While poor remain homeless, private business gains from “socialized” housing

March 22, 2017

by IBON Foundation

As the National Housing Authority serves eviction notices to members of urban poor organization Kalipunan ng Damayang Mahihirap (KADAMAY) who have occupied long-vacant and dilapidated relocation units in Pandi, Bulacan, research group IBON said that the so-called socialized housing largely benefits private developers through public-private partnerships (PPPs). These private realty and construction firms garner profits and incentives from public-funded housing while much-needed homes remain inaccessible for poor Filipinos. The group said that the Duterte administration should uphold Filipino people’s right to decent and affordable shelter and reverse housing privatization.

IBON said that the so-called socialized housing has considerable profit potential for private realty and construction firms. The Class D market where informal settlers belong is largely untapped and expanding, providing numerous opportunities for big housing developers. The government estimated a housing backlog of 800,000 units per year or a total of 5.8 million units from 2010-2016. The World Bank also stated that the Philippines has one of the highest rates of urban population growth among poor countries.

The Philippine Development Plan (PDP) 2017-2022 indicates that the Duterte government intends to continue the previous administration’s implementation of a housing program through PPPs, observed IBON. Private developers will continue to amass profits from “socialized” housing through guaranteed payments from the government.  They will also continue to enjoy a number of incentives, including 30% off on taxable income from profit, which is granted when a real estate project is negotiated as part of socialized housing compliance to Republic Act (RA) 7279 or the Urban Development and Housing Act (UDHA), said the group.

RA 7279 likewise states that the private sector will be exempted from paying the following: capital gains tax on raw lands used for the project; value-added tax for the project contractor concerned; transfer tax for both raw completed projects, and donor’s tax for lands certified by the local government units to have been donated for socialized housing purposes. IBON said that these incentives make it easier for private companies to do business and profit while monthly housing amortization burdens millions of low-income homeless families.

IBON noted that major players in the development of supposedly low-cost housing units include Ayala Land, Inc. (ALI) which constructed 7,276 units in 2012 and another 14,070 units in 2013. Phinma Property Holdings Corp. is another major player, and was behind government relocation projects such as Quezon City Mayor Herbert Bautista’s Bistekville, and Mayor Strike B. Revilla’s Grand Strikeville 4 in Bacoor, Cavite.

Despite government and private sector claims, these “socialized” housing units remain unaffordable and unattainable for many informal settlers, said the group. A Bistekville unit, for example, does not require a down payment, but still has an amortization of Php2,273.84 per month over a period of 30 years. Many informal settlers are struggling to meet their families’ daily basic needs, and are also ineligible for housing loans from the Home Mutual Development Fund (HMDF) and Pag-IBIG.

IBON said that shelter is a human right, which government has a responsibility to ensure and uphold. The Duterte administration should prioritize the development of sustainable, decent, as well as free and affordable housing in consultation with urban poor communities. The group said that government should revert the housing program from a profit-making venture to a genuinely government-controlled social service.###