National Home Builders Regulatory Council on its financials, inspections and expenditure; Resolutions/actions

Human Settlements (WCPP)

12 February 2020
Chairperson: Ms L Maseko (DA)
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Meeting Summary

The relationship of the Department of Human Settlements to the GAP/Finance Linked Individual Subsidy Programme (FLISP) market from 2014-2020, the status of the Rent-to-Buy solution and the challenges the department experienced in implementing GAP and FLISP Programmes were discussed. The department clarified that it only counted an opportunity or beneficiary as having been assisted when the title deed had been issued and the transfer had taken place. In 2015/2016, 426 FLISP applications had been processed, in 2016/2017 745 applications processed and in 2017/2018 this number had dropped. In 2018/2019 465 applications had been processed and in the current year, 2019/2020.  There had been a huge uptake totalling at 955 FLISP applications. There were two types of FLISP applications which are referred to as walk-ins and land release respectively. Land release referred to when the department had created the housing stock or the province and municipalities had built new stock which the department then sold to beneficiaries. Walk-ins referred to when an individual sourced a property on their own, and approached the department for a FLISP subsidy. The department stressed that it was increasing its stock for building; however, there had been an inevitable delay in finishing a house, handing it over with occupation certificates and reaching the point of transfer. The Department discussed the Institutional Subsidy Programme which allowed for an individual to do Rent-to-buy and there had been a number of these programmes in the past since 1994. That programme was aimed at households that earned less than R3 500. The Department highlighted that earning R3 500 in 1994 compared with the present day differed widely and stated that many of its schemes had struggled as expecting an individual to pay R3 500 when they only earn a rental has been challenging. The Department highlighted the various challenges the schemes experienced such as individuals who did not keep up with rent payments, which made it difficult to transfer the property. The Department noted that the policy was not working with a household income of less than R3 500. In relation to development and consumer debt finance, the National Housing Finance Corporation (NHFC) had attempted to recover and fix some of the schemes, but had struggled and so had not supported any other schemes to develop that type of housing. In particular, the Cape Town Community Housing Company (CTCHC), had effectively shut down, with only skeleton staff to manage the outstanding rental claims. The Department noted that FLISP also did not benefit individuals earning R6 000 or R7 000 as bonds could not be accessed in this case as banks would typically look at individuals who earned R15 000 and more. A high level of individuals was also declined by banks due to affordability and their credit-worthiness. The Department had consequently attempted to assist people with affordability since households in that market were unable to put down a deposit. The idea to a certain extent was that the FLISP subsidy acted as a deposit. The department also noted that its biggest challenge with the credit-readiness programme project within municipalities was that the municipalities did not understand or appreciate the demand within their particular municipality. The Department was currently running a pilot-readiness programme where approximately 300 people who had been identified through the sifting demand process would be placed with a credit service provider. The programme was currently running in George, Breede Valley and Drakenstein and would be running in Mossel Bay as at present workshops were taking place while the Department was awaiting a response from the banks they had approached. The Department was running the Better Living Challenge, which was linked to the informal settlements programme where people had been given serviced sites. It considered the support those people needed in order to build their houses incrementally. A housing orientation was also being run by the Department which aimed to teach people how to build their houses in a way that reaped all the benefits from a north-facing environment. Through this project, the Department had attempted to reach out to companies such as Builders’ Warehouse and all stores that sold material for people to build on a small scale to evaluate what types of packages could be offered to a particular community. Committee members raised issues about old RDP houses and about those who still did not qualify, showing that a gap remained. Questions were raised about how individuals who had lived in a property for years could eventually become home owners. The chairperson commented that in the past the committee had been told that the Department was working with the Rent-to-buy programme, but was hearing something completely different from the Department’s presentation. Committee members were concerned about policy which would cover the groups in the informal settlements. In discussing its resolutions, the committee decided that it would request a list of farms where housing programmes were taking place and wanted a presentation on the successes which the Department had experienced in relation to housing schemes whereby the gap market was serviced through successful partnerships with employer organisations. The committee confirmed that it would be writing to the chairperson of the Portfolio Committee on Human Settlements and Water and Sanitation.

