Rental Housing
Rental Housing
Rental Housing
BY
BATCH 2063
TRIBHUVAN UNIVERSITY
INSTITUTE OF ENGINEERING
DEPARTMENT OF ARCHITECTURE
NEPAL
CERTIFICATE
This is to certify that this thesis entitled “Rental Housing: Issues & Opportunities for
Urban Poor” submitted by Poonam Bajracharya (MSU/063/F/205) has been
examined and it has been declared successful in the fulfillment of the academic
requirement towards the completion of the Master of Science Course in Urban
Planning of Tribhuwan University.
…………………………………..
(Thesis Supervisor)
DECLARATION
I declare that this dissertation has not been previously accepted in substance for any
degree and is not being concurrently submitted in candidature for any degree. I state
that this dissertation is the result of my own independent work/investigation, expect
where otherwise started. I hereby give consent for my dissertation, if accepted, to be
available for photocopying and understand that any reference to or quotation from my
thesis will receive an acknowledgement.
Signed ………………………
(Poonam Bajracharya),
ACKNOWLEDGEMENT
This study is initiated to understand the characteristics of rental housing in
Kathmandu, intending to address the urban poor communities of the valley. I would
like to acknowledge my Thesis Supervisor, Mr. A.C. Lal for his continuous guidance
on my study. The credit for anything good output is attributed to his guidance.
Mr. P.S. Joshi of CIUD and Mr. Prafulla Man Singh Pradhan of UN-Habitat deserve
special appreciation for helping me on choosing the topic as well as case study sites.
A special thanks goes to my dear Yogeshdai for his support and time since the
beginning of my study. I am as well thankful to my friends of M.Sc. Urban Planning,
Deepak Chhetri, Deepak Shrestha, Rabin Shrestha and Sudeep Kumar Shrestha for
providing materials related to my thesis. My gratitude even goes to entire M.Sc.
Urban Planning team and library team for their kind co-operation and support.
Besides, I would like to appreciate valuable inputs from Mr. Puskal Pradhan of CARE
Nepal, Mr. Arun Dev Pant of Design Cell and our jurors: Dr. Jibgar Joshi and Surya
Bhakta Sangachhen.
It’s my pleasure to mention here the institutes namely SeaGate and AARC, which
provided space to work during load-shedding.
I sincerely gratitude my family members for showing patience during my entire study
and also for the support and co-operation.
Finally, I would like to thank all the tenants and owners of the case study areas who
directly or indirectly took part in the study.
Abstract
Rental housing is a vital component in accommodating large number of families in
developing countries. The increase in urban population through both migration and
natural increase has been absorbed to a large extent by the rental market. In
Kathmandu Valley, more than 25% of the households are rented units. This
percentage will surely increase as there is no effective mechanism housing delivery.
National housing and strategies did not usually take account of the rental sector and
most rental opportunities are provided by the private sector. And in such a condition,
the most suffered one is low income group who tend to live in rented rooms.
As per the case study, there is a dominance of male population with high working age
group in rental tenure. Owners are generally similar to their tenants in terms of social
and economical characteristics. There is a trend of living in a single room by sharing
with friends of similar ethnical background. The space being used by tenants is highly
compromised and far behind to be wholesome. On the other hand, the only way of
extra income for the poor owners is to build a house within their native land
occupying full plot for maximum return with no regards to ventilation for rent.
In particular, from the case study and literature survey the following issues have been
identified in the rental housing of urban poor:
The poor cannot solely develop every aspect of their own shelter through their own
efforts, because they lack the economic and or political power. In such a case
Public/Private partnership is one of the best tool for assisting the urban poor in
dealing with these aspects of the shelter process. Hence, PPP is considered to be a
broader policy recommendation for the support and improvement of rental housing of
the urban poor.
TABLE OF CONTENTS
CERTIFICATE........................................................................................................................................I
DECLARATION....................................................................................................................................II
ACKNOWLEDGEMENT....................................................................................................................III
ABSTRACT...........................................................................................................................................IV
TABLE OF CONTENTS......................................................................................................................VI
LIST OF FIGURES...............................................................................................................................IX
LIST OF TABLES..................................................................................................................................X
LIST OF MAPS.....................................................................................................................................XI
LIST OF PHOTOGRAPHS................................................................................................................XII
CHAPTER 1 INTRODUCTION.....................................................................................................1
1.1 BACKGROUND..........................................................................................................................1
1.2 RATIONALE..............................................................................................................................2
1.5 OBJECTIVES.............................................................................................................................5
2.1 HOUSING..................................................................................................................................7
2.2 POVERTY................................................................................................................................10
2.3 MIGRATION............................................................................................................................11
2.5.3 Why can’t most poor people borrow money from banks?...............................................14
4.1.3 Some of the appropriate public intervention & assistance for rental housing..............37
5.2.1 Demography......................................................................................................................52
5.2.2 Migration..........................................................................................................................57
5.2.3 Household.........................................................................................................................61
5.2.6 Rent...................................................................................................................................82
CHAPTER 7 RECOMMENDATION..........................................................................................96
BIBLIOGRAPHY................................................................................................................................104
APPENDIX...........................................................................................................................................107
LIST OF FIGURES
Figure 1: Problem Tree on Rental Housing for Urbn Poor............................................4
Figure 15 : Per Capita Income per Day of the tenant (in US Dollar), 2009.................67
Figure 16: Per Capita Income per Day of the owner (in US Dollar), 2009.................68
LIST OF TABLES
Table 1 : Research Methodology.................................................................................27
LIST OF MAPS
Map 1: Location map of the case study areas..............................................................43
LIST OF PHOTOGRAPHS
Photo 1: Tenants of Sawal Bahal.................................................................................70
Chapter 1 Introduction
1.1 Background
Kathmandu has become the focus for urbanization i.e. the concentration of
urbanization is greatest in the valley. Half of the urban population live in only 9 of the
58 municipalities and 31% live in Kathmandu valley (CBS 2004: NLSS II).Besides the
growing trend of living in nuclear families, analyses of 2001 census data reveals that
migration is the principal reason for urban growth. The regional imbalance is a main
cause for compelling the rural poor to migrate to the cities for employment and other
social and economical opportunities. The concentration of economic wealth and
political power compelled the rural poor to migrate for employment and other social
and commercial opportunities. About 41% of population of Kathmandu valley are
migrants (CBS 2004: NLSS II). According to the 2001 census, the actual population of
the Kathmandu city is just above one million. But combine it with the floating
population, visitors, job-seekers and residents of surrounding cities, and the figure
could reach anything between 1.5 million and 2 million. The urban growth rate of the
city is 6 percent per annum. If the present trend continues, experts predict that the
populations of the city will double every 10 years. (Manandhar, M.Sc. Thesis, 062)
And as such the demand for housing in the valley is increasing day by day and it is
estimated that the need will be increased by 5 % per annum (Lumanti). The housing
demands are being catered by rental housing as a quick response. The type rental
accommodations in Kathmandu can be divided as according to the types of renters.
Broadly speaking, it can be seen that the division is clearly visible for the Nepalese
people and for the people from foreign countries. It is also visible, that the immigrants
from outside the country gather around people from same countries. But in most cases
these renters prefer to hire housing near to their work place in the city. So, is the case
with the renters from within the valley and other districts of the country. The rental
accommodations for these two types of renters, from within the country and outside
the country have drastic difference in provision of facilities as well as rental charges.
Most of the people migrating to the city from other districts for the purpose of getting
economic opportunities and for having access to social infrastructure like education
In Kathmandu Valley, more than 25% of the households are rented units
(M.Shrestha, Urban Poverty and Housing). This percentage will surely increase as
there is no effective mechanism housing delivery. And in such a condition, the most
suffered one is low income group such as day labourers, hawkers and unskilled
workers who tend to live in rented rooms. Due to their incapability to afford and poor
policy support of government on shelter, they are bound to live on the rent with very
miserable condition.
1.2 Rationale
Although renting is one of the dominant forms of tenure in the city, it had been
seriously neglected in research and policy making by the public sector. National
housing and strategies did not usually take account of the rental sector. Generally poor
people rent because they can’t afford to own. Most rental opportunities are provided
by the private sector. (UNCHS, 1990)
Many initiatives have been taken by Public and private sector in providing access to
land for housing. However hardly anyone has considered or accommodate the need of
the poor families. Since the poor families neither can afford the available land in the
The major problems in rental housing are in terms of cost, security (tenure ship) and
basic facilities. According to the study done by Lumanti, the biggest problem in
rented household is lack of adequate space followed by environmental problems,
strained relationships with landlords etc. Other problems are maintenance of houses,
water and electricity supply, high rent and pollution. House owners are also suffered
from untimely rent payments, improper care of houses, crowded occupancy and
misuse of housing facilities. These all have resulted in poor living standards of people
living in rented house. Though inhabitable those people tend to live there because of
their inability to pay high rent. The poor physical scenarios of these places with
haphazardly growing structures and buildings which lack proper maintenance reveal
the poor social conditions as well. The inadequacy of the basic needs may lead to
various undesirable situations such as health hazards in the residents, social
relationships, which in turn affect their economic productivity and other aspects of
life (Manandhar, M.Sc. Thesis, 062). As the survey conducted by Lumanti on
Bansighat squatter settlement, a higher percentage of the squatters were initially
staying on rent however after they got know about the area they started living there so
that they could save rent. Negligence and concentrated poverty in low income housing
sector can also contribute to increased crime.
