housing policies* - world bankpubdocs.worldbank.org/en/...bank-housing-lmt-low.pdfincentives for...

Housing Policies**that save (and improve) lives, protect assets and shield economies

Luis Triveñ[email protected]

Housing Policies

THE DREAM OF OWNING YOUR OWN HOME

Housing Policies

THE DREAM OF LIVING IN THE CITY

Housing Policies

THE DREAM OF MAKING ENDS MEET

Housing Policies

THE DREAM OF LIVING WITH DIGNITY

Housing Policies

THE DREAM THAT TURNS INTO A NIGHTMARE

Housing Policies

The Facts

World housing gap:

US$ 900 billion - 1.1 trillion per year(without land). US$ 1.6 trillion (including land).

World infrastructure gap:

US$ 800 billion per year

Housing Policies | The Facts


81%of housing price increases explained by rising land prices.


- Regulation. (eg. land use, zoning, building codes, competition, consumer protection, financial supervision).

- Credit promotion. (eg. through mortgage banks, second-tier banks, guarantee funds and deposit insurance).

- Direct Financing. (eg. through national housing funds or provident funds).

- Insurance against mortgage default. (eg. Collateral and other risk enhancers for the

securitization of mortgages).

- Demand Subsidies. (eg. to increase affordability for homeownership or rental and for encouraging home

improvement).

- Reconstruction, etc.

Role of the State, –with or without natural disasters:


Does not have a

housing problem.

Can purchase formal

housing with a mortgage.

Can purchase formal housing

with a mortgage and government

subsidy.

Live in informal and/or low-quality

housing.


98%of the budget allocated to housing policies is used for housing purchase subsidies.


Can purchase a home with a

bank mortgage.

Can purchase a home with a mortgage and

government subsidy.

The bias toward the promotion of new housing can end up benefiting a segment of the population that does not need government help.

>30x Each year, households invest

what the government invests in housing.


50% - 90%The home represents between

of a family’s assets.


80%of the years of life lost to natural disasters are concentrated in low -and middle- income countries


4%60%

percent of natural disasters are earthquakes.

of deaths from natural disasters are caused by earthquakes.


>40% of the damage and private losses from earthquakes are concentrated in housing.

Haití [2010] M 7.0° Cost: US$ 8.8 billion.Chile [2010] M 8.8° Cost: US$ 32.6 billion.Ecuador [2016] M 7.8° Cost: US$ 3.3 billion.


>4xReconstruction costs

what prevention costs.The bill is paid by the government.


- a matter of life and death;- families’ most important, and sometimes only, asset.

- a source of economic instability.

Poor-quality housing is:


Housing Policies

Resilient Retrofit of (Informal) Housing

Is it affordable?Is it technically feasible?

Is it scalable?Can it be financed with a combination of public and private

funding?Can it be combined with additional home improvements

that enhance the quality of life of families?Can it be combined with a program of formalization of

informal constructions?

Housing Policies | Resilient Retrofit of (Informal) Housing

Key components

1. Housing Triage.

2. Affordable structural strengthening solutions.

3. Redesign of home improvement subsidies.

4. Incentives for households and microfinance institutions to invest in additional improvements.

5. Regularization of informal constructions for land owners who invest in the structural strengthening of their homes.


1. Housing Triage.

Types of housing in the City of Guatemala, Guatemala

Types of housing in Yogyakarta, Indonesia


1 floor, confined masonry with a lightweight roof

36% 1 floor, confined masonry with a sturdy roof

32% 2 floors, confined masonry with a lightweight roof

17% 2 floors, confined masonry with a sturdy roof

15%

Unreinforced masonry34% 1 floor, confined

masonry42% 2 floors, confined masonry21% 1 floor wood

frame3%


Cost of structural strengthening in the City of Guatemala, Guatemala

Cost of structural strengthening in Yogyakarta, Indonesia


1 floor, confined masonry with a lightweight roof

US$ 4,000

1 floor, confined masonry with a sturdy roof

US$ 1,900

2 floors, confined masonry with a lightweight roof

US$ 3,400

2 floors, confined masonry with a sturdy roof

US$ 3,300

US$ 3,150

Unreinforced masonry

US$ 2,900

1 floor, confined masonry

US$ 1,950

2 floors, confined masonry

US$ 3,900

1 floor wood frame


Cost of structural strengthening in the United States


US$ 4,000 - US$ 5,000Between 1% and 3% of the initial value of the structure:


Nepal



Haiti



Guatemala



The incremental process of housing construction


1980 1990

Change of job

2010

Income

BedroomsFamily


COLOMBIA

- Construction of new housing (266,800) is very close to the creation of new households (282,600).

- Cost of the Free Housing Program = US$ 1.5 billion.

- 1999-2016 = 30,376 emergencies, 1.6 million houses damaged and lost, estimated cost = US$ 5.6 billion.

- 87 percent of houses are exposed to seismic risks.


3. Redesign of housing improvement subsidies.

COLOMBIA

- Structural reinforcement subsidy = US$ 2,890.

- 60 participants, 62 requirements, 117 steps in 705 days.

- 12,732 structural reinforcement subsidies, out of a total of 504,507 housing solutions.

- Regular inspections replace construction licenses (1 floor).

- No link to formalization and microfinance.


4. Incentives for households and microfinance institutionsto invest in additional improvements.


4. Incentives for households and microfinance institutionsto invest in additional improvements.


Home improvements or expansions requested by households:

- Improvement of ventilation, bathrooms, kitchens, windows, interior partitions, natural light and electrical systems.

- Improvement of the roof to make it more resistant to earthquakes and waterproof.

- Vertical expansion.

5. Regularization of informal constructions.


Occupantwith formal

title

Earthquake proof housing

NON-earthquake proof housing

Can beStrengthened

CANNOT be Strengthened

Can beStrengthened


Can beStrengthened


Pending (for the passage of time to resolve the title issue)

Relocation

Formalization + Improvement

Relocation, or demolition and construction of new housing

Relocation, or demolition and construction of new housing

Improvement (rooms, additional bathroom, etc.)

Earthquake proof housing



Vivienda NOsismo resistente

Occupant with tenancy that can be formalized

Legal Condition of the Housing

Unit

Occupantwith tenancy that CANNOTbe formalized



Housing Policies

The Time to Act

Housing Policies | El momento de actuar

NOW

Housing Policies | Time to Act

The 10 natural disasters causing the most property damages and losses have occurred

since 2005.


- The chance of being involved in a traffic accident on each trip you make is 1 in 100,000.

- Over a period of 50 years, the chance of being involved in a traffic accident is 1 in 3.

- The chance that a home will be affected by flooding this year is 1 in 100.

- Over a period of 25 years, the likelihood of being affected by flooding is 1 in 5.


- Save (and improve) lives and help close the housing gap.

- Combine public and private investment to protect assets and improve the housing stock.

- Shield economies against the risk of disasters at a fraction of the cost.

Housing Policies can:

Housing Policies

THANK YOU!REFERENCES: This presentation was prepared by way of illustration based on the results of the Knowledge Management Product “Resilient Retrofit of Informal Housing,” produced by the World Bank. The information presented was obtained from sources that are considered reliable and are available upon request. Photo Credits: Build Change, Xavier Conesa, Shutterstock.

Housing Policies

Luis Triveñ[email protected]

housing policies* - world bankpubdocs.worldbank.org/en/...bank-housing-lmt-low.pdfincentives for...

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