Meeting report

Presentation to Standing Committee for Human Settlements

Mr Rob Smith, Director of Grant and Municipal Performance Management, made the presentation to the Committee. He stated that the presentation represented a high level status concerning where the department was at in relation to the GAP/Finance Linked Individual Subsidy Programme (FLISP) market from 2014-2020, the status of the Rent-to-Buy solution and the challenges the department was experiencing in the implementation of the GAP and FLISP Programmes.

Mr Smith said that when the performance of FLISP was considered, it was evident that in 2015/2016, 426 FLISP applications had been processed. He then offered some clarity on FLISP, saying that the department only counted an opportunity or beneficiary as being assisted when the title deed had been issued and the transfer had taken place, for example if an individual had purchased a house or the department had assisted someone who qualified for a subsidy, the status of being assisted only applied when the transfer had been registered. As a result, the subsidy was only recorded as disbursed upon transfer. In 2016/2017 745 FLISP applications had been processed and in 2017/2018 during only ad dropped off. In 2018/2019 465 applications had been processed and in the current year, 2019/2020 there had been a huge uptake totalling 955 FLISP applications which had been processed only three quarters of the year, which showed quite a significant improvement. He indicated that he would explain the challenges and successes of this at a later stage in the meeting,

Mr Smith provided a breakdown of how the significant improvement in FLISP applications had come about. He stated that there were two types of FLISP applications, referred to as walk-ins and land release. Land release occurred when the Department had created the stock or the province and municipalities had built new stock which the department then sold to beneficiaries. The beneficiaries were able to access a part bond and part FLISP subsidy, which was again only counted when the transfer had taken place. Mr Smith stated that walk-ins referred to when an individual sourced a property on their own, for example through a developer who would approach the department for a FLISP subsidy. He stressed that this was again only recorded once the transfer had taken place as the department had noted that a lot of these transactions faulted, which results in the FLISP subsidy not being released. He pointed out that the department was increasing the stock that they were building; however, there was an inevitable delay in finishing the house, handing it over with occupation certificates and reaching the point of transfer. He said that an increase in transfers that were processed on many properties built by the department should be visible in the following year. In contrast to land release, a huge demand could be seen with walk-ins, which were escalating.

The Institutional Subsidy Programme allowed for an individual to perform Rent-to-buy and there had been a number of programmes in the past going back to 1994. This programme was aimed at households earning less than R3 500. Mr Smith said that in that case the subsidy was made available and the institution that built the housing would build a slightly improved house; to make up the difference there would be a rental over a period of four years and when the rental had been settled, the property could be transferred. He pointed out that that there was a great difference between earning R3 500 in 1994 and the present and said that many of these schemes had struggled as expecting an individual to pay R3 500 when they only earned a small amount was rather challenging. He stated that all rental housing programmes now fell under the Social Housing Regulatory Authority. In the past institutions were set up either by the municipality or by an independent institution which then set up the project, brought the tenants together, arranged for the project to be built and managed these tenants. There were a number of housing organisations such as Cape Town City Housing Company and the Housing Association of Blaauwberg which had undertaken these projects, subsequently taken over by the National Housing Finance Corporation (NHFC). The NHFC took over the management of the loans, outstanding tenant payments and the transfer of the remaining properties. The challenge here could be seen when individuals did not keep up with rent payments which made it difficult to transfer the property. As a result, this policy was struggling to work with a household income of less than R3 500. In terms of these challenges, the target really should be households with an income of more than R3 500 if the Rent-to-buy Model was applied. In relation to development and consumer debt finance, the NHFC had attempted to recover and fix some of the schemes, but had struggled with these and consequently had not supported any other schemes to develop this type of housing. In particular, the Cape Town Community Housing Company (CTCHC), had effectively shut down and kept skeleton staff to manage the outstanding rental claims; since the NHFC had backed the loans, they were quite involved and were attempting to wrap up the situation. Mr Smith mentioned that any new institutions which would like to be a part of this process had to consult with the Social Housing Regulatory Authority. He also said that funding was being managed by the Social Housing Regulatory Authority. He said that those housing policies were not appropriate for the times and that there had been no policy framework which was workable to apply the Rent-to-buy Model at that point and there had been a number of issues with the historical projects, which ranged from poor building quality which caused the tenant to be unhappy with making payments. In some cases, the sectionalisation of the units had not taken place, which meant that the property could not be transferred. There was also non-payment by certain buyers and in some cases the institutions had weak administrative systems in place to collect rent and to manage the handing-over of the units to the beneficiaries. The NHFC programme had closed down in the last five to ten years and the only remaining financiers to fund these projects were funding institutions, and since the institutions had been struggling financially, the NHFC had also been struggling.