Decrease in Economic
Output
Migration Sub-division
Some of the key issues related to rental housing in Kathmandu, as mentioned by Dr.
Rabenau, are as follows:
Most rental housing appears owner financed.
Much of the rental stock appears to be in housing occupied by the owner.
In urban areas, rental housing is predominantly for urban poor (Labourers,
construction workers, transport workers i.e. porters and similar service categories)
Urban service level s are low for almost all urban housing, but, they are much
lower for rental housing in slum areas, using as evidence the low rent charged.
How the quality of life of urban poor living in rental housing can be improved?
1.5 Objectives
General Objective
Specific Objective
iii.To explore the options of Public Private Partnership for the improvement of
living condition of urban poor living in rental housing.
iv.To recommend the follow up actions based on the findings for up grading the
situation of urban poor living in rental housing
• The study is based on primary data collected from two case study area selected
within greater Kathmandu.
• The conclusion and recommendation will be drawn on the basis of case study
and secondary study carried out by different scholars and institutions.
Housing is a basic and fundamental right, since it not only provides shelter and the
space for households to live and to carry out their living functions, housing also
provides the point of reference through which households can access other services
and utilities. Access to Housing – that is, which households have access to what sort
of housing and on what terms – is a key determinant of urban conditions and of the
social status and well-being of the households. (Prof. Babar Mumtaz, Quick Guide on
Housing Finance)
Housing is recognized as one of the three basic needs of human beings, namely food,
cloth and shelter. Housing can be defined as a physical structure built on land to
accommodate people and facilitate their household activities. It needs to have basic
services and facilities such as water supply, sanitation, electricity, telecommunications
etc. The housing community also desires for social and cultural infrastructures.
Housing means many things to many people. Besides being a physical structure that
saves human beings from adverse effects of external environment and provide safety
and privacy to people, it encompasses various other factors such as social, cultural,
economic aspects of life in human civilization. Besides being an important entity for
the lives of the people in their individual sense, housing is often taken as criteria to
define a community and set the value of a place. (Manandhar, M.Sc. Thesis, 062)
Housing provides the owner with valuable assets. It is the most dependable asset. As
its value appreciates over time, it generates income and is a good insurance.
In addition to the use value, housing has an exchange value. As more and more land
came under commercial use, most houses in highly urbanized areas began to be
constructed as commodities, as something to be traded for (or to be rented). When
housing is produced as a commodity, the meaning of self help, people-bound
resources or the sense of belonging becomes less important. This is the case of
economic housing against the social housing. Real estate developers, private investors
are involved in these activities. (Joshi, Jibgar, 1999: 30)
Housing provides us all with privacy and security, as well as protection against the
physical elements. By keeping us healthy and productive, good housing contributes to
the well-being of both households and to a country’s broader economic and social
development. Housing is also a good investment, and house owners often use their
houses and land as a kind of savings account. Housing is an important asset for its
owner — it can be used as a place to generate income through home-based economic
activities and it can serve as collateral for loans. (UN-Habitat & UN-ESCAP, Housing
the Poor in Asian Cities)
There are different ways and means for the supply of housing in urban areas which
are described as below:
a. Government and Public Sector Housing
Government act as producer, financier, regulator or manager for producing house
usually targeting for low-income groups.
b. Private Sector Housing
The private sector is the major player in housing production, and is engaged in the
production of housing in three distinct ways. Firstly as the producer or supplier of
inputs to the housing process – including land, finance, building materials and
components and labour; secondly, it is engaged in the production of houses itself,
as a contractor, managing and operating the process for the government or
individuals; and thirdly, it produces houses as a commercial, speculative product.
c. Owner-occupied Housing
Many households, particularly in the upper income groups, use the opportunity of
their own housing construction to build housing unit on their (often) allocated plot
of land.
d. Rental Housing
Rental Housing is that form of accommodation which isn’t owned but a house or
room or a dwelling unit occupied by the individuals or a household for living by
paying some regular rents to the actual owner who is interested to sublet.( Karki,
T.K., Rental Housing: Third World Syndrome)
Rental Housing are those in which residents and owners of the house are different and
the residents pay due charges at certain interval of time to the house owners for using
the property or the house. A resident who reside in houses owned by another person,
and pays due charges at certain interval of time, is called as a renter or tenant.
(Manandhar, M.Sc. Thesis, 062)
Rental housing patterns tend to be much higher in cities than in rural areas, and also
vary greatly between cities within the same country. People’s reasons for making
decision to rent housing are different based on their economical, social and cultural
values.
Renting lets people stay mobile and move away when good work is available
elsewhere, without being tied down to any particular place or to regular house
payments.
Renting gives people flexibility in how they manage their household budgets,
moving to cheaper housing when times are hard and to better housing when their
incomes increase, or freeing up more of their earnings for more essential needs like
food, education, medical care or emergencies.
Renting accommodates people in transitory periods of their lives, when they are
not yet ready to settle down in one place.
Renting accommodates people who may not want to make the long-term financial
commitment that comes with buying a house, or to face the long term costs
involved in repairing and maintaining their own house.
Renting allows people to send more of their city earnings home to relatives, or to
invest in buying land or building a house back in the village.
If people are deprived of these essential things, they will have difficulty realizing their
full potential as human beings and as members of society. As such, they will not be
able to benefit from, contribute to or have much influence on their society’s
development.
In urban areas, an important aspect of poverty is often the lack of adequate housing
and infrastructure.
Poor people in cities may have greater cash incomes, but these may be unstable and
inadequate, especially when considering the higher costs of living in cities, such as
transport and housing. With a lack of formal housing options, many are forced to
settle in slums and informal settlements, often on unsuitable land, or live ‘invisibly’ in
overcrowded buildings, and far from employment opportunities. As they often do not
own the land they occupy, or possess housing registrations and building permits, they
lack a stable asset base, access to credit and basic services. Environmental health can
be a large concern, especially for children. Limited or weak safety nets can make
urban poverty particularly difficult, especially in times of crisis. (UN-Habitat & UN-
ESCAP, Housing the Poor in Asian Cities)
2001)
Chapter II – Literature Review
Conceptual framework of Urban Poverty (adapted from Baharoglu and Kessides,
Urban poverty has many causes. Some of these are the willingness of new migrants to
take low paid jobs in the city, increases in the cost of land, long journeys to work, less
support from an extended family network, exposure to greater environmental risk, and
greater vulnerability to changes in market conditions in urban areas. Conditions of
urban poverty are worsened by the scale and speed of urbanization in many cities,
forces with which municipal governments cannot keep pace. In a situation of scarce
resource allocation, the urban poor are badly placed to compete for essential services
and shelter. Biases in investments, standards, pricing policies, and institutional
structures often skew services in favor of the better-off in cities. (______, Urban
Sector)
2.3 Migration
Migration is one of the crucial factors for the migration. As mentioned in a guide
book ‘Housing the poor in Asian Cities’, there are many different types of migration
which will likely to have different housing needs:
There are different reasons for migration among which some major reasons are as
follows:
The pushing and pulling forces of migration.
People migrate either because they are being pushed out of their place of origin,
or because they are pulled to their new migration destination. Or more often,
people move because of a combination of overlapping pushing and pulling forces.
Most have little chance of making a decent living in agriculture. Most people in
the rural areas work in the agricultural sector, but agriculture is highly dependent
on weather conditions, rural land is limited and its fertility is sometimes low or
declining, land holdings are small, farm debts are high, and many households
have always been or have become landless. As a result, overall rural incomes
tend to be pretty low.
Migration to cities improves the prospect of finding better jobs. Even when a
rural household can live off its land; the future for rural children is in non-farm
and more often in non-rural employment.
People know what cities have to offer them. Although some rural households
have no choice but to leave the rural areas in order to survive, most migrants
make a deliberate choice to stay or to leave.
Urban migration is often a survival strategy for rural households. In order to
spread economic risks, households may split into several groups that locate
themselves in different places: rural areas, small towns, and big cities, while
some household members may even move abroad.
Rental housing may be only a partial answer to urban housing problems, but it is an
important housing option — especially for the urban poor, and particularly in
situations where people are not ready or able to buy or build houses of their own.
