MBC Task Force on Housing - Executive Summary

Production and Processes

• Short-Term Recommendations
  • Immediate implementation of the revised processes for permit acquisition that will bring down the processing time from 24 months to 3 months. By doing so, there would be an estimated additional 80,670 units that would be produced in one year's time; (for a total of 123,754 units)
  • Acceptance of units up to P225,000 in the 20% compliance requirement for Socialized Housing;
  • Utilize idle government lands for socialized housing; and,
  • Encourage the use of cheaper non-conventional/indigenous materials where available for lower production cost.
• Medium to Long-Term Vision
  • Passage of the National Land Use Act; encourage LGUs to craft and implement Comprehensive Land Use Plans;
  • Encourage rental housing utilizing innovative approaches such as (1) allowing for joint ventures between government and the private sector in developing idle government lands for rental socialized housing, and (2) developing and implementing an urban renewal program;
  • Standardize materials (doors, windows, etc.) for low cost and socialized housing to achieve economies of scale, thus bringing down the cost of production; and,
  • Coordinate areas for socialized housing with the existing and proposed mass transport systems and vice versa (both rail and water transport).

Finance (for the Commercially-Viable Segment of the Market)

• Short-Term Recommendations
  • Encourage and support the use of the Contract-to-Sell (CTS) scheme as an acceptable means of financing by (1) having GFIs channel their support for housing by providing a liquidity mechanism (re-discounting facility) for private financial institutions holding CTS, (2) Pag-IBIG to continue to finance developers exclusively via CTS system backed by buy-back guarantees (5% retention with a 2.5% guarantee fee) of developers, and (3) BIR to issue ruling that CTS does not constitute conveyance of property and therefore, not subject to transfer taxes (capital gains, documentary taxes);
  • Liquefy the portfolio of government housing agencies- NHMFC, Pag-IBIG, HIGC-through sale or Joint Venture Asset Management mechanisms, in order to improve the financial health of these institutions, improve recovery, and provide additional resources to housing via securitization;
  • BSP supervision should recognize that housing, especially securitized mortgages, has a different risk profile compared to other real estate lending and consider the eligibility of these for rediscounting; and,
  • Private financial institutions to explore alternative instruments for housing finance, e.g., contract savings for housing scheme.
• Medium to Long-Term Vision
  • Making government subsidies for socialized housing transparent through a housing assistance fund, an "on-budget" subsidy fund targeted at the bottom 30% of society, with the subsidy period shortened from 25 to 10 years;
  • Correcting the false premise of earlier programs equating shelter provision to homeownership by giving due attention to the rental housing market, a long ignored segment of the housing sector;
  • Developing a secondary market for mortgage-backed securities to increase the flow of private funds into the housing sector and ease pressure on public pension and provident institutions to directly shell out funds for unsustainable socialized housing programs; passage of the Securitization Bill;
  • Support initiatives for the development of a privately managed Secondary Mortgage Institution (SMI) through (1) support by GFIs and endorsement to multilateral funding institutions, (2) provision of HGC guarantees on asset-backed securities, and (3) inclusion by the BSP of securities issued by the SMI among acceptable investments for banks to apply towards their agri requirements and liquidity reserve cover;
  • Develop on budget, well targeted and time bound subsidy mechanisms, and improve database for targeting subsidies (which can take the form of capital allowance in lieu of interest rate subsidies);
  • Develop LGUs' capability to undertake socialized housing initiatives, including
    passage of required local taxes (e.g., on idle lands) to finance these where needed;
  • Review the roles and responsibilities of public sector entities involved in the government's housing program to improve government's overall intervention in the housing sector;
  • HLURB to institutionalize the sale of socialized housing credits to lower the cost of providing low-cost housing and thereby reach the lower end of the market;
  • HUDCC to consider increasing the ceiling for socialized housing in Metro Manila to be able to develop socialized housing in Metro Manila;
  • Repeal of the "Maceda Law" and the provision in the General Banking Act that allows for property redemption within one year after foreclosure; and,
  • Putting in place a reliable title registry system, including enabling environment for the development of title insurance scheme to protect owners of real estate against defects, forgery, falsification, double titling, etc. in their land titles.

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