ATC230509: Report of the Portfolio Committee on Human Settlements on Budget Vote 33: Human Settlements, the revised Strategic Plan for the coming Medium Term Expenditure Framework (MTEF) period and the Annual Performance Plan 2023-24, 9 May 2023

Human Settlements

Report of the Portfolio Committee on Human Settlements on Budget Vote 33: Human Settlements, the revised Strategic Plan for the coming Medium Term Expenditure Framework (MTEF) period and the Annual Performance Plan 2023-24, 9 May 2023.        

 

The Portfolio Committee on Human Settlements (later referred to as the Committee), having considered Budget Vote 33: Human Settlements, the revised strategic plans for the MTEF period and the annual performance plans of the Department of Human Settlements (later referred to as the Department) and its entities, referred to it, reports as follows:

 

1.         Introduction

The mandate of the Department emanates from Section 26 of the South African Constitution, which provides that everyone has the right to have access to adequate housing. The state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realization of this right and no one may be evicted from their home, or have their home demolished, without an order of the court. Furthermore, the Constitution provide the legislative framework for the institutional arrangements used in the development of sustainable human settlements.

 

2.         Policy imperatives

2.1       National Development Plan

Chapter 8 of the NDP focuses on transformation of human settlements and the national space economy. Its human settlements trajectory anticipates that by 2050 South Africa’s human settlements would have transformed into equitable and efficient spaces with citizens living in close proximity to work, and having access to social facilities and essential infrastructure. It also envisages that by 2030, measurable progress towards breaking apartheid spatial patterns would have been made. The Department is therefore responsible for addressing the issue of transformation in the housing sector, and to ensure that the fractured housing and land markets are addressed. The national strategy for spatial transformation is, according to the NDP, guided by the need to:

 

• Respond systemically over time to entrenched spatial patterns across all geographic scales that exacerbate social inequality and economic inefficiency;
• Implement strategically chosen catalytic interventions to achieve spatial transformation in a manner that supports local driven spatial governance;
• Achieve a creative balance between spatial equity, economic competitiveness and environmental sustainability;
• Expand the personal freedoms by providing residents of South Africa with a greater choice of where to live;
• Support individuals, communities and the private sector in engaging with the state on the future of spaces and settlements in which they live and work, while streamlining processes to enable local governments to implement strategic spatial interventions.

 

2.2       Medium Term Strategic Framework (MTSF) 2019-2024

The MTSF 2019 - 2024, as a medium term plan to systemically achieve the overarching vision of the NDP, identified three key, interrelated outcomes to achieve spatial transformation, namely:

• National frameworks and guidance towards coordinated, integrated and cohesive national spatial development;
• Regional-level interventions to unlock opportunities, ensure redress and respond to environmental, risks and vulnerabilities;
• Interventions to ensure integrated service delivery and transformation in all places.

 

In terms of the importance of addressing housing needs, the MTSF notes that South Africa has the largest housing delivery programme in the world, with important and redistributive spin-offs. One of the key concerns, however, is that the form and location of land developments, human settlement projects and informal settlement upgrades do not often respond directly to government’s commitments around spatial intent and transformation.

 

Despite significant efforts to address the issue of spatial inequality, human settlement patterns remain inequitable and dysfunctional across South Africa where the former homeland areas are typically densely settled and where insecure tenure remains a challenge. Housing demand has increased, while household sizes have reduced and urbanisation has rapidly increased. For this reason, the MTSF 2019-2024 is focused on three specific interrelated outcomes related to the human settlements sector specifically, namely:

• Spatial transformation through multi-programme integration in priority development areas;
• Adequate housing and improved quality living environments; and
• Security of tenure.

 

2.3       State-of-the-nation address (SONA) 2023

During the 2023 SONA address, the President referenced human settlements sector in three aspects, namely:

• Infrastructure projects: By January 2023, projects worth R232 billion were under construction and projects worth nearly R4 billion were completed. The completed projects included new human settlements in Gauteng;
• Title deeds: During 2023, steps would be taken to unlock massive value for poor households by expediting the provision of title deeds for subsidized houses. This would include processing the current backlog of title deeds, of over 1 million houses, with an estimated value of 242 billion in assets;
• State-owned land for human settlements: The Department of Public Works and Infrastructure had finalized the transfer of 14 000 hectares of state land for housing.

 

2.4       Performance analysis

The Capital Subsidy Model was in place for more than two decades and new priorities have emerged with the population growing exponentially coupled with changes in household formation. The sector would continue to do more with less using its multi-pronged delivery model, that was:

• Public sector-driven Breaking New Ground (BNG) for beneficiaries in the gap market that earn below R3500 and requires large resources;
• Private sector driven First Home Finance (FHF) for beneficiaries in the gap market that earn between R3500 and R22 000 where the model includes debt, equity, and grants that were provided by the government, and; 
• The hybrid delivery model People’s Housing Process (PHP), which includes programmes that were driven by the private and public sector such as the people housing process, housing cooperatives and informal settlements upgrading.

 

The Department would continue, in the current year to focus on implementing the following MTSF priorities:

• Designated groups;
• Emergency housing;
• Eradication of mud housing;
• Removal of asbestos in houses;
• Blocked projects;
• Eradication of title deeds backlog;
• Provision of land/ serviced sites;
• Upgrading of informal settlements;
• Provision of affordable housing;
• Provision of social and rental housing;
• Provision of socio-economic amenities.

 

To enable the implementation of priorities, the Department approved and gazetted the norms and standards for the rental and would make conscious efforts to finalize the drafting of the macro policy foundation document, create post BNG norms and standards that would be aligned to the latest SANS, responsive to emerging country issues and consolidate these into the national housing and human settlements code.

 

The Department would continue to focus on rolling out of a housing subsidy programme that prioritizes the delivery of serviced stands, post BNG norms and standards that would include water-wise technology, improved engineering services and implement facilitative programmes that contribute to growing South Africa’s economy and create employment. The Department plans to bring stability in the sector by setting up panels, securing additional capacity and finalize the organizational structure to support the implementation of the above priorities.

