Social Housing Bill [B29-2007]; Rental Housing Amendment Bill [B30-2007]: briefing

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Meeting report

HOUSING PORTFOLIO COMMITTEE
15 August 2007
SOCIAL HOUSING BILL [B29-2007]; RENTAL HOUSING AMENDMENT BILL [B30-2007]: BRIEFING

Chairperson:
Ms Z Kota (ANC)

Documents handed out:

Rental Housing Amendment Bill presentation
Social Housing Bill presentation


Relevant documents:
Rental Housing Amendment Bill [B30-2007]
Social Housing Bill [B29-2007]

SUMMARY
The Committee were briefed by the National Department of Housing on the Rental Housing Amendment Bill and the Social Housing Bill which it hoped to see passed by the end of the 2007/8 financial year. The Rental Housing Amendment Bill dealt with broadening the definition of “unfair practice”, the composition of the Rental Housing Tribunals, clarification of the Rental Housing Tribunal jurisdiction over eviction order, the provision that the tribunal’s ruling should be enforced in terms of the Magistrates’ Courts Act and address issues of tenant responsibility. The Social Housing Bill aimed at regulating the social housing industry and ensuring affordable rental housing for households that could not access rental housing on the open market.

The Department assured the Committee that the amendments to the rental housing legislation would have a strengthening, and not a weakening effect, as it would strengthen the rental housing tribunals plus create uniformity across the provinces. Concerns were raised that not all provinces had rental housing tribunals yet as well about the delays caused by unavailable chair and deputy chairs of these bodies.

While everyone agreed that there was a need for much social housing, the Committee was concerned that the proposed legislation made no mention of rural areas where there was also a need. The Department assured Members that while the projects would be mainly for metros and larger local authorities, as that was where the need was most acute, it would not be exclusive to these areas. The Department emphasised that at present there was great need as well as much uncertainty in the sector and that the speedy signing into law of the legislation would enable them to start the phasing out of the Social Housing Foundation and the phasing in of the new Social Housing Regulatory Authority. The process ought to take about 18 months.The Committee acknowledged the urgency, but was adamant that the legislation would not be passed without adequate public participation.

MINUTES
Deputy Director General’s opening remarks
Mr Moses Dlabantu, Deputy Director General and Chief Financial Officer (CFO) led the delegation from the National Department of Housing (NDOH) which comprised Ms Odette Crofton (Acting Chief Director: Social Rental Housing) and Mr K Ngwenya (NDOH: Legal Advisor). He relayed the Director General’s apologies for his absence from that day’s meeting.

Rental Housing Amendment Bill (B30 2007] briefing
Mr Ngwenya proposed taking the Committee through each of the clauses but the Committee felt that at that stage it ought rather to be given an overview of the proposed amendments. The Committee was not yet at the stage of adopting the proposed legislation.

Mr Ngwenya explained that the Rental Housing Amendment Bill aimed at addressing challenges that had been identified since the introduction of the Act in 2000. Among other things the amendments dealt with broadening the definition of “unfair practice”, the composition of the Rental Housing Tribunals, clarification of the Rental Housing Tribunal jurisdiction over eviction orders and the provision that the tribunal’s ruling should be enforced in terms of the Magistrates’ Courts Act (see document).

Discussion
The Chairperson reminded the Committee that it would not be able to take any decisions until the bills had been sufficiently considered. She asked the Department to elaborate more on the amendment to Section 15.

Mr Ngwenya explained that it was felt that by empowering the Minister, rather than the MECs to make regulations, procedural uniformity within the tribunals would be ensured throughout the country. It would mean that the Rental Housing Tribunal (RHT) referral forms would be the same across the country.

Mr A Steyn (DA) said that following the Committee’s interactions with the various provinces he had been of the understanding that the amendments were primarily aimed at tightening the powers of enforcement the RHT enjoyed. He was disappointed that what had been put on the table now was a watered down version of the existing act. His concerns were threefold. Despite the fact that in some provinces there were no tribunals while in others they were ineffective, the amended legislation would leave much more to the discretion of the RHTs. Secondly, he reminded the Committee that the Breaking New Ground (BNG) and national social housing policy would result in much more focus be placed on social housing. Some of the amendments would however have an adverse effect on such social housing programme.

