Social Housing between Old Policies and Future Opportunities

Press Release

7 December 2014

Since the 1950s and to the present day, Egyptian governments have sponsored subsidized housing projects for limited-income Egyptians. These various projects go by many names, from popular housing, to economic housing, housing for youth and the future, and most recently social housing; one project carried the name of deposed former president Hosni Mubarak. Billions have been invested in these projects, although most were built prior to the explicit constitutional provision enshrining Egyptians’ right to housing. The first constitution to carry such a guarantee was that of 2012, followed by the current 2014 constitution.

The shortcomings of this policy have become clear to the Ministry of Housing. In May, it began drafting a new housing policy. The Egyptian Initiative for Personal Rights (EIPR) contributes to this policy with its new study launched Sunday under the title of: “Housing Policy in Egypt between the Continuation of the Past’s Policies, and Drafting Just Policies for the Future.”

An in-depth analysis of current housing policy as embodied in the two biggest housing projects in Egypt’s history—the national housing program known as Mubarak Housing and the social housing project known as the One Million Units project—and a consideration of these projects in light of socioeconomic studies and standards on the right to housing demonstrate the failure of current policy, which relies primarily on building subsidized units to relieve the difficulties faced by poor families in acquiring adequate, safe, and healthy housing.

The One Million Units project was shaped by the political interests of ruling regimes, having been conceived in the midst of the popular unrest that toppled Mubarak and ushered in four political eras in the last three years. Although all of these governments adopted the project and spent some LE20 billion on it, thus far only 11 percent of the total units planned for fiscal years 2012–13 and 2013–14 have been executed and less than 1,000 families have benefited as of this. Since the project relies on mortgage financing to allocate units, eligibility is limited to Egyptians formally employed in the public or private sector from the poor up to the upper middle income bracket. The project thus excludes the majority of those who work without contracts in the informal labor market and who are most in need of subsidized housing.

At the same time, the informal private sector has built some 6.5 million units in the last three years*, at a rate of 1.8 million units annually. Assuming that just one-third of these units serve low- and middle-income Egyptians, this is already three times the government’s housing target and about 43 times the amount of housing actually built by the government in the same period.

This pattern is troubling because it closely mimics the errors of the previous Mubarak Housing project. Although LE34 billion was invested in the project, Mubarak Housing disregarded limited-income families (the poor and poorest income cohorts), with the most appropriate units for poor families (rental units or those designated as priority need) constituted less than one-tenth of completed units. Moreover, the priority need units were small and inadequate for a family dwelling. The project did not meet its commitment to build half a million units in six years, completing only three-fourths of the target even after extending the end of the project by one year. One-third of the units were built by individuals, local residents, and the private sector (the Build Your House component and investors). Although the project initially seemed to make real contributions to urban housing, it met none of its social objectives.

Despite expertise offered at the highest governmental levels on social justice issues such subsidy leakage and the vetting of potential beneficiaries, the national housing program appeared to be geared primarily to winning political advantage for the regime and economic gains for its supporters in all groups.

The current situation thus requires a thorough restructuring of the policies and legislation that regulate the government’s provision of adequate housing for the poor and vulnerable if there is a genuine intention to fulfill citizens’ constitutional right and stop the spread of urban informal housing and the erosion of agricultural land. To draft a new housing policy for Egypt, public housing projects and investments must be incorporated into one comprehensive plan by:

Regulating the real-estate market: the purchasing power of the Egyptian family has declined nearly 13 times over, compared to the price of subsidized housing, and 25 times over in the private market, which has substantially affected families’ ability to find adequate or even inadequate housing. The foremost recommendation is thus to regulate the housing market by designating all social housing units as rental units, establishing an independent body to monitor the housing market and protect consumers, and getting the Ministry of Housing out of the business of buying and selling land and real estate.

Directing housing subsidies to the poor and the poorest, especially those who work in the informal sector: this can be done by setting up a non-executive governmental body at the Cabinet level to regulate and coordinate subsidized housing programs managed by various government agencies, drafting an integrated plan for subsidized housing, establishing a uniform database of beneficiaries of state subsidies, and amending the statutory definition of “limited income” in accordance with official income statistics to include only those who qualify as poor and poorest.

Drafting a plan for subsidized housing that includes ten different projects to respond to different challenges: this will minimize the number of families living in substandard housing. The priority should be to support the poor and poorest. This can be done by designating all units in the social housing project as rental units, redirecting cooperating housing to provide subsidized plots in rural and peripheral areas for these two cohorts only, creating a program to lease existing private housing units, creating a program to offer subsidies for the maintenance and repair of units slated repair, and instituting a program to rehouse families living in crowded conditions.

*“al-Taftish al-fanni: 318 alf ‘iqar mukhalif fi Misr tadumm 6.5 milyun wihda,” al-Borsa, 1 Oct. 2014,التفتيش-الفنى-318-ألف-عقار-مخالف-فى-مصر-تض/, accessed 30 Oct. 2014.