BACKGROUND The Servcon rehabilitation programme offered to the occupants contains the following elements:   ·        Subsidised rental option ·        Buy back or loan reschedule option ·        Rightsizing option (assistance towards an alternative affordable house) ·        Special Assistance to the Aged and Disabled Servcon’s prime objective is to normalise the situation and specifically to dispose of the portfolio over an 8-year period from 1 April 1998 to 31 March 2006. Four years have now been completed under the new dispensation.

PROGRESS REDUCTION IN THE PORTFOLIO – SATISFACTORILY DISPOSED OF (SDO) Key Performance Area Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Accumulative since 1/4/1998 Target 2.5% 2.5% 2.5% 2.5% 10% 40% Performance 2.68% 3.16% 2.78% 2.79% 11.41% 41.8% SDOs ACHIEVED FROM THE FOLLOWING SOURCES   Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Accumulative Outright Sales 64 73 49 56 242 1 398 Instalment Sales/Rescheduling 217 223 169 159 768 3 720 Rightsizing 231 362 372 402 1 367 2 076 Evictions 68 126 113 39 346 1 159 Vacated & Vandalised 103 90 132 64 389 1 815 Debt Settled Account Normalised 209 178 93 210 690 3 740 TOTAL 892 1 052 928 930 3 802 13 908

IMRPOVE RENTAL RETURN Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year   Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year 1. NUMBER OF ACCOUNTS PAID Target 51% 52.5% 54% 55% 53% Performance 32.67% 33.71% 32.13% 30.4% 32.2% 2. AMOUNT PAID AS PERCENTAGE OF VALUE Target 4.6% 4.75% 4.9% 5% 4.8% Performance 4.68% 4.4% 4.4% 4.3% 4.4% 3. NUMBER SIGNED AGREEMENTS PAYING Target 61% 62.5% 64% 65% 63% Performance 47.29% 50.46% 49.79% 48.9% 49%

REDUCTION IN PROBLEM AREAS Common issues that have been identified are:   ·        Breakdown of law and order/defiance thereof ·        Unemployment and poverty ·        Structural defects ·        Environmental conditions ·        HIV/AIDS and other health issues ·        Poor community leadership ·        Lack of education and understanding of housing issues ·        Lack of Financial Discipline A package of measures to address each issue within a holistic context is required in order to: ·        Create an enabling environment ·        Re-establish the secondary market ·        Uplift communities

RESOLUTION   The following areas have been “normalised” or at least improved to a status in keeping with the norm for Servcon areas or have been removed as they are relatively insignificant from a Servcon perspective. Zola, Wedela, Gelvandale, Bultfontein (insignificant only 17 properties), Kanana, Drieziek, Bethelsdorp, Kwa Dabeka Problem Areas Remaining Vosloorus Tokoza & Katlehong-Self Help Tembisa Soshanguve Block GG & FF Protea Glen Ennerdale, Lawley, Lenasia South Emdeni Khuma Evaton North & Lakeside Sebokeng Zone 6 Ext. 3 Palm Springs Crossroads Khayelitsha Motherwell 4A & 7A (CPA Houses) Daleview Motherwell NU5 (Disa Homes) Thabong Meloding.

Job Creation/Community Development Projects Purpose Assist clients to reestablish themselves economically Contribute to community redevelopment Examples Recycling Crèche Baking, Computer Training Sewing and Knitting Brick making AIDS Project Vegetable Gardens Counselling Education Homebased Care AIDS orphan problem?

RE-ESTABLISHMENT OF THE SECONDARY MARKET Resale of Vacant PIP’s Institutional Approach

EVICTIONS Required when: Clients won’t respond Default on new agreements Refuse to rightsize Emotive issue Legal issues Sheriffs Failed Evictions

ISSUES Cut off date In situ subsidies New subsidy rules Amount Contribution Peoples Housing Process

RIGHTSIZING PROVINCE TOTAL HANDOVERS TO DATE EASTERN CAPE 229 FREE STATE 0 GAUTENG 1 279 KWAZULU NATAL 0 LIMPOPO 0 MPUMALANGA 276 NORTHERN CAPE 0 NORTH WEST 85 WESTERN CAPE 260 NATIONAL TOTAL 2 129