In relation to FLISP, the target is individuals earning between R3 501 and R22 000. To service this unit, properties should be built in the range of R350 000-R450 000 for it to be affordable in respect of the bond payments. Mr Smith pointed out that it was rather challenging to build houses within this price range and said the department was trying to cut costs in order to do so. He stated that FLISP still did not benefit individuals earning R6 000 or R7 000, as bonds could not be accessed in those cases. He added that banks would typically look at individuals who were earning R15 000 and more. He said there was a high level of individuals who had been declined by banks due to affordability and creditworthiness. What had been attempted was to do is assist people with affordability and Ms Kahmiela August, Director for Affordable Housing, would elaborate on that later. Households in that market were also unable to put down a deposit and the idea was to a certain extent that the FLISP subsidy would acts as a deposit.

In relation to the successes, Mr Smith said that in reality an individual made an offer on a property that was for sale within the market that they could afford; however, the seller became impatient and then also considered other offers. As a result, the individual looking to purchase got a bond and processed the deal, but those individuals would qualify for a subsidy from the department. He said that such individuals could approach the department for a retrospective period if they qualified for a subsidy, which would then be approved and could ultimately go into the bond. When a new house was at issue, the FLISP was paid upon the lodgement to the attorney’s account and the retroactive  amount went into the bond account as the agreement was with the bank. The payment of the transfer costs was covered by the subsidy, as even paying the transfer costs was out of the reach of individuals in this target market.

Mr Smith deferred to Ms August to take over the presentation and asked her to elaborate on the credit-readiness programme which was how the Department had identified individuals who should qualify, but for various reasons did not qualify at the banks due to affordability and credit-worthiness challenges. Ms August said that one of the biggest challenges with the credit-readiness programme projects, even within municipalities, was that they did not necessarily understand or appreciate the demand within their municipality. For example, their criteria would include the house being 72 square metres in size and should cost not more than R350 000. A service provider would come in and tender for the job, but still be unable to deliver that. When the FLISP pipeline was considered, many projects could be seen, but very few were put in this pipeline by a municipality which understood the demand. That was where the thought process behind the credit-readiness programme had come about. Ms August said that when a municipality had identified a particular project the department asked them to show the demand and community workshops were run where the department brought along their banking partners.  The Department and its banking partners assessed the income and expenditure of individuals through a survey form, and that process took a few months and in the end there was a reflection on a particular area. The income area which was most prevalent was R12 000, and if an attempt was made to build for individuals earning more than that, that would constitute 3% or 4% of household income in that area. Ms August stated that the target for the projects market was between R7 000 and R12 000, which mean that the aim for housing costs should not be more than R350 000 or it would be unaffordable. She added that the above process also enabled the department to identify which individuals had been declined for affordability and credit-worthiness. When an individual was declined due to affordability, through some work and a readiness programme, the applicant may be able to reduce their debt within a year and reach a level where they were able to purchase a property for an amount that their household income allowed. She said the department had seen individuals who earned R18 000, but only qualified for R10 000 at the bank. She said these individuals should in reality qualify for a bond of R500 000/R600 000.

