Department of Human Settlements on 2016 Plans, Housing Subsidy Scheme, Community Schemes Ombud Service regulations & Housing Development Agency plans, in presence of Deputy Minister

Meeting report

The Chairperson noted the apologies of the Minister of Human Settlements but welcomed the Deputy Minister who briefly introduced the team.

Department of Human Settlements (DHS) 2016 Annual Performance Plan and budget briefing
Mr Marius Hitge, representative of the Department of Human Settlements, noted that the budget and the Annual Performance Plan (APP) of the Department were linked to the National Development Plan (NDP) Chapter 8. The strategic goals included
- enhanced efficiency and effectiveness of the Department
- integrating and responsive human settlements sector,
- a planning and policy environment
- an increase in the provision of adequate housing in quality living environments

He noted that the strategic objectives and the APP itself would show the Committee that the Department is responding to the criticism of government and indeed the recognition of the Department itself that up till now there had been a lack of integration and responsiveness within the Department and other sectors of government. The three points that the Department will focus on in the coming year were:
- adequate housing and an improved quality of living
- a functionally equitable residential property market
- enhanced institutional capabilities for effective use of spatial investment.

He summarised the process behind the strategic plans, noting that they were submitted on time and took into account the comments of the relevant advisory bodies. There was formerly a criticism that the Department had 144 objectives but this has now been amended and the Department now has 44 key issues. The main priorities in this year would include:
- enforcing a policy for coherent and inclusive approach to land for human settlement
- revising the Housing Code
- amending the Housing Act
- upgrade of 2 200 informal settlements
- 750 000 households to be provided with basic services
- 563  000 subsidy housing opportunities provided
- 110  000 loans (70 000 under the finance linked individual subsidy programme (FLISP) and 40 000 through direct finance institutions (DFI)
- 27 000 social housing units to be  provided
- 35 000 affordable rental housing opportunities to be provided.

The Human Settlements White Paper upgrade had targeted 750 000 houses with regard to water electricity and tenure on good land.

Particular priorities for the APP for 2016/2017 APP included:
- housing of Military Veterans
- implementation of human settlements interventions in mining towns
- eradication of the title deeds backlog and the transfer of title deeds for new properties in the subsidy market - acquiring, rezoning and release of well-located land
- implementation of capacity building support programmes across the sector
- strengthening of partnerships for better delivery.

He summarised the content of the different programmes. Programme 1 dealt with administration. Programme 2 focuses on policy development and implementation. Programme 3 aims to eradicate the 100 000 title deeds backlog, and targeted 2 455 hectares of well-located land to be acquired, rezoned, and released for new developments, particularly  targeting poor households. This programme formed the main focus of the Department. It was intended that 15 catalytic projects would be implemented. Nine human settlements, interventions were to be implemented in mining towns. 500 feasibility studies would be conducted on informal settlements. 444 informal settlement upgrading plans were to be developed. 175 000 households would be provided with basic services. 115 000 housing opportunities were to be provided, including those to military veterans (MVs). Finally title deeds for new home owners in the subsidy market would be issued. Programme 4 was focused on the Chief Financial Officer's office and the financial management of the Department.

Ms Funani Matlatsi, Chief Financial Officer, Department of Human Settlements, took the Committee through the slides on the budget (see attached presentation) The Department  did feel the effects of the economic slowdown and there was a R1.6 billion cut to the Human Settlements Development Grant in the 2016/17 financial year. Grant payments accounted for 95% of the DHS's budget. The Goods and Services budget was reduced by R6.6 million in 2016/17, R10.8 million in 2017/18 and R41 million in 2018/19. This was quite a serious issue, as this was where the actual work of the Department is done. The budget for the compensation of employees had been cut by R28.9 million in 2017/18 and R43.1 million in 2018/19. In total, the DHS budget for 2016/17 had been cut by R2.515 billion in this year, with a cumulative cut of R3.8 billion budget cut in the human settlements sector over the next three years. She said that the budget cuts may hinder the performance of the Department, as it was already under-staffed.  There are 18 positions that are funded in this financial year, but not filled, and the Department should be looking to fill them. 247 positions were not funded, and the Department was therefore now prioritising filling only the strategic positions. The major part of the Department's funding happened by way of the Human Settlements Development Grant (HSDG).

