Social Housing Bill 29 of 2007 NCOP Briefing Odette Crofton Acting Chief Director Social / Rental housing & CoDHI February 2008

Outline Context Social housing policy Social housing Bill Chapters –Chapter 1 –Chapter 2 –Chapter 3 –Chapter 4 –Chapter 5

Context Socio-economic demographics Migration Patterns Rapid rate of urbanisation ⅓ of low-income renters in metro’s are in backyard shacks & informal settlements The poor struggle to access limited rental opportunities provided by formal market (especially in good locations) Province R0 – R800R801 – R3, 200R3, 201 – R6, 400 Eastern Cape 52.8%33.72%13.41% Free State 56.06%33.19%10.75% Gauteng 41.62%43.88%14.49% KwaZulu Natal 53.03%34.68%12.29% Limpopo 49.26%33.25%17.49% Mpumalanga 48.61%38.77%12.62% Northern Cape 42.22%40.86%16.92% North West 44.40%42.48%13.12% Western Cape 30.87%47.31%21.82% Total 45.12%40.27%14.61%

Context - Demand Demand for rental rising (7% p.a. for groups earning R1600- R3200/month) = affordable market need Additional pressure due to: –National Credit Act –21 – 18 as age for contracting –Property boom – no ceiling on rentals that can be charged

Context Basic Rental Formula TenantpaysRentto occupy a Unit Common Denominator Definition: An agreement between a landlord and a tenant that gives the tenant the right to use and occupy rental property for a period of time

Intervention required Public rental housing market Private rental housing market Access for lower & indigent income groups Gearing to scale

Context – Rental Strategy Public rental housing market Private rental housing market Access for lower & indigent income groups Gearing to scale CRU Social Housing Complementary initiatives

Proposed Rental strategy Community Residential Units Correcting historical problems with public housing & hostels Coherent framework for public housing & hostels Indigent & lower income groups (R3500 – R800) Stabilizing market & housing environ Addressing slum landlords Affordable formal accom for informal tenants Object subsidy Social housing Private sector for-profit & non-profit sectors mobilized Cross-subsidization Mobilizing private funders Restructuring objectives Lower and middle income groups (R7500 – R1500) Object subsidy

Context

Social housing policy

SH programme involves a mixture of gov grants, private sector funding and equity Focus on involvement of private sector Allowing for maximum cross subsidisation from higher/middle income to support lower income Targeted & focused programme, not mass delivery Restructuring objectives

Definition of social housing A rental or co-operative housing option for to low income persons at a level of scale and built form which requires institutionalised management and which is provided by accredited social housing institutions or in accredited social housing projects in designated restructuring zones

Delivery agents for Social housing Non-profit company Municipal owned entity Housing Co-operative For-profit company Public-private partnership Social Housing institutions

Social housing policy Introduces three groups of instruments: Legislative & regulatory Instruments Social housing Bill = framework legislation Social Housing Regulatory Authority (SHRA) Defined sector roles & players Financial instruments Restructuring capital grants for social housing Capacity building grants Tax incentives Risk mitigation measures Capacity building instruments Focus on capacity to run viable projects 1. Capacity to develop and implement projects 2. Effective internal functioning of SHIs 3. Support to gear up staff Resource pools like TRGs

Social Housing Bill, 29 of 1997 Bill aims to: Regulate the social housing industry Ensure affordable rental housing for households which cannot access rental housing on the open market Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5

Terminology central to Bill –E.g. Social housing institution; low to medium income households; restructuring zones Setting out general principles applicable to social housing –Principles as set out in SH policy and contained in Housing Act 107 of 1997 Chapter 1

Terminology & definitions ambiguity: Approved projects vs accredited projects Low & medium income groups Lease agreements Social housing – not include rent-to-buy

Roles & responsibilities of various spheres of government & NHFC –National = creating & upholding a sustainable SH environment –Provincial = administering the SH programme –Local = facilitating SH in its area –NHFC = improved access to loan funding Chapter 2

Establishes the Social Housing Regulatory Authority (SHRA) –Council, CEO, corporate services manager & other staff as necessary Chapter 3

Powers & functions include: –Regulate the social housing sector –Accredit social housing institutions –Advise Minister on SH –Administer & disburse capital & institutional grants –Compliance monitoring –Power to intervene in management of social housing institutions Chapter 3

Intervention powers: –Instructing an SHI to take such remedial action as proposed by SHRA –In cases of an SHI resisting: Ordering forensic audit Suspending members of the SHI board Applying to High court to place SHI under administration of SHRA Chapter 3

Phasing in of SHRA & Phasing out of SHF –Preparation phase – once Act is passed –Establishment phase –Operational phase

Provides accreditation & functioning of SHIs –Only accredited SHIs may participate in national SH programme and associated grants –Strict criteria within which SHI’s must operate, which includes approval of corporate governance policy by SHRA Chapter 4

Provisions allowing Minister of Housing to: Fund national social housing programme Make regulations to the Act Chapter 5

Regulations to the bill –Code of conduct –Investment criteria & qualifying criteria –SHRA & other delivery agents –SHRA & provinces –SHRA & NHFC –Administrative matter

Social Housing Bill, 29 of 1997 Social Housing Bill 29 of 1997 Chapter 1 Terminology & principles Chapter 2 Roles & Responsibilities Chapter 3 SHRA establishment Chapter 4 SHI functioning & Accreditation Chapter 5 Programme & Regulations

Urgency of the Bill –Stability, clarity and direction in the sector –Growth in the Industry –Harness bigger and more institutions into the sector –Entice and provide comfort for funders (local & international