Ms August said the Department was currently running a pilot readiness programme where approximately 300 people that had been identified through the sifting demand process would be placed with a credit service provider. The programme was currently running in George, Breede Valley and Drakenstein and would be running in Mossel Bay as at present workshops were taking place while the department awaited a response from the banks which they had approached. The Department had also identified which individuals were linked to its projects and once the applicant’s credit situation was clear, there would an opportunity for them to move into a particular project. Ms August pointed out that the credit scores of some individuals were so bad that the department was unable to assist them. A bank would also take into consideration the age of a person, for example one who was 50 years old, earning R8 000, would not qualify for a bond as they would have only 10 years to repay it.

Mr Smith stated the department was creating properties that would be for sale in certain areas and that information would be forwarded to the committee. He said that houses would be built in Mossel Bay in the Mountain View Project and that at present houses are being built in the Belhar CBD, Forest Village and Blue Downs.

Discussion

Mr A van der Westhuizen (DA) referred to the agenda, which concerned gap housing. He said his impression was that a gap had been identified between the old RDP houses and those people who did not qualify for RDP houses. It seemed to him that what the department had presented showed that there was still a gap. He asked if a gap in the market was again on the way. He said that in the past he had experienced housing schemes which were initiated by employers who were concerned about their employees. They then began a housing project whereby the employees eventually took transfer of those properties. He said that it seemed to him this had to a large extent come to a standstill and wanted to know to what extent funding would be available as he felt like this would have great leverage if the department could help employers support their employees eventually to become home owners. He referred to a number of properties which were registered in the name of the Department of Public Works in the Western Cape and where people had been staying for generations who would wish to take ownership of those properties. He asked whether there was a policy for that and whether support existed for those people eventually to become home owners.  

Mr Brian Denton, Director of Project Administration, said in relation to houses which belonged to state departments, if there was a willing buyer and willing seller, the FLISP did make this possible. The department had done many of deals with for example Transnet, and if any other department wished to sell off their stock, and a person does not qualify in terms of the EDBS, the Department would then sell off that stock and give the person concerned a FLISP subsidy.

Mr B Herron (GOOD) referred to the rent-to-buy system, saying that there was no institutional programme for this. He said that there were historical schemes which were not being implemented through the CTCHC, but that rather cities were directly transferring properties in Rent-to-buy schemes. He asked whether the municipalities or government within their current programmes could still offer a Rent-to-buy option even though there was no institutional subsidy for this. He referred to an informal settlement in Cape Town called Poeksebos where approximately 150 families resided. Mr Herron said the community wanted to live together, and it was proposed that they implement the Rent-to-buy purchases asked how that would be done if there was no institutional framework for it. He referred to FLISP and asked if R1 2000 was the average salary that the department was looking at as FLISP extended to R22 000 on a declining scale. He asked for information on the scale of contributions that families would make based on their income.

Mr Smith responded that some of the people who were getting houses were actually employed and that no-one who was employed earned less than R3 500. Anyone who was earning was pushed out of the free housing market to what was identified as a gap which was originally R3 500-R7 000. That had then been changed and moved from R3 500 to R22 000. However, a gap still existed and the banks were looking at an individual’s credit-worthiness and therefore had their own limits. By going through the sliding scale on that, discussion would still be possible, although the problem then reverted to FLISP. A fundamental thing about this is that one could only approach the main four banks in South Africa and SA Home Loans, which affected the employer loans issue, because employer loans could be given only as a form of a bond. However, the department was not allowed to consider that for the FLISP subsidy as it needed must be linked to a bank loan. That was a very complicated matter, as it referred to the terms of the loan. The safety of a bond consisted in the owner also having rights, whereas other loans could possibly be withdrawn, for example, an employer could simply take the house back. FLISP was very limited in assisting where someone else wanted to come forward, which occurred quite often where land owners and farmers were willing to invest money. However, it became tricky to access the FLISP subsidy, because this needed to be a bank loan.

