India – Housing For All Engages Citizen Sector and Housing Developers to Align Supply and Demand for Affordable Homes

Housing For All brings an example of how cross sector partnerships can be leveraged to increase the attractiveness of affordable housing developments and encourage private-sector involvement. 

12.22.2015
 

Objectives

  • To motivate housing developers to build quality homes for the low-income segment
  • To engage the citizen sector and local communities to increase demand for affordable homes

Summary

The Housing For All (HFA) initiative by Ashoka is supported by the Hilti Foundation and it brings together real estate developers that have access to land with Citizen Sector Organizations (CSOs) and housing finance institutions. The developers contribute to the supply of homes on the market, while the CSOs and microfinance institutions are there to ensure they can foster demand within the local communities. The target segment is any household that is earning an average income of 6-10 USD per day.

Leveraging the partnerships with the CSOs is something that stands out in the Housing For All business model. The CSO acts as a marketing agent and receives a commission for units sold. The CSOs are effective because of their established local network and are trusted within the community. There are also feedback mechanisms in place whereby the CSOs are able to have input within the construction development in order to align the buildings’ features with the needs of the community. In this way, HFA incorporates local considerations as an integral aspect of the business model.

The housing microfinance institutions play a role in providing loan amounts from INR 300,000 to 600,000 or $6,500 USD to $14,000 USD. Tenures tend to be around 15 years at interest rates of 12 - 14%. The loan-to-value amount does not exceed 80%, which is generally considered quite high for this segment, and therefore, the risk of default is a main concern and must be mitigated by HFA. The main concerns from the financing front is that many home owners still cannot afford to pay the 20% down payment on homes and are already spending 35% to 40% of their income to pay back their monthly loan payment. Nonetheless, HFA provides insight into how CSOs and community organizations can play a valuable role in aligning supply and demand in the affordable housing marketplace. 

Results

2,500 units were offered to low-income customers across 4 projects in 2011. Of those housing units, 670 relied on the mortgage loans offered by Housing For All.