Smart cities are turning into ‘means of survival’ for the underprivileged population. For them, these are not places where they can ‘live’ – but they can just avoid dying.
Cities around the world are facing the challenge of providing affordable homes to their citizens. A global study conducted on 200 cities showed that 90% of them were deemed unaffordable. The average house prices are three times more than the middle income.
One of the major problems lies in the fact that house prices keep surging but the income doesn’t. London based real-estate consulting firm, Knight Frank found this. Across 32 megacities around the globe, average home prices increased by 24% over the past five years. Whereas average real income grew by only 8% over the same period. Dubai and Sao Paulo are two such examples where real income has dropped down more than the home price.
Lately, the National Association of Realtors analysed that every single metropolitan area grew less affordable between the years 2017 and 2018. The situation is getting worse. For instance, in the US, nearly one-third of households are overburdened by housing costs. More than a quarter of tenants have to spend more than half of their income on housing.
But there are some ideas which can enable smart cities and countries to provide affordable homes to citizens. Delve into the context to unveil some of the successful strategies implemented!
Combined Effort For Affordable Homes
For about 20 years, Bill & Melina Gates Foundation has been working towards eliminating homelessness in the US. The NGO is responding to families without shelter and even those who are at risk of it due to the increasing rents.
The Foundation has helped a lot of families getting shelter while making it less likely for them to return to homelessness. However, more families are becoming homeless and there are not many places to accommodate them.
For this, the local government can step forward to encourage mixed-income neighbourhoods via zoning, building codes and tax incentives. It is also required that they invest in housing and behavioural health. But this calls for a joint effort – a coordinated action between private companies, communities and the local government.
This strategy is being furthered by Seattle and King County. These urban spaces are gathering resources, planning and coordinating a regional response to homelessness. Companies like Microsoft and Amazon are joining forces. The former is offering low-interest housing loans while the latter is offering space for Mary’s Place family shelter. Seattle Chamber is supporting affordable housing by connecting property owners in ways that can help citizens.
Some companies are offering homeowners a surety bond that enables potential tenants to pay a one-time fee instead of a security deposit. The fee is generally 20% of the security deposit. This aids lower-income families to get access to a broader range of apartments.
A company established in 2018 offers short-term loans to renters so that they can pay their rent and avoid eviction. The loans are way cheaper than the traditional payday loans.
In addition, State policies also play a contributing role. Policies like eviction reform, the Housing Trust Fund, and behavioural health services are about to be introduced. Besides, NGOs are coming up with creative ideas with the intention to build more affordable places for people to live. In fact, there are instances where NGOs are coming together to serve different communities. One example is “Rise Together”, which is a syndicate of five NGOs.
Such strategies have proven to be effective, as they are collaborative and community-driven. This is the reason that the Bill and Melinda Gates Foundation is making investments in such projects. Their efforts will create approximately 1200 affordable places that can be called ‘home.’
Modular Construction & Smart City Technology
A series of smart city technologies are attracting great opportunities that can reduce the cost of housing. Some of these are modular construction, digitally-enabled home-sharing and innovative financial tools for tenants.
Modular construction, in particular, will see tremendous growth in the coming years due to its capabilities to reduce construction cost and time. For example, Skender, a Chicago-based firm is employing modular homes for developer around the Windy City. Many more companies are following this trend. To further promote such projects, local and state governments can assure building codes that enable modular construction by granting expedited sanctioning.
On the other side, financial tools are aiding people to find quality rental homes while supporting their financial stability. New constructions form just a part of the strategy towards sustaining affordable homes. Because there are homes where spare rooms exist. Homeowners have been providing rooms for rent.
Today, the benefit for homeowners is that they do not require to spend on advertising. Companies such as Nesterly and PadSplit are helping homeowners apportion their homes into multiple units or rent out spare rooms. There are about 50 million of spare rooms in the US alone. Alongside, smart cities can promote home-sharing by updating regulations related to rental properties and through tax policies.
But the biggest difficulty comes in for low-income renters. For them, maintaining a home once rented or access to affordable homes is a challenge. Hence, a number of companies are involved in finding a home for low-income people, in the first place. For example, OneApp allows tenants to have access to a list of apartments that accept their credit and criminal background status (if any). This helps avoid costly application fees.
City and City Efforts
Barcelona and New York have come together to address the affordable housing challenges faced by both cities. The governments of both the cities in partnership with Fira Barcelona are working towards making affordable housing the right of citizens. They are inviting public, private, social and academic sectors that are deploying innovative technologies and tools to make housing affordable.
Barcelona has committed to double the number of public housing units in the coming 10 years. New York is determined to develop and maintain affordable homes for 300,000 families.
The smart city of Barcelona is specifically under the pressure due to its comparatively small size and historic housing structure. Another thing that’s driving change is the success of living and working in the city. Most of the rental properties are private which further limits the city’s influence on affordable pricing.
French Government Housing Strategy
On 20 September 2017, the French government presented a housing strategy to make living more healthful. The nations housing strategy is based on three pillars which are as follows:
- Construction of more better and cheaper housing facilities that trigger a “supply shock.” It focuses on implementing an unusual tax allowance, on capital gains for the sale of land where the market is under pressure.
- Satisfying the needs of each citizen while protecting the most vulnerable. This pillar focuses on a specific rental agreement which is non-renewable and without a security deposit. In every six years, each household will be reviewed for new entrants. Under this pillar, it will also deploy a “Housing First” plan which will optimise the building of very low-income housing.
- The third pillar is to improve living conditions. It concentrates on 450 neighbourhoods with the highest rate of poverty. It includes enhancing the availability of public services and economic development.
While affordable housing is directly related to the rent/lease required for accommodation, the underlying meaning is more complex. In simple words, affordability exists when people are able to live a healthier life fulfilling their basic requirements. These include food, shelter, transport, health, infrastructure and service.
What if a home is located too far from work or school? Or if a tenant’s electricity and water consumption requirement are not met (as in developing countries)? This cannot be called affordable housing. Therefore, it is highly important that affordable housing is considered including all the factors that are essential for a quality life.