 

3.         Budget analysis

The overall allocation increased by R1.46 billion, from R33.4 billion in 2022/23 to R34.9 billion in 2023/24, reflecting a real percent change of -0.5%. Programme 2 dominates expenditure (i.e. R23.5 billion), which equated to 67.4% of the total budget for the Department. This was also the only of the five programmes which received an above–inflation increase. Programme experienced a -6.0% real percentage change, the highest of all the programmes. Below is an analysis of the budget allocation and Annual Performance Plan targets for each programme.

 

3.1       Programme 1: Administration

The Corporate Services sub-programme received the largest allocation, to the value of R233,6. million. This represented a nominal increase of 1.43%, but in real terms a -3,3% change. The Departmental Management sub-programme, experienced -15.3% real change from the previous year, while Financial Management changed with -7.2% in real terms.  When taking into the inflationary effect, all five of the sub-programmes experienced negative changes in real terms.

 

3.2       Programme 2: Integration Human Settlements Planning and Development

The Grant Management sub-programme dominated expenditure under this programme, i.e. 98.1%.  Its R23.1 billion allocations for 2023/24 reflected an increase of 6.9% nominally (1.9% in real terms). This is the sub-programme responsible for managing and transferring of   conditional grants to provinces and municipalities for the implementation of housing and human settlements programmes. The Sub-programme Public entity oversight received the second largest allocation at R268,6 million. However, compared to previous years, this reflected a real change of -4.4%.

 

3.3       Programme 3: Informal Settlements

The Grant Management sub-programme receives the largest allocation out of the three sub-programmes, with a total of R9.2 billion. The previous year, its allocation was R9,27 billion. This represents a real percentage change of -5.2%.  Capacity building and sector support sub-programme received the second largest allocation with R74,4 million, reflecting a nominal increase of 1,4%, but -3.4% real change.

 

3.4       Programme 4   : Rental and Social Housing

As part of efforts to improve the functioning of the rental housing market, over the medium term, the Department would focus on increasing the number of social housing units for rental, with the aim of delivering 8 000 units per year. To this end, expenditure on project development for social housing was set to constitute 89.4% (R2.6 billion) of the total expenditure over the medium term. Expenditure was expected to increase at an average annual rate of 4.3%, from R887.4 million in 2022/23 to R1 billion in 2025/26. The Public Entity Oversight sub-programme received the bulk of the allocation under Programme 4. The allocation increased to R922,7 million in 2023/24, representing a real percent change of -0.9%. All three sub-programmes experienced a real percentage decreases.

 

3.4       Programme 5   : Affordable Housing

Programme 5 provides housing finance for the Gap-market, or households that earn too much to qualify for a full housing subsidy but too little to qualify for a mortgage loan. The Finance Linked Individual Subsidy Programme (FLISP) or the First Home Finance (FHF) programme, which is set to disburse 10 405 subsidies over the medium term to first‐time home buyers at a projected cost of R1.6 billion over the MTEF period. As a result, a total expenditure is expected to increase at an average annual rate of 4.7%, from R942.6 million in 2022/23 to R1.1 billion in 2025/26. The Public Entity Oversight sub-programme receives the largest proportion of the allocation under this programme. Its allocation grows from R512,2 million in 2022/23 to R516,8 million currently, representing a real percent change of -3.8%.  The decrease can be observed in the Management for Affordable Housing sub-programme, with a real percent change of 16.6%. The allocation to the sub-programme decreased from R4,86 million in 2022/23, to R 4,2 million in 2023/24.  The following section provides the Departmental Annual targets of 2023/24 Financial Year.

 

4.         Departmental Annual Targets per Branch

4.1 Office of the Director- General

• Percentage compliance with statutory prescripts – 100% compliance with statutory prescripts.
• Percentage implementation of approved Risk Management Implementation Plan - 100% implementation of approved risk management plan.
• Percentage implementation of approved internal audit plan – 100% implementation of approved internal audit plan.
• Percentage execution of approved anti-fraud and corruption implementation plan - 100% implementation of approved Anti-fraud and Corruption Implementation Plan.

 

4.2 Corporate Services

• Percentage implementation of Human Resources implementation plan - 100% implementation of Human Resources implementation plan.
• Percentage implementation of Approved annual ICT Plan - 100% implementation of approved Annual ICT Plan.
• Percentage implementation of approved Communication plan - 100% implementation of approved Communication Plan.
• Digital Transformation Strategy and Implementation Plan Implemented - Signed Service Level Agreement on development of Digital Transformation Strategy and Implementation Plan.

 

4.3 Chief Financial Office

• Percentage compliance with statutory prescripts - 100% compliance with statutory prescripts.
• Human Settlements Grants Framework Approved - 2024/25 Human Settlements Grants Framework Approved.
• Number of quarterly assessments conducted on performance of human settlements grants (HSDG, and ISUPG) - 8 quarterly assessments conducted on performance of each human settlements grant.
• Number of quarterly assessments conducted on performance of human settlements grants (USDG and ISUPG) - 8 quarterly assessments conducted on performance of each human settlements grant.
• Number of reports on monitoring of set aside for the designated groups (USDG and HSDG) - 4 reports on monitoring of set aside for the designated groups.

 

4.4 Research, Policy, Strategy and Planning

• Number of reports on monitoring the development of integrated implementation programmes for PDAs   - 2 reports on monitoring the development of integrated implementation programmes for PDAs.
• Number of reports on monitoring the Human Settlements allocations to PDAs - 2 reports on monitoring the Human Settlements allocations to PDAs.
• Number of reports on monitoring rezoning of land acquired within PDAs during 2014-2019 - 2 reports on monitoring rezoning of land acquired within PDAs during 2014-2019.
• Business plans assessed - Provincial and Metros Business Plans assessed.
• 2019-2024 MTSF reviewed - Review of the 2019-2024 MTSF.
• Draft 2025-2030 MTSF developed - Draft 2025-2030 MTSF developed.
• Number of policy programmes approved - 1 Policy Programme approved.
• Number of policies approved - 1 policy approved: Policy Foundation for Housing and Human Settlements submission for approval.
• Research Agenda approved - Approved Research Agenda.

