Local Shelter PLan – Assessment Affordability, the Chapter 4

CHAPTER 4

4. ASSESSMENT OF AFFORDABILITY 

4.1 Affordability of Households for Housing

This portion of the plan deals with looking into the affordability of the target households to pay for their housing facility.

In determining the affordability for housing of the target households, the planners categorized them into six (6) income groups.  The following assumptions are drawn in assigning the income groupings:

•     The 1st income group is composed mainly of tricycle and small fisher folks, odd jobs/laborers with monthly household income falling below the poverty threshold of P6,690 and below income bracket.  They have a typical household monthly income of P5,000.

•          The 2nd income group has at least two members that have regular income that covers the families of tricycle operators/casual workers, micro scale businessmen and vendors with monthly household income ranging from P6,691 to P15,000.  This group has a typical monthly income of P10,846.

•     The 3rd income group has an average income of P22,501 and has at least two or more members that have permanent incomes that covers the regular employees, small business owners, and skilled-workers with monthly household income ranging from P15,001 to P30,000.

•     The 4th income group comprises the OFW supported families, professionals mainly composed of teachers, nurses, and regular government employees with monthly household income ranging from P30,001 to P45,000 with a usual income of P37,500.

•     The 5th income group includes families of professionals/supervisors/departments heads and OFWs with monthly household income of P45,001 to P60,000 with an average income of P 52,500.

•     The 6th income group consists of highly paid professionals and entrepreneurs with monthly household income of over P60,000 with a typical income of P65,000.

The chart below shows that out of the targeted 3,636 new units needed due to backlog and population growth for the period of 2016 to 2025, approximately 45% or 1,636 units of these belong to the 1st income group, 21.75% or 791 units belong to the 2nd income group, 25.50%  or 927 units for the 3rd income group, 4.85 % (176 units) are in the 4th  income group while 2.10%  (76.35 units) and .80% (29 units) belong to the 5thand 6th income groups, respectively.

Figure _____ Different Income Group by  New Units Needed (%)

Further shows the various potential percentages of the household income that can be used to pay for their housing.  Based on their typical income and percentages of income for housing, the affordable housing loans were computed using the prevailing loan terms (interest rate and number of years to pay) of the government housing programs.

In terms of affordability, the first income group, has an affordable housing of not to exceed P73,785.60.  While the 2nd income group should not exceed P129,198.54,  3rd income group can afford of P254,534.66, the 4th income group can have a maximum loan of P424,220.66, while the 5th income group’s affordable loan is approximately P712,687.99 and lastly, the 6th income group can well afford to pay a loan of around P882,367.

All of the above explanation pertaining to household’s affordability for housing has been summarized in the table below.

Table 29 – Affordability Analysis and Land Need Calculation

The chart below is clearly showing that the 1st  income group has the highest land need of 14.96 hectares and belong to the socialized housing design, followed by 3rd income group having a land need of 10.73 hectares but this group is already belong to economic housing design.

Figure ____ Land Need by Income Group (Ha.)

4.2 – Affordable Housing Options.  This section presents the various affordable housing options for the six income groups.

Based on the estimated costs of land and land development, three (3) affordable housing options were designed.  As shown on the table, the first option is for 1st income group where it was designed for public rental only while the 2nd option is for 2nd, 3rd, and 4th income groups and these units were designed with two schemes “rent and or rent to own a unit” while the 3rd   option is exclusively designed for the 5th and 6th income groups. Single detached option is intended for all the income groups.

There are 1,636 households belong to the first income group that target for provision of new housing units.  The planners have positive outlook after 30 years that these units will be one among of the major local revenue generations of the municipality of Titay.

The Single detached building is the only option so far that the local planners thought best for future need, for thereby accommodating 1,636 units in 14.95 hectares of land.

The cost of land, land development and building construction will be recovered with marginal returns for the LGU.   There is a 12% additional indirect cost on top of land development and building construction cost to defray expenses for documentation, as well as, maintenance of the buildings (See Table 27- Affordable Housing Options).  The household income is also anticipated to increase through the years and enable the target households to cope with the rental.   Basic amenities are present in this scheme including the shared parking facility and a multi-purpose center for community activities.

Option 1 – Each unit will have a 22.5 sq. m floor area having a lot size of 64 sq.m. and with a total land need of 91.43 sq.m. These have been constructed in a location having power and water connection, enclosed bath and toilet, costing P 340,578.40.  These already include all the developmental costs of the building as well as the land development (roads, parking area, green areas and spaces for communal facilities, etc.).

