Delivering more affordable housing through partnershipsKuala Lumpur

Michael Newey BSc FRICS FCIH MAHIRICS Vice President

Purposes and key message

To discuss the context for providing affordable homes

To share some comparative data on the UK and Australia

To explore the potential for more affordable housing delivery

Affordable housing provision is critical for a successful economy and community cohesion

Agenda

My experience

Rights to housing

Some Malaysian context

Housing and the economy

English and Australian comparisons

Housing realities

Development ideas and stories

PERSONAL CONTEXT FOR MY REMARKS

The “day job”

Social Enterprise Group in East Anglia

4,600 homes• Family, Singles,

Seniors

Building 150 new homes each year

Working with unemployed and

people with mental health conditions

£22 m rent turnover• RM 107 million

£129 m debt• RM 627 million

Australian experiences 2008/9

Seconded for three months as Special Adviser to the Minister of Housing for the State of Victoria

Increasing the supply of community housing

MACRO CONTEXT – THE BIGGER PICTURE!

Rights to housing

Article 25 Universal Declaration of Human Rights

“EVERYONE has the right to a standard of living adequate for the HEALTH AND WELLBEING of himself and his family, including food, clothing, HOUSING and medical care and necessary social services”

International Covenant on Economic, Social and Cultural Rights

Adopted by United Nations General Assembly in 1966

Article 11 – the right to an adequate standard of living

“the right to live somewhere in security, peace and dignity”

"adequate privacy, adequate space, adequate security, adequate lighting and ventilation, adequate basic infrastructure and adequate location with regard to work and basic facilities - all at a reasonable cost."

Housing rights in the UK

Rights to assistance

• Legally eligible• Homeless

Rights to temporary housing

• Priority need

Rights to settled accommodation

• Municipal or Registered Social Landlord

Housing rights in Victoria, Australia

A safety net – not a preferred option

• Income• Circumstances

No intrinsic right to housing

But protections for vulnerable people ...

Public housing via waiting lists

Signposting to other landlords

SOME MALAYSIAN CONTEXT

Malaysian Quality of Life 1999

“encompassing personal advancements, a healthy lifestyle, access and freedom to pursue knowledge and a standard of living which surpasses the fulfilment of the basic needs of individuals and their physiological needs, to achieve a level of social well-being compatible with the nation’s aspiration”

Source: Economic Planning Unit, Prime Minister’s Dept. Malaysia

MQLI – Housing Indicators

Average price of medium and low cost homes to per capita income

% Low Cost Housing Units to Total Low Income Households

% Housing Units with piped water

% Housing Units with electricity

Housing aims within the 10th Malaysia Plan

Ensuring access to quality and affordable housing

• Meeting the needs of a growing population by matching demand and supply for affordable housing and promoting an efficient, healthy and sustainable housing industry

Initiative 61 – Centrally guided

• Promoting high quality, inclusive and sustainable housing development

10 MP Housing targets

78,000 new affordable homes

• 38,950 People’s Housing Programme

• 39,050 Ministry of Rural and Regional Development

RM 500 Million

• Repairs and maintenance of public and private low cost housing

10 MP Initiatives

50,000 units of new / rehabilitated houses for urban and hardcore poor

Assisting home ownership•44,000 existing units through KL City Hall and National Housing Dept.

Financial assistance for initial deposits, legal fees and low interest loans for low income households who are not recipients of public low cost houses

Relevant National Housing Policy Statements

NHP 2.2•Setting the quality standards and minimum housing specifications

NHP 4.1•Setting prices for low cost houses as well as controlling ownership and sales to avoid speculation

NHP 4.2•Setting a realistic rental rate for low cost houses

Published housing need in Malaysia

30 June 2010

• 90,282 squatter families

1 Jan 2009 – 31 August 2010

• 20,426 applicants for low cost home ownership or renting

HOUSING AND THE ECONOMY

Economic success and effective housing

“An economy’s stock of knowledge, talent and creativity determines its ability to increase productivity, innovate and sustain growth”

Romer P (1990) ‘Human capital and growth: theory and evidence’

“Providing a well managed offer and paying careful regard to the type of ‘mix’ - in terms of housing tenure, type, size and quality – will be key to attracting different types of workers.”

