Urban Housing Challenges: Informal Settlements and Slums

Informal settlements are residential areas built without legal permission or on land that residents do not legally own, and slums are overcrowded urban areas lacking basic services such as clean water, sanitation, durable housing, enough living space or secure tenure. In brief: according to UN-Habitat, more than one billion people live in slums or informal settlements, mostly in cities of Asia, Africa and Latin America, where urban populations grow faster than the supply of affordable housing. Examples include favelas in Brazil, bustees in India, kampungs in Indonesia and barrios in Latin America. Solutions include upgrading, secure land rights, site-and-service schemes and affordable housing.

Housing is a basic need, and its lack affects health, safety and opportunity. This guide explains why informal settlements form, the problems that residents face, the main approaches to improvement, compares them in a table, works through example calculations, outlines the history of the response and corrects common mistakes.

What are slums and informal settlements?

UN-Habitat defines a slum household as one that lacks one or more of five conditions: access to improved water, access to improved sanitation, durable housing that protects against extreme weather, sufficient living area (no more than three people sharing a room) and security of tenure. An informal settlement is one built without legal title or building permits, and it may or may not be a slum in quality. Names vary by place: favelas in Brazil, shanty towns, barrios and bidonvilles. Famous examples are Dharavi in Mumbai, Kibera in Nairobi and Rocinha in Rio de Janeiro. Slum areas are not all equal: some have active small businesses, strong communities and gradually improved homes.

Why do informal settlements form?

The main cause is rapid urbanization. Migrants arrive faster than governments and the market can build affordable housing and services. Other causes are poverty and low wages, high land prices and rents, shortage of land that is legally available for the poor, complex or slow planning and titling systems, weak governance and corruption, and sometimes conflict and disasters that push people toward cities. People settle on land that nobody wants or that is unsafe, such as steep hillsides, floodplains, riverbanks or land beside railways and rubbish tips.

What problems do residents face?

• Health: poor water supply and sanitation spread diarrheal disease, cholera and typhoid, and crowding spreads respiratory illness and tuberculosis. Cooking with wood or charcoal indoors causes air pollution.
• Safety and hazards: buildings on unstable slopes or floodplains are at risk of landslides and floods. Fires spread easily in dense, flammable structures with narrow lanes that emergency services cannot enter.
• Insecurity of tenure: residents may face forced eviction and have little incentive to invest in their homes.
• Lack of services: schools, clinics, waste collection and public transport may be absent or far away. Residents often pay more per liter for water bought from vendors than people connected to the mains.
• Crime and exclusion: weak policing and stigma can limit access to jobs and credit.

What are the solutions?

• Slum upgrading: improving the existing neighborhood by adding water pipes, drains, toilets, electricity, paved roads and street lighting, so residents keep their homes and community. Brazil’s Favela-Bairro program in Rio de Janeiro in the 1990s is a well-known example.
• Self-help and site-and-service schemes: the government provides plots with basic services, and residents build their own homes with loans or materials.
• Security of tenure: giving residents legal rights, which encourages them to invest in their homes. The economist Hernando de Soto has promoted this idea, although critics note that titles alone do not solve poverty.
• Affordable and public housing: building homes for low-income residents, though large projects far from jobs have sometimes failed.
• Community-led and NGO projects: residents’ groups plan and manage improvements, for example with savings groups and partnerships with city governments.
• Clearance and resettlement: demolition of slums and moving people, which is controversial because it often destroys livelihoods and social networks if done without consultation.

Approaches compared

Worked example: crowding and services

The numbers are hypothetical but typical of the calculations used in housing studies.

1. Overcrowding: a household of 7 people shares one room of 14 m². The space per person is 14 ÷ 7 = 2 m², and seven people in one room is far above the limit of three persons per room used in the UN-Habitat definition.
2. Density: a neighborhood of 60,000 people covers 0.4 km². The density is 60,000 ÷ 0.4 = 150,000 people per km².
3. Toilets: if 1 shared toilet serves 150 people, a settlement of 3,000 residents has 3,000 ÷ 150 = 20 toilets. A guideline of at most 20 people per toilet would require 3,000 ÷ 20 = 150 toilets, so there is a shortfall of 130.
4. Water cost: a household buys 100 liters a day from a vendor at 5 per 100 liters, which is 5 per day, or 150 per month. A piped connection costs 0.5 per 100 liters, or 15 per month, so the vendor water costs ten times as much.
5. Share of slum population: if 1.1 billion of the world’s 4.4 billion urban residents live in slums, the share is 1.1 ÷ 4.4 = 25%.
6. Upgrading cost: upgrading a settlement of 10,000 households at 1,500 per household costs 10,000 × 1,500 = 15,000,000.

How has the response changed?

In the 19th century, industrial cities in Europe had severe slums, and reformers pushed for public health laws and housing standards. In the mid-20th century, many governments cleared slums and built large housing blocks. From the 1970s, institutions such as the World Bank and UN-Habitat (created in 1978) started to support site-and-service and upgrading programs, since clearance proved costly and disruptive. In 2000, the Millennium Development Goals set a target to improve the lives of 100 million slum dwellers by 2020, and the Sustainable Development Goals (2015) include SDG 11: to ensure access to adequate, safe and affordable housing and to upgrade slums by 2030. Despite progress, the absolute number of slum residents has risen because of urban growth.

Which mistakes are common?

Mistake 1: Treating all slums as the same

Informal settlements vary widely, and many contain active economies, strong communities and well-built homes alongside serious problems.

Mistake 2: Believing that clearance is the best solution

Demolition can destroy people’s livelihoods and social networks, and new buildings may be unaffordable to those displaced.

Mistake 3: Thinking that slums only exist in poor countries

Informal and substandard housing also exists in richer countries, although at a smaller scale and in different forms.

Mistake 4: Assuming that residents are passive

Residents often build and improve their own homes and organize to demand services, and projects work best when they take part in planning.