Housing legislation: briefing

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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

14 September 1999

Documents handed out
Provisional Committee Programme for 1999 (see appendix 1)
Housing Act No 107 Of 1997: Summary (see appendix 2)
Prevention Of Illegal Eviction From & Unlawful Occupation Of Land Act, No 19 Of 1998: Summary (see appendix 3)
Housing Consumer Protection Measures Act, No 95 Of 1998: Summary (see appendix 4)
White Paper On Housing - A Brief Summary (see appendix 5)
National Housing Policy: Executive Summary: March 1998 (see appendix 6)
Housing Consumers Protection Amendment Act 27 of 1999
Housing Consumers Protection Amendment Act 28 of 1999

The committee adopted the draft programme of 1999. A department official briefed the committee on the legislation passed by the department in recent years.

Adoption of the Programme
The committee adopted the draft programme of 1999. The date of the visit to provinces has not been finalised. The Western Cape and Gauteng provinces would be the start of the visits to all provinces.

Mr R Thatcher of the Department, gave a brief history on housing in South Africa. In 1992 the National Housing Forum came into being. The National Housing Forum consisted of all major stakeholders in the housing sector and they had to develop a housing strategy and policy for South Africa. In November 1993 Parliament passed the Housing Arrangement Act and this Act established the National Housing Board and four Regional Housing Boards.

In 1997 the first Housing Bill of 1997 was passed and the Housing Act has been amended several times. The Act scrapped all old housing legislation and it replaced them with a single piece of legislation. It establishes the National Housing Board and unlike the previous National Housing Board, the present board is a juristic person. The National Housing Development Board took all the assets of the different boards into a single board and the department changed from having zero assets to many assets. All the assets vested in the National Housing Development Board were to go to the Provincial Housing Boards. Then the MECs would be able to take over the assets and the assets of the provinces can then be vested to the local authorities. He informed the committee that they are building up the capacity and knowledge of the municipalities. He believes that they do not have sufficient knowledge on how to handle assets.

Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 1998
Landlords were evicting tenants unlawfully and the Department decided that intervention was necessary to regularise evictions. This Act set out the procedure for eviction of unlawful occupiers and a procedure for mediation. The Act strikes a balance between the needs of land owners who are faced with illegal land occupation and the poor and landless who are often victims of eviction through actions over which they have no control. The Act protects both the land owner and those suffering from illegal evictions.

The Department initially had problems with the implementation of Act but it is dealing with this. For the first time the Act made it an offence for a landowner to evict a tenant unlawfully.

Housing Consumer Protection Measures Act 1998
Some builders built poor quality units and as the result the home owners were left without a remedy. Because the houses had such defects, the home owners refused to pay rates and taxes. In 1995 the National Home Builders Registration Council (NHBRC) came into being. The NHBRC was not a statutory body then so there was little help that could be provided to its members.

The Department decided to bring legislation which came into effect on 4 June 1999 to give statutory recognition to the NHBRC, then the Housing Consumer Protection Measures Act was passed. The NHBRC established in terms of this Act became a statutory body. The Council deals with all problems relating to housing building and monitors building activities. Any builder has to register with Council. If the builder is not registered, the bank will not grant the loan to the recipient and every home which is built has to be registered with Council. This ensures that the home owner is protected. The regulations are being introduced in staggered phases but those regulations dealing with subsidised lower income homes should come into effect in January 2000.

The funds of the Council come from enrolment and registration fee. The builders are registered not only by the name of the company but also by his name and ID number. This method ensures that the builder is held accountable for any wrong done and has to remedy it or face a ban from the building industry.

Home Loan and Mortgage Disclosure Bill and Community Re-investment Bill
The idea to formulate these bills was taken from the United States of America. Mr Thatcher said that the USA had a powerful set of laws in this area because, as in SA, American banks had been unwilling to lend money to the poor.

The Fair Lending Practice Housing Bill did not go beyond Cabinet and was withdrawn but its principles can be found in the Home Loan and Mortgage Disclosure Bill which is drafted. A meeting had been arranged with the Leader of Government to negotiate whether this legislation can be included in this year's parliamentary programme and a decision will be made next week. In terms of this Bill, banks will have to disclose not only to whom they lend money but also to whom they refuse to lend. The Bill will bring about the principle of fair lending and it will level the playing fields and enable everyone to be able to receive a loan. The Banking Council has told the department that in principle they accept the principle of fair lending.

The Community Re-investment Bill still needs to be drafted.

National Housing Policy: Supporting the Peoples' Housing Process
This strategy enables rural and urban people to build their own homes. [See
executive summary.]

