Magri Díaz, A. (2013). El rol de las políticas de vivienda en la eficiencia sistémica de los países en desarrollo: análisis aplicado a la experiencia en Uruguay.. Revista INVI, 28(79), 17-59. Como citar este artículo
Revista INVI - The role of housing policies in the systemic efficiency of developing countries: analysis applied to the Uruguayan experience

doi 10.4067/S0718-83582013000300002


The role of housing policies in the systemic efficiency of developing countries: analysis applied to the Uruguayan experience1


Altair Jesica Magri Díaz2

2 Uruguay, Political Scientist, Ph.D. in Social Sciences with a specialty in Political Sciences, University of the Republic. MA and BA in Political Sciences. Professor and Researcher, Institute of Political Sciences, Faculty of Social Sciences, University of the Republic. Researcher, National Agency on Research and Innovation.


This paper analyzes the inclusion of the housing sector in the systemic efficiency of States and applies the case study to the Uruguayan process by scrutinizing the reforms implemented by left-wing governments since 2005. It presents and analyzes the nature of the housing sector, which is defined as systemic due to its impact (in conjunction with the social issue) on the general development of the production and financial systems of a country and its systemic efficiency in relation to the external situation. This paper scrutinizes the different stages involved in the evolution of the systemic integration of housing, which includes the transformation of its social function into a financial and productive function. These policy categories evolved as follows: from the classical (universal) social policies on housing and (targeted) social housing policies defining the role of the State in the production of dwellings, to the recent inclusion of the low-cost housing concept that replicates the experience of other Latin American countries and creates a quasi-housing market that ignores the social issue.




This paper analyzes the inclusion of the housing sector in the systemic efficiency of States. Such a study has a general content that is then applied to the analysis of the Uruguayan case. This public area is generally studied in relation to its sectoral nature, understood as a social reason of the State in fulfilling the right to housing. However, as suggested by the regulations currently in force in other countries, the treatment of policies aimed at reducing the housing deficit through regulatory and distribution measures inhibits the treatment of complex and multifactorial policy objectives related to the economy and politics due to the magnitude of factors and actors involved. Governments and international organizations agree that housing, beyond its infrastructural and funding processes, is linked to the residence, habits and job and cultural activities of a family; it also generates identity and a sense of belonging, creates neighborhoods and gives shape to the city. However, it has been observed over the last decade that the policies suggested by different bodies and those implemented by governments move in the opposite direction, favoring other interests related to the financial and productive markets.

The planning of actions in the housing sector has a political conceptualization that goes beyond the provision of dwellings across the country. There are other type of factors that take part in the agenda, decision and implementation processes of housing policies, the result being the generation of a complex scenario defined by the difficulty involved in the distribution of resources and the participation of this sector in the economic growth and development in a world where social changes are insufficiently and inappropriately supported by governments.

It is then suggested that the housing area has a markedly systemic character due to its involvement in other public spheres and the tendency it shows to favor social and economic stability with an eye to meet specific goals according to the targeting process based on systemic competitiveness. If this area is merely regarded as a social policy, as in the case of the institutions that compose it (in the Uruguayan experience, such a conception has been historically represented by the charter of the Mortgage Bank of Uruguay –BHU and the Ministry of Housing, Land Planning and Environment –MVOTMA) then is not possible to explain the history of regulatory and distribution problems that stand apart from the orientation imposed by successive governments. This systemic character complicates the understanding of the official functions involved in the elaboration of public policies and the selection of recipients, thus perpetuating the notion of housing deficit and unmet demand whatever the direction of the government might be. According to recent reports3, this type of deficit does not exist in Uruguay; on the contrary, there is an important surplus of it. Such a shortcoming can be identified in the matchup between the targeting and elaboration processes. It is worth questioning why the rest of the countries, and in this case Uruguay, still show sterile political inertia and social frustrations of an imaginary that had a large impact on societies during the first decades of the XX century. Then, a paradox emerges: governments develop a socially oriented discourse and operate on the basis of the financial and productive dimensions of the country, turning the social content into a residual element.

This paper presents and analyzes the real nature of the housing sector, which is defined as systemic due to its impact (in conjunction with the social issue) on the general development of the productive and financial system of a country and its systemic efficiency in relation to the external situation. There is also an analysis of the Uruguayan case and the different stages involved in the progressive change towards a systemic integration of housing, which includes the transformation of its social function into a financial and productive function. These housing policy categories evolved as follows: from the traditional (universal) social policies on housing and (targeted) social housing policies defining the role of the State in the production of dwellings, to the recent inclusion of the low-cost housing concept that replicates the experience of other Latin American countries and creates a quasi-housing market that ignores the social issue. Such conceptual dimensions define the role of the State in terms of intervention, recipients and actors involved in the provision of services, the result being the creation of networks that expand the operational ratio towards other dimensions alien to the basic function of monitoring the right of citizens to housing.


