housing tenure for the urban poor

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Housing Tenure for the Urban Poor : A Case Study of Mumbai City

Gaurang DesaiUniversity of Western Sydney

22 June 2007Email : [email protected]



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SummaryA. Mumbai City and Context

B. Impact of regulations on real estate markets and land/ housing affordability – Topography & FSI Ratios – Urban Land Ceiling Act (ULCA) and Rent Control Act (RCA) – Coastal Regulation Zone (CRZ) – Housing Finance and the poor

A. Response from the poor – Squatter and slum settlements - Non formal, multiple and opaque tenure

• Social and economic networks• Flexible budgets and Incremental Building• Housing quality – contextual to owner

A. Government response – Conferring ownership: – Targeted housing finance schemes – Dictated by opaque tenures, investment scale and need for private participation – Special housing projects for the poor (PPP housing, sites and services)

A. Possible Effects of tenure and identification of other solutions



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Mumbai City: Economic powerhouse of India• Commercial capital and economicgrowth engine of India.

Diversified economic base - value-added manufacturing, finance andsoftware services.

Reserve Bank of India and the twolargest stock exchanges, the BombayStock Exchange and the National Stock Exchange located here.

Accounts for 1/10th of factoryemployment and value-addedmanufacturing

Mumbai Port handles more than one-third of the total value of foreign trade

Mumbai Muncipal Corporation one of the richest, with a budget of more than

USD 1.2 billion (Rakesh Mohan, 2003)



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Migration and Population Growth

•Mumbai Metropolitan Region (MMR) is the

fastest growing regions of India.

Population increased from 7.7 million in 1971to 18.3 million in 2001 (Source: Census of India)

Projected to increase to 22.4 million by 2011

(Source: MMRDA)

(Image Source: MMRDA 1999, pg 18)



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Real Estate & Housing Affordability•Within a radius of 25 km from the city center,sea and water bodies occupy:66% of the total area for Mumbai

22% in the case of Jakarta and,5% for Seoul. (Source: Bertaud, 2002)

Extreme topography compensation by liberalizingFloor Space Index (FSI)

(Image Source: Bertaud, 2004)



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Impact of Regulations on Land Use & DensityFSI in Mumbai city - 1.33 and 1.00 in the suburbs.Most large cities varies from 5 to 15 in the CentralBusiness District (CBD) to about 0.5, in the

suburbs. Urban Land Ceiling Act (ULCA) and the RentControl Act (RCA) eliminate mechanisms for discovering efficient land use.

ULCA caps the amount of land that can beaccumulated or transferred by the private sector.• Large tracts of land frozen due to lengthy legaldisputes• Lack of economies of scale

RCA to protect tenants from arbitrary andexorbitant rents.• Depresses supply of new space as buildingsunder the act restricted from redevelopment or renovation.• Tenants pay rents as low as 1/100th the normalrents - disincentive to move, restricting dev



7(Image Source: Bertaud, 2002)

Impact of Regulations on Land Supply



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Housing Finance: Policy Mismatch

Housing Finance companies require: • Secure tenure as collateral

• Minimum monthly income (30% of hholdincome)• Require completion of dwelling• Equated Monthly Instalments• Large loans with longer duration

Urban Poor have no clear title and build:• Have flexible monthly budgets due toflexible incomes• Incrementally• Hesitant to take on debt.•Differing values on housing quality

Urban Poor require:• Smaller loans with shorter term for loans• Interest rates irrelevant• Flexible repayments



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Housing response by the poor

Squatter and slum Settlements:• Incremental development• Social and economic networks• Sustenance landlordism and rental tenure• Non formal and opaque tenure



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Government response

Major policy Drivers:• Global campaign for secure tenure• National Housing and Habitat Policy 1998• Belief that ownership facilitates integration of market forces,• Results in a more efficient land use and,• Provides incentives for the upkeep and maintenance of environs.

Problem Areas in Implementing secure tenure for poor:• Coexistence of multiple competing tenures including non-formal and legal tenure:

• Rental, Leasehold, Freehold• Non-formal tenure – squatting and slums• Collective forms of tenure – Communal

• Layered governance responsibilities – National, State and Local•

Required Investments – Rs 1,51,000 crores• Government capable of providing only 25% (Source – Planning Commission, Ninth Five year plan 1997-2002)

• Negative connotations to landlordism

Government approach:• Formalising housing and land tenure in slums

• Sites and services; Permanent Housing• Refinancing at 2% discount for Housing finance companies lending to poor.

“…the right to adequate housing has been recognized as an important component of theright to an adequate standard of living” Habitat Agenda, Paragraph 61



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Possible effects of conferring ownership

• May render large proportion of tenanted residents homeless• Increase land and home values and consequently rents• Lack of data makes outcomes unpredictable-unpredictability cannot be controlled• Downward raiding of slums and squatter houses – no security for poor • May not improve tax revenues as conferring ownership may encourage defaulters• Access to housing finance may not improve – Eligibility for Incomes and not assets



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housing tenure for the urban poor

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