Issue link: https://maltatoday.uberflip.com/i/262615
14 BUSINESS & FINANCE F or those who are unfamiliar with the term, 'social hous- ing' is used throughout pro- grams in the promotion of housing tenements for rent or for sale either by the state, non-profit- making organisations, or a combination of the two, usually with the end goal of facilitating access to affordable hous- ing in the lower-income earning demo- graphic of a given population. Social housing programs are not a novel concept and we can see many examples around the world. In Europe one can highlight the case of the Netherlands where in many cities such as Amsterdam, The Hague, Rotterdam and Utrecht social housing is a statistic that approaches or even exceeds 50%. These types of habitats are known there as 'huurwoningen sociale', literally translated 'social rental housing'. Another successful example in Europe is Catalonia in Spain. Here there is a program for the housing rights of 2009- 2012, in which the public housing policy and promotion of the rehabilitation of buildings is encouraged. The opposition leader in UK Miliband wants to reach his target of 200,000 homes by inducing a major expansion of council housing once elected to government. His party has promised to "simplify rules surrounding the Housing Revenue Account to give local authorities more flexibility in how existing public funding is spent". It is good to read that the Chartered Institute of Housing estimates that raising the caps by £7bn could enable the construction of 60,000 homes over the next five years, creating 23,500 jobs and adding £5.6bn to the British economy. Is the opposition leader in UK trying to copy the example of France, where more than half of new homes are constructed by their owners. Miliband will call for a "self-built" revolution to reduce the dominance of the big four developers and to help expand supply in areas where there are most shortages. Crossing continents we can also highlight the success had by social housing programs in the case of Minha Casa Minha Vida in Brazil. This program offers various facilities such as discounts, bank loans, allowances as well as reductions in the value of mortgage insurance. Through these incentives lower-income families are given the possibility to become home-owners, a status desired by most. Despite the program not having been without a nuance of corruption which saw scandals permeate the program, the venture has been a megalithic success with upwards of 1.4 million homes having been built. The Minha Casa Minha Vida program aims to build the second phase, 2 million houses and apartments by 2014. The program is for families who have a gross income of up to R$5,000.00 (€1517.90); the program offers some facilities, such as, discounts, allowances and reduction in the value of mortgage insurance. If the family has gross income greater than R $ 5,000.00, they can buy property financed and even use their FGTS, but not participate in the Minha Casa Minha Vida. The result was more income for workers and development for Brazil slowly eradicating the "favelas" – slum areas. The family income is the sum of the gross income shown informally or, formally, of all persons in a family. Gross income is the amount before the discount INSS, transport, etc. to quote an example; A typical example of a family of three low income earners such as: -Son has a job with a gross income registered R$800.00; -Mother is selling beauty products and have a monthly income of R$300.00; and -Father has a machine shop and he puts it in the current account of R$700.00 per month. The income of the family is therefore aggregated as R$1,800.00 and at this level they can be eligible to enter into a bank loan guaranteed by the government at heavily subsidized rates. The social unrest due to unaffordable housing in Brazil can start to be mitigated as the lower classes will benefit from subsidies and special rates giving families help to purchase their first property. However, in the socialist creed every citizen has the right to have his own house, so government is making available properties of modest size but enjoying full amenities built in rural areas as financed by Minha Casa Minha Vida. For the amount of compensation one is entitled to, the applicant must submit a simple application which takes into account how much the municipality will subsidise the property based on the value of the family income. The subsidy can reach R$ 25. 000 (€7622.80). Within the Minha Casa Minha Vida program families can finance the property for up to 360 months. Another bulwark social housing program is that offered in Venezuela. Given the name of 'Gran Mision Vivienda', this program has, since its inception in 2011, overseen the assembly of more than five hundred thousand homes in the last three years. This accomplishment of phenomenal proportions was also flanked with corruption, which according to a segment of locals is attributed to the bureaucracy of the country's leaders. The injustice is attributed to the government's power to unilaterally decree sites eligible for development under the program, where one unmistakably finds huge discrimination in opposition-dominated areas which receive negligible housing compared with the rest. Even so, despite the large figures of new builds it is important to note that 'demand far exceeds supply' where this housing translates into very meager yet proliferated habitats largely classified as 'slum areas' or 'ranchos' as they are colloquially there known. While its small size and leadership over the years have preserved the Maltese islands and its welfare state persona from breeding poverty that is easily apparent, there is certainly no denying that housing issues are subsistent and so to a degree warranting concern amongst parliamentarians. In efforts to realise every citizen's right to a humane home, the Maltese government is promoting the creation of a social program to help low- income families acquire decent housing seeking private-public partnership to guarantee expediency and transparency. As per usual one finds three key elements, the solutions as purported on paper, the problems in reality and an excessive stock of 70,000 unused tenements creating the inevitable double standard. This is accentuated in the face of social efforts to alleviate the problem of social housing where such efforts might beg the question 'why' to a number of factors such as delays in timing, allowing the situation to deteriorate, and the irking nature of 'a new broom sweeps clean' approach where the same approach purports to re-invent the wheel that has been lying motionless for decades begging for attention. Changing perspective to sizing down what is currently underway, the Ministry for the Family and Social Solidarity is currently considering a fresh initiative aimed at regenerating urban areas and village cores, which will be done by the pertinent Authority in partnership with the private sector where the two shall collaborate to build more affordable apartments or dispose of the current sizeable (economists may term these as toxic assets) vacant private property stock. The endeavor will invite interested parties to submit their proposals for the provision of apartments to meet the rising demand for social housing including homes for the elderly. The policies spoken of are described as 'long-term' and targeting a 'sustainable development framework'. It is very important to note that this program is being aimed at reducing the housing stock in the country and therefore proposals to lease out units shall not be considered. Many criteria have been set out for following in the development of this program but it is important to note that those requiring a lesser financial commitment will be more favorably viewed. However the standard set is commendable noting that lifts and mobility access for wheel chair bound are a mandatory criterion for eligibility, showing a certain commitment to quality beyond quantity. The authority also reserves itself the possibility of exchanging immovable property in its possession with shortlisted proposed unit. With the fast-approaching deadline for applicants being next week, one awaits the unraveling of this innovative venture with an open heart, where the current short-falls might be softened if this program takes off as intended. Leaving the south American socialist waterfall in the backdrop, the optimal route for Malta as it embarks on this new feat would be to undertake an in- depth study noting carefully the most prominent social housing programs conducted throughout the world, seeking the most conducive path that curtails the means that has led to scandal elsewhere while sustaining the honesty necessary to provide a lasting betterment to the quality of citizen's lives. This would primarily demand being pro-active, in an endured stance that commands resourcefulness and sensitivity to the needs at grass-root level. Samuel Alonso is an Economy graduate at PKF Malta, for more details please contact info@pkfmalta.com maltatoday, WEDNESDAY, 19 FEBRUARY 2014 Social Housing – from South America to the Med Samuel Alonso letters of credit ship nance payments forfaiting factoring mbank.com 2132 2100 FIMBank is an international trade nance specialist with an established reputation as a dynamic and customer-driven provider of trade nance solutions. FIMBank is headquartered in Malta and benets from a growing network of international oces. documentary collections bonds and guarantees treasury management structured trade nance commodity trade nance letters of credit ship nance payments forfaiting factoring Trade Finance Solutions engineered for business success The social unrest due to unaffordable housing in Brazil can start to be mitigated as the lower classes will benefit from subsidies