A New Housing Policy and Strategy
for South Africa
2. Housing and the Economy
2.2 Macro-economic Performance
3. The Current Housing Context
3.1 Statistical Profile of Housing in South
3.2 Existing Housing Conditions in South
3.3 Existing Constraints to Resolving South
Africa's Housing crisis
3.4 Opportunities Prevalent in the Housing
3.5 Recent & Current Policy Development
Processes in Housing
4. Proposed National Housing Strategy
4.2 National Housing Vision
4.3 National Housing Goal
4.4 Basic Points of Departure
4.5 Underlying Policy Approaches and
4.6 Overall Approach to Ensuring Housing
5. Key Substantive Appoaches and
5.1 Stabilising the Housing Environment
5.2 Institutional Arrangements
5.6 Housing Support
5.7 Land and the Housing Development Process
5.8 Infrastructure, Service Standards and
Housing the Nation...
...is one of the greatest challenges facing the
Government of National Unity. The extent of the challenge derives not only from the
enormous size of the housing backlog and the desperation and impatience of the homeless,
but stems also from the extremely complicated bureaucratic, administrative, financial and
institutional framework inherited from the previous government.
This White Paper marks the beginning of a process. For the
first time in its history, South Africa now has a policy framework for all of its
citizens. The approach adopted has been the search for the creation of an enabling
environment, and not for the publication of a new set of rules. It aims to contribute to
the certainty required by the market, as well as give the Provincial and Local Governments
their capacity to fulfil their Constitu- tional obligations.
Throughout the document, a partnership between the various
tiers of government, the private sector and the communities is envisaged. This is seen as
a fundamental prerequisite for the sustained delivery of housing at a level unprecedented
in the history of this country. It requires all parties not only to argue for their
rights, but also to accept their respective responsibilities.
One of the greatest initial challenges facing all role
players is the creation of a public environment conducive to attracting the necessary
private investment, both of the household as well as that of the institutions. Our
collective success in achieving this productive climate will be the essential foundation
for removing the blight of homelessness - one of the most visible and destructive legacies
of the past. Success in meeting the housing challenge will be one of the cornerstones of
rebuilding our social structures and regenerating the economy.
This White Paper also marks the end of a process. From its
inception in 1992, the National Housing Forum has played a seminal role in creating the
conditions necessary for a national consensus in housing, most visibly evident at the
National Housing Summit in Botshabelo on the 27~ October 1994. Out of this consensus, the
people of South Africa now have the task of harnessing the skills, resources and energy
that the nation has in abundance, and directing it to the task at hand.
We believe that of all of our resources, nothing compares
with the latent energy of the people. The housing programme must be designed to unleash
that energy, not only to get the houses onto the ground, but also to give meaning to the
notion of a people centred development.
The time for policy debate is now past - the time for
delivery has arrived.
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2. Housing and the Economy
This chapter analyses the housing sector within the context
of the macro-economy.
In order to assess the relationship between the housing
sector and the macro-economy in South Africa for the purposes of formu- lating housing
policy, it is necessary to define the general economic context in which that policy will
The analysis of the intersection of the housing sector with
the broader economy can be desegregated into four interrelated areas:
- Real side linkages: Real linkages include the effects of
housing policy on such macro-economic variables as output, employment, income,
consumption, savings and investment, prices, inflation, and the balance of payments;
- financial linkages: Financial linkages deal with the
relationship between the financial sector - in particular formal and informal institutions
providing housing finance - and the demand for, and supply of, housing;
- fiscal linkages: Fiscal linkages cover the contribution of
government to the supply of housing through tax and subsidy policy; and
- socio-economic linkages: Housing policy, through the quantum
and quality of housing delivered impact on socio-political stability, productivity and
attitudes and behaviour.
2.2 Macro-economic Performance
2.2.1 Economic Growth
Growth in the Gross Domestic Product (GDP) has shown a
cyclical decline over the past three decades, with the average annual growth rate of the
GDP falling below the annual population growth rate. This has resulted in a decrease in
real per capita income.
2.2.2 The Distribution of Income
In South Africa, the effect of previous racially-based
policies has left the distribution of income remains substantially skewed, prompting
powerful arguments in favour of economic redistribution. The trend towards equalisation
needs to be accelerated.
An increased income to lower-income groups could have a
major impact on the housing sector by converting latent demand for housing into effective
Evidence indicates that while low-income groups have more
restricted savings capacity than higher income groups, their sav- ings are more directly
targeted towards specific needs, such as education and housing.
South Africa is characterised by large scale unemployment
in the formal sector of the economy. The increasing growth rate of the economically active
population in conjunction with a declining or stagnant rate of growth of GDP, implies that
the level of unemployment is set to increase still further. The high level of
unemployment, coupled with the declining levels of per capita GDP, has a negative effect
on demand for and investment in housing and diminishes Government's resource ability to
assist the poor and unemployed. A solution to this problem is fundamental to a sustainable
solution for the housing problem.
At the same time, it is equally apparent that the housing
sector has a potentially enormous role to play in the revitalisation of the South African
economy. This point is underlined by the very high direct and indirect economic multiplier
effect of housing production. In this regard, the closest possible linkage between the
housing and electrification programmes should be sought as one of the primary approaches
to satisfying basic needs as well as providing a sound basis for job creation and economic
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Low levels of growth and income are associated with low
levels of investment. In South Africa, the low level of economic growth is not attributed
solely to the low general level of investment, but also to the fact that the productivity
of capital has declined.
In summary, however, the low level of Gross Domestic Fixed
Investment (GDFI) of which housing is a component - means that as the economy begins to
grow again, many sectors will be competing for scarce investment funds.
The aggregate level of personal, corporate and government
savings as a percentage of GDP has shown a declining trend over the last decade. The
decline in personal propensity to save has occurred as falling per capita income has
pushed up the consumption: savings ratio in disposable income.
At the same time, personal savings have shifted towards
longer-term, contractual savings, influencing the type of investment financed by these
savings. This shift, together with the low level of personal saving, has reduced the
availability of savings for investment in housing, especially within the banking (mortgage
In summary, in order to increase the level of housing
investment it is first necessary to increase the level of personal savings by increasing
the level of disposable income, and secondly, to redirect savings towards mortgage lending
2.2.6 The Fiscal Deficit
In recent years the fiscal deficit has grown rapidly,
despite government efforts to maintain the deficit at around 3% of GDP, in keeping with
International Monetary Fund guidelines. The current size of the deficit (8 % of GDP)
places serious constraints on economic development.
The greatly expanded housing delivery programme to meet the
Reconstruction and Development Programme target of 1,000,000 houses in five years, will
necessitate substantially increased fiscal spending on housing. The currently accepted
five year targets cannot be achieved on the current housing allocation within the national
budget. The size of the budget deficit, however, implies that this additional funding will
have to come either from an expansion of the tax base, or from a reallocation of current
funds among budget categories. The scope for such reallocations is limited, placing
constraints on the level of financial assistance possible through subsidies.
South Africa experienced two-digit inflation over the last
20 years excluding 1993 when the rate dropped to a single figure. The level of inflation
is of key importance when assessing the viability of a mass housing programme, as it is
necessary to determine whether a rapid increase in supply will lead to an increase in the
price of housing. This is of particular concern, as the rate of inflation in the
construction and building materials sectors has consistently exceeded the consumer price
Although studies show that the manufacturing sector is
operating well below full capacity at present this, in itself, is too broad a category.
Inflationary implications of a mass housing programme, which on preliminary analysis
appear to be significant, will require specific monitoring and attention from government.
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2.2.8 The Balance of Payments
Since the mid-1980s, South Africa has run a surplus on the
current account of the balance of payments (BOP). This has been necessary to offset the
persistent deficit on the capital account, caused firstly by financial sanctions which
blocked access to foreign loans, and secondly, by the need to repay existing debt
according to a strict debt servicing timetable.
Current trends suggest that the BOP constraint will
increase in the short term.
2.2.9 Policy Implications
In conclusion, a broad economic policy framework which
facilitates a significant increase in the delivery of housing, must address the following
- a higher rate of economic growth and, in particular, rising
and more equitably distributed real per capita income;
- an increase in the level of employment; greater incentives
- reduction in government dissaving; and
- effective containment of the rate of inflation (especially
in construction prices).
These factors, in combination, serve to create an
environment conducive to savings for, and investment in housing, and which, in turn, will
increase the likelihood that specific housing policy will achieve its objectives.
In light of these facts, Government has taken a policy
decision to increasingly promote a savings-based approach to housing credit. This will
have the effect of mobilising higher levels of investment from the private sector,
particularly from the contractual savings industry. It should, however, be recognised that
this is a long-term policy approach, the effects of which will become more perceptible
3. The Current Housing
Presently, there is no comprehensive source of information
on housing. Consequently, the statistical information given in this section must be seen
as indicative only. Work is already under way to develop a comprehensive Housing and
Services Information System, which will allow a much more detailed overview of housing
conditions in South Africa.
