DEPARTMENT OF HOUSING PRESENTATION TO THE PORTFOLIO COMMITTEE ON HOUSING

PRESENTATION INDEX 1. Priorities for World Conference on Sustainable Development 3. Issues Raised by Housing Institutions a) Absence of Housing Institutions in Provinces other than Gauteng b) Proclamation R293 and the Impact on Transfer of Houses to End Users 4. Conclusion

DEPARTMENT OF HOUSING Vision: A nation housed in sustainable human settlements with access to socio-economic infrastructure Mission: To establish and facilitate a sustainable process that provides equitable access to adequate housing for all within the context of affordability of housing and services and access to social amenities and economic opportunities

Priorities for 2002 NATIONAL HOUSING POLICY AND STRATEGY A.) Medium Density Housing Development Programme Promotion of Higher residential densities in existing urban areas aimed at:  Integrated development  Improved access to socio-economic opportunities  Improved urban efficiency

Priorities for 2002 Identification and development of well located state-owned land for medium density housing purposes Integration of subsidies for medium density projects including:  Consolidated Municipal Infrastructure Programme  Land subsidy by Land Affairs; and  Increased housing subsidy for medium density units. Guidelines on how to implement and deliver densification projects Lessons of completed medium density projects in the Job Summit Pilot densification projects must be evaluated to inform the phased implementation of the medium density housing programme

Priorities for 2002 B.) Rental Housing Policy and Rental Housing Subsidy Three challenges must be met: Large financial deficits incurred on state rental stock must be reduced and curtailed. Contribution to city integration, urban renewal and restructuring must be realised. Mobilisation of the full spectrum of non-government investment and management of rental accommodations, must be made a priority.

Priorities for 2002 C.) Social Housing Policy Finalise Social Housing policy and legislation The specific goal is to establish 30 social housing institutions over 5 years to develop social housing units. The following are essential issues for the success of the programme :  Government incentives such as tax and VAT for the sector.  Sufficient capacity to manage the social housing institutions.  Capacitation of social housing institutions by Government in the form of a once-off grant to social housing institutions.

Priorities for 2002 D.) National Programme for Housing Development in Emergency Circumstances Precedent set by Grootboom and the floods. Finalising policy prescripts and implementation guidelines for housing development in emergency situations E.) Savings Linked Housing Subsidy Scheme Developing detailed policy guidelines to operationalise the Government’s new Savings Linked Housing Subsidy Scheme

Priorities for 2002 F.) LEGISLATIVE PRIORITIES Disestablishment of South African Housing Trust Limited Bill, 2002 Community Reinvestment Bill and regulations, 2002 Prevention of Illegal Eviction from and Unlawful Occupation of Land Amendment Bill, 2002 Social Housing Bill and regulations, 2002 Housing Amendment Bill, 2002

Priorities for 2002 G.) HUMAN SETTLEMENT POLICY PRIORITIES Strategic priorities: Alignment of housing and land policy and strategy Compliance with international agreements in respect of human settlements The promotion of policy and strategy to support environmentally sound, safe, healthy and creative human settlements The development of policies and programmes for settlements for the needs of women, children, youth, the aged, persons with disabilities and people living with HIV/AIDS. Actions to be taken: Provision of technical support for the development of a national rapid land release programme; Bi-lateral engagement with the Department of Land Affairs; Promotion of the Habitat Agenda;

Priorities for 2002 Engagement with the UN Programme for Human Settlements (UN-Habitat); Support for human settlement initiatives within programmes such as NEPAD, and the SADC region; Development of green financing and incentive programmes for the residential sector; Initiation of a national residential eco-rating system; Development of policy guidelines on safe and healthy settlements; Support for projects relating to sustainable housing; Support for the implementation of guidelines on gender issues, the needs of the elderly, youth, children and people with disabilities; and Reporting on implementation iro constitutional and other legislative requirements.

World Conference on Sustainable Development (WSSD) Background  Dates 26 August – 4 September 2002  Place: Johannesburg  Theme: People, Planet, Prosperity  History:  Earth Summit, Rio, 1992 (Agenda 21 and the Rio declaration)  Rio +5, New York, 1997 (5-year review of Agenda 21) - WSSD (10-year review of Agenda 21 and Johannesburg declaration)

World Conference on Sustainable Development (WSSD) Participation  Formal WSSD meeting – Government to Government  Civil Society Global Forum – Civil Society Partners  Business Lekgotla – Business Action for Sustainable Development  Local Government Forum – ICLEI  Ubuntu Village and Exhibition – All stakeholders  Side Events: including Round Table on Sustainable Cities in Africa hosted jointly by UN Habitat & Department of Housing

World Conference on Sustainable Development (WSSD) Outcomes  Political Commitment (Type 1): Johannesburg declaration  Global Consensus (Type 1): Chairman’s Paper  Global Commitments (Type 2): Implementation Planning for key themes  Enhanced delivery partnerships (Type 2)

World Conference on Sustainable Development (WSSD) Preparations  National: IMC and NSC (SA Country Report and SA Positions)  Global: 4 Preparatory Committee meetings (Johannesburg declaration and Chairman’s Paper)  Logistics: JoWSCo (

World Conference on Sustainable Development (WSSD) Substance  Crucial importance of human settlements in achieving sustainable development  Overall objective: to improve the social, economic and environmental quality of human settlement and the living and working environments of all people, especially the urban and rural poor.

HOUSING SUPPORT INSTITUTIONS * Nurcha * People’s Housing Partnership Trust * Servcon * National Home Builders Registration Council * Social Housing Foundation * Thubelisha Homes * National Housing Finance Corporation * Rural Housing Loan Fund

PROVINCIAL REPRESENTATION Where there is a need for institutions to have regional offices these have been established, e.g. Servcon and NHBRC. The projects undertaken by other institutions do not justify provincial offices and these are run from the head office.

NURCHA THE SAVINGS PROGRAMME Misalignment Nurcha’s original mandate/new project linked subsidy. THE PUBLIC FINANCE MANAGEMENT ACT budgeting, financial planning, authorisation procedures PROJECT PROBLEMS – JVDF Project in Cape Town All Africa Games Village

People`s Housing Partnership Trust (PHPT) RESOURCE PROBLEMS INSTITUTIONAL PROBLEM ORGANISATIONAL PROBLEMS FUNDING PROBLEM

SERVCON HOUSING SOLUTIONS (PTY) LTD CUT OFF DATE (31/8/1997) – Servcon vs Non-Servcon Properties ‘IN SITU SUBSIDIES” – e.g Mining areas. NEW SUBSIDY RULES – Contribution by beneficiaries RIGHTSIZING IN KATLEHONG BLOCKED – Community resistance to rightsizing. BREAKDOWN OF LAW AND ORDER - People move back into properties after eviction. POOR COMMUNITY LEADERSHIP - Mislead and misinform the community. UNEMPLOYMENT AND POVERTY LACK OF FINANCIAL DISCIPLINE - Monthly payments

SERVCON HOUSING SOLUTIONS (PTY) LTD (cont.) LACK OF EDUCATION AND UNDERSTANDING OF HOUSING ISSUES – Mortgages ENVIRONMENTAL CONDITIONS - Poor infrastructure RESISTANCE TO RIGHTSIZING - Clients are reluctant to accept a smaller house ACTIVE INTERFERENCE BY COMMUNITY STRUCTURES - Resistance to both evictions and rightsizing. RATES AND TAXES - Huge bills are accumulated. LACK OF SECONDARY MARKET - Problems of refinancing. HIV/AIDS - Number of parentless households ABSCONDED SPOUSES -Spouse no longer available – remaining spouse cannot get relocation assistance.

NATIONAL HOME BUILDERS REGISTRATION COUNCIL (NHBRC) Entry into the State Housing Subsidy Establishment of a Training Fund for the Historically Disadvantaged Home Builders Application for Exemption from the Housing Consumer Protection Measures Act, 1998 (Act 95 of 1998) Amendment of the Housing Consumer Protection Measures Act, 1998 (Act 95 of 1998) Establishment of Council Advisory Committee Establishment of the NHBRC Tender Committee. The engagement of Section 14(2) of the Housing Consumers Protection Measures Act, 1998 (Act 95 of 1998)

SOCIAL HOUSING FOUNDATION (SHF) Essential to the successful management of the Job Summit & medium density rental housing stock GOVERNANCE – Decision making structure of the organisation. Board composition/mix of board members. Availability of board members for meetings. Competency, still understanding and experience of board members. Private sector funders have limited confidence/faith in the governance structures of SHI’s and see them as a risk.

SOCIAL HOUSING FOUNDATION (SHF) (cont.) TENANTS/RESIDENTS Diminish number who fall within subsidy requirements Awareness and understanding of social housing. Awareness of rights and responsibilities as a resident

SOCIAL HOUSING FOUNDATION (SHF) (cont.) GENERAL ISSUES Local Authorities and Provinces ability to monitor/support emerging and established Social Housing Institutions Limited funding support at start-up making SHI vulnerable to risks. Pool of expertise on Social Housing limited. Perceptions around low cost housing vs social housing. Development of capacity takes time. Lack of incentives for SHI’s to stay in the sector. Private sector funding and involvement limited Starting in installment sale yet this is very risky sector (long-term) Formation of shell companies by developers in order to access subsidy

THUBELISHA HOMES ABSCONDED SPOUSES -The spouse remaining behind has no contractual capacity to receive relocation assistance. THE R2, CONTRIBUTION - The rightsizing clients are by definition indigent-use this as an excuse. INCONSISTENT NORMS & STANDARDS - Provinces impose their own increased standards. INCREASED SUBSIDY –  raised expectations in terms of the size  Contractors increasing their prices

THUBELISHA HOMES (cont.) QUEUE JUMPING - Rightsizing clients are seen as “queue jumpers”. PREVIOUS SUBSIDIES - Some of the provincial offices are rejecting applications because the beneficiary has already had a subsidy. NEGATIVE EQUITY - RDP units will decrease the value of bonded houses. THE INEFFECTIVE EVICTION PROCESS GENERAL LACK OF LAW AND ORDER

NHFC Lack of effective rapid land release programmes resulting in the primary market not developing as expected. Private banking sector concentration on Mortgage and fully secured lending. Legal issues: transfer fees, evictions, stamp duties, VAT etc. The economic problems of retrenchment and general unemployment. Crime, which affects building developments in theft of material, intimidation of contractors etc.

NHFC (cont.) Limited number of developers remaining in the low income market through lack of funding for low income products (funding from the JVDF does not appear to have addressed this issue), problems with accessing subsidies, etc. Lack of management capacity in intermediaries which necessitates substantial training and handholding in managing the NHFC risk of capital advanced. The increasing resistance of employers, including State, to allow payroll deductions for housing and the problem of finding other secure methods of collecting installments to reduce defaults.

RURAL HOUSING LOAN FUND Identify and address hitherto neglected markets in the rural sector. Support existing clients and emergence of new rural focused intermediaries Adequately capacitated housing finance institutions. Support for improving intermediaries’ marketing strategies and plans.

Proclamation R293 and the Impact on Transfer of Houses to End Users Paragraph 9.2.b of the Discount Benefit Guidelines (Chapter Nine of part Three of the Housing Code) provides that a beneficiary must first receive registered title to the unit concerned in ownership, leasehold or deed of grant before a consolidation subsidy for erection of a top structure may be allocated.

Proclamation R293 and the Impact on Transfer of Houses to End Users Section 118 of the Municipal Systems Act, 2000 requires payment of two years’ rates and service charges to be made before a municipality can issue a clearance certificate to allow registration of transfer to proceed. The effect has been to halt transfers of all subsidised properties, including those relating to Proclamation R293. A Bill is pending to rectify this situation by exempting a transfer to the first purchaser of a state-subsidised property from the provisions of Section 118.

Thank You