Towards an Understanding the Outcomes of HousingPrivatisation in South Africa

Lochner Marais & Moeketsi Sefika & John Ntema &

Anita Venter & Jan Cloete

Published online: 15 August 2013# Springer Science+Business Media Dordrecht 2013

Abstract Housing privatisation is commonly understood in political economic terms.The proponents of privatisation argue that the provision of ownership enables householdsto have security of tenure, which in turn leads to increased housing investment, thedevelopment of a secondary housing market and a source of income for the local authorityby means of land tax. On the other hand, critics of housing privatisation suggest that suchprocesses lead to landlordism and an increased dependence on mortgage finance. Thispaper uses historical methodology to trace the historical lack of secure tenure for urbanblack South Africans. The data consists of 395 structured questionnaires conducted in thecase study area of Mangaung, the former black township of Bloemfontein. The resultssuggest that housing privatisation processes in South Africa cannot be viewed onlythrough a political economic lens.

Keywords Housing privatisation . Neo-Marxism . Neoliberalism . Views frominhabitants . Bloemfontein . Apartheid

Introduction

The privatisation of state-owned housing stock has been a worldwide phenomenonover the past three decades, and South Africa is no exception. Almost all of the more

Urban Forum (2014) 25:57–68DOI 10.1007/s12132-013-9206-0

L. Marais (*) :M. Sefika : J. Ntema : A. Venter : J. CloeteCentre for Development Support, University of the Free State, Bloemfontein, South Africae-mail: charlene.lochner@gmail.com

M. Sefikae-mail: moeketsi.sefika@mangaung.co.za

J. Ntemae-mail: ntemaLJ@ufs.ac.za

A. Ventere-mail: VenterA@ufs.ac.za

J. Cloetee-mail: CloeteJS@ufs.ac.za

than 500,000 state-owned housing units, mainly constructed during the apartheid era informer black townships, were privatised by 2012. The privatisation process began underapartheid rule in the early 1980s with the ‘Big Sale’ and continued into the post-apartheid period in the form of a discount benefit scheme. Although there is a largebody of literature focusing on post-apartheid housing policy and practice (Tomlinson1998; Huchzermeyer 2004; Charlton and Kihato 2006; Tomlinson 2006), investigationsof housing privatisation in South Africa have been rather limited (see however Mabinand Parnell 1983 and Bond 2000 as exceptions in this respect).

Housing privatisation is commonly discussed in terms of the political economy, fromeither a neoliberal or a neo-Marxist perspective. In terms of conventional (neoliberal)economic theory, housing privatisation is seen as a way to reduce government spendingand to shift housing responsibility to the individual or household. Furthermore,privatisation is thought to result in owners experiencing an appreciation of their assets,the release of dead capital (through increased borrowing from financial institutions), anincrease in housing investment and the development of a secondary housing market.Finally, privately owned houses serve as collateral for accessing credit, which can beused for further house improvements or the initiation of economic activity. In contrast,neo-Marxists argue that housing privatisation leads to landlordism, an over-reliance onhousing bonds, the inability to affordmortgage finance and the subsequent displacementof poorer households. Despite the above theoretical frameworks regarding theprivatisation of housing, limited empirical work has been carried out in this respect.

Against this background, this paper aims to assess empirical evidence in respect ofhousing privatisation in South Africa by examining the privatisation of former statehousing in Mangaung, the former black township of Bloemfontein, Free State. Twomain methods were used to gather information. First, an empirical survey wasconducted in 2010 with 390 households, randomly sampled and representing 6.5 %of the total sample area. The interviews, containing both closed- and open-endedquestions, were conducted by two trained post-graduate students over a period of3 months with the heads of household (defined as the person making the maindecisions about expenditures in the household). This was followed by a deeds searchof the same 390 households. The paper begins with an overview of theories ofprivatisation and then turns to a brief discussion of black housing and the exclusionof black people from the core urban areas during apartheid. Finally, the paper assessesthe responses provided by households living in houses that had previously beenowned by the state. The results of the survey allow a new understanding of housingprivatisation to emerge, one that challenges the conventional political economicapproaches and instead emphasises the historical exclusion of black South Africansfrom urban areas.

