Inclusionary Housing: An Evaluation of a New Public Rental Housing Governance Instrument in China

Inclusionary housing (IH) is a regulatory instrument adopted by local governments in many countries to produce affordable housing by capturing resources created through the marketplace. In order to assess whether it is efficient, scholarly attention has been widely focused on its evaluation. However, there is a lack of studies evaluating IH from a governance perspective. Since IH is about involving private actors in affordable housing production, the governance point of view of cooperating governmental and non-governmental actors governing society to achieve societal goals is highly relevant. The two most important elements of governance—actors and interrelationships among these actors—are taken to build an analytical framework to explore and evaluate the governance of IH. Based on a research approach that combines a literature review and a case study of China, this paper concludes that the ineffective governance of Chinese IH is based on three challenges: (1) The distribution of costs and benefits across actors is unequal since private developers bear the cost, but do not enjoy the increments of land value; (2) there is no sufficient compensation for developers to offset the cost; and (3) there is no room for negotiations for flexibility in a declining market. Given that IH is favored in many Chinese cities, this paper offers the policy implications: local governments should bear more costs of IH, rethink their relations with developers, provide flexible compliance options for developers, and perform differently in a flourishing housing market and a declining housing market.

Affordable Housing Provision in Informal Settlements through Land Value Capture and Inclusionary Housing

Public-driven attempts to provide decent housing to slum residents in developing countries have either failed or achieved minimal output when compared to the growing slum population. This has been attributed mainly to shortage of public funds. However, some urban areas in these countries exhibit vibrant real estate markets that may hold the potential to bear the costs of regenerating slums. This paper sheds light on an innovative hypothesis to achieve slum regeneration by harnessing the real estate market. The study seeks to answer the question “How can urban public policy facilitate slum regeneration, increase affordable housing, and enhance social inclusion in cities of developing countries?” The study approaches slum regeneration from an integrated land economics and spatial planning perspective and demonstrates that slum regeneration can successfully be managed by applying land value capture (LVC) and inclusionary housing (IH) instruments. The research methodology adopted is based on a hypothetical master plan and related housing policy and strategy, aimed at addressing housing needs in Kibera, the largest slum in Nairobi, Kenya. This simulated master plan is complemented with economic and residual land value analyses that demonstrate that by availing land to private developers for inclusionary housing development, it is possible to meet slum residents’ housing needs by including at least 27.9% affordable housing in new developments, entirely borne by the private sector. Findings suggest that under a robust public-led governance umbrella, market forces can (1) significantly contribute to fill the financial gap in order to achieve the end of slums by 2050 in coherence with the United Nations Agenda 2030 targets and principles, and (2) increase both affordable and market housing in upgraded neighbourhoods, hence enhancing social inclusion in cities of developing countries.

The incentivisation of inclusionary housing by South African municipalities: a property law perspective

ABSTRACT Although it is still in its formative stages, the idea of inclusionary housing in South Africa's constitu tional con text is inescapable. The typical characteristic of inclusionary housing is that a developer is required or encouraged to dedicate a specified portion of her housing development project to the provision of affordable housing. This raises concerns about the possible violation of developers' property rights because it affects their investment backed expectations regarding future earnings. Since municipalities are the chief agents of the implementation of inclusionary housing, it is important to investigate how they can respond effectively to the property related concerns of developers. This article conducts an overview discussion of the concept of property in South African law, with a special focus on how property regulation can be anchored on the "givings" concept. It then explores the legal mechanisms through which municipalities can pay financial incentives to housing developers to ensure the growth of a housing stock that is geared for affordability as well as social and economic integration. We undertake a critique of the current statutes governing local government financial management and illustrate their inadequacy. It is concluded that inclusionary housing can only succeed in South Africa if legal policy recognises the need for financial payments to developers that go beyond mere compensation for excessive regulation of property rights. Keywords: Property, deprivation, inclusionary housing, incentivisation, future earnings, financial incentives, immaterial interests, givings.