The Systemic Nature of Public Policies

The systemic approach can be understood as the action of a series of subsystems with the capacity to reproduce the specific and general activities of the system; these subsystems are related to each other in order to exchange resources with a greater or lesser degree of dependence based on the roles, capacities, and intrinsic power relationships. The application of the systemic approach to the public sector was defined by Easton4 as the response capacity that enables this area to remain in a general system of exchanges where vital processes are protected. The essential resource is the response capacity that ensures the survival of this area as a public subsystem (known as governability, which is defined as the capacity to efficiently and effectively serve the public good and governance, defined as the relationship with the market and society or other spheres external to the nation State)5. Public policies can be defined as relationship instruments; these actions respond to the demands or preferences of the government and can be modified according to such factors6.

The twentieth century has shown the crisis and transformation stages of the modern State in response to social changes and external factors. From the adaptation process to the capitalist industrialization that gave shape to the liberal State and the construction and decline of the interwar Welfare Keynesian State and the strengthening of social and political rights; including the liberal reforms that took place in the 1970s and 1980s as the market response to public expansion to the current adaptation of national States to the globalization and post-Fordist7 era. Broadly speaking, social transformations played a key role in these processes. With different degrees of intensity, each of these stages was characterized by their relationship with the market and society and a particular internal structure for the provision of public policies. However, States and their public policies operate according to the national systemic efficiency of the State, the capacity of the former to satisfactorily achieve citizenship-oriented goals8. This is why each course of action derived from a sectoral or territorial area is part of the systemic scenario where national political activity takes place: political system, corporations, companies, guilds, social groups and transnational groups. The development of these initiatives should consider the different factors and actors involved in a system of incentives and interests intended to maximize expectations. In this sense, the solution of sectoral problems lying outside their scope of action and the achievement of satisfactory syntheses in the negotiation and collaboration fields, with the latter reducing the conflict of interests within the social body and the State itself, represent a major dilemma for public policies. Such a problem arises when satisfactory sectoral initiatives measured in terms of institutional mission and demand are labeled as unsatisfactory by actors from public or private sectors, thus casting doubts on the ability of the area from which these policies emerged.

These problems turn public policies, especially those socially oriented ones, into a complex issue given their autonomous development, promotion on the part of political elites in search for profit and bureaucracies making the most of the power they have, and the effect such initiatives have on international entities, especially on developed countries. Marshall9 identified the self-referred sectoral specific interests that denied the systemic nature upon which the public sector is based as one of the main problems of bureaucratic States: first of all, because there was no connection among the institutions that targeted the civil, political and social rights of citizens, thus allowing the emergence of a vertical and hierarchical structure; and secondly, each of these bodies followed their own rules because there were no common fields of action.

In Latin America, the area of social policies enjoyed substantive autonomy in the management of legal recourses for the provision of social policies for almost five decades. However, after the liberal contraction that took place in the 1970s and 1980s, this area became part of macroeconomics, changing its role and losing its functions in the social universal regulation by adopting a residual approach. During these decades, the quality of universalism turned into a targeted orientation that stratified the society into groups sorted by earning capacity or incapacity, thus generating the recommodification of social policies10. From functional self-referred areas to large social groups, the social front experienced a shrinkage within the systemic sphere of the State where the change of role readapted the services provided in terms of quality and quantity. The crisis did not only affect the social environment but also the institutions. The latter, for instance, reduced their operative capacity because they had to operate under a mutually dependent mutual dependence relationship with other areas of the State with more political capacity to develop policies and “enable” the entry of new -public actors (market and organized civil groups). This was the crisis of the institutional governability and the preeminence of the market governance11.

The end of the 1990s saw the emergence of changes in Latin America. On the one side, there is a recognition that “a new systemic vision –different to that of the Washington Consensus– that incorporates the needs and problems of people and includes the social issue not only as an externality of economic growth and accumulation, but also as a main concern. In this way, the State is revalued. In contrast to the previous period (...) the State plays an important role in three fields: the articulation of the different factors and actors involved in the economic process (...); as the guarantor of the integration of society and, lastly, a function according to the new prominence of citizens”12. Such a vision incorporates intergovernmental relationships, multisectoral specific policies and non-state actors. This approach provides more governability to public areas as it allows the undertaking of functions through the reformulation of the boundaries and scope of its capacities to serve the public good; it also improves governance as it modifies the hierarchical relationship with the society and its groups according to the formulation of agreement and negotiation spheres. All systemic plans and programs and the instrumental application based on crosscutting management were embedded in the social areas of States and, on several occasions, depended on the executives belonging to entities other than sectoral ministries. Likewise, there was a proliferation of total or partially funded loans provided by international entities such as the Inter-American Development Bank (IADB) and the United Nations Development Program (PNUD).

