PD12-O1 Micro-Housing

PD12-O2 Definition Micro-Housing Housing FinanceMicrofinance

PD12-O3 Three Tiers of Housing Finance in Developing Countries Private commercial institution providing credit to upper income groups Public sector that provides subsidized funds to middle-income groups and civil servants Microfinance housing programs cater to lower middle, moderate and low-income households

PD12-O4 In considering housing options, households balance –Location –Space consumption –Access to urban services –Budget constraints The poor also consider… –Ability to activate support networks in housing locations –Personal security Micro-Housing

PD12-O5 Families’ 3 Perspectives on Housing Housing as Shelter –The poor allocate 10-15% of income for shelter –Marginal enough to deter displacement, close enough to transportation for employment Housing as a Commodity –Offers financial security and social status Housing as an Investment –Offers prospects of lucrative returns

PD12-O6 Microenterprise vs. Housing Loans ME Loan Impacts income Small loan amounts Individual or group Repayment capacity based on current income Housing Loan Impacts asset base and may impact income Large incremental loans Usually individual Repayment capacity based on current income

PD12-O7 Micro-Housing Proceeds Housing improvements and repairs Construction of a new house Acquisition of land parcels Delivery and services for infrastructure

PD12-O8 Client Eligibility Requirements Individual Clients –Regular savings pattern –Proof of sufficient and steady income –Participation in one or more cycles of loan products –Successful repayment history –Legal land ownership Group Clients –Fellow members’ approval –Minimum length of residency –Collective guarantee

PD12-O9 Terms and Conditions One year regular savings habit is a requirement 3-6 months loan duration for house repairs and improvement 1 – 4 years for new construction Interest rate is usually the same as those of other financial products Group liability is enforced as the main guarantee Proof of legal occupancy

PD12-O10 Micro-Housing Challenges Scaling up to reach potential and significant number of clientele base Complexity of legally acquiring land – financial and political burden Provision of non-financial technical assistance on housing MFI technical capacity on housing

PD12-O11 Non-Financial Assistance Evaluating the technical feasibility of the proposed improvement Preparing cost estimates Improvement design and construction Providing construction oversight