Theoretical Research About Privatisation

This section provides an overview of the policy discourses related to the privatisation ofstate-owned housing. After discussing literature focusing on Europe, particularly theUK, the overview turns to the dominant policy discourse in developing countries.Thereafter is a brief summary of the work of Tipple (2000), who evaluated housingprivatisation processes using the patterns of investment made by inhabitants. Essentially,

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we make the point that much of the policy discourse is embedded in the politicaleconomic dichotomy, which assesses state behaviour and intent rather than individualresponses.

The negative consequences of the privatisation of state housing stock in the UK andother European countries are well documented (see Linneman and Megbolugbe 1994;Horita 2000; Malpass and Mullins 2002; Paris andMuir 2002). Neo-Marxists argue thatthere are four main drawbacks to housing privatisation: tenants are subjected to rigorousprivate sector lending rates and fall behind on their payments (see Burrows 1998),private sector repairs are more expensive than in the public domain, those failing to payrent to housing associations are prone to eviction (Bramley and Morgan 1998) andprivatisation leads to landlordism. In addition, Linneman and Megbolugbe (1994) pointout that privatisation in Britain was dominated by the housing association approachwhich exposed tenants to rent hikes, erosion of tenancy rights and longer housingwaiting lists. In terms of privatisation’s negative impact on social relations, Munro(2007) notes that some former ‘right to buy’ neighbourhoods have become stigmatised.Households that were the original buyers in the early 1980s are now ageing and unableto maintain their houses or pay service costs. This results in houses being resold toprivate landlords, thereby repeating the vicious circle. These neighbourhoods have alimited sense of community and they eventually consist of pockets of medium-incomeand poor elderly households (Munro 2007). On the other hand, the positive outcomes ofpublic housing privatisation in Britain have also been documented (seeMerret and Gray1982; Karn 1985; Saunders 1990; Munro 2007). For instance, Merret and Gray (1982)observed that owner occupation provides benefits for households such as control,mobility and financial power. In terms of the former, homeownership provides house-holds with the power to rehabilitate their dilapidated properties by adding rooms,painting, paving the driveway etc. Furthermore, homeownership enables householdsto enter the housing market and subsequently leads to housing mobility.

The World Bank (1993) and Hernando De Soto (2000) have probably been the twomost prominent influences on privatisation in the developing world. Although much ofthe privatisation debate in the developing world has focused on the upgrading orformalisation of informal settlements, these discourses are nonetheless relevant toprivatisation processes. The initial World Bank land titling programmes in the 1970sfocused on the upgrading of informal settlements and were based on the principles ofaffordability, cost recovery and replicability. The underlying aims of these programmeswere to create a secondary urban housingmarket, ensure a basis for revenue creation andprovide a platform for housing investment. By the early 1990s, however, the WorldBank had acknowledged that it was unable to ensure cost recovery and therefore couldnot attain the levels of replicability that were initially envisaged (World Bank 1993).During the mid-1980s, World Bank housing policy approaches began to focus on therelationship between macroeconomic reforms and housing policy, including theprivatisation of state-owned housing stock. Programmes during this period focusedmainly on the reform of subsidies and housing finance institutions but land titling,privatisation and the role of the private sector in housing development remained centralto the overall World Bank approach (World Bank 1993).

The early 1990s saw the introduction of whole sector housing development, whichemphasised urban upgrading, infrastructure improvement, financial market development,regulatory reform and the formalisation of tenure arrangements (World Bank 1993). The

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importance of land titling was emphasised by the World Bank (1993, p. 117) in thefollowing words: ‘The registration of property rights is… important in making land andhouse transactions possible and giving occupants legal protection. It encourages thebuying and selling of housing and makes it possible for households to move to a dwellingthat suits their needs and their budgets. It also increases the choice of tenure available tohouseholds, allowing them to own or rent as they see fit’. These anticipated outcomeswould also allow governments to institute a system for the collection of property taxes,which in turn would generate funding for new urban development.

