There are many questions surrounding the recent modifications to the Mi Casa Ya program, which are mentioned in the latest Rasec report, namely:
• The guaranteed budget for the Mi Casa Ya program, to date, is around half a billion pesos, a figure disclosed by the National Government itself. Taking the Mi Casa Ya 2022 budget as a reference, that amount would guarantee between 10,000 and 15,000 subsidies under the current structure of the program.
• The budgetary addition to the approved General Budget of the Nation 2023, filed last Friday, February 17, before the House of Representatives, would increase the resources for housing programs and strategic drinking water and basic sanitation projects for which it is in charge. the Ministry of Housing. Budget that, if approved, would increase the number of subsidies for the duration, but it would not be enough to reach the goal of 60,000 that the sector expects to continue the impact that the program has had, or for the 50,000 that it indicated the national government
• The change in the factor for determining the VIS housing ceilings from SMMLV to UVT established in article 238 of the PND, implies two main risks for the sector. The immediate effect of the decree implies the modification of the VIS limits of 2022, which the article establishes, in most cases, will be 3,552 UVT equivalent to $150,647,424
This amount does not cover the significant increase in the minimum wage of 16%, the 2022 inflation of 13.25% or the PPI that was above 20%. Therefore, this element would leave out the supply of housing that was structured to be low-income housing (especially in large cities), by disabling them from accessing the Mi Casa Ya program. In the medium term, taking into account that the costs for the builder can be located above the increases of the UVT, a process would be beginning in which the space for social interest housing is closed in the cities with the highest construction costs. production. For this reason, it is necessary to review the grace periods for the entry into force of the articles and the relevance of the UVT as an indexer of the ceiling.
“At ANIF we undertook the task of evaluating the scope of the current budget allocation and the expected budget allocation for Mi Casa Ya, as well as the scope of the modifications in the factors for determining the ceilings of the subsidies. At the same time, we reviewed the recently proposed allocation structure.”
There are several points to keep in mind:
1. The budget that had been socialized in January 2023 for the Mi Casa Ya program was located at $560 billion. To understand the scope of the allocation in terms of subsidies, we chose to consider the same scenario of 2022 maintaining the allocation brackets, initial fee and rate coverage. In this way, if it is assumed that in 2022 60,159 subsidies equivalent to $2.527 billion were granted, in a scenario without modifications around 13,000 subsidies would be delivered in 2023. Level much lower than that observed last year.
2. With the new allocation ($1.5 trillion), which depends on the approval of the bill to add and make modifications to the PGN 2023, it would be talking that, in the absence of modifications to the 2022 scenario, the Government could deliver 35 thousand subsidies. This estimate could increase up to 44,000 subsidies if the majority of these were delivered to households from 0 to 2 SMMLV. With this, the per capita amount of the subsidy would be reduced, giving way to a greater volume of allocation. However, once again there is talk of a volume of subsidies lower than that observed in 2021 and 2022 (62,017 and 60,159, respectively) and the expectations of the sector.
3. Although the estimate proposed by the Minvivienda may be supported by the new allocation strategy, there are several points worth discussing to understand its feasibility. The allocation would be structured based on the Sisbén score and by a territorial prioritization criterion, benefiting category 4, 5 and 6 municipalities. Two additional entry barriers that, although they were created with the intention of prioritizing those most in need, VIS housing development unfeasible. In the first instance, the prioritization according to the Sisbén score assigns in the first categories to households that may not have the financial requirements to be able to access a loan, leading to the fact that the subsidies do not materialize. Under this scenario, the support of entities such as the National Guarantee Fund would be required to back credit obligations with guarantees of 100% coverage, which would translate into greater budgetary pressures. Secondly, the prioritization by municipalities conflicts with the incentives, ease and feasibility of building buildings in territories with difficult access, with little supply of services and goods, high construction costs and little profitability or return on the projects. Likewise, they are the municipalities that have the lowest demand for housing and where the scale effects are wasted. In addition, it reduces the offer of subsidies in large cities, where there is still a significant population density that requires them.