Many poor households prefer to rent rather than own their house in a slum. They may
not be able to borrow enough or gather the resources necessary to informally buy a
plot or house in an existing slum, or to pay for the cost of building a house of their
own. Some may prefer to remain mobile and be able to move away when employment
opportunities change, especially when the household’s main income earners work as
casual laborers or temporary employees. Others may stay in the city only a limited
time and may wish to save as much money as possible for meeting other needs, or to
gradually build a house back in the village. Hence, rented rooms offer certain
advantages to the urban poor, giving them the flexibility to move on if they have to
find work elsewhere or if some emergency makes it necessary to suddenly leave
thereby allowing them to save as much money as possible and invests their savings in
other sectors.
For the urban poor: Rental housing might come in the form of cheap rental rooms in
small owner-managed apartment buildings, apartments of various sizes in subsidized
public housing blocks, or rooms built with substandard construction on illegally
subdivided land or partitioned within dilapidated older buildings. It could be a shack,
a room built in a slum or behind the owner’s house with shared services. It could be
rented space within a shared room, or even the right to store one’s belongings and
occupy a certain space within a shared room for part of the day, according to the
occupants’ working times. (UN-Habitat & UN-ESCAP, Housing the Poor in Asian
Cities)
Whole process by which households get loans to buy a house, including all the rules
and procedures that go with that process. Housing finance covers the process of
giving and recovering loans, not only to individual households, but also to housing
developers, based on funds raised by the lender from the wider financial markets.
M.Sc. Thesis in Urban Planning [13] Poonam Bajracharya (MSU/063/F/205)
Rental Housing: Issues & Opportunities for Urban Poor Chapter II – Literature Review
The shortfall of housing is primarily for low-income housing, where the population is
the least able to pay for rising land and housing construction costs and where the
market has not been able to provide affordable housing in locations where poor
people can access employment and others services. So, shelter is not affordable to the
poor, and this is where housing finance becomes so important.
Many people don’t trust banks and keep their money safe by stowing it under, for
example, mattresses or buying gold instead. Banks prefer to lend the money they have
to a business for a short period, rather than for housing over many years. The
economic and political situation is often unstable and that increases the risk that a
borrower may not be able to pay back a loan.
2.5.3 Why can’t most poor people borrow money from banks?
Obstacle for poor borrowers is the condition that they prove that they have a regular
monthly income, which most poor households working in informal sector, self-
employed or casual labour jobs do not.
Collateral: Another obstacle is the need to have legal title to the property they want to
buy, which most of the urban poor don’t have.
High down payments: To reduce the lender’s risk, many housing loans come with the
condition that a certain part of the total housing cost is borne by the borrower. Poor
households often do not have the means to raise such “down payments”.
Small loans: Given their low income, the poor often require small, incremental loans
which can be easily paid back. Processing such small loans is not cost effective for
banks.
The public sector refers to the institutions and responsibilities of government at local
(municipal), regional and national (central) levels.
Comparative advantage
Ensuring an adequate supply of land for low-income housing via reducing land-
use standards, simplifying procedures for obtaining secure tenure, ensuring that
laws do not reward speculation, utilizing its own land holdings efficiently, and
establishing land development agencies with sufficient authority and
accountability;
Coordinating the provision of infrastructure and services, seeking the maximum
degree of cost recovery compatible with the preservation of access among the
very poor, ensuring that networks are developed on a rational basis throughout
the city, and regulating standards of quality and maintenance;
The commercial private sector operates on the basis of adequate returns to investment.
This has limited its involvement in low-income shelter in the cities of developing
countries because the commercial private sector has normally been unable to provide
housing at a profit, at a price the poor can afford. The comparative advantages of the
commercial private sector in shelter can therefore be summarized as follows:
Production and marketing of land and housing units for those who can afford
them (usually down to lower-middle-income households);
Provision of infrastructure at full cost recovery in middle- and higher-income
settlements, and (if conditions are right) involvement in the provision of some
services (such as water and electricity) to lower-income areas;
Creation of a private housing-finance market via the mobilization of domestic
savings, including secondary mortgages for middle- and higher-income
consumers;
Production of standardized building materials for use in housing construction;
Development of an efficient and competitive private construction industry using
industrial methods.
The third sector (and particularly individual men and women among the urban poor)
are and always has been by far the most important and efficient producer of its own
housing. People are highly skilled at making the most of limited opportunities, at
building incrementally, at innovating and at reacting quickly and flexibly to a rapidly
changing environment. However, they can only do these things if the wider
environment in which they operate supports them.
People and their organizations have no comparative advantage in large-scale service-
provision or in planning and coordination beyond their immediate neighbourhood.
Legal and regulatory frameworks are largely outside their control and they cannot,
The urban poor have always relied on their own resources to house themselves
regardless of, or perhaps in spite of, the activities of governments and the commercial
private sector. However, the experience in other countries suggests, this situation is
Experience shows that poor people can develop their own housing over time with
minimal external financial inputs, but constraints on the supply of housing finance
still form one of the most serious barriers to the enabling approach to shelter. All
housing-finance systems have to reconcile three objectives which may conflict with
each-other: afford ability to the borrower, viability to the lender, and resource
mobilization for the expansion of the system or economy as a whole. Hence,
affordable housing finance may not be viable (sustainable), and viable systems are
often not affordable, at least to the urban poor. As in the case of the land market,
public/private partnerships in housing finance provide a mechanism for increasing
While public/private partnerships in the supply of inputs to shelter are clearly crucial,
they also have considerable potential in facilitating the processes by which inputs are
transformed into outputs – the processes of construction, production and development.
Partnerships in this area may take the form of public contracts with private
developers; public assistance to the commercial private sector in the form of land,
infrastructure, tax concessions and other incentives; government assistance to third-
sector organizations in providing more effective support to individual low-income
builders; and simplifying building regulations and streamlining approval procedures,
rent controls and other legal measures in order to stimulate the development of a
private rental market and/or inner-city redevelopment. Partnerships which support
individual producers and their organizations, and which remove the constraints which
often face poor people in their efforts to develop their own shelter, are critical to the
success of the enabling approach.
The experiences show that commercial interests can be encouraged into developing
land and turning over a portion of the lots or dwellings to lower-income groups. One
example is the development of publically-owned land by private developers who hand
the completed units back to public for allocation. Similar experiences are in inner-city
rental markets whereby private landlords are allowed to redevelop their properties on
condition that the original tenants are allowed to return to occupy part of the space
created. One of the conventional uses of private-sector developers is as contractors in
public-sector housing programmes.
Collective organizations such as housing cooperatives can bridge the gap between
needs and demands by acting as guarantors for loans, negotiating over land, and
NGOs have no comparative advantage over people and private developers when it
comes to the actual building of housing, but they can and do play a critical role in
facilitating people's efforts by negotiating on their behalf, representing their interests,
providing technical support and advice, acting as a channel for credit and other inputs,
and assisting with community organization and mobilization so that individuals can
work together and pool their resources.
The great majority of rental accommodation is held in the private sector, though
usually on a small scale. Therefore, encouraging the production of rental housing via
public/private linkages is one of the most important aspects of partnership in the
development of shelter strategies.
It is unreasonable (because of the high capital costs involved) to expect the urban poor
to develop their own infrastructure and services, especially in the areas of electricity
supply, drainage and sanitation. Therefore, public sector should focus on providing
things which the poor cannot do for themselves (such as services), rather than on
things which they can (such as housing). “However, direct public provision of
services is unlikely to be an effective solution to the needs of the urban poor (even if
it was an option, which it rarely is in resource-poor economies). Small-scale
privatization of services is bound to continue in most developing-country cities,
though this has more to do with sheer scarcity of resources than with economic
theory". Nevertheless, experience shows that private suppliers can enjoy significant
cost advantages over the public sector and are prepared to invest in service provision
so long as the risks are acceptable. They must, however, operate within a framework
Public/third-sector partnerships
Partnerships between the third sector and government in the low-income shelter
process are critical for many reasons. Most importantly, these partnerships can
facilitate greatly the supply of housing inputs to the poor, especially in the case of
“This partnership will relieve pressure from the lower-income housing market and
help to prevent downward filtering." Government can also act to protect the interests
of the poor in particular areas of the city which are attractive to commercial private
capital (such as the city centre). In addition, there are certain aspects of the shelter
process (such as some basic services and employment-generation) in which the
commercial private sector can play a more valuable role.
Second research question will be addressed through the archival analysis and case
study.
Data that will be dealt in the study will be both quantitative & qualitative.
The areas in Kathmandu and Lalitpur were classified from the rental point of view.
Basic information of the classified area was collected through the reconnaissance
survey. And accordingly, two sites for case study were selected in traditional fringe
area. The selection of case study area for primary survey is based on the following
criteria:
The traditional fringe area of the core city is mostly resided by traditional poor people
who are mainly belong to socially excluded groups. So, it is assumed that the people
who have to accepted to live in those areas must have even worst condition than
owners because of their poor economic condition. Due to location advantage in terms
of employment link and transportation opportunities, most of the low-income tenants
wish to live near the city centre.