These universal formulas downplayed their application by not modifying poverty and exclusion indicators; in a context defined by a globalized and competitive world, it is recognized that States can develop proper processes in line with their courses of action and historical correlations, revealing differences in the orientation of public expenses and, most especially, the development of the social sphere in relation to other productive and financial fields13. In short, the institution and public policies spheres are immediate and long-term interrelations according to issues/problems and historical processes. In 2006, the IABD revived an old stance of the systemic-based political sciences14 related to the effects of the “policy of public policies” by labeling the results or courses of action as interaction processes of the political system which, together, receive and process demand and pressures from external spheres (other subsystems).

Likewise, there is another systemic stance, consistent with the neoliberal line, that has to do with the special place of housing. Such a point of view claims that housing has a transaction value. This is the anchor used to secure the new concept of housing and the mission of States in the topic that barely coexists with the other perspective. De Soto widely disseminated the “other” systemic nature of housing, which contradicted the social vision of the welfare State: “[...] property provides the market economy with an infrastructure that attributes responsibilities to people, turns their assets into fungible goods and makes their transactions fully traceable, thus contributing the mechanisms required by the financial and banking system to operate and those needed by the investment system to run properly. This is why property is the means that connects capital and money with finance and investment”15. The access to housing was justified as “the opportunities made available to people”16from which they entered into the general exchange system. These two interpretative lines became established and coexisted in influential multilateral systems within national governments. Public housing areas were restructured with elements from both of the abovementioned approaches. All plans and programs had a liberal component about the concept of property: “[...]a large number of countries chose to promote the housing market and individual property, privatize social housing programs and deregulate the markets for housing finance”17; and elements focused on the integration to the social/urban system and its services: “[...]it is important to know the functioning of the interaction elements that may operate as the source of the assets required for social integration in each historical stage, it is equally important to recognize not only the relationships that may take place, but also the behavior of other social actors”18.


The Inclusion of the Housing Area In the Systemic Competitiveness of the State Over Its Different Stages and Orientations

Along the European process, Latin American housing policies have a long history. The origins of these initiatives date back to the first and second decades of the XX century. Argentina, Brazil, Chile, Mexico and Uruguay developed the State responsibility concept during the “social issue of housing” era. Adapted to the institutional political process of each country, these public sectors were a major element of the Latin American welfare State. They show a similar process as they reflect common stages: first, a liberal State that shares private philanthropy and public assistance (public health awareness); second, a universal welfare State that enshrines the right to housing in its constitution19; third, the contraction stage, the neoliberal residual social housing; and fourth, the progress towards a State that restructures itself between liberal contraction and universalism periods. These four stages show how housing policies move towards or away from the abovementioned systemic quality. In developing countries, the first (liberal), third (neoliberal) and fourth (current) stages are deeply embedded in the general system because they are seen as a regulatory policy for uncontrolled markets (1900-1930) or the detachment of social functions from State concerns (1980-1990); the second stage (welfare, 1930-1970), in contrast, achieved autonomy from the State production due to the institutional structure generated (autonomous bodies) in Latin American countries and the vision under which these plans and programs were developed. During the welfare stage, it was rare to find a relationship between housing and other fields such as infrastructure, education or health (all of them regarded as State social policies).

In the State of today, and beyond political orientation (whether conservative or liberal), national governments take the responsibility of providing collective goods through social and economic functions that merge, in terms of public policy, as a competitiveness strategy in a globalized and post-Fordist era20.

Therefore, the functional contraction of the State during the neoliberal stage (1980-1990) has not shown signs of returning to the classical welfare, bus has instead provided measures that reflect a complex social reality where different social groups have difficulties in terms of accessibility, markets exert pressure for achieving liberalization and flexibility and external events outline strategic trends. Gone are the days when the State led the investment, production and provision of social goods during the middle of the XX century and there are no reasons to think this situation may change given the regulations enshrined in the legislation and policies of Latin American countries.

Then, it is worth asking: Why do right-wing and left-wing governments take similar stances on this issue? What are the reasons (or demands) governments have to adapt to? How is housing policy systematically inserted?

In order to answer these questions it is necessary to agree that housing is a human and social development factor included in a series of citizen rights such as employment, culture, habitat, environment, etc. Housing acts as a container and development anchor that secures, identifies and gives individuals a sense of belonging to the social sphere; development through housing is possible if families produce and reproduce society. The effective implementation of this factor determines the success of other elements related to human development, thus proving the systemic nature of housing. Under this conception, the failure of factors such as employment, stability, salaries and social protection reduce the value of housing. In this case, housing turns into an option with a commercial transaction value that does not come to fruition as a human development value. In addition, property per se cannot define these values since it only operates in the economic dimension.