He wondered why it was proposed that landlords should go to court to get an eviction order, when the RHTs could give an order, which the justice system ought to enforce. Obtaining and eviction order was a lengthy and costly process. Referring to the well-known problems associated with the Prevention of Illegal Evictions Act, he said that by requiring that eviction orders were obtained from court, the NDOH would be adding to the problems.

Mr Steyn said that while he had no problem with the Minster appointing a deputy chairperson, in the absence of the Chairperson or deputy Chairperson of the RHT, he wondered how practical such an arrangement would be. The tribunal would only realise that the Chair or Deputy would not be available as the meeting was about to commence. Would it not be more practical for the Members to elect an acting deputy chairperson in such instances?

 

Mr Igbal Mohamed, a member of the KZN RHT and the Civic Rights Organisation, said that their impression was that the amendments would have a strengthening rather than a weakening effect. He conceded that there might be legitimate concerns, and suggested that perhaps the NDOH could respond to those.

Mr Mohamed explained that under the principal act the RHT did not enjoy powers of eviction. He pointed out that within the seven tribunals that were in existence (two provinces had to date not yet formed tribunals), there were members who although they had legal backgrounds but lacked the necessary training as far as acting as commissioners or adjudicators. Judges and magistrates had the necessary expertise, experience and training to do so. In addition if given the powers to evict the RHT, training would be integral. At this point it would be onerous to be granted such powers. They were also reluctant to be given powers of attachment such as the ones enjoyed by magistrate and the high courts. While he felt that Mr Steyn’s last suggestion as far as the election of an acting chairperson held merit, Mr Mohamed added that once appointed as chairpersons and deputies, as per a survey that was carried out, they were often not available for many months, even years. This disadvantaged those tenants as well as landlords and –ladies who had to wait for many months to have their cases adjudicated. Cases were meant to be finalised within three months.

Mr Andre Rouseau, Manager: Western Cape RHT, added that the principal act required that a suitably qualified and experienced person be appointed as chair. The MEC then appointed a deputy chair from among the members. The amendment would allow for a suitably qualified deputy chairperson to be appointed. This would be of assistance should the deputy have to stand in for the Chairperson.

An official said that the amendment proposed in clause 4 was not new, but already existed in the principal act. She thought that the scenario where both the chair and the deputy were unavailable could be provided for in the rules that governed the meetings of the tribunal.

The Chairperson asked why chairpersons who were repeatedly unavailable, were allowed to retain the positions.

Ms Nazreen Perman, Acting Chairperson of the North West RHT, said the tribunal had suggested that the regulations should provide that member who failed to attend a certain number of meetings, would be removed. At the moment, because chairpersons were appointed by the MECs, the tribunal had to liaise with the NDOH in cases where chairpersons were often unavailable. They then had to wait on the MEC to issue a directive.

Ms Perman referring to Mr Steyn’s concerns about the weakening effect the amendments appeared to have, explained that the amendments arose from the “logistical constraints” RHTs experienced. She thought it important to bear in mind that the RHTs were quasi-judicial bodies and lacked the competency required of a judicial process. This fact impacted on their ability to carry out eviction, which according to the Constitutional provisions had to be done by a court of law.

Ms Perman assured the Committee that the North West RHT had been “bothering” the NDOH a lot so that compliance could be strengthened. They were unable to issue certain orders such as attachment orders, because they did not have sufficient interaction with the Department of Justice and Constitutional Affairs (DOJ&C). The provincial tribunals had tried to improve on the level of interaction but had failed. She pleaded with the Committee for assistance in improving the interaction so that the RHT could have more teeth.

Mr Steyn asked if the Department had had any interactions with the DOJ&C to ensure that the RHT decisions were enforced.

Mr Ngwenya explained that the NDOH had engaged with the DOJ&C on the matter and would also meet with the Magistrates Commission and the South African Law Commission in an attempt to ensure enforceability. He predicted that by the NDOH’s next briefing of the Committee they would be able to indicate what progress had been made.