 

4.5 Entities oversight, Intergovernmental Relations, Monitoring and Evaluation

• Number of reports on monitoring of entities performance - 4 reports on monitoring of entities performance.
• Number of intergovernmental relations programmes implemented - 17 intergovernmental relations programmes implemented.
• Number of reports on monitoring of projects as per approved business plans - 4 Reports on monitoring of projects as per approved business plans.
• Number of evaluation studies completed - 1 Evaluation study completed: Design and Implementation evaluation of the Priority Human Settlements and Housing Development Areas Programme (PHSHDA).

 

4.6 Informal Settlements Upgrading and Emergency Housing

• Number of Provinces and Metros provided with support in the upgrading of informal settlements with permanent engineering services - Support provided to 9 Provinces and 8 Metros in the upgrading of informal settlements with permanent engineering services.
• Emergency housing guidelines developed - Emergency housing guidelines developed.

 

4.7 Affordable, Rental and Social Housing

• Number of reports on the monitoring of Rental Housing Programme - 2 reports on the monitoring of Rental Housing Programme.
• Number of reports on the monitoring of the CRUs programme - 4 reports on the monitoring of the CRUs programme.
• Number of quarterly reports on title deeds registered - 4 Quarterly Reports on title deeds registered.
• Number of reports on monitoring of blocked projects across 9 provinces - 4 reports on monitoring of 320 blocked projects across 9 provinces.
• Number of reports on monitoring the delivery of BNG units - 4 reports on monitoring the delivery of BNG units.
• Number of reports on monitoring the delivery of Serviced sites - 4 reports on monitoring   the delivery of Serviced sites.
• Number of reports on monitoring of households that received financial assistance through FHF (FLISP) - 4 reports on monitoring of households that received financial assistance through FHF.
• Number of reports on the creation of job opportunities - 4 quarterly reports on the creation of job opportunities.
• Number of reports on monitoring the eradication of asbestos roofs - 4 reports on monitoring the eradication of asbestos roofs.
• Number of Provinces provided with support in the eradication of uninhabitable mud houses - 7 Provinces provided with support in the eradication of uninhabitable mud houses.

 

5.         Human Settlements entities budget and annual performance plan

5.1       Housing Development Agency (HDA) Budget 

The agency derives revenue from programme management fees and transfers from the Department. Revenue was expected to increase in line with expenditure. Over the medium term, the agency would continue to focus on assisting provinces and municipalities with the implementation of human settlements programmes and projects. The agency was expected to provide upgrading support to provinces and municipalities for 850 informal settlements. Spending on built environment projects constituted the largest spending item in the budget at 56.4%. Expenditure was expected to increase at an average annual rate of 4%, from R503.7 million in 2022/23 to R566.7 million in 2025/26.

 

5.1.1 Annual Targets for the HDA, 2023/24 Financial Year

5.1.1.1 Administration

• Unqualified audit outcome with no material findings - Unqualified audit outcome.
• Percentage of annual HDA procurement spend, targeted at businesses owned by women - 45% of annual HDA procurement spend, targeted at businesses owned by Women.
• Percentage of annual HDA procurement spend, targeted at businesses owned by youth - 25% of annual HDA procurement spend, targeted at businesses owned by Youth.
• Percentage of annual HDA procurement spend, per financial year, targeted at businesses owned by Persons with disabilities - 7% of annual HDA procurement spend, per financial year, targeted at businesses owned by Persons with disabilities.
• Percentage implementation of the approved internal audit plan - 100% implementation of the approved internal audit plan.
• Percentage Implementation of Anti-fraud and corruption plan - 100% implementation of an anti-fraud and corruption plan.
• Percentage Implementation of the approved risk management plan -  100% Implementation of the approved anti- fraud and Corruption Plan.

 

5.1.1.2 Land Assembly and Priority Development Areas (PDAs)

• Number of integrated implementation programmes for PDAs completed per year – 10 Integrated implementation of programmes for PDAs prepared.
• Number of hectares of well- located land acquired within PDAs – 1000 hectares of well-located acquired within PDAs.
• Number of hectares of land rezoned for Human Settlements development - 550 hectares of land rezoned for Human Settlements development.
• Number of hectares of well-located land acquired and/or released for human settlements development - 1000 hectares of well-located land acquired or released.

 

5.1.1.3 Programme 3: Programme Planning and Design and Regional Coordination and Human Settlements Implementation Support Services

• Number of Informal settlements supported for upgrading to phase 3 of the UISP - 250 informal settlements supported for upgrading between Phase 1 to Phase 3.
• Number of development programme and project plans drafted for funding and implementation - 5 draft project development plans drafted for funding and implementation.
• Number of priority projects provided with implementation support - 6 Priority projects provided with implementation support.
• Number of provinces provided with programme planning and implementation support for the revitalization of distressed mining communities - 6 Provinces provided with programme planning and implementation support for the revitalisation of distressed mining communities.
• Number of Monitoring Reports on the Set Aside for The Designated Groups - 4 of Monitoring Reports on the Set Aside for the Designated Groups Project Funding.
• Number of housing units delivered i.r.o. projects implemented by the HDA - 1386 Housing units delivered i.r.o. projects implemented by the HDA.
• Number of serviced sites delivered i.r.o. projects implemented by HDA - 953 Serviced sites delivered i.r.o. projects implemented by the HDA.
• Number of asbestos roofs Replaced i.r.o. projects managed by the HDA - 1200 Asbestos roofs replaced i.r.o. projects managed by the HDA.
• Number of Temporary Emergency Accommodation managed by the HDA - 3 of Temporary Emergency Accommodation managed by the HDA.
• Number of Title deeds registered - 882 title deeds registered.