Similar to the World Bank approach, the publication of The Mystery of Capital:Why Capitalism Triumphs in the West and Fails Everywhere Else by De Soto (2000)stresses the importance of land titling and privatisation in housing policy. Two pointsrelevant to this paper should be made about De Soto’s work. First, he argues that thebiggest stumbling block preventing poor countries from developing is the lack of landtitling, which if put in place would release credit markets, thereby fast-trackinggrowth. Second, De Soto suggests that existing informal settlements (and the infor-mal economy as a whole) are largely the result of inappropriate planning and tenureregulations in the formal sector. De Soto states that the simplistic answer lies inderegulation and the formalisation of tenure through ownership, both of which willhelp integrate the poor into the formal economy.

It is important to note that De Soto’s ideas have been criticised by numerousauthors (Gilbert 2002; Royston 2006; Campbell 2013). For example, Gilbert (2002)questions whether mortgage lenders would be willing to lend money to poor peopleand whether low-income households would actually want to borrow money. Gilbert(2002) also argues that most informal dwellers either have or experience securetenure and that land titling plays a marginal role in ensuring security of tenure.From a developmental point of view, De Soto’s ideas have been criticised becausehe singles out one factor (land titling) as the recipe for development, whiledisregarding a multiplicity of other factors (Campbell 2013). Furthermore, the overallmobility of low-income residents in Latin American cities remains limited (Gilbert1999; Ward et al. 2011), which minimises the demand for a secondary market.

These type of analyses that emphasise political economic frameworks or statewelfare theories have two main points of criticism. In the first place, these approacheslargely concentrate on policy discourse. The second problem is that they are funda-mentally concerned with state behaviour and not with the behaviour of low-incomepeople. Given these valid critiques, it is striking that much of the conceptual work andpolicy discourse have taken place without understanding the reaction of low-incomeearners to housing privatisation. In this regard, it is useful to consider the work ofTipple (2000). Five main points should be emphasised. In the first place, Tipplewrites that housing stress is the main reason for housing transformations. In otherwords, as households grow, they enlarge their housing units due to the urgent need forhousing space; the financial capability of the household is not necessarily the mostimportant factor. Secondly, Tipple makes the point that housing is frequently seen asan inter-generational matter, as houses are commonly occupied by extended familiesor multiple families. Thirdly, Tipple emphasises the importance of secure tenure and,more specifically, ownership, but also states that significant changes to housing unitsoften take place even when households have not received ownership. Fourthly, Tipple(2000) shows that housing transformations and alterations (mainly as a result of

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privatisation) such as increased house size and improved access to sanitation improvethe social and economic quality of the environment and increase productivity within acommunity. Finally, Tipple’s work considers the impact of housing privatisation fromthe perspective of affected households and not from a policy perspective, thusbeginning to fill a gap in the literature.

South African Housing Policy and Privatisation: The Case of Bloemfontein

The history of housing provision in South Africa has been well documented (Morris1981; Wessels 1989) and it is not our intention to provide a thorough review of thisliterature. However, some key notes need to be made in respect of the historicaldevelopment of South African cities and housing policies in relation to land tenure.The following historical overview traces access (or lack of access) to Bloemfonteinfor black South Africans (see Krige 1991). It is structured in terms of three timeframes: pre-apartheid (before 1948), apartheid (1948–1985) and late apartheid (1986–1993).

In the early 1900s, black Africans were seen as temporary sojourners in urbanareas of South Africa. This temporary status of blacks in urban South Africa wascontrolled through various forms of influx control (Smit and Booysen 1977) andracial segregation even before 1948 (Lemon 1991). Housing provision for blackpeople in Bloemfontein before 1948 was mainly provided in the Mangaung townshipand ranged from various forms of self-help housing to housing units provided by thelocal government and single sex hostels (Krige 1991). The temporary nature of blacksettlement was further reinforced by the Natives Land Act of 1913, which disallowedblack South Africans from owning land in urban areas although home ownership waspossible in some areas.

