Social Housing Bill:Department Of Housing Briefing

NCOP Public Services

05 February 2008
Chairperson: Mr R Tau (Northern Cape; ANC)
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Meeting Summary

The Department of Housing briefed the Committee on the Social Housing Bill. The justification for the Bill included the fact that the rental housing market was dysfunctional and not inclusive of low-income earners. The Bill aimed to provide stability and clarity as well as to entice private investors into the rental housing market. The Bill stipulated which organisations would qualify as Social Housing Institutions and delivery agents. An effort was made to ensure that private investors did not abuse government funding. She also attached a sense of urgency to the Bill, stating that the rental housing market was in dire need of stabilisation.

The Committee was not pleased with the statements around the urgency attached to the Bill. They claimed that if the Bill was urgent then it should have been introduced in the National Council of Provinces (NCOP) as opposed to the National Assembly (NA), since the Committee Members would have go back to their provinces and present the Bill to them. The Committee was also dissatisfied with the pace that the presenter set for the presentation. The absence of legal advisors meant that technical legal terms could not be explained and the Committee would then lack sufficient understanding of the Bill. The Committee decided that, although they appreciated the presentation, another would have to be made, in a different format, that the presenter’s notes should be made available, and the proper legislative processes would be observed. Because of this the Committee concluded that the Bill would likely only be passed in the next term.

Meeting report

Social Housing Bill [B29-2007]: Department of Housing (DOH) briefing
Ms Odette Crofton, Acting Chief Director: Rental Social Housing, DOH,  first placed the Bill into context. The reasons given for developing a Bill around the issue of rental housing included the rapid urbanisation and rapid growth patterns. One- third of low-income renters in metropolitan areas were living in backyard shacks and informal settlements. The poor were struggling to access limited rental opportunities provided by the informal market. There was additional pressure due to the National Credit Act, the change in the age of contractual consent from 21 to18 years old, and the property boom.

The proposed rental strategy for the Community Residential Unit programme was to correct historical problems with public housing and hostels. It included providing a coherent framework for public housing and hostels, and indigent and lower income groups, and affordable formal accommodation for informal tenants. The Social Housing programme was aimed at mobilising the private sector for profit and non-profit sectors. It included cross-subsidisation, mobilising private funders and restructuring objectives.

The Social Housing Policy involved a mixture of government grants, private sector funding and equity. There was a focus on the involvement of the private sector. The definition of social housing was, “A rental or co-operative housing option for low income persons at a level of scale and built form which requires institutionalised management and which is provided by accredited social housing institutions or in accredited social housing projects in designated restructuring zones.”  The delivery agents for social housing included non-profit companies, municipal owned entities and housing co-operatives, all which were considered as Social Housing Institutions (SHI), and profit companies and Public-Private Partnerships (PPP).

The Social Housing Policy introduced three groups of instruments; legislative and regulatory instruments, financial instruments and capacity building instruments. Ms Crofton reiterated that the Bill aimed to regulate the social housing industry and ensure affordable rental housing for those who could not access rental housing on the open market.

Ms Crofton briefly outlined the structure of the Bill. Chapter 1 dealt with terminology and definitions. Chapter 2 explained the roles and responsibilities of the various spheres of government and the National Housing Finance Corporation (NHFC). Chapter 3 established the Social Housing Regulatory Authority (SHRA). Chapter 4 provided the accreditation and functioning of the SHIs. Chapter 5 set out the provisions for the Minister, programmes and the regulations.

Ms Crofton emphasised the urgency of the Bill to provide stability, clarity and directions in the sector.

Discussion
Mr L Van Rooyen (Free State; ANC) noted that on the list of organisations and people consulted regarding the Bill there was no mention of the Department of Land Affairs (DLA). He wanted to know if there was a specific reason why they were not consulted.

Ms Crofton replied that land and housing were cross-cutting issues, and this was not specific to rental housing, but affected all other forms of housing. She did not know why the DLA was not mentioned as having been consulted but she was aware that there were some discussions between DLA and Department of Housing (DoH).

Mr Van Rooyen could not accept the explanation that was given. The Bill impacted on the DLA and he would have assumed that it was obvious that the DLA must be consulted. He felt that the DLA should be consulted if this had not been done.

Mr Van Rooyen wanted to know if the regulations that would come at a later date would go through the public process.

Ms Crofton replied that the regulations would go through the public process and it was indicated in the Bill that they would be gazetted.

