BREAKING NEW GROUND

Introduction  Presented departmental budget June 10, 2004  Budget debate  MPs raised concerns

What were these concerns? 1. Demand 3.Funding 2. Supply 4.Institutional

Current Demand – Realised Demand  Approximately 2,4m households living in informal structures  Only 800,000 on the approved subsidy list – Unrealised Demand  “Ineligible” beneficiaries – Previously accessed subsidies in another location – Legal requirements of for eligibility (eg dependents not registered legally). Future Demand – Set to grow disproportionately oNet Population growth, Smaller household sizes & Rapid urbanisation Current Demand – Realised Demand  Approximately 2,4m households living in informal structures  Only 800,000 on the approved subsidy list – Unrealised Demand  “Ineligible” beneficiaries – Previously accessed subsidies in another location – Legal requirements of for eligibility (eg dependents not registered legally). Future Demand – Set to grow disproportionately oNet Population growth, Smaller household sizes & Rapid urbanisation 1. DEMAND

2. Supply  Major part of the subsidy spent on land & infrastructure  Little money left for house  Little or no community facilities or amenities  Supply too homogenous – “no choice”  Lack of access to rental stock  One house, one plot model  Construction of poor quality  Housing supply slow with little monitoring  Complex and lengthy planning process  Lengthy deeds transfer process  Lack of capacity in public and the private sector  Withdrawal of large construction companies  Absence of subsidy or consumer information  Weak estate agency market in township areas 1.6 million houses built since 1994 but

Close to R30 billion spent on delivering to 1,6 million households since Overall challenges – Funding formulae have not kept pace with inflation, income cut-offs too low, lack of flexibility in the funding system Informal market – The low levels of employment and limited subsidy funding combine to ensure that overall funding levels are low to non-existent Hardest hit are those that earn between the R 3,000 – R 6,000 to 7,000 pm Incremental and old township markets – Mortgage finance is unavailable Privately developed market – Mortgage finance is limited to this market because of perceived affordability and risk issues 3.FUNDING

 Subsidy process - complex, slow and bureaucratic  Suggestions of corrupt local government practices  Title transfer processes slow  Integration with other development processes weak eg basic service infrastructure, social infrastructure.  The NHFC is an “overly bureaucratic institution”  Current Social Housing Association model are costly bureaucracies unable to deliver affordable housing. Need to separate governance roles from operating and managing roles  Illegal occupation of houses  Passionate Leadership at all levels is critical to success 4. INSTITUTIONAL

AFTER THE BUDGET?  We listened  We consulted the politicians, communities, banks, construction companies and all those who were ready to share their experiences  We understood the issues  We have come with a dynamic plan that will be tested in 18 pilot projects around the country between now & March 2004  We will evaluate the plan after the pilots are complete & then full steam ahead in April 2005

Issues to be resolved after the budget debate What are the real needs and choices facing different communities ? How does Government enable the creation of sustainable communities ?

The Evolution of the Plan Policy in 1994 Strengthen Policy Strengthen Policy Policy Integration Sets playing field Incentives Policy Integration Sets playing field Incentives Integrated Government Delivery Houses Sustainable Communities Note: Source:

THE PLAN FOR EVERYONE For all South Africans it provides more money for houses and an opportunity to access homes in well designed, serviced and located human settlements; For the hardcore poor ie pensioners and the indigent, the ability to access a home for rental or ownership with no savings requirement; The poor ie those with access to some sort of employment - the ability to access a home for rental or ownership with a cash or ‘sweat equity’ contribution; Those earning above R3,500 – R7,000, a deposit to access credit; All subsidy beneficiaries will get increased access to credit and a choice of ownership options and top structures; For urban migrants and highly mobile job seekers and seasonal workers, access to a renting in the city while owning a home in the rural area; A decent life for people in the informal settlements with security of tenure, access to services, housing choices and a better life; For the financial sector, commitment to a partnership with Government and a conducive lending environment The construction sector too receives the government’s commitment to a partnership, an enabling environment including incentives to participate actively in housing delivery to the poor. For all South Africans, to participate in a fast tracked delivery mechanism that creates sustainable communities.

What are human settlements? Housing Community Safety and Security Economic Opportunities Public Transport Health & Education Services Title Deeds Fun ding Public Spaces Provision of Basic Services

THE PLAN High Level Details

1. Redefinition of role Oversee entire residential market. Housing to sustainable settlements. Policy, Implement, Monitor & Audit. Create non-racial integerated societies.

2. SUBSIDIES For the hardcore poor : Access to R25,800 with no savings requirement. The poor access a home for rental or ownership valued at R25,800 and a cash or ‘sweat equity’ contribution of R2,479. Those earning R3,500 – R7,000 per month, contribution to the deposit required for mortgages

3. QUALITY PRODUCTS Choice & quality non-negotiable. Work smart. Multi-departmental approach –Bulk Infra structure –Land Approach ensures subsidies spent on quality and bigger top structure

4. RENTAL Rental Rent to buy Part of broader urban renewal and inner city regeneration Housing to be dovetailed with urban development zone tax incentive

5. INFORMAL SETTLEMENTS Reduce & replace. Suitability located – upgrade on area wide basis. Certainty, access to proper services, security, choice and formal top structures.

6. PRIVATE SECTOR Financial Sector –the government’s commitment to a partnership, an enabling environment including incentives to lend to all households ; –negotiate the housing provisions of Financial Services Charter; –Review pre-emptive recovery rights of local authorities. Construction Sector –Opportunity to partner with government; –Established & BEE (men and women) contractors; –Skills development Employer Assisted Housing

7. HOUSING: Creating Wealth Consumer education on housing as an asset. Encourage linkages between primary & secondary markets. Limit barriers for re-sale of subsidised house from 8 to 5 years. Title deeds.

8. Housing Institutions Evaluate and redefine the mandates of all housing institutions. Align to the Plan

9. FAST TRACK DELIVERY Delivery chain timelines. Strong Project Management. Responsibility and Accountability. Role of local government. Accreditation.

10. IMPLEMENTATION Current Projects to continue Next 100days – 18 pilot projects National Implementation Team Inter-Ministerial Committee Evaluation & Assessment Streamline plan & full speed ahead by April 2005.

THE PLAN IN ACTION “N2 Gateway Project” Cape Town

Statistics 1.No. of households Existing densities range from / ha 3.Existing area 124 ha 4.Developable area estimated 48 ha 5.Target densities (4 storeys)150 du/ha 6.Capacity of N2 land7 200 du 7.Deficit2 800 du 8.Land identified in Delft & Driftsands

Scope of the Project CT Int Airport

Airport New Rest, Kanana, Barcelona Scope of N2 Gateway URN MP URN KYA Joe Slovo Industria Epping Industria The Synergies

Borcherds Quarry Interchange

Barcelona

A Vision for Barcelona

Airport Approach Road

Kanana New Rest NY1