By the time that apartheid was introduced in 1948, living conditions in many blacktownship areas were extremely poor. The apartheid government embarked on a largestate-driven rental housing project between 1950 and 1970, eventually providinghousing to more than 500,000 black households in South Africa and approximately6,000 in Mangaung, Bloemfontein. However, the temporary status of black peoplewas reinforced by the fact that house and land ownership was not possible and thenew units were only available to rent from local governments. The situation becameeven more pronounced in 1968 when Bloemfontein froze land expansions for blackresidents. Starting at this time, new black migrants to the area were channelled awayfrom the city to Thaba Nchu (65 km east of Bloemfontein) and from 1979, also toBotshabelo (45 km east of Bloemfontein; Tomlinson and Krige 1997). Through thischannelling of new migrants, black urbanisation was displaced from Bloemfontein tothese two settlements, which were considered ethnic homelands (Thaba Nchu wasalready a homeland while Botshabelo was envisaged to become part of the homelandfor Sesotho speaking people, QwaQwa) at the time (Krige 1991).

In the mid-1980s, the apartheid state started to crumble. The first major step in thisregard happened in 1985 when influx control was abolished and replaced with a policy oforderly urbanisation. Subsequently, some private sector development for middle- andhigh-income black households took place in 1986—the first land expansion inMangaungtownship since 1968. In themeantime, the rental stock built in the 1950s and 1960s started

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to become a financial burden on the state, especially due to the rent and service boycottsthat became common after the 1976 Soweto riots (Mabin 1991). Following in thefootsteps of the Conservative Party in the UK, the South African government announcedin 1983 that state-owned housing units would be for sale at market-related prices (theoriginal Big Sale). Due to the low demand and the increasing financial burden, however,the apartheid government introduced the R7 500 discount benefit scheme in 1990, whichresulted in the majority of houses being transferred to their inhabitants free of charge. Theearly 1990s also saw the beginning of a large-scale influx of poor black households tourban areas across South Africa including Mangaung (see Wolfson 1991; Marais andKrige 1997). Lower-income black households tried to access permanency through infor-mal land ‘invasions’. The development of Freedom Square in 1990 was the first suchinformal land ‘invasion’ in Bloemfontein (Marais and Krige 1997). The combination ofthe increasing number of informal settlers and the discount benefit scheme meant thatblack South Africans for the first time experienced permanency in the historically ‘whiteurban environment’. The discount benefit policy was continued by the social democraticpost-apartheid government and well over 95 % of the original state-owned housing unitshave been privatised.

Considering this historical perspective, a number of conceptual notes should bemade. First, the apartheid-era discourse of state rental housing was embedded inapartheid ideology which tried to prevent permanent black settlement in urban SouthAfrica. Second, the discourse of privatisation was originally (under late apartheid)intended to reduce the state’s role in housing and to reduce the financial burdenassociated with state rental housing. Third, the post-apartheid social democratic statecontinued the policy of privatisation, largely due to the fact that the new governmentviewed privatisation as a welfare state approach to transfer land assets to individuals.Fourthly, the dichotomy between rental and ownership cannot be separated from the factthat ownership was not culturally embedded amongst black people (although somewould rightfully argue that black people were purposefully deprived of such rights bycolonialism and apartheid). New arrivals to urban areas either migrated from tribal areaswhere communal land tenure was the norm or from commercial farms where land tenurearrangements were at best ad hoc. The western concept of individual land ownershipwas thus not historically entrenched in black communities. With this historical back-ground in mind, the paper now turns to an assessment of the outcomes of privatisationfrom the perspective of the affected households. The survey responses suggest that blackSouth Africans’ historical lack of access to urban areas is an important factor that is oftendisregarded by both the neoliberal and the neo-Marxist paradigms.

Housing Privatisation in Mangaung, Bloemfontein: Challengingthe Conventional Wisdom Through the Narratives of the New Occupants/Owners

This section starts off with a brief overview of the quantitative changes that haveoccurred in respect of the privatised housing units. This is followed by an assessmentof the survey results against the differing political economic viewpoints of privatisation.Both the qualitative and quantitative responses are examined to gain a thoroughunderstanding of the impact and role of housing privatisation.

