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close this bookSupport Measures to Promote Rental Housing for Low-Income Groups (HABITAT, 1993, 132 p.)
View the documentA. The nature of owners, tenants and sharers
View the documentB. Preferences for owning, renting or sharing
View the documentC. The choice between different kinds of non-ownership
View the documentD. Who invests in rental housing?

B. Preferences for owning, renting or sharing

In the United Kingdom, Saunders (1990: 2 and 311) argues that:

“mass ownership is associated with a strong popular desire to own personal property and is underpinned by deeply cherished and widespread values which emphasize independence, security and the importance of home as a base from which to venture out into the world... “Ownership not only guarantees certain rights which may be denied to tenants, but it also ensures permanency, even across generations. In a world where change is rapid and expectations are forever being turned upside down, the privately owned home seems to represent a secure anchor point where the nerves can be rested and the senses allowed to relax”.

Saunders is certainly correct in underlining people’s attachment to ownership but it should not be thought that this attitude is uninfluenced by any notion of monetary gain. For, over the years, British Governments of every political persuasion have offered people generous financial incentives when purchasing their home. Similar tactics have been employed in Australia where “the owner occupied sector has been heavily protected and taxed at a lower rate than other sectors in the economy” (Flood and Yates, 1989: 208). Fiscal incentives have also been used in the United States where, not surprisingly, a recent survey found that four out of five Americans thought that owning a home was a good investment (Megbolugbe and Linneman, 1993: 660).

Financial rewards have increasingly been offered by governments to formal sector owners in many Latin American countries. In Chile, for example, Governments since 1958 have offered families generous subsidies to buy their own homes (Kusnetzoff, 1990). As IEU (1990) point out “the treatment accorded by the state to owners and tenants is very different and highly regressive with respect to tenants”.

Ownership has also been attractive to low-income households, even if few have ever been offered any kind of financial incentive. Recent surveys conducted in several major Latin American cities, for example, have found a widespread preference for owner-occupation among both owners and tenants. In La Paz, Beijaard (1992: 67) finds ownership to be “by far the most preferred tenure situation for households of all tenure groups.” In Caracas, Mexico City and Santiago de Chile, the vast majority of existing home-owners express clear contentment with their current tenure, practically all of whom had had previous experience as tenants or sharers (Gilbert, 1993). Similarly, most tenants wish to be owners: 86 per cent of tenants interviewed in Santiago de Chile say that they would prefer to be owners and 94 per cent of those in Caracas. Only in Mexico City, is the preference less marked, a mere 58 per cent saying that they would prefer to own. Patterns of residential movement in each city also reflect this general preference for ownership. While most owners had once been tenants or sharers, few families now renting or sharing accommodation had previously been owners. The move into ownership is one-way traffic.

Similar attitudes are found in the three case-study countries. In Delhi, 72 per cent of a sample of 200 tenant respondents prefer owner-occupation, only 4 per cent preferring to rent (Wadhva, 1993: 52). In Egypt, Abt Associates (1982: 124-125) found that

“most households, whether owners or renters, would prefer to own rather than to rent. Among owners in Cairo and Beni Suef, 91 per cent and 100 per cent respectively expressed a preference for owning; among renters, Cairo and Beni Suef proportions who would prefer to own were 75 and 82 per cent respectively.”

In Nigeria, Ozo (1993: 38) reports that “the desire to own one’s house is widespread and cuts across all classes.”

A range of perceived advantages attracts low-income households to ownership. When owners in Latin America are asked about the advantages of owning a home, it is the sense of security and the feeling of independence that comes across (Green, 1988). Having something of one’s own gives an important boost to a family’s self-esteem. No doubt, such self-esteem is enhanced by the constant bombardment of television commercials, aimed at the middle class, about the availability of luxury homes on brand new housing estates. The image conveyed is that all “decent” people own their own home. Ownership in Latin America has become the cultural norm.