In the absence of generally endorsed, comprehensive housing
information, this chapter sets out to, in quantified terms, as far as this is possible;
- Define the statistical profile of housing in SA;
- describe existing housing conditions in SA;
- identify existing constraints to resolving the housing
crisis in the country;
- identify opportunities prevalent in the housing environment;
- summarise recent and current policy development processes
(at a national level).
3.1 Statistical Profile of Housing in
3.1.1 Demographic profile of South Africa (1995)
South Africa has a rapidly increasing and urbanising
society but population growth will result in a numerically stable rural population.
Coupled to this is a large existing and increasing housing backlog, due to very low rates
of formal housing provision.
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(a) Population Size and Population Growth Rate (1995)
South Africa's population is projected to be almost 42.8
million in 1995. The projected average annual growth rate of 2.27% per annum between 1995
and 2000 will increase the total population to approximately 47.4 million by 2000. This
implies an average increase of approximately one million people per annum over this
(b) Number of Households (1995)
There will be an estimated 8.3 million households in South
Africa in 1995. The average household size nationwide is 4.97 people, and it is estimated
that there are approximately 2.0 million single people. Given the projected rate of
population growth, an average of 200,000 new households will be formed annually between
1995 and 2000. The phenomena of extended households and circulatory migration further add
to the complexity of dealing with the housing issue.
(c) Urbanisation Rate (1995)
It is estimated that over 28.0 million people (66%) of
South Africa's population are functionally urbanised. This implies that approximately 14.5
million people (34% of the total population) reside in rural areas, many of whom will
spend part of their working lives in the urban areas.
3.1.2 Income Profiles (1995)
The low incomes earned by many South Africans are a major
consideration in the formulation of future housing strategy. Table 1 outlines the
proportion of households falling into certain income categories.
TABLE 1:Projected monthly household income distribution
No Income Category Percentage Number of Households
1 R 0 - R 800 39.7% 3.30m
2 R 800 - R1,500 29.0% 2.41m
3 R 1,500 - R2,500 11.8% 0.98m
4 R 2,500 - R3,500 5.6% 0.46m
5 R >3,5001 13.9% 1.15m
TOTAL 100.0% 8.3m
3.1.3 Living Conditions, Existing Housing Stock and Rate
A relatively small formal housing stock, low and
progressively decreasing rates of formal and informal housing delivery in South Africa
have resulted in a massive increase in the number of households forced to seek
accommodation in informal settlements, backyard shacks and in overcrowded conditions in
existing formal housing.
(a) Urban Formal Housing
Approximately 61% of all urban households live in formal
housing or share formal housing with other families. The total formal housing stock in
South Africa is estimated to be 3.4 million units. This includes formal houses, flats,
townhouses and retirement homes.
Formal housing provision for low-income households (houses
costing below R45,000) is estimated to have decreased to under
+-20,000 units during the 1993/94 financial year, from
levels of around 45,000 in 1989/1990.
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(b) Urban Informal Housing
Approximately 1.5 million urban informal housing units
exist in South Africa at present. These include around 620,000 serviced sites delivered by
the old Provincial Authorities and through the Independent Development Trust's (IDT)
Capital Subsidy Programme, as well as almost 100,000 unused (sterilised) serviced sites.
Delivery of serviced sites through the IDT's Capital Subsidy Scheme and by the four (old)
Provincial Authorities is estimated to have reached levels in excess of 120,000 per annum
over the last three years, but has declined this year.
An estimated 5.2% of all households presently reside in
private sector, grey sector4 and public sector hostel accommodation. No new hostel
accommodation has been constructed over the last five years. Approximately one third of
all public sector hostels (58 in all) housing approximately 100,000 people have been or
are in the process of being upgraded.
(d) Squatter Housing
Approximately 13.5% of all households +-(1,06 million) live
in squatter housing nationwide, mostly in free-standing squatter settlements on the
periphery of cities and towns and in the back yards of formal houses.
Low rates of formal housing delivery coupled with high
rates of new household formation have resulted in a massive growth in the number of people
housed in squatter housing.
This form of housing remains the prevalent means through
which urban households are accessing shelter in South Africa at present. It is estimated
that approximately 150,000 new households per annum house themselves in this way. The
recent rapid increase in the number of land invasions is a further indication of this. In
the short-term particularly, policy responses from all tiers of Government will have to be
pro-actively responsive to this fact.
(e) Rural Housing
Two thirds of the 17.1 million people estimated to live
under the poverty datum line (PDL) live in the rural areas. Of the 14.5 million people
estimated to live in the rural areas, the far greater part reside outside the commercial
farming areas. There is a mix of both formal and informal house structures but what they
generally share in common is inadequate access to potable water and sanitation, and a
general insecurity of tenure.
(f) Farm worker Housing
The estimates on Farm worker households vary considerably
between one to one and a half million households. Since 1990 farm owners received
subsidies towards the building of 20,140 approved Farm worker residences. Farm workers do
not have security of tenure, and are therefore reluctant to put earnings into housing.
Consequently, the living conditions of Farm workers are among the worst in the country
especially the hostel-type accommodation for seasonal workers.
3.1.4 Access to Basic Services
Many people in South Africa do not have access to basic
services, such as potable water, sanitation systems and electricity. Furthermore, many
neighbourhoods are inadequately supplied with social and cultural amenities.
(a) Water Supply
Approximately one quarter of all functionally urban
households in South Africa do not have access to a piped potable water supply (South
African Labour Development and Research Unit, 1994).
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An estimated 48% of all households do not have access to
flush toilets or ventilated improved pit latrines, whilst 16% of all households have no
access to any type of sanitation system (SALDRU, 1994). An estimated 85% of rural
households have some form of sanitation system whereas an estimated 49% of Farm workers
are reliant on the veld for this purpose.
It is estimated that 46.5% of all households are not linked
to the electricity supply grid in South Africa (SALDRU, 1994).
(d) Socio-cultural Amenities
Although no accurate statistics exist, many households do
not have access to socio-cultural amenities within their neighbourhoods, such as schools,
health care facilities, sports facilities, cultural and community centres, etc. Most
informally housed people have poor access to such facilities, whilst many formal housing
areas are also poorly served.
In undertaking its new housing programme, the Government
will strive to eliminate previous approaches which effectively separated the provision of
housing stock from other services, be they physical or social. The massive damaging
effects of this illogical and fragmented policy approach are physically reflected in our
urban and rural areas, and socially reflected in the dislocation of our society.
A housing programme cannot be limited to housing, but needs
to be promoted in such a manner as to give meaning to the goal of creating viable
communities. This simple and self-evident Statement will necessitate the most fundamental
and far-reaching conceptual changes for all those involved in the housing delivery
process, and constitutes one of the primary challenges in effecting the Government's
Reconstruction and Development Programme.
3.2 Existing Housing Conditions in South
3.2.1 Present Housing Backlog
It is estimated that the urban housing backlog in 1995 will
be approximately 1.5 million units. The consequences of this backlog are physically
reflected in overcrowding, squatter settlements and increasing land invasions in urban
areas, and generally by the poor access to services in rural areas. Socially and
politically, this backlog gives daily impetus to individual and communal insecurity and
frustration, and contributes significantly to the high levels of criminality and
instability prevalent in many communities in South Africa.
Coupled to this housing shortfall are:
- An estimated 720,000 serviced sites in the urban areas that
will require upgrading to meet minimum standards of accommodation;
- a large number of rural houses that lack access to basic
- approximately 450,000 people living in existing public,
private and grey sector hostel accommodation that requires upgrading.
Due to the high rates of population growth and low rates of
housing provision, it is estimated that the housing backlog is presently increasing at a
rate of around 178,000 units per annum.
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3.2.2 Conditions of Tenure
Many South Africans do not have adequate tenurial security
over their homes:
- Approximately 58% of all households (4.8 million households)
have secure tenure (ownership, leasehold or formal rental contracts) over their
- an estimated 9% of all households (780,000 households) live
under traditional, informal / inferior and/or officially unrecognised tenure arrangements
in predominantly rural areas; and
- an additional estimated 18% of all households (1.5 million
households or 7.4 million people) are forced to live in squatter settlements, backyard
shacks or in over-crowded conditions in existing formal housing in urban areas, with no
formal tenure rights over their accommodation.
This pattern of insecure tenure is undoubtedly one of the
salient features and causes of the housing crisis in South Africa.
One of the most significant and short-term interventions
required of the Government will be to provide the widest range of options for the rapid
attainment of secure tenure. As an invisible intervention, it is likely to have a highly
significant and positive impact on the propensity of individuals and communities to
commence with the process of investing in their own housing conditions, no matter how
modest they may be at the beginning.
3.3 Existing Constraints to Resolving
South Africa's Housing Crisis
Numerous constraints to housing delivery still remain.
During the formative stages of policy development, extensive analyses of the problems
facing housing in South Africa were undertaken.
This section summarises some of the key constraints and
problems that need to be addressed by new housing policy and strategy in South Africa.
3.3.1 Scale of the Housing Problem
The large scale of the housing and services backlog, and
the rapid growth in housing demand represent a mammoth ask for future housing policy.