Questions from the members
D Montsitsi (ANC): Are the coming Community Re-investment Bill money bills or not?
Mr Thatcher: We are negotiating with the Department of Finance and the Department of Trade and Industry. We may do late adjustments. I cannot at this stage say what will be the ultimate result. People view the bills as money bills.

Mr Nush (ANC): Is the list of building contractors available from NHBRC?
Mr Thatcher: It is available from the NHBRC and the information is made available free of charge to anyone who asks for it.

Ms Coetzee (ANC) asked that now the Housing Consumer Protection Measures Act covers houses above R250 000, was this per unit or per complex? She also asserted that she knew of no one who had benefited from an individual subsidy.

Mr Thatcher: The R250 000 is per unit not per complex. With regard to individual subsidies I cannot answer this question until I take it up with the Director of Subsidies within the Department. There does exist a perception that Provincial Boards tend to favour big group projects rather than individual applications. This certainly needs to be clarified.

The meeting was adjourned.

Appendix 1:
Revised 13/09/99

14/09 Briefing on: Acts passed on Housing matters (Department of Housing)
12/10 Briefing on: Agreement between RSA & Govt. Fed. Rep. Germany - assistance to NHFC (Department of Housing)
19/10 Briefing on: Housing Delivery - Inner City (Department of Housing)
26/10 Briefing on: Role of certain Housing Institutions (Servcon & Nurcha)
02/11 Briefing on: Women in Housing ; People's Housing Process (Department of Housing)
16/11 Consideration of: NCOP Amendments to Rental Housing Bill Department of Housing [If the bill is amended]
23/11 Provincial Visits: Gauteng/ Western Cape
30/11 Briefing on: Incidence of corruption in Housing Dev. (Department of Housing)

Please note that this is a provisional programme. Should you have any suggestions to enrich the programme bring them to the attention of the Committee.

Appendix 2
The White Paper on Housing, 1994, identified the lack of an overall housing strategy and the multiplicity of Housing and development legislation as key constraints.

The government inherited a diversity of housing and development legislation which were based on apartheid ideology. This resulted in a lack of an overall focused housing development strategy and result in a fragmented, poorly focused and inequitable housing funding mechanism.

The Housing Act aims to:
facilitate a sustainable housing development process in which national, provincial and local governments, the business sector, the citizens and permanent residents of the Republic cooperate: progressively realise the right to access adequate housing, as set out in section 26 of the Constitution, 1996.

The key points of the Act are to:
- clearly define the roles and functions of the three spheres of government;
- provide a comprehensive new regulatory framework to enable the effective delivery of housing for the poor and disadvantaged households in South Africa;
- provide for the establishment of a national housing data bank and information system; provide that Provincial and local governments are empowered to administer national housing programmes and provision is made for the financing of such initiatives; make provision for the abolishment of the National Housing Board and to replace it with the South African Housing Development Board;
- oblige the Minister of Housing to phase out the housing subsidies of the previous dispensation within one year of the promulgation of the Act; and
- make provision for the establishment of a National Housing Code to ensure an official basis for the publication of national housing policy and frameworks determined by the Housing Minister.

The Housing Act is an important milestone in moving the country towards a uniform, equitable and sustainable housing development programme.

The housing Act is a product of extensive consultation, negotiation and deliberation with many role players in the housing sector including national, and provincial housing departments, national and provincial housing boards, the private sector, civil society and organised local government.

The Act abolishes all apartheid housing legislation and replaces it with a single Housing Act which reflects the priorities of the current government

Appendix 3

The Constitution (section 26(3)) determines that "no one may be evicted from their home or have their homes demolished without an order of court made after considering all the relevant circumstances" and "no legislation may permit arbitrary evictions". Furthermore, section 25(1) states that "no one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property."

In line with these Constitutional requirements, the "Prevention of Illegal Eviction from and Unlawful Occupation of Land Act" was passed by Parliament in 1998. This Act replaces the unconstitutional and highly contentious "Prevention of Illegal Squatting Act."

The aims of the act are to:
- repeal the unconstitutional "Prevention of Illegal Squatting Act" and replace it with a statute that is in line with the Constitution;
- criminalise unlawful evictions; and
- create a new and fair procedure for the eviction of unlawful occupiers.

The Act seeks to:
- prevent anyone from encouraging people to unlawfully occupy land;
- put a mechanism in place to evict persons who are occupying land unlawfully;
- put urgent proceedings in place for eviction; and
- put procedures for mediation in place.

The Act will strike a balance between the needs of land owners who are faced with illegal land occupations and the poor, homeless and landless who are often victims of evictions through actions over which they have no control. This Act protects both the land owner and those suffering from illegal evictions.

Appendix 4

The National Record of Understanding and the 1994 White Paper on Housing called for the establishment of a central, self-regulatory defects warranty scheme for new houses. This role has been fulfilled by the National Home Builders Registration Council (NHBRC), a non-statutory body since June 1995.

In the past there has been very little help that consumers could turn to for assistance in their fight with a builder. Whilst many builders are good, service orientated companies, the actions of the bad elements has given the building industry a poor reputation.
It was decided to bring forward legislation which can give statutory recognition of the NHBRC. There was an urgent need to remove uncertainty regarding the scope of activities of the NHBRC and to prevent the undermining of a key component of the housing delivery programme.

The aim of the Housing Consumer Protection Measures Act, (Act 95 of 1988), is to regulate the activities of persons who are involved in the home building industry.

The objectives of the Act are to:
- create a national registration board with the powers to regulate the home
building industry effectively;
- provide consumers with protection by creating a deemed home builders warranty that forms part of every agreement for a newly built home;
- establish mechanisms to set minimum national quality standards for all home builders, including the subsidy section;
- enable subsidy housing providers to conclude agreements with the new national regulatory body to monitor construction quality of registered home builders;
- create a national fund or more than one such funds to carry out repairs on new homes, on a non-compulsory basis where home builders have failed to honour their warranty obligations to consumers; and
- make provision for the evolution of consumer protection in the new home building market into a competitive market based on insurance backed warranties.

The Act has been created to provide protection to buyers of new homes against "fly-by-night" builders. This refers mainly to those builders who either build unacceptable or poor quality units or those who refuse to get involved in the rectification of built-in defects in a home.

The Act provides for the statutory establishment of a few regulatory body known as the NHBRC. The NHBRC will cease operations round about June 1999 and a completely new statutory Council will take over.

The new NHBRC will offer home warranties to all aspects of the home building industry. This will cover Beneficiaries of the R15 000 state capital subsidy scheme.

Contracts between the provincial housing development boards and the NHBRC will provide cover whilst significantly reducing administrative processes and costs.

New housing units above the R250 000 selling price will also be covered whether the building is financed by a bank or built for cash. By covering all homes the NHBRC will be able to provide uniform protection to all South Africans at an affordable price.

Appendix 5
The White Paper for the first time establishes a long term strategic framework within which institutional, funding and delivery arrangements for housing can be structured and planned from a stable foundation. The document is the outcome of a negotiation process started in the National Housing Forum approximately 2 years before the April 27 election. The process has been expanded and refined since then between the Central Government and nine new Provincial Governments.

The White Paper represents complete consensus between the 10 Governments on all key policy and strategy issues.

The strategy consists of seven key thrusts which it is believed will together enable the delivery of one million houses in the next five year.

The seven elements are:
1. Stabilising the housing environment
This strategy recognises the severe threat to the Government’s housing plans and the Reconstruction and Development Programme posed by prevailing high levels of non-payment of bonds, rents, and service charges, and by the breakdown in the due process of law in many areas in the country.
It commits Government in an unprecedented campaign to reverse these trends and is supported by a carrot and stick approach towards providing development and housing assistance in exchange for increasing levels of fiscal responsibility by communities.

2. Housing support
The White Paper recognises that South Africa does not have the resources for Government to deliver pre-designed or pre-packaged standard houses to everybody. It is also clear that this is not what communities want.
Housing is recognised as an integrated process during which residential and public environments must be created within which communities can grow and prosper.
To this end, the Government proposes introducing a range of institutional, technical and advisory support structures within communities in partnership with the private sector. It will be their task to pro-actively and in a coordinated manner support an ongoing process of upgrading of both the public and private residential environments. This constitutes a radical departure from the previous dispensation where communities were left to their own devices when dealing with these issues.
Underlying this approach is the recognition of the latent ability and ingenuity of communities, and that scarce housing resources have to be utilised in a manner which has the widest possible impact in South African society and addresses as a first priority access to secure tenure and basic services.

3. Mobilising Credit and Savings
The White Paper recognises that a large segment of South African society which can afford access to credit is currently denied such access.
Following on the landmark agreement between the Government and the Association of Mortgage Lenders in October, the White Paper commits Government to the establishment of the envisaged National Housing Finance Corporation. The document also contains a shortened version of the key points of the AML agreement. It is envisaged that the NHFC will be a facilitating agency in the parastatal sector which will focus its attention on:

* Implementation of the short-term measures envisaged in the agreement with the Banks; and
* In the long term implementing a range of interventions aimed at the
sustained growth and expansion of access to credit for the majority of South Africans both through the conventional financial institutions and the so-called non traditional lenders.