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Overview of Housing Transformation in Mangaung

According to the survey results, 99.3 % of the units were transferred to individuals by2008. In nearly 80 % of the cases, the interviewees stated that the unit was eithertransferred to them by the state or purchased from the state or someone else. A further15 % indicated that they had inherited the units. A distinction was made betweenhousing units where floor space was added (hereafter called transformers after Tipple2000) and housing units to which only housing accessories were added such as newdoors, new windows, burglar proofing and paving. All units that were surveyed had atleast some change in respect of added accessories while additional floor space wasadded in 50 % of the cases. In 70 % of the houses where floor space was added, it wasadded by the current owners, while in the other 30 % it was added by previousresidents. According to the deeds search, two thirds of the transfers took placebetween 1996 and 2000 (in the post-apartheid era), while 17 % were transferredbetween 1983 and 1990 under the first wave of the Big Sale. The majority of housingunits were originally four-roomed houses with two bedrooms, a living room and akitchen; the toilet/bathing facilities were usually outside the house in a separatestructure. Due to transformations, the average house size in the area increased from4.18 rooms to 5.39 rooms between the mid-1980s and 2010. For those who madeextensions, the average house size increased from 3.35 rooms to 6.37 rooms, animprovement of three rooms (mid-1980s to 2010). The average size of the extensionswas 21 m2, which is just less than half the size of the original housing unit.

Challenging the Neo-Liberal View

This section uses the responses given by the current occupants/owners to challengefour fundamental assumptions of the neo-liberal view of privatisation: (1) thathousing extensions and improvements are directly related to a need to improve thevalue of the house, (2) that privatisation leads to a secondary housing market, (3) thatownership releases dead capital and (4) that ownership is a prerequisite for housingtransformations.

First of all, residents’ responses support Tipple’s argument that housing stress is byfar the most important motivator for extending floor space. Nearly 80 % of therespondents provided housing stress as the main reason for extending their housingunits. Typical answers in this respect were ‘all the childrenwere still alive and we neededmore space’ and ‘family was growing and we needed larger space’. Despite a relativelysmall average household size of 3.59 people, nearly 60 % of households includedextended family relations. This intergenerational nature of the housing units isevidenced by the following quotation from one of the respondents: ‘The extensionwas built by my older children as they needed privacy’ and probably serves as anindication of how difficult it is to access new housing in the area. Only 9 % ofrespondents viewed their housing transformation process as an investment or a way ofgaining financially. Comments representative of this group include ‘built the house toinvest my pension fund’ and ‘we built lodger rooms for income’. However, there seemsto be a link between housing stress and constructing housing for lodgers, as reflected inthe following response from one of the interviewees: ‘We used it [the extended space]for the older children until they got married. Now we use it for lodgers’. Although it is

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beyond the scope of this paper, other researchers have alluded to the value of rentalhousing of this nature (Gilbert et al. 1997); the average rental value of extra rooms in thisstudy was R240 per month. Overall, 9 % of the respondents rented part of their housingto lodgers; 16 % of those who transformed their units rented part of them out comparedto only 2 % of non-transformers. The low rental rate suggests that very little exploitationtakes place and that renting fulfils a specific market need.

The second main challenge to neoliberal assumptions that emerged is that sur-veyed households were unlikely to engage in secondary housing market processes.Heads of household were generally aware of the benefits of the market but wereunwilling to sell. More than 80 % of respondents were aware of the value of theirhouses, but 96 % were unwilling to sell. Approximately 60 % of respondentsindicated that they had ‘no alternative’, which suggests the lack of a secondaryhousing market or ‘ladder’ for these residents. Typical answers as to why respondentswould not sell their houses include ‘they have nowhere to go’, it is a ‘family house’,‘the family was fighting for this house’ and ‘this will become my children’s home’.

These quotations require three comments. First, they reflect the historical exclusionand lack of tenure for black people in urban South Africa, including Bloemfontein. Thefact that black South Africans can now own houses is the result of the long struggleagainst apartheid. The comment that ‘the family was fighting for this house’may indicatethat this fight is not only about access to urban South Africa, but is also about competingfor a specific house. The struggle to access and keep a house was of such a nature that itseems unthinkable to many respondents that their house could be sold. (This is probablyalso the main reason why nobody who inherited a house bothered to transfer it legally).Second, the notion of a ‘family house’, in many cases inter-generational, also comesthrough, suggesting that access for the whole family is an important consideration.Furthermore, there is evidence of housing transfers that do take place but withoutregistration at the deeds office—a common phenomenon in other parts of Mangaungtownship (Marais and Ntema 2013). The anecdotal evidence in this respect suggests thatit is mostly done within families, especially upon the death of the older people who werethe original inhabitants. These extra-legal transfers usually occur without financialcompensation. In other words, what began as a formal process of providing mostlylow-income households with formal land tenure has been informalised. As a result, theinformation contained in the deeds register does not always correspond with the house-hold residing on the stand, making future legal transfers or bond applications extremelydifficult. Thirdly, the comments reflect upon the existing housing market. Owners sellingtheir housing units have two options in practice: purchasing a house in the formerly whitearea of Bloemfontein or purchasing a house in a more up-market area in Mangaung.Houses in formerly white Bloemfontein are probably five times more expensive than themarket value of respondents’ current homes and homes in up-market areas of Mangaungare at least three times more expensive. Thus, in the absence of a suitable housing ladder,households would rather stick to their current housing units.

The third assumption of neoliberal thinking is that privatisation releases dead capitalthrough increased borrowing from financial institutions. However, our deeds searchindicated that only 3 % of the houses were bonded and the average bond amount wasextremely low at R27,000. Furthermore, a considerable number of respondents noted alack of access to housing finance when asked why they did not invest more in theirhouses; the majority of respondents (60 %) used their own finance to improve their

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houses. Admittedly, the willingness of banks to provide mortgage finance is most likelynot very high. But in addition to this factor, it seems that many residents themselvesconsider it unthinkable to access debt through a mortgage bond. As a result, very little‘dead capital’ has been released as a result of privatisation.

Finally, neoliberal proponents argue that home ownership is a prerequisite forhousing transformation. Although the study results suggest that ownership is animportant element in the transformation process, there is also evidence of transfor-mation taking place before the title transfer actually occurred. In this respect, weconsidered the information provided by respondents in terms of when transformationswere made and the information from the deeds office in respect of the date of transfer.More households indicated that transformations has been made from 1983 to 1989(25.2 %) than there were deeds registrations (17.7 %) according to the deeds office.This seems to show that urban low-income families were more concerned withbelonging to the urban domain than with purchasing units through formal mecha-nisms. The formality of securing tenure through the formal issuing of a title deed wasin many cases not considered to be a prerequisite to transforming one’s house.Households who had obtained only insecure or informal tenure after being deniedurban rights for so long nonetheless went ahead and transformed their home.

The evidence provided above suggests that the neoliberal arguments regardinghousing privatisation are not always valid, at least not within the study area ofMangaung. There is very little evidence of a secondary housing market and mosthousing improvements are not done for financial gain. We argue that there are twocontributing factors. First, in line with international findings, housing stress over-shadows economic reasons for housing extensions and the development of secondarymarkets. Secondly, it is our contention that the current reality can only be understoodby taking into account the historical exclusion of black people from urban SouthAfrica during the colonial, union and apartheid eras. Nevertheless, it is possible thatthe situation may change in the next few decades as older residents pass away and ayounger generation from a different historical context starts to occupy these units.

Challenging the Neo-Marxist Views

Neo-Marxist critiques argue that housing privatisation increases the financial burdenon households, creates landlordism and housing speculation and results in thedisplacement of the poor. However, we found very little evidence of these criticisms.

