Cross-Cutting Issues Regarding Slum Upgrading Property Rights and Security of Tenure

Secure of tenure, according to Cities Alliance (2014), "is at the very center of slum upgrading." As Cities Alliance further points out, lack of some kind of legal tenure security makes the circumstances of those who reside in slums highly uncertain. This is particularly the case given that evictions could be instituted at any moment. It is important to note that people are not likely to invest in permanent structures if they fear eviction -- meaning that the structures they put up will be largely shoddy and meant to serve temporary shelter needs. However, once people are assured of the right to keep their homes, they develop "a sense of permanence and realize that they can sell their house and recoup their investment" (Cities Alliance, 2014). Property rights also protect slum dwellers from extortion and exploitation (Cities Alliance, 2014).

End-User Finance for Low Income Housing

According to Housing finance and financial inclusion (p. 9) "while the volume of housing finance grew rapidly in many developing countries in the decade up to 2008, the majority of people in these countries do not have access to formal housing finance…" -- an assertion supported by Housing microfinance the state of the practice, who points out that the existing mortgage financing instruments seem to be designed...

Thus in reality, those living in informal settlements cannot afford housing microloans or mortgages. This is further confirmed by Ferguson (as cited in Housing finance and financial inclusion) who expresses that in most emerging markets, approximately three-quarters of households cannot afford the least expensive developer-based unit.
End-User finance for low income housing could assume diverse formats. For instance, the government could partner with development partners and undertake to construct housing units which would then be delivered to the target residents of informal settlements. In this case, delivery could be on a cost recovery basis, whereby repayment is tailored to match the rent (monthly) over a specified period of time. Alternatively, a specialized mortgages scheme targeting slum dwellers could be formulated. The criteria adopted for purposes of access to the proposed mortgages could be based on such parameters as the household income. As Housing finance and financial inclusion (p. 25) proposes, "the minimum household income necessary to support the smallest available mortgage can be calculated as the income at which an installment and other housing-related costs can be paid, leaving sufficient income to cover expenditure…." To ease the equation, the government could formulate a well-defined expenditure line that applies nationally for the target…