As for the first question regarding the reasons why housing policy orientations do not differ from a different ideological inclination, this paper observed that the State restructuration recognized two successive tendencies: a. the neoliberal State (1980-2000) that introduces the private logic in which public institutions adopt a mix of market-oriented lines disguised as public good, with the intention to create a service market21; and b. the “new” State (from 2000 onwards) regarded by some authors as a “neoWeberian, developmental or welfare-based” body politic that (guided by left-wing ideas22) tries to re-decommodificate goods with different (but not opposite) alternatives to neoliberalism. The problem to be observed is the continuity of conceptual lines that modify themselves or continue within these two large tendencies. While the first case showed an orientation towards the commodification of goods according to the ideological conception of liberalism that excluded the “consumers”, the second case presents the recodification of”[...] a series of structural reforms [...] implemented by neoliberal policies or the Washington Consensus aimed at generating more State, social and political presence in the economy”23. For the author, different socioeconomic components take part in this tendency in a context defined by globalized accumulation, the revaluation of policies as an instrument of democratic community and capitalist utopian traditions that move governments towards the left. Such a switching implies avoiding looking back at the welfare dominated by bureaucracy and patronage systems, solving the character or nature of universalism, and implementing political control instruments aimed to achieve effectiveness without losing sight of the importance of the housing factor in the political and economic systems and its country-level competitiveness.

The second question is related to the adaptation of the neoliberal system to governments concerned about equity and social cohesion, including the public space recovered in the process. In the first place, governments have taken control of dismantled, empty, corrupted and non-oriented institutions as the result of market activity. As Garretón suggests”[...] it is the loss of State functions in relation to its controlling, leading and supplying role alongside the weakening of major social categories (working class, mid-class, students, etc.)”24. As for this last aspect, Grau comments that “rights are more complex than they used to be”25, so further development in this public area without proper support from social institutions may contribute to this slow and constantly decaying process of the role of citizens.

With a broader sense of analysis, but still applicable to the object of study, Garretón feels that there are gaps that need to be filled in, as the welfare model was deconstructed and replaced by an exclusive and commodified model that, in turn, was not properly replaced according to the preferences of citizens who voted for progressive or left-wing parties. This was due to the fact that the Welfare State was built upon participation, “politics was the cultural mortar of society”26, such an opinion was mentioned by Huntington, Crozier and Watanuki in 1975; however, this point of view was regarded as the reason for all of the ills of the State.

Thirdly, there is a departure between the historical discourse of left-wing parties and the pragmatic wielding of power. Vilas27 points out that concepts such as democracy and reforms have used the space of systemic confrontation or social revolution. Facing the dilemma of maintaining macroeconomic stability or competing in the global system, current progressive governments adopted cost contention strategies28that involve supporting neoliberal policies focused on demand29.In the words of Rolnik30: “[...] as the result (of this strategy), the assistance provided to families to obtain credit, the financial sector and the private market turned into the main mechanisms to offer housing solutions” because they eliminated large investments in production and public responsibility from social debt.

Likewise, these governments had to put the house in order. To do so, they restructured their institutions in order to make them more credible, effective and efficient. However, they did not have local allies (political parties, guilds, unions and the traditional bureaucracy) willing to absorb the costs of a reform intended to cut public spending on structure, funds and human resources. Against this backdrop, multilateral answers provided by experts gave shape to a new institutionalism and operational resources, thus imposing the models observed in all Latin American countries. Generally speaking, the results of this initiative showed: a. an institutionalism that paved the way for the consolidation of the public administration model and decentralized entities with operational autonomy beyond their respective ministries; b. the inclusion of the productive and financial markets in the provision of social goods; and c. the steady reduction of the role of the State in the planning of housing affordability31 measures through intermediation between the market and families, subsidies, loans, microcredits and tax waivers. The State, then, adopted a facilitator role by intermediating between the market and society. The difference between this stage and the neoliberal stage that created a housing market is the desire shown by the State to provide affordability and accessibility. What remains unchanged is the orientation to hand over the substantive role of the market; then, given the loss of the funding, production and provision monopoly on the part of the State, it is possible to talk about the construction of quasi-housing markets”[...] in terms of maximizing earnings through market or quasi-market competition, providing incentives and forcing hired companies to maximize their efficiency”32.

How is housing policy systematically inserted? The third question says that governments articulate the housing issue as an economic and financial commodity and (through the power of its political power) argue about its social reason., once the social function is disabled or weakened within traditional institutions and then substituted by agencies facilitating transactions between the market and individuals. In her last report to the United Nations, Rodnik points out that: “The financing of housing has become a cornerstone of world financial markets and it is essential for the development of the financial sector at national and international level.” This author also states that: “A large number of financing policies and strategies [...] aim at promoting property and are based on the premise that the housing market, if properly structured and regulated and supported by a legal and institutional framework, may ensure access to affordable and good-quality housing to as many people as possible”33.

This stance weakens the sectoral reason that linked both public housing to the State and the collective imagination to the Welfare State, thus reaffirming the residual tendency that emerged during the neoliberal stage at the end of the XX century. The housing area was defined as a social function of the State when the latter intervened through programs aimed at addressing the social issue. This quality enabled the State to provide universal policies by way of the development of social policies on housing to middle groups and targeted social housing policies based on corporate arrangements. These widely spread and poorly controlled plans were organized and developed by the State and mediated by the participation of different State levels (central, regional and local) and organized groups (saving and credit cooperatives, guilds, unions and businessmen investing in housing as a function connected to industry, thus creating the working class neighborhoods). Citizen and civil participation was also the “mortar” of political culture during the welfare period. Today, the role of facilitator is the regulatory and control mediation which, adapted to the characteristics of each country, provides users and suppliers with freedom to operate. This entails, among other things, the variation of the concept related to the development of housing policies. As for the two above-mentioned categories, the “low-cost housing” is the one that is currently operating in Uruguay; such a conceptualization leaves behind the original nature of the area, the involvement of the State in the development and provision of goods and the social rights of citizens.


The Uruguayan Case: The Systemic Transformation of the Area Sine 2005

This chapter addresses the course taken by the housing area over two consecutive left-wing governments (2005-2010 and 2010 to the present) and analyzes its changes and continuities in relation to previous processes with respect to the conceptualization and direction of the public area of housing and the governance models developed according to goals and policies. First, this contribution describes the legacy of the governments belonging to the Frente Amplio in 2005 and then analyzes the reforms that substantively changed the notion of social housing upon which the foundation of institutions was based at the beginning of the XX century. This section deals with the relationship between State and non-State actors particularly due to the fact that some of the reasons that explain this change can be found here.


2005-2010: Putting the House In Order and Reorientation of Roles

The State area of housing had no goals or content when Tabaré Vásquez took up the presidency. His first measure was to organize and rationalize the institutional function. The default of the BHU, which lacked financial autonomy and was under the control of the Ministry of Economy and Finance (MEF) since 2002, the high levels of political corruption (including the prosecution against high-ranked politicians) and an anachronistic and bureaucratized administration model were not compliant with the requirements of national and international financial systems.

The first aspect verified in the programmatic proposal of the new government is the postulate that the State has to transform itself and modify the relationship with a society that is ever more complex as far as its structure and relationships at internal, State and political levels are concerned. The “Uruguay Social” proposal claimed the universalist and integral vocation of public policies while acknowledging that the social emergency that was hitting the country needed an urgent and targeted intervention. However, there was a long gap between the Program intended to give an immediate solution to the housing demand (about 80,000 families) and its practical application. This was the beginning of the institutional restructure process which, midway through the presidential term, changed the social orientation of the area. Some of the first measures of this institutional reorganization was the inclusion of the housing factor in the systemic order of the State: on the one hand, there was a need for a financial responsibility over its assets and liabilities; on the other hand, such an area had to be aligned to the path of economic growth and development of the country. Likewise, there was a strong presence of foreign capital in the housing market and local agents began to operate focused on premium segments; the result was the neglect of social solutions. Such lack of interest34 was based on the doubts that a left-wing orientation would make some room for the private interest and the effective capacities to restructure a public area that was assumed to be on the verge of extinction.


The Inclusion of the Area In the Systemic Order of the State

Such a change would need strong tools so as not to generate major political problems within an political force with no experience at governmental level. There was a dilemma regarding how to take power away from the Mortgage Bank of Uruguay (nationalized in 1912) and its bureaucracy while empowering an “incorrectly bureaucratized” ministry with low technical capacity and highly politicized in relation to demand. In addition, the generation and regeneration of political leadership in terms of housing required responsible and solvent institutions. The elimination of these bodies would entail a high political cost, hence the need to find a substitute with the political strength to disassemble the historical structure without affecting social and corporate support.

Mortgage debtors (social debtors), and most especially support and credit cooperatives, represented another dilemma. These entities with organization and pressure capacity had been historically linked to the left-wing sector and facing them constituted a major political problem for the State and the governing party35. Neither the ministry nor the bank had the power to force debtors with inappropriate and tight regulations due to the few options they had to pay their social debts. This reform needed a new orientation aimed at avoiding the obstacles put forward by corporate actors and a society with the capacity to exert pressure and immobilize the political class.