Mr Van Rooyen wanted an indication of the financial impact of the Bill during the next Medium
Term Expenditure Framework (MTEF) period.

Ms Crofton replied that the Memorandum reflected the impact on the MTEF and the SHRA. The Social Housing Foundation (SHF) budget would all be carried over.

The Chairperson responded that the Memorandum of the Bill did go into detail about the financial implications.

Mr Van Rooyen wanted to know if the SHF would be incorporated in to the regulatory authority.

Ms Crofton replied that he SHF would be incorporated into the SHRA. The regulatory programme would be developed and that would be the core task of the SHF.

Mr Van Rooyen wanted to know why there was no mention of rural development.

Ms Crofton replied that the Bill did not specifically mention rural or urban development although it was biased towards urban areas. The implementation of the Bill would largely happen in the urban areas. However the Bill was not written so that it excluded rural areas. If there were to be a restructuring zone in the rural area it would be possible to have social housing. It was simply focusing on urban areas because of the way the cities were growing.

Mr M Mzizi (Gauteng; IFP) wanted clarification on the seemingly ambiguous Proposed Rental Strategy as hostels and the indigent seemed similar. He wanted to know how were hostels and indigents identified.

Ms Crofton replied that there were two housing programmes that dealt with rental housing specifically. The social housing programme targeted the lower and middle income group, specifically, R1500 to R7500 per month. It was not typical that social housing would be done in hostels presently. The Community Residential Unit programme (CRU) would be done in hostels and in public stock owned in government. Indigent groups typically earned an income in the nil to R1500 per month bracket. Hence the CRU programme made provision for those groups.

Mr G Krumbock (Kwazulu-Natal; DA) was confused about the reference to the property boom as it was common knowledge that the property market was in a slump. He wanted to know why the Bill was premised on the problems caused by the property boom, when currently the property market was collapsing.

Ms Crofton agreed that the property market was currently in a slump and that did not help the housing sector either. There was a prediction of another property boom towards the end of 2008. Rental housing was adversely affected by both the property boom and slump. In both cases the market was at the point where the cost of managing, purchasing or redeveloping a rental property was high and therefore the cost of rental was high. The rental housing market was a dysfunctional market, because it was benefiting the people with a higher income. People with lower incomes were attaining access. If the market boomed again it would be worse for rentals.

Rev P Moatshe (North West; ANC) asked for the implication for the provinces.

Ms Crofton replied that planning upfront, administering, disbursing and accounting for the funding (which was both government and private sector funding) were critical roles for the provinces. They had to supplement and ensure that the local authorities had the capacity to manage and oversee the programmes. Ensuring that the role players were performing the function allotted to them, and that the project was properly managed and implemented,  was also a critical part of the provinces’ responsibilities.

Rev Moatshe commented that the pace of the presentation was too fast. He did not understand the subject matter of the presentation and requested more clarification. This was the only briefing before the Members had go back to their provinces.

The Chairperson commented that Rev Moatshe had raised an important issue. In the Memorandum of the Bill there was advice by the legal advisors that the Bill be dealt with in terms of Section 76 of the Constitution. The Bill was introduced in the National Assembly, however there was mention of urgency around the Bill. He wanted to know why the Bill was introduced first to the National Assembly when the NCOP had to go to the provinces for consultation.

Mr Mzizi mentioned that in the programming meeting there were other Bills that needed to be dealt with and things needed to move more quickly. It seemed as if the National Assembly were not rushed, yet the National Council of Provinces was always called upon to deal with a Bill urgently.

Ms Crofton replied that because she was not a legal expert she was not able to comment on the process that took place in the Portfolio Committee.  She was aware that the urgency of the Bill was stressed in both the Portfolio and the Select Committees. The urgency was relayed in order to provide stability to the housing sector so that there were not problems and concerns with policies.

Mr Van Rooyen agreed that the presentation was done quickly. He said that it would be difficult for him also to go back to the Province and present the Bill on the basis of what had been put before the Committee. Furthermore he did not think it was fair that the Portfolio Committee on Housing was briefed twice on the Bill, yet the Select Committee only had one briefing.

Ms Crofton apologised for the pace of the presentation. She realised that the Bill was very dense as there was a lot of information to process. She had tried to give the Rental Housing Sector concepts and then move to the Social Housing Policy document. The Bill was derived from this document. Briefing on the Bill alone was too abstract.

Mr Krumbock suggested that the presenter give her notes that accompanied the presentation. These would be more explanatory if they could be considered along with the presentation.