The Chairperson noted that the NDOH had consulted broadly. The Committee would have to consider whether there was a need for further consultation through public hearings. She felt that the Committee now had a reasonable understanding of what the motivation behind the amendments were and added however that the Committee felt that continuously amending a piece of legislation was a waste of energy and of no use to Government. It was important to ensure that when the legislation was passed only once all loopholes had been covered and both tenants and landlords and -ladies were protected. She thanked the Department for the presentation and asked them to give the Committee time to consider the amendments.

Social Housing Bill briefing
The Social Housing Bill aimed at regulating the social housing industry and ensuring affordable rental housing for households that could not access rental housing on the open market. Ms Crofton took the Committee through different aspects of the proposed legislation including its central terminology, the roles and responsibilities of the Government and National Housing Finance Corporation as well as the establishment, powers and functions of the Social Housing Regulatory Authority. The Department was hopeful that the legislation would be passed by the end of the 2007/8 financial year.

Discussion

Mr Steyn requested Ms Crofton to elaborate on why restructuring zones were to be determined by municipalities. He feared that in areas where the need was most acute municipalities with little resources and capacity would not be able to adequately address housing needs. He wondered whether another body would not be more suitable for identifying these zoned.

Ms Crofton explained that the NDOH had tried to make social housing a “sharp and focused instrument” - restructuring zones were a means of targeting social housing. Over the past ten years they had seen social housing institutions cropping up in areas where there was not necessarily a rental housing need that would sustain them. The NDOH felt that the institutions ought to be in metros and larger local authorities. Funding to develop social housing would only be granted to those within a restructuring zone.

She then proceeded to explain what the zoning procedure was and how it was synchronized on three levels. The local authority was the first port of call - they knew the areas best and could therefore start and own the process. After identifying the restructuring zone the local authority ought to engage with the province so that the provinces could be satisfied that the zoning was in line with the provincial objectives. The NDOH would ultimately sign the zones off - the Minister would publish them in the Government Gazette. The NDOH had to ensure that the zones were in compliance with the National Spatial Development Framework (NSDF).

Five of the nine provinces had established provincial steering committees that worked with local officials and the national steering committee. She admitted that capacity remained a problem that needed to be addressed urgently.

The last two of the 15 towns that had to declare restructuring zones were expected to do so within the next two months. The key principle was that the process should start at local government level and that, mainly through capacity building, the local authority got the projects off the ground.

She added that problems might arise once the zones had been declared. Some people would find that they had been included and others had not. They had to take care that no ones’ rights were being contravened in the process. She felt that once the provisional phase had been completed, the finalisation should not be a matter of concern - as long as the principle was clear and the capacity to give it life was there, she did not expect that there would be any problems.

Mr Dlabantu commented that the question was relevant and assured the Committee that it had been considered in detail.

The Chairperson was concerned that the briefing had been silent on rural development. The Committee did not want the programme to focus on the urban areas only.

Mr Dlabantu responded that the rural concern was an issue emphasis rather than something that needed to be provided for in the legislation. From a demand perspective and based on analysis, the social housing would be largely, but not exclusively, focus on the larger metros.

The Chairperson wondered what progress had been made as far as the redefinition of the functions of the National Housing Finance Corporation (NHFC).

Mr Dlabantu said that social housing was part of that particular process.

Mr Steyn referring to the provision that municipalities had to provide access for social housing institutions to acquire municipal rental stock (clause 5 (c)(ii)), asked if this process was spelt out in greater detail.

Ms Crofton explained that the process was outlined in the rules of the regulator as well as the programmes. The rules of the regulator would spell out that if a social housing institution were to take on municipal stock it would address the issues and complications of dealing with that stock. Institutional support and capacity development would be provided to ensure that the process was successful. She emphasised that support at local level would be critical.

She continued to explain that the acquisition of municipal stock would be provided for in the legislation as local authorities, due to the provisions of the Municipal Finance Management Act (MFMA), experienced difficulties with conferring stock to anybody. The new legislation made clear that when it came to social housing one could give the housing institutions preferential access to stock without it becoming a “procurement issue” under the MFMA.

Stock that was difficult to transfer might be beneficial to maintain as rental housing stock, while the easier transferable stock could be transferred. The stock that was too difficult to transfer could be used as rental housing stock.