Centre for Cities research report 2008

Housing and the economy

Labour mobility

• Access to housing associated with employment hubs

Educational achievement

• Links between good housing and qualifications

Health outcomes

• Lost labour days / productivity• Health costs

UK Construction Industry

£91 billion of UK GDP in 2008

1.5 million jobs in 2008

£1 spent on construction output generates £2.09 in total economic activity

Leverage on public investment - £1 releases £3.51

Housing development IS economic development

Source: ONS and UK Contractors Group

Source: Shelter UK /ONS

Public Capital Investment&

Leveraged Private Capital Investment

National Economic Output

New Homes

Construction Employment

Financial Inputs

Economic & Social Outputs

Housing and employees

Link between availability of workers and adequate housing

Clear link between urbanisation and economic development

Need to stimulate housing supply in areas of economic growth

Rented housing promotes mobility of labourOwned housing supports neighbourhood investment

Population distribution in Asia by area of residence (2000)

Urban Millions %> 10 million 142 10.4 5 – 10 m 91 6.71 – 5 m 307 22.40.5 – 1 m 149 10.9< 0.5 m 678 49.6Total Urban 1,367 100Total Rural 2,313Total 3,680

Source: UN Population Division, World Urbanisation Prospects 2003

Urbanisation is not all mega cities

SOME COMPARATIVE STORIES

Housing Tenures in UK and Australia

Owner occupiers Private Rented Social / Public0%

10%

20%

30%

40%

50%

60%

70%

80%70%

12%18%

72%

23%

5%

Comparative tenures

English housing Australian Housing

Key reasons for differences

AUSTRALIA• 80% public• 20% community

Home ownership dream

Significant PRS

Residual social rented sector

ENGLAND (AND UK)• Owned outright• Mortgage• Shared ownership (social and private house builders)

Still significant social sector

Largely amateur private rented sector

Ownership – tenure of choice

“Welfare” housing in the UK

Drivers

• Home ownership dream• Extreme house price inflation

• Increasing unaffordability• Escalating need

Provision

• Municipalities and not for profit organisations• Rented and Low Cost ownership• Reduced supply due to right to buy

Low Cost Home Ownership

Static rented supply

Growing intermediate

House price inflation is not just a UK problem ...

Some key lessons from UK and Victoria

Lack of supply of properties and over supply of mortgage debt fuels unrealistic house price inflation (HPI)

Growth in land values underpin HPI and determine viability

Need to match supply of housing with economic activity to prevent ghettos of worklessness

Government has a key enabling role

HOUSING REALITIES

Perhaps stating the obvious ...

The reality of urban informal settlements when housing costs are prohibitive

• Everyone needs somewhere to live• Slums and squatter settlements inevitable without

adequate supply

UN Habitat – “Slum” definition

• Security of tenure• Structural quality and durability• Access to improved water• Access to improved sanitation• Sufficient living area

Lack of one or more of the following:-

Enabling Housing Strategies

Essential partnerships

• Government has to help provide what others cannot• Infrastructure and land?

• Low income families should be encouraged to save and invest

• Non governmental organisations can develop community organisations

• Private sector partners can act as investors, landlords, and developers especially to lower middle income households

Clear tariffs / contributions

• Developers and land owners need clarity on expectations in advance

ADDRESSING LOWER MIDDLE INCOME HOUSING RELIEVES PRESSURE ON BOTH PUBLIC HOUSING AND INFORMAL HOUSING

DEVELOPMENT DRIVERS

Employer roles – examples from the past

George and Richard Cadbury in late 19th century

Originally housing for their factory workers, now a “normal” housing association

Initially houses sold to low income workers on 999 year leases – now more rented

Another Victorian Employer – model industrial housing

William Hesketh Lever

To house staff from his soap factory

800 buildings built – 250 remain in charitable ownership

Motivations

• Health and availability of factory workers• Stability of the workforce• Morality

Potential for modern day Cadburys and Levers

Tied housing attached to

employment?

Charity starts at home?

Employers building decent culturally

appropriate homes adjacent or near factories

etc?

Meeting Corporate Social Responsibility

objectives

Section 106 in England – enforced partnerships?

Planning obligations authorised by the Town and Country Planning Act 1990

Agreed percentage of speculative development to be affordable housing

Schemes larger than 15 dwellings or larger than 0.5 hectares• Rented• Shared ownership

Affordable includes:

Housing equity – investment and CSR?

Developers retaining ownership of affordable rented homes

• Third party or in-house management• Subsidiary structures

Financial institutions funding NGOs

• Near cost finance• Corporate Social Responsibility• UK – Aviva about to launch a fund

Brief conclusions

Developing societies and vibrant economies need ...

• Effective housing ladders• Equitable housing solutions• Reduced marginalisation

Not just a government problem, but an opportunity to not only exercise Social Responsibility, but also long term investment