Coupled to the scale of the problem are other key constraints that need to be addressed:
- Geographic disparities: large disparities in housing
conditions exist between rural and urban areas, different urban areas as well as between
different provinces; and
- low-incomes: low-incomes of large proportions of South
Africa's population imply that many people are unable to afford adequate housing using
their own financial resources alone.
3.3.2 Structure of South Africa's Human Settlements
South Africa's history has produced a wasteful settlement
structure that has inherent to it specific constraints that need to be overcome:
- Concentrated need: high rates of urbanisation have
concentrated housing needs in urban areas;
- inefficient and inequitable cities: the geographic
segmentation of living areas according to race and class, urban sprawl, and disparate
levels of service provision and access to amenities in different areas make South Africa's
cities very inequitable; inefficient and relatively expensive to manage and maintain; and
- dispersed rural settlement structure: the dispersed nature
of many rural settlements hamper servicing and make access to socio-cultural amenities
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3.3.3 Institutional Framework
The past institutional framework governing housing has
resulted in numerous constraints to housing delivery in South Africa:
- Duplication of housing institutions and funding mechanisms:
fragmentation of the housing function racially (between the three previous own affairs
administrations and the Department of Housing) and geographically (with the TBVC States
and homeland areas having jurisdiction for housing in their areas) has resulted in a large
amount of overlap, duplication and confusion within and between housing institutions which
results in significant inefficiencies and wastage;
- inability to carry out responsibilities: many authorities
have been inadequately resourced and politically unable to undertake certain
responsibilities, which has resulted in delays to the housing development process and a
virtual collapse in the public environment and public administration, in many areas; and
- local government transition: the slow process of local
government transition is already resulting in significant delays to the housing process.
However, new legislation and procedures are being developed and the problems associated
with the collapse of local government in many areas under the previous dispensation are
being addressed. Because of the mutually reinforcing or potentially destructive
relationship between the housing process and the local government process, a high level of
policy-coordination will be essential between the relevant national and provincial
3.3.4 Policy Framework
Apart from duplicated and inequitable policy approaches for
different race groups, the housing policy framework in South Africa suffers from the
following other key constraints:
- Lack of overall housing strategy: inadequate definition of
roles and responsibilities of all role players in the housing sector, as well as the lack
of a coherent overall housing strategy have contributed to the present confusion and
breakdown in delivery. Specific areas of concern include the exclusion of rural housing
needs from the mainstream of housing policy approaches, as well as the continued
marginalisation of workers and families effectively trapped within the hostels, especially
those within the public sector;
- multiplicity of legislation: there is multiplicity and
duplication of legislation governing housing, land and services.
3.3.5 End-User Finance and Subsidies
Constraints in the structure and availability of end-user
finance for housing and housing subsidies have exacerbated the housing problem:
- Poorly focused use of housing funds: statutory housing funds
have been used for diverse purposes (such as funding for bulk infrastructure, community
facilities, interest rate and rental subsidies), which has resulted in diluted, dispersed
and inadequate impact of State expenditure;
- duplicated and poorly targeted subsidies: subsidy systems
have been duplicated, racially segmented, poorly targeted at poor households and often
inadequately funded and largely unsuccessful in mobilising significant levels of non-State
- lack of end-user finance: the unavailability of end-user
finance, especially for low-income households (due to a complicated set of constraints
including the lack of appropriate retail lending capacity as well as the reluctance of
formal financial institutions to lend in certain areas and to certain income groups)
impedes the ability of many households to access adequate housing, even though they may be
able to afford it.
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3.3.6 Land and Planning Issues
The historical and existing patterns of land use and
allocation, as well as the legislative and policy framework associated with land, provides
an immense challenge and constraint. A fundamentally different approach will be required
to make the housing programme a sustainable reality. However, the impact will have to
reach far beyond purely legal and institutional matters, which Government can rectify over
A wholly new approach to land use and planning is required,
impacting both on the professions and the communities. Even today, South Africans tend to
view land as an infinite and cheap resource, whereas the opposite is generally true. The
country's extremely wasteful approach to land will have to change, allowing for higher
densities and innovation in its use. A different approach to land use not only promises
the possibility of social cohesion, but can also have a dramatic and beneficial impact on
costs and the efficiency of other resource utilisation such as energy and water.
The inability and unwillingness to release sufficient
suitable land for housing continues to be a constraint to timeous housing delivery:
- Lack of coherent policy on land: no clear outline of
responsibilities for the identification, assembly, planning and release of land for
low-income housing exists, and inconsistent positions exist between different government
departments and tiers of government;
- land identification: previous racial zoning practises,
reluctance of certain authorities to accept responsibility for low-income housing,
resistance of many existing communities and various legislative constraints have impeded
the identification of sufficient, suitable land for low-income housing;
- constraints to land assembly: due to legislative controls
and the fact that land was previously assembled according to ability to pay rather than
need, insufficient land has been assembled for low-income housing;
- land planning: present planning legislation and approaches
are burdensome, inappropriate in the South African context and resource-intensive;
- land invasions: increases in informal land invasions hamper
efforts to timeously release adequate, suitable land for human settlement in a planned
manner, and may result in certain people attempting to jump the housing / subsidy queue;
- land title: many different tenure arrangements (many of
which are not officially recognised) complicates the registration of secure tenure.
Furthermore, notwithstanding the sophistication of South Africa's land registration
system, most citizens are forced to acquire accommodation outside this formal system.
3.3.7 The Housing Construction Sector
The building materials supply, building and civil sector
also face significant constraints:
- Inadequate development framework: the lack of identified
land, poor access to bulk infrastructure networks and confused and lengthy planning
procedures hamper developers' ability to undertake housing development expeditiously;
- limited capacity: at present, South Africa's construction
sector and building materials supply industry are emerging from an economic recession and
production slump: significant capacity will have to be built to enable it to deliver the
number of houses required: competition from other development programmes will further
dilute this capacity. Certainty around the future housing policy and strategy to be
adopted by Government has become essential to initiate the necessary sustained capacity
growth and mobilisation, and to release the job creation and employment potential latent
within this sector. This will most markedly be felt within the marginalised sector of
small and largely black builders, through whom a great deal of the challenge should be
- potential bottlenecks: significant potential bottlenecks
exist in certain sub-sectors of the construction and building materials supply industries:
the lack of basic and managerial skills and building material production and supply
constraints are but two examples;
- incompatibility of demand and supply: geographic
distribution of demand does not match present location of construction capacity and
building materials suppliers;
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3.3.8 Sociological Issues
Many social features of South African society pose
important constraints and challenges to future housing policy:
- High expectations: the high expectations of many people from
a new democratic order have to be tempered by fiscal and practical realism, if this is not
to become a major constraint to housing development in South Africa;
- crime and violence: continuing high levels of crime and
violence often hamper or derail development processes;
- lack of consumer protection: inadequate protection for
consumers against fraudulent and exploitative practices and behaviour by suppliers of
housing products and services, currently characterises the housing environment
- poor consumer education: low levels of consumer education
increase misunderstanding of developmental and housing issues and the number of
unscrupulous operators in the housing environment
- perceptions of housing: many households still have a limited
view of housing, and have not realised its full potential as a means of increasing equity
and security. While this is undoubtedly partly a function of the backlog itself, increased
housing production will provide an opportunity for the creation of a viable secondary
- non-payment: non-payment for services constrains the
long-term viability of the public environment and sustained housing production, as well as
limiting the amount of resources available for new housing provision. Linked to the
breakdown in law and order and the due process of civil and criminal law in many areas,
private housing finance has effectively been withdrawn from large sectors of South African
- special needs housing: prevalent social problems in South
Africa have increased the need for special needs housing, such as old age homes, homeless
shelters and frail care facilities; and
- other important sociological considerations: specific
sociological factors complicate the ability of housing policy to reach all targets, such
- Circular migration and dual households;
- hostel accommodation;
- the prevalence of single (often female-headed) households;
- cultural and legal impediments to access for women to
- traditional tenure systems.
3.3.9 Economic Issues
A number of factors militate against a massive increase in
effective demand for, and supply of housing:
- A low rate of growth;
- declining per capita income;
- a highly unequal distribution of income which penalises
- mass unemployment;
- low levels of gross domestic investment and fixed capital
- declining personal domestic savings;
- a high consumption: savings ratio among low-income groups;
- a high level of government dissaving;
- persistent inflation; and
- a persistent balance of payments constraint.
All of the constraints above are able to only provide a
brief sketch of the scope and extent of the challenge. However, all of them are dwarfed by
the single most significant constraint to the housing delivery process, that of
In policy terms, affordability is conceptualised here as
having two essential components. The first relates to State affordability, and is
understood in terms of the very real and accepted limitations imposed by the State fiscus
and macro-economic realities. This constraint is further tempered by the realisation that
housing has to compete with other national priorities such as health, water and education.
