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Institutional Framework and Housing Finance

This document provides an overview of housing finance and the institutional framework surrounding it. It discusses [1] the role of the private sector in affordable housing development, [2] how housing finance brings together complex multi-sector issues to fund home purchases, and [3] the advantages of housing finance systems in creating jobs and infrastructure. Formal housing finance is described as complex and literacy-focused compared to informal systems that are convenient and have low transaction costs. The global growth of housing finance is also summarized.

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SREYAS K M
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82 views11 pages

Institutional Framework and Housing Finance

This document provides an overview of housing finance and the institutional framework surrounding it. It discusses [1] the role of the private sector in affordable housing development, [2] how housing finance brings together complex multi-sector issues to fund home purchases, and [3] the advantages of housing finance systems in creating jobs and infrastructure. Formal housing finance is described as complex and literacy-focused compared to informal systems that are convenient and have low transaction costs. The global growth of housing finance is also summarized.

Uploaded by

SREYAS K M
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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MODULE 5

INSTITUTIONAL FRAMEWORK AND HOUSING FINANCE

SEMESTER 9 BATCH A
DEPARTMENT OF ARCHITECTURE, T.K.M.C.E.
FACULTY: MIRIA ROSE JACOB
ROLE OF PRIVATE SECTOR IN HOUSING

• Contribute to efficiency gains in the development of land, construction, operations and maintenance for

affordable housing through the use of technology, better management and construction practices.

• Delivery of projects at a lower cost and, without cost and time overruns, can potentially contribute to

availability of affordable housing.

• In order to achieve these positive outcomes, PPP projects will need to be structured such that they create

appropriate incentives for good performance by the private sector partner.


HOUSING FINANCE

“Housing finance brings together complex and multi-sector issues that are driven by constantly changing

local features, such as a country’s legal environment or culture, economic makeup, regulatory environment, or

political system”
HOUSING FINANCE

“The purpose of a housing finance system is to provide the funds which home-buyers need to purchase their

homes. This is a simple objective, and the number of ways in which it can be achieved is limited.

Notwithstanding this basic simplicity, in a number of countries, largely as a result of government action, very

complicated housing finance systems have been developed. However, the essential feature of any system, that

is, the ability to channel the funds of investors to those purchasing their homes, must remain.”
HOUSING FINANCE

“Put simply, housing finance is what allows for the production and consumption of housing. It refers to the

money we use to build and maintain the nation’s housing stock. But it also refers to the money we need to pay

for it, in the form of rents, mortgage loans and repayments.”


HOUSING FINANCE

Housing finance development plays a role in boosting equitable economic growth and reducing poverty

through:

• helping households build assets

• improving living conditions

• empowering the middle and lower income population

• strengthening communities.

Helps in creation of more houses which results in building up more infrastructure facilities, such as roads,

electricity generation, drinking water facilities


FORMAL AND INFORMAL SYSTEMS OF HOUSING FINANCE
INFORMAL HOUSING FINANCE FORMAL HOUSING FINANCE

• Provides savings and credit facilities for small farmers, lower-income • Ignore small savings and credit facilities for small farmers, lower-income

households and small-scale enterprises in urban areas. households, and small scale enterprises in favour of a larger-scale, well-

off, and literate clientele which can satisfy their stringent loan conditions.

• Procedures are usually simple and straightforward - they are easily • Complex administrative procedures beyond the understanding of the rural

understood by the population. masses and small savers.

• Operate at times and on days which are convenient for their members. • Do not take rural work schedules into account; banks are open at times

when farmers are at work in their fields.

• Access to credit is simple and little based on written documents. Literacy • Loan application procedures are complex and require reading and writing

is not a requisite. skills.

• Transaction costs are low. • Transaction costs are high.

• Repayment rates are high. • Repayment rates are low.


HOUSING FINANCE

ADVANTAGES OF HOUSING FINANCE

• Creates employment, both directly and indirectly.

• More demand for industries such as cement, brick manufacturing, sanitary products, electrical fittings and glass.

• Creation of more houses which results in building up more infrastructure facilities.

• Reduces congestion in urban areas.

• Vertical expansion and re building of dilapidated houses and re modelling of the existing houses.

• Housing facilities not only improve, they also reflect the culture of the country.

• Non conventional energy gets popularized due to modern housing facilities.


HOUSING FINANCE

NEED FOR HOUSING


FINANCE

SUPPLIERS USERS

LAND ACQUISITION, PURCHASE OF BUILDING PURCHASE / CONSTRUCTION OF NEW HOUSE OR


MATERIALS AND CONSTRUCTION RELATED FLAT OR HOUSE-SITE, FOR REPAIRS, RENOVATION
ACTIVITIES OR EXTENSION OF ALREADY EXISTING HOUSES

Housing finance, thus, enables individual households to acquire land and build their own dwelling units
with the basic amenities for a better standard of living.
HOUSING FINANCE

GLOBAL SCENARIO IN HOUSING FINANCE

• Substantial growth world-wide in the recent past.

• Recognized as the driver for economic growth.

• Lower inflation, lower interest rates and increasing real estate prices provided the necessary environment for

the growth of housing finance.

• People aspire to realize their life time dream of living in their own house of choice.

• Many countries have tax incentives for the borrowers.

• The legal regime was made lender-friendly with appropriate foreclosure laws.
THANK
YOU

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