Affordable housing is a term often conflated with social housing; generally it means housing for the bottom 40 percentile of income groups, that is, for all those with incomes that are 80 per cent or less of the median income. So it covers not only the very poor but also the not so poor, reaching upwards into the lower middle classes.
An important fact to keep in mind is that if you belong to this bottom 40 per cent of the population, you might prefer rental, if available, to ownership. It gives you greater mobility. If you get a much better job in some other corner of the city you can decide to move to be closer to work. And rent is a known commitment, unlike ownership where you can be struck by sudden and large demands for repair.
We must also recognise that rental housing for the poor has to be distributed throughout the city. This is because low-income jobs, which are often of a kind that service a local population, are distributed, like the population, all over the city, and transport from home to work for the poor needs to be minimised, ideally to walking distance, not only to save money but also time because they often work longer hours than most.
A second reason for scattering low-income housing all over the city is that you get social inclusion, and this makes for a more peaceful and well adjusted society, in contrast to an urban structure of gated communities with ghettos for the poor. These inevitably result in accentuated hostility.
There will always be both rich and poor in a city, with minimal interaction between them. But if all public space is shared there is, however trivial it may be, a shared commonality that engenders compassion and sympathy. In that sense it is no different from the Kumbh Mela, or pilgrimages to Sabarimalai or the Haj.
How do you get low-income housing, with low-income rentals, in the heart of higher income localities? If you are not providing social housing, as most countries are not, with the notable exception of Singapore, then the only way to do this is to mandate inclusionary housing. This is done all over the world. France in fact requires the lowest level of government, more or less Ward by Ward, to ensure that a specific fraction of the housing in that Ward is for the poor.
It is unrealistic to expect that such housing will be delivered by the market. It has to be mandated by Government; either that, or Government itself must undertake construction of social housing. Mandating requires each developer to provide, on the plot he is developing, inclusionary housing for lower-income groups as a corollary to the for-sale development. In principle it is very similar to requiring that servants’ quarters be provided within the same compound when building a bungalow. Notice incidentally that the rental paid by the occupants of the servants’ quarters is linked to their income, and not priced at the same rate per square foot as the bungalow.
The cost of constructing such inclusionary housing is reimbursed to the developer. He is consequently not out of pocket on that account. Moreover, the inclusionary housing work can be supervised and quality demanded because it is being paid for. The only thing the developer gives up is a portion of the land for that housing, without charge, but this is the condition on which he is getting permission for the rest of his development. In most countries the proportion of inclusionary housing to be provided (also called social or affordable housing) is 25 per cent of the total units in the development. In Spain it is much more—50 per cent of the project area has to be devoted to social purposes, including social housing.
It is obvious that no developer in the country likes his country’s policy of inclusionary housing. For them it may be unpopular, just as Income Tax is unpopular, but it is necessary in the wider public interest. The end result of a policy of inclusionary housing is that it is built, across the city, wherever construction happens, with the cost of the underlying land taken out of the equation altogether. Once the cost of land is excluded the housing built on it can be made affordable, and it can be differentially priced according to the particular income group it caters to.
Another policy that has proven very successful in the United States is Low-Income Housing Tax Credits (LIHTC, pronounced lie-tec), where over a period of almost 30 years two million homes have been built. This is a centrally funded scheme that gives a deduction in income tax of the amount invested in low-income housing; not a deductible expense but an actual cut in the amount of income tax payable (equivalent, more or less, to a tax-deductible expense of 133 per cent).
In all its recently announced programs and policies our Central Government nowhere mentions either inclusionary housing or LIHTC. Neither is on the horizon. It cannot be that Government is not aware of these options, and the success they have had in other countries. Nor is there any suggestion of introducing housing vouchers, on the lines of those provided in the US to low-income families, which can only be used towards paying for rental.
So how can we conclude otherwise than to say that in regard to affordable housing Government is not really serious about achieving its declared objectives? It all sounds like sloganeering at its best, or the construction of an elaborate mirage, with no real intention of delivering results.
Points to ponder
|Rental housing for the poor has to be distributed throughout the city. Similarly, transport from home to work for them needs to be minimised, ideally to walking distance.
|You get social inclusion, and this makes for a more peaceful and well adjusted society, in contrast to an urban structure of gated communities with ghettos for the poor.
|If you are not providing social housing, as most countries are not, with the notable exception of Singapore, then the only way to do this is to mandate inclusionary housing.
|The end result of a policy of inclusionary housing is that it is built, across the city, wherever construction happens.
About The Author
A graduate in Mechanical Sciences from the University of Cambridge, Shirish B Patel's interests extend beyond civil engineering into the engineering design of public works, urban planning and urban affairs, solar energy research, and software development. He founded Shirish Patel & Associates in 1960 which has designed a number of innovative structures for the first time in India. Its projects include the Kemp's Corner Flyover and the large panel prefabricated buildings of Petit Hall in Mumbai, the Yelahanka factory for Larsen & Toubro in Bangalore, the Panval Nadi bridge near Ratnagiri for Konkan Railway, the arched foot overbridge at Juinagar in Navi Mumbai, and the headquarters building for ECC in Chennai which won an FIP Award, among others. He was one of the three original authors to suggest the idea of Navi Mumbai in 1965. He served in the Maharashtra government as Director of Planning & Works for the first five years of the project.