Slum areas refer to poor and vulnerable areas which lack basic amenities and basic
facilities. The slum in core areas are characterised with highest density of houses with
very limited basic utility facilities, narrow streets, limited or no sunlight, litter and
stinks, are inhabited by both poor traditional communities and migrants. A substantial
market in rental accommodation is known to occur in the slums of Kathmandu,
mainly in the inner city areas with poor access. (CDS). About 22.1% households in
slum areas have rented out the rooms (Lumanti 2001). The total monthly rent
collected from the 65 households renting out rooms in the slum communities was Rs
93,900 (Rs 1445 per household) According to Jhigu Manka Samaaj, some of the
identified Slum localities are Dhaukhel, Dhumakhel, Hyumat, Inayatol, Kalimati,
Kohiti, Marudhoka, Ombahal, Ramghat, Tahachal, Tankeswar, and Teku-
Khichapokhari in Kathmandu Metropolitan City and Chyasal, Irti, Khapinchhe,
Kumbheswar, Lnolha, Naga Ga, Naudo, Satdobato, Tadhoka, and Talchhikhel
Lalitpur Sub-Metropolitan City.
For the site selection, the rental occupancy of the area is determined through
reconnaissance survey. High density settlement area is selected with high rental
occupancy where both the owner and tenant live in the same house.
According to these criteria, Kumbheswor in Patan and Sawal Bahal in Kathmandu are
selected for the case study. Both of these areas are resided by low caste groups like
butchers and sweepers and three out of every four houses are rented. In Kumbheswor,
most of the tenants are scavengers as well as students whereas in Sawal Bahal most
are working as scavengers.
The collected information from primary survey is presented in tabular form using
SPSS software tools. Maps and photographs are also included to present the visual
condition of the study area. The analysis includes cross tabulation of the parameters
related to research question. Analysis result of these data has been presented in
diagrammatic chart forms.
The analysis results are referred for the identification of the problems and drawing the
inferences of findings. Set of recommendations are proposed to resolve the problems.
The methodology is summarized in the tabular form below with the methods, tools
and output to deal with each objective.
Situation in Kathmandu
Site Selection
Development of Literature Review Final Survey Tools
Checklist/Questionnaire
Discussions Checklist / Questionnaire
(Observation/Measurement/Photo Map
graphy)
Household Survey
Individual level
Data Analysis SPSS – household database Existing situation in terms of
physical, social, economic &
Visual survey – maps &
demographic aspects
photographs
Inferences/Findings
Objective: To explore the options of Public Private Partnership for the improvement of living
condition of urban poor living in rental housing.
Revisiting the literature Urban Indicator Guidelines Model
MDG targets
3.6 Research Fields
The research has been carried out in the following fields as identified by an expert
group meeting, UNCHS-1989, Slum Upgradation Forum and other experts:
The nature of low-income landlordism and the motives for letting
Tenure preferences among different groups in terms of income, ethnicity, gender,
marital status
Owner-tenant relationship
The characteristics of rental units and owner occupied dwellings
Rent, rate of occupancy and housing condition
Provision of infrastructures and monetary return to the owners
Locational preference of the low-income groups for rental accommodation
The socio-economic characteristics of landlords, owner-occupiers and tenants
Role of individual public sector, private sector and civil societies including Public
Private Partnership on the improvement of low-income rental housing
The potential of house owners as suppliers of rental housing
• Housing policies are often biased in favour of homeowners and fail to take
rental housing into account. This increases the risk of tenants being exploited,
especially poor tenants
• When rental housing conditions are poor, the problem is not usually with the
rental arrangement itself. Rather, it is related to the state of a city’s overall
housing conditions and the complex factors which cause poor living conditions
and poverty in general.
• Rental housing is closely linked to the way a city’s overall housing market
functions. Problems of rental housing are expressions of larger problems of how
the social, economic and political relations involved in land and housing are
balanced.
Developing countries have done little to stimulate the development of rental housing.
Indeed, the manner of their intervention in rental housing matters has actually
discouraged investors from increasing the supply of housing for rent. (UNCHS, 1993)
Rent-control legislation: Most governments first introduced rent controls at the time
of national insecurity or rapid inflation. The rationale behind introducing controls at
these times was the fear of what rapid inflation might do to rents. Governments were
concerned that the majority of their urban populations would be threatened with
The existing rent control law is unable to protect the low income households since
most low income renters dwell in self-help rental accommodations, where informal,
verbal contracts are not uncommon. In Mumbai, for example, where strict rent control
laws make it almost impossible for a landlord to increase the rent or evict a tenant, the
rental market is almost nil. In brief, the main problems with rent control are:
Equity: Rent controls can operate inequitably in three ways. First, they favour some
tenants at the expense of others. In particular, they tend to favour those who have
lived in rental housing for years against those who wish to become tenants. Secondly;
there is no guarantee that those covered by rent controls are actually poor. Thirdly,
tenants clearly gain at the expense of landlords. But, when tenants are more affluent
than the landlords, the effects of rent control are the reverse of what is intended.
Efficiency: By distorting market values, rent control often encourages the inefficient
use of housing. For example, small tenant households may occupy housing that is
much larger than they require, and for which they would not be prepared to pay the
market price, limiting the availability of accommodation to larger households. More
importantly, by holding down profits, controls discourage some landlords from
investing in rental property, although this claim is sometimes exaggerated and
contrary evidence also exists.
Maintenance: Where rent control makes rental housing unprofitable, a regular
complaint has been that landlords do not maintain the property. In Karachi, rent
control leads to “rapid deterioration in the quality of the buildings”. It is only when
the tenants have been prepared to take up the burden of repair that living conditions
have not deteriorated, something that apparently happened in parts of central Cairo in
the 1970s.
Hence, many governments have recently modified or even eliminated their rent-
control regulations.
Encouraging the building of housing for rent: on occasion many governments have
attempted to increase the supply of rental-housing generally by following one or
Most governments have attempted to encourage the private sector get involved in
rental housing. In Mexico, the Government provided generous tax incentives to
companies building rental accommodation, permitting the sale of the rental units after
a period of five years. In practice, this produced little housing outside of the main
tourists’ resorts. In India, income-tax concessions were made available to companies
willing to build rental housing although they have been removed now. In Egypt, the
1981 housing law required two-thirds of units in new buildings to be set aside for rent
rather than sale. It has also offered concessions on property and income taxes.
However, these provisions do not seem to have stimulated much in the way of
construction. (UNCHS, 1993)
Previous policies were not wholly successful and there is a shift in strategy with a
new approach called enablement strategies. The public sector should move out of the
housing arena and should play only the secondary role of providing infrastructures
4.1.3 Some of the appropriate public intervention & assistance for rental housing
Incentives for small landlords: In South Africa, Martin and Nell have proposed the
establishment of ‘The Household Rental Grant Programme’ comprising a capital grant
to households who are owners or have site permits and have built or renewed rental
accommodation on their properties to meet specified minimum standards. The grant
would be paid only once the accommodation has been built and inspected.
In Indonesia, the State provides credit for investment in rental housing and channels
this to "small developers". In order to facilitate access to this new credit line, loans are
available in small amounts, short maturities, and simple application procedures and
through community-based institutions.
In Bogotá, a Colombian NGO arranged a credit line from BCH to acquire a large
number of tenements in two historic sections of the city - Egipto and La Candelaria.
These were then renovated and handed back to the original tenants at the same rent.
An interesting feature of the scheme was that collateral for the credit line was
provided by interest accruing on donations to the NGO.
Efforts to improve the quality of private rental housing: In the United Kingdom,
landlord forums have been established which organize meetings in which local
authorities and landlords can discuss issues of common interest. Such forums are in
M.Sc. Thesis in Urban Planning [37] Poonam Bajracharya (MSU/063/F/205)
Rental Housing-Issues & Opportunities for Urban Poor Chapter IV – Rental Housing:
National & International Context
operation in 146 local authority areas (41 per cent of the total), most having been
established in the last couple of years. The local authorities administered three
quarters of the landlord forums, and many of the rest were run by institutional
landlords (like universities) rather than by landlords. Almost half of all the forums
were meeting at least every four months.
In Nepal, about 6.7 Percent households live on rental accommodation whereas in the
context of urban context the percentage is large compared to the national data which
is shown in the following table.
The percentage of households having owned house has declined compared to 1991,
whereas there is an increment in the percentage of household living in rented house
during the inter-census period. The size of urban population in Nepal has increased to
15 percent of the total population (CBS 2005) in 2004 from 6.9 percent in 1994. Due
to this reason, it is seen that an increasing percentage of households are living in
rented house in urban areas.
As housing is one of the means for economic generation, the renting response is much
higher in urban areas after the reason for housing own family.