She described the breakdown of the grant by provinces. In total, there was R19.8 billion, divided between the 9 provinces. Gauteng receives the most, followed by KwaZulu Natal (KZN) (see attached presentation for details). Between 2016/17 and 2018/19 the HSDG will increase by around 3.1% to R22.3 billion, and by the end of three years it was anticipated to be R63 billion. . She said that in total that the human settlement grant over the next three years would be R63 billion. The Urban Settlements Development Grant (USDG) had decreased by 2%. These two grants complement each other.

She reminded the Committee that the DHS worked with four programmes and noted that the programmes 3 and 4 were working together closely.  Collectively, R9 billion is allocated to them. She described the breakdown of the figure of R30.6 billion for the forthcoming year.

Community Scheme Ombud Service (CSOS)
Briefing on CSOS
The Chairperson welcomed Rev Mehana, Chairperson of CSOS.

Adv Seeng Ntsaba-Letele, Chief Executive Officer, CSOS explained that the Minister had the power to create subordinate legislation by way of regulations, although the CSOS Act stated that the Minister must consult with Parliament, and that any regulations would have to be approved by Parliament. The minister had published a call for public participation in the process. CSOS consulted the three key stakeholders, who were the Office of the Registrar of Deeds, the National Association of Managing Agents (NAMA), and the Association of Residential Communities. There had been media coverage, articles in newspapers, interviews broadcasted on national television and other publicity. There were 148 written comments received from the public and CSOS is currently preparing a summary of those written comments.

The main concerns had related to the capacity of CSOS, and the fact that levies that CSOS receives come from individual homeowners who live in the relevant communities. The argument was made that CSOS should not be funded through levies, but rather through taxes. Any aggrieved property or homeowner could now approach CSOS if they wished to complain about the body corporate. The point about levies was very important because CSOS is expected to be self-sustainable over time and the levies do form a large portion of the capital that will keep CSOS going. The Fidelity Fund is supposed to take care of funding which has been paid to body corporates who might have gone bankrupt or are corrupt. CSOS has to ensure that every body corporate is line with the constitution. There is the option of an appeal. CSOS inspectors can enter and inspect the property.

The levy formula was then explained: the amount payable will be R40.00 or 2% of the amount by which the monthly levy charged by the Scheme exceeds R500.00, Units with monthly scheme levies of R500 per unit or less are entitled to 100% waiver, and all units will be entitled to a waiver of the levy on the first R500. There was also a cap for those units charging R2 500 per unit and more, because the higher the levy, the higher the levy contribution to CSOS must be, but the cap was R40.00. The funding for CSOS will be phased out. It is important that the regulations are passed, for without this, CSOS would not be able to be a self-sustainable entity.

Dispute settlement fees were not implemented, as it was deemed not legally proper. The CSOS levy is a compulsory levy. In cases where the owners had paid their monthly levies to the body corporate, but the body corporate had not paid across to CSOS, there would be legal recourse. It is a huge market and therefore the government should govern this sector, through CSOS. It was estimated that there are around 200 000 community schemes in the country.

Housing Subsidy System: Department of Human Settlements briefing
Ms Matlatsi displayed a real-time presentation of the Housing Subsidies System (HSS) and said that it was mandatory for all provinces to use the HSS. It effectively was the link between the big budget of the Department and what the Department had spent at a specific site. The HSS allowed it to track all elements of the Department's operations in real time. HSS is linked and has an interface with BAS, and to the National Housing Needs Register. He said there were 11 716 projects nationwide that the DHS was running to subsidize housing and this would enable it to capture, verify and approve all housing subsidies.

A representative then demonstrated HSS’s applicability and importance. HSS Online enables the Department to view applications and the detailed history and status of this application. HSS validates subsidy applications, which is essentially doing due diligence on the applicant. Every household that has ever received a subsidy is on the system, and if a household has already received a subsidy, any new application will be denied. There is also monitoring of developers and their requests for subsidies and their applications. HSS enables the Department to track in real time which business plans have been approved and to track expenditure approvals. It shows housing, real estate, projects that are currently underway, units available and how many title deeds have been issued, as well as other information.

Discussion
The Chairperson recommended that housing projects for Military Veterans should be classified as a separate project, in order that the DHS could track how well military veterans are being taken care of.

Mr Hitge said that it would be impossible to do that in this financial year, but that this comment would be considered for the next year.

Housing Development Agency (HDA) briefing
Mr Brendon Abrahams, Programme Manager, Housing Development Agency (HDA)  noted that a spatial information system had been established – LaSPIS. This stores title deeds and records and allows for interactive viewing. The information system is used to identify, monitor and verify property and housing development at the national and provincial level. Another initiative was named the National Human Settlements Land and Individuals (NaHSLI), whose objectives are to make property and housing development more aware of its context and sustainability of any efforts. It is intended to ensure integrated development and to look at whether any development is aligned with spatial plans and spatially targeted initiatives.

