Social Housing Regulatory Authority Regulations: adoption

Meeting report

Social Housing Regulatory Authority (SHRA): Regulations
The Chairperson suggested that the Committee should firstly deal with the regulations framed in relation to the Social Housing Regulatory Authority (SHRA), so that they could get clarity on any issues that might need to be raised with the Department of Human Settlements (the Department or DHS) or the Authority.

The Committee Researcher read out the relevant provisions of the Social Housing legislation.

Discussion
Ms G Borman (ANC) raised the application for accreditation. She noted that the time allowed for the processing of an application and giving of a response was 90 days. She wondered if 60 days was not sufficient for the consideration and processing of such an application.

The Chairperson asked other Members to comment upon whether it was necessary to reduce the time frame.

Ms M Njobe (COPE) expressed the opinion that it would be premature for the Committee simply to amend the number of days, before getting further clarity on the reason for the 90 days being inserted in the first place.

Mr R Bhoola (MF) explained that the 90 days were required in order to take care of the administrative processes in dealing with the application.

The Chairperson raised her concerns around the reference to the Promotion of Administrative Justice Act (PAJA), which was general and broad.

Mr Bhoola explained that PAJA covered a certain kind of matter. It was also not clear whether this was tied in with the Promotion of Access to Information Act (PAIA). There was a need for the pieces of legislation to tie in with each other.

The Chairperson asked that he should raise this point at the next meeting with the Department.

Ms Borman said that a further concern about the time frame was that there was no clarity whether the time frame included the time for an appeal, if one was required, nor were any specific time limits given for this procedure.

Mr Bhoola went on to raise her concern with the time frame given for applications which did not clarify whether the time included that which an applicant would need if they decided to appeal, in the case that their application had been rejected.

The Chairperson further enquired what would happen if an application took the full 90 days to be processed, and was then rejected, and enquired whether in this case the applicant would be told that s/he was out of time to appeal. This was not mentioned, and this was a loophole.

Ms D Dlakude (ANC) thought that an applicant whose application for accreditation was rejected ought to be given a further 30 days to deal with the next stage of the process.

Ms D Dlakude (ANC) proposed that there should be a provision which would allow the applicant to respond in 30 days if his/her application for accreditation was rejected.

The Committee Researcher explained that there was a lot involved in the processing of an application, which included deliberations, the time it took for the response to reach the applicant, and the decision of the applicant whether to appeal or not.

Mr K Sithole (IFP) wanted to know if there was a way in which the various housing institutions or entities could be regulated by one body.

The Chairperson asked who the municipal entities might be.

Mr A Figlan (DA) explained that a municipal entity referred to any agency that worked with the municipalities.

Ms Borman agreed that the issue of municipal entities needed to be clarified.

Mr Bhoola thought that it was not possible to regulate the various entities under one body.

The Chairperson was manly concerned about Section 3(2)(b), which dealt with the issue of profits that were generated by these municipal entities. There was a danger that these entities could be excluded from complying with the qualifying criteria stipulated by the regulatory authority for purposes of accreditation. There was a contradiction, in her view between the requirements set out in subsections (2)(b) and (4)(c), and this would have to be clarified. She noted that this was another point that the Committee would raise with the Department.

The Chairperson raised was also concerned with the references to an independent Chairperson being appointed to deal with the issue of policies and procedures, and asked how control was to be exercised over significant decisions. It was not clear who the independent Chairperson was, and how or where he/she could be found.

Ms Borman expressed concern that anything to do with housing was vulnerable to corruption. Internal controls were very important, because there was no regulation of these institutions by the Auditor-General. She agreed that all internal policies had to be above board and correct, to avoid any corrupt activities taking place.

The Chairperson tasked Mr Figlan with raising the issue of the independent Chairperson in the meeting with the Department.

Ms Dlakude was concerned about Regulation 5(j)(iii), which referred to discrimination against people who were “affected” by HIV, and asked what meaning would be attached to “affected”.

The Chairperson suggested that perhaps the phrasing should have read “infected with”, and asked Ms Dlakude to raise this issue with the Department for clarity.

The Chairperson wanted to know if cooperatives produced a surplus. There was a risk that they could be excluded from making application for accreditation. She pointed out that Regulation  6(b)(iii) referred to entities that generated a surplus “from time to time”.

Ms Njobe pointed out that Regulation 5(c)(iii) responded to the concerns that had been raised earlier on the issue of internal auditing and the independent Chairperson.

Ms Dlakude asked whether, in addition to having internal auditors, it was possible to include external auditors as well.

The Chairperson pointed out that when companies registered they already would have their own independent accountants, who regularly attended to internal auditing. She said that internal audits generally spoke to this particular function.

Mr Bhoola said that cooperatives had to ensure that they had financial capacity, before they could be registered.

The Chairperson noted that there were difficulties in the interpretation of section 23(3)(a) and (b) of the Act, which talked about rentals and levies, and suggested that instead of using wording referring to “target levies or rentals” it would be easier to simply insert a reference to the number of units that must be supported.

Ms Dlakude noted that Regulation 3(b) spoke about the  percentage of units and not the actual rentals.

Mr Bhoola suggested that it made little difference whether the term “rental” was used or not.

The Chairperson insisted that this issue had to do with the number of units, and said that this was something that must be clear to the public. She asked that Mr J Matshoba (ANC) should raise this point with the Department.

The Chairperson then asked that the departmental representatives be called in to the meeting, and explained to them that the Committee had some concerns still about the legislation, although the content was fairly clear.

Discussion
Ms M Mnisi (ANC) wanted to know where in the document an explanation of the acronyms would be inserted.