In Guayaquil, the most important emotion expressed by tenants about ownership is the need “to feel themselves masters of their own destiny, as symbolized by living in their own houses” (Salmen, 1989: 28). In part this means that they no longer have to share with kin or to put up with interfering landlords or fellow tenants. But, ownership also offers a major financial advantage, freedom from the need to pay rent every month. In Guayaquil,

“the future homeowners looked forward to having their monthly payments be an investment in their own property rather than a contribution to what they regarded as an alien landlord’s ill-deserved affluence” (Salmen, 1989: 28).

Home-ownership also provides something that can be left to the children.

Ownership also promises the chance of capital gain. Houses can be sold when the family move on. Rents are handed over to the landlord but payments for the purchase of land and housing are an investment for the future. In places this is no doubt a real advantage but all too frequently the advantages of ownership in terms of capital gain are vastly exaggerated. Capital accumulation is only possible if it is actually possible to sell. In practice, few owners in third world cities manage to sell their property. As Lloyd (1990: 293) puts it:

“the possibility of purchasing a house from the previous owner... in Africa is very weakly developed. Most of those who have already built a home intend that it shall pass through inheritance to their children - or if they cannot occupy it, to be rented so their children enjoy the income. The inadequacy and complications of legal titles are a further deterrent to transfer.”

Similar problems seem to be faced by owners in the suburbs of Santiago de Chile, to judge from the almost complete residential immobility of the owners in the low-income areas (Gilbert, 1993).

In Egypt, the main advantage of ownership for some appears to be associated with the possibility of living a different style of life. As Wikan (1990: 133) describes it

“the dream of a house of one’s own has been a woman’s dream... Confined to the back streets with the noise, turmoil and neighbourly interference, the desire for peace is one constantly expressed by poor women and is embodied in such dreams.”

Other less qualitatively based assessments in Cairo come up with preferences for “not having to pay rent” and “security” (Abt Associates, 1982). Hardly any prospective owners mention housing as a good “investment”.

Not only are there good reasons for positively opting for owner-occupation but there is also a push factor behind wishing to leave rental accommodation. Reporting on a survey in Oaxaca, in Mexico, Selby et al. (1990: 160) report that “renting is viewed as very unsatisfactory by urban Mexicans... Of all the bills that the poorer people of urban Mexico dislike, it is the most detested.” In the light of other surveys in Mexico this appears to be rather an exaggerated claim, but it is clearly true that in inflationary times ownership frees households from the worry that they will not be able to pay constantly rising rents. However, this is only possible where land is free or very cheap. Where land is expensive, monthly payments on land are a direct substitute for rental payments.

Despite this general preference for ownership, some households remain in rental or shared accommodation even though they have the resources to acquire their own self-help home. Some tenants, despite living in crowded conditions and who could have had much more space as home-owners on the periphery, cling to their rental accommodation. In Delhi, Wadhva (1993: 52) reports that 17 per cent of her tenant sample prefer to stay in the rented house for reasons of location, even though they own houses elsewhere in the city. In Nigerian cities, migrants often rent even though they buy property at home in the countryside (Ozo, 1993: 38). Even those who have lived many years in the city retain a strong allegiance to their rural “home”, the place to which they will retire and where eventually they will be buried. In certain parts of Latin America, substantial numbers of tenants also dissent from the chorus of approval for ownership. In Mexico City, two fifths of central tenants prefer to rent and, in Santiago de Chile, 30 per cent of those living in the conventillos say the same. Four fifths of these central tenants had never looked for their own home (Gilbert, 1993).

There are many reasons why some Latin Americans continue to rent. First, for tenants with secure tenure living in the central areas, a move into ownership is likely to mean a move away from the city centre. If they work in the centre, a move may lead to a journey of several hours per day, especially if they live in a megacity suffering from acute traffic congestion. Poor families in Santiago de Chile who were moved forcibly to the south of the city strongly resent the move. They tell of the many inconveniences caused by the move.