Being a focus for urbanization, rental tenure pattern tend to be much higher in the
valley compared to national and urban national context. More than half urban
households are living in rental accommodation in case of greater Kathmandu.
One of the studies has identified 368 locations of the poor rental areas within the
valley. Among five municipalities, Kirtipur with about 147 locations followed by
Lalitpur 70 locations has highest number of locations of poor renters probably due to
the close proximity to Kathmandu and lower rents than in Kathmandu.
How is rental housing within the informal sector of developing country cities
evolving?
What are the main features of the mechanisms underlying rental housing for the
poor?
What are the effects of renting within slums and what are the implications to slum
upgrading?
SAWAL BAHAL
KUMBHESWOR
Sawal Bahal is located in Ward No.21 of KMC which is surrounded Bhotebahal area
on the East, Bramha Tole on the West, Lagan area on the North and Teku on the
Southern side. For the survey, the lane which is demarcated as Sawal Marga by KMC
was taken. The area is situated on the elevated land after which there is a heavy drop
towards Teku main road. Being the peripheral area of traditional settlement pattern,
the majority of inhabitants are from socially backward groups of caste Pode and few
Kasain who are ethnically categorized as Sweeper and Butcher respectively.
The area of the study site is 7955 sq.m. with total number of 161 buildings. The
survey area consists of 151 residential buildings among which 53 buildings are rented
out for residential purpose. There are 21 buildings which are fully on rent whereas in
about 32 buildings both tenants and owner are living. The native households count
128 in number whereas the tenant household counts for 170 accounting the total
number of households as 298. These results in gross average household per building
as 2.Besides residential use, there are two government schools up to primary levels,
Kawads, garment factories and poultry located in the study area. The buildings are
arranged in a row fashion along the lane with sound open spaces after certain interval.
The site also contains some vacant plots which have been using by the tenants.
The rental history of this area started from 25 years ago however the mass has rapidly
increased since 15 years. As the area is near to Kalimati and city centre, most of the
people who are involved in informal jobs prefer to reside here as tenants. Similarly,
the owners, as economically also backward, have only way to make income through
letting rent a portion of their native property. Hence, the area has greater demand for
rent mainly for low-income groups.
The indigenous population counts 762 and the tenant population counts 722 in Sawal
Bahal. Population density of the area is 1865 ppha.
There are 133 residential units, 3 Kawad, 1 primary school, factories, office building
and orphanage in the case study area. Among 133 residential units, 38 buildings have
been rented out and one factory has also been rented for the own workers. 15 numbers
of buildings are fully rented including factory whereas in 24 buildings both owner and
tenants are living. The case study area consists of 117 native households whereas the
tenants constitute 111 households which results in 228 households in total. Hence the
gross average household per residential building of the area is 1.7.
The total population of the area is 1201 in which 752 is native population and 449 is
tenant population including tenants of the factory. The population density of the area
is 662 persons per hectare.
Being near to heritage site, the people mostly involved in handicrafts used to rent in
core area of Kumbheswor. After the trend of building a house at low land by local
people, the renting process also started there.
5.2.1 Demography
Population
66+
61-65
56-60
51-55
46-50
41-45
36-40
31-35
26-30
21-25
16-20
11-15
6-10
0-5
20 15 10 5 0 5 10 15
Numbers
Ethnicity
11%
Source: Census Survey, 2009
Majority of tenants are Podars having ethnic occupation of vessels and Kawad.
Nearby Kawad and relatives has tended these caste groups to live in Sawal Bahal.
Most of the caste groups are involved in the same occupation and they tend to bring
their relatives and friends in the same occupation. Since the owners are of
1%
2% 1% 11%
Source: Census Survey, 2009
Employment
66+
61-65
56-60
51-55
46-50
41-45
36-40
31-35
26-30
21-25
16-20
11-15
6-10
0-5
20 15 10 5 0 5 10 15
Numbers Source: Household Survey, 2009
Figure 6: Employment in Sawal Bahal
66+
61-65
56-60
51-55
46-50
41-45
36-40
31-35
26-30
21-25
16-20
11-15
6-10
0-5
15 10 5 0 5 10 15
Numbers
Scenario in Kumbheswor
Literacy
66+
61-65
56-60
51-55
46-50
41-45
36-40
31-35
26-30
21-25
16-20
11-15
6-10
0-5
20 15 10 5 0 5 10 15
Numbers
In spite of the free government schools, Podar families are involving the age group of
6-10 in the Kawad. Female literacy rate (50%) is higher than male as most of the
woman of Podar Family migrated mainly after marriage giving them opportunity to
study in their own village.
Scenario in Kumbheswor
Besides the Podar families, who tends to involve their children of 6-10 in Kawad, all
the rest of the age group are the school students enjoying the opportunity of the
existing technical school.
As most of the tenants are migrated from the villages of Nepal, which lack
educational opportunity in remote areas as well as socially biased towards female,
female literacy rate (47%) is much lower than male literacy rate (74%).
66+
61-65
56-60
51-55
46-50
41-45
36-40
31-35
26-30
21-25
16-20
11-15
6-10
0-5
15 10 5 0 5 10 15
Numbers
Some of them directly migrated to the current location whereas some migrated to
some other place in Kathmandu valley initially and then gradually migrated to Sawal
Bahal. Most of Podar families used to live in Sawal Bahal and nearby areas as it is
near to Kalimati. They only shifted from one building to another in the same location
for their own convenience or others. Similarly, the local families who get subdivided
tend to live in live in the same neighborhood area.
Scenario in Kumbheswor
Unlike Sawal Bahal, Kumbheswor does not contain significant migrant from a single
place. However, a large number of tenants in Kumbheswor have been found to have
migrated from places in the Central Development Region, mainly from eastern part of
Kathmandu Valley viz Kavre, Dolkha and Ramechhap.
Because of the opportunity on working nearby technical school and other factories,
Source: Household Survey, 2009
the migrants working there tend to bring their relatives and friends to involve in the
There are about 15% Indian tenants who have migrated from Bihar. They almost
belong to the same caste and are involved in similar occupation. Some of them have
been living in valley since 28 years.
Like in Sawal Bahal, some migrants have directly come to the current location
whereas some lived in other places of the valley and gradually shifted to the present
place. Almost all Podar families have been living in Kumbheswor area on rent since
many years and they use to shift from one building to another. Other caste groups like
Tamang, Magar, Lama etc. used to live near to Kumbheswor area and shifted here
because of the availability of water, near to educational facilities and work place.
Health
Security
Landlessness
Occupation
Education
Family Sub-
Escaped from
Reason for Migration
division
Sawal Bahal 84 3 3 7 3
village
Kumbheswor 64 3 4 4 18 7
Source: Household Survey, 2009
Mr. Abdulla Khan, 45 years old tenant of Sawal Bahal, came to Kathmandu in 1986
A.D. He was brought here by his cousin who was involved in tailoring. He started
to live with his elder brother on rent in Khichhapokhari. His brother was mechanics
and used to work in a workshop at Jyatha. Mr. Khan also joined there to learn the
mechanical works. He worked there for two years and then, joined another
workshop at Siphal. He started to live with his new friends of workshop on rent in
Sundhara. About four friends used to live in a single room sharing the cost.
However due to far workplace, he thought its better to look for a new job rather
than shifting the room as most of his relatives were near to the area. As soon as he
got job in Maruti Showroom at Pulchowk, he came to Sawal Bahal 15 years back
and started to live on rent in an old house. At the mean time his nephew Foul Khan
was living in Bhote Bahal with his friends. He called him to live in the same room
and work in the same company. In between they had to live in Kalanki with relatives
for about 3 months, as the building at Sawal Bahal was reconstructed. They started
to live on the same building after reconstruction. However they had to leave after
few weeks because the room was given for shop. As the rent was cheap, they
preferred to remain in the same place rather than other location. So, they moved to
another old building in Sawal Bahal. They again had to leave the building for
reconstruction, so they decided not to shift in old building. Finally they found the
current building which was constructed just two years before at that time. As the
rent charge was high for them, they called two other friends to live in the same
room so that the expenditure could be minimized. If there is no objection made by
owner, he wants to live there until his work time in Kathmandu. According to him,
though they have to pay, they are getting at least drinking water from the owner
which other tenants of Sawal Bahal do not have and get only after long queue.
5.2.3 Household
20
15
10
0
1 2 3 4 5 6 7 8 9
Number of Persons in a Family
The average household size of the tenant in Sawal Bahal is 5 whereas the average
household size of the owner is 8 which show that owner family size is higher than
tenants.
Unlike Sawal Bahal, there is not much tendency of sharing a single room by number
of families except in the case of students. As in Sawal Bahal, household having
number of members 4 is higher in percentage depicting the trend of living two-
generation family. As in Sawal Bahal, the average household size of owner is greater
than tenants.
