Support Measures to Promote Rental Housing for Low−Income

INTRODUCTION
A. Rental housing in a global perspective
Rental housing is a vital component in accommodating large numbers of families in less−developed countries
and particularly in the major cities. In many major cities of Africa and Asia, more than half of the population
are tenants. In Latin America, owner−occupiers tend to dominate the housing stock but, as table 1 shows, at
least one third of the population of most large cities rent homes.
It is clear from the data in table 1 that there are major variations in the relative importance of rental housing
between regions. Broadly, rental housing dominates urban housing tenure in most African cities, in the
Republic of Korea, and in the South Asian subcontinent. Elsewhere owner−occupation is more dominant with
rental housing absorbing between around one third of urban households. The importance of renting in the
three case study countries, Egypt, India and Nigeria, is considerable. In all three countries renting is the
dominant form of urban tenure. In Indian cities, it contributed 37 per cent of all urban homes in 1988 (Wadhva,
1992: table 4.1) and in Egyptian cities 59 per cent at the time of the last census in 1986 (Serageldin, 1993:
58). In Nigeria, there are no overall figures available but most cities contain even higher proportions of tenant
households (Okoye, 1990; Oruwari, 1990; Ozo, 1990; Peil, 1976); in Port Harcourt, 88 per cent of households
are renting accommodation (Oruwari, 1990: 8).
Table 1 certainly reveals a very weak relationship between tenure and city income. Some very poor cities,
such as Kumasi and Calcutta, contain a majority of home−tenants; others, such as La Paz, a majority of home
owners. More−prosperous third−world cities also differ in their tenure mix. Whereas housing in Seoul is
dominated by rental tenure, Santiago de Chile and São Paulo have a predominance of owner−occupation.
. Since most of their population lives in the countryside,
The clear implication of this tendency is that as countries urbanize, the proportion of tenants and sharers
increases. This is especially true when the major flows of migrants are towards large cities, for the latter
frequently contain higher proportions of non−owners than smaller cities. This is very clear in Indonesia, the
Republic of Korea and Turkey, although not in Colombia or Mexico (Hoffman et al., 1990: 2.1; Keles, 1990:
142; IYSH, 1987). It is certainly the case in India, where cities with more than 1 million inhabitants in 1981
contained an average of 61 per cent of tenant households compared with 48 per cent for those between
100,000 and 1 million. It is also clear in Egypt where Cairo has a much higher incidence of renting than other
governorates in the country (Serageldin, 1993: 58).
The combination of rapid cityward migration and high rates of natural increase in many third−world cities, has
led to rapid increases in the absolute numbers of tenants in most third−world cities. In places, the numbers of
tenants have increased dramatically. In Mexico City, the number of tenant and sharer households increased
from 484,000 in 1950 to 1.2 million in 1980. In Delhi, the number of tenant households rose from 324,000 in
31961 to 545,000 twenty years later. In Seoul, there was a simply incredible rise in the number of tenants, from
883,000 in 1960 to 5.7 million in 1985 (IYSH, 1987: 48−49).
Despite these dramatic increases, most third−world cities have been experiencing a strong shift towards
owner−occupation in recent decades. This shift has been particularly marked in Latin America and in most of
South−East Asia, but it has also begun to affect the South Asian subcontinent. In parts of Latin America, the
trend began in the 1930s and has continued with few interruptions ever since. In São Paulo, home−ownership
rose from one quarter in 1940 to 56 per cent in 1982 (Sachs, 1990: 74−75). In the Federal District of Caracas,
owner−occupiers increased from 47 per cent of all households in 1950 to 64 per cent in 1981 (Gilbert, 1993:
108). In Mexico City, the proportion of home−owners increased from 18 per cent in 1930 to 64 per cent in
1980 (Coulomb and Sánchez, 1992). In Santiago de Chile, the share of owner households rose from 26 per cent in 1952 to 64 per cent in 1982 (Gilbert, 1993: 64).
In Asia, the trend towards owner−occupation is less clear−cut. It occurred in Bangkok during the 1970s and
less rapidly in the 1980s (Angel and Amtapunth, 1989; IYSH, 1989) and very strongly in Singapore (IYSH,
1989). By contrast, the share of owners has stayed fairly constant in urban Indonesia (Hoffman et al., 1990)
and fallen quite dramatically in Turkish cities from almost three quarters of homes in 1955 to little more than
half in the 1980s (Keles, 1990: 142). Ownership has increased greatly, however, in the South Asian
subcontinent. In urban Pakistan, the proportion of owners increased from 48 per cent to 68 per cent between
1961 and 1980 (Kalim, 1990: 192). Sundaram (1990: 126) notes that in India the percentage of urban
households living in their own home increased from 46 per cent in 1961 to 54 per cent twenty years later.
During this period, owner−occupation increased in 112 out of the country’s 140 largest cities. In some cities,
the shift was startling: in Bombay from 30 per cent in 1961 to 61 per cent in 1981, in Ahmedabad from 18 per
cent to 42 per cent and in Delhi from 34 per cent to 53 per cent.
In Africa, it is impossible to decipher any general trend because of the severe lack of figures. In Lusaka
ownership increased from 40 per cent in 1969 to 43 per cent in 1980 and in Rabat it increased from 29 per
cent in 1971 to 33 per cent in 1982 (Edwards, 1982: 260; Keles and Kano, 1987: 166) By contrast, Port
Harcourt seems to have experienced very little change between 1973 and 1984 in the very low proportion of
owners (around 11 per cent) (Oruwari, 1990: 40).
The shift towards owner−occupation has been motivated by a variety of processes. First, changing technology
and tastes have brought about an increasing demand for suburban housing. The growth in car−ownership and
mass−transit systems, the ability of governments to provide infrastructure over increasingly large areas, and
changing patterns of architectural design have led to the widespread development of suburban housing.
Secondly, building interests have recognized that construction of housing for ownership is both a more
profitable and a less difficult business than building for rent. Large real−estate companies have emerged
whose main activity is the development of suburban housing. Thirdly, housing−finance systems have been
developed which have permitted higher income groups to purchase their own homes on credit. The ability to
borrow money over a longer period has given many more families the opportunity to buy their own home.
Fourthly, low−income groups have participated in the shift towards owner−occupation through irregular forms
of land alienation. In places, the poor have invaded public land, and sometimes even private land. Elsewhere,
they have bought land cheaply because it lacked infrastructure and planning permission. Fifthly, government
policy has favoured owner−occupation both by providing cheap loans to higher income groups and by doing
little to discourage informal housing solutions among the poor. Sixthly, few governments have followed a
tenure−neutral housing policy. Most governments have shifted from building State housing for rent to a policy
of constructing homes for sale.To be continued
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