Social Housing Finance Program aims to provide affordable housing for low- and middle-income Egyptians (2011–Ongoing)

Population growth and massive rural-urban migration has caused overcrowding and a housing crisis in Egyptian cities, particularly in Cairo. In response, the Egyptian government launched the Social Housing Program in 2011. The program aims to provide affordable housing, at close to construction cost, to low-income Egyptians, with low interest and long-term subsidized loans.

Since the 1970s, rapid population growth and rural-urban migration have contributed towards a rise in informal housing and slums in urban areas in Egypt, and on otherwise productive agricultural land. In an attempt to provide decent housing for vulnerable urban dwellers, the government of Egypt launched the National Strategy of Housing and the Social Housing Program in 2011.¹ By 2014, Law No. 33 for Social Housing was issued, the Social Housing Program was restructured to Housing for All Egyptians, and a Social Housing and Mortgage Finance Fund was established.²

Under the 2014 social housing reform, the government laid out plans to construct one million housing units in 283 cities by 2020 for low-income Egyptians.³

Implementation

Areas for construction are first identified by the Ministry of Housing where basic infrastructure is available (access to water, sanitation ,and decent roads), and are then prioritized according to where there is the greatest need for new housing units.⁴ Construction is executed by the Central Agency of Construction, working under the Ministry of Housing and by private sector entities (through tenders), supported by funding and consulting services from the World Bank.⁵

Homes are made available for low-income Egyptians to buy at a five percent mark-up over their cost of construction, while the government worked with the Central Bank so that low-income families could afford to buy newly constructed housing units through long-term subsidized loans.⁶ The Central Bank supplies commercial banks and mortgage lenders with subsidized funds for mortgages, whilst a government decree limits mortgages supplied under the Housing Finance Programme to a maximum interest rate of seven percent and a loan duration of 20 years. In comparison, the weighted average lending interest rate at the time (2014) was 18 percent.⁷ In 2022, the program was extended so that loans are up to 30 years and charged at three percent interest.⁸

In 2019, mortgage owners under the program would have to make a down payment of between 15 and 50 percent of the housing price.⁹ However, in recognition that low-income households would not be able to afford the down payment, many low-income applicants were provided with cash stipends to cover part of the initial down payment. The subsidies were progressive, the lower the income, the higher the amount subsidized, and may reach a maximum value of 15 percent of the house’s price.¹⁰    

To be eligible for the house loan under the Social Housing Program the applicant must be an Egyptian citizen, aged between 21 and 50 years,¹¹ and have a maximum yearly income of EGP 72,000 for units dedicated to persons with low incomes¹² and a maximum yearly income of EGP 156,000 for units dedicated to persons earning what is considered a middle-level income.¹³

In 2022, an Environmental Unit was established within the Social Housing and Mortgage Finance Fund, to adopt the Green Pyramid Rating System (GPRS). The GPRS guarantees environmentally friendly practices in all the phases of the construction process, and that the buildings constructed are green and have minimal energy consumption. As a result, the Social Housing Program was the first green social housing initiative in the region.¹⁴

Cost

The Egyptian government allocated EGP 390 billion (equivalent to USD 55 billion according to the rate in 2014)¹⁵ for the Social Housing program.¹⁶ The World Bank provided a USD 1 billion loan in 2015 to support the Social Housing Program under the Inclusive Housing Finance Program for Results project, mainly dedicated to support subsidies to low-income households, and the GPRS initiative.¹⁷

Assessment

A total of 435,600 housing units were constructed by the fiscal year 2020–21 (compared to the target of one million).¹⁸

The number of households that benefited from the Social Housing Programme reached 401,769 in March 2022, 24 percent of them are female-headed households and 49 percent of beneficiaries belong to the bottom 20 percent of the income distribution.¹⁹

With respect to the GPRS initiative, 7000 GPRS units were already in the construction phase in 2022, and 25,000 units are to be completed in the following three years.

Despite the Social Housing Program’s large-scale efforts to solve the housing problem in Egypt, it still receives some criticism regarding an unbalanced geographical distribution of housing projects, a shortage in fulfilling the housing market demand and a failure to equitably provide subsidies, as the conditions are sometimes unfeasible especially for workers in the informal sector. ²⁰

Tags

• Affordable Housing
• Egypt
• Housing
• Low-Income Groups
• Middle East & North Africa
• Middle-Income Country