Assessing demand & supply of low income housing

Scope: The study’s objective was to assess the demand and supply of self-constructed incremental housing in India for households earning below Rs 15,000 per month and to evaluate the feasibility of providing technical design assistance.

Methodology: The study analysed the current state of housing in four different tiered cities (Delhi, Ahmedabad, Jaipur and Dehradun) and developed a typology framework based on three parameters: title/tenure, land-use, and right to sell. The typologies served to further disaggregate the simplistic characterization currently adopted of slum vs. non-slum that does not capture the diversity of locations/neighbourhoods in a city. The research involved interacting with civil society organizations and financing institutions to understand the different legal statuses and rights of low-income/informal neighbourhoods.

Study Findings:

a) Self-construction is the largest supplier of housing: Even in a planned and developed mega city such as Delhi, over 55% of the housing stock has been built through owner led, incremental/self-construction practices.

b) Self-construction is rampant across all settlement types: The practice is seen largely in informally planned neighbourhoods or low-income areas such as slum-resettlement colonies or unauthorized colonies. However, in tier II and III cities, even residents of formal planned neighbourhoods engaged in self-construction practices.

c) Households earning less than Rs 15,000 a month rent or own housing produced through self-construction: To target this income segment, innovative financing/mortgage models are required to reach the market. The poorer households (earning Rs 5,000 per month) live in cheap private rentals in settlements with the weakest property rights and do not usually invest in home upgrades.

d) Safety requirements would demand technical assistance: The National Housing Bank, under the direction of the National Disaster Management Agency (NDMA), has issued guidelines to financial companies to ensure financing of safe and quality structures. However, the technical assistance piece still must be facilitated. In parallel, creating awareness on the risks and problems of self-construction and bringing knowledge to masons and contractors through training camps would ensure compliance. The study proposed alternative mechanisms for delivery of assistance and conceptualized a large-scale pilot to test the delivery mechanisms.