The first legal measure appeared on 2007. The Act N°18,125 reshaped the management area of three fields sensitive to the interests of a government with particular majorities. In this sense, the functions of the BHU were restructured to focus exclusively on the financial area, the National Housing Agency (ANV) was created as a decentralized body and a housing debt recovery system was developed, disregarding the judicial intervention system36.These three measures have a strong connection and are intended to strengthen the efficiency and efficacy of the State in the administration of funds and the relationship with the target group, two factors that departed from their original purpose over the decades. The functions and role of the State and its new relationship with citizens and the private sector were included in this package of measures. This reform identifies three prominent actors: the BHU, the financial housing agent that competes with the private sector and the State-run Bank of the Republic (BROU); the MVOTMA, which is in charge of the operation of targeted programs; and the ANV, which concentrates the decision and operative administration of institutional resources and the management of debtors by playing a key role in terms of the design and execution of housing accessibility plans implemented either internally or within the other two institutions according to each modality. The ANV was designed by a program funded by the PNUD37 and proposed by the Executive; it was approved by a large majority (government and opposition parties). The creation of these bodies is enshrined in Chapter n°2, Article 9°: The National Housing Policy is hereby established as a decentralized service, with the purpose, duties and power as specified by law. This entity may be identified as ANV” though this Act refers to it as the “Agency”. The creation of this new entity was argued as a system that “[...] is intended to promote and facilitate the access to housing according to the Art. 45 of the Constitution of the Republic38 and contribute to the development and implementation of public policies in terms of urban habitat39.

Its responsibilities included:

a. “Implementing housing and urban development programs in accordance with public and private entities

b. Developing and managing financial instruments aimed to facilitate the access to housing finance

c. Acting in the housing market as an investor and manager of projects in urban areas

d. Administrating housing credits”

The declaration of the goals and objectives of the ANV states that the latter should be “An entity with the necessary capacities to serve excellence in the implementation, through the inclusion of the economic, social and environmental dimensions, of urban habitat policies and programs defined by national and local authorities”.

Being the creator of the policies implemented by the ministry and the BHU, the ANV was provided with direct information and controlled the activities of these entities, thus becoming the executive axis of this area. Likewise, a series of instruments were programmed; these include the creation and management of a credit insurance system for mortgages, guarantee funds, the development of instruments for the reduction of housing funding costs to certain segments of the population and the capacity to invest in the housing market as sole owner or in association with private entities.

There were great expectations regarding the prime position left-wing “social partners” (cooperatives) would hold during this stage; market agents were more cautious about it. However, the ANV did not rely on political partners, thus generating a line of policies running independently from the ministry and the bank. Such an action resulted in the operative restriction of the latter and the reduction of the pressure capacity on the part of corporate social groups (cooperatives). The ANV holds a low media profile, maintaining a distance from the public debate in line with the principles of the new public managerialism. It is possible, though, to observe its efficiency and effectiveness in the reduction in the number of defaulters, the resolution of mortgage defaults and delinquencies and the outline of policies for other institutions, stimulating the purchase of dwellings. Table 1 shows data provided by the ANV in relation to the March, 2011 and March, 2012 period.


Table 1: Solutions to arrears, new registrations and intervened dwellings between 2011 and 2012.

Arrears: 52,063 families

Mortgage Debts

New dwelligs and projects

Registered in the pre-owned housing program: 7,819 families

Auctioned: 51%

Current 22%

6,390 dwellings

Recipients: 1183

Settlements: 49%


Refinanced 88%

210 from cooperative initiatives

In process: 252

Handed over: 931

Source: Author’s elaboration based on ANV data


This institutional operation reformulated the inclusion of the housing area in the State planning. Over the first five years of leftist administration the institutional restructuring was meant to link the economic and productive aspects to a traditionally social area. Subsequently, other important act would concrete such a change.


