Presentation to the Housing Portfolio Committee 3 November 2004

NHFC’s Primary Responsibilities … To promote increased access to housing finance through the banking system for the benefit of low income households To fund or underwrite the funding of specialized alternative lenders able and equipped to operate where banks find it difficult to operate; To develop and appropriately fund institutions delivering tenure options other than individual freehold; and To facilitate a sustainable and growing housing finance sector for the mobilisation of funds into the housing process

NHFC Programmes NHFC HOME OWNERSHIP INCREMENTAL HOUSING ALTERNATIVE TENURE

NHFC Programmes Home OwnershipExtends credit through accredited intermediaries for mortgage and non-mortgage loans for existing or new houses, collateral provided by pension fund guarantees, mortgage bonds and insurance cover. Alternative TenureIn association with social housing institutions and accredited financial institutions, creates housing finance opportunities for forms of tenure other than direct ownership such as Rental, Rent-to-buy, Instalment Sale and Cooperatives. Incremental HousingThrough accredited micro-lenders, extends credit for building homes on an incremental basis or to extend or improve existing property, or top-up credit for discount benefit or capital subsidy beneficiaries.

Geographical distribution of HOD Clients

Geographical distribution of AT Clients

Geographical distribution of IH Clients

Stimulate and lead informed debate on LIH Housing  Sponsor Housing Finance Forums :  Quarterly Forums  Annual Housing Symposiums (1 st and 2 nd )  Key Research Studies :  Reasons for defaults in Social Housing (May 2003).  Borrowers Survey. To identify blockages and investigate obstacles that impede delivery of formal housing (Aug 2003).  Township Residential Property Market. To understand dynamics of township property markets and develop policy and strategy which would result in better workings of housing markets in these areas (June 2004)  Quarterly publications on topical issues in housing finance

Advocacy and Enabling Arrangements  Facilitate the quantification and therefore appropriate pricing of risk in the LIH sector  Promote “enabling” arrangements and policy initiatives that would facilitate better access and affordability of housing finance for the LIH  Develop information tracking systems for ongoing risk evaluation to improve data on riskiness of the sector.

Funds disbursedR1.7 billion Housing Opportunities Created Number of people benefited1,103,375 Housing Impact 1996 to date 31 March 2004

Job Summit What we are doing: Agent for NDoH on Job Summit; Managing grant and subsidy funding for the Job Summit; Supporting and engaging in the development of sustainable and adequate capacity of housing institutions; Contributing to the formulation of social housing policy.

Breaking New Ground 1.Guarantee Programme – Loss limit mitigation instrument being developed by NHFC to facilitate finance in secondary property market. 2.Possible Retail Intervention – Direct intervention by NHFC in providing home loans to borrowers being considered by NHFC. 3.Informal Settlement Upgrading – The housing consolidation process contemplated in phase 4 will be considered for incremental based housing finance. 4.Inner City Regeneration – Aligning NHFC investments with urban development zones and possible role in facilitating inner city localized funding interventions. 5.Development Fund – Facilitate the capitalization of housing intermediaries for sustained delivery and promoting deeper outreach of housing finance.

Future Funding Options…  Deposit-Taking institution – Retail Option  Capital Markets  Issuing of Bonds  Securitization  Government – Grant and Allocations

Audited Financial Results Income Statements (R000s) Net Interest Income212,231213,407 Impairments in terms of AC133(15,962)(45,359) 196,269188,698 Operating Costs(60,034)(56,083) Net Income before Tax136,235132,615 Taxation(35,841)(34,687) Income Attributable to Shareholders100,39497,928