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Of more significance and concern is the grinding poverty of
such a large proportion of the South African population. This provides the single most
important limitation on the housing programme. The resolution of this problem is something
that a sustainable housing programme can significantly contribute to, but cannot remotely
seek to solve on its own.
These two affordability constraints have important policy
consequences. In broad terms, it confirms the need to focus limited State resources on the
poorest sections of our population. In more specific terms, it requires the State to
constantly seek new ways of supporting the poor to mobilise complementary support through
which our housing goals can be achieved over time.
In political terms, these facts must serve as an important
corrective to the temptation to promise that which is not achievable in the short to
medium term. While the nation's expectations may be deemed in certain quarters to be high,
they are also eminently reasonable. The manner in which such expectations are to be
achieved becomes the critical policy question.
3.4 Opportunities Prevalent in the
3.4.1 Participative Policy Development Processes
An important opportunity for the future of housing in South
Africa has been the open and honest process of policy formulation that has been embarked
upon. Joint deliberations between the State and civil society interests through the
National Housing Forum / Government process over the last two and a half years, with full
participation from all affected parties and the utilisation of all relevant expertise, has
forged a new approach to housing policy formulation. The many constructive relationships
that have emerged from this process augur well for the future of housing in South Africa.
3.4.2 Acknowledgement of Importance of Housing in the RDP
The recognition of housing as a key and priority component
of the Reconstruction and Development Programme under a new democratic order should secure
the necessary political will and fiscal support to enable the successful launch of
sustainable housing programmes meeting the needs arising from inherited backlogs and new
family formation. This will require two main approaches: first, securing for housing an
adequate contribution from the national budget and, second, establishing multi-sectoral
and multi-departmental coordination as an urgent matter of policy and reality.
3.4.3 Well Developed Infrastructure
South Africa has a relatively well developed infrastructure
as a basis upon which future housing policy can develop:
- A diversifying and growing economy;
- a relatively well developed settlement hierarchy that can
form the skeleton for future development and growth;
- a sophisticated financial sector with well developed
infrastructure although this infrastructure in inappropriately distributed due to past
policies and constraints;
- an internationally renowned land surveying and tenure
- a well defined legal system; and
- technical capacity and innovation.
3.4.4 Potential Resources for Housing
Although South Africa does not have an abundant supply of
resources, significant amounts of resources could be mobilised for housing development:
- There is general acknowledgement that State resources for
housing can and should be increased substantially over time through budgetary
- significant resources in the private sector can and should
be mobilised for development, given the correct policy framework;
- there is a high likelihood that international aid could be
mobilised towards housing and related development; and
- individuals themselves have the capacity to mobilise
important resources for housing.
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3.4.5 Economic Factors
A number of positive economic trends for housing are
- The economic growth rate is projected to increase faster
than the rate of growth of population during the latter half of the 1990s;
- as a result, real per capita income is set to increase;
- the need to reduce the level of unemployment, and the scope
for job creation in a mass housing programme, should encourage investment in housing;
- to the extent that the rate of savings among low-income
groups does increase and these savings, in turn, are invested in housing, this does not
represent an opportunity cost in terms of investment in more productive sectors. Rather,
this investment represents consumption expenditure foregone by these groups;
- there is significant spare capacity in segments of the
manufacturing sector, which may diminish the inflationary impact of a rapid increase in
demand for housing; and
- the BOP constraint may ease in the short term thanks to
increased foreign borrowing, foreign investment, and inflows of foreign aid funds.
Furthermore, the perception that housing places little direct strain on the balance of
payments makes investment in housing an attractive option, especially given its high
employment: investment ratio.
3.5 Recent and Current Policy
Development Processes in Housing
3.5.1 Housing in the Interim Phase
(a)Relationship Between Department of Housing (DOH)
and the National Housing Forum (NHF)
The NHF was established in 1992 as a forum for all major
stakeholders in the housing sector to develop a new housing strategy and policy for South
Africa. Policy positions were developed through a process of bilateral negotiations
between the Department of Housing and the NHF, representing the most inclusive process of
policy development ever undertaken in South Africa in respect of housing.
(b)Housing Arrangements Act [No 155 of 1993]
In November 1993, the Housing Arrangements Act (Act No 155
of 1993) was passed by Parliament, after extensive negotiations
This Act aimed to ensure that housing provision could
proceed in the interim phase, while detailed future policy was being developed and
implemented. This Act set out the following:
- The establishment of a National Housing Board (with
representation from housing suppliers, consumers and regulators) to advise government on
issues of national policy;
- the establishment of four Regional Housing Boards in the
four (previous) provinces, to adjudicate the allocation of fiscal resources to projects at
the provincial level; and
- the amalgamation and joint operation of housing funds and
certain housing institutions of the old own affairs administrations, by April 1994.
(c)Housing Amendment Act [No 8 of 1994]
In March 1994, the Housing Amendment Act provided for:
- The replacement of the four existing Regional Housing Boards
with nine Provincial Housing Boards, again as an interim measure pending a comprehensive
new housing strategy and institutional arrangements; and
- extension of subsidy availability to previous Self Governing
Territory and TBVC areas.
3.5.2 Present National Housing Forum/Department of Housing
Relationship: Joint Technical Committees
In May 1994, the DOH and the NHF agreed to establish eight
Joint Technical Committees (JTC's). The JTC's have representation from both parties, and
each was tasked with developing policy on a specific priority area of future housing
strategy. These priority areas are:
(a) Overall Housing Strategy;
(b) Housing Subsidies;
(c) Retail Lending Initiatives and the
(d) Institutional Arrangements, Fund Mobilisation and the National Housing Budget;
(e) Land and Planning;
(g) Sector Efficiency and Effectiveness; and
(h) Rural Housing Policy and Programmes.
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All key housing policy recommendations are then referred to
the National Housing Forum and National Housing Board for comment. Substantive proposals
developed by these JTC's and the Department of Housing / National Housing Forum process to
date underlie many of the proposals in this document.
3.5.3 Relationship with the Provinces
An extensive process of consultation with the nine new
provincial governments was undertaken in order to reach consensus on the new housing
policies and overall housing strategy, outlined in this White Paper.
Given the nature of housing and its constitutional
positioning (as a schedule 6 matter), consensus on the broad national approach between
national and the provincial governments, is essential. The evolution of housing policy and
delivery over time will only become a success if it is underpinned by the continued and
programmatic empowerment of the provincial governments and their respective
4. Proposed National
This chapter provides, in summarised terms, the overall
strategy Government intends to pursue, in order to attack the housing challenge in the
country. It deals with:
- The basic trade-offs facing South Africa in housing;
- the National Housing vision and goal;
- some basic points of departure underlying the strategy;
- underlying policy approaches and considerations;
- the overall approach to be adopted in relation to:
- stabilising the housing environment,
- supporting the housing process,
- mobilising housing credit,
- mobilising savings,
- subsidisation, to alleviate affordability constraints,
- institutional arrangements,
- land, and
- the coordination of development efforts and fund allocation
within the State.
In devising a national housing strategy, the State
alia has to reconcile the following key factors:
- Existing backlogs in housing requiring +- 200,000 households
to be housed annually in order for the backlog to be eradicated over a period of 10 years.
- New household formation requiring a further +-350,000
households to be housed annually if backlogs are not to increase.
- A current State housing budget (new allocation) of +-R1.4
billion per annum (+1% of the total State budget).
- +-45 - 55% of households in need of housing, unlikely to be
able to afford or access credit and therefore entirely dependant on own (limited)
resources and State subsidization to satisfy their basic housing needs.
The required annual delivery rate (of +-338,000),
relatively high proportion of poor households and budgetary constraints do not allow
sufficient subsidy money per household to enable the construction, at State expense, of a
minimum standard complete house for each household not able to afford such a house. Only a
limited State subsidy contribution towards the cost of a house is possible.
The fundamental requirement to address the challenge is the
economic growth and employment to be created through the com- prehensive programme of
economic reconstruction and development embarked upon by Government. It has, however, to
be recognised that this will require time and that relatively high levels of unemployment
and poverty will prevail for a considerable period in the future.
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Appropriate housing policies and delivery systems can
contribute to employment creation and economic growth, but cannot be the only primary
drivers of such growth. Housing policy will therefore favour the involvement of small and
medium sized businesses and labour intensive approaches, in order to maximize the economic
growth and employment impact of such policy.
There is no single formula for solving South Africa's
housing dilemma. It is only by mobilising and harnessing the full diversity of resources,
innovation, energy and initiative of individuals. communities. the State and the broader
private (non-State) sector, that the challenge can be met effectively. It is this belief
that most significantly underpins the approach to housing that has been adopted by the
Government of National Unity.
A national housing policy and strategy therefore has to be
a multi-faceted approach towards serving all segments of the market with particular
emphasis on the poor and should essentially be driven at a local and provincial level.
Households access housing at a level commensurate with the
means at their disposal at the time and thereafter continuously strive to improve their
circumstances with whatever further means come at their disposal. The more limited the
ability of a household to be self sufficient, the more the responsibility on the State to
support the endeavours of such a household to house themselves.