Education
Except in the case of students, the education level of both working as well as non-
working groups is much lower in the case study areas. The maximum level of
education being attained by them is S.L.C. The major reason for not attaining higher
education is due to economic reasons and the need to earn for livelihood as well as
lack of educational opportunity. This lagging behind in education has led tenants from
proper employment in turn has affected on the economic status.
Occupation
As more than half tenants belong to Podar, the occupation related to their ethnicity is
higher in number. However Podar families who once used to work on vessels are
gradually shifting towards Kawad works as whole family members even females and
children can get involved in that occupation. The trend of buying accessories from the
mobile-seller is getting less, so most of their area of sale is the satellite towns like
Khokana, Lubhu, Chapagaun, Godawari etc. however they are living in Sawal Bahal
only because it is near to Kalimati which is main area of suppliers.
Informal economic activities are seen to be the major basis for livelihood. Some of
them mainly Pode families, are also found to be in the formal sector as a sweeper in
municipality, private organizations etc.
Being near to the heritage zone, most of the people’s occupation is related to the arts
and crafts in which females are engaged in Technical School.
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
ke
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Almost all Podar families are still involved in their ethnic works i.e. of vessels and
Kawad, however most of them are engaged in Kawad compared to vessels. Though
the dealer of vessels at Kalimati is far from the area, the vessels workers are residing
Figure 12: Occupation Pattern in Kumbheswor, 2009
there only because of the relatives. The local households who are in rent after family
sub-division are still continuing their ethnic jobs as in Sawal Bahal. Most of Dalits are
working as laborers reflecting the community trend.
Being in the inner part of the city, both of the areas are facilitated by proximity to
places of employment or schooling, health services, accessibility and availability of
public transport facilities etc.
There are two government schools which use to give free education up to primary
level in Sawal Bahal area. Most of the tenants as well as owners have sent their
children in these schools. In Kumbheswor, there is one technical school, which
provides food up to kinder garden level as well as free education has played a vital
role in the education level of the children.
Rent Charge
Rent charge highly depends upon the size and quality of the accommodation, the
structure of dwelling unit and the level of finishing and access to basic infrastructure
and services.
In both of the case study areas, the average rent paid for an approximate size of 12’ x
10’ room is Rs 1000 per month which is for accommodation only. Besides this, other
charges for electricity, cable line and in some cases maintenance charges are taken
separately by owners. Rent is increased in different ways such as increasing small
amount of money like Rs 20 or so in every 6 months, increasing Rs 50 every year.
According to the owners, inability to increase a sufficient rent charge is mainly due to
unavailability of water and level of services.
Rent levels can increase due to rising land values but low level of services and
amenities as well as the social context of the owners has leaded them to charge rent
level too low. The availability of inherited land has made the possibility of low rent
level.
In Sawal bahal, the total income include only 25 % rent to almost half of the owners
whereas in Kumbheswor, the rent covers not even 15 % of the total income to half of
the owners except in cases to some owners whose about 90% of the income from the
rent only. Hence the rent constitutes very little portion of the total income of the
owners depicting the chance of less feasible.
Rs 1000 per sq.ft. and the occupancy status to be 80% in a year; then the cost for
constructing 120 sq.ft.room is Rs.120,000 and the pay-back period comes to be 27
years which is quite discouraging to the owners.(Calculation-Annex) This suggests
that the market rent is below the level required for cost recovery.
The tenants are found to be paying 20% of their income in rent which varies from 5%
to 60% and even 100% in some cases of Sawal Bahal, whereas in Kumbheswor half
of the population are paying less than 10% of their income in rent. In Kumbheswor,
the rent charge seems to be acceptable to the tenants however in some cases of Sawal
Bahal, where a higher portion of their income is spent on room; there is a chance of
squatting where at least room rent could be saved and an opportunity could be found
to improve by saving certain amounts every year.
Source: Household Survey, 2009
Figure 15 : Per Capita Income per Day of the tenant (in US Dollar), 2009
Figure 16: Per Capita Income per Day of the owner (in US Dollar), 2009
In case of owners, more than half are above the poverty line however, the per-capita
income almost resembles to the tenants in both cases.
The expenditure pattern of the tenants also helps to show the level of poverty. More
than half percent of Income goes for food in Sawal Bahal. As there is not tendency of
sending children to school, the expenditure on education is very low. The amount sent
to their home, which is saving of the tenant, is more in Sawal Bahal because there are
more single persons living as a combined family sharing the cost of rent as well as
others. And this has also lessened the expenditure on rent as shown in the chart. Since
most of the tenants have working place near to the rent, the expenditure on daily
transportation is very less however as most of the tenants are Indians having their
families at home province, they have to spend on transportation at least once in a year.
M.Sc. Thesis in Urban Planning [70] Poonam Bajracharya (MSU/063/F/205)
Source: Household Survey, 2009
Expenditure Pattern
Expenditure Pattern in
in Sawal
Kumbheswor
Bahal
9%
2% 12%
1%
2%
2%
Food
Food
4% Clothes
Clothes
Education
Education
5% Transportation
Transportation
22% Sent
Sent toto home
home
5% 52% Medicine
Medicine
Miscellaneous
Miscellaneous
Rent
Rent Charge
Charge
63%
9%
8%
3%
2%
Per Capita Space is very low in both of the case study areas as compared to the
average per capita space of urban area i.e. 135 sq.ft./persons (NLSS II) Almost all the
tenants are living in very congested environment which may later effect on the
personal development of the inhabitants especially the children.
Accessibility
Kumbheswor contains an old settlement as well as a new settlement. The main stretch
of the old part is vehicular and brick paved while the inner roads are non-vehicular
with very narrow lane and in unmaintained stage. In the new settlement, there is not
any defined path as many buildings have encroached the road. The access is generally
foot tracks with small bridge over sewer. As almost all inhabitants use to dispose
garbage in sewer line, the environment of path along the line is very miserable.
Most of the upper floors are resided by owners whereas the lower floors are being
rented out. Since the owners have separate kitchen, there may not be severe problem
to them. However for the tenants who use the same room as kitchen may lead to a
disastrous situation.
4%
96%
The case is different in Kumbheswor, where the tendency of building a new building
nearby area is more than adding a building in the old one.Either the whole building is
left out for rent or the owner shifted to the newer one. This has created proper
ventilation either being rented the old building or the newer one.
Level of Services
Urban service levels are much lower in the case study areas using rent charge
increment as evidence.
Water Supply
Access to a regular supply of water is a problem for most people in the Kathmandu
Valley; however the problem is seemed to be more severe in the case of Sawal Bahal.
Almost all the houses are connected with pipeline from Nepal Water and Sanitation
Corporation, but it has been about 15 years that no water being supplied. As the
problem became harsher, the local club of Sawal Bahal decided to distribute water
through tanker to 130 households. However, the program couldn’t be successful due
Source: Household Survey, 2009
to disputes among locals at distribution area. Later on, new pipe network was laid out
Figure 21 : Type of opening in Kumbheswor
Later on this was also stopped. On those days, people used to stay in queue overnight
in Yangal for water from communal tank. Looking at those problems on the request of
another local club, which is associated with a political party, water tanker of
municipaltity was brought up to Teku charging Rs 5 for 3 gagris. Nowadays charge is
taken only if any community works need to be done and water is distributed daily
once at Teku and once in the Tole. On the other hand, with the aid of ADB, different
NGO’s also started to distribute water twice in a week with the agreement of Rs2 per
20 litres. The local club use to collect the charge (Rs 5 per 3 gagris) and spend it on
community development works. Allocation of water is according to the coupons
distributed and about 300 Households including rent have coupons and have also
formed Water Users Committee. As soon as the tanker arrives, a portion of water is
separated in jars which are sold to the local residents having no card with high charge.
Besides these, the club also uses to sell a jar in Rs 7 forSource: Household
the local Survey,
residents 2009
and renters
who don’t have time to wait in queue. For this the support has come from UN-Habitat
& different other NGOs.
Distributed water from a single source is not enough to most of the houses, so they
have to depend on the entire available alternative sources. Almost half a day of people
mainly of housewives is being spent their time on water. As different organizations
are involved in distribution of water at different time in the same place, the users have
to face lot of problems for the queue. From the survey, about 60 percent people use
the water with coupon and those having large family size use that only for drinking
purpose and for other purpose, they even use other sources like communal tap for
which also they have to stand on queue. Most of the families spend in an average Rs
200 only for the water in a month. Most of the tenants have a complain on the locals
and club volunteers who don’t let the renters in queue before the locals though they
have coupon.
