1. SELECT COMMITTEE ON PUBLIC SERVICES 1.Servcon’s Role 2.Rightsizing 3.Performance on KPA’s 4.Issues 5.Swamp 6.Towards a New Vision 7.Draining the Swamp 8.Evictions 9.Job Creation and Community Development Project 10.HIV/AIDS 11.Institutional Approach 12.Segmentation Model

2. SERVCON PAYMENT NORMALISATION PROGRAMME PRESENTATION TO SELECT COMMITTEE ON PUBLIC SERVICES IN PARLIAMENT – CAPE TOWN “SERVCON IS HERE TO HELP” JUNE 2002

3. SERVCON’S ROLE Joint venture *Department of Housing *Banking Council Deals with Banks Repossessed Properties *Cut off date 31 August 1997 Rehabilitation programme * Subsidised rental (13% - less than mortgage) * Buy back option – instalment sales * Rightsizing (Thubelisha Homes) * Aged and disabled Twin Focus * Relief for ex-owners * Dispose of portfolio over 8 years

4. RIGHTSIZING “Assistance to relocate to affordable house” Targeted at those who cannot afford existing house *Alternative to eviction *Affordable interim rental *Government pays special subsidy (relocation assistance *Thubelisha procures alternative house *Client relocates *House sold back into the market

5. PERFORMANCE ON KPA’S Dispose of Properties *14 248 (42,8%) Disposed of. (Target 41%) Resale to ex-owner4800 Other Sales 420 Voluntarily Vacated/Vandalised1840 Successful Eviction1189 Other Arrangements3825 Rightsizing2174 Rental Performance *Between 53% to 65% tenants pay “Good Book/Bad Book” Split *Good Book59% *Bad Book41%

6. ISSUES *Payment of subsidies “in situ” in certain circumstances *Cut of date – access to rightsizing *New Subsidy rules – issue of contribution *Resale of vacated properties in possession *Environment has not “normalised” *New Lending?

7. Environmental Conditions Unemployment/ Poverty Poor Community Leadership THE HOUSING SWAMP Breakdown of Law and Order / Defiance Lack of Financial Discipline Lack of Education And Understanding HIV AIDS Structural Defect

8. Unemployment/ Poverty THE HOUSING SWAMP Breakdown of Law and Order / Defiance Bridge Trend Line Trend Break NEW VISION Towards a New Vision

9. Environmental Conditions Unemployment/ Poverty Poor Community Leadership DRAINING THE SWAMP Breakdown of Law and Order / Defiance Lack of Financial Discipline Lack of Education And Understanding HIV AIDS Structural Defect What is needed is A Package of Measures to address Each issue individually But also holistically *Create an enabling environment *Reestablish secondary market *Uplift Communities Mission

10. EVICTIONS Implemented only where: *Occupant refuses to join *Defaults on agreement *Refuses to relocate “All Evictions Can Be Prevented” Status *6700 instructed *2400 carried out *560 failed (24%) Issues *Cooperation from police and sheriffs? *Open resistance and defiance *Evictees move back in *Difficulty to press charges “People do come forward when evictions are successful”

11. JOB CREATION/COMMUNITY DEVELOPMENT PROJECTS “Rebuilding Communities” Support for Servcon clients trying to improve their financial circumstances Support activities which will benefit broader community “SERVCON CLUBS” * Networking * Skills Training * Needs analysis * Marketing channel * Data base of skills * Opportunities “Activities” * Computer Training * Internet Access * Sewing & Knitting * Baking * Recycling * Vegetable Gardening

12. HIV/AIDS PROJECT “Growing number of Parentless Households” Joint venture with AIDS Consortium – USAID Grant Education Counselling Home Based Care Investigating problem of AIDS (and other) orphans

13. “INSTITUTIONAL APPROACH TO HOUSING DELIVERY” Project to sell Properties in Possession *Old houses – especially occupants rightsized *Institutional Subsidies (R20 300) *New qualifying buyers *5% Deposit *Instalment sale 10 – 12 years “Market Potential?”

14. INSTITUTION APPROACH TO HOUSING Product Price Net Price to Beneficiary Product TypeInstalmentApprox. Income Required R75 000R55 000R900R3500 R60 000R40 000R660R3000 R30 000R10 000R165R1500 R20 000NIL N/A< R1000 Based on: Interest rate of 15,50% and 10 year term Institutional subsidies of R20 300