Housing for all: Forgotten priority, beyond budgets alone

Summary:
> For housing negative budget, not just a reduced budget, is the real proposal for next year.
> DHSUD needs more financial and political support
> Added issues housing needs to address includes licensing of new projects, accreditation of socialized housing, socialized housing technical and price ceiling, fake titles, overlapping titles, inaccurate titles, hidden records, and taxation.

Housing for all: Forgotten priority, beyond budgets alone
New Worlds
November 29, 2020

The unjustifiably low housing budget of P3.9-billion out of a record P4.2-trillion budget, a point raised by Cagayan de Oro City Second District Rep. Rufus Rodriguez, could be part of a disaster in the making.  There are sudden disasters like a tsunami or a pandemic, and there are slow-brewing ones that start out invisible until the damage manifests such as climate change or excess exposures that develop into cancer. Housing issues, like social disparities, can build into social volcanoes, or they can be managed into becoming catalysts of a dynamic society.  The current low housing budget is just another manifestation of existing disabilities in our overall national logic, system of allocations, use of talent and political processes.

Negative budget, not reduced budget

A negative budget, not just a reduced budget, for housing is the real proposal for next year.
Because aside from declining to almost an invisibly low 0.08 percent of the national budget, there is the impending removal of the VAT exemption for housing for the middle class, i.e., 12-percent VAT will be added to cost of buying a humble home of P2 to P3.2 million, apart from other recent impositions. These should be revised.  Why are we creating more ground for social exclusion, fissures and unrest?  Why is housing and community so fundamental to peace, and the progress of a community or nation?

There is no economic, financial inclusion today without home ownership because it is the asset that rises in value along with the development of an economy.  An ordinary person saving his earnings to earn 2 percent a year can never catch up with inflation at 3 to 10 percent a year for commodities and properties, what with all the printing of money and debt financing in the world today. Even the success of the Build, Build, Build program is increasing the values of properties and wealth throughout the country, unleashing potential capital, but also increasing the costs of inputs of all property assets. Most people without a property stake will necessarily keep falling farther behind. The major debt or capitalization capacity for enterprise or emergencies of the individual today is asset-based.

There is no social inclusion today without a home.

1. It has been shown that children focus and perform better if they are certain of their physical home. If asked where their home is, they often reply, “Nag-uupa lang kami “ (We are only renting) as if it is a source of shame.  People are proud to bring friends to a space that is their own, even if humble.

2. It serves as a forced saving vehicle, to prevent excessive consumption spending.

3. Stability of the Filipino family revolves around a home, which is more permanent than the relationships of the average Filipino couple.

Home building especially during the pandemic can be a very powerful base for economic recovery and future proofing.  The construction aspect alone is an industry with about a 3.5-multiplier to the economy for most of the world, so is a natural restarter for the economy.  The geographic distribution will furthermore allow more even countryside development and new urban centers, also allow better environments for work and study from home and reduce spaces for unrest and rebel activity.

Shelter is a basic need that is intuitive, and all governments in the world recognize it as such or pay the price.  Seventy-eight percent of Singaporeans reside in HDB government-housing projects, in the midst of some of the highest priced properties in the world.  The Hong Kong unrest is partly caused by housing issues, which have to be addressed.

Housing has been a major engine of the US economy and also almost collapsed the world financial system, and it is the major allocation and policy study of governments to address social issues.  The Duterte administration has a real achievement in the creation of the Department of Human Settlements and Urban Development or DHSUD, which took over a dozen years to realize, and has given it an open and logic-based leader in Secretary Eduardo del Rosario, who has achieved many things even prior to his recent confirmation.

The DHSUD needs more financial and political support, the new car needs more fuel to reach its destinations.

Beyond the budget 

The housing budget as an allocation issue has been brought up already by our more aware legislators, many of whom like Senators Ralph Recto and Franklin  Drilon and Representatives Stella Luz Quimbo of Marikina’s second district and Jose Maria Salceda of Albay’s second district have been studying conscientiously our economic direction.  Given an estimated over 6 million-home backlog, those homes destroyed since Yolanda, Taal, Ulysses and Marawi, and others not having been rebuilt yet, not to mention the  750,000 added pregnancies estimated for this year as a result of  pandemic “homecomings,” on top of the approximately 1.1 million births yearly, the record low budget especially at this time indicates an important lack that can still be adjusted.
Added issues housing needs to address include:

1. Licensing of new projects, accreditation of socialized housing that the government requires of developers has stalled for two years now.  Alternative guidelines now like escrow arrangements or parameters of acceptable projects need clear approval or will become future issues and blame games.

2. Socialized housing technical and price ceiling requirements are not viable. After years of delay in adjusting price limits, new standards were set a few years ago  increasing minimum size and other requirements such that the cost per meter went up, but allowable price per meter was reduced despite increases in land and material prices. This caused the low end of housing to clearly go below any economic viability.  Interagency rules also need to be harmonized and agreed upon between the tax, investment, technical agencies. One possible method to address them is to just drop the requirement for socialized housing and continue normal taxes.  Another way is by formulating costs and prices including land, material and labor so that progress is not delayed by events and personalities.

3. Fake titles, overlapping titles, inaccurate titles, hidden records should be addressed.  The government needs to protect property owners and transactions, especially as it is collecting taxes including for registration and titling. Industry needs a title check and insurance agency, accurate and accessible mapping.  Very limited processing capacity claimed by some agencies despite automation, long periods for processing, multiple repeat documentations between agencies.

4. Taxation.  VAT exemption being dropped from 3.199 million to 2 million needs review… this is not luxury but basic housing.  Valuation tax schedules of properties should consider differences that can be big even “in the same location.”  Taxation needs to be seen as a mutual obligation between the government and persons to create enhancement of value for both.

Overall, our country has had increasingly competent officials for economics and finance, and periodically in some executive agencies, and that has led us to improved financial stability and growth.  The next stage is to attain competitiveness.  Given a pandemic-accelerated new economy depending on greater speed for everything, we also have to adjust our legislative and executive algorithms for greater optimizations of decisions and execution.  We are improving but not nearly enough even to just keep pace.  It is an exciting time where we can be part of the new winners, but this can happen only if we listen to what we don’t want to hear, on top of enhancing our strengths further.

New Worlds by IDSI aims to present frameworks based on a balance of economic theory, historical realities, ground success in real business and communities and attempt for common good, culture and spirituality. We welcome logical feedback and possibly working together with compatible frameworks (idsicenter@gmail.com).

**Also published in: https://www.manilatimes.net/2020/11/29/opinion/columnists/housing-for-all-forgotten-priority-beyond-budgets-alone/802573/