 

5.2       Social Housing Regulatory Authority (SHRA) Budget

The entity derives all its revenue through transfers from the Department. Revenue was expected to increase in line with expenditure. However, over the medium term, SHRA would focus on increasing the number of social housing units for rental, with the aim of delivering 8 000 units per year. To this end, expenditure on project development for social housing was set to constitute 89.4% (R2.6 billion) of total expenditure over the medium term. Expenditure was expected to increase at an average annual rate of 4.3%, from R887.4 million in 2022/23 to R1 billion by 2025/26. To this end, expenditure on project development for social housing was set to constitute 89.4% (R2.6 billion) of total expenditure over the medium term. Expenditure was expected to increase at an average annual rate of 4.3%, from R887.4 million in 2022/23 to R1 billion by 2025/26.

 

Overall, the entity’s budget increased with R35,4 million from the previous year, to R922.7 million. This translated to a nominal increase of 4,0%, but when calculating the inflationary effect declines with 0.9% from the previous year. Programme received the largest share of the entity’s budget with an allocation of R826 million.  This was 89.5% of the entity’s total budget. Despite an increase of R34,9 million, Programme 2’s allocation actually declined with 0.5% in real terms. Programme 4 experienced the most significant decline from of all four programmes, i.e. 27.8% nominally (and 31.2% in real terms). Overall, none of the four programmes experienced above inflation increases to its allocations for 2023/24.

 

5.2.1 Annual Targets for the SHRA, 2023/24 Financial Year

5.2.1.1. Programme 1: Administration

• External audit outcome - Unqualified audit opinion with no findings.
• Percentage implementation of the Internal Audit Plan – 100% implementation of the Internal Audit Plan.
• Percentage implementation of the Fraud Prevention Plan – 100% implementation of the Fraud Prevention Plan.
• Percentage implementation of the Risk Management Plan - 100% implementation of the Risk Management Plan.
• Percentage implementation of a Rental Boycott Strategy – 80% implementation of a Rental Boycott Strategy.
• Percentage of SHRA procurement spend on businesses majority-owned by women – 40% of SHRA procurement spend on businesses majority-owned by women.
• Percentage of SHRA procurement spend on businesses majority-owned by youth – 16% of SHRA procurement spend on businesses majority-owned by youth.
• Percentage of SHRA procurement spend on businesses majority-owned by persons living with disabilities -  5% of SHRA procurement spend on businesses majority-owned by persons living with disabilities.

 

5.2.1.2. Programme 2: Compliance, Accreditation and Regulations

• Percentage of the Remedial Action plan implemented -  70% of the Remedial Action plan implemented.
• Number of subsidised housing units' tenancy audits conducted - 3 750 of subsidised housing units' tenancy audits conducted.
• Number of Compliance Monitoring Inspections conducted – 8 of Compliance Monitoring Inspections conducted.
• Number of Building Condition Audits conducted – 10 of Building Condition Audits conducted.
• Number of fully accredited institutions – 10 fully accredited institutions.
• Percentage of projects accredited from other delivery agents that are majority black-owned – 75% of projects accredited from other delivery agents that are majority black-owned.

 

5.2.1.3. Programme 3: Sector Development and Transformation

• Percentage achievement of the SHI Intervention Plan – 80% achievement of the SHI Intervention Plan.
• Percentage achievement of the Social Housing Projects’ Intervention Plan – 75% achievement of the Social Housing Projects’ Intervention Plan.
• Number of municipalities having received support – 3 municipalities supported.
• Number of youth graduates placed – 15 of youth graduates placed.

 

5.2.1.4. Programme 4: Project Development and Funding

• Number of social housing units completed – 3200 of social housing units completed.
• Number of social housing units tenanted – 3200 of social housing units tenanted.
• Percentage expenditure of the approved annual Consolidated Capital Grant cash flow projection – 95% of expenditure of the approved annual Consolidated Capital Grant cash flow projection.
• Percentage of Consolidated Capital Grant awarded to black majority owned enterprises – 75% of Consolidated Capital Grant awarded to black majority owned enterprises.
• Percentage spent by grant recipients on main contractors and professional teams that are from the designated groups – 25% spent by grant recipients on main contractors and professional teams that are from the designated groups.
• Number of job opportunities created through projects implemented – 6 938 of job opportunities created through projects implemented.

 

1.  

CSOS derives its revenue through levies paid by community schemes. Revenue was expected to increase in line with collected levies. The Service would focus on ensuring that 80% of scheme governance documents would be registered and compliant with the legislative framework by 2025/26. To this end, spending on regulation was expected to increase at an average annual rate of 5.6%, from R117.5 million in 2022/23 to R138.6 million by 2025/26. Total expenditure was expected to increase from R431.9 million in 2022/23 to R467.2 million in 2025/26 at an average annual rate of 2.7%. CSOS would incur an operating deficit in 2023/24 as its expenditure plans include spending the surplus funds it generated in 2021/22, for which National Treasury approval has been granted.

 

The CSOS allocation for 2023/24 was R444,1 million. It reflected an increase of 5,3% in nominal terms, but 0,42% in real terms. Programme 1, which is responsible for ensuring that functions that support the core operations are sustainable and implemented effectively, received 64.9% of the overall allocation. However, it was the only of the entity’s programmes that declines in both nominal and real terms. Its R286.4 million allocation was 3.1% nominally less than the previous year. Programme 3: Education and Training, responsible for training and consumer awareness, received the lowest portion of the entity’s overall budget, i.e. 4.8%.  However, its R21,5 million allocation reflected significant growth from the previous year, i.e. 147.1% nominal growth. Programme 2, which provides the core operations, increased by 15.9% nominally from the previous year.