Adv Mongameli Kweta, State Law Advisor, Office of the Chief State Law Advisor, noted that this would be placed at the beginning of the document, just after the contents page.

Ms Borman asked whether it was necessary to keep the time periods for accreditation at 90 days.
 
Mr Kweta explained that the 90 days was prescribed in terms of PAJA. Since this was an overarching Act, any other piece of legislation had to comply with those periods. Sub sections (6) and (7) were in harmony with the provisions of PAJA.

Ms Borman pointed out that there was no timeframe indicated for an appeal, if the application was denied, and was concerned about whether this might not then drag out for a long time.

Mr Bhoola asked about the relationship between the PAJA and the Promotion of Access to Information Act (PAIA).

Mr Brian Moholo, Chief Executive Officer, SHRA, explained that there was a clear and direct relationship between the two acts. For instance if a party was affected by a decision taken under PAJA, PAIA would compel disclosure of all relevant information to the aggrieved party.

The Chairperson proposed that the Committee should not make any changes to the 90 day provision.

Ms Borman noted that the municipal entities needed to be defined, so that people could understand what was being referred to.

The Chairperson asked for a clear definition of municipal entities.

Mr Bhoola also pointed out the fact that articles 4(c) and 2(b) were in contradiction to one another.

Mr Maholo responded by saying that municipal entities were defined under the Municipal Systems Act.

The Chairperson insisted that a definition should also appear in this piece of legislation. She pointed out that Members and the public should easily be able to explain what was meant.

Ms Borman wanted to know what happened to profits made by these entities.

The Chairperson noted that cooperatives should not be excluded from applying for accreditation because of the issue around profits.

Mr Maholo explained that municipal entities were companies that were established by municipalities, but which could not distribute profits. Any entity which was established by the government, such as Eskom, was allowed to use profits made for expansion of the entity, but was not allowed to distribute the profits. Municipal entities fell under the same rules, because they too received a grant, or public monies, from the regulatory authorities.

Adv Kweta added explained that these entities need to use any profits they made for their expansion. The Committee had raised concern in an earlier meeting on the effectiveness of these entities. However they could not be excluded from accreditation.

Ms Borman wanted to know if cooperatives made any profits at all.

Mr Bhoola explained that nothing could be achieved without accreditation. Previous municipalities had housing funds at the provincial level for further development. He asked what had happened to those funds.

Mr Morris Mngomezulu, Chief Director, Department of Human Settlements, explained that those were taken over by the provincial housing boards, which were now no longer operational. There was now only a central funding board at the national level, which was distributing funds.

The Chairperson noted that the contradiction on this issue of municipality had been clarified.

Ms Mnisi wanted to know the meaning of an independent Chairperson in the legislation.

Mr Maholo explained that an independent Chairperson had to be someone from outside the SHRA.

Mr Figlan suggested that the word “anti” be added to the word “fraud”. He also questioned if the internal audit function could not be further strengthened by also carrying out external auditing.

The Committee agreed with the proposition.

Ms Borman added that there was a need to ensure that there were no gaps for corruption.

Mr Maholo explained that the regulatory system would have areas of special focus, and that entities would be obliged to account for the monies they received from the Regulatory Authority. In addition, the SHRA sent in its own teams to do audits.

Mr Mngomezulu also explained that these institutions, such as cooperatives, were entities which were funded, with the specific intention to assist the poor. The auditors would carry out procedures of checking and balancing. SHRA had to report to the Department, but these institutions did not have to report separately as well.

Ms Mnisi wanted to know if cooperatives generated any profits at all.

Mr Maholo answered that the issue of profits in respect of cooperatives was only meant only for institutional purposes. It was related only to financial management, and was intended to ensure smooth running of the cooperatives.

Mr Bhoola asked the Department to define a tenant membership agreement, and to explain what would happen in the case where a tenant lost his or her membership.

Mr Maholo explained that the programme was similar to all other government programmes. In the case of social housing, people’s personal circumstances changed, and that might mean that they could not longer continue to live in social housing. If this was so, or if people fell into arrears and were evicted, they may need to be moved to cheaper accommodation, or they may make their own personal arrangements.

Mr Bhoola wanted to know what the time limit was for the transfer of social housing stock.

Mr Maholo responded that when the social housing scheme began, there were various schemes, such as the “rent to buy” scheme. Here, the minimum period that must run until ownership was established was 15 years. There was also a scheme where people just rented, without any prospect of owning. There were problems in the Eastern Cape with some tenants who had rented for long periods but who then refused to vacate the properties, demanding that they be given ownership.

The Chairperson pointed out that most of the concerns had been clarified, and the Committee felt that the Regulations did speak directly to the relevant Act.

Mr Figlan asked where social housing stock was disposed of.

Mr Maholo said that it was up to the regulatory authority to decide where the transfer should be made. The stock was evaluated first, and then sold at market value.

Mr Matshoba (ANC) wanted clarity on section 23(3)(a) of the Social Housing Act, asking why the term “rentals” was used when talking of the number of units.

Mr Maholo said the term “levies” were used to cater for cooperatives, since they did not pay rentals but levies.

Ms Borman asked if the Department was ready to educate the public on these new regulations.

Mr Maholo responded that the Department was taking steps to raise awareness on the new regulations. It had internal systems in place to deal with this. He said that social housing organisations also had the duty to educate their tenants about the regulations.

Mr Kweta also added that the Social Housing Act itself had provisions that emphasised the issue of educating the public. There were also plans to translate the Act into local languages.

The Committee agreed to adopt the Regulations.

The meeting was adjourned.