The Alliance for Change: NGP and Participation in the Market

In 2011, at the request of the ANV and supported by votes from the Frente Amplio and the opposition, the Promotion to the Private Investment in Low-Cost Housing Act (N° 18,795) was adopted. Through the regulation and control of the State, this act established the intervention of the market in the financing and selling of non-sumptuary housing. The main objectives of this act are: increasing the number of available dwellings and improving the financing and guarantee conditions of the mortgages. In this sense, the ANV rethought the traditional social concept of housing in three types of access: a. social housing for vulnerable groups, implemented by the ANV and ministry with partial or total subsidy for families according to income; b. market housing for groups with access to financing (income and savings); and c. low-cost housing, an intermediate category that includes a network of suppliers, users and clients operating privately according to State regulations but with autonomy of transactions and funding between private parties. The introduction of this new concept is oriented towards the property over the housing asset, consolidating the lines of action developed in other countries. The State regulates the access and provision conditions (funding, quality and prices), thus meeting the needs of intermediate groups with the ability to pay and no saving capacity or certainty to incur into financial obligations due to their current and future economic condition; this group is not regarded by the State as a recipient of focalized policies, loans or subsides. The State plays the role of the facilitator of access to families and the market benefits from important tax waivers. At the same time, the low-cost housing becomes a factor that impacts the macroeconomic conditions that favor private investment and the increase of systemic competitiveness due to the mobilization of investment, the industrial production chain and employment. The objectives declared in the body of law include: a. mortgage guarantee funds where the State provides a subsidy of 20% the initial down payment of 30% (the remaining 10% is paid by the buyer who contributes his savings); b. the private creditor covers the remaining 70% and is exempt from taxation (VAT, ITEA, inheritance, PIT40, urban real estate contribution, among others). The results achieved to the date of the elaboration of this paper are promising. The premium market become saturated41 and provided the expected answers related to the “social interest”, even though the demand of interested families, the adjustments of salaries and the cost of materials raised the price of the square meter for construction. Land is also increasing in price, especially in Montevideo (and its metropolitan area) and in the department and city of Maldonado. There was an increase in the price relationship among land, squared meters for construction and the final sale price since the inception of the program and the elaboration of this research. Table 2 shows the price of factors and table 3 represents the evolution of housing prices between 2011 and 2013 in an area with great dynamism in housing supply oriented to middle and high– income groups.


Table 2: Approximate price of m2 of land and m2 of land for construction in Montevideo and Canelones

Mdeo/Can Area

Average Price of Land

Price of m2 for Construction

Coastal Area

US$ 544

US$ 1581

Central Area

US$ 459

US$ 1290

Periurban Area



Source: Author’s elaboration based on data retrieved from INE 2013 and Revista Propiedades 2013.
Estimated price according to typology, structure and quality.


Table 3: Price evolution of two and three-bedroom housing

Number of Rooms

Price US$ (2011)

Price US$ (2013)

2 Rooms (44 to 69 m2)

 Maximum US$ 96.567

proxy 133.600*

3 Rooms (68 to 107 m2)

 Minimum US$ 119.917

proxy 167.800*

Source: Author’s elaboration based data retrieved from ANV, Revista Propiedades and
This is an average of the supply observed at the ANV website between June, 2013 and August, 2013.



The Uruguayan State has definitely and orderly entered into the strategy aimed at financing social housing and low-cost housing. The dominant orientation over the last two presidential periods suggests that a “restrained” State is a reliable supplier that may address the lines of action that politics and the public area are not willing to deal with.

The current conception that transcends political orientations related to the added value of the State function in the social issue (carried out by the welfare State of the XX century and traditionally supported by the national left-wing sector) has been relegated by the idea of the government to think of housing as a competitiveness factor that affects the economy, production, and employment areas and the public welfare as a whole.

Given its late entry into this global trend, Uruguay was able to benefit from the experiences of other countries and learned the political and social costs associated with the implementation of reforms. In the case of the Promotion to the Private Investment in Low-Cost Housing act, the State does not shoulder the economic cost of such an edict because it only assumes the 10% of a possible debt and transfers the instruments for immediate implementation to the financial and productive markets.

Despite not involving an economic cost, such a measure may imply political costs in the mid and long terms if the State does not control the market in terms of tax exemption, quality of life and mechanisms to legally act against debtors.

Concurring with the report prepared by Rolnik, the prices and previous savings required to apply for housing benefits do not ensure the inclusion of groups with no access to either the State subsidy for social housing or the mortgage guarantee fund. Likewise, such conditions do not ensure the provision of State assistance to the poorest groups, with no guarantees in case of lack of integration within the system. In fact, the Plan Juntos, promoted by President Mujica, operates independently from formal institutions and has difficulties reaching the 1,6% of the population considered indigent.

