ORGANIZATIONAL AND INSTITUTIONAL CHALLENGES FOR EFFECTIVE HOUSING DELIVERY SYSTEM

AND
COMMUNITY DEVELOPMENT ASPECT OF HOUSING

The housing problem arises from two major conditions :

1. Overurbanization

-has been defined as a stage where a higher degree of urbanization exists relative to the rates
warranted by their degrees of industrialization.

2. Relatively inelastic housing supply

Supply side constraints arise primarily from problems in the land and financial markets.

The land market in the country is inefficient because land administration

and management is weak in various aspects: legal and regulatory framework

and land administration infrastructure (Llanto and Ballesteros2002).

Informal land markets

provide affordable sites for most additions to the housing stock in major cities especially at urban
fringes. Governments tend to tolerate informal settlements in order to gain some popularity politically

based on the pretext that it contributes to continuous economic growth of city residents.

Transactions in informal land markets are often not controlled and registered by the appropriate
authorities. This implies that houses are built without necessary permits and their quality as well as the
provision of infrastructure may be below expected standards, which is precisely what makes them
affordable for low-income groups.

What about constraints in the financial market?

The limited sources of long-term funds in the country also restrict the supply of housing. Financing is
paramount in housing investment because housing services are lumpy and ordinarily households do
not have sufficient cash for such investments. In the absence of long-term finance, the large demand for
housing is not translated into effective demand.

Banks thus make loans only to the high-income households to minimize risk. On the other hand,
the low to middle-income households have been largely dependent on government funds, which are
limited and cater mainly to the formal sector.

Jenny Lou Olasiman

BS ARCH-V
The main mechanisms employed to achieve the Program's objective are:

(a) direct production of housing units by government, and

(b) provision of public funds for development or end-user financing to entice the private sector to
produce "socialized" housing

Initially, the government adopted a highly centralized system of managing the program. This was done
through the creation of a Ministry of Human Settlements (MHS) in 1978, which served as the umbrella
organization of all shelter agencies that had evolved since the 1950s. These agencies include the
following:

1.National Housing Authority (NHA), in charge of social housing production specifically upgrading of
sites and services

2. Human Settlements Development Corporation (HSDC), also into shelter production and New Town
and Estate developments. The agency was also in charge of the following:

(1) standardization of building components and systems;

(2) materials stockpiling; and

(3) establishment of regional fabrication centers

3. National Housing Commission (NHC), supports the HSDC and NHA in shelter production

4. Human Settlements Regulatory Commission (HSRC), regulates subdivision development and

socialized housing construction

5. National Pollution Control Commission (NPCC)

6. National Environmental Planning Council (NEPC)

7. Housing Finance Corporation (HFC), provides mortgage insurance or guarantees to encourage private
banks and financial institutions to grant housing loans on easy terms of payment

8. National Home Mortgage Finance Corporation (NHMFC), acted as a secondary market for housing
mortgages

9. Home Development Mutual Fund (HDMF), a provident savings fund maturing after 20 years

Jenny Lou Olasiman

BS ARCH-V
Several community-based housing programs have been created, namely,

Community Mortgage Program (CMP),

Group Land Acquisition and Development (GLAD) Program,

Community Land Acquisition Support Program (CLASP),

and the Land Tenurial Assistance Program (LTAP).

Two major laws support the greater role given to the local governments.

1.) Local Government Code of 1991

- which laid the groundwork for a decentralized regime in the country and the
devolution of housing and urban development functions to local governments. This law mandates
local governments to undertake housing developments and take the lead in land use planning in
their respective localities.

Issuance of permits and licensing of land developments in the local area, which was a task
assigned to the HLURB, have been devolved to the local managers.

The Code also gives local governments the authority to access the private capital market
through issuance of bonds for development projects (e.g., municipal housing bonds).

2.) Urban Development and Housing Act of 1992

- which accords local governments a more participative role in slum improvement,

resettlement, and solving the problem of squatting.

There are constraints that prevent LGUs from taking on full responsibility over housing.

Limited source of supply of LGU funds.

- LGUs are mainly dependent on internal revenue allotment (IRA)

because of institutional constraints to debt financing and real property taxation

Availability of land for relocation or resettlement of squatters.

- This is a critical concern. Price of rental housing is relatively high and finding low cost land in highly
urbanized areas is difficult.

Jenny Lou Olasiman

BS ARCH-V
Reforms in the land market

Land laws have to be examined.

