Four ways home ownership improves lives

26-year-old client of Shubham. Primary borrower on a new home construction loan. Photograph: John Rae

By Vidyut Perti and Jeanne Fineston


Indian housing development finance company, Shubham has learned that the value of home ownership goes far beyond economic returns

Buying a home is a major milestone in everyone’s life. The immediate benefits of home ownership – an asset for the future, a roof over one’s head, no more rent, tax benefits in many countries – are significant irrespective of income level, job type or region. As a mortgage lender to first-time homeowners who have been excluded from the formal credit system, Indian housing development finance company, Shubham has learned that the value of home ownership goes far beyond economic returns. Here are four ways it improves lives and livelihoods for low-income households. 

1. Basic infrastructure improvements

Home ownership, home improvements and home relocation generally include substantial changes in basic infrastructure, which confer enormous benefits to health and livelihoods. The majority of Shubhams’ customers (77%) report that the ability to relocate to better-equipped neighbourhoods has improved their access to clean drinking water and 67% report improvements in waste and sewage disposal. Access to clean water further impacts kitchen and bathroom hygiene, which prevents diseases.

Access to electricity is also critical for advancing social and economic development. Electricity contributes to income generation, assists in cooking, provides heat and hot water, charges mobile phones, powers medical facilities and equipment, allows students to study after dark and improves the safety of households and communities. In addition, electricity powers the internet, which helps poor people – adults and children – bridge the digital divide to better compete in an interconnected world. Our study showed the majority of our customers - 59%- experience improved electricity access.

2. Community development

Informal settlements and slums develop and expand organically as a result of influxes of migrants who move toward cities. People relocate to urban areas for various reasons, generally to improve employment opportunities, as well as better education and healthcare for their families, and improve their overall livelihoods and quality of life. As people migrate to cities in search of new opportunities, the accessibility of housing loans allows them to settle in developed areas which offer a host of services and benefits. Key services such as healthcare and education are crucial to community as well as economic development. While healthcare and education are not available to everyone, these services tend to be more accessible to people residing in better developed communities than in underdeveloped areas.

Underdeveloped areas typically pose higher security risks. The majority of Shubham’s customers reported that by receiving a loan, they were able to choose safer communities. Home ownership also entails responsibility, and with it the recognition and respect of other community members. This in turn increases homeowners’ concern for their neighbours, their environment and the events taking place around them.

Whether it is better access to healthcare and education, improved safety or a healthier environment, Shubham’s customers have expressed their satisfaction with being given the chance to live in better communities.

3. Financial inclusion

The 85% of Shubham’s customers participating in the informal economy are not able to take advantage of the many opportunities available to the wider population. These include loans to start or expand a business, make home improvements, or the financial literacy to balance a household budget. Through its innovative products and services, Shubham provides its customers with an array of benefits that allow them to transcend the economic and social barriers they previously faced. Its research shows that home ownership has improved 55% of customers’ careers, 51% of households’ incomes, 67% of customers’ ability to budget and manage expenses, and overall financial security for 62%.

4. Quality of life

While “quality of life” is a phrase generally associated with higher income brackets, people from all walks of life seek a quality of life that ensures health, comfort, happiness and opportunity. For families at the base of the economic pyramid, home ownership is a critical means to achieve a better quality of life. Our study shows that the overwhelming majority of new homeowners, more than 80%, experience strengthened familial bonds, a better standard of living, reduced stress and increased self-esteem, pride and confidence.

Shubham understands that low-income people face a number of hurdles in fulfilling their most basic needs. Yet as we have seen, access to home financing does more than create an asset: it enhances families’ social, environmental, financial and personal wellbeing. It takes time to make a difference, but Shubham understands that change starts with one loan at a time.

Headquartered in Gurgaon, India, Shubham Housing Development Finance Co. was created in 2010 by Sanjay Chaturvedi and Ajay Oak, two experienced lending professionals who saw a massive gap in the availability of formal credit to low-income households. Having obtained registration from the National Housing Bank – India’s regulator for housing finance institutions – in February 2011, Shubham has steadily expanded its reach from its initial branches in the national capital region to a presence in 12 states. Its primary products include mortgages, home-improvement loans and loans against property. 

Content on this page is provided by Business Call to Action, and originally appeared on the The Guardian Business and the Sustainable Development Goals Hub