year.

A massive program similar in intent, equal in scale but different in implementation is the DSWD Conditional Cash Transfer Program (Pantawid Pamilyang Pilipino Program). The equivalent conditions to their continued education for our housing upgrades must be studied.

In drafting the new program, two important features must be stressed: One, the most efficient and welcome housing assistance for the poorest 40 percent is not to build unaffordable houses but to upgrade their inadequate houses; and two, the numbers of upgraded, new, livable houses should be counted as the equivalent of new houses built, thus meeting our housing assistance targets.

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Teodoro Katigbak is chairman of Urban Poor Associates, Foundation for the Development of the Urban Poor and former head of the HUDCC.