The Chairperson asked if there would be smaller provincial social housing councils in addition to the bigger national one.

Ms Crofton explained that due to the scale of what the Council would be dealing with, many smaller social housing institutions would not be beneficial. It would be better to have fewer councils that were stronger.

Mr Steyn noted that the Council was merely a body within the regulatory authority. It sustainability would be dependant upon the authority performing its functions. He wondered how long it would take for the regulatory authority to be up and running should the legislation be passed.

Ms Crofton explained that the Social Housing Regulatory Authority (SHRA) would have specific roles around the social housing institutions and that the whole sector would not be affected by it. The SHRA would focus on accrediting and monitoring the social housing institutions while other regular rental housing activity would be ongoing. The provinces would be responsible for project monitoring. She added that while they were getting the SHRA up and running, an interim regulator that did not have the powers of the Council, would be set up. The legal process involved in setting up the SHRA would be long and difficult and would happen after the proposed legislation became law, and it was important that Council was set up once the bill became law.

The phasing in of the SHRA and the phasing out of the existing body would be an important part of the process. Monitoring and evaluation of such a process had been developed and tested in the sector and it was currently being rolled out to the provinces. The NDOH and the SHRA would ultimately be the custodian of that information. Monitoring, turnaround and capacity was also ongoing at the moment. The phase in process would take about a year to a year and a half.

Mr Steyn asked whether a provisional interim process would be put in place before the regulatory authority would be put in place to approve the restructuring zones.

Ms Crofton explained that the restructuring zones could also be approved by the Minister, and had to be made public in the Government Gazette. Thus even if the SHRA was not up and running yet, the process could continue. The provisional restructuring zones would have two to three years in which they had to formalise.

A member asked if the Social Housing Forum (SHF) would be incorporated in the SHRA.

Mr Dlabantu explained that a process to accommodate the institutional arrangements had been put in place. The functions of the two bodies would not necessarily be the same.

Ms Crofton explained that the SHF would close officially and be replaced by the SHRA. The phasing in and phasing out process had been put in place to ensure that once it was announced that the SHRA was up and running it could actually “up and run”. The phasing in and phasing out was a critical component of the programme. One had to make sure that the coming into being of a new body did not destabilise or halt the creation of a new body.

The Chairperson referring to the strict criteria according to which social housing institutions had to cooperate asked whether these had been formulated or whether they were already in existence. She asked whether the criteria would be distributed to the interested parties so that they could submit their corporate governance policy to the SHRA for approval.

Ms Crofton explained that the social housing policy already contained some of the criteria in question. The criteria would be formalised through a move the SHRA would develop, as well as within the regulations to the Bill. Extensive work had been done on which criteria should be contained in the Bill and what should be contained in the regulations. The SHF had been made aware of the coming changes and had been through the process and its refinement. The SHRA would formulise the existing policy and would ensure that everyone would be catered for.

The Chairperson wondered how the privately owned special housing institutions were governed.

Ms Crofton explained that the special housing policy allowed for both not for profit and profit organisations to participate. “For profit” organizations could not be regulated in the same manner but their projects could be accredited. They would enter into a contract with the SHRA. This would ensure that their projects would be monitored and the SHRA would still be able to exercise its powers.

For reasons of sustainability many such organisations often worked outside of the market they were supposed to be functioning in. Should the legislation be passed they would now fall within its ambit and would have to engage with the SHRA and would if accredited by the SHRA be expected to deliver middle and lower income housing. They would probably not become private businesses. They would thus have the option of becoming accredited.

The Chairperson noted that the tenants had not been mentioned at all. She wondered at what point they started to play a role. Many housing institutions were not able to perform due to lack of cooperation from the tenants. She felt that tenants should also be made aware of their responsibility.

Ms Crofton said that the Rental Housing Act regulated tenant-landlord relationships and the NDOH did not want to develop an additional overlapping piece of legislation. The lease agreement between the tenant and the landlord was a very important contract as far as their relationship was concerned.

The Chairperson sought greater clarity on the role public private partnerships (PPP) played in the process.