 

5.3.1 Annual Targets for the CSOS, 2023/24 Financial Year

5.3.1.1 Outcome 1: Functional, Efficient and integrated Government

• Percentage of the approved Anti-Fraud and Corruption Implementation Plan implemented – 100% of the approved Anti-Fraud and Corruption Implementation Plan implemented.
• Percentage implementation of the approved risk management plan – 100% implementation of the approved risk management plan.
• Percentage implementation of Internal Audit plan – 100% implementation of Internal Audit plan.
• Number of new transactional sites established (satellite office) – 3 new satellite offices established.

 

5.3.1.2 Outcome 2: Effectively regulated Community Scheme Sector

• Amount of CSOS levy collected – an amount of R408,698,702 collected.
• Percentage of unregistered schemes registered – 25% of unregistered schemes registered.
• Percentage of registered community schemes compliant – 65% of registered community schemes compliant.
• Percentage of quality assured schemes governance documentation – 95% of quality assured schemes governance documentation.
• Percentage of compliance certificates issued on all amended scheme documents – 100% of compliance certificates issued on all amended scheme documents.

 

5.3.1.3 Outcome 3: Effectively Disputes Resolution

• Percentage of disputes assessed within 30 days – 90% of disputes assessed within 30 days.
• Percentage of disputes conciliated within 45 days – 90% of disputes conciliated within 45 days.
• Percentage of disputes adjudicated within 90 days – 90% of disputes adjudicated within 90 days.
• Percentage of adjudication orders quality assured within 7 days – 95% of adjudication orders quality assured within 7 days.

 

5.3.1.4 Outcome 4: Empowered stakeholders 

• Number of training and education sessions conducted for schemes executives and owners – 85 training and education sessions conducted for schemes executives and owners.
• Number of training sessions conducted for adjudicators and conciliators – 16 training sessions conducted for adjudicators and conciliators.
• Number of stakeholder information sessions conducted – 18 stakeholder information sessions conducted.

 

5.3.1.5 Outcome 5: Transformation of community schemes advanced

• Number of previously disadvantaged individuals trained and supported as executive managing agents – 40 previously disadvantaged individuals trained and supported as executive managing agents.
• Percentage of community schemes’ requests for Executive Managing Agents awarded to previously disadvantaged individuals – 90% of community schemes’ requests for Executive Managing Agents awarded to previously disadvantaged individuals.
• Percentage procurement spend on businesses owned by women – 40% of procurement spend on businesses owned by women.
• Percentage procurement spend on businesses owned by Youth – 16% of procurement spend on businesses owned by Youth.
• Percentage procurement spend on businesses owned by persons with disabilities – 5% of procurement spend on businesses owned by persons with disabilities.
• Percentage of annual procurement spend, targeted at businesses owned by Military Veteran – 5% of annual procurement spend, targeted at businesses owned by Military Veteran.

 

1.  

The corporation would focus on increasing affordable housing finance to intermediaries over the medium term. As such, its loan book was expected to increase from R4.5 billion in 2022/23 to R5.9 billion in 2025/26. To fund this growth, the Corporation requested the Minister of Finance’s approval to borrow in terms of section 66(5) of the Public Finance Management Act (1999). The corporation was also mandated to administer the finance‐linked subsidy programme, which is set to disburse 10 405 subsidies over the medium term to first‐time home buyers at a projected cost of R1.6 billion over the MTEF period. As a result, total expenditure was expected to increase at an average annual rate of 4.7 percent, from R942.6 million in 2022/23 to R1.1 billion in 2025/26. The Corporation derives its revenue from interest on loans, income from controlled entities and revenue from rental properties and management fees. Total revenue was expected to increase at an average annual rate of 3.2 per cent, from R1.2 billion in 2022/23 to R1.3 billion in 2025/26.

 

5.4.1 Annual Targets for the NFHC, 2023/24 Financial Year

5.4.1.1 Programme 1: Administration

• Percent implementation of the risk management plan - 100% implementation of the risk management plan.
• Percent procurement spent on businesses owned by persons with disabilities - 5% procurement spent on businesses owned by persons with disabilities.
• Percent spent on businesses owned by Military Veterans - 5% spent on businesses owned by Military Veterans.
• Unqualified audit opinion with no material findings - Unqualified audit opinion with no material findings.
• Number of learners hired into learnership programmes - 10 learners hired into learnership programmes.
• Percentage procurement spent on businesses owned by women - 40% procurement spent on businesses owned by women.
• Percentage procurement spent on businesses owned by youth - 16% procurement spent on businesses owned by youth.
•  Unqualified audit opinion with no material findings -  Unqualified audit opinion with no material findings.
• Number of learners hired into learnership programmes - 10 learners hired into learnership programmes.

 

5.4.1.2 Programme 2: Integrated Human Settlements Planning and Development

• Sign agreements with key stakeholders in the sector to undertake interventions to improve planning, financing, and delivery of affordable housing projects - Sign three agreements.
• Subsidy Housing - Bridging Finance - Disbursements of approved loans of R58 million.

 

5.4.1.3 Programme 4: Rental and Social Housing

• Social Housing Finance - Disbursements of approved loans of R65 million.
• Social Housing Finance - Value of approval of R200 million.
• Private Rental Housing Finance - Value of approval R185 million.

 

5.4.1.4 Programme 5: Affordable Housing

• Number of subsidy applications approved – 4615 of subsidy applications approved.
• Value of approvals – First Home Finance Grant - R300 million First Home Finance Grant approved.
• Value of disbursements – First Home Finance Grant – R240 million disbursed for First Home Finance Grant.
• Number of subsidies disbursed – 3692 subsidies disbursed.
• Amount leveraged from private sector – R1, 760 million leveraged form the private sector.
• Value of consolidated disbursements – affordable housing products – R733 million disbursed- affordable housing products.
• Value of disbursements - Strategic Investments – R61 million disbursed.
• Affordable Housing - Bridging Finance Approval – R456 million Bridging Finance approved.
• Incremental Housing Finance Approval – R208 million incremental Housing Finance approved.
• Affordable Housing -Strategic Investments approved – R99 million approved for Affordable Housing- Strategic investments.
• Value of disbursements targeted towards designated groups – R319 million disbursements targeted towards designated groups.
• Value of disbursements targeted towards B-BBEE compliant companies - Level 4, 3, 2, 1 Contributor – R239 million disbursement targeted towards B-BBEE compliant companies.
• Value of disbursements targeted towards black owned entities – R239 million disbursed towards black owned entities.
• Value of payments to black and designated group owned contractors – R75 million payment to black and designated group owned contractors.
• Number of SMME's appointed on managed programmes – 128 SMME’s appointed on managed programmes.
• Approved implementation plan for an entrepreneur incubator programme targeting residential developers owned by designated groups and black people – Undertake and complete preparatory work and secure approval.

