Delivering more affordable housing through partnerships Kuala Lumpur Michael Newey BSc FRICS FCIH MAHI RICS Vice President
Aug 19, 2015
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