80% to
piped
60%
water
40% in most
of the
20%
7%
4%
0%
Pipeline Well Stone spout
households in Kumbheswor, number of stone spouts in the areaSource:
have Household
helped to Survey, 2009
Figure 23 : Different Water Sources in Kumbheswor
overcome the problem of water to certain extent. People not only in Kumbheswor but
also around that area like Chyasal, Balkumari, Shankhamul etc depend upon the same
source. One of the reasons for choosing Kumbheswor by tenants is also the
availability of water compared to other places. The Public Private Partnership concept
seems to be working well in Kumbheswor area for the effectiveness of traditional
spouts. There are different committees formed for the conservation and preservation
of different spouts in which NGOs, municipality and users are involved. For the
effective use of wastage water discharging at the night time, they use to store and
redistribute water to household levels through the pipes connected to the security box.
For the storage and distribution, overhead water tank has been kept at different places.
There is not allowed to dig wells or hand pumps for water in Kumbheswor in order to
preserve spouts.
For the households who have connection with pipelines also use to give water to the
tenants. However for the tenants who don’t have owner use to have problem. During
dry season, as there is no sufficient water in the spout, people use to pump water
whenever possible for filling the tank. But this has created a lot of problem to the
tenants and other households who depend directly on the spouts. There are also
separate stone spouts used for bathing and washing clothes. All of the tenants as well
as owners use stone spouts as a primary source which creates mass at the source
thereby lengthening the fetching time.
Solid-Waste Management
As most of the owners are involved in the sweeping occupation in the municipality,
Solid Waste is well managed in the area. Initially the area was used to be as dumping
site of the city which created a lot of problems in the health. People did not even want
to pass from Sawal Bahal area. This initiated a local club to work for solid waste.
Table 13 : Solid waste disposal pattern
Disposal of solid waste Sawal Bahal Kumbheswor
Home Service 66% 11%
Collection corner 6% 11%
River 9%
Paid Home Service 19%
Open Sewer 79%
Source: Household Survey, 2009
Laxmi Chhetri, though only 16 years old girl, has to act as a head in the family. She
used to have hard life since her birth which further added after her father left her
pregnant mother in a hospital. Now, she has a mother, one younger brother and two
younger sisters in a family.
They used to live in Kuleswor with her father on rent. Her father sold all his
ancestral properties at Trishuli. After her father left them, they found it very
difficult pay rent because no one of them used to work. So, they started to look for a
new place where the rent was cheap and could find job nearby. As her mother
belongs from Podar family, she got to know about Kumbheswor through the
relatives living there. Finally, they choosed an old building in Kumbheswor for rent
because there are Kawads nearby, water is easily available and the rent is cheaper
than former.
As soon as they shifted to Kumbheswor, Laxmi got job as a helper at two housed in
Chakupat and her brother also joined Kawad. She gets Rs 1700 in total from her
service and her brother earns Rs 100-150 per day from Kawad. Besides these, to
meet the expenses, she uses to carry water for her owner and other neighbours from
dhungedhara for which she gets Rs 25 per day. However, they always use have
deficit economic condition in the family. They have to pay Rs 850 for the rent
including electricity and cable line. Their daily expenditure on food goes up to Rs
They are living in a single room of a very building of size 10’ X 12’. A corner of the
room is used as kitchen where they have made small cooking place. They use
fodder, which her brother brings, as a fuel. Near to the door, they have kept a
bucket and tub where they use to wash the vessels. This has made the floors very
muddy. They use to store water in buckets and keep in the lobby. As the building is
located in the alley, the tall surrounding buildings have block all light making room
more unhygienic.
However, they are satisfied with whatever they have. They say at least they have a
place to live and afraid if they could not pay the rent and being evicted. So they try
to manage the rent even by taking advance from Kawad.
5.2.6 Rent
There is a phenomenon of social divide among renters, non-renters and tenants in the
society which has created a difference on the perception for looking toward renting
and towards each other.
In newly developed area of Kumbheswor, quite a number of owners have also rented
to recover the loan taken for the construction of building itself. From the study above,
the owners can be categorized mainly within three groups:
Owners who invest to make income from the property.
Owners who have spare rooms.
Acceptability
In both case study areas, owners often tend to rent out the tenants with resembling
social and economic status to oneself. As owners themselves are scheduled caste
group, they accept the other lower caste for rent which others do not readily accept.
Besides caste, there exist similarities in occupation pattern as both of them are
involved in solid waste management job.
However, few owners have complains over tenants for untimely payment of rent,
misuse of premise and leaving the room without payment.
Parbati Pode is 33 years old widow, living in Sawal Bahal with her son. Her
husband died 10 years back when her son was just 6 years old. She used to have a
job as a sweeper in municipality which was not enough to sustain. As her son was
small, she could not join other jobs too. So she found no other way to make income
except giving the extra rooms on rent. As almost all neighbouring buildings had
given rent, it was not difficult for her to look for tenant through them.
Now she has given three rooms on lower floors on rent to two Podar families.
Though the income from the rent is not much, according to her, the amount has at
least supported the payment of electricity bill and the education of her son. As her
room is not partitioned i.e. open to the staircase, initially, she used to feel unsecure
from tenants of being theft. However, with the time she has got attached with them
and now feels more secure. Their relation has created some sort of mutual
dependence among themselves. Whenever, she needs to go out, she uses to leave the
rooms on their trust. She is very happy to be with them as she says she got family
members with whom she could share the things.
Maiya Pode is 44 years old unmarried woman, living in Sawal Bahal. She owns
another building, which she had bought 8 years before, is fully on rent. It was on
rent since before buying, so she thought to let it for rent to the same tenants until
she requires room for the family. However, she is now regretting for her own
decision of that time. The building contains 15 rooms and about 13 rooms are in
rent and rest are being used by self as store. The tenants are mostly labourers and
according to her, except few no one pays rent on time. As her family does not live in
the same building, some tenants use to escape without payment. The rent charge
ranges from Rs 750 to Rs 1000 per room and whatever charge collected need to
spend on maintenance only. No one among tenants bother for the maintenance and
cleaning of the place. This has created very stinking environment inside the
building. She further adds some tenants use to burn wood during winter which has
made the ceiling of the room black. She even found sub-renting among tenants i.e.
tenants themselves giving rent to other tenants and collecting the charge to pay the
rent to the owner. She felt about the need of rental agreement in order know about
the tenant families and their occupation because their used to live a group of
Pattern of Renting
Owners prefer to rent out the rooms in different floors as per their convenience. In
Sawal bahal, most owners have rented the lower floors, whereas the upper floors are
fully resided by themselves whereas in Kumbheswor, various cases are found
according to the floors being rented. The owners have rented the rooms in all floors
and they are also living in the same floor sharing the space. In some cases, the owners
have rented the middle floor residing own selves in lower and upper floors along with
the middle floor. Owners have even been living in the lower floors renting the upper
floor.
There are different opportunities for tenant as well as owner on living different floors
and sharing the floors which are demonstrated and summarized below.
Tenants have tendency to bring friends and Tenants have hesitation on bringing friends
relatives in the room as the owners get less and relatives in the room as each activity get
distracted from the tenants activities. known to the owner.
Usually the facilities mainly toilet and Terraces and toilets are shared without
terraces are less shared with the tenants hesitation.
which makes more use of nearby chowks or
lanes by tenants.
Owner occupied floors are well maintained As the space and facilities are shared by
and serviced which lacks in tenant occupied both , the areas are seemed to be moderately
floors maintained. However, there may create a
tension in the relationship for the
responsibility of maintenance.
5.3 Problems Identified
Vulnerable groups
The owners generally try to avoid the family with small children or a single person for
renting. Usually, they do not provide a single woman or a girl with rent.
Security of Tenure
Due to lack of rental agreement, the tenants have to leave the room as per owners
choice. One always needs to be mentally ready for departing the room without former
notice.
Relationship between tenant and owner as well as among the tenants gets worse due
to misunderstanding on the matter of responsibility for maintenance. The poor
tenants, for whom the charge is high, think responsibility should be taken by the
owner. Whereas the owner, for whom, the weightage of rent is very low, thinks it is a
responsibility of tenant to maintain. Lack of proper maintenance and timely repairs
has made rental housing of inferior quality.
Physical infrastructure
Urban service levels are low for all urban housing; in addition they are much lower
for rental housing. Both tenants and resident owners use to spend more time for water,
especially the women. This has resulted in the restriction of women from gaining the
opportunity of self-empowerment. Sanitation facilities are very poor in rental housing.
The tenants and owners share the utilities with no regards to the total number of users.
Accommodation occupied by tenants often consist of a single either sharing with
friends or family members performing almost all the functions on same room. Other
utility areas such as washing, cooking are often absent in these rental housing. These
all have resulted in the deterioration of housing condition which has inverse impact on
the personal development.
Participation
Tenants generally do not exhibit interest on the community works. The local people
also do not intend to make them participate along. As community organization is one
of the gateways for the alleviation of poverty related problems, the problems of the
tenant remain unspoken.
There is a dominance of male population with working age group in case of rental
tenure which shows the need of housing of that particular group. There is a trend of
living in a single room by sharing with friends of similar ethnical background. Most
of them use the room as night shelter only.