 

5.5 Property Practitioners Regulatory Authority (PPRA) Budget

Over the medium term, the Authority would focus on improving compliance within the sector by inspecting a targeted 920 estate agencies and renewing 211 128 fidelity fund certificates. Spending on compliance constituted a projected 25.8 percent (R157.5 million) of total expenditure, increasing from R49.2 million in 2022/23 to R56.6 million in 2025/26 at an average annual rate of 4.8 percent. Total expenditure was expected to decrease at an average annual rate of 3.8 percent, from R230.3 million in 2022/23 to R204.8 million in 2025/26, as the authority repositions from the old Estate Agency Affairs Board to become a streamlined regulator in the sector. The authority derives its revenue from fees and levies from property practitioners and fees from managing the Property Practitioners Fidelity Fund.

 

5.5.1 Annual Targets for the PPRA, 2023/24 Financial Year

5.5.1.1 Programme 1: Administration

• Unqualified audit opinion with no material findings - Unqualified audit opinion with no material findings.
• Internal Audit Report - 100% implementation of the approved internal audit annual plan.
• Percentage implementation of the approved risk management plan - 100% implementation of the approved risk management plan.
• Percentage implementation of fraud prevention plan - 100% implementation of fraud prevention plan.
• Percentage procurement spent on businesses owned by persons with disabilities -  5% procurement spent on businesses owned by persons with disabilities.
• Percentage procurement spent on businesses owned by military veterans - 5% procurement spent on businesses owned by military veterans.
• Percentage procurement spent on businesses owned by women - 40% procurement spent on businesses owned by women.
• Percentage procurement spent on businesses owned by youth - 16% procurement spent on businesses owned by youth.
• Percentage of consumer queries resolved within 90 days - 85% of consumer queries resolved within 90 days.
• Percentage integration of ERP - 100% implementation of ERP integrated system.

 

5.5.1.2 Programme 2: Licensing

• Number of property practitioners registered on the database of the PPRA per annum - 8 000 new (compliant) property practitioners registered on the database of the PPRA per annum.
• Percentage of all compliant new registrations processed within 30 working days - 100% of all compliant new registrations processed within 30 working days.
• Percentage of compliant renewals processed within 30 working days of payment reconciliation - 85% of compliant renewals processed within 30 working days of payment reconciliation.

 

5.5.1.3 Programme 3: Inspections and Enforcement

• Number of PPA Inspections Conducted per annum - 210 PPA inspections conducted per annum.
• Percentage of completed investigations requiring mediation are mediated within 30 days from date of notice of mediation - 75% of investigations that are completed through mediation.
• Percentage of completed investigations requiring adjudication are adjudicated within 60 days - 100% of adjudicators ‘orders enforced by serving on the respondents.

 

 

5.5.1.4 Programme 4: Education, Professionalization, CPD

• Number of Property Practitioners (Estate Agents) awarded professional designations in the year - 1500 property practitioners (estate agents) awarded professional designations in the year.
• Number of property practitioners fully meeting CPD requirements in the year - 12 000 property practitioners fully meeting CPD requirements in the year.

 

5.5.1.5 Programme 5: Research Centre

• Percentage of approved transformation agenda items researched - 60% of approved transformation agenda items researched.
• Percentage of research report prioritised recommendations implemented - 10% of the research report prioritised recommendations implemented.
• Percentage Implementation of the Consumer Awareness Programme - 100% Implementation of the Consumer Awareness Programme.
• Number of black women principals established through the Principalization Programme - 400 black women principals established through the Principalization Programme.
• Number of principals established through the Principalization Programme - 1000 principals established through the implementation of the Principalization Programme.
• Number of candidate practitioners placed with property industry host employers through the “One Learner - One Property Practitioner” Programme - 500 candidate practitioners placed with property industry host employers through the “One Learner - One Property Practitioner” Programme.

 

5.5.1.6 Programme 6: Property Sector Transformation

• Number of SMMEs owned by historically disadvantaged groups placed through the incubation programme - 25 SMMEs owned by historically disadvantaged groups placed through the incubation programme.

 

5.5.1.7 Programme 7: Transformation Fund

• Percentage of Implementation of the transformation fund strategy - 100 % Implementation of the transformation fund strategy.

 

5.5.1.8 Programme 8: Fidelity Fund

• Percentage of fully compliant claims paid within six months - 100% of fully compliant claims paid within 90 days of lodgement.

 

5.6 National Homebuilders Registration Council (NHBRC) Budget

The Council would continue to focus on improving compliance with building standards by inspecting a targeted 448 749 homes over the MTEF period. Total expenditure was expected to increase from R862.8 million in 2022/23 to R949.3 million in 2025/26 at an average annual rate of 3.2 per cent. The Council generates its revenue through fees for the enrolment of newly constructed homes, the registration and renewal of membership for home builders, and the provision of technical services. Revenue was expected to increase at an average annual rate of 4.4 per cent, from R1.3 billion in 2022/23 to R1.5 billion in 2025/26 as 45 280 home builder memberships are renewed, and 155 420 houses in the subsidy sector and 137 703 houses in the non‐subsidy sector are enrolled to protect consumers against poor workmanship.