Mr A Watson (Mpumalanga, DA) asked if there was an overlapping of authority between Rental Housing Tribunal and the SHRA. He wanted to know where the tenant who was to be empowered would be referred to.

Mr Brian Moholo, Managing Director: Social Housing Foundation (SHF),  replied that in the past entrepreneurs had indicated that they wanted to build social housing projects purely to access government funding and they had completely disregarded the principles that went along with social housing. There had to be someone between the tenants and the landlords to deal with the issues that might arise. The SHRA would be an institution that would be able to protect government investment. The SHRA would be able to intervene if intervention was required. The SHRA also had to work with the provinces to guide where investment had to occur. The SHRA had to build ongoing capacity.

Mr Mzizi commented that the presentation was not reader-friendly. The dilemma was trying to distinguish between the Rental Housing and the Social Housing policies. He wanted a more explanatory definition that distinguished the two policies.

Mr Moholo replied that the definition of social housing emphasised that the projects were built in a manner that required institutionalised management. When state funds were invested in housing, then the projects had to adhere to certain principles that were outlined in the Social Housing policy.

Mr Mzizi wanted clarification on the cross-subsidisation and how was the process to take place.

Mr Moholo replied that funding was made available for the development of social housing. There were those people that would qualify for the subsidy because they earned within the target group. There were those also, who might earn more, and they could live in the social housing but would pay full rent and not qualify for the subsidy.

Mr Mzizi agreed on the delivery agents for social housing. He wanted to know about the other delivery agents that were mentioned, and where would they fit in the social housing instruments.

Mr Moholo replied that when speaking about profit companies this meant banks and other private sector institutions. The intention was to create and increase capacity within the social housing sector. There was an outline on the way the PPPs were structured.

Mr Mzizi wanted further clarity on leases, and what was the difference between the low and medium income in the context of leases.

Mr Mzizi wanted clarity on accredited social housing institutions. He commented that those institutions that qualified were those that had already benefited from the past. He wanted to know what criteria were being used to encourage participation.

Mr Watson asked if there was a difference between the accredited social housing institutions and the delivery agents. Furthermore he wanted to know how could full profit companies and private enterprises become SHIs if they were not recognised as SHIs at the onset.

Ms Crofton replied that the Bill and the regulator would be regulating SHI. The SHRA would be able to intervene and oversee SHIs, and in most cases they were non-profit entities. However, the accredited projects would be where the for-profit companies and PPPs would be role players. The SHRA would have oversight over the accredited projects.

The Chairperson confirmed that accredited projects were those that were approved by national, provincial and local authorities.

Mr Watson followed up that in the presentation it was stipulated that only accredited SHIs could participate in national social housing. He asked how was it possible that for-profit companies and the PPPs could not become accredited.

Mr Crofton reiterated that in the case of the for-profit companies and the PPPs, only their projects would become accredited. Non-profit companies gained support from both the government and private sector and that would enable the SHRA to have control over the performance of the non-profit company. However, for-profit companies already had funding or could obtain it. The SHRA would then only be able to control the accredited project in order to ensure that the project performed and that the government funding was protected.

Ms B Dlulane (Eastern Cape; ANC) asked about the processes involved in the accreditation of the accredited SHIs.

Mr Moholo replied that accredited SHIs had to comply with requirements and principles as outlined in the policy and the Bill.

Mr V Windvoel (Mpumalanga; ANC) mentioned the current developmental processes regarding hostels, where the majority of residents were indigent and asked what would happen to those processes. 

Mr Moholo replied that the relationship between social housing, hostels and CRU was complementary. The CRU programme targeted those who were earning lower than those who qualified for social housing.

Mr Windvoel asked what was the situation in regard to the current private sector arrangements with social housing. He asked if partnerships were going to be encouraged. 

Ms Dlulane asked about the relationship between the N2 Gateway Project and the Social Housing Bill.

Ms Dlulane asked if the Eastern Cape was included in the consultation process.

Mr Moholo replied that there were several social housing projects in the Eastern Cape.

Ms Dlulane asked that the briefing notes should be given to the Committee.

Ms Dlulane noted that traditional leaders were not consulted as yet, as advised by the legal advisors, and stressed that because of the land involved the matter would affect the traditional leaders.

Ms H Matlanyane (Limpopo; ANC) asked if the indigent people were allowed to have alternative funding or whether they would be forced to approach the NHFC.

Mr Van Rooyen wanted to know if the NHFC was going to set aside money for access to loan funding or if it was going to be demand-driven.