The cost of land, land development and building construction will be recovered with marginal returns for the LGU.   There is a 12% additional indirect cost on top of land development and building construction cost to defray expenses for documentation, as well as, maintenance of the buildings (See Table 27- Affordable Housing Options).  The household income is also anticipated to increase through the years and enable the target households to cope with the rental.   Basic amenities are present in this scheme including the shared parking facility and a multi-purpose center for community activities.

However, with the goal of providing decent and climate change resilient shelters, land only is no longer being promoted as the best option.  The LGU therefore looked for alternative schemes to make shelter affordable to the lowest income group without compromising their safety. So therefore the buildings must be constructed at P10,000/sq.m. to make them beneficial even after 30 years. If after or before 30 years there have some parts of the building needs renovation, the planners are confident that it will cost only less and it will give enough return for the LGU.  Although this is not affordable for this income group but offered for public rental.

Option 2 is having a floor area of 33 sq.m. In an 81 sq.m to be constructed on a 115.71-square meter lot in a location where concrete roads, covered drainage, septic vaults, water and electrical connection are in place. It costs P 481,833.60 per unit.

Option 3 is still a single detached unit having a floor area of 45.5 sq.m., a lot size of 120 sq.m. with a total lot need of 171.43 sq.m., estimated unit cost at P717, 792.00 per  unit.  Develope land includes concrete roads, underground drainage, septic vaults and electrical connection.

Table 30 – Affordable Housing Options

Source: As Computed

Table below shows that out of 6 income groups, only three housing design has been proposed. 1st Income group shows that only P400/month is the amount they can only afford for their housing needs and 450/month as rental is the only key to live a house suitable for a living and that includes the presence of 6 basic infrastructure needs. The P50.00 additional for their monthly rental would not cost them so much compared to the benefit that they get in return. After 30 years, the land, land development and buildings construction costs would be break even in favor to the LGU.

While the 2nd Income group has given the opportunity to rent a house that is more spacious compared with 1st income group. Their capacity to rent is P867.64 but in this design, they are only to rent 800/month with an annual interest rate at 7% for 30 years. In this scheme, the land, land development and building construction can be doubled after 30 years. (See Annex – 3).

While the 3rd and 4th income groups has a scheme to own a unit by a monthly amortization of P2,250 with a 10% interest rate every after 2 years for 25 years (See Annex -4). These 2nd and 3rd income group who has the capacity to amortize and offered with the same housing design with the 2nd income group considering that potential capital cost in housing don’t differed that much so the planners are confident that these households appreciate the low amortization with a very satisfying housing design suitable for them.

The 3rd housing design is just like the 2nd housing design but a bit spacious and offers monthly amortization of P5,000/month with an interest rate of 10% every 2 years. After 30 years, the land, land development and building construction cost will be almost tripled. See Annex – 5.

Table – 31 Affordable Housing Options for Different Income Groups

All income groups will enjoy the basic amenities of concrete main and minor roads, power and water lines, covered drainage and regular garbage collection.  Open spaces provided for parks and play grounds, as well as for other community facilities, can be utilized for day care centers, chapels, multi-purpose center and other community infrastructure desired by the homeowners that are not in conflict with residential use.

In all options, there is a provision for green space for vegetable and urban and ornamental gardening and circulation in support of the “One Village, One Block, One Flower, One Shrub, One Tree” program of the Local government through the Local Housing and Development Office for the relocation sites.

Provision for insurance will be incorporated in all housing options as a beneficial measure in case of fire mishap.

To proceed click the link below:

Local Shelter Plan – Acknowledgement

Local Shelter Plan – Abstract

Local Shelter Plan – Table of Contents

Local Shelter Plan – List of Acronyms

Local Shelter Plan – Foreword

Local Shelter Plan – Local Shelter Plan – Preface

Local Shelter Plan – Local Shelter Plan – Chapter 1

Local Shelter Plan – Chapter 2 – Municipal Overview

Local Shelter Plan –Assessment of Shelter Need, the Chapter 3

Local Shelter Plan – Assessment Affordability, the Chapter 4

Local Shelter Plan –Chapter 5

Local Shelter Plan – WORK AND FINANCIAL PLAN, the Chapter 6

Local Shelter Plan –Local Shelter Plan – Chapter 7 and Chapter 8

 

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