The South African context requires an approach of
assistance to households in need in a way that will maximise the options available to
enhance and strengthen their own efforts and initiative to improve their housing situation
as quickly as possible.
Past inappropriate site and service approaches through
which the poor were accommodated have to be left behind for good.
4.2 National Housing Vision
Housing is defined as a variety of processes through which
habitable, stable and sustainable public and private residential environments are created
for viable households and communities. This recognises that the environment within which a
house is situated is as important as the house itself in satisfying the needs and
requirements of the occupants.
Government strives for the establishment of viable,
socially and economically integrated communities, situated in areas allowing convenient
access to economic opportunities as well as health, educational and social amenities,
within which all South Africa' s people will have access on a progressive basis, to:
- A permanent residential structure with secure tenure,
ensuring privacy and providing adequate protection against the elements; and
- potable water, adequate sanitary facilities including waste
disposal and domestic electricity supply.
Despite the constraints in the environment and the
limitations on the fiscus, every effort will be made in order to realise this vision for
all South Africans whilst recognising the need for general economic growth and employment
as well as the efforts and contributions of individuals themselves and the providers of
housing credit, as prerequisites for the realisation thereof.
In order to meet the housing challenge in the country,
Government aims to establish a sustainable housing process which will even- tually enable
all South Africa's people to secure housing with secure tenure, within a safe and healthy
environment and viable communities in a manner that will make a positive contribution to a
non-racial, nonsexist, democratic and integrated society, within the shortest possible
4.3 National Housing Goal
Government's goal is to increase housing's share in the
total State budget to five percent and to increase housing delivery on a sustainable basis
to a peak level of 338 000 units per annum, within a five year period, to reach the target
of the Government of National Unity of 1,000,000 houses in five years.
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4.4 Basic Points of Departure
In developing a new housing policy and strategy for South
Africa, the following points of departure are believed to be fundamental.
4.4.1 Sovereignty of the Constitution
In terms of Section 126 of the Constitution of South Africa
Amendment Act No 2 of 1994, a provincial legislature has concur- rent competence with
parliament, for making laws for the province with regard to all matters which fall within
the functional areas defined in Schedule 6 of the Act. These include housing, as well as
areas relevant to housing, such as consumer protection, public transport, regional
planning and development, and urban and rural development.
A provincial law will prevail over the national law except
where an Act of Parliament:
- Deals with a matter that cannot be regulated by provincial
- deals with a matter that, to be performed effectively,
requires to be regulated or coordinated by uniform norms or standards that apply generally
throughout the Republic; or
- is necessary to set minimum standards across the nation for
rendering of public services; or
- is necessary for the determination of national economic
policies, the maintenance of economic unity, the promotion of inter provincial commerce,
the protection of the common market in respect of the mobility of goods, services, capital
or labour or the maintenance of national security; or
- a provincial law materially prejudices the economic, health
or security interests of another province or the country as a whole.
The critical policy challenge for housing is to facilitate
maximum devolution of functions and powers to provincial and local government tiers
through concurrence between national and provincial governments, while at the same time,
ensuring that na- tional processes and policies essential to an effective and equitable
housing sector are in place. Recognition of the principle of subsidiarity will ensure
effective empowerment at second and third tiers of government.
4.4.2 Housing as a Basic Human Right
Government is under a duty to take steps and create
conditions which will lead to an effective right to housing for all. It is also under a
duty to refrain from taking steps which promote or cause homelessness. It is held that a
person has a right to live in dignity, in habitable circumstances. Government therefore
will vigorously promote an effective right to housing for all, within the resource and
other limitations applicable to it.
The challenge facing South Africa in housing, is to develop
a strategy in the short term to direct scarce and insufficient State housing and other
resources together with private, non-State resources, to ensure that all those in need
(and particularly the poorest sector of society) are able to progress towards the
realisation of an effective right in housing.
4.4.3 The Role of the State
The harsh socio-economic realities and sometimes despair
faced by the relatively large proportion of poor people in South African society have to
be recognised. The State has a fundamental role and responsibility to implement policies
and strategies that will redress this imbalance in the distribution of wealth in the
Where people, due to socio-economic adversity, are not in a
position to afford access to secure tenure, basic services and basic shelter, society in
general and the State specifically has the responsibility to address this situation within
the resource and other constraints applicable to it. In doing so Government's aim will
have to be to, in the medium to long term, reduce levels of dependency and increase levels
of independency from State financial assistance and support. This approach is consistent
with the RDP of which housing is an integral part.
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It is the responsibility of the State to ensure conditions
conducive to the delivery of housing. Delivery should take place through the widest
possible variety of mechanisms. It is incumbent on the State to assist particularly the
poor to enable them to be adequately housed whilst the State at second or third tier
government can, through appropriate structures, act as deliverer.
4.4.4 People-centred Development
Government is committed to a development process driven
from within communities. Through its policies and strategies it will encourage and support
initiatives emerging from communities or broader local social compacts aimed at equipping
and empowering people to drive their own economic empowerment, the development of their
physical environment and the satisfaction of their basic needs. Policies must recognise
and give effect to this approach.
In order to convert these laudable sentiments into reality,
government will be required to actively provide support for this process. This will
include not only financial resources, but the creation of appropriate institutional
frameworks and support structures. In addition, communities as well as government must be
constantly alert to people and organisations who abuse this developmental approach for
their own ends, and turn development into a contest for influence.
4.4.5 Freedom of Choice
The right of the individual to freedom of choice in the
process of satisfying his or her own housing needs is recognised. At the same time it is
recognised that people should be able to access and leverage resources on a collective
basis. The State should promote both the right of the individual to choose and encourage
collective efforts (where appropriate) by people to improve their housing circumstances.
4.4.6 Non discrimination
Given past and present regulatory and statutory
discrimination in South Africa, it is essential that new policies, strategies and
legislative actions by the State should be particularly sensitive to the removal of
entrenched discriminatory mechanisms and conventions in respect of gender, race, religion
and creed. Government has particularly identified the need to support the role of women in
the housing delivery process. In addition to its positive individual and social
consequences, such an approach is internationally recognised as being essential to the
success of any housing programme.
4.5 Underlying Policy Approaches and
The following approaches and considerations
underlie government's housing strategy:
4.5.1 Housing and Economic Empowerment
Housing as a process represents more than a simple economic
activity but constitutes the foundation for the establishment of continuously improving
public and private environments within which stable and productive communities can grow
Government housing policies and strategies will therefore
be directed at enabling and supporting communities to mobilise towards participating in
the satisfaction of their own housing needs in a way that maximises the involvement of the
community and the private sector and leads to transfer of skills to and economic
empowerment of members of the community.
Policy emphasis will be placed on supporting local
initiatives including small or medium sized companies in partnership with larger,
established companies committed to providing appropriate support and training.
In order to do this, future housing strategy will place
specific emphasis on:
- Promoting the participation of affected communities in the
planning and implementation of new developments;
- maximising job creation in the construction and allied
sectors (in particular, the role of labour based construction and the use of local labour
in housing development);
- improving economic linkages, particularly with the national
- programmes for skills transfer, capacity building and upward
mobility for both skilled and unskilled labour in the housing field;
- the role of small and intermediate enterprises in housing
construction, as well as in backwardly linked (materials supply), forwardly linked
(household businesses) and sideways linked (school construction) economic sectors;
- mechanisms to stimulate entrepreneurial development in
creating new housing environments and maximize the participation of historically
disadvantaged, emerging entrepreneurs; and
- constantly evaluating and supporting the role of women in
the housing delivery process.
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4.5.2 Sustainability and Fiscal Affordability
It is critical that housing delivery as a process be
initiated at scale on a sustainable basis. This requires the essential short term action
should be structured in order not to frustrate medium to longer term interventions.
The State has insufficient resources to meet the needs of
the homeless on its own and recognises that sustained, substantial investment in housing
from sources outside the national fiscus will be required. Housing policy will therefore
need to recognise the fundamental pre-condition for attracting such investment, which is
that housing must be provided within a normalised market and thus attract maximum private
investment. The challenge is achieving a balance between State intervention and the
effective functioning of the housing market with vigorous and open competition between
suppliers of goods and services to end users.
The housing process must be economically, fiscally,
socially, financially and politically sustainable in the long term. This implies balancing
end-user affordability, the standard of housing, the number of housing units required and
the fiscal allocations for housing. It is important that:
- The contribution of housing to the overall success of the
Reconstruction and Development Programme and the Government of National Unity be
- a long-term housing programme be outlined that meets the
housing needs of all South Africans within the shortest possible time frame;
- the maximum possible sustained investment is mobilised from
the State, private sector and individuals if the housing programme is to be sustainable,
requiring the State to continuously ensure level playing fields between the broader public
sector and the private sector. This does not preclude the State from vigorously
intervening to correct distortions and imbalances in the market-place;
- projected fiscal allocations to housing should form a part
of such a long-term housing strategy;
- the housing programme must take cognisance of constraints to
its implementation, if such a programme is not going to lead to distortions in the housing
market (such as high inflation, poor quality workmanship and a higher proportion of
housing starts to finishes);
- programmes should make provision for skills transfer; and
- a primary aim of the housing strategy must be to build
viable and sustainable communities: to this end, responsibility for and affordability of
the costs of long term maintenance and development of housing environments and services
must be recognised in planning and implementation.
