Successful land delivery for low income housing in Iran (Michael Mattingly)

Michael Mattingly, Hamid Majedi (DPU PhD 1996) and Ramin Keivani (DPU PhD 1993) have recently published an account in Urban Studies of Iran's little-known experience in improving access to land for housing through large scale public land banking. Using the research of Hamid Majedi, the article examines the first 10 years of the implementation of a policy that adds to the debate surrounding the widely accepted notion of market-enabling in order to improve low-income housing provision in developing countries. This action of the Government of Iran effectively provided an alternative to land markets that have hitherto failed to serve low-income and even lower middle income households.

The market enabling strategy has long been advocated by the World Bank and others as essential for improving the delivery of land for low income housing. However, it has been strongly criticised as being inappropriate to the conditions of developing countries. Because it places too much emphasis on supporting formal market processes, it does not give sufficient attention to other modes of land delivery that can succeed in reaching poor urban people, especially those of the informal land markets. Formal markets do not respond well to factors such as rapid urban growth, poverty and under-resourced services or to difficult economic conditions such as high inflation and interest rates and a shortage of investment opportunities other than real estate. In such contexts, market-enabling policy measures appear to be inadequate in expanding low-income housing to any significant degree, if at all. Among those other or additional actions which might be chosen is that of strong government land management to avoid formal market faults, many of which are unique to or exaggerated by the context of developing countries. Admittedly, the experience in developing countries with government management of large amounts of public land has been discouraging. However, the constraints facing a market-enabling approach present strong reasons to bring forward the positive case of Iran which has been sadly overlooked.

Evidence shows that the government of Iran substantially expanded the stock of low-income urban housing by directly providing land for its construction by individuals and organisations, effectively by-passing conventional urban land and housing markets and their shortcomings. This intervention became a rich source of urban land for housing the low and middle income groups in particular, as well as for commercial and public service purposes. A large section of the low and middle income sectors benefited that would otherwise have been excluded from formal land and housing markets. Moreover, this intervention showed that public-private joint venture schemes can sometimes be more effective mechanisms for promoting private sector housing provision that reaches lower income households than a process left entirely in the hands of market forces.

At the very least, this history shows that a government in a less developed country can effectively assemble and distribute public land so that it is then used to house a large number of low income urban families. This is very different from the results of most efforts in countries of the South to augment housing for poor people through land nationalisation (e.g. Nigeria and Tanzania), through limitations on individual land holdings (e.g. India), or through the allocation of the large stocks of urban land that governments inherited from colonial regimes (e.g. Kenya).

Following the revolution, Iran did not nationalise land but retained individual ownership. The new government created a large scale land bank by appropriating individual land holdings beyond a certain size. Islamic law may have played a critical role in the success of this policy, as well as the use of some land for middle income housing that was also badly needed. Although compensation was paid that was lower than market prices, there was not a political backlash powerful enough to halt the programme during the study period. From this land bank, land was distributed directly to individuals and to organisations that would construct low income and lower middle income housing in urban areas.

The Iranian government showed the commitment and administrative capacity that was necessary to deliver public land to poor urban residents, in contrast with so many other cases. It demonstrated that this could be done at the national scale, throughout the country, within all of its regions and cities. It showed that government could bring about construction of new low income housing by delivering land to co-operatives and even to private sector firms. It worked directly with them, rather than through the market.

So much of this case deserves further investigation. This is especially so because the experience occurred in a developing country of the kind where international donor agencies such as the World Bank would probably advocate enabling the market as the preferred approach to improve housing for poor people. More research is needed to understand why this strategy worked in Iran during the study period and to identify the factors that made it so effective. There are valuable lessons here for other governments, and not just those that have so poorly performed in their attempts to improve access to low income housing in their cities and towns.

Keivani, R., Mattingly, M., and Majedi, H. Public management of urban land, enabling markets and low income housing provision: the overlooked experience of Iran, Urban Studies, vol.45, No.9, pp 1825-1853, Sage, 2008.