BEYOND BORDERS

HOUSING ISSUES : SOUTH AFRICA

CHRA ACHRU CONGRESS

Ismail Khatib

May 2013

BACKGROUND

Pre 1994

Housing segregated along racial lines

Apartheid SA declared areas based on racial category

Residents (mainly black) cleared of land

Relocated to townships – distance

Commute to work - costly

RACIAL CONCENTRATION

BACKGROUND

TownshipsVery basic shelterOne room shackNo servicesNo policingHostels Communal, males onlyFamilies remain in rural areas

POST 1994

Housing backlog estimated at 1.2mExplosive growth – shacksNear urban areasLate 1990’s – 250 000 units required pa±1000 units per dayActual 25 000 units paSerious housing shortage

POST 1994

Housing is a Human RightMost critical factor for quality of life – adequate housingMajor policy shiftsHousing, sanitation, electrification, basic servicesUrban sprawl

POST 1994

Reconstruction & Development

Program

10 million access to clean water

1.75 million homes electrification

3 million sanitation

2.4 million RDP homes

GOVERNMENT PROGRAMS

Eradication of shacksRDPCommunity Residential Units (CRU)Social HousingHostel UpgradeGAP HousingOther

MEDIUM TERM PLAN

Major service delivery challenges12 point planOutcome 8 – HousingSustainable human settlementsImproved quality of lifeShort to medium term – 4 years

MEDIUM TERM PLAN

Upgrade 400 000 informal settlement unitsImprove access to basic services80 000 affordable social and rental housing unitsHousing finance for 600 000 household with GAP market for purchaseReleasing public land for housing

SOCIAL HOUSING

Started 1995Institutional SubsidyOnly for income < $440/moDevelopment cost low allowed for projects in earlier yearsPeriod of stagnation – policy vacuum2007 – New Social Housing PolicyFormation of Regulatory Authority (SHRA)

SH BACKGROUNDProvision well located rental housing stock:• Affordable income R1500 – R7500 per month

To spatially restructure ‘apartheid’ cities • Restructuring Zones within Municipalities• Providing low and moderate income

households with access to socio economic resources of the city

Governed by Social Housing Act 2008, linked regulations and SH policy

KEY ELEMENTS OF SH ACTSocial Housing Regulatory Authority (SHRA)• Accredit and regulate SHI and regulate the sector• Allocate the Restructuring Capital Grant (RCG)

Restructuring Capital Grant• Capital subsidy on development of SH – National allocation• Linked with Institutional subsidy (capital subsidy from Province)• Only awarded to projects in RZs that meet the social housing

criteria

Social Housing Institutions – SHI• Non profit companies to facilitate the development and manage

stock• Often also have strong community development component

KEY ELEMENTS OF SH ACT

Accredited projects• Projects that are approved for RCG financing meeting

regulatory requirements• Usually part of SHI programme• Can be allocated to non SHIs

Example of Financial structuring:• Average cost of 42m2 unit ± $42,500 • Restructuring Capital Grant ± $15,700• Institutional Subsidy around ± $11,250• Loan finance and or equity ± $15,550

KEY RESPONSIBILITIES OF SHIs

Land and development• Own or lease land or buildings• Facilitate development or act as developer• Raise and mange the capital finance

Management • Allocation• Rent setting, collection and arrears management• Tenancy management• Maintenance• Reactive and planned

Community and neighbourhood development (some SHIs)

GOVERNMENT FUNDING

Outcome 8 – 24 000 units 2011 - 2014

MTEF Commitments

Grant increased• $112,5m 2013 – Est. 6700 units• R150.0m 2014 - Est. 8100 units

$ m 2013 2014 2015 2016 2017 Total

Grant 73.0 85.0 89.0 94.0 99.0 440.0

STATE OF SECTOR

Presently estimated 33,000 units• 80% in 4 metros (Jhb, Ethekweni, Cape Town and Buffalo City)

Estimated 132,000 people housed

Replacement value estimated $1.20bn

Estimated 32 functioning SHIs• 8 Fully accredited• 14 conditionally accredited • Remainder Pre Accredited

STATE OF SECTOR

30% of tenants below $440/mo income70% between $440 to $940/mo income

Rental range $100/mo to $275/mo • Mean $200/mo

Rental collection average 80%• 6 SHIs with 95%+ collections

Rental boycotts – some SHI’sReasonable reactive repairs but poor record on planned and preventive maintenance

KEY SECTOR ISSUES

Growing Government Commitment • Increased capital investment• Funding for SH from $15 million in 2006/7 to over

$120 million in 2013/4

Insufficient management capacity within the sector• Required caps development strategy• Financing of caps development

Danger of spatial drift of projects • lack of affordable well located land and buildings• Issue of government land for SH

Need to increase municipal engagement with SHIs

KEY SECTOR ISSUES

Greater flexibility in financing mechanisms • Not only single project based• Not only capital subsidy grant but other alternatives

Rapid increase in Municipal and Utility charges affecting affordabilityLack of well priced loan financeStrategy and approach to ‘Greening of Social Housing’ Upward creep in beneficiary incomeOwnership aspirations

NASHO

National Association of SH OrganisationsFounded in 2003Support resource to SHI’sLobbyingCapacity BuildingStrengthen SH sector

FIRST METRO

SH Company, PBO Established 19981200 units under management1600 units under construction2300 units under acquisitionGAP HousingAssistance to outlying municipalities

FM PROJECTSLakehaven Estate

Hawaii

SH PROJECTSEmerald Sky, East London

SH PROJECTSWalmer Link, Port Elizabeth

SH PROJECTS

Steenberg, Cape TownCarr Gardens Johannesburg

CHALLENGESHousing Shortage – 2.1m30% live in informal dwellings (Urban)Delivery challengesCapacity limitationsSocio economic climateNon payment / rental BoycottsHIV / Aids, Child headed households

CHALLENGES

Illegal immigrants (between 5.0m to 8.0m)

Construction CPI 11%Policy lagLimited Debt fundingBanks conservative to fundingCost of Municipal Services

Thank You