On February 16, the Ministry of Housing, City and Territory announced substantial changes to the program My House Alreadyseeking that these subsidies can reach all the municipalities of the country and benefit those who need it most.
However, the Anif Center for Economic Studies issued several warnings about the negative effects that were had not only by these changes, but also by the reduction in program budget and what is stated in the articles of the National Development Plan (PND).
(Also read: Government announces the changes that Mi Casa Ya will have: everything you need to know)
«The two operational modifications of Mi Casa Ya by the National Development Plan and by the modifications that will be made via decree generate, at the worst moment, A crisis in the flagship program of the housing policy in Colombia«, he warned.
This would exacerbate the bad moment that new home sales in Colombia would go through. According to the Camacol Urban Coordination, in January 11,978 units were soldpractically half of those that were sold a year ago: 23,934.
Fewer families benefited
1.4 trillion pesos are available to deliver 50,000 housing subsidies in 2023.
Mi Casa Ya has proven to be an efficient instrument for helping thousands of families to fulfill their dream of having their own home. In the last two years it has been able to grant between 60,000 and 70,000 annual subsidiesfocused on households that earn between zero and two monthly minimum wages.
Only in 2022 the investment of Mi Casa Ya was around 2.5 trillion pesos for the delivery of approximately 60,000 subsidies. According to Anif, for this year only almost 40,000 subsidies would be guaranteed, «which would be a strong blow to the building sector which has been facing a sharp drop in sales».
(Also: Sisbén IV: this is how you can request the survey to apply to the ‘Mi Casa Ya’ program)
However, the Ministry of Housing verified that this year there are available 1.4 trillion pesos to deliver 50,000 housing subsidies. In any case, in 2023 some 10,000 fewer subsidies would be delivered from Mi Casa Ya.
Another point that Anif mentions is what has been included in the articles of the National Development Plan, since the legal limits with which the Mi Casa Ya program had been working are being modified.
Currently, there is a maximum of 150 monthly minimum wages in the main cities for housing construction, while for the rest of the country it is 135 wages. But in the PND It is considering changing the minimum wage for the UVT (Tax Value Unit) as a determining factor of the Social Interest Housing (VIS) ceilings.
In this sense, the new cap would be 3,552 UVT, which in 2023 represents 150’647,424. This in the case of large cities would represent an increase of 0.4 percent compared to 2022, but in minimum wages the increase would be 16 percent (174 million pesos in total).
(Also read: How to obtain the rental subsidy in compensation funds?)
For Anif, if this is compared with inflation of 13.25 percent or the PPI (Producer Price Index) it is unjustified and there is a real risk of reducing the supply of VIS in cities.
In addition, ensure that fixing the increase for UVT can be recovered by not recognizing additional costs of the sector such as increases in land costs, labor costs and exchange risks, among others.
«The addition of one or two percentage points to the UVT could be more effective, compensating for this consideration, or reviewing the adjustment from the perspective of the Icoced (Building Construction Cost Index) or the IPP,» Anif proposes.
Change in the rules of the game?
With the changes announced on February 16 to the Mi Casa Ya program, targeting is being improved from Sisbén IV and its coverage is being expanded to rural sectors.
In urban areas, households in Sisbén classified between groups A1 and C7 will receive a subsidy of 30 monthly minimum wages (34.8 million pesos) for the payment of the initial installment. This same amount will be received by people who live in rural areas and will have Sisbén between A1 and C14.
Prioritized households are those that probably have the least favorable conditions to access a home loan
Urban households with a Sisbén classification between C8 and D11 will have a subsidy corresponding to 20 salaries (23.2 million pesos). While the rural ones must have a Sisbén classification between C15 and D20 to receive this subsidy.
These changes also mean that Households that are not in the Sisbén bases will not be able to access the Mi Casa Ya subsidieswhich limits the demand for the program due to a new access barrier.
(Also read: Housing subsidies: departments that will have more resources in 2023)
In addition, Anif ensures that this new targeting mechanism generates large elements of risk for the execution of the program where the prioritized households are those that will probably have the least favorable conditions to access a home loan.
«It remains to be established whether this will create bottlenecks in the system in the face of a current scenario of rapidity in the resolutions to request subsidies,» he adds.
Targeting by category of municipality could also leave large cities with Strong limitations on access to housing. Based on the scoring system presented by the Ministry of Housing, category 1 and 2 municipalities would be the most affected compared to category 5 and 6 municipalities.
Anif recommends that in the process of expanding the program to more cities there should be a study that supports the demand in this type of municipality, since this criterion generates access barriers for low-income families that still require housing.
Financial closures at risk
The builders’ concerns are also due to the change in the figure from ‘enabled’ to ‘interested’. They ensure that by ending the subsidies enabled also presale ends and with the builder credit.
Now, an ‘interested party’ would not refer to a person who is ‘eligible’ to receive a subsidy because they meet all the requirements after a prior evaluation.
Based on the ‘qualified’ banks, they enter them to analyze that flow of people and value it as pre-sale (project income), which helps the builder to be able to demonstrating the financial close of the project and thus access financing with construction credit.
(You may be interested in: Mi Casa Ya: who has priority and how to apply for the housing subsidy?)
With this change that was announced, an ‘interested party’ could refer to any person who is ‘interested’ in accessing the subsidy, whether or not they are a candidate, which makes it an important gap in the figure of pre-sales.
Due to the implications in pre-sale and in the sector’s access to financing conditions from the financial sector, builders who depend on credit for their projects would be deprived of their main working capital,once again affecting the supply of housing, jobs in the sector and their participation in economic activity.
It would also be necessary to know the future of the concurrence and the resources of the Social Interest Housing Fund (Fovis) that have worked correctly to make more homes achieve financial closure.
What will happen to the subsidies approved in 2022?
According to the Ministry of Housing, for operational fines, all homes that are currently in an ‘enabled’ state will be called ‘interested’, a condition that will be valid until March 30, 2024.
After this time, the registration will be canceled and if the household wishes to apply again, they will have to make a new registration. Only one active registration per household will be allowed.
Assignments will be made to households in ‘Interested’ status that meet program requirements.
(You can also read: Sisbén score will now be essential to access the Mi casa Ya subsidy)
As of next April 1st, new applications will be accepted permanently. For the household to be included in the ‘Interested’ status, it must meet the Sisbén requirement. Therefore, if the person does not have a classification in the Sisbén, they must take steps to do so.
After one year, if the household does not continue the process, their registration will be canceled and they will have to apply again. The application to the program must be made on a platform provided by the Ministry of Housing, City and Territory.