Ms Crofton explained that PPPs were possible and the NDOH expected that more would get involved. PPPs were provided for in terms of the programme regulations but they were regulated in terms of National Treasury rules.

Mr Steyn said that the Rental Housing Bill proposed that there should be no administrative fee for contracts. He had some reservations about this provision and feared that landlords would now merely incorporate that fee into the monthly rental.

Ms Crofton explained that leases that were endorsed would include the fee but generally involved much revenue charges. Such leases were much stronger contracts. Social housing institutions had a choice between the two and have not been guided in that choice. Through monitoring and evaluation the council would pick up on what institutions catered for, their operational costs vs their income, etc. Should institutions load their operational expenses unnecessarily that would be picked up quite quickly. The NDOH was aware that rental could only be as low as the operational costs allowed.

The Chairperson asked if the legislation would accommodate the receipt of funding from elsewhere. The Government would not be able to afford the housing on its own.

Ms Crofton explained that such provisions would not be included in the Bill as South Africa already had bilateral agreements with other countries. The NDOH also wanted to move away from donor dependence and wanted to ensure that institutions were sustainable. She added that the allocation and use funds should not be accommodated in the legislation, but depended upon how the NDOH managed the funds for that particular programme.

The Chairperson asked if there would be an incubator process that would ensure that the projects had enough support in order for them to be sustainable. Turning to Mr Dlabantu she added that while such policies looked good on paper they were a “nightmare” when it came to implementation.


Mr Dlabantu explained that there were organisations that had been created outside of the policy. This often resulted in conflict between these organisations and what the official policy dictated. Such situations needed to be addressed. Many institutions failed due to poor management capabilities and poor corporate governance. The SHRA would regulate the environment and in so doing would protect these institutions. A viability assessment would also be done. Monitoring would ensure that early threats to the projects’ sustainability would be noted early and hopefully addressed. The NDOH could not ensure that all of the institutions would be successful.

Mr Steyn asked whether the regulations would go through a public process and whether the Committee would have the opportunity to engage with it.

Mr Dlabantu assured the Committee that such a process would take place. Ms Crofton added that there would be both regulations as well as programme guidelines. The normal process would be followed and public participation would be sought.

The Chairperson said that while the Committee would not expect wonders over night they would keep a close eye on the process.

Mr Steyn requested that the financial implications be shown over a three-year term.

A Member said that he had received information that the NDOH was eager for the legislation to be passed in the 2007/08 financial year. He asked why the NDOH had not had consultations with the Department of Land Affairs. The programme would after all impact on that department too.

Mr Dlabantu admitted that that had been an omission on the NDOH’s side. Usually everything was submitted to the social cluster.

He said that the NDOH would like the Bill to be passed in the 2007\8 financial year. Ms Crofton added that the sooner the legislation was passed the sooner the work on the phasing in and phasing out process could start. Not knowing created much uncertainty and activities could become more focused once the legislation had been passed. The demand for social housing was growing and demanded a focused approach, direction and stability.

The Chairperson did not think that it would be wise to wait until February 2008 to pass the legislation. She added that the legislation would not be passed without proper consultation having taken place. The Department would have to be present at the hearings, which would be essential to ensure that adequate consultation could take place.

Mr Dlabantu thanked the Committee and assured Members that the NDOH was committed to the legislation.

Mr Steyn said that it would be of great use to the Committee if the NDOH could provide the Committee with any of the written submissions it had received. The Chairperson asked if the NDOH had in fact received any submission from the public.

Ms Crofton said that a number of submissions had been received on the social housing legislation. Public concerns related mainly to who would be included and excluded from restructuring zones, how the legislation would affect the SHIs, whether municipal entities would be favoured, the separation of powers between Government and regulator and their respective roles, why the NDOH had not provided for rent-to-buy options as well as what the powers and functions of the SHRA were. She assured the Committee that the submissions could be made available to the Committee.

After the delegation had been released the Committee agreed that an advertisement for comment on both the Rental Housing Bill and the Social Housing Bill would be published as soon as possible. The Committee might decide that written comment on the Rental Housing Bill would be sufficient. The social housing legislation would however require full public hearings.

The meeting was adjourned.

 

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