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WEEKLY NEWSLETTER
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Chile
Index
A resident of Conchalí, a low-income district in northern
Santiago, making use of caseta, a government-financed and
government-built housing unit containing cooking and sanitation
facilities
Courtesy Inter-American Development Bank
The mayor of the low-income community of Peñalolén on the
eastern side of the Santiago metropolitan area paying a visit to
her constituents to inspect casetas
Courtesy Inter-American Development Bank
The state began its involvement in the construction of
low-cost
housing in 1906, with a law stipulating that builders of
low-cost
units would qualify for a complete exemption from all
taxes and
that their owners would be exempt from real estate taxes
for
twenty-five years. Subsequent housing programs in Chile
have
usually consisted of providing subsidies to those who
built lowcost houses or to those who bought them. In addition the
programs
have furnished one-time grants for the necessary down
payments to
permit people to obtain a loan or qualify for a housing
program.
Generally, all three features have been in place since the
1950s,
although the emphasis on one or another means has shifted
with
changing governments. Subsidies to buyers have been
channeled
through below-market interest rates for long-term loans.
These
generally were made available through pension plans.
Between 1955
and 1973, these subsidies mostly benefited the poorest 60
percent
of the population, especially the lower-middle 30 percent
(for
definition of
extreme poverty, see
Glossary).
Starting in the 1950s, the state also assumed a major
role in
the construction of low-cost housing. The Housing
Corporation
(Corporación de la Vivienda--Corvi) was established by the
national
government in 1953. Between 1960 and 1972, an average of
42,000
houses per year were built in Chile, of which the state
built 60
percent and the private sector with state financing built
20
percent; private companies built the remaining 20 percent
with
private funding.
The military government cut public spending for housing
to less
than half of its 1970 levels. Supporters of the regime
argued that
state resources were more efficiently used than before,
citing a
slight increase, to about 43,000 units, in average annual
housing
construction. They also argued that attempts were
made--with
greater success in the late 1980s than at the beginning of
the
Pinochet regime--to channel state subsidies to the poorest
sectors.
However, on average the number of new housing units was
equal to no
more than 56 percent of the total number of new households
created
between 1974 and 1989; the result was an increase in the
nation's
housing deficit. A rapid acceleration of construction
toward the
end of the 1980s, with almost 84,000 units being built in
1989,
kept the deficit from becoming even worse.
The military regime reduced the subsidies on housing
loans and
initiated a monthly readjustment of all such loans
according to the
rate of inflation as a means of retaining their real
value. The
government also increased the participation of the private
sector
in the construction of housing and municipal buildings. It
also
attempted to allocate houses primarily to households that
met
certain savings goals, an objective that proved virtually
impossible for poor families to meet. As a result, toward
the end
of military rule the state put more resources into
one-time grants
to enable families to cover the down payment.
The Aylwin government increased public funds for
housing by
about 50 percent, although construction remained in the
hands of
the private sector. It changed the eligibility
requirements for
public housing programs to favor poorer people unable to
save
money. The government's intention was to freeze the
housing deficit
that existed in 1990 by facilitating the building of as
many new
houses as were needed by the new households that were
being formed
(see
Construction
, ch. 3). It also reintroduced utilities
subsidies
to poor neighborhoods and placed a greater emphasis on
communal
services for such areas.
Data as of March 1994
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