Renting is said as a transition phase but this is not true in the case of poor. There are
some tenants who had migrated here for occupation more than 35 years back and have
still been on rent. This shows that the migrants also tend to live for a long run in rent.
However, most of the tenants are mobile in nature. They frequently use to change
their place as per convenience.
Most of the occupation is related to informal sector which shows insecurity and may
also results in more bad conditioned housing or squatting. Lack of education and
tendency of not sending children in school mainly for work as a part of earnings also
tend for difficulty for them to enter in formal sector jobs.
Owners are generally similar to their tenants in terms of social and economical
characteristics. If the tenants having low caste with such occupation pattern were not
accepted by owners then there would be no option for them to get shelter except
squatting. Similarly, the tenants have also supported the owners economically by
accepting them as owners. However, owners generally prefer family and male with
friends for renting. So the single woman and the family with children often get
difficulty for rent.
Rent constitutes very little portion of the total income for the owner which is so less to
be financially feasible. It seems private investment on rent is not encouraged. On the
other hand, rent levels for the poor tenants are often such that they can afford the
accommodation only through overcrowding and decrease the rent load per capita.
The only way of extra income for the poor owners is to build a house within their
native land occupying full plot for maximum return with no regards to ventilation for
rent. And, there are some cases where the tenants are displaced against the increasing
Both tenants and owners are equally suffering from the lack of services and facilities
which leads the owner difficult in raising expected rent charge and the tenants not
been satisfied for whatever being charged. Even in the available services. Almost all
the tenants are using public water sources and facilities which have directly impact on
the time taken to collect water and the availability of water. The space being used by
tenants is highly compromised and far behind to be wholesome. Limited space has
serious ramifications for the personal development of the people mainly on the
academic development of children.
Tenants do not tend to participate in community works and even the local people do
not want them to participate which show the lack in the feeling of belongings as well
as the attitude of local people towards renters.
The analysis of the case studies, theoretical frameworks and outside practices exhibit
different issues which need to be addressed in order to understand and assist the
current rental housing market. The issues can be categorised into the following broad
headings:
Because of the low rent charge, the quality of the accommodation is depleting as a
landlord is left with not even a handful amount to maintain and repair and provide
other amenities. With the market escalation, the basis of rental increment is weak
reflecting the non-sustenance of the overall business.
Supply incentives like tax incentives, interest and subsidies are some measures used
for the promotion of rental housing. However these subsidies carry a large
administrative burden and a great potential for abuse and being misdirected. A
developing country, which itself is weak in resource and where the poor count is
greater than non-poor; it is really a difficult task to accumulate sufficient resource for
all needy groups.
“The issue of rental housing is more crucial to the low-income groups as it is unlikely
that they will be able to own a house unless there is some plan or policy to support
their housing needs.” And it is a responsibility of government to widen the range of
housing options available to each income group.
6.2.9 Participation
Tenants are less motivated to join community projects and only the owners are
assumed to be local residents. Similarly, the community organizations which are
mostly dominated by owners also ignore the tenants in community development
works. Community involvement in local improvement projects does not work unless
the tenants are also involved. The lack of stability and roots in urban areas of the
Thus, renting is one of the common and dominant forms of tenure in the urban area.
The access to land and housing is beyond the reach of majority of people so rental
accommodation has become only the option for them especially the urban poor. Room
renting is a dominant form of rental accommodation to them as they cannot pay for
the whole unit or flat. On the other hand, most landlords among the urban poor are
poor themselves and own property only on a very small scale. Most of the poor
landlords spare one or two rooms of the house for subletting mainly to supplement
their income. This phenomenon has proved to be beneficial to both parties.
“A substantial market in rental accommodation is known to occur in the slums mainly
in the inner city areas.” Poor people give more priority to the shelter or
accommodation than services and quality as they cannot afford for all. In spite of
difficulties, they are forced to live on rental rooms with great deal of congestion and
inconvenience resulting poor housing condition and unhealthy society. However,
neighbourhoods are not only a place for people to sleep and work, but also the place
where people want to live and prosper. So, there is a need for intervention from
government and other sectors to assist low-income rental area.
Chapter 7 Recommendation
Government should recognize the important role that rental housing plays in
accommodating the urban poor. Regarding the necessity and the issues related to it, it
is necessary to introduce some kind of policy and models to implement the policy,
with an objective to facilitate the lower-income people to have an access to affordable
and adequate shelter (rental housing) and at the same time also taking care of the
concerns of the owners.
7.1.2 Promote the institution or companies for the shelter insurance of their
employee
In order to decrease the demand for rental housing, the policy should include the
strategy for the insurance of shelter to the employees by institution and organized
sector employers. There should be a provision of houses for industrial workers in new
industrial areas or growth centres by public and private employers as a part of project
cost and for stimulating this by appropriate fiscal concessions and institutional finance
under industrial policy.
7.1.3 Encouraging the existing low-income house owner for renting through
incentives
Most rental opportunities for the poor are provided by low-income home-owners.
Generally, owners get benefit from rental income by letting part of their properties
whereas tenants are benefitted from lower rents. Small-scale landlordism is the best
way in which to reduce supply constraints in the rental market, but of course for this
strategy to continue, poor families must have access to the inputs they need to develop
As such, governments should encourage banks to move into the low-income housing
sector and to lend to landlords wishing to enlarge or modify their properties. They can
be encouraged using various forms of guarantee or support, or through untapped
sources of funds, such as credit societies or secondary mortgage markets, which takes
off some of the pressure on housing markets. The various measures could be as
follows:
Community-managed savings and credit programs should be developed and these
saving schemes should be linked with housing development. Government should
help to establish link between these credit groups with banks or other financial
development agencies.
Government should establish a revolving fund which poor communities can tap for
their own development activities.
Formation of co-operative societies with the help of NGOs by taking loan from
government financial institutions at the nominal rate of interest
Based on policy recommendations, different models are proposed here for assisting
the urban poor in dealing with different aspects of the shelter process.
Most of the working age group male tenants live singly but in a group with friends
and relatives sharing a single room and facilities. Generally, they leave the room very
early in the morning and come back late in the evening as if they require the space
only for the night. Targeting such groups as well as other needy groups like pavement
dwellers, a model for night shelter is proposed.
Government invests for the construction of a building for night shelter near the core
area. For the operation and maintenance, management contract is provided to the
private parties. Nominal facilities like bed and wardrobe are provided for which they
are charged. Public toilet and public mesh hall is associated with this scheme.
7.2.3 Using the regulatory framework to create conditions for the poor in private
development
Private developers are allowed to assemble the land of more than specified for
residential housing development only in the condition if certain portion of land is
reserved for low-income groups. Greater FAR is provided in reserved low-income
bulk which gives an advantage of additional floors. The low-income groups are
encouraged to own the house there through the provision soft-loans by financial
A revolving fund in a local level is established by government with its own seed
money as a program for rental grant. The resources are used to provide subsidized
credit to the low-income owners who want to add or extend the building for rent.
Certain criteria are developed by the program for the provision of fund like one must
be resident of specified locality should have income below urban average level, and
building should meet minimum standards regarding ventilation, sanitation facilities
and utilities after construction. For the management of fund, a committee is formed
with the representatives of owners, local authorities and NGOs.
The owners, who want to fully reconstruct the building and have already on rent, can
borrow money only if the old tenants are assured for renting before reconstruction.
7.2.5 Financing scheme for the existing landlords for the maintenance of
infrastructure
Owner Co-operative society is formed with the help of NGOs by taking loan from the
government financial institutions on the prevailing rates of interest. The board of co-
operative society includes representatives from landlords, tenants who are staying in
the current place since two years, NGOs and experts. Landlords are encouraged to
deposit certain amount of their rent on monthly basis as saving deposit. High interest
rate is provided for the deposit in maintenance account. The interest is provided tri-
monthly which should be used for the maintenance and repair of the housing. Separate
group is formed by co-operatives themselves to monitor the housing condition.
However, NGOs should also actively involve to ensure the tenants that improved
condition do not tend to raise the rental price.
From the cases of other developing countries, direct government intervention on the
provision of housing has proved to be infeasible and expensive. Similarly, large-scale
involvement by the commercial private sector in the low-income rental market has
been shown a decline in housing standards, increasing costs (rents), and the
concentration of profits in the hands of a small number of landlords. For the existing
trend of rental housing where both the parties viz. tenants and owners are not
satisfied, in order to have access to housing and improve the living conditions, poor
families living in rental accommodation need to be addressed jointly by private
sector, public sector and civil societies.
“In summary, even though public/private partnership is not a panacea for the shelter
problems facing the urban poor, in the right circumstances, it can provide an
effective mechanism for improving the shelter options of low-income groups, for
which partnerships have to be limited in scale and reach among the beneficiaries.”
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Appendix