Photo: Mint
Photo: Mint

Community land reserves and affordable housing in India

We need a different strategy if we are to provide affordable housing for the poor well into the future

In a city with rapidly rising land values, if the poor are to be provided with affordable housing, the cost of the land on which they reside needs to be somehow taken out of the equation.

Usually in India, when affordable housing is sold to an occupant—at well below market value because the land cost is either heavily subsidized or excluded altogether when computing the price—a condition is often laid that the occupant will not sell for ten years. But what happens thereafter, on resale?

The cost of acquiring the property, formerly heavily subsidized, for the incoming occupant is now at market value, including appreciation in the cost of land. Affordability, after ten years, is lost. The property is now priced at market value, of which land is often the major component.

A similar situation arises with sites-and-services development of the kind we see in Charkop in north-western Mumbai. Sites given to the original occupants at a relatively low cost are now, thirty years later, resold at market prices, with land value almost invariably the major component of cost. The smallest and cheapest dwellings, once affordable for the lowest-income groups, are now no longer within their reach.

We need a different strategy if our objective is to provide affordable housing for low-income groups, not only immediately but well into the future. There will always be poor people in the city, and let us say our purpose is to provide affordable housing for the city’s bottom 40 percentile of family income, for all time.

Taking land off the market

One way of doing this would be by organizing and administering the land on which the poor reside in the form of what we might call a Community Land Reserve. Just as we have Forest Reserves and Wildlife Reserves—areas of land reserved for all time for a specific purpose—so also a Community Land Reserve would have land reserved for all time for affordable housing.

A Community Land Reserve’s mission would be to provide affordable housing to the lower-income groups, on the urban land it owns, in perpetuity.

The situation in India

The central difficulty is that we live in an environment where credibility in public initiatives is lacking, and mistrust of individuals is the starting point of all transactions. We have to work out transparent and fair mechanisms for the selection of new incoming occupants because, in essence, the Community Land Reserve will be providing them with housing at well below market rates.

The Champlain Housing Trust in Vermont (US) has an elaborate and transparent points system for the selection of new incumbents (family size is one parameter; family income is another). We should perhaps set an upper limit on the size of accommodation permitted in a Community Land Reserve, to make sure that occupants are families at or below the median income. The size may vary from city to city.

We should recognize that, on a greenfield site, the layout most appropriate for a Community Land Reserve would be row housing, or individual plots around a courtyard, as in Charkop. Multi-storeyed buildings are of course possible, and do exist in some Community Land Trusts, as they are known in the US, but such construction demands an upfront investment. Mortgages would help, but the possibility of incremental construction, investing as and when possible over a period of decades, and the affordability that this would provide, is completely lost.

Row housing, or plots around a courtyard, retain this possibility. And the volume of potential construction can be automatically constrained by a limit on the number of permissible floors.

We could try out such schemes on land that is owned by the government and given to a Community Land Reserve. This could be a greenfield site, or it could be an existing slum, provided individual plots are properly demarcated, and access to each is adequate.

The availability of mortgage finance is critical to the success of a Community Land Reserve. Most housing finance corporations will not lend to anyone whose income is below the median. They may do so if the Community Land Trust takes on the responsibility for repayment of instalments. In any case, the Community Land Trust collects its own monthly charges from individual occupants, so, the collection of mortgage repayments would not be a significant additional administrative burden.

We would need to declare that any applicable rent act would not apply within the boundaries of a Community Land Reserve. And we need to somehow give the Community Land Reserve powers of eviction in case of failure to meet mortgage repayments. We presume the Board governing a Community Land Reserve would be cautious and restrained in forcing evictions.

Community Land Reserves offer a scheme for perpetually affordable housing in cities, a scheme that has been in use in US Community Land Trusts for over forty years. To work well, such Community Land Reserves must not be in ghettos but should form an integral part of comprehensive housing developments that offer housing across the spectrum of income groups, with the Community Land Reserves forming part of a larger housing development.

Shirish Patel is chairman emeritus, Shirish Patel & Associates.

This essay has been excerpted from The Making of Vibrant Cities: A Collection of Essays Compiled by Mumbai First, Rupa Publications India Pvt. Ltd, New Delhi, 2016.

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