Mr Pascal Moloi, Chief Executive Officer, HDA, spoke about the Master Spatial Plan (MSP) and stipulated that it is a Geographic Information System (GIS) map (see attached presentation). The yellow represented sparsely inhabited areas that needed housing. He gave a demonstration of the MSP in action. In Limpopo 74% of on-going projects are completed, but in Northern Cape most of the projects have not broken ground yet. This was a mix of real information on the ground, and was also capable of tracking expenditure. He then demonstrated how the HDA Command Centre dashboard worked. He concluded that this was essentially a Centre where the HDA “declares war on unsustainable human settlements in the country”. He noted that more would be said in a later briefing once the provinces were exercising their provincial mandates.

Discussion
The Chairperson thanked the Department.

Mr M Khawula (KZN IFP) also thanked the Department. He wanted to know what the Department does to solve the issue of people who live in areas that are zoned as farming and not residential areas. These people had water, but there were no services, and government says that it is not responsible for providing services to areas zoned as farms. There appeared to be a deadlock and he wondered what the DHS was doing to try to break it. He wanted to know why KZN’s mining towns had not been granted status and what was being done regarding this. He then said that the Urban Settlements Development Grant was uneven, and that KZN was disadvantaged because it only had one metro, even though it has a larger population than the Eastern Cape with its two metros. He challenged the formula for administering the funding of the USDG on the number of metros.

Mr Khawula asked why the CSOS message had not been put out on the largest radio station in Africa and the second largest in the world, Kozi FM.

Ms T Mpambo-Sibhukwana (Western Cape, DA) asked about the problem of “double dipping” in the housing subsidies sector. She asked if these events could be tracked with HSS. She also asked for a detailed report on this, using HSS and the MSP. She asked what was the reason for the reduction in the targets in each programme. She acknowledged that the DHS was intending to up its efforts in handing out of title deeds, but she asked about the illegal renting and selling of the RDP and Breaking New Ground houses. She said that it seemed to be an issue of oversight and asked the Department why the APP mentioned nothing about increased and more effective oversight. She asked about the White Paper on Human Settlements and what the status of this paper was now. She said that there were many people who were very concerned about the plight of the military veterans, and asked that detailed information about the military veteran housing situation should be forwarded to the Department.

Mr C Hattingh (North West, DA) noted the high importance of title deeds, as they unleashed a lot of energy into the national economy. He then queried why there was such a low annual target for title deeds, at only 100 000. He said that the longer the issuing of title deeds was postponed the more likely it is that they get traded illegally. There is a backlog of title deeds of between 7 and10 million, so he questioned whether the target figure was actually even realistic in the first place. He felt that the problem was getting worse. He asked what the Department was doing about it. He asked whether the Department had time frames within which it intended to finalise the issue.

Mr Hattingh asked whether the HSS was able to track families who had made use of multiple subsidies over provincial borders, and have effectually become ‘lords of land' in doing so.

Mr D Stock (Northern Cape, ANC) asked the Department what it was doing about the fact that in the Northern Cape the wrong beneficiaries were occupying the houses that the Department had built. He said that he read in the newspaper that people were being killed in this area, and asked whether the killings were linked to wrongful occupation of units: if so, then he wanted to know what the DHS was doing about the issue. He then asked about the mining towns and why the Department had allowed miners to occupy houses that had asbestos roofs, without first looking into that situation, and what it was doing now to remove the asbestos.

Ms T Mampuru (Limpopo ANC) asked for more details on some of the items in the APP. She asked about the Municipal Human Settlement Grant decrease, expressing her concern that municipalities did not have the resources needed to address the problems in their immediate areas. She also asked about the rural housing loans. She referred to slides 16 and 17 and said that the Department should have disaggregated this information into the provinces, as the responsibilities of Members of the Select Committee were provincial rather than national. She asked whether the Department linked an ID to a plot of land, commenting that there were children of these title deed holders who were now adults that needed to develop their own space within the land. She asked how, if the budget was going to decrease, the Department was then going to ensure that it did not compromise on service delivery. She asked if there was enough capacity in the municipalities to spend the grant. She was specifically referring to the Municipality of Ethekwini.

Ms Mampuru commented that CSOS was a very important organisation. She then asked whether there would be interaction between CSOS and the municipalities in regard to payment of the levies proposed by CSOS.