In general terms, it is observed that the Latin American region is experiencing an overlap of the social issue, just as in the first half of the XX century42.While this problem is assumed, there has been a change in the social nature developed by the housing area, which was based on universalism and supported by political elites with inclusive policies. These policies, in turn, are being observed under a quasi-market perspective. Firstly, this is due to the detachment of intervention on the part of the State, leaving the task of handling transactions, the relationship with buyers, the quality of dwellings and the territorial localization that is not related to the concept of habitat in the hands of the private sector. Therefore, this tendency is avoiding the right of citizens to housing and a proper habitat. Secondly, the concepts of accessibility and affordability refer only to the financial factor, releasing the State from responsibilities such as the planning, implementation, control and evaluation of actions. These dimensions are part of a public policy that is not governed by a managerial administration based on efficiency indicators. Likewise, the role of civil participation, regarded as a political asset of democracies, is lessened as a consequence of the re-commodification in the provision of social goods; in this scenario, the State, after its initial facilitating role, has no incidence in this process. Such a circumstance dilutes an element that associates the construction of cities and the territory with the concept of nation (all needs are disregarded and only those “interested” are taken into consideration, the rest of demands are diluted because there are no public entities available). Property is promoted as a tradable asset that affects the economic growth at family level; however, the rest of the factors other than finance are not included in this conception. In short, the housing policy, seen as a social good, has been included in a systemic process to operate as the recipient of interests alien to the social issue. This means that the housing dimension has lost or is losing its social purpose, what matters now is the systemic competitiveness of the State in terms of economic growth. In this connection, the question remains whether this social dimension will recover its substantial role within the public structure. The liberal theory of growth has subsumed the public orientation of housing policies: the more involved people are in this process, the more opportunities they have to suit the quasi-housing market promoted by the State, the latter being just another actor with decision-making capacity.



1 This paper is part of research project of the author regarding institutional processes and public policies on housing in South America, framed within the Latin America and the Caribbean Workgroup on Popular Habitat and Social Inclusion, funded by the Latin American Council of Social Sciences (CLACSO).
3 Casacuberta, 2006.
4 Easton, 1965.
5 Flisfisch A., 1989; Franco R., 1999; Cerrillo i Martínez, A. comp., 2005; Echeverría Koldo, 2005.
6 Meny & Thoenig, 1992; Aguilar Villanueva, 1993; Lahera, 2002.
7 Jessop, 2008.
8 Narbondo, 2012, p.2.
9 Marshall, 1998.
10 G.E. Andersen, 1993.
11 Rhodes, 1997 and 2005; Pierre, 2000; Prats, 2000; Rosanvallon, 2009, et al.
12 Arriagada, 2006, p. 11.
13 Pierson, 1993 and 2006.
14 Easton, 1973; Dalh, 1956.
15 Soto, 2001, p. 93.
16 Katzman, 2000.
17 Rolnik, 2012, p. 4.
18 Katzman, 2000, p. 186.
19 Brazil integrated this right in the 1980.
20 Jessop, 2008.
21 Maintz, 2001; Pollit, 2007; Pierson, 2006.
22 Garretón, 2012; Narbondo, 2012; Boschi & Gaitán, 2008.
23 Garretón, 2012, p. 67.
24 Ibíd,p. 61.
25 Taken from Nuria Cunill’s talk presented at the X SAAP Congress, 2011 (unpublished).
26 Garretón, op cit., p. 59.
27 Vilas, 2005.
28 Policies reflecting variations in the behavior of public expenditure in relation to the origin, budget origin, and temporary dynamics of expenditure (Pierson, 2006).
29 Contrary to the welfare model that was aimed at recipient from different social groups, the identification of demand suggests that citizens become organized, thus generating policies and plans.
30 Rolnik, 2012, p. 4.
31 Affordability is defined as what can be “achieved or acquired” in relation to “moderate” prices and conditions. Such a concept is different to that of accessibility, the latter defined as “easy access or entry”.
32 Narbondo, 2012, p.8.
33 Rolnik, 2012, p. 13.
34 The decline in economic activity during the welfare period, it was associated with the State of focalized housing aimed at low-income groups in 1991 and the private provision of housing for middle-income groups.
35 See Magri, 2007.
36 A legal action involving housing might take more than a decade.
37 “Institutional Strengthening of MVOTMA and Support to the Design and Implementation of Housing Policies”. URU/05/005. U$S 21,600 co-financing against a total of US$1,915,338. (PNUD, 2005).
38 In 1945, the constitutional reform regarded the market as a partner and supplier; however, this function was not performed until the liberal reform of 1991. The power of the BHU downplayed its importance.
39 Ordinary session, House of Representatives, Uruguay, 07/18/2007, p. 44.
40 VAT: Value-added Tax; TIEA: Income Tax on Economic Activities; PIT: Personal Income Tax.
41 Investment property in Punta del Este, Maldonado such as the towers belonging to Donald Trump and operated by Chilean, Argentinean, German and Brazilian investors.
42 Case experiences expounded by representatives from all Latin American countries at the “Popular Habitat and Social Inclusion” CLACSO Conference, Río de Janeiro 10/2012. The author of this research took part in this event.



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Received: 25.01.13
Accepted: 10.09.13