 

5.6.1 Annual Targets for the NHBRC, 2023/24 Financial Year

5.6.1.1 Programme 1

• Unqualified audit opinion with material findings – Unqualified audit opinion with no material findings.
• Percentage implementation of the annual internal audit plan - 100% implementation of the annual internal audit plan.
• Percentage implementation of the Anti-Fraud and Corruption plan – 100% implementation of the anti-fraud and corruption plan.
• Percentage implementation of the risk management plan - 100% implementation of the risk management plan.
• Percentage implementation of Communication Plan -  100% implementation of Communication Plan.
• Percentage procurement spent on businesses owned by women - 40% procurement spent on businesses owned by women.
• Percentage procurement spent on businesses owned by youth - 16% procurement spent on businesses owned by youth.
• Percentage procurement spent on businesses owned by people with disabilities - 5% procurement spent on businesses owned by people with disabilities.
• Percentage procurement spent on businesses owned by Military Veterans - 5% procurement spent on businesses owned by Military Veterans.
• Percentage savings on budgeted expenditure - 10% savings on budgeted expenditure.

 

5.6.1.2 Programme 2

• Number of home builders registered – 3 400 home builders registered.
• Number of registrations renewed – 15 950 registrations renewed.
• Number of homes inspected non-subsidy – 28 000 homes inspected non-subsidy.
• Number of homes inspected subsidy - 28000 homes inspected subsidy.
• Percentage of prosecutable matters suspended – 100 of prosecutable matters suspended.
• Percentage of prosecutable matters set down for hearing – 100 of prosecutable matters set down for hearing.
• Percentage of disputes resolved – 100 disputes resolved.
• Number of homebuilders trained – 2 300 homebuilders trained.
• Number of Youth trained – 1 800 Youth trained.
• Number of Women trained – 2 000 Women trained.
• Number of Military Veterans trained – 200 Military Veterans trained.
• Number of people with disabilities trained – 250 people with disabilities trained.
• Number of Technical professionals trained – 750 Technical professionals trained.
• Number of Artisans trained – 650 Artisans trained.

 

5.6.1.3 Programme 3

• Percentage of Enrolment applications approved Subsidy - 100% of enrolment applications approved Subsidy.
• Percentage of enrolment applications approved subsidy projects - 100% of enrolment applications approved subsidy projects.
• Percentage of enrolment applications approved Non –subsidy - 100% of enrolment applications approved non subsidy.
• Evaluation and monitoring of constructed Green First Zero energy model house - Evaluation and monitoring of constructed Green First Zero energy model house.

 

6. Committee observations and recommendations

The Committee, having been briefed by the Department and its entities on its revised strategic plans, annual performance plans and budget, deliberated and made the following observations and recommendations. The Minister must ensure the implementation of these recommendations:

 

6.1 Observation: Noted that according to the Executive Authority statement in the APP of 2022/23, MINMEC agreed, to a number of priorities for the year, including increased issuing of title deeds with specific focus on clearing the pre-1994 stock; eradication of mud houses; digitization of the Beneficiary list; unblocking blocked projects; addressing asbestos roofs; and an increase on serviced sites. This priorities, continued to form part of the current financial year (2023/24). Some of these priorities were not easily traceable or specific in the APP targets and indicators, which makes it difficult to identify and track. For example, there were no clear targets for the number of mud houses to be rectified, or the number of title deeds to be issued, or a deadline for the digitization of the beneficiary list. The Committee welcomed the Departmental prioritization of the three-year plan to unblocking of blocked projects, elimination of asbestos roofs and eradication of mud houses. However, the Committee expressed a concern about the confusion between blocked projects and rectification programme.

Recommendation: Fast- track the unblocking of blocked projects, elimination of asbestos roofs and of mud houses. Ensure that projects that are 80% un-implementable are considered to be blocked. Use the Project Readiness Matrix to determine project readiness or feasibility. Provide a list of blocked projects in the country and a strategy to unblock them the Committee.  The Department must also present the targets for mud houses. This list would also assist individual Members on their oversight initiatives. This list and strategy must be presented to the Committee within 7 days after adoption this report.

 

6.2 Observation:  noted with concern that work in this was slow progress digitization of the housing beneficiary lists, which poses a challenge on rightful beneficiaries. This was because digitization would ensure transparency and accountability. However, the Committee was concerned about the slow progress.

Recommendation: Fast-track the digitization process of housing beneficiary lists. Provide constant feedback to the Committee on progress made. The Department should present work done around the digitization of the lists within 3 months and Report to the Committee quarterly.

 

6.3 Observation: Noted progress made in the filling of vacant posts in the Department and Entities. The Committee also welcomed the finalization of the redeployment of the previous Director General (DG) to the Department of Cooperative Governance and Traditional Affairs. The Committee further noted the resignation of the HDA Chairperson and slow progress in the appointment of SHRA CEO.

Recommendation: Fast-track the appointment of the new DG in order to create stability in the Department. Appoint the new HDA board and PPRA Chairperson to ensure stability and accountability.

 

6.4 Observation: Welcomed the phasing off of the Emergency Housing Grant in order to move towards more cost-effective alternative housing technologies. This was because the Emergency Housing Programme was deemed to be costly to implement. This was also because Provincial Departments and municipalities were not utilizing the grant effectively. The Committee also welcomed the use of Alternative Building Technologies (ABTs) which can be assembled within 7 days.

Recommendation: Ensure that ABTs is communicated to communities to ensure their buy-in and support. Furthermore, ensure that ABTs comply with the South African Bureau of Standards (SABS). Present to the Committee the guidelines use to deal with emergency housing within 2 weeks.

 

6.5 Observation: That the quality of service provided to citizens was still a challenge due to fact that housing was a concurrent function. The Committee also observes a lack of coordination in providing services of the citizens. This also results in poor performance by implementers and lack of accountability.

Recommendation:  Strengthen coordination in all spheres of government. Closely monitor the role of all spheres of government in the housing development. Ensure that dedicated responsibilities are adhered by Provincial and Local Government.