All functional policies and strategies should take due
cognisance of the complexities of and potential implications for the upgra- ding and
redevelopment of hostels in order to create sustainable humane living conditions in State
and privately owned hostels country wide and to ensure the re-integration of these hostel
communities into the surrounding communities.
It must be honestly acknowledged that the Stated desire to
end the marginalisation of hostels and their residents has not yet been given effect.
Government undertakes to constantly review its approach to hostels, both public and
private, and to do so with the assistance of the residents and workers living in
conditions that are often inhumane.
4.5.4 Special Needs Housing
State housing policies and subsidy programmes must reflect
a constant awareness of and provision for the special needs of the youth, disabled people
and the elderly. To this end, special attention will be paid to the possible modification
of the subsidy programme to give effect to this approach.
4.5.5 Urban and Rural Balance
Historically, the relationship between urban and rural
housing and their respective needs has been paid scant attention. The Government has
already initiated a process of institutional review that seeks to bring the question of
rural housing into the mainstream of national housing policy. State housing policy and
strategy should achieve balance in emphasis between urban and rural and take cognisance of
the particular characteristics and requirements of rural communities. Special cognisance
needs to be taken of:
- The dilemma facing farm workers reaching the end of their
working life or contemplating a change in employment, in terms of the linkage between
their employment and home;
- the different composition of rural households;
- the effects of circulatory migration;
- the pre-dominance of female headed households;
- the non-saleable nature of the rural home; and the diversity
of tenure arrangements and the impact thereof on especially the accessing of credit and
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4.5.6 Housing and the Reconstruction and Development
The Reconstruction and Development Programme sets out a
clear vision for housing in the future. It is therefore imperative that future housing
policy and strategy be developed in accordance with this vision and guidelines.
The provision of housing and services is a key component of
the Reconstruction and Development Programme. Apart from being seen as a national priority
in its own right, future housing strategy has a direct bearing on the success of all five
key programmes of the RDP. These programmes are:
- Meeting basic needs;
- developing human resources;
- building the economy;
- democratising the State and society; and
- implementing the RDP.
The implications of a successful housing programme, or of
its relative lack of success, are the subject of constant interaction between the
Department and the RDP unit. Because of its consequential impact on the question of hard
and soft services, as well as on local government, the role of housing needs to be
correctly located within the overall framework of the RDP.
4.5.7 Consumer Protection and Education
Adequate measures to protect the rights of and inform
housing consumers on the technical, legal and financial aspects of housing is a critical
priority and should support the regulatory and delivery framework for housing. Many of the
problems characterised with the current housing impasse stem from the fact that the State
had previously failed to intervene on behalf of the consumer. This Government undertakes
to improve its capacity in this regard, to ensure that ordinary people, driven by the
desperation of homelessness, will not be at the mercy of unscrupulous operators in the
Experience over the past few years has indicated that there
are landlords willing to exploit the desperation of the homeless, and to charge exorbitant
rents without taking responsibility for the conditions of the buildings under their
control. As a consequence of this, Government will be reviewing the composition and
effectiveness of the Rent Boards currently under its control and will investigate
mechanisms to combat such exploitation, especially on government subsidised housing stock.
4.5.8 Accountability and Monitoring
It is of vital importance that appropriate monitoring
mechanisms should be implemented for all key interventions and at all levels of government
and that responsible authorities should account fully for performance against agreed
4.6 Overall Approach to Ensuring Housing
The level of poverty in South Africa is significant. In
excess of 40,370 of all households in the country have a joint household income of less
than R800 per month.
To impact on poverty a coordinated, multifaceted approach
towards initiating and maintaining sustainable socio-economic development is necessary.
Housing interventions by Government can at the most be seen as part of integrated approach
by Government to resolve the problem of poverty.
Government's overall approach to the housing challenge is
aimed at mobilising and harnessing the combined resources, efforts and initiative of
communities, the private, commercial sector and the State. It seeks to do this through
pursuing seven key strategies:
- Stabilizing the housing environment in order to ensure
maximal benefit of State housing expenditure and mobilising pri- vate sector investment;
- facilitating the establishment or directly establishing a
range of institutional, technical and logistical housing support mechanisms to enable
communities to, on a continuous basis, improve their housing circumstances;
- mobilising private savings (whether by individuals or
collectively) and housing credit at scale, on a sustainable basis and simultaneously
ensuring adequate protection for consumers;
- providing subsidy assistance to disadvantaged individuals to
assist them to gain access to housing;
- rationalising institutional capacities in the housing sector
within a sustainable long term institutional framework;
- facilitating the speedy release and servicing of land;
- coordinating and integrating public sector investment and
intervention on a multi-functional basis.
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4.6.1 Stabilizing the Housing Environment
A stable public environment is required for viable private
investment. At the same time the creation of a stable public environment is dependent on
and requires the incentives and benefits associated with the improvement of the private
living environment of people, created by private investment and access to credit. It is
essential that the vicious and degenerative cycle of despair in many areas of the country
be turned into a cycle of reconstruction and development, through joint and simultaneous
action by both the public and private sectors in consultation with affected communities.
This will require action by the State as a whole and cannot be dealt with by the housing
departments in isolation.
In this regard government intends to pursue an incentive
based approach to stabilize the living environments for many communities living in
unstable and degenerating residential areas.
The approach is envisaged to be two pronged namely:
- A general governmental strategy, consisting of an
unprecedented national and provincial campaign aimed at the re- sumption of payment for
goods and services, combined with coordinated multi functional public investment and
management focus in areas where the public environment has collapsed; and ,
- simultaneous, equally vigorous engagement by the private
sector (by agreement with the State), in areas where the public environment has
substantially stabilised, in terms of identified criteria. Housing credit will be the main
focus, although private investment across the full spectrum of business activities will be
4.6.2 Supporting the Housing Process
Delivery of housing to lower-income earning people and
especially the poor has come to a virtual stand still. Environmental con- ditions,
political transition, economic adversity and a range of other complicating factors have
lead to virtual market failure in many areas in the country.
It is incumbent on government to take the necessary steps
in order to not only restore a level of delivery but also enable increases in sustainable
delivery to a level where backlogs as well as requirements flowing from new family
formation, are being dealt with.
It is government's first and foremost priority to deal with
the problem of housing for the poor.
The biggest challenge facing government is dealing with
households in need of proper housing who currently cannot access credit or accumulate
significant savings in order to acquire access to housing. Until such time as the
Reconstruction and Development Programme has started to make inroads on the problems of
poverty and unemployment, the State has to accept the responsibility to meet at least the
basic needs of these households
International experience indicates a large degree of
resilience, ingenuity and ability in households to look after their own housing needs with
appropriate institutional support and financial assistance from government.
Government' s approach to housing support therefore centres
around promoting a wide variety of delivery approaches, ensuring access to well located
land, basic services, secure tenure and the ongoing construction and upgrading of the
public environment, services and homes.
Assisted through State subsidies and appropriate technical
and institutional support, a process of consolidation and upgrading must form an integral
part of subsidised housing projects in order to ensure that the housing situation of all
but especially the poor, continuously improves.
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4.6.3 Mobilising Housing Credit
A significant number of households in need of housing in
South Africa can afford to access housing credit, provided that this is available. Such
credit is currently not readily accessible by most of such home seekers. Unlocking housing
credit is therefore seen as a fundamental requirement in order to facilitate the ongoing
improvement of the housing circumstances of such households. Credit supplemented with
savings can enable a large proportion of people in need of housing and eligible for State
housing subsidies, to acquire access to formal starter housing under a range of tenure
options. This will ensure progressive consolidation on and integration of initially less
formal areas into the formal urban environment
Extensive investigations have indicated the need for both
short as well as medium to long term intervention by the State in order to facilitate the
sustained mobilisation of housing credit.
18.104.22.168 Short-Term Mobilisation
In order to mobilise credit at scale in the short term, a
code of conduct, targets, reporting and monitoring mechanisms and a range of risk
interventions and incentives aimed at mobilising the considerable capacity and resources
of the major banks have been identified. At the same time the establishment of a defect
warranty scheme and a national housing education fund are seen as vital interventions to
assist in unlocking housing credit.
Short-term interventions to mobilise credit under
Redlining and discrimination
An agreed code of conduct for mortgage lending will require
banks to ensure that credit criteria for granting loans to individuals and area criteria
on which security value is determined will be non-discriminatory and will not differ based
solely on the geographic area in which the property is situated.
Mortgage indemnity scheme (MIS)
In terms of this proposed scheme, Government will indemnify
financial institutions for losses (within certain limits), where normal contractual rights
to beneficially access and attach securities provided for mortgage loans, cannot be
exercised due to a breakdown in the due process of law. This scheme will require
concentrated effort from government to deal firmly with illegal occupation of residential
properties in such areas.
