A huge Venezuelan housebuilding programme has exceeded its targets, helped reduce poverty and boosted the economy.
In the build up to George Osborne’s spending review there have been loud demands for more investment to meet Britain’s shortage of affordable homes. Some countries do things differently: Venezuela has a programme to build an astonishing three million homes using public funds by 2019.
Last month marked the second anniversary of Venezuela’s Great Housing Mission, started by the late Hugo Chávez to tackle the country’s massive housing deficit. The mission was to start by building 350,000 houses in 2011 and 2012 – a target actually exceeded by nearly 25,000 – at a cost of $22 billion so far. From now on the annual targets are much tougher – over 300,000 per year.
Of course, Venezuela’s situation is very different from Britain’s. Its population is half that of the UK and national income per head is one third of Britain’s. Nearly half of government income is from oil revenues, boosted by recent higher oil prices. The new government headed by Nicolas Maduro, elected by a wafer-thin majority in April, faces high inflation and food shortages. Nevertheless, in contrast to Britain, the country has had three years of steady growth and a longer period of growth in real incomes. Poverty has been cut by half and the gap between rich and poor is now one of the lowest in Latin America. At 50% of GDP, government debt is high but less than half the level in the UK. Public spending doubled under Chávez, but is still only just over 20% of GDP.
Yet at the same time half the population of the capital, Caracas, lives in slums. While he started to address poverty early on, it took Chávez ten years to respond to the country’s housing shortage which has since become one of the government’s highest priorities. There are now 3.7 million households on the national waiting list.
What are the keys to the scheme’s successful start? One is that it goes with the grain of popular demand. In Latin America, there is very limited experience of social rented housing: home ownership is very high, albeit that the ‘home’ might be a tin shack or worse. So although they are state-provided the new homes become the occupants’ property, financed by mortgages. The cost of the house varies according to income: the very poorest get 100% subsidy, those on twice the minimum wage get 50%. At four times the minimum wage the subsidy disappears. Banks are obliged to put 20% of their funding into mortgages to back up the programme.
Another factor is that community councils build over half the projects, mostly using private firms. This helps to ensure that schemes are in tune with local demand and often involves community supervision of projects. Crime levels (notoriously high in Venezuela) are reported to have fallen significantly in the new neighbourhoods.
The mission also boosts the construction industry, which has grown from 5% to 16.8% of the national economy. There are 51 new production centres across the country making building components like windows and doors, providing local jobs. One change made by Maduro is that these factories now provide materials to repair or extend existing homes.
By UK standards the new houses are small – usually 2-4 bedrooms in a single storey structure. Obviously, in tropical conditions the main construction requirement is that houses are impervious to heavy rain. Most have been built by using conventional techniques, but a proportion are ‘petrocasas’, built from prefabricated panels using waste products from the oil industry and filled with concrete. These have had their sternest test in schemes donated by Venezuela to replace hurricane-damaged houses in Cuba, where they have already withstood further hurricanes.
It’s difficult to envisage George Osborne looking to Venezuela for lessons for his spending review, but it’s surely salutary that a relatively poor country can aim to pull itself out of a housing crisis using public funds, then not only meet its ambitious targets but see a massive boost to the construction industry and to local jobs?
In Britain, the recent report Let’s Get Building by the National Federation of ALMOs bases its case partly on the fact that of every pound invested in house building 92p is spent within the UK. It also argued that, unlike other building projects like roads and schools, housing schemes can get on site quickly and have an immediate economic impact. If we can learn one thing from Venezuela’s very different circumstances, it is that large-scale housing programmes can be mounted speedily, can have an immediate social impact and can boost local economies. Isn’t it time for a ‘Great Housing Mission’ in Britain too?
John Perry was the author of Let’s Get Building, published last November by the NFA with four other national organisations.
Original post with multiple comments: Guardian Housing Network