Presidential Pilot Project on Rental Housing: briefing

Meeting report

HOUSING PORTOFOLIO COMMITTEE
25 April 2002
PRESIDENTIAL HOUSING PILOT PROJECT: BRIEFING

Chairperson: Ms Z Kota (ANC)

Documents handed out:
Presidential Pilot Project on Rental Housing: Job Summit Project

SUMMARY
The Committee expressed concern about the slow pace of progress with the project and a resluctance on the part of the private sector and organised labour to commit resources to it. Questions were asked about its appropriateness for addressing the housing needs of the poorest of the poor.

MINUTES
Presidential Pilot Project on Rental Housing
Mr Wallis said that the project was premised on several key criteria, the foremost being job creation not only through construction work but also through community participation in the long-term management of housing schemes. Private sector participation was key to the success of the project, which would form part of Integrated Development Plans (IDPs) in the areas targeted. Seventy-five per cent of the units concerned would be earmarked for rental accommodation whilst the reminder would be available for home ownership.

Discussion
Mr S Montsintsi (ANC) referred to the management problems identified as one of the challenges facing the rental project, asking whether this was in relation to rent collection or some other activity.

Mr Wallis replied that the National Housing Finance Corporation (NHFC) would identify management agents to collect rentals and pay rates and levies to the relevant service providers.

Mr G Schneemann (ANC) expressed concern about the slow progress made since the launch of the project, especially in view of the huge demand for housing in urban areas. The private sector's apparent reluctance to commit to the project was typical of its attitude towards anything that did not involve significant profit-making opportunities. Had the Department looked at the Brazil model for rental housing?

Mr Wallis replied that the Brazil model was heavily subsidised. The South African pilot project relied less on subsidisation and more on stakeholder funding partnerships that could ensure sustainability.

Mr Montsintsi observed that the Kliptown housing project was aimed at working class people and yet was located in an informal settlement where most of the inhabitants are jobless. He asked why.

Mr Wallis acknowledged that Kliptown was an extremely poor area. A rental project had been located there for that very reason, to cater for people who might never qualify for home ownership and needed temporary housing.

Ms C Ludwabe (ANC) expressed concern that the rentals charged were beyond the means of the very people the project sought to assist. She also objected to the continuing construction of single-roomed houses that lacked privacy and were an affront to people's dignity.

Mr Wallis said that there were many people in need of a single room for temporary shelter. The rental project targeted low-income earners.

A DA member asked if the Department had looked at the possibility of refurbishing already existing inner-city structures.

Mr Wallis replied that in Gauteng existing structures were being converted into rental accommodation on a test basis. Refurbishing existing structures was sometimes extremely expensive, far exceeding the cost of erecting new structures.

Mr W Skhosana (ANC) regretted that labour had been dragging its feet on participating in the project. What did the Department think would work best and give good results?

Mr Wallis explained that labour faced the challenge of securing a mandate from stakeholders in the pension funds concerned to invest in a project that could not guarantee a good return.

Mr Montsintsi wanted to know how the Department would reconcile its plan with Government's policy of free housing for the poorest of the poor.

Mr Wallis replied that the rental project was based on a financial model that made provision for repayment. Government was trying to avoid a situation in which it was required to manage housing schemes, hence the need to involve communities in the whole exercise.

The Chair expressed concern about the slow pace of progress on the project, inviting the Department to approach the Committee if it continued to encounter problems with the process of implementation. She wondered how the Department intended meeting its obligation to provide housing to the poorest of the poor.

Mr Wallis replied that this issue had always been a problem and was the focus of ongoing debate. The question of whether or not to increase the government housing subsidy was controversial and a political issue.

The Chair reiterated that the Committee's main concern was the welfare of the poor.

The meeting was adjourned.