News & Events

Malta News - 16/10/2014

Budget on social housing – please give generously



Author: Samuel Alonso
Published on the Malta Today, 16 October 2014

social housingThe creation of the welfare state and provision of social housing are both arms of the same political body which is prevalent in modern industrialized countries where, over the years, they devised plans to subsidize housing tenements to be offered for rent or for sale either by the state, non-profit-making organizations, or a combination of the two, usually with the end goal of facilitating access to affordable housing in the lower-income earning demographic of a given population.

Social housing programmes are not a novel concept and we can see many examples around the world. In Europe one can highlight the case of the Netherlands, where in many cities such as Amsterdam, The Hague, Rotterdam and Utrecht social housing is a statistic that approaches or even exceeds 50%. These types of habitats are known there as ‘huurwoningen sociale’, literally translated ‘social rental housing’. Another successful example in Europe is Catalonia in Spain. Here there is a programme for the housing rights of 2009-2012, in which the public housing policy and promotion of the rehabilitation of buildings is encouraged. The opposition leader in UK, Ed Miliband, if elected next year wants to reach his target of 200,000 homes by inducing a major expansion of council housing, noting that his Labour party has promised to “simplify rules surrounding the Housing Revenue Account to give local authorities more flexibility in how existing public funding is spent”.
It is good to read that the Chartered Institute of Housing estimates that raising the caps by £7bn could enable the construction of 60,000 homes over the next five years, creating 23,500 jobs and adding £5.6bn to the British economy.
Is the opposition leader in UK trying to copy the example of France, where more than half of new homes are constructed by their owners? Crossing continents we can also highlight the success had by social housing programmes in the case of Minha Casa Minha Vida in Brazil. This programme offers various facilities such as discounts, bank loans, allowances as well as reductions in the value of mortgage insurance. Through these incentives lower-income families are given the possibility to become home-owners, a status desired by most. Despite the programme not having been without a nuance of corruption, which saw scandals permeate the programme, the venture has been a megalithic success with upwards of 1.4 million homes having been built. The Minha Casa Minha Vida programme aims to build the second phase, two million houses and apartments.
The result was more income for workers and a boost for property development in Brazil, which as can be expected will slowly eradicate the “favelas” slum areas.The perennial social unrest due to unaffordable housing in Brazil can start to be mitigated as the scheme succeeds to empower low class applicants so as to benefit from subsidies and special rates giving families help to make their dream come true – purchase their first property. However, in the socialist creed every citizen has the right to have his own house, so the government is making available properties of modest size but enjoying full amenities built in rural areas as financed by Minha Casa Minha Vida.

For the amount of compensation one is entitled to, the applicant must submit a simple application which takes into account how much the municipality will subsidize the property based on the value of the family income. The subsidy can reach R$25.000 (€7,622.80). Within the Minha Casa Minha Vida programme families can finance the property for up to 360 months.
Another bulwark social housing programme is that offered in Venezuela. Given the name of ‘Gran Mision Vivienda’, this programme has, since its inception in 2011, overseen the assembly of more than 500,000 homes in the last three years. This accomplishment of phenomenal proportions was also flanked with corruption, which according to a segment of locals is attributed to the bureaucracy of the country’s leaders. The injustice is attributed to the government’s power to unilaterally decree sites eligible for development under the programme, where one unmistakably finds huge discrimination in opposition-dominated areas which receive negligible housing compared with the rest.

Even so, despite the large figures of new builds it is important to note that ‘demand far exceeds supply ’ where this housing translates into very meagre yet proliferated habitats largely classified as ‘slum areas’ or ‘ranchos’ as they are colloquially known there. In Malta controversies abound on speculative use of land and one may recall a typical example, such as the cacophony of luxury flats disfiguring the view in Tigne point (mostly built on public land bought on the cheap) and a recent Mepa application to approve another three massive residential luxury towers in Sliema rising 32 floors to the sky.
While its small size is a reality, one cannot but praise its political masters who since Independence have sought to improve the quality of living in the Maltese islands to sustain its welfare state persona from breeding poverty that is easily apparent. Observers note there is certainly no denying that housing issues are subsistent and so to a degree warranting concern among parliamentarians. In efforts to realize every citizen’s right to a humane home, the Housing Authority is promoting the creation of a social programme to help low-income families acquire decent housing seeking private-public partnership (PPP) to guarantee expediency and transparency. Usually this PPP is faced with a three sided-dilemma – the bureaucracy on building permits, the problems to finance and the paradox of an excessive stock of 70,000 unused tenements creating the inevitable double standard.
This is accentuated in the face of social efforts to alleviate the problem of social housing where such efforts might beg the question ‘why’ to a number of factors such as delays in timing, excessive red tape forcing the situation to deteriorate, scandals of undue preference and the irking nature of ‘a new broom sweeps clean’ approach where the same approach purports to re-invent the wheel that has been lying motionless for decades begging for attention. Changing perspective to sizing down what is currently underway, the new minister at the Ministry for the Family and Social Solidarity (the previous incumbent has since been appointed President) was considering a fresh initiative aimed at regenerating urban areas and village cores, which cost will be met by the Housing Authority in partnership with the private sector, where the two shall collaborate to build more affordable apartments or dispose of the current sizeable (economists may term these as toxic assets) vacant private property stock. The policies spoken of are described as ‘long-term’ and targeting a ‘sustainable development framework’.
Many criteria have been set out for equitable development of this programme to revive the use of vacant properties but it is obvious to note that those houses requiring a lesser financial commitment will be more favourably viewed. However the standard set is commendable, noting that lifts and mobility access for the wheelchair-bound are a mandatory criterion for eligibility, showing a certain commitment to quality beyond quantity. The Housing authority also reserves to itself the possibility of exchanging immovable property in its possession with shortlisted proposed units which match the set criteria. With the budget speech next month one awaits the finance minister’s comments on progress registered (if any) in this innovative venture with an open heart, where the current shortfalls might be softened if this programme takes off as intended.

It goes without saying that the optimal route for a reform in social housing in Malta would be to undertake an in-depth study noting carefully the most prominent social housing programmes conducted throughout the world, seeking the most conducive path that curtails the means that has led to scandal elsewhere while sustaining the tempo (to catch up on lost time) necessary to provide a lasting betterment to the quality of citizens’ lives. Taxpayers would primarily demand more funds to be allocated in the 2015 budget to help encourage PPP in social housing. Ideally the Housing Authority maintains a pro-active role, in an endured stance that commands resourcefulness and sensitivity to the needs of the low-income families, particularly the sans Culotte at grass-root level.

Samuel AlonsoAuthor: Samuel Alonso, Economist Graduate, PKF Malta
Published on the Malta Today, 16 October 2014
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