In relation to properties and state ownership with which that the department could assist there was the EDBS Programme, which Mr Denton would discuss later. Mr Smith said he assumed that this referred to a city disposing of the stock that people were living in or creating new stock. He asked Mr Herron for clarity on his question about Rent-to-buy.

Mr Herron said he was not talking about the Rent-to-buy. He said that historically, the city built housing and held the bond. In recent years the bond had been settled since people had been in the houses for 20 or 25 years. It was sort of a Rent-to-buy scheme where the city was the bond holder.

Mr Smith said that with the PFMA and MFMA organs of state were not allowed to be financial institutions and give loans to individuals anymore, which was what had made it challenging to get projects such as that off the ground. There were historical situations where communities did that, but Mr Denton would deal with that in due course.

Mr Denton said he wanted to add on to the comment on the gap market. When the FLISP had been initiated it was R3 501-R15 000, which had then extended to R22 000. Automatically the gap had also shifted, in addition to which there was the bracket of R3501-R7000 where no one was prepared to go. The knee-jerk reaction to this in terms of national policy was that people earning between R3 501 and R7000 could not obtain a bond, but could get a serviced site for free. In IRDP projects as sites were serviced, the municipality could decide that the person concerned still needed to go through the HSS and had to qualify in terms of all criteria to get the service site for free. If a person became unemployed after that, they could not come back and apply for FLISP or any other subsidy. Mr Denton said that the policy is under review and that national government had made an announcement in terms the division of the FLISP subsidy, however there wasn’t much change except for the increase to R22000. They were talking about pension pack loans, loans by non-registered financial institutions, however this has not been finalised. We also do look at pension pack loans, but it still needs to be a mortgage loan where its backed by a pension. In terms of employer housing, when we initiated the FLISP, we engaged the Pick’n Pay’s and other big employers and there were some instances where we have assisted, but most instances where we have offered assistance in employer housing has been in the individual non-credit linked subsidy which includes persons earning up to R3500. Mr Denton said this was where farmers engaged the department and where the farmer was willing to come up with an amount of R150 000, the department would then provide the subsidy of R168 000. He said that many of the farm employees were getting houses which were much bigger than RDP stock as these went up to 60 or 70 square metres. That was where the department had made some progress in terms of inroads with employers.

Mr Denton referred to the EDBS Rent-to-buy in Poeksebos. He said in terms of the discount benefit scheme, the department was implementing the Rent-to-buy scheme, as a result of which the discount benefit scheme then became the extended discount benefit scheme which included more of the existing stock until it became the enhanced discount benefit scheme. Mr Denton clarified that the Rent-to-buy and EDBS were one and the same thing. In such instances where there were people who did not qualify for the EDBS or who did not apply for it, these people could also apply for it and the city would then sell these houses to non-qualifiers who were in the FLISP category but they would still qualify for FLISP. Mr Denton said that one of the challenges that the department experienced for which they did not have a clear policy was for example if an individual was living in an EDBS house in Ottery but did not qualify for it. The market-rated price chosen by the city was R100 000 and the individual qualified for this amount, earning slightly over R3 500; there was no requirement for a mortgage loan as basically the subsidy covered the full selling price. He said the policy for this was not clear. He said that national government insisted that there should be a mortgage loan, but from its success factors in terms of FLISP and the two-year retrospective payment period, the payment of transfer costs within the subsidy had all been Western Cape initiatives where the department had gone over and above the national policy. That had made the Western Cape the best performing province in terms of FLISP.

