•Substantial unmet housing demand – 200,000 units per year needed

•Acute shortage of buildable land in urban areas

•Near absence of formal housing finance•Incomplete legal and regulatory system for private sector investment in housing

•Infrastructure backlogs

•Many households cannot afford decent housing

•Deteriorated rental stock

•Undercapitalized construction sector•Lack of established procedures to address unplanned settlements

Housing Sector Challenges

Land• Prioritise infill developments• Encourage land wholesaling to mobilise capital for land development• Establish land inventories• Undertake electronic land title registration processes• Progressively remove subsidies on the allocation of public land, and introduce sunset clauses on undeveloped allocated land• Institute fair and appropriately scaled system of real estate taxes

Housing Production• Establish a level playing field to support private developers• Rationalise housing SoEs• Encourage PPPs and cooperatives for housing delivery

Key Housing Policies – Enabling Approach

Housing Finance• Encourage commercial banks to enter the market by: - Reviewing legal currently restrictive framework (foreclosure law) - Establishing NHF and REB as second-tier financing instruments to capitalise commercial housing finance providers• Modify building standards to make housing more affordable• Utilise government banks to provide targeted low-interest loans to poor/ vulnerable HH• Encourage more extensive use of loans for housing extension and improvement

Infrastructure for Housing• Increase capital investments and improve maintenance/ management• Upgrade Trunk Infrastructure• Promote private sector involvement in the development and management of housing infrastructure (explore PPPs)

Housing Policies – Enabling Approach

Housing Management and Maintenance• Increase inspection of private/public rental housing through commuity based methods to improve compliance with minimum standards• Privatize maintenance services of public rental stock

Housing Construction Materials•Introduce financial instruments to support materials producers• Promote international joint ventures• Standardize operating environment and rationalize SoEs• Promote environmentally friendly, local production

Informal Housing• Upgrade/ redevelop on a case by case basis using standardised criteria• Resettlement undertaken fairly, with consultation and compensation

Housing Policies – Enabling Approach

Land• Land policy vision, studies undertaken (PMAC), state land policy drafted – nothing yet submitted to COM• Land inventory piloted (MMPW)• Digitisation of land registry underway (MoJ RERD, USAID)

Housing Production• Rationalization of MoCH SoEs initiated/ under discussion as a pilot in a PMAC led programme to rationalize SoEs

Housing Finance• Capacity Building of Iraqi Private Bankers League in regard to housing finance (USAID); dialogue on reforming legal framework

Housing Policies – Achievement so far

Informal Housing• Informal Settlement Upgrading piloted in Erbil and initiated in Baghdad (Governorates, line ministries and UN-Habitat)• Studies completed on Baghdad informal settlements utilizing land sharing mechanisms to redevelop high value informal settlements (UN-Habitat)

Housing Policies – Achievement so far

Result so far: Limited progress on implementation, therefore limited impacts

Constraints• Renewed focus of MoCH on traditional housing delivery mechanisms to meet urgency of current demand• Communication strategy has been insufficient• Commitment of relevant institutions in implementing the policy is not yet translated into significant programmes and budgeted actions

Housing Policy provides appropriate directions in creating a well functioning housing market, and should remain a medium - long term goal

Contributing institutions should reflect on progress and consider whether this approach is well understood, feasible given the limited interaction between ministries, and has sufficient political support

If there is political will to move forward, Housing Policy implementation requires unified vision and serious commitment of relevant institutions, strong leadership and adequate resources

Additionally, short – medium term mechanisms/ instruments are required in order to rapidly address the housing needs, particularly for the poor

Suggested Way Forward

Affordable Housing (Rent to Buy) model

population

Inco

me:

USD

/mon

th

2000

500

Land /Housing is often “allocated.” Housing provision constrained by ineffective housing market

Often informal/inadequate housingRequires housing assistance

Rent to Buy model

Housing Agency provides low cost housing - ideally within mixed use development, or mixed housing developments

Housing Agency is capitalized by government and through value capture mechanisms on mixed-use developments by private developers

Housing units cost are 75 sqm and cost approx 30,000 USD to build

Housing is provided on a rental basis (eg 75 USD / month – ie 3% per year of building cost). This makes it affordable to HH with incomes of 300 USD or more

HH on lower incomes are provided with rent support based on a periodic means test

HH are encouraged to own asset through repaying capital

Rent is reduced proportionate to share of ownership

Affordable Housing (Rent to Buy) model

Population

75

300

500

Rent cost

Rent Subsidy

Repayment

400Income

Inco

me:

USD

/mon

th

Value Capture through Land Sharing: Informal settlement, 9 Nissan, Baghdad

84,000 sq. m Commercial.

58,000 sq. m. MoA Research Lab

114,912 sq. m. and 1,512 units, Government supported Housing

56,928 sq. m. and 211 units Private Housing

800 households informal

•Land is redeveloped for mixed use•Phased to avoid external relocation of existing informal residents•Value capture to finance “assisted” housing

Net positive Cash Flow: 115 Billion IQD (US$98.6 million)

Annual Internal rate of return: 68%

Land Sharing: Al Bahith El Almi: proposed

Outcomes

What does it take?• An agreement from the land custodian (or custodians) to redevelop the

site.

• An expeditious conversion of the legal land use as agricultural/protected

green zone to the proposed residential and commercial uses.

• An initial investment of 27.5 Billion IQD (US$23.6 million).

Value Capture through Land Sharing:

• Continue with Housing Policy Implementation to establish an

effective housing market

• Expedite housing delivery by establishing a land development

agency that develops land for mixed uses, and uses value capture

mechanisms to capitalise assisted housing for vulnerable and low

income families.

[urban informal settlements are a good place to start; land is often

high value, has access to trunk infrastructure, local amenities,

sources of livelihood, and they in any case need to be addressed]

• Establish a Housing Management Organization that provides

housing to vulnerable and low-income families on a Rent to Buy

basis

Recommendations: