1. Draft Remedial Programme For Housing Mr. M. Tshangana

2. PURPOSE To share the details of the Proposed Remedial Policy Programme to be administered by NHBRC. CONFIDENTIAL2

3. Policy Foundation The Minister of Human Settlements on 14 August 2014 during the budget speech said: "We spent R2 billion on rectifying houses. I don’t know how we came to this unacceptable situation, but it is my intention to scrap this programme and ensure that the onus is on each and every contractor to build properly or return to repair. This will allow us to return these resources to people who have been waiting for houses. The rectification programme was only meant to cover houses that were built before the NHBRC was established. The NHBRC has been up and running for some time, hence my reluctance to continue using tax payers money to rebuild houses. For all of us sitting here, taking part in any contract, please know that you may not continue without the required certificates from the NHBRC. Lets cut the waste." CONFIDENTIAL3

4. Policy Foundation The Minister of Human Settlements on 7 May 2015 during the budget speech said ‘ We are no longer rectifying houses using our budget ’ Ministerial Directives with regards to rectification programme have been issued. Ministerial Pronouncement at November Mintop Meeting – The Remedial Programme must be administered by the NHBRC. CONFIDENTIAL4

5. Contents of the Draft Policy Acronyms Preamble Terminology Background Situational Analysis Problem Statement Policy Intent Policy Outcome Policy Objectives Programme Principles Scope Prescripts Exclusion Norms & Standards Targeted Beneficiaries Funding Mechanisms M & E Institutional Arrangements Dispute Resolution Procedure for Review Date of Implementation CONFIDENTIAL5

6. Terminology Rectification Remedial Assessment Self Help Unfit for habitation Defective Problematic Municipal services CONFIDENTIAL6

7. Background The NHBRC legislation was enacted in 1998 & NHBRC became operational in 2002. In 2004 BNG committed to enhance the quality of the residential products. The National Sales Campaign(NSC) revealed that certain dwellings constructed under the pre-1994 state financed housing dispensation do not comply with acceptable minimum technical and infrastructure standards. The pre-1994 rectification programme was aimed at aligning the advancement of the sale and transfer of quality housing units to the relevant beneficiaries. CONFIDENTIAL7

8. Background In 2011 government realised that there is stock delivered between 1994 and 2002 that required to be rectified. NDHS developed strategy for houses that were not enrolled with NHBRC and these covered houses constructed between 1994 and 2010 but this excluded PHP projects. Such stock was to be quantified and audited by NHRBC and no additional houses were to be added (condition). The programme was to start from 1 April 2012 & be finalised by 31 March 2014. CONFIDENTIAL8

9. 2015/16 FINAL BUSINESS PLAN Delivery variables/milestones Annual Targets SitesUnits Funds Allocated R'000 Eastern Cape - 2 296 156 563 Free State - 508 91 154 Gauteng - 100 5 135 KwaZulu-Natal - 2 273 204 579 Limpopo - 500 43 500 Mpumalanga - - 500 Northern Cape - 95 12 022 North West - 598 80 980 Western Cape - 523 16 480 Total - 6 893 613 913 Situational Analysis

10. Situational Analysis - KZN Rectification of RDP Stock 1994-2002 MunicipalityProjectsDelivery Targets Emnambithi/Ladysmith Cymax enterprise Rectification - Dezzo Holdings 24 Steadville - Umlilo Enterprise JV 60 Endumeni Sbongile Buffer Strip - Sthembile Glencoe Ext 2 - eThekwini Brooks Farm Rectification 20 Burlington Station : Phase 1 20 Emaplazini 20 Harmony Height 10 Lovu rectification - Westrich Phase 1 - KwaDukuzaMbozamo 10 Msunduzi Msunduzi Wirewall 63 Revamp, refurbishment (Slangspruit) 18 UbuhlebezweMarianthal Mission 36 Umzimkhulu Clydesdale 50 Riverside Phase 1 50 UMzimkhulu Ext 5&6 34 TOTAL 415

11. Situational Analysis (Pre 94) - KZN Rectification of housing stock (pre 1994) MunicipalityProjectsDelivery Targets eThekwini Austerville 29 Ex-own affairs 100 EX-R293 AREAS:PHASE 2 75 EX-R293 AREAS:PHASE 3 78 Marrianridge 22 Shallcross 21 Newcastle Fairleigh Rectification 14 Surrayaville Rectification 14 Subtotal 28 TOTAL 430 PROGRAMME TOTAL 845

12. Situational Analysis (Post 94) – Free State MunicipalityProject Name/Description Delivery Targets Ngwathe Local Municipality Fezile Dabi Maono Incomplete 2014/15 (Township Revitalization Program Ngwathe Mun. - Parys - Masilonyana Local Municipality Soutpan 101 Two Rooms Ruwacon - Matjhabeng Local Municipality Welkom - 100 Two-rooms E'tsho - Matjhabeng Local Municipality Welkom Bronville 50 Two - Rooms E'tsho (rectification) 2014/15 - Matjhabeng Local Municipality Welkom Thabong 135 Two Rooms E'tsho 2015 - Tokologo Local Municipality Boshof - 35 Two Rooms Ruwacon - Tokologo Local Municipality Dealesville 70 Two - Rooms Ruwacon - Mangaung Metro Municipality Professional Resource Team Of Asbestos Eradication - Blackhead 2014 - Mangaung Metro Municipality Bloemfontein - 71 Malaykamp Ruwacon Two Rooms 2014/15 - Mangaung Metro Municipality Bloemfontein 12 Heidedal Two-Rooms C-Max 2013/14( Inzuzo Trading - Mangaung Metro Municipality Bloemfontein - 100 Rocklands C Max Dilapidated Two Room Units(2013) 3 Mangaung Metro Municipality Bloemfontein - 100 Heidedal 2 Rooms - C Max 9 Mantsopa Local Municipality Tweespruit 100 Two-rooms E'tsho(rectification) 6 Maluti a Phofung Local Municipality Bluegum-bosch - 2000 TTC & Group Ywo Rectification 2013/14 ( Subs. Phase 3 (China Everbright) - Setsoto Local Municipality Senekal - 100 Superb Two-rooms (2014/15) 9 TOTAL 27

13. Situational Analysis (Post 94) – North West Rectification of RDP Stock 1994-2002 MunicipalityProject Name/DescriptionDelivery Targets Ngaka Modiri MolemaRatlou 2000 15 Ngaka Modiri MolemaLetsopa Ext. 1 & 2 (Rectification) 17 Ruth Segomotsi MompatiIpelegeng 400 8 Ruth Segomotsi MompatiNorthern Cape Cross Border Rectification Project 7 TOTAL 47

14. Problem Statement Cost – Expenditure Review findings of R127 000 for rectification over and above the BNG cost Commitments - Northern Cape 700 and signed contracts Inability to hold contractors accountable Implications for the Warranty Fund Magnitude of the stock to be rectified Double subsidisation Application of norms & standards CONFIDENTIAL14

15. Policy Outcome To contribute to the improvement of the functional residential property market. Ensure legitimate expections are fulfilled – Pre-94 CONFIDENTIAL15

16. Objectives 1.To facilitate the use of self help approach and minimise the cost of doing remedial work by centralising the function to NHBRC. 2.To encourage beneficiaries to advise government on sub standard work in need of remedial action. 3.To facilitate investigations of shoddy workmanship on all stock that was built by government through Housing Subsidies 4.To ensure blacklisting of contractors that have compromised quality. 5.To ensure that contractors pay back the funds used/ pay towards rectification of houses. 6.To provide for various options for conducting remedial work- revised funding mechanism CONFIDENTIAL16

17. Principles Accountability Transparency Value for money Self Help Universal Access Retributive Justice Dr Zoleka Sokopo17

18. Scope Pre 1994 – 2011 including PHP Property belonging to municipality and or provincial government. Property sold to beneficiaries but in need of upgrading to achieve technical norms and standard. Require renovations to address dilapidated conditions. Remedial to terminate hazardous health, and safety conditions due to inappropriate design and construction methods Confidential18

19. Prescripts 1.Where residential properties have been transferred to the beneficiaries and improvement and or upgrading work is required, 2.The beneficiary must provide written approval for access to the property by the public authority and/or its agent and the intended upgrading/improvement work must meet with his/her written approval; 3.Where municipal engineering services require upgrading/improvement, MIG/ USDG will be leveraged for the funding allocation. 4.In the event MIG/USDG are insufficient the annual housing development funding allocation will only fund such municipal engineering service upgrading, improvement as a measure of last resort. CONFIDENTIAL19

20. Exclusions This excludes housing units that: – Were developed by the previous government for official use for employees of the state such as SAPS employees, magistrates, members of Parliament etc; – Were developed by the previous and/or existing parastatal institutions for occupations by employees of such institutions. – Municipal and provincial owned rental stock that will never be sold ; – Houses that have already been transferred to beneficiaries who have already rectified the defects utilising their own resources; – Properties with defects that are attributed to poor maintenance ; and – Properties with defects in extensions to the original dwelling. – Properties affected by disaster CONFIDENTIAL20

21. Technical Norms and Standards Due to the diversity of housing units that were delivered during the pre- 1994 era, and proposed funding arrangements, it is impossible to determine a generic set of norms and standards for the top structures. However the dwellings must as a minimum comply with the following criteria: – Safety and health conditions - Dwellings should comply with minimum safety and health conditions and should under no circumstances pose any threat to the health and safety of the inhabitants. – Structurally sound - Dwellings should be structurally sound and should not be subject to severe cracks in the superstructure resulting from severe foundation and wall failure. – Sound building practice and material use - Dwellings should consist of quality materials and building practices must have been executed in terms of minimum standards, for instance roof tiles must comply with minimum standards to ensure secure roof cover construction and the absence of lintels should not compromise the integrity of any walls above window and door frames etc. CONFIDENTIAL21

22. Targeted Beneficiaries Those that will benefit under the Programme would have to be the vulnerable original beneficiaries who acquired the property from the State organ. ( Aged, disabled, pregnant women and child headed) However where the original beneficiary is deceased and his or her heirs are now the registered owners of the property, the MEC will have the discretion to extend the benefits of the Programme to such heirs on the merits of each individual case. Where approved, rectification work to the dwelling would require the occupants thereof to be temporarily housed, the MEC may, upon receiving consent from the said occupants, approve the provision of temporary accommodation. (The National Housing Programme: Housing Assistance in Emergency Circumstances be utilised for this purpose) CONFIDENTIAL22

23. Funding Mechanism The funding shall be defrayed from: – Warranty Fund – Repayments made by contractors – Contribution by beneficiaries – Moneys appropriated by Parliament A 60/40 % funding split for original beneficiaries A 90/10 % funding split for beneficiaries that purchased homes. Ceding of contracts CONFIDENTIAL23

24. Monitoring & Evaluation 1.Provinces and Municipalities quantify the number of properties in need of remedial work over the MTEF 2.A National Register of Contractors – details of contracts, – deviations and – actions taken on contractors that built shoddy work(including sanctions). CONFIDENTIAL24

25. Institutional Arrangements NDHS PHDS Municipalities NHBRC CONFIDENTIAL25 Policy and Legislative Reform – use of Warranty fund, assess, implementer and educator

26. Recommendation It is recommended that the Committee notes and support the proposed draft remedial policy. CONFIDENTIAL26

27. THANK YOU CONFIDENTIAL27