Existing Properties in Possession (PIPs)
Financing institutions currently hold thousands of
properties foreclosed against in many areas in the country. These securities, against
which mortgage loans have been provided, cannot be attached and nor can vacant, beneficial
occupation be achieved, due to a breakdown in the due process of law. No payments are
being made by the occupants of these houses and financiers are unable to obtain relief in
accordance with court orders and contractual stipulations.
It is essential that this situation be normalised, if new
housing developments are to take place in these areas, and that actions taken are
consistent with the approach adopted under MIS.
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The need for appropriate institutional capacity at a local
level, to assist borrowers who have fallen on hard times, has been identified. A proposal
for the establishment of a service organisation(s) jointly by the mortgage lenders and
government, which will assist such borrowers to downsize / rightsize their accommodation
to suit their affordability, is under consideration. The linkages between this proposal
and proposals for a housing support programme will also be investigated.
This service organisation is envisaged to also be utilised
by MIS to assist occupants of properties bought in by the MIS to vacate the properties
voluntarily and by banks on an ongoing basis, to assist in dealing with cases of hardship
related default. This will allow for the release and refinancing of such residential
properties so released.
Home Builder Warranty Fund
Negotiations for the introduction of a comprehensive home
builders warranty fund by the construction sector, are at a very advanced stage. Although
financial involvement by Government is not anticipated, Government may have to be involved
in the regulatory aspects of the scheme. In order to ensure the participation of emerging,
largely black contractors, a mechanism whereby Government may assist financially to enable
the scheme to accredit such contractors despite a lack of resources and adequate track
record, is under consideration. Such assistance will only be contemplated on a limited
basis linked to a proba- tionary programme.
22.214.171.124 Long Term Mobilisation (National Housing Finance
A range of longer term interventions are under
consideration in order to facilitate ongoing mobilisation of appropriate credit to the
lower end of the housing market. This will include specific programmes to facilitate the
development (and if necessary rationalisation) of the capacity of non-traditional retail
lenders to make an increasing contribution at the lower end of the market.
Because of the range and complexity of short- and
longer-term interventions required, the establishment of a National Housing Finance
Corporation (NFC) which will have a focused mandate to promote and facilitate the
mobilisation of all types of housing credit, is contemplated. This is envisaged to be a
wholesale institution and in essence is the "National Housing Bank" originally
envisaged in the RDP, and will establish a relationship with existing or future State
corporate structures created in the provinces. Given the nature and scope of its envisaged
functions the term "Bank " is clearly no longer appropriate.
4.6.4 Mobilising Savings
Personal savings represents a potentially large source of
fund mobilisation for housing purposes and can act as a powerful tool to leverage credit
through increasing the individual's ability to contribute to equity in the property and
demonstrating a willingness and ability to regularly set aside money for housing purposes.
It is therefore intended to implement a savings linked
credit scheme (SCS) in collaboration with accredited mortgage lenders, through which
individuals will be able to secure credit through participation in the scheme. This is a
policy approach taken with a long-term view, and is likely to become one of the most
significant features of delivery over time. In addition, interna- tional experience has
comprehensively demonstrated that such an approach will have the effect of empowering the
role of women in the housing delivery process.
At the same time mechanisms through which
communal/collective savings efforts can be harnessed to mobilise and unlock credit, will
[ Top ]
Given the skewed income profile of the South African
population and the severe affordability problems at the lower end of the market, the
targeted provision of end user subsidies constitutes one of the cornerstones of the
Government' s approach to the housing challenge.
A capital subsidy approach, based on the current subsidy
scheme will be maintained, not least for the benefit of providing fiscal certainty in the
national housing programme. The aggregate need for subsidies measured against fiscal
constraints determines the level of subsidy benefits payable to qualifying beneficiaries,
and government remains committed to a subsidy approach favouring width over depth in the
provision of financial assistance. Given the dire need at the lower-income levels a fourth
(increased) subsidy level at the lowest end of the market, will be implemented with
Subsidy policy is envisaged to be as flexible as possible
in order to accommodate a wide range of tenure and delivery options and enable the
flexible application of subsidies at the delivery (provincial and local) level in order to
obtain maximum gearing with private investment, savings and sweat equity.
Subsidy programmes already introduced or under
consideration for introduction include:
- Ownership subsidies aimed at assisting individuals to
acquire ownership of residential property by either accessing such subsidies on approved
projects or individually;
- collective ownership subsidies aimed at facilitating the
application of collective housing models through which individu- als acting in cooperation
with others on a collective basis, can access appropriate housing;
- social Housing subsidies aimed at providing subsidies to
institutions created to supply affordable social housing to the lower end of the market;
- rental subsidies, anticipated to be aimed at institutions
created to provide affordable, subsidised rental accommodation to the lower end of the
- subsidies directed at redressing anomalies created by
previous policies implemented by Government, including Consolidation subsidies aimed at
site and service schemes implemented under previous subsidy regimes.
4.6.6 Institutional Arrangements
A rationalised governmental, statutory and parastatal
institutional framework within which the national housing strategy will be implemented is
a priority to government.
Fragmentation, overlap, wastage and inefficiencies in the
institutional set up for housing must be removed wherever present, in order to establish
an institutional basis from which a sound long term strategy can be launched.
The process of institutional rationalisation already
initiated will therefore be dealt with as a matter of priority in order to establish an
institutional and funding framework within which the envisaged Government programmes can
be implemented with success.
Government's strategy on institutional reform for housing
will focus on:
- Finalising the restructuring of statutory and advisory
structures in terms of legislation already introduced, in line with government's
commitment to introduce appropriate national and provincial representation into the
processes of policy development and fund allocation.
- Re-focusing, rationalising, consolidating and re-positioning
(where appropriate) parastatal housing bodies at national and provincial level.
- Establishing appropriate linkages and relationships between
national and provincial / local governmental, statutory and parastatal corporate
institutions in order to achieve maximum efficiency and effectiveness of governmental
- Rationalising the assets and liabilities of the various
statutory housing funds in line with the new constitutional situation and institutional
dispensation for housing envisaged.
[ Top ]
126.96.36.199 Facilitating Speedy Delivery
Efficient assembly and release of appropriately located
land for housing is critical to achieving the desired rate of delivery of housing.
The present regulatory framework within which land is
delivered is fragmented, complex, inadequate and in contradiction with the aims and
objectives of the proposed housing strategy and the RDP.
Short-term intervention in order to facilitate the speedy
delivery of land for development purposes is believed to be essential for the launch of
the envisaged housing programme.
Under these circumstances the proposed Development
Facilitation Act was drafted as a bridging measure in the short term. This proposed Act
sets out to establish:
- Nationally uniform norms and standards in relation to land
- national legislation in parallel to provincial (inherited)
laws as an alternative, more appropriate mechanism for rapid land delivery; and
- an option for Provincial Administrations to adopt and
continue to utilize the Act, once all considerations have been taken into account.
A feature of the proposed Act is the legal requirement for
structured interaction and consultation between various departments of Government.
Future efforts in respect of land delivery will focus on
influencing land policy processes as outlined in Chapter 5.
188.8.131.52 Publicly Owned Land for housing
Land held by public authorities represent a significant
national asset and therefore its disposal and/or application should be un- dertaken within
a coherent policy approach. It is believed to be essential that the potential use of
appropriately located and suitable land for affordable housing should be considered for
such use on an equal basis with other competing uses.
It is therefore envisaged that suitable mechanisms through
which such consideration can be achieved will be pursued in conjunction with the relevant
national and provincial/local authorities.
4.6.8 Coordinated Development
As an integrated process, housing delivery requires
coordinated and integrated action by a range of players in the public sector and the
non-State (private) sector. Inadequate coordination and integration of efforts between the
housing function and functions such as education, health services, transport and local
government in the past, lie at the root of the breakdown in the housing process in many
areas of the country.
Mechanisms at provincial and local government level which
will ensure coordinated planning and budgeting on a multi year basis between all relevant
government functions and the non-State (private) sector are to be instituted. These
mechanisms must, eventually, result in the necessary coordination and integration of
planning and budgeting at the national level.
Housing, as the sector most adversely affected by the
absence of such coordination and integration is envisaged to take the lead in this
process. This approach will require the most dedicated and structured approach to such
inter-sectoral coordination, and is likely to provide one of the most significant
contributions to the attempts of Government to redevelop our society.
[ Top ]
5. Key Substantive
Approaches and Interventions
Chapter 4 summarised Government's overall approach to the
housing challenge. This chapter sets out in greater detail the envisaged substantive
approaches, policies and interventions.
In terms of the national housing strategy set out in
chapter 4, the following policy approaches and interventions are envisaged in order to
enable the attainment of the country's housing vision and goal in respect of:
- Stabilising the housing environment;
- institutional arrangements;
- housing support;
- housing credit;
- land and the housing development process; and
- infrastructure, service standards and tariffs.