Mr Denton referred to the sliding scale and said that there were 35 increments for people earning just above R3 500 up to R22000, so the people earning less would receive an amount up to R120 000; the median was R65 000 to R70 000 and the person on the top end of the scale would receive R20 000 or R25 000. Mr Denton mentioned that there was a R100 increment.

Mr Herron said that he wanted to refer back to families in Poeksebos as those families who did not qualify were in the R3 500 to R7 000 income bracket and were borderline non-qualifiers. He asked if the EDBS provided a solution to them or if it was a historical phenomenon where the city would build stock and use the FLISP to allow the families to be a part of the redevelopment.

Mr Denton said that the EDBS would not create provision for that and that if the department wanted to create new rental stock, the only programme that could achieve that was the CRU Programme which was not working. If those families earned between R3 501 and R7 000, the city could decide to give them a serviced site for free. EDBS only applied to historical existing stock.

Mr Herron asked whether the city was unable to build a FLISP product.

Mr Denton replied that if the city found a second-hand dwelling in the secondary market or if the department or the city developed any stock, whether those individuals qualified for a loan would be an issue. He said there were isolated cases where people did receive loans, but in respect of R7 000, 30% of that qualified the owner for a house of R150 000 or R200 000. He added that the minimum that the department was currently pushing for in terms of their military veteran’s house was a 50 square metre house which amounted to R350 000. The product that the department was looking at amounted to between R300 000 and R400 000.

The Chairperson commented that in the past the Committee had been told that the Department was working with the rent-to-buy, but was hearing something totally different then. She said that there were many municipal workers who had been blacklisted and there was no way they would ever qualify to be in affordable housing and thus fall into the gap that needed to be covered. She asked if the department was saying that there would always be informal settlements with the issuing of the serviced sites.  She remarked that that was a huge market in the country had at that time. That policy said that provision should be made for the fact that informal settlements should exist. She asked if Mr Denton agreed with that.

Mr Denton said that he agreed and that informality it would always be there. He said that if some research was done to find out how many people in an informal settlement did not qualify for any form of subsidy, the only thing the department could do for these people was to enter into a lease agreement; however, these people would still remain in an informal settlement.

The chairperson asked what policy would cover the group in the informal settlement so that there would not be a policy that formalised informal settlements.

Ms Pamela Masiko-Kambala, Director of Policy and Research, said that the whole area around non-credit linked loans was an issue for which the department and national government needed to push. She said that the department’s policy of allowing people to rent properties over a period of time may be problematic in terms of the PFMA. She referred to what Mr Denton had said concerning where people qualified for R100 000, but that all they needed was R20 000 to purchase a property of R140 000. However, if that was not linked through a bond, no bank would give an individual a bond of less than R100 000, which meant that the person who needed only R20 000 could get that through a personal loan from the bank. The department could not even offer such an individual FLISP as they did not have a mortgage. Until national government considered that policy and non-credit linked loans, progress would be possible, although that was difficult to do, because the main existence of credit Acts and all the rules that exist to prevent people from being indebted. Ms Masiko-Kambala said there was also an area that was part of the so-called downward grading, where people were given a subsidy to purchase their house of R100 000 and fell short of R20 000. After obtaining the house, they sold it for R180 000. Attempts were being made to keep within the pre-emptive clause and prevent people from selling these properties and moving to informal settlements.

Ms Masiko-Kambala said another issue the department did research on was deferred ownership which looks at conditions for developers to be interested in the scheme. We are looking at CTICC and we have analysed what they have done, what has worked and what has not worked in the past. Unfortunately, while we may not have completed this work, what we are gathering is that with affordability and non-affordability, people will be kicked out of their houses when they fail to pay. Ms Masiko-Kambala said the unemployment rate was high and that people were losing jobs and pointed out that if someone is placed in a property for ten years, it will be a problem if the person can no longer afford to pay in year ten. A financial institution that has offered this person a loan would have to repossess the house which means there are risks for homeowners and sellers.

