Affordable Housing Provision in Informal Settlements through Land Value Capture and Inclusionary Housing

Abstract

Public-driven attempts to provide decent housing to slum residents in developing countries have either failed or achieved minimal output when compared to the growing slum population. This has been attributed mainly to shortage of public funds. However, some urban areas in these countries exhibit vibrant real estate markets that may hold the potential to bear the costs of regenerating slums. This paper sheds light on an innovative hypothesis to achieve slum regeneration by harnessing the real estate market. The study seeks to answer the question “How can urban public policy facilitate slum regeneration, increase affordable housing, and enhance social inclusion in cities of developing countries?” The study approaches slum regeneration from an integrated land economics and spatial planning perspective and demonstrates that slum regeneration can successfully be managed by applying land value capture (LVC) and inclusionary housing (IH) instruments. The research methodology adopted is based on a hypothetical master plan and related housing policy and strategy, aimed at addressing housing needs in Kibera, the largest slum in Nairobi, Kenya. This simulated master plan is complemented with economic and residual land value analyses that demonstrate that by availing land to private developers for inclusionary housing development, it is possible to meet slum residents’ housing needs by including at least 27.9% affordable housing in new developments, entirely borne by the private sector. Findings suggest that under a robust public-led governance umbrella, market forces can (1) significantly contribute to fill the financial gap in order to achieve the end of slums by 2050 in compliance with the United Nations Agenda 2030 targets and principles, and (2) increase both affordable and market housing in upgraded neighbourhoods, hence enhancing social inclusion in cities of developing countries.

Housing Affordability, Public Policy and Economic Dynamics: An Analysis of the City of Lisbon

“…In the construction sector, a mechanism used in other countries is the Land Value Capture, which would allow the requisition and use of a part of any increase in the value of land for public benefit, if related to a public policy and/or investment. With this mechanism, CML would receive an agreed share of that valuation and could use it to provide capital for its programs that promote affordable housing (Nzau and Trillo 2020). Another mechanism used is inclusionary housing zoning.…”

Effective affordable housing provision in developing economies: An evaluation of expert opinion

“…Study findings show that most significant expert solution for land acquisition challenges of the urban poor is deliberate land allocation policies that are inclusive of the urban poor. Experts submitted that government needs to deliberately reserve some parts of urban land for affordable housing provision, similar to (Nzau & Trillo, 2020) who advocated for government allocation of urban land to private developers in inclusionary housing arrangements.…”

“…Experts housing characteristics of the urban poor (Akinwande & Hui, 2022;Patel & Bartlett, 2016). These data will provide insights for suitable housing provision in consonance with (Amoako & Boamah, 2017;Average, 2019) and the prevalent mismatch between housing supply and housing demand will be mitigated (Barka & Kumar, 2020;Nzau & Trillo, 2020;Saidu & Yeom, 2020;Young, 2020). Experts concluded that housing is an ecosystem and is better treated as such.…”

Community Empowerment and Utilization of Renewable Energy: Entrepreneurial Perspective for Community Resilience Based on Sustainable Management of Slum Settlements in Makassar City, Indonesia

“…Community empowerment in slum settlements, based on the use of renewable energy, will encourage increased effectiveness and efficiency in the use of natural resources toward sustainable urban development. That is, low-income households are faced with the challenge of meeting energy sufficiency [55].…”