Mass Housing as an Innovation Driver. Global Experience and Local Challenges Affordable Housing

1. Mass Housing as an Innovation Driver. Global Experience and Local Challenges Affordable Housing Moscow Urban Forum July 2018

2. A value-chain approach to Affordable Housing in Cities Supply side value chain Acquiring Land & SecuringTitle Design & Construction FinancingHousingSupply Land Use - Zoning & Regulation EvaluatePurchaseModel – Rent or Own DeterminingEligibility Access to Credit Demand side value chain

3. Supply Side Value Chain – An Overview Recommendations Supply Side Challenges • Role of Cities • Optimize and repurpose existing land (e.g. Motel Ordinance Law in Los Angeles) to accommodate affordable housing. • Development of collective tenure mechanisms (Community Land Trusts, cooperatives) in partnership with Land banks in each city. • Mixed-use of land with inclusionary zoning and density bonus programs. • Single window clearance systems to facilitate approvals • Role of private sector • Encourage Mortgage Liquidity Facilities Embrace innovative financial instruments to finance housing supply (crowdfunding and blockchain), residential REITs, etc. • Invest in sustainable design concepts to optimize space (tiny homes), energy consumption (green roofs), construction techniques (3D printing, prefabrication) and materials (Cross Laminated Timber, compressed earth blocks, recycled materials, etc.) • Provide skill development, technical training and using tools (e.g BIM) and automated equipment (robots for bricklayering) to improve productivity • Role of non-profit sector • Leverage non-profit institutional investors for microfinance, non-profit REITs (e.g. Housing Partnership Equity Trust in US) • Provide technical support and knowhow services to those looking to self-construct homes. • Scarcity of public (and private) land for affordable Housing • Housing investments are tied to land titles especially between formal and informal markets. • Conventional single-use zoning practices and restrictive land use regulations (w.r.t. density, intensity, vertical growth, etc.). • Leveraging capital markets, debt instruments and government supported financing in securing funds for affordable housing. • Use of conventional materials and methods for construction and delay in government approvals result in productivity losses that prove costly for affordable housing. Acquiring Land & SecuringTitle Land Use - Zoning & Regulation FinancingHousing Supply Design & Construction

4. Demand Side Value Chain – An Overview Recommendations Demand Side Challenges • Role of Cities • Introduce rule based eligibility criteria that prioritizes affordable housing using different social characteristics age, household size, occupation (key workers), etc. • Explore different tenure models in the city – rental, shared equity ownership, shared ownership and complete ownership – catering to wider demand. • Role of private sector • Develop formal financial instruments and innovate on credit underwriting of loans for low-income households and use alternate collaterals (e.g. Tala, uses behavioural data, merchant transactions, SMS messages to provide microloans). • Explore tenure models like Build-to-Rent to diversify affordable rental markets with varying terms for those who can purchase homes. • Employers need to invest in affordable housing for the community to balance the inflationary effects caused by incoming talent in the city. • Role of non-profit sector • Develop financial instruments that provide incremental microloans to those making home improvements and cant access the formal market • Work with private sector and governments in developing and managing rental units for low to median income households • Eligibility criteria for affordable housing only uses household income as critieria. • Unintended beneficiaries buy affordable homes as “investor” units converting them into market rentals. • Affordable homes supply-demand mismatch – Homes targeted for an income bracket are occupied by a different target segment. • Economic boom triggers inflation in home prices as employers attract skilled talent into the city. • Overemphasis on “homeownership” in housing supply where demand is for affordable rental markets. • Excessive wait times for affordable homeownership • Lack of credit access for down payment and mortgages for those with low-incomes and no collateral. DeterminingEligibility Evaluate Purchase Model – Rent or Own Access to Credit

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