OBG talks to Luis Felipe Henao Cardona, Minister of Housing and Social Development

Interview: Luis Felipe Henao Cardona

What are the government’s housing priorities?

LUIS FELIPE HENAO CARDONA: The government’s housing development priorities have positively affected not only the industry but the entire economy. The housing sector showed double-digit growth in the first half of 2013 and 7.9% in the second half. The number of social housing licences increased by more than 60%, while housing sales went up by 18% in 2013. Part of the task is to decentralise social housing, so construction is no longer taking place solely in large cities. We have reached 223 municipalities through the Free Housing Programme, which grants property to lower-income earners. The programme is aimed at helping families which earn less than two minimum salaries by subsidising the first payment on the property as well as interest on the loan. We also offer interest reduction to help middle-income families.

In addition to a diversified housing policy that benefits all social classes, an increased number of mortgages has also been decisive to housing growth over the past four years. While the sector will continue to face difficulties, with land management being the greatest, the long-term potential is huge. In addition, there has been a large drop in the number of Colombians in extreme poverty and those without employment. The countryside is the area most in need of housing and this must be the next government’s priority.

What measures are being taken to assist conflict-affected rural communities, in particular farmers?

HENAO: To prepare the country for a hypothetical peace agreement, we are putting in place the Integral Neighbourhood Improvement programme. The plan is to renovate neighbourhoods involved in the conflict by improving housing conditions and formalising the acquisition of property. These reforms will increase security and the number of guarantees citizens enjoy. The ministry’s role does not stop with building housing. It also includes improving sanitation. Our greatest challenge in regards to relocating farmers is extending utilities in the countryside. To this end, we are building 120 rural aqueducts and 100,000 homes in rural areas with the Ministry of Agriculture and Rural Development.

After the collapse of the Space Tower, do building standards need to be revised?

HENAO: The incident in Medellín was an isolated case. Over the past 70 years the country has never experienced anything like that. The earthquake-proof regulation put into place in 2010 is one of the strictest in Latin America and is overseen by an advisory board that comprises a large number of stakeholders. The Space Tower tragedy, however, proves that we need to revise our procedures. So, we are including external supervision for all projects under development. We are also planning to implement processes to ensure construction managers exercise their responsibilities, which is in line with the US and Spain. The regulations in place, as well as new ones that will implemented, are in accordance with the highest international standards.

What overall housing needs does the country have?

HENAO: The ministry has a social focus, but also a strong economic emphasis. We want to create more jobs and to leverage the development of the whole sector. We need to develop public-private partnerships that allow the construction of affordable homes for new professionals. The ministry is also willing to contribute to enhancing housing infrastructure in cities, which will require support from countries with broader expertise such as the UK, France and Spain, respectively.

We must continue to generate incentives, in particular to improve the conditions of mortgage credit. Colombia needs to reach a mortgage portfolio depth of 10% to 12%, and to do so we are following examples such as Chile’s measures to reduce the cost of mortgage insurance for families. Moreover, we have to reach more than 1100 municipalities and formalise all processes related to housing. Increased formality will have the effect of turning the sector and the country as a whole into a more attractive destination for global investors.