A challenging issue | Sunday Observer
Inadequacy of houses

A challenging issue

5 July, 2020

‘Maslow’s Hierarchy of Needs’, one of the most discussed psychological theories in the world, describes housing as a basic physiological need that is placed at the bottom of the hierarchy. The theory explains that basic needs arise due to deprivation when they are unmet. Therefore, the motivation to fulfil such needs become stronger, the longer the duration they are denied.

The present housing requirement in Sri Lanka is estimated to be approximately over five million whereas the existing number is approximately less than 4.5 million as per research papers, creating a gap of several hundred thousand. With the rapid urbanisation, Sri Lankan urban housing demand keeps on increasing despite the efforts of consecutive past governments to manage the issue.

Challenging issues

The inadequacy of affordable houses is one of the most challenging issues plaguing countries all around the world. Along with tight lending conditions and escalating living expenses, buying a house or buying a parcel of land and building a house has become extremely difficult to low, middle and even upper middle income groups in the country. Constantly spiking land prices have also made it more difficult for this group to get a foothold.

In recent years, the country has seen artificially inflated land and housing costs manipulated by land sales companies, compelling an average buyer to move away from house building. In this context, suburbanisation has become an important aspect to look at positively to move people from the city centre to semi-urban areas. This is taking place already where the middle income segment is moving away from the city, escaping from overcrowding and congestion.

The wave of swift urbanisation in the past two decades had hundreds of thousands of people and families streaming into the cities, creating a big demand in shelter. The persistently increasing demand reflected directly on the prices of land and housing in urban areas, particularly, in main cities such as Colombo, Kandy, Galle, Kurunegala and so forth. Elevated land costs in urban areas have become one of the main issues in housing for low and middle income groups.

Of the three main segments of urban, rural and estate, Colombo has become the most congested while overcrowding in other cities around the country is somewhat manageable. A large number of dwellers in the Colombo city live in unhealthy and crammed environments, in shanties and slums. Providing housing facilities to this low income community has always been a pressing issue in the past several decades. Several multi-storey housing projects introduced in the Colombo city recently solved only a fraction of the problem.

As per records, thousands of acres of state owned lands are being illegally occupied by this segment. Political influence imposed based on the large number of votes available in this group of people creates a critical issue to solve the problem of proper houses in the city of Colombo. Apart from the poor social well being, pollution and poor health conditions, this segment generates more harmful and critical issues of illegal drug peddling, gang violence and other criminal activities.

Although the housing needs of the rural sector, consisting of approximately 78% of the population, also are considerable, it is not as severe as the urban communities. Generally, rural communities are a little more comfortable compared to the city dwellers although the amenities or facilities may not be up to the required level. As per the National Housing Development Authority (NHDA) figures, approximately 46,000 families need assistance annually for improvements of their houses and another 22,000 families need assistance for new houses.

Never ending battle

Estate workers comprising approximately 4.4% of the population, living in plantations consist of 165,000 families as per the NHDA. They have been facing an ongoing and never ending battle for housing, in the past many decades. Building houses alone would not solve the problems experienced by this cluster. Despite occasional government interventions, this community continues to suffer not only from the lack of houses but also from other factors such as sanitary issues, harsh water problems and even poor educational facilities.

Probably the only way to solve the plantation family housing issue is to build houses for them in close by areas. However, integration of estate workers into the village life environment has to be done with extreme caution as such a move would be exceptionally sensitive. Any arbitrary attempt may lead to serious socio-political repercussions.

In his ‘Vistas of Prosperity’ President Gotabaya Rajapaksa envisages and admits that adequate housing is a basic need and that most families cannot afford this. Therefore, he has pledged that during his tenure in office, he and his Government will recognise the pressing issue of housing needs of low income urban communities. He has emphasised that he will provide them permanent housing and extend it to rural communities as well.

To provide a solution, the Government is planning to offer an easy payment plan through one housing bank, by merging Banks and other public institutions which lend funds for houses and land purchasing. In addition, public private partnership arrangements will be formulated for special housing projects island wide.

In a welcome move to the young private sector community, the Government has planned a method to consider interest paid on housing loans as an expense in paying income tax.

An effective nation-wide housing loan system is vitally important to develop a better mortgage lending, convenient to both, the borrower and the lender. This move, which is already on the cards of the Government through President Rajapaksa’s manifesto, will encourage lower and middle income group prospects that will provide a sizeable contribution to solve the country’s housing problem. Special care should also be given to improve access to low income groups and rural borrowers.

Daunting task

In reality, at present, obtaining a loan facility for housing from State owned Banks, private Banks or any other lending institution is a daunting task. These institutions devised systems to be biased towards applicants with good accounts with them with formal employment and good credit histories. Therefore, it is virtually impossible for an ordinary customer to obtain a housing loan.

In addition, the procedure of getting a loan approved by a State Bank is a strenuous and exhausting process at present. However, on a positive note, although the procedure is tedious, while all private lending institutions including Banks practise extreme caution in lending, public institutions such as the Bank of Ceylon, People’s Bank, NSB and HDFC are not only easy to approach but also offer lower interest rates.

The Government recognises the importance of providing adequate houses for the needy although it remains a key challenge in Sri Lanka. As pledged in the manifesto, they are already in the process of devising lasting policies and strategies to overcome the challenge. However, the policies must remain intact even when a government changes and also those policies should be made based on social, economic, environmental and cultural adequacy to avoid any future criticism. It is time that focus and a determined effort is initiated to solve this continuing critical issue of human settlement.