The Chairperson said that on the FLISP side, the Department had the rental and asked how they knew if the person that they assisted would be employed for a very long time. So, are you saying that when a person is no longer able to pay, you can kick them out and the solution is that the Department will give them free housing?

Ms Masiko-Kambala answered that the people would be given a service site and that it would not be free housing. She said people would be set up in a social house, but it would still not be a solution for ownership.

Mr van der Westhuizen thanked the delegation for their presentation and said it had not been what the committee had wanted to hear. He said he wanted to spell out what he saw as the implications of the scenario that the department had sketched to the committee. He was not familiar with Poeksebos, but he presumed people would like to upgrade or relocate those people so that the area could be redeveloped. He said he was thinking of the people who lived in the SANRAL Reserve area in Somerset West where whole communities sometimes had to be relocated due to infrastructure upgrading requirements. Mr van der Westhuizen pointed out that some of the people staying there may qualify for a free house and others may qualify for FLISP, but at that moment there was a vast number of people for whom there was not an acceptable solution, which created real problems for both the individual and community at large. It would be necessary to engage with national government and to say that R3 500 in 1994 and in 2020 could not be compared. It would also be necessary to address the gap in the middle as solutions were not available. Entities such as SANRAL may be prohibited from doing their infrastructure work or SANRAL could possibly offer to assist with certain households. The question arose as to what the options were for role players who needed the changes in the different areas.

The Chairperson asked if some people were given a serviced site, what the terms and conditions were for those people to access the subsidies for building themselves.

Mr Denton said that if a municipality decided to award service sites to persons who qualify for an amount up to R7 000, there were municipal by-laws which applied, some of which required that building be completed within two years. The market fell short regarding policy in terms of how to access small loans, for example with the KUYASA Fund, and how to get them back as role players who would provide small loans so that people could incrementally start developing their property. This was something that was currently not functional in the Western Cape.

Ms August said that Capitec was working on a product to for unsecured lending for human settlements purposes. She said there were disadvantages to this as a home loan had a set interest rate and with unsecured lending one was looking at R17000 or R18000 which was prime plus act that they would be lending to and this becomes unaffordable. However, if they ha no other option and were to be given a service site, banks are beginning to explore options for unsecured lending.

Ms Masiko-Kambala said the Department was running the Better Living Challenge and was linked to the informal settlements programme where people had been given serviced sites. Consideration was given to what type of support these people would need in order to build their houses incrementally. A housing orientation course was being provided where people were taught how to build their house in a way that took all the benefits from a north facing environment. Through that project an attempt was also being made to reach out to companies such as Builders‘ Warehouse and all those stores that sold material for people to build on a small scale to see what type of package could be offered to a community that had been given for example, 200 serviced sites, who would like to upgrade their houses. She pointed out that that would still be dependent on the household in terms of how much credit it would exposed to and how willing it would be to take that up in order to build over time. The least the Department could do was to give a serviced site and ensure that players in the sector were willing to assist.

Mr D Smith (ANC) asked about the farmers who partnered with the Department and wanted to know if the Committee could get a breakdown or list of the areas where the Department had assisted the farmers. He said it was important that the Department should start thinking of partnering with a Builder’s Warehouse or Build-It. He said he knew that if a credit programme was in place up to a certain amount the person concerned qualified for an amount which could go up to R100 000 or R150 000.

The Chairpersons said she was worried that that group was being left out as if someone went to social housing, a subsidy was available. A person earning R22 000 would be able to get good credit at Builder’s Warehouse to build for themselves, but a person who had access to R3 500 or R7 000 would have to negotiate for this credit to be given to them. She said the have-nots would always be the have-nots and the haves would always be the haves. The policy was not covering everyone and it was necessary to go back to the drawing-board. People are being forced to lie to municipalities since if they earned more they would not have access to housing opportunities.