The Chairperson appreciated the considerable improvements in this year's plan and the increased alignment to the strategic plan. The Chairperson said it was always difficult to receive the strategic plan for the current year when the Committee had not received the Annual Report from the previous financial year, but she noted that this was the manner in which matters were dealt with. However, she told CSOS that she would have like to hear an explanation of why CSOS was created and a more substantive explanation on the regulations, rather than merely listing them. She asked if CSOS had enough internal capacity. She said that the levies that CSOS was proposing are very low. She asked what the meaning of the higher numbers in the CSOS meant, in comparison to the R40 cap on levies.

The Chairperson appreciated the outlining of the systems but would like to see a separate presentation on HSS, as it was very important. She also recommended that the system should become more integrated with other sectors and departments of government. She then asked whether the Western Cape and the MSP had been updated, because there seemed to be a discrepancy between the MSP map and the reality on the ground in the Western Cape.

The Chairperson also sat on the Select Committee dealing with defence matters, and wanted to emphasise the importance of housing military veterans.

She then asked about what was done to people who illegally occupied houses, with specific reference to Ethekwini South Municipality.

The Chairperson mentioned that the USDG should be extended to secondary cities. She noted the question of Mr Khawula and emphasised that she agreed that the formula for the USDG should be re-considered and asked again that secondary cities should be taken into account, because this is was very important issue in urban development.

She concluded that the DHS need not answer all the questions now, but she would like to hear its response to the recommendations made.

Ms Zou Kota-Fredericks, Deputy Minister of Human Settlements, said that the issue of secondary cities was quite valid and the Department will talk to the National Treasury. She noted the comment on the inequitable treatment of KZN, based on it having only one metro.

Mr Higte responded on the question of housing, and said that Marikana houses were invaded by a group of people who were not beneficiaries. The DHS did have a list of beneficiaries, which was only proper practice before the construction started. The Department had consulted with the local community and relevant committees.

In relation to miners, he noted that the DHS was negotiating with the mining unions; most of this was to do with rental issues. He commented that there were some legitimate grievances in Marikana but there were also some illegitimate events and in respect of these, the law should take its course.

He explained that the target for 100 000 title deeds is divided into pre and post 1994 and there is a backlog in both cases. There was not budget to deal with the title deeds backlog but the Department had convinced the National Treasury to give the DHS a specific amount to deal with this. In order to break the backlog the Department would need R1.7 billion rand, and although it had managed to persuade the National Treasury to grant this funding, it was spread over three years. If National Treasury agreed to ring fence the budget then the 100 000 target could be increased.

He acknowledged the concerns about unequal treatment in KZN, but said that although it might not be getting as much as it thought it needed, this province was receiving the highest allocation after Gauteng. The allocation even to the single metro of Ethekwini still worked out more, in terms of the monetary value, than the two metros of the Eastern Cape combined.

The worst aspect around the selling of subsidised houses was that there was still a lack of consumer education and awareness, as some of the houses that cost R130 000 to build were being sold for R30 000.

The declaration of mining towns was a Presidential declaration and the Department had added more to the numbers that were  originally declared mining towns by the President, so that it was now giving special attention to 22 towns instead of the original 14.  The Department has not classified any towns in KZN as “mining towns”, yet it was acknowledged that there were depressed towns in KZN. It would take a while to deal with them all.

In relation to staffing, he said that it would be difficult to maintain service delivery, given the budget cuts, but the Department had re-prioritised its priorities and identified key positions within the Department that needed to be filled.

He said that the linking of the ID to the plot of land is done through HSS and it was not possible to start building in a separate space without a subsidy approval. With the system, it was possible to link the ID to the plots of land, and it was also possible to allow for development of different areas of that land.

The Chairperson asked the officials to send the responses in writing, and asked again that the Department should now comment specifically upon those issues with recommendations by the Members.

Mr Mehana said that CSOS was very important as there were a lot of disputes dealing with the abuse of tenants and owners by body corporates. There were around 200 000 community schemes in South Africa, so there were numerous people clearly who were a part of these schemes and who needed to be protected by SOS; legal recourse would make this possible. He then asked the Committee to do all it could to promote effective working of CSOS as it would be a great service delivered to the people of South Africa.

The Deputy Minister said that the Department would respond in writing to the remainder of the questions. She noted that the HSS was designed to stop “double and triple dipping” and that it will only get better as the system improves.

The meeting was adjourned.