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Subsidizing urban rent, like public transport, vital
Subsidies have been fundamental instruments to provide basic needs, especially for goods and services essential for the dignity and productivity of a society. A subsidy for providing a roof over everyone’s head is even more fundamental and urgent. Housing rights are attached to many other rights. #opinion
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Housing option: A high-rise apartment is one feasible housing solution in large cities like Jakarta. The Jakarta administration is offering affordable apartments under a zero down payment scheme as part of its public housing program. (The Jakarta Post/Ghina Ghaliya Quddus)
T
he country’s housing programs have never been successful, even almost 70 years after the Housing Congress in 1950. During the congress, one of the founding fathers, Muhammad Hatta, set a target of 40 years to adequately house all Indonesians.
Yet, housing affordability in the country’s big cities is at a critical stage. Reports reveal that with the continuous rise in house prices, millennials will never be able to afford adequate housing. Most people cannot afford to live near their workplaces in the cities. Institutional commitment has also faltered from a full separate ministry to three directorates general within a larger Public Works and Housing Ministry.
House prices always rise at a higher rate than that of anything else in cities. Housing subsidies logically lead to speculative rises. Imagine a subsidy for car purchases. It would similarly increase vehicle prices. Moreover, when a subsidy is channeled through the supply side (the developers) as it is now, it becomes greatly mistargeted and far from effective, because only 3.72 percent of home owners buy their homes from developers (and almost 70 percent build their own houses), according to a 2016 nationwide survey by Statistics Indonesia (BPS).
The fundamental mistake is that subsidies have been granted for people to own property, including landed houses, which is an even greater evil. This is analogical to subsidizing people to buy private cars. In transportation, subsidies are instead used to build and maintain public transportation and the operation of it. In housing, subsidies should also be used to build and manage social housing, and its use.
Social housing here means housing that is not meant to generate a profit, which should be made available to middle- to lower-income groups. This means people pay rent at different rates proportionate to their income levels. A certain level of maximum income should be set as an eligibility limit, as housing is a basic need, one of the human rights firmly stated in the Constitution, the Housing Law and the 1999 Human Rights Law, along with our 2005 ratification of the International Covenant on Economic, Social and Cultural Rights.
Nowadays, it is an essential step to suppress speculation, which has led to many vacant (even if sold out) apartments.
Consider protests in cities like Berlin and Paris. Berliners demanded a referendum for the German city to expropriate thousands of vacant apartments. The city, which has a population of 3.7 million, has 466,000 social residences consisting of 280,000 public housing residences (managed by government-owned companies) and 186,000 residences managed by 80 housing cooperatives. That is 28 percent of the city’s total housing stock. Jakarta has a total of 27,000 public residences for its 10.5 million population.