Neo-Marxist theorists have written that transferring the housing stock to poorresidents will result in financial strain as they will not be able to deal with thefluctuations of mortgage repayments. In addition, financial constraints may causesuch households to experience increasingly poorer housing conditions, as they willnot have the capital to maintain their houses. Although there is evidence thattransformers have a higher income than non-transformers, every household surveyedhad at least added some accessories, meaning that some level of personalisation hadtaken place. Furthermore, only 3 % of housing units were bonded, and only another5 % of households had borrowed money in order to finance extensions. Pension payouts at the end of a working career were one of the main sources of finance forhousing expansions (20.3 % of the cases) and 40 % of the transformers werepensioners. This high percentage of transformers being pensioners is most likely

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related to the fact that during apartheid, people could only access state rental houses ifthey had a job. Many of these residents have now reached retirement age.Remarkably, 89 % of the respondents paid cash for their extensions, 84 % indicatedthat they used their own money to pay for the extensions and 90 % used their ownmoney to pay for accessories. Only 10.5 % of those who extended their housing unitsfound it ‘very difficult’ to find the funds to do so, while a quarter found it to be‘difficult’. For more than 50 %, it was fairly easy to find the funds to extend theirhousing units. The fact that 89 % paid for their house expansions in cash is anindication that they did not need to go into debt in order to extend their units.Therefore, partly as a result of minimal exposure to formal finance, the respondentsdid not suffer the anticipated financial strain of home ownership. And although only50 % of households had extended their housing units, all households had added someaccessories and/or carried out necessary maintenance.

Another neo-Marxist argument is that transferring state housing stock to individualsleads to landlordism and the subsequent displacement of low-income earners.Researchers also warned against this potential problem in South Africa (Mabin andParnell 1983; Mayekiso 1996). Two aspects were investigated to evaluate this possibil-ity and there was very little evidence of landlordism or households owning more thanone housing unit. Only 2 % of heads of household said that they owned another houseand, in most of these instances, the house was located outside Bloemfontein(Mangaung). This aspect speaks to the historical movement of black South Africansfrom the rural hinterlands to urban centres to look for work. Furthermore, only 16 % oftransformed houses (and 8 % of houses overall) were used specifically for lodgingpurposes (i.e. renting out rooms). At the same time, rental incomes were extremely lowshowing that rental accommodation resulting from privatisation is extremely reasonablypriced and does not result in the exploitation of lodgers. This serves as an indication thattransformers have not acquired and transformed rental units en masse in a quest toaccumulate wealth through running lodging houses. Thus, the evidence from this studydoes not support the conventional neo-Marxist thinking that privatisation leads tolandlordism. Once more, this finding should be understood against the historical contextof the lack of urban tenure for black South Africans.

In order to assess the possibility of landlordism in the future, we looked at double homeownership, the degree to which households considered selling and the nature of the rentalmarket in the area. In this respect, only 1 % of the respondents considered relocation,while 93 % of respondents had no intention to sell. Those who did not intend to sell theirhouse indicated that they had no alternative place to live or they were simply not intendingto sell. It may be that speculation occurs only in a market that is active and has availablestock for buying and selling, which does not appear to be the case in the study area. Onceagain, an explanation can be found in the historical context. After decades of exclusionand displacement, the households in the study area can finally lay their claims to urbanSouth Africa. Therefore, there is no desire to leave and move elsewhere.

Conclusion

Housing policy discourses related to privatisation commonly use political economicframeworks to explain the outcomes of housing privatisation processes. We argue in

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this paper, however, that these political economic discourses seldom consider the newhomeowners’ responses to privatisation. A consideration of the historical context andthe results of a study in Mangaung, Bloemfontein suggest that the privatisation ofstate-owned housing stock in South Africa should also be analysed through theviewpoint of residents. The responses from new owners indicate that there is onlylimited secondary market development, the main motivation for transforming housesis housing stress rather than a desire to improve house value and privatisation has notled to the release of dead capital as De Soto (2000) suggested. In addition tocontradicting neoliberal claims, the study results also suggest that the neo-Marxistpredictions of landlordism and displacement of the poor are not coming true, at leastnot on the short and medium term. We argue that the historical lack of access to urbanSouth Africa is an important factor explaining the surprising results. Nobody who hasstruggled long and hard and finally gained access to an urban area is prepared torelinquish such a right if selling one’s house means that one’s family will not have anurban alternative.

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