“The central area is a desirable place of residence because of the greater availability of services, its better access to sources of work and the presence of a local authority with a superior capacity to attend to their needs. They have a strong attachment to the centre, they value the contact with their neighbours and the security that the area offers them... In spite of counting with a home of their own, they manifest a clear desire to move; many would prefer to rent in the central area than to own a home in the south of the city” (Rodrez and Icaza, 1993: 5 and 72-73).

Secondly, a move to the self-help periphery may not be what tenants really want. While most families may want their own home, some families are in a particularly weak position to engage in the construction process. This becomes clear when we look at the characteristics of families who do become owner-occupiers. Families capable of undertaking the task of self-help construction are found in much greater numbers among the owners than among the tenants. Thus the proportion of workers in the construction industry is usually higher among the owner households and the number of female-headed households much lower (Gilbert and Varley, 1991). When tenants say that they want a home of their own, they may not mean that they are prepared to build their own house. As Coulomb and Shez (1991) put it: “the great majority aspire to owner-occupation but not under the conditions that are implicit in the ownership and self-help construction of a house in the periphery.” They want to own, but they mean ownership of a custom-built house not living in a shack.

Thirdly, renting may not be as bad as many reports portray. As chapter VI shows, many tenants get on with their landlords and are not constantly being threatened with eviction. For tenants with guaranteed tenure living near the centre of Cairo, Delhi or Mexico City, renting may offer just as much security as ownership. In Delhi and Cairo, tenancy rights can even be passed on to one’s children. Elsewhere, tenure is less secure but in cities like Caracas, Guadalajara and Santiago de Chile, few tenants change home frequently, indeed, in the central areas of Santiago and Mexico City, households stay in the same house for a very long time (Gilbert, 1993). If security of tenure is supposedly one of the main advantages of ownership, many families in Mexico and Santiago seem to achieve this goal perfectly satisfactorily through renting.

Fourthly, while most tenants may aspire to owner-occupation, they may not want that tenure right now. There are several groups for whom renting offers clear benefits. As Sundaram (1990: 126) points out:

“rental housing has certain inherent advantages from the individual’s point of view, such as low initial investment and greater flexibility for future tenure options. This makes it a more preferred alternative for more mobile younger households, the floating population and new migrants.”

In sum, the goal of home-ownership is much cherished. However, the form in which home-ownership becomes available is highly significant. Some families will accept home-ownership even when it means building a home on the unserviced periphery, while for others this is anathema. For some, ownership on the periphery is highly desirable, but it is an unobtainable dream. The result is that we have a highly diverse response to seemingly the same aspiration.

So far, the question of relative costs has not been raised. In some cities, rents are high relative to incomes, elsewhere they are cheap. In some cities, purchasing a plot is expensive, elsewhere land can be invaded or bought cheaply. A critical ingredient in tenure choice is the relative cost of the options. Renting a home in Mexico City is much cheaper than renting a home in Santiago de Chile or Caracas (Gilbert, 1993). Consequently, there are relatively few families in Santiago de Chile who can afford to rent accommodation whereas rent-income ratios in Mexico City are much lower. Under these circumstances fewer families in Mexico will be forced into peripheral ownership by their inability to pay rent. Families in Mexico City face a much more balanced choice between renting and owning than in Caracas or Santiago de Chile. Clearly when rents are very low, families will continue in rental accommodation even when the accommodation is inadequate. Should rents rise they may well reconsider their housing situation, either because they cannot afford the higher rent or because the balance of advantage between ownership and renting has shifted. It is this balance of advantage, not just in costs but in convenience, servicing and location, that seems to be critical in the process of residential choice. This balance, of course, is not determined by individual families but by the political economy of land and housing in the city and country concerned. The basic ingredient in understanding the transition to ownership in third-world cities, therefore, is to consider carefully how readily poor families can obtain land.