The NHFC will be a wholesale institution which will have as its target market the full range of housing credit providers at the retail level in the private sector, NGO sector and parastatal sector.
In line with international experience and in recognition of the low levels of savings and investment in housing in South Africa, the White Paper commits Government to the introduction of measures to encourage the mobilisation of savings by the population for purposes of housing investment. The first of these measures is the savings linked credit scheme contained in the agreement with the AML

4. Subsidies
The White Paper confirms Government s commitment to the end user capital subsidy programme and to expanding this programme to cater for a wide variety of delivery approaches.

A new, increased subsidy band for the joint spouse income category below R800 per month is introduced. Set at a level of R15 000, it will enable households at the very bottom end of the market to obtain access to at least a basic structure. This measure is introduced in anticipation of an increased budgetary allocation to housing in 1995/96 and is estimated to have fiscal implications of approximately R270m per annum.

Subsidies are envisaged to support project-based developments, individual transactions on new and existing residential properties, social housing schemes, rental housing schemes, and, in certain instances, retrospective subsidisation on previous site and service schemes implemented by Government and the Independent Development Trust.

The White Paper emphasises that the present budgetary allocation to housing is entirely inadequate to support the housing programme envisaged in the RDP and that it will be essential for Government to adjust its priorities in this regard, if it is serious about achieving Its target of one million houses in five years. It also emphasises that one million houses in five years merely takes care of the increase in new households over that period and does not in any way address the existing backlog conservatively estimated at approximately 1.5 million homes. A target of 5% of the national government budget for housing within five years is set, in line with international experience in countries at a similar development stage to South Africa.

5. Institutional Arrangements
The White Paper recognises that the institutional set up for housing and development in general in the country is in a parlous state and constitutes an entirely unsound base upon which to launch the nation's housing and Reconstruction and Development Programmes.

The White Paper outlines a clear demarcation of functions and authorities between the national, provincial and metropolitan I local government levels as well as between the government, parastatal I statutory and private sectors.
A new approach to the composition of statutory advisory and fund allocation bodies is envisaged. It will ensure nominated representatives of various sectors / interest groups in the housing sector serve on these bodies in order to ensure a representative and participative process of policy formulation and fund allocation.
The basis for the rationalisation, consolidation and re-positioning of existing institutional capacities in the housing sector and impacting on or involved in the housing sector is established.

6. Land and services
The White Paper deals extensively with the land issue, while recognising that it falls outside the jurisdiction of the Housing Ministry. The availability and release of land and the process involved in preparing land for development are of such fundamental importance to an effective housing programme that it is impossible to divorce housing policy from the land issue.
The recently published development facilitation bill which should be enacted early in 1995 was formulated jointly by the Departments of Housing and Land Affairs, and constitutes the basis for rapid reform in the land delivery process in support of the government’s housing drive. In addition, the White Paper calls for state owned land to be identified as a major potential land resource in the housing delivery process and proposes a mechanism through which housing will receive the necessary priority.
A nationally consistent approach towards the establishment of service charges and tariffs is proposed. Service standards and levels are left to be determined at the level closest to the consumer.

7. Coordination of Public Funding and Development Activities
The White Paper identifies the lack of coordination of funding and development activities between various arms of Government as one of the key deficiencies contributing to the collapse of housing delivery to the lower end of the market in South Africa. It envisages the establishment of appropriate mechanisms to ensure coordinated planning, budgeting and implementation between the departments of housing, education, health services, safety and security, transport, and water affairs. Housing, as the sector most affected by inadequately coordinated action by the State, is envisaged to take the lead in establishing these mechanisms.

In conclusion, it is clear that none of the seven elements in the new housing policy and strategy proposed in the White Paper can, in isolation, succeed in breaking the housing log jam.
Each of the seven elements are integrated and dependent on the successful implementation of the other elements. In combination these strategic thrusts establish a basis upon which a new housing dispensation for South Africa can be built.
The strategy essentially constitutes a long term partnership between communities, the state, and the private sector aimed at harnessing and mobilising the combined resources of these two sectors in creatively addressing this pressing need in South African society.

Appendix 6
National Housing Policy: Executive Summary: March 1998
To introduce and obtain comment on the National Housing Policy: Supporting the Peoples' Housing Process.

