Housing Policy – Mortgage Finance – Microfinance for Housing – Land Policy and Administration
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| || Urban housing in Tblisi, Georgia. |
The right to adequate housing, like the right to clean water and sanitation, is recognized by governments worldwide. However, many countries, especially the poorest, fall short in delivering these basic needs, and the growth of slums is an increasing scourge for many cities. Shelter is a multi-faceted good, with delivery dependent on enabling frameworks supporting access to land, tenure security, housing finance suitable for the poor as well as middle income households, and well-targeted subsidy policies.
Housing Policy: Experience worldwide has shown that comprehensive housing policies are difficult to design, difficult to implement, and difficult to afford. The consequences include lack of forward planning for land, infrastructure, and tenure, resulting in further growth in squatting and slums. In addition, housing subsidies are notoriously difficult to craft, and can create as many problems as they solve. Examples include poorly targeted subsidies, poorly managed and crumbing high rise structures, interest rate subsidies resulting in disincentives for expansion of housing funding at commercial rates, and costly supply-side subsidies.
UI has helped government develop sector-wide policy roadmaps; encouraged real estate groups to develop private sector information systems in order to compliment government data; assisted with legal frameworks for condominium management, and developed slum upgrading strategies which combine community organization and housing microfinance with public subsidies. UI has also provided technical assistance in international best practice for housing subsidies for both renter and owner housing.
Mortgage Finance: Developing a mature and growing mortgage finance sector is of major importance to growth of both the housing market and the financial sector, and thereby the macro-economy. First and foremost, effective mortgage finance requires a sound legal framework. In addition, assistance with liquidity, regulation, loan products, and credit enhancements are needed.
UI has broad experience with assessing the legal, regulatory and institutional framework for mortgage finance, and with drafting legislation and model transactional documents. We have specialized expertise in the areas of loan recovery and foreclosure, registration of title and mortgage, condominium law issues, and financing for multifamily construction. UI has also developed strategies for primary and secondary market development, including liquidity facilities, and mortgage default insurance. Advising on the role of government-owned lenders and housing banks is also crucial to assure that such institutions do not undercut the growth and market competitiveness needed for an effective system.
Microfinance for Housing: Poorer households, especially those with variable and/or informal sector income, generally do not quality for formal mortgage finance. They can be excellent customers, however, with specially-designed, short-term loan products. Housing microfinance is a growing product line among microfinance lenders, as well as among housing-focused NGOs. Help is needed, however, to expand awareness of housing microfinance, structure it to grow with increased commercially-based funding, and provide credit enhancements to encourage this commercial participation.
The Urban Institute has been at the forefront in developing awareness of housing microfinance, and assisted various low income lenders in improving their scale. UI is also developing schemes combining a full complement of activities needed to address slum upgrading: this combines housing microfinance with community organization, tenure security, credit enhancement schemes, and government subsidies to address infrastructure and assistance with housing.
Land Policy and Administration: Secure tenure is required for good housing policy and for development of the housing finance sector. Clear property rights are critical to economic development and social stability, and one of the key elements of the underlying legal framework that supports the housing sector. In order to protect the property rights of homeowners and lenders, the property registration system must be effectively managed so that it is efficient, transparent, accurate and comprehensive.
Urban Institute has world-wide experience in improving property rights, security of tenure, and property registration systems. Projects include assessment of conditions in relevant sectors, and development and implementation long-term interventions, including drafting or amending laws and regulations, and improvement of institutional arrangements and procedures for land administration.