Public funds and subsidies

Policies and regulations

Affordable housing provision in Sri Lanka 

Provision of affordable housing has been a priority of successive governments in Sri Lanka since independence in 1948. In 1977, the National Housing Development Authority was established to implement and promote mass housing programmes such as the One Hundred Thousand Housing Programme and the One Million Housing Programme to increase the housing stock and home ownership, by providing long-term subsidized loans for new developments and upgrading activities. In 1994, because of increasing land scarcity, the focus shifted away from slum upgrading to a programme to relocate slum dwellers in high density apartments built by the government.  

The One Million Housing Programme aimed at reaching 1 million households to support their efforts to improve their own housing. The fundamental principles of the Million Houses Programme were:  

  • Minimum intervention and maximum support by the State;  
  • Maximum involvement of the builder-family;  
  • Minimum assistance for many rather than ample assistance for few;  
  • Minimum standards for many rather than high standards for few;  
  • Decentralization of decision-making, planning and implementation to the local authorities, the communities and the householders.  

The Million Houses Programme consisted of six sub-programmes: the rural housing sub-programme, the urban housing sub-programme, the plantation housing sub-programme, the Mahaweli housing sub-programme, the private-sector housing sub-programme and the major settlement schemes housing sub-programme. The two most important sub-programmes were the rural housing sub-programme and the urban housing sub-programme. The Government of Sri Lanka gave NHDA the responsibility to implement the Million Houses Programme. To implement the urban housing sub-programme, the NHDA created the Urban Housing Division which absorbed the Slum and Shanty Division of the Urban Development Authority, until then responsible for slum and shanty upgrading in Sri Lanka.  

The rural housing sub-programme started in 1984, but the Urban Housing Division needed more time to develop its approach and the urban housing sub-programme was launched a year later. Unlike in rural areas, a simple loan provision programme for individual house builders is not enough to improve low-income housing conditions in urban areas. Most urban poor in Sri Lanka live in settlements without formal land tenure, so the land tenure has to be regularized to create sufficient security of tenure to make the investment in housing worthwhile. Most of the settlements are not adequately served by infrastructure, so piped water, a human-waste-disposal system, roads and drains have to be constructed. Moreover, urban areas are subject to complicated planning and building regulations which need to be waived for low-income housing projects to keep housing affordable. For these reasons, the urban housing sub-programme required a project-based approach of regularization and upgrading of slums and squatter settlements (UNCHS, 1985: 22).  

Vienna’s Urban Renewal Program 

  2.1

In Vienna, where half of the housing stock is social housing, subsidies are an important aspect of the city’s urban renewal program. The amount of subsidies granted for a particular project are dependent on the standard of the existing building, but can be up to 90 per cent of total construction costs. This also includes an allowance for low-income households to reduce short-term costs involved with renovations. The renewal is followed by a controlled and limited rent increase for 15 years to cover any loans required. Any type of building is eligible for a renewal (construction) subsidy, including private rental and owner-occupied. One such example is Gasometre City, a brownfield redevelopment around four large gas tanks that were built in 1899 but have been unused since 1986. The city decided this would be a project to spearhead development in this previous industrial area. The new multi-functional area with 620 units of subsidised housing, 250 student hostel units, 47,100 m2 of commercial space, offices, and a theatre has become the catalyst for the redevelopment of the whole neighbourhood.  

Targeted subsidies in South Africa

South Africa has been the use of a wide range of targeted subsidies, for which all households with incomes below certain minimum levels qualify. Since 1994, the Government, working in collaboration with various civil society actors, has constructed more than 1,155,300 housing units that house some 5,776,300 people, or close toone-eighth of the total population of 40 million people .

More information: 

  • UN-Habitat’s Affordable Land and Housing in Asia Report. Source: Sri Lanka, 2005; Ergüden and Precht, 2006. Source:  
    1. https://mirror.unhabitat.org/pmss/getElectronicVersion.asp?nr=3225&alt=1