There are no clear guidelines on land use and the use of public or government lands for housing
the poor.

For instance, while security of land tenure programs (e.g., Community Mortgage Program
or CMP) provides a mechanism to resolve some squatting issues, it has also encouraged the
development of informal land markets (Baross 1993).

Poor land administration infrastructure is another source of problem.

The absence of systematic information on land and real estate properties in the country
increases the transaction costs in the land market and opens an avenue for corruption and
professional squatting.

For instance, the absence of a national standard and method for real property valuation caused
land valuation problems and stalled negotiations for infrastructure development or for housing
programs such as the CMP. Issues of conflicting ownership and problems concerning rights-of-way have
also delayed negotiations.

Reforms on real property taxation should also be prioritized.

Although the real property tax system is well designed in the country, this has not been used
effectively to generate revenues and serve as equalizing factor in the distribution of wealth (World Bank
2002).

Real property tax will provide the government the flexibility in the provision of basic services and
in the maintenance of physical infrastructures. Efficient enforcement of property tax also nullifies the
necessity of an idle land tax and allows an efficient functioning of the land market.

CHALLENGES FOR HOUSING DELIVERY

LAND
LABOR
HOUSING
FINANCE
MATERIALS

CHALLENGES FOR EFFECTIVE HOUSING DELIVERY SYSTEM

AFFORDABILITY
ACCESSIBILITY
SUSTAINABILITY

Jenny Lou Olasiman

BS ARCH-V
BARRIERS TO EFFECTIVE HOUSING DELIVERY SYSTEM

LOCAL BARRIERS
FINANCING BARRIERS
INDUSTRY CAPACITY

STRATEGIC OBJECTIVE NO. I: UPGRADING RELOCATION, AND INCREMENTAL, AFFORDABLE NEW HOMES
FOR SALE AND RENT

Strategy 1. Guide future land development within the context of strategic city-wide development and
CCA/DRRM

Strategy 2. Adopt informal settlements upgrading with secure tenure within an urban renewal,
CCA/DRRM, and income generating framework.

Strategy 3. Resettle people selectively with appropriate compensation and choice within a sustainable
new town framework.

Strategy 4. Engage the private sector and civil society to produce and manage affordable, new home to
ISFs

Strategy 5. Encourage a fully functioning private rental market. Strategy 6. Shift more to the market for
ISF housing finance.

Strategy 7. Expand the role of microfinance and community finance in urban renewal and ISF housing.

Strategy 8. Target subsidies to those in need based on household incomes.

Strategy 9. Provide Appropriate funding for urban renewal and ISF housing.

Strategy 10. Improve capacity of local governments as the lead agencies for urban renewal and ISF
housing

Strategy 11. Improve sector governance

Strategy 12. Enhance sector leadership, wider vision and improved skills for urban development and ISF
housing at the national level.

Strategy 13. Set up, operationalize and build capacity for appropriate data collection, mapping,
knowledge management, and monitoring systems.

Strategy 14. Build capacity of peoples organizations, community-based organizations and homeowners
associations to engage more in ISF housing.

Jenny Lou Olasiman

BS ARCH-V
Questions:

1.Give at least one housing problem that arises.

2. ________ served as the umbrella organization of all shelter agencies that had evolved since the
1950s.

3. In the past 25 years, the Philippine action agenda for housing has been the
______________________, primarily a homeownership program for the lowest 50 percent of the
country's population.

4-5. What are the two major laws support the greater role in housing strategies given to the local
governments?

6. Started in 1999, this Project aims to foster efficient land markets through the development of an
efficient system of land titling and administration as well as clear, transparent and consistent land laws.

7. It regulates subdivision development and socialized housing construction.

8. It is in charge of social housing production specifically upgrading of sites and services.

9. It has been defined as a stage where a higher degree of urbanization exists relative to the rates
warranted by their degrees of industrialization.

10. Give at least one constraints that prevent LGUs from taking on full responsibility over housing.

Answers:

1. Overurbanization

2. Ministry of Human Settlements (MHS)

3. National Shelter Program (NSP)

4-5. Local Government Code of 1991

Urban Development and Housing Act of 1992

6. Land Administration and Management Project (LAMP)

7. Human Settlements Regulatory Commission (HSRC),

8. National Housing Authority (NHA)

9. Overurbanization

10. Limited source of supply of LGU funds

Jenny Lou Olasiman

BS ARCH-V