Mr van der Westhuizen again asked about the residences which belonged to the Western Cape and wanted the Department to expand on this. He said that quite often those properties had been neglected as there were huge backlogs in terms of maintenance. In many cases it would be desirable to transfer those properties to the individual homeowners as there was no strategic value for the Province to hold on to those properties. In some cases there were properties next to a farm, such as Elsenburg, whose workers needed to be housed at a property close by their place of work; that made strategic sense. The question was how we support those people could be supported. It is also not desirable to transfer a dilapidated building to a poor individual and require them to do the maintenance on it.

Mr Smith said the Department’s asset manager could provide a breakdown of those properties and said that it did have a fair number of properties, for example, next to Century City it owned a few free-standing houses. The Department was still in the process of deciding how to dispose of those. He said with the De Waal Drive Flats a decision had been made to retain those and keep them as rental stock, but perhaps that was a new topic for discussion. In a small town, for example Riebeeck West, a lot of unhappiness which had manifested at the end of the project was due to the fact that people had been excluded from housing, because they earned slightly more than R3 500. That was exactly what was taking place in Poeksebos as Mr Herron had mentioned. These people did not fit into their communities and did not fit anywhere else, as a result of which their anger was real and the department is beginning to see that now.

Mr Herron said that for as long as the current National Housing Programme would be implemented this problem would remain. He said if policy was to be influenced he would propose that the policy needed to be more flexible as what people could afford in Cape Town was very different to a small rural town. If there continues to be this blunt instrument people will be cruelly excluded because they earn R3501.

Mr van der Westhuizen said he feared that people were being forced to be dishonest about their income.

The Chairperson commented that a woman had said to her that she applied to get a house when she bought bread for R7 and now she was buying it for R14, but the department was still saying that R3500 was the standard when the bread price had increased. She said that this did not make any sense as the price of bread and other things have increased and we were still stuck onR3500.

Ms Masiko-Kambala said that what was not being said was that if the income threshold were to be  increased, the demand would also be increased.

Mr Herron interjected and said there was a real demand.

Ms Masiko-Kambala continued saying that in the bad economic climate the Department had received less funding from national government to build houses. She said one could see why government would not want to push for a higher income threshold, because it would double the demand.

Mr Herron said that that would not increase the demand, but rather would identify the real demand.

The Chairperson said that the Committee would engage more on that issue until the Department had figured out a solution for the gap market which was not being attended to. She said that as long as there were no solutions there would be protests.

The meeting with the delegation from the Department was adjourned and committee members remained to discuss the resolutions.

The Chairperson said that the Department had agreed to provide the Committee with a list of where it was doing transfers of its rental stock to communities. A list of farms where housing programmes were taking place would also be given to the committee.

Mr van der Westhuizen said that this needed to be taken further and that the Committee should receive a presentation on the successes of this initiative. The presentation should be about successful housing schemes whereby the gap market was serviced through successful partnerships with employer organisations.

Mr Smith said there was a particular interest in partnering with the private sector and industry to assist the gap market and asked how this could be put into a resolution. He said he also needed a list of the farms or farmers that the Department had assisted up until that point and he asked for a presentation of a possible policy amendment and how to partner with private industry.

Mr Herron said national policy needs to be changed in order for the Western Cape to implement a different programme.

Mr van der Westhuizen said that partnerships had never been excluded from the policy unless it were excluded in later provisions and asked if the Committee could be briefed on best practices and where successful partnerships had been implemented with their assistance.

Mr Herron asked the chairperson if the committee could ask the National Assembly committee to look at a policy change as opposed to asking the departmental officials to fight for change.

The Chairperson said at present the politicians influenced the policy and the flexibility of the policy was what needed to be implemented as a short-term solution; reforming the policy would be a long- term solution.

Mr van der Westhuizen confirmed that the Committee would be writing to the Chairperson of the Portfolio Committee on Human Settlements, Water and Sanitation.

The meeting was adjourned.

 

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