Ms Matlanyane requested that before the regulations were passed and made part of the Bill, these must be placed before the Select Committee so that they could be part of the process.  

Mr Van Rooyen asked if there was any consultation with the South African Local Government Association (SALGA) as the Bill would affect municipalities.

Mr Van Rooyen noted that there was overlapping and asked where was the final authority.

Mr Van Rooyen noted that the regulator had to promote an enabling environment and the National Government had to create an enabling environment. He asked what was the difference between the two instances and was there was not an overlapping here as well.

Mr Van Rooyen asked how people living with disability were going to be accommodated.

Mr Van Rooyen wanted to know who were the non-profit organisations that were mentioned.

Mr Van Rooyen noted that the presentation stipulated that the Public Finance Management Act (PFMA) classification was not applicable. He wanted clarification, since government funds were involved and therefore the PFMA should be applicable.

Mr Van Rooyen referred to the Municipal Rental Stock that the municipalities had to acquire. He wanted further clarity on how it was to be legislated. 

Mr Van Rooyen wanted to know if restructuring zones had already been declared, as the Bill had not been passed yet.

Ms Dlulane was concerned that even though the Bill was considered a matter of urgency, it was not introduced to the NCOP first. This was the house within Parliament that dealt with Section 76 Bills. She understood that State Law Advisors advised the Minister of the processes, but was concerned as there was a six week cycle that the NCOP had to maintain, during which time Members could take the Bill back to their provinces to make their decisions.

Rev Moatshe wanted to know if the Bill was completely new since there were no indications of where the Bill had been amended by the Portfolio Committee.

The Chairperson agreed with Rev Moatshe and noted that it seemed as if it was a new Bill. He noted with concern that there was not a legal representative present at the meeting and that the legal technical questions could not be answered. There was a lot of emphasis on the accountability to the Minister, and not to Parliament, and this lessened the role of Parliament.

Ms Dlulane was also concerned that there were no legal advisors present at the meeting and asked at what stage would the legal advisors be present. Because of the lack of attendance,  several technical legal questions could not be answered. She also commented that the Bill seemed to lack any additions or amendments that were made by the Portfolio Committee. She commented that usually there would be different versions of the Bill resulting from the various stages of it progression through Parliament.

Ms Crofton agreed that the State Law Advisors should have been present at the meeting. The Portfolio Committee did make an amendment, and that version of the Bill should be the version that the Committee had. She would follow up with the State Law Advisors and advise the Committee. She would also get the specific process of the Section 76 Bill.

Mr Moholo explained that South Africa had ten years of social housing experience and experimentation. There were social housing projects in place and lessons to be learned. The SHIs were pioneering and guiding social housing until legislation was in place. The Social Housing Foundation offered their support and expertise in the provinces when the Committee members went to the provinces and required assistance.

The Chairperson was concerned that the absence of the legal advisors meant that the Committee would have to decide whether it would be conducive to the legislative process if Members were to return to their constituencies without having had clarification of technical legal issues. The Committee must act correctly, and it was not desirable to have a Constitutional Court ruling resulting in the Committee having to return to re-assess the Bill. This would fuel the perceptions of inefficiency at the NCOP. The Committee appreciated the presentation, but would have to continue to consult and check whether their procedures were correct. If not they would have to deal with the Bill in the next term. The Committee requested that a further presentation be made, in a simpler format that could be presented to the constituencies. He added that the process had not been exhausted. He said that it was a serious oversight to have allowed that a Bill was presented without the legal advisors being present to clarify any issues.

The Chairperson excused the presenters at this point, and the outstanding questions listed above remained unanswered.

The Chairperson informed Members that he was aware of the programme that had been adopted, but noted that it was not the same one as the Committee had received in December 2007 and January 2008.  The dates clashed with the opening of legislatures and the Committee members would not be able to introduce the Social Housing Bill to their provinces. Furthermore the Committee had realised that there were serious technical problems, and the absence of the Departmental legal advisors and the State Law Advisors had effectively denied Members the opportunity to be properly informed about the Bill. In addition they were not made aware of the amendments made by the Portfolio Committee.

Ms Matlanyane commented that according to the programme there was supposed to be another briefing on the 13 February 2008.

Mr M Sulliman (Programming Whip; ANC) replied that it was obvious that the Committee had not received an actual briefing.  He understood that the Committee Members had to be in their legislatures for the opening. He suggested that they apply their minds to decide what to do about the Bill.

The meeting was adjourned.

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