Draft Egypt Housing Strategy: A Step in the Right Direction

The Ministry of Housing has recently presented the Egypt Housing Strategy at the Arab League’s seminar on the right to adequate housing, as part of its efforts towards realizing that basic right. What is the Egypt Housing Strategy, and why is it important, are some questions this analysis aims to answer, along with recommendations to improve it. The latter were submitted by the BEO during an expert group meeting held by the Ministry of Housing and UN-Habitat in Cairo in May 2018.

To read the final Egypt Housing Strategy published in September 2020, click here

What is the Housing Strategy?

It is an official document that sets out the Ministry of Housing, Utilities and Urban Communities’ (MoH) short, medium and long-term goals. It has been prepared by the MoH’s Housing Division, in cooperation with the UN-Habitat’s Regional Office for the Arab States, and was written by housing experts David Sims and Hazem Abdelfattah.

 

What is the role of the Strategy?

The final draft of the Housing Strategy (which is still under review) included a number of ‘Governing Principles’, such as; all citizens have a right to adequate housing as enshrined in the 2014 Egyptian Constitution (Article 78) and the Universal Declaration of Human Rights (Article 25), social justice, social inclusion, helping to house those who are unable to house themselves, and freedom of choice and movement of all citizens.

Besides the strategy’s role as a component of the constitutional right to adequate housing, it also has a role towards realising international responsibilities such as the UN SDGs (11.1 By 2030, ensure access for all to adequate, safe and affordable housing), and the New Urban Agenda (14a providing equal access for all to… adequate and affordable housing).

What does it aim to do?

The Strategy then translated these principles into a main objective to “Enable every citizen to realize his or her right to dwell and pursue a decent livelihood in a stable, secure, and well-served environment. without distinction as to social or income categories, and in particular ensure honourable housing for those categories that are not able to house themselves”.

Four sub-objectives emanated from this main objective (Social Equity, Aid to the Poor, Economic Efficiency, and Sustainability), intersecting with three main focus points (Existing Housing Stock, New Housing Supply, and Steering the Housing Sector) branching into 16 components.

 

What are its strengths?

The Housing Strategy departs from the current, unwritten one, in how it shifts the focus of solving the housing crisis, from the traditional government construction of new homes, to dealing with the existing stock, as well as supporting individual owner-builders.

 

For example, Focus Point 1: The Existing Housing Stock contains a number of relevant points:

Component 1 – Improving Rental Markets, seeks to establish a balanced landlord-tenant relationship. This component could not be more relevant as the rental market is witnessing a sever retreat, with the lowest proportion of renters in the last forty years.

Component 2 – Reducing Vacancies is also pertinent as the 11 million vacant homes we have today could easily absorb all newly formed households for the next 18 years. Of course, not all the units are fit for habitation, but Component 2’s recommendations towards making them habitable, as well as incentivizing owners to sell or rent them out, would go quite a long way in preserving scarce natural resources and energy (drinking water is used in mixing concrete, and making cement is an energy intensive process), curbing pollution, and balancing Egypt’s trade deficit by exporting, rather than importing, building material and energy.

 

Another notable departure was how in Focus Point 2: New Housing, outlined the shrinking role of the government in building new housing, planning a shift towards supporting poor households towards renting or buying homes (components 10 and 12). In light of the current housing surplus, as well as the complicated government Social Housing Project that has aimed to build one million housing units, this could not be more relevant.

 

Focus Point 3 – Steering the Housing Sector, raised an important recommendation to increase the efficiency and coordination of housing related agencies, while developing databases and housing research. Indeed, research and data on the housing sector is lacking, especially a house price index that could provide a vital support to potential home-buyers and tenants in making their decisions, improve the targeting of government housing subsidy, and help monitor the housing market.

 

What are its weaknesses?

While the Housing Strategy showed a vast improvement over current policy, there were still some points that did not fully address the present challenges, while others were missing.

Absence of market regulation:

A key absence was that of a component to address eroding affordability, where more than half of Egyptians suffer cost burdens to own or rent a home. It is also the primary reason why many live in inadequate homes The continuation of existing policy that encourages housing commodification and financialization, would no doubt undermine much of the progressive policies that the new Housing Strategy proposes.

Own time frame:

Another weakness was how the strategy follows its own timeframe, which would make it a challenge to implement and monitor, given that a national economic strategy exists, the Sustainable Development Strategy: Egypt Vision 2030.

