1 POTENTIAL IMPLICATIONS OF RENTAL HOUSING AMENDMENT BILL [B ] Institutional Readiness Assessment 13 August 2014 Cricklewood Manor, Pretoria

Presentation outline 2 1.Cost implications for municipalities 2.Ministerial regulations 3.Impact on backyard rental 4.Impact on social housing

Status of the Bill 3 NCOP had made amendments to the bill and referred it back to NA NA was already on constituency period and could not convene to consider NCOP’s amendments. Thus Bill now has lapsed because we are in a new parliamentary term, and it can only be revived by the Minister of Human Settlements, through a letter to the Presiding Officers requesting for the Bill to be revived. NA would then take the process forward by voting on the Bill in the House as amended by the NCOP

1. Potential cost to municipalities 4 Munis expressed concern that requirement to set up RHTIO creates costs for local government. Prov Dept will incur costs associated with implementation of Act, including publication of the Bill for public comments, information sessions, and translations. Natl Dept responsible for developing and funding programmes to train mun officials who appointed or designated to carry out duties pertaining to RHTIO Prov depts must assist local muns who have not been accredited to Level 3 (or assigned) the housing function, in establishing a RHTIO. Only those six Metros who are set to be assigned the housing function in 2015, must cover those costs themselves. Low-capacity munis who are unable to hire a new person or designate a full-time post to the RHTIO can combine the functions of the RHIO with an existing office Section 12 Amend Bill

5 Amend Bill: Minister—not the MEC—may make regulations related to the Act Principal Act Section 15(1)f says regulations may relate to ‘unfair practices’ which include: Deposits Eviction House rules Tenants committees 2. Regulations issued by Minister Amend Bill now empowers the Minister to also issue regulations which relate to: “Norms and standards that are aligned to the policy framework set out in Section 2(3), in relation to: Terms of and conditions of the lease Safety, health and hygiene Basic living conditions including access to basic amenities Size Overcrowding; and Affordability “Calculation method for escalation of rental and max rate of deposits may be set per geographical areas to avoid unfair practices particular to that area” Amend Bill Section 15(f) Overcrowding and health matters Maintenance Reconstruction or refurbishment Municipal services

6 Minister only has 12 months after the commencement of the Rental Housing Amendment Act to issue such regulations. Short timeframe is problematic because: Scope of the potential regulations is very wide—ranging from safety standards to rent limits All municipalities should be consulted on regulations which stipulate fire safety standards for backyards in their jurisdiction, for example. 2. Regulations issued by Minister

7 In the principal Act, definition of dwelling includes a hostel room, shack, room, or outbuilding. Therefore the Act will apply to backyarders in both formal and informal dwellings. Amend Bill introduces requirement all tenants have written lease enforceable in RHT or competent court Section 8(a) Amend Bill Minister to do develop pro-forma lease in 11 languages Lease must include list of defects Application of this requirement to backyard rental will have far-reaching implications Most backyard tenants have informal arrangements (often non-monetary) If landlord not comply, can pay fine or up to two years in prison 3. Impact on backyard rental

8 Enforcing requirement for formal written leases will seriously distort and alter the backyard rental market, which capitalizes on the flexibility of lease arrangements. Impact on supply of affordable informal rental units? Will there be separate norms & standards for backyard rentals in the Minister’s regulations? Will the definition of ‘unfair practices’ be different for formal and informal rental? Enforcement of norms and standards for backyard rental will be costly and require significant resources. Need to work together to ensure adequate capacity at prov and mun level to enforce regulations and deal with additional caseload related to informal sector. 3. Impact on backyard rental

9 Muns fall under category of ‘landlord’ in cases of municipally-owned rental stock Presumably also social housing institutions (SHIs) 4. Impact on social housing?

Thank you! Comments or questions to: Alison Tshangana Specialist: Human Settlements SALGA National Office Cell: