Making urban land markets work for the poor

1
Making urban land markets work for the poor

• Gauteng Department of Housing
• 28 November 2006
• Phumelela Race Course, Turffontein
• Mark Napier

2
seminar structure

• Who is Urban LandMark ?
• The extent of landlessness in SA
• Why should the poor have a place in the city ?
• How should this be achieved ? M4P as an
  approach
• What needs to be done ?

3
Who is Urban LandMark ?

• describing the Urban Land Markets Programme

4
www.urbanlandmark.org.za
5
goal what we want to achieve

• to improve access to well-located urban land (in
  South Africa)
• by making markets work for the poor and improving
  governance systems
• thus giving meaning and effect to the right to
  land

6
Governance
People
Market
Place
7
long term impacts

• MARKET greater access to urban land markets by
  the poor
• reduction in numbers of slums
• GOVERNANCE more pro-poor and responsive policies
  institutions
• lower thresholds to holding and trading land
  formally
• PEOPLE greater tenure security and ability to
  assert rights and aspirations
• greater residential and income mobility
• PLACE greater choice of urban location and
  tenure type
• more efficient cities and towns
• more sustainable settlements

8
mission how we intend to achieve our goal

• By creating a place for engagement and discovery,
  and establishing
• a clear advocacy position on M(UL)MW4P
• a dependable empirical information base
• and the basis for policy dialogue
• Launched May 2006
• Funded till March 2008

9
moving towards advocacy
Tools for Policy Impact Daniel Start Ingie
Hovland
10
who are our stakeholders?
11
The extent of landlessness in SA

• defining the problem

12
(No Transcript)
13
transformation of the apartheid city
Ahmedi Vawda
14
RSC Black
1980 - 1990
80 -90
1960 - 1970
99 yr lease
Hostels
T/S
GAA
CBD
Tax base
Ahmedi Vawda
15
RDP
CMIP
1994 - 2003
RSC Black
1980 - 1990
80 -90
1960 - 1970
99 yr lease
Hostels
T/S
GAA
CBD
Tax base
Public delivery can sometimes exacerbate
dislocation
Ahmedi Vawda
16
(No Transcript)
17
(No Transcript)
18
profile of urban land tenure
Tribal (1.1)
Transferred Council (7.6)
Subsidised Post-1994 (15.2)
Private Owned (27.2)
Squatting (12.3)
Subsidised Rent (0.5)
Private Rental (11.5)
Council Rental (7.6)
Company Rent (1.6)
Informal Rental (11.4)
Ownership (51.1)
Rental (35.5)
Squatting (12.3)
South African Urban Households (1999) (60 of SA
households)
From David Gardner Sharpening the FocusA New
Look at South Africas Housing Strategy
19
R8000
R6000-R8000
R4501 -R6000
Backlog. / landlessness
R3501-R4500
R2500 -R3500
R1501 -R2500
From David Gardner Sharpening the FocusA New
Look at South Africas Housing Strategy
R801 -R1500
R0 -R800
Tribal
Ex-council (7.6)
Subsidy (15.2)
Private (27.2)
Squat (12.3)
SHI (0.5)
Private (11.5)
Council (7.6)
Co. (1.6)
Informal (11.4)
Ownership (51.1)
Rental (35.5)
Squatting (12.3)
20
so

• Of the 6.5 million households who live in urban
  areas, over 1.5 million, or almost a quarter, of
  urban households live in informal rented
  accommodation or in freestanding squatter
  settlements.
• For a middle income country, this represents a
  large proportion of urban households who could be
  said not to have legal, secure tenure.
• Another 70 thousand households live under
  customary tenure arrangements in urban areas.

21

• These figures say nothing about
• whether the people with formal tenure are living
  in locations which suit their livelihoods,
• about whether people who own urban land would
  rather rent urban housing,
• nor about how many rural households might move to
  urban areas if it were possible to more easily
  secure legal tenure in better locations.
• This has implications for
• how quickly land needs to be released and
• how rapidly housing needs to be built via state
  programmes and private sector initiatives.
• This one quarter of households needing secure
  tenure represents a demand for a large amount of
  land, not to mention the administrative
  capability to grant appropriate formal tenure.

22
increasing land costs, scarcity
Cited in Rust presentation, 15 Nov 2006
23
what people are saying

• First National Banks property economist, John
  Loos, warned in April that Land scarcity has
  become more of an issue than building costs
  (Daily Dispatch, 25 Apr 06).
• Jopie van Honschooten of the Banking Association
  is quoted as saying in July that A lack of
  available land for development of low-cost
  housing is the main hurdle standing in the way of
  banks meeting their financial sector charter
  commitment (Business Day 10 Jul 06).

24
summary the nature of the problem

• ¼ of households have no direct or secure access
  to urban land
• those who do, do not always live where they want
  to (allocation versus demand-led housing)
• land costs are increasing at pace
• the challenge therefore is to reverse apartheid
  city patterns

25
what is the state doing about it?

• New policy statements emanating from government
  indicate a key shift in emphasis towards broader
  interventions in markets aimed at shifting
  patterns of property ownership (thus also
  changing the spatial patterns and density
  matrices of residential development). The
  planned outcome of these interventions is a more
  equitable and efficient city which contributes to
  economic growth at regional and global levels,
  and in which there is class and ethnic
  integration.