4. The figure of “qualified interested” is essential for the support of the constructor credit. This refers to the citizen interested in acquiring a home for whom the State has already carried out the evaluation process and, therefore, confirms that they meet all the requirements to access the subsidy. With that, the “qualified” has the right to access a subsidy once he chooses the project that is of interest to him. In this sense, the banks analyze the volume of the “qualified” and value it as the flow of resources generated by a housing project under the figure of pre-sale, so it falls within the criteria to approve the credit to the builder. The modification to the “enabled” proposed by the new scheme, removes the support for the sector to access construction credit. This, while the new nature of the applicant becomes “interested”, which is not a minor change, since it goes from having an effective right to a subsidy, to being inclined to access one, without prior accreditation.
In this way, the builders would lose the support of the volume of qualified (or what in effect is a pre-sale), which affects the access to credits by the bank. In practice, a large part of the sector turns to the financial sector to leverage its projects. All of this would mean that only large construction companies, which use their own resources, can develop VIS housing programs, which ultimately reduces the supply of housing solutions.
It is then that it is worth asking if Mi Casa Ya is the best instrument to reach the population that the Government is targeting today. The program to date has been the best VIS housing instrument in the country, granting more than 230,000 subsidies. Its operation and success can be seen from the financing mechanism that is has managed to structure between the Government, compensation funds, the financial system and households, the few entry barriers that it presents and the incentives that it has developed for the participation of the offer in the development of buildings. The need to provide decent housing for those with lower incomes is clear and progress should be made in structuring a sustainable state program that lays the foundations for reducing the housing deficit. However, this effort must be made by complementing the efforts that have been made up to now, not to restructure a program that today operates on its own with good results.
5. Currently, the VIS (135-150) and VIP (90-110) housing ceilings are determined in terms of SMMLV. This incorporates the increases in inflation, the increase in productivity and the additional determined by agreement or by decree. If the scheme continued with the same structure as in 2022, the maximum VIS cap that in 2022 was equivalent to $150 million in 2023 would correspond to $174 million. This cap decision factor is of great importance to builders, as the maturity age of a VIS project is 14 months on average. The projects that are being built and are planned to be built this year have been structured for several months under the scenario of the increase in the SMMLV.
Thus, the change in the factor for determining the SMMLV ceiling to a maximum of 3,552 UVT (equivalent to $150,647,424) leaves, once the modification is approved, an important fraction of projects that had as reference the VIS segment excluded $174 million cap. The effects of this go through leaving a large number of real estate products without a target market, which increases the months of turnover and makes financial closings difficult, to the detriment of families who aspire to access a housing solution.
It should be noted that with this we do not ignore the relevance of the exercise of de-indexing the ceiling of the minimum wage subsidies. On the contrary, we consider that it is a step on the right path. However, the development times used in construction projects must be taken into account in order to implement these measures. In this order of ideas, it is necessary to make an orderly transition that allows the offer to reduce the inventories that were structured with the price model indexed to the SMMLV, while the new offer is incorporated to the use of the UVT, or another reference, such as limit determining factor. If this is not done, the sector may continue accumulating inventories, which implies reducing the effective supply of the VIS segment while reducing the construction of new projects.
Final message
From ANIF, we highlight the policy decision to seek mechanisms so that the segments with the lowest income and the greatest needs are homeowners. Howeverthe reform to Mi Casa Ya limits the supply and demand of the sector, which reduces the success of the program. These guidelines could have negative effects on the building sector at a time when they require greater support. It is worth noting that the Ministry of Finance itself has recognized, in the past, the multiplier effects of construction, which are the second highest of all economic activities, due to their impact on employment and the demand for inputs of all kinds. To weaken this sector is to weaken the creation of new jobs, economic growth and the opportunity for more families to be homeowners.