Only ownership for tenure regularization:

Component 5 – Tenure Regularization, which aims to legalise informal settlements, based its recommendations primarily on ownership titles. However, various studies have shown the limitations of this method, especially in preserving homes, and ensuring access to utilities. [1]

Absence of legislation to regulate resettlement:

Component 7 – Resettlement, did not address the legal rights and precarity of those being resettled.

 

How can the Housing Strategy be improved?

1. Modifying existing components:

 

1.1 Component 1 – Improving Rental Markets:

Added recommendations should include official support for dispute resolution (without recourse to courts) as a first instance, as the court system is currently overwhelmed. This can be through the support of civil society organisations, whether existing or to be established, which would provide dispute resolution services, awareness on landlord and tenant rights and obligations, and help with drafting fair contracts.

These steps are especially pertinent given Component 6 – Reducing Rent Control, which will definitely lead to massive numbers of evicted tenants (see below).

1.2 Component 5 – Tenure Regularization:

Existing recommendations should expand to include a raft of measures such as communal or cooperative ownership, usufruct/lease, and basic recognition/amnesty (from eviction).

 

1.3 Component 6 – Reducing Rent Control:

This subject should be treated with care, as many tenants will not be able to afford already high market rents, in the same neighborhoods, or even cities.

A number of measures need to be put in place, including a detailed socio-economic survey of Old Rent (rent control) tenants, as well as relocation models that show the opportunities available for the different families to relocate, especially the poor, low-income, ageing and disabled.[2]

A government housing support program should also be designed to allow the relocation of precarious Old Rent tenants to alternative adequate housing close to their current homes.

 

1.4 Component 7 – Resettlement:

Legislation needs to be drafted to define in more detail the rights of residents (owners and tenants) of areas and buildings slated for replanning, expropriation, heritage protection, or demolition.

 

1.5 Component 10 – Subsidized Rentals:

Details of support programmes could be expanded, especially to balance out the risk of rent price increases associated with similar programmes.

These could include: a sub-national house price and income index to establish affordability limits for tenants, as well as fair rental values for participating landlords, minimum contract lengths, and dispute resolution mechanisms.[3]

 

2. Adding new components to Focus Point 3 – Steering the Housing Sector:

 

2.1 Restructuring MoH to become a regulator and enabler:

More detail should be included in the strategy as to how the MoH would migrate from its current construction-intensive role (of both subsidized and for-profit housing, as well as land sales and development, and water and sanitation construction and management), to that of a primarily service oriented agency that regulates the housing market, and enables homes affordable to all.

One such step would be the MoH’s establishment of a residents’ protection agency (owners and tenants), much like a consumer protection agency, and the disinvestment from real estate investments (see next point).

 

2.2 Restructuring housing related agencies:

While the Housing Strategy promotes a smaller role for government production of housing, more detail needs to be added as to how this will be applied to the tens of government bodies (service agencies, housing funds, state owned enterprises, public companies, public banks, and the Central Bank) already in operation constructing subsidized or for profit housing, or both, as well as financing construction as well as buyers.

A starting point would be the short, medium and long-term vision to separate their roles into regulators, contractors/developers, subsidized finance, and market finance, at both the national and local levels, to provide a spatially and economically even and needs-based distribution of public support. This could lead to the merger of some, and establishment of others.

 

3. Regulating the housing market and protecting affordability:

In addition to the MoH’s proposed role as regulator, it can only operate with a national framework with support form other government agencies. Here the Housing Strategy must also propose regulatory roles for other government agencies such as:

• A moratorium on all policies that commodify and financialize housing, namely the drive to internationalize the housing market through the policy of “Exporting Real Estate”.
• Restructuring of the capital gains tax on real estate sales to penalize speculators (quick sales) and incentivize owner-occupiers.[4]
• Restructuring of the real estate tax so that it is more progressive, with a low load on modest owner-occupiers, and a heavy load on large properties, and multiple property owners.[5]
• Tax incentives for private rental.[6]
• Promoting and expanding non-real-estate related industries and investments, especially for individuals.

Acknowledgements

The author greatly appreciates being invited to comment on the Housing Strategy by engineer Nafisa Hashem, First Deputy to the Minister of Housing, Utilities and Urban Communities, and head of the Housing Sector.

Written by: Yahia Shawkat

Main image: New government housing in Badr New City, Cairo, 2012 – BEO

Notes and References