2.1 The White Paper on Housing published on 23 December 1994 indicated that Government's overall approach to the housing challenge is aimed at "mobilising and harnessing the combined resources efforts and initiatives of communities, the private, commercial sector and the state". It sought to do so through the implementation of seven key strategies. One of these strategies is "Supporting the housing process".

2.2 Accordingly my Department after extensive consultation has developed a National Housing Policy: Supporting the Peoples' Housing Process. This policy is now distributed for public comment, before its finalisation.

2.3 The policy intends to encourage and support individuals and communities in their effort to fulfil their own housing needs by assisting them in accessing land, secure tenure, services and technical assistance in a way that leads to the transfer of skills to, and empowerment of the community.

3. PEOPLES' HOUSING PROCESS: Concept and Support
3.1 Concept and Support
The policy measure intends to assist people who wish to enhance their housing subsidies, by building or organising the building of their homes themselves, to access:
- housing subsidies, and
- technical, financial, logistical and administrative support regarding the building of their homes on a basis which is sustainable and affordable.

3.2 Target Group
3.2.1 This policy framework focuses on those poorest of the poor families who in both urban and rural areas, fall within four broad situation categories, namely families who either: have been settled on fully serviced sites with ownership rights;
or have been settled on fully serviced sites on a rental basis and have not yet received ownership rights;
or have settled informally on land and are not yet in possession of any form of tenure rights;
or are without land in the sense that they reside in overcrowded hostels, backyard shacks and any other form of accommodation without secure tenure rights.

3.3 The aim of this policy is to

3.3.1 facilitate access by poor families to subsidies in appropriate ways to support peoples' housing initiatives,

3.3.2 promote the most cost effective use of resources, choice of and trade-off between options,

3.3.3 foster partnerships between all levels of government, civil society, the private sector and other players,

3.3.4 build capacity and skills wherever they are required,

3.4 Institutional Arrangements

3.4.1 Legal Entity Support organisations, which must be legal entities, should be
established to;
- secure housing subsidies for families in the most direct
- facilitate the acquisition of land on the basis of secure tenure; and
- provide technical, financial, logistical and administrative support
to housing subsidy beneficiaries regarding the building of their
homes. Support functions should be carried out in a Housing Support Centre. A group of families or, a community based organisation may form a Legal
Entity itself, contract with a Legal Entity or where a municipality,
organisation or body interested in becoming a Legal Entity takes the
initiative and identifies a group of families interested in participating in a
housing support project it may conclude an agreement with the families
concerned to function as the Legal Entity.

3.4.2 Funding policy measure which will form part of the National Housing
Programme: Housing Subsidy Scheme, is to be implemented utilising funds allocated by the Minister of Housing to provinces for the implementation of national housing programmes. Accordingly Provincial Housing Boards will need to allocate:

* housing subsidies; and

* facilitation and establishment grant funding for the preparation for and establishment of housing support functions. Each MEC has the responsibility to prioritise how much funding should go to the various national housing programmes and sub-programmes, including Supporting the Peoples’ Housing Process and each MEC is accountable to the Provincial Legislature in this regard.

3.4.3 Decision-Making
Decision-making with regard to projects in terms of this policy measure will be assigned to Provincial Housing Boards in accordance with Guidelines for the Peoples' Housing Process to be included as Part 1O of the Housing Subsidy Implementation Manual, once the policy has been finalised.

3.4.4 Monitoring
This policy measure forming part of a national housing programme will be monitored by the Minister of Housing. Accordingly, provincial governments will be required to furnish such reports, returns and other information as the Minister may require.

3.4.5 Provincial and Local Governments
As can be inferred from the foregoing, .provincial governments as well as municipalities, will have vital roles to fulfil in the successful implementation of this policy measure.

3.4.6 The Role of the Peoples' Housing Partnership Trust The Peoples' Housing Partnership Trust (PHP Trust) will drive the implementation of the Support Programme for the People's Housing Process. The United Nations Development Programme (UNDP), the United Nations Commission for Human Settlements (UNCHS) and the United States Agency for International Development (USAID) have expressed interest in providing funding and technical assistance to this programme. Wherever a lack of capacity or skills is identified at provincial or local levels, the Peoples' Housing Partnership Trust (PHP Trust) can be invited to assist, promote and facilitate the establishment of housing support projects. Where required the PHP Trust will provide capacity building and develop the skills required to implement and sustain these support projects.

4.1 A more detailed policy document is available from the Department of
Written policy comments should be, sent to the Department on or before
3OApriI 1998.
Contact person: Mr J F Jacobs
Department of Housing
Telephone no: (012) 421-1493
Fax number: (012) 341-7264


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