26
2003 Review of ten years of democracy, mentions
the need to place greater emphasis on overcoming
the spatial disjuncture between home and work by
promoting more compact designs that increase
residential densities and reduce long-distance
commuting State of the Nation address 2004,
indication that government would address the
broader question of spatial settlement patterns
and implications of this in our efforts to build
a non-racial society SIGNALS A SHIFT IN
EMPHASIS FROM BASIC NEEDS TO DIRECTED INVESTMENT
27
Why should the poor have a place in the city ?

• making the case for access to land

28
(No Transcript)
29
the positions

• on why it makes social, economic or ideological
  sense to open up access to land, location and
  markets
• the livelihoods / quality of life argument
• the justice and rights argument
• the urban efficiency argument

30
some opinions

• Economically, as long as the poor are viewed as
  not productive and as predominantly consumers,
  good urban land will not be allocated by
  municipalities for lower income use (residential,
  trade etc) Colin Marx
• Economically, access to urban land through
  housing is an important national poverty
  alleviation strategy, not only for the household
  but for the state. The importance of secure
  tenure is in providing a poor household with a
  reliable urban perch with which to build an asset
  base Catherine Cross
• Economically, assumptions that urban land is an
  investment asset for trade or raising collateral
  may not be the primary motivation for the urban
  poor to acquire land. It is important to
  understand the importance of land as a place
  that provides access to employment, income
  generation through home based industries and
  rental income or for purposes of building social
  networks - Michael Kihato and Stephen Berrisford

31
some more opinions

• Socially, public space in cities is important for
  promoting human contact, social interaction and
  tolerance, in a context currently marked by
  widening inequalities Nana Ntombela Karina
  Landman
• Socially, there is poor understanding of ways in
  which the poor informally access urban land, so
  we only recognise the formal rules of the game
  Lauren Royston
• Ideologically, there is a need to redress the
  historical lack of access to land and
  opportunity, and to overcome the shortfalls of
  post-apartheid urban policies, and the uneven
  distribution of economic growth Mercy
  Brown-Luthango

32
How should this be achieved ?

• M4P as an approach

33
what is M4P?

• Making Market Systems Work Better for the Poor
  (M4P) is an approach that aims to accelerate
  pro-poor growth by improving outcomes that matter
  to the poor in their roles as entrepreneurs,
  employees or consumers of markets.
• M4P focuses on changing the structure and
  characteristics of markets to increase
  participation by the poor on terms that are of
  benefit to them.

34
why M4P?

• Drawing on a paper by Alan Gibson, Hugh Scott and
  David Ferrand (July 2004), the assertion is that
  the promotion of economic growth and poverty
  reduction have achieved mixed results. The
  authors urge that we support approaches to
  development that have tapped into and shaped the
  power of markets and which allow poor people to
  contribute to and benefit from economic growth.

35
how to apply M4P

• M4P is an approach which
• establishes where the poor are in markets,
• tries to understand the complexity of markets,
• builds realistic plans for how markets can work
  more effectively in the future, and
• sets out to address key impediments to a better
  functioning market.

36
Urban LandMark believes

• that we can improve the situation
• by applying an M4P approach
• by promoting a more effective state (as the
  entity which sets many of the rules for market)
  and
• by underpinning the concept of land as a national
  asset to which people have rights

37
What needs to be done ?

• programme of action

38
(No Transcript)
39
what does M4P mean for the 1.5 million landless
urban households in South Africa?

• M4P will mean campaigning (on behalf of the
  poor)
• for lower transaction costs
• for more consumer education around transacting
  in land for residential and commercial use
• for greater recognition by finance houses of
  alternative forms of tenure
• for release of better-located, affordable,
  serviced land (to help the low and lower middle
  income), accompanied by access to better
  information

40

• M4P for government will mean promoting
• the shift away from government grant allocation
  mentality to demand-sensitive systems
• greater use of legislation which allows
  prescriptive acquisition and zoning for social
  use
• streamlined land packaging and approval processes
  (to help developers and banks to build housing
  and other social and commercial infrastructure)
• capacitation of municipal officials able to
  negotiate with market players
• greater value extraction other creative
  measures to distribute value across cities/ towns
  and improve residential markets in depressed
  areas (inner city and township)

41

• M4P for housing authorities and cities would mean
  promoting
• better location of government housing
• higher density forms of housing and commercial
  accommodation, and mixed use zoning
• allocation of houses in a more market-like way
• less barriers to trading government subsidized
  houses
• but protection from downward raiding (as location
  and quality improves)

42
interventions which offer hope

• Urban development tax incentive (accelerated
  depreciation allowance within declared urban
  development zones)
• Housing subsidies
• larger and inflation-linked
• reduced limit on resale
• informal settlement upgrading instrument
• social housing linked to urban redevelopment zones

43
interventions II

• Moratorium on sale of municipal land
• State land sales (departments, government owned
  entities)
• Housing land fund
• Land special purpose vehicle
• Voluntary charters (finance, property,
  construction) and Social Contract
• Inclusionary zoning legislation
• INSTRUMENTS TAKE ON THE PUBLIC/ PRIVATE SECTOR
  NEXUS

44
conclusion

• Mass delivery has succeeded in the first decade
  of democracy
• The second decade demands sharper instruments
  capable of achieving socio-economic and spatial
  integration
• State interventions which lead to poverty
  alleviation and economic growth have the greatest
  chance of success
• Making urban land markets work for the poor is an
  important building block for a vibrant economy
  and society

45
(No Transcript)