 

6.6 Observation: Concerned about reported cases of selling of government provided houses on social media.

Recommendation: Provide beneficiaries with copies of happy letters that include an explanation of how a government provided house can be sold.

 

6.7 Observation:  Welcome the digitalization of the inspection model to reduce corruption. That monitoring of human settlements projects by the Department was generally poor. This include the invisible role of NHBRC inspectors in ensuring quality of houses provided. Some inspectors were alleged to be taking bribes in order to approve poor workmanship. As a result, some houses had poor flooring and poor building materials. This was prevalent in all provinces. Conversely, inspectors reported to be attacked and killed when doing inspections.

Recommendation: Provide necessary monitoring support to municipalities to ensure that issues in projects are identified and addressed at project inception. Ensure the visibility of NHBRC inspectors in all provinces in the country. Ensure consequence management for NHBRC inspectors who collude with contractors to approve poor workmanship. Conduct lifestyle audits on NHBRC inspectors.  Put measures in place to protect inspectors from being attacked and killed. The model should be presented to the Committee within 3 weeks.

 

6.8 Observation:  Welcome changes in the payment system of contractors. That the bulk of monies would no longer be paid on the completion of foundation phase of housing construction. This would be done to ensure that contractors do finish projects.

Recommendation: Fast-track the changing of the contractor payment system to ensure that contractors do not leave construction work at foundation phase.

 

6.9 Observation: Noted intended changes in subsidy quantum to accommodate inflation.

Recommendation: Changes in the subsidy quantum were welcomed by the Committee. The Committee pleaded with the Department to ensure that the increase of the subsidy quantum should result in improved housing product and contractors should account every sent.

 

6.10 Observation: Noted a policy changes to provide burglar guards for disabled people. This was because there were lot of break-ins in houses owned by people with disability.

Recommendation: Ensure the implementation of this policy change to protect disable people who are vulnerable to crime.

 

6.11 Observation: Welcome a policy change to install solar panels and water tanks for new BNG houses in order to address energy shortages and reduce the reliance on municipalities for water services.

Recommendation: Fast-track the installation of solar panels and water tanks for new BNG houses to ensure that beneficiaries do not solely rely on the power grid and municipal water services. This would also contribute to sustainable human settlements development and environmental protection because of the use of renewable energy sources.

 

6.12 Observation: Concerned about the slow pace of the issuing of title deeds, especially the backlog of the pre-1994 title deeds. This was a concern for the Committee because this was a recurring problem, yet having a title deed present real empowerment of housing beneficiaries. The Department had only addressed 7% of one million title deeds backlog. However, the Committee welcomed the development of a strategy to improve the issuance of title deeds.

Recommendation: Fast-tract the development of the strategy to improve the issuance of title deeds. Present the strategy to the Committee within 5 weeks after the adoption of the report.

 

6.13 Observation: That there was a substantial increase of funds allocated to consultants while internal capacity in the Department was not adequately utilized. This increase was observed in the Upgrading of Informal Settlements Programme.

Recommendation:  Reduce the reliance of the Department on consultants. Use internal capacity in the Department. Use the HDA, as an implementing agent, to assist with the implementation of the Upgrading of Informal Settlements Programme and other technical programmes.

 

6.14 Observation: Noted that there were several reports on housing scamming in country, for example Lufhereng housing project.

Recommendation: Involve the South African Police Service (SAPS) to deal with scamming in all human settlements projects. Ensure consumer education takes place before projects commencement. Involve community structure to identify and report these scammers.

 

6.15 Observation: That illegal sale of RDP or BNG house was a happening at a perpetual rate. This further complicated the title deeds system because of undocumented changes in ownership.

Recommendation: The Department, through the Minister, should make strong statement against the informal sale of RDP or BNG houses.

 

6.16 Observation: That business plans, APPs, and grants of the various spheres were not synchronized.

Recommendation: Enforce the utilization of the District Development Model (DDM) to ensure integrated and coordinated planning in all spheres of government.

 

6.17 Observation: That the NHFC had changed the FLISP to FHF, yet the Department was still refereeing to FLISP. The Committee was also concerned that this change of name might confuse prospective beneficiaries who were used to the FLISP programme.

Recommendation: Ensure alignment of plans of the Department and entities. Ensure that there is adequate education on the name change from FLISP to FHF.

 

6.18 Observation: That Metros such as the City of Johannesburg, Tshwane, and Mangaung had been deliberately not coming to the Committee to account.

Recommendation: Withhold grant funding to the mentioned Metros until they account to the Committee.

 

6.19 Observation: That issues identified by the Auditor General (AG) on Entities were often not followed up by the Department.

Recommendation: Ensure consistent monitoring of the core business of entities and address issues raised by the AG and internal audit.

 

6.20 Observation: Observed that the HDA was not assisting municipalities in the Eastern Cape.

Recommendation: Ensure that the HDA provides assistance to municipalities in the Eastern Cape.

 

6.21 Observation: That the CSOS was not visible in rural areas.

Recommendation: Ensure the visibility of CSOS in rural areas. Conduct public education campaigns on the role of CSOS and report progress to the Committee on quarterly bases.

 

6.22 Observation: That CSOSs did not have a policy on revenue collection.

Recommendation: Ensure that CSOS develops policy on revenue collection.

 

6.23 Observation: That the work of CSOS on community schemes was not understood by communities.

Recommendation: Ensure community education on the role of CSOS.

 

6.24 Observation: That contractors registered with NHBRC often do not get appointed by the provincial departments.

Recommendation: Ensure that contractors registered with NHBRC get appointed by the entity. Department must make sure that only registered contractors get government work.

 

6.25 Observation: That transformation in property sector was still illusive.

Recommendation: Ensure CSOS and SHRA work together to foster transformation in the property sector. Use Transformation Fund to foster transformation.

 

6.26 Observation: That there were several rental boycotts that resulted in some social houses not being maintained.

Recommendation: Ensure that SHRA develops measures to deal with rental boycotts. People willing and able to pay rent should be considered for social housing.

 

 

Report to be considered.