Home Rental Market in Colombia
Jorge Enrique Torres Ramirez
No 4812, Research Department Publications from Inter-American Development Bank, Research Department
Historically, formal housing development in Colombia has shown limitations in both its dimension and composition due to factors such as location, price, type of dwelling, etc. This supply has met the demands for housing aimed at the medium-high to high average income groups. The homes of low to medium-low income groups have balanced off this market scenario mainly by means of informal construction and renting. However, informal dwelling construction serves, on the one hand, low-income families, excluded both from the market of new homes and that of home rentals, and households which, although not considered poor, take on their own housing management, more as a rejection of the attributes of formal supply than because of their socioeconomic condition. Within this context, home rental represents a form of possession of a dwelling endorsed by families which do not have access to new-home markets, but still do not consider informal construction a viable alternative. This situation has turned, since 1985, into a progressive decrease in the proportion of homeowners, to the point that this form of possession is currently surpassed by all the others. As a result, they two types of possessions have emerged: home rental and a type associated to it, which is that of families which occupy the dwelling under usufruct status. This last group presents the most precarious living conditions and critical poverty. The factors that have determined the predominantly informal nature of house rental supply are related to a low production of Public Housing (VIS in Spanish), limitations in the financial capability of the demand, and a legislative framework that used to boast a strong market regulation which favored the tenant. The interaction of these factors resulted in a lack of motivation towards the development and consolidation of formal residential rental projects. With regard to public policy proposals, there are two groups of initiatives: enhancement of residential rental supply and the introduction of rental subsidies.
JEL-codes: R21 R31 R38 (search for similar items in EconPapers)
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