5.1 Stabilising the Housing Environment
5.1.1 General Strategy
Government will launch a vigorous and unprecedented
national and provincial campaign aimed at the resumption of payment for goods and services
received and the reinstatement of the due process of law. This campaign will, however,
only have the desired effect if matched by a simultaneous and equally vigourous campaign
of engagement and investment by the private sector, ending their effective withdrawal from
many affected areas over the last few years.
This national campaign will require intra-governmental
agreement on the need for focused and priority attention on a multi-functional basis to
areas where the public environment has substantially collapsed, and a concomitant
commitment from the private sector to, once the level of stability of the public
environment in these areas has substantially improved, invest and provide credit in such
5.1.2 Prioritization of Reconstruction Areas
In areas where the public and private environment has
deteriorated and to a large extent collapsed, conditions are not conducive to private
investment by either individual members of the communities or the private commercial
sector. It is recognised that the reinstatement of a habitable public environment has to
be a precursor to a resumption of private investment and sustained development, and that
the process of turning such situations around should as far as possible be initiated and
driven from and by the communities and local governments involved.
Government will therefore recognise, against identified
criteria on the basis of a series of incremental steps or classification, those areas
where conditions are progressively becoming conducive to viable development and will at an
identified stage signal to the private sector that investment and the provision of credit
for housing purposes is viable and required, through making housing subsidies and mortgage
indemnity cover available in such areas.
Criteria to be considered inter alia include whether
or not and to what degree:
- A Local Authority duly constituted under the Transitional
Local Government Act, 1993, exists;
- effectve exercise of primary Local Government functions is
- reciprocal performance by communities measured against
agreed objectives is evident;
- an acceptable level of civil responsibility and behaviour as
well as civil and criminal law enforcement is being achieved;
- there is an acceptable level of performance in meeting
commitments in respect of:
- service charges,
- rental and
- instalments to mortgage lenders.
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It will be incumbent on the communities and / or local
governments involved to establish appropriate mechanisms / structures, inclusive of all
stakeholders involved or affected, through which:
- Initial and subsequent evaluations will be sought in order
to establish a classification or re-classification;
- the coordination and formulation of plans and budgets
improve the local situation through rectification of identified deficiencies, with
appropriate State support and incentives can be achieved;
- the required resources and interventions from various State
departments can be sourced on a competitive basis, in terms of the classification
- the implementation of such plans can be monitored and
- recommendations can eventually be made when adequate
stability has been achieved in the affected area to the subsidy and mortgage indemnity
authorities. It is envisaged that subsidies and finance for low-income housing will become
available at identified stages in the stabilisation process, with mortgage finance backed
by the envisaged Mortgage Indemnity Scheme. This is believed to be a critical component of
a successful stabilisation process, but cannot take place before a substantial degree of
stability is achieved.
5.2 Institutional Arrangements
Current institutional arrangements for housing within
government and in the parastatal sector are still fragmented, inconsistently funded and is
characterised by a lack of clear role definition and defined lines of accountability.
A significant degree of overlap, duplication and confusion
is still evident, despite the implementation of interim adjustments which has resulted in
some rationalisation during late 1993 and early 1994.
It is believed that rationalisation of existing
institutional capacity within a coherent long term strategic framework can significantly
improve efficiencies and ensure enhanced and sustainable housing delivery at the levels
required to deal with backlogs and new family formation.
Taking due cognisance of the basic points of departure
outlined in part 4, the following framework within which the restructuring of the housing
sector will be undertaken, is envisaged:
The National Ministry and Department of Housing
Schedule 6 of the Interim Constitution of South Africa
determines that provincial legislatures and national government concurrent competency to
legislate, inter alia in respect of housing, regional planning and development as
well as urban and rural development. The intent, however, is clearly that appropriate
housing functions and powers should be devolved to the maximum possible extent, to the
provincial level. Against this background the National Housing Ministry and Department are
envisaged to fulfil the following functions:
- Setting broad national housing delivery goals and negotiate
provincial delivery goals in support thereof;
- determining broad national housing policy, in consultation
with relevant other national departments and provincial governments where relevant, in so
far as it relates to:
- Land development and use (especially in respect of State
- land title and registration systems,
- minimum national norms and standards,
- national subsidy programmes,
- fund allocation to provinces,
- fund allocation to national facilitative programmes,
- mobilisation of funds for land acquisition, infrastructural
development, housing provision and end user finance,
- guidelines for the spatial restructuring of cities and towns
and rural settlement patterns;
- adopting or promoting legislation to give effect to national
- establish a national institutional and funding framework for
- monitoring national and, in liaison with provincial
governments, provincial performance against housing delivery and budgetary goals and
accounting to the national parliament in this regard;
- overseeing and directing the activities of national
statutory advisory and facilitative institutions and accounting to national parliament in
- negotiate for the systematic increasing of the national
apportionment of State budget to housing; and
- account to national parliament for the performance of the
sector against set targets and efficiency / effectiveness parameters.
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5.2.2 Role of Provincial Government
Provincial government has a critical role to play in
ensuring effective and sustained housing delivery at scale.
Within the overall institutional and constitutional
framework it is envisaged that the following housing functions will be executed at a
- Setting of provincial housing delivery goals and performance
parameters within the context and in support of national delivery goals;
- determining provincial housing policy (within broad national
guidelines), so far as it relates to :
- Minimum housing norms and standards in the province,
- development priorities and programmes,
- urban and rural development,
- land identification and planning within the province,
including performance criteria,
- urban spatial restructuring,
- rural settlement restructuring;
- monitoring provincial housing delivery and accounting to the
provincial legislature in this regard;
- overseeing and directing the housing activities of
provincial statutory advisory and executive bodies, local authorities as well as the
activities of provincial facilitative institutions, and accounting to the provincial
legislature in this regard;
- liaising and negotiating with the National Ministry and
Department as well as national statutory and facilitative bodies in respect of:
- Fiscal transfers for housing to the province,
- provincial priority status in respect of national
facilitative programmes for housing, and
- national housing policy and programmes.
It is recognised that provincial governments are
accountable to the people who have democratically elected them in the provinces, for the
delivery of housing. A leading role for these governments in enabling sustained delivery
of housing in the provinces, within broad national housing policy guidelines, is
envisaged. At the same time, it has to be recognised that the Minister of Housing is
accountable to Parliament for overall sectoral performance. A balance between the
functions and powers at national and provincial level to reflect these accountabilities,
will be vital to success.
5.2.3 Role of Local, Rural and Metropolitan Government
The physical processes of planning and housing is very much
a local community matter. The role of metropolitan and especially local government in
enabling, promoting and facilitating the provision of housing to all segments of the
population in areas under their jurisdiction, can therefore not be over emphasised. The
absence of legitimate, functional and viable local authority structures will jeopardize
both the pace and quality of implementation of housing programmes.
The following housing functions are envisaged to be
performed at metropolitan and/or local level:
- Setting metropolitan / local housing delivery goals;
- identification and designation of land for housing purposes;
- the regulation of safety and health standards in housing
- the creation and maintenance of a public environment
conducive to viable development and healthy communities;
- the mediation of conflict in the development process;
- the initiation, planning coordination, promotion and
enablement of appropriate housing development;
- facilitative support to housing delivery agencies;
- planning, funding and provision of bulk engineering
- provision and maintenance of revenue generating services (if
not provided by specialised utilities / suppliers);
- provision of community and recreational facilities in
- welfare housing;
- land planning in areas under their jurisdiction (in terms of
laid down performance criteria, possibly at provincial and even national level); and
- regulation of land use and development.
[ Top ]
5.2.4 Statutory Advisory and Policy Execution Bodies
Government is committed towards the creation of statutory
advisory and policy execution / overseeing bodies for housing, which introduce key
stakeholder representation into the processes of policy development and fund allocation.
To be effective it is believed that membership of these bodies should be determined on a
representative (nominated) basis, through an inclusive transparent and democratic process.
The participation of stakeholder groupings and structures
of civil society in the process of policy development and public fund allocation is
believed to be of critical importance to secure the necessary commitment of all relevant
parties for strategies and policies adopted. By informing the deliberations of these
structures with inputs from nominees of the various stakeholders and civil society
groupings in the housing sector, balanced and practical advice and decision making can be
(a) National Housing Board (NHB)
A new national statutory advisory body to the Ministry for
Housing is envisaged (similar in function to the current National Housing Board). This
body will fulfil the following functions:
- Advise the Minister on housing policy, strategy and related
- recommend to the Minister housing budget allocations to
national facilitatory institutions and parastatal housing bodies and the provinces;
- monitor and evaluate the performance of the housing sector,
review policies and strategies accordingly and advise the Minister on an ongoing basis;
- oversee the execution of national housing policy.
Members of this Board should comprise competent persons
with expertise and knowledge in the field of housing, but it is believed imperative that
they should at the same time be representative of and nominated by the following
stakeholder groupings representing national interests in the housing and related sectors
in the urban and rural areas of the country:
- one third of the members by consumer organisations and
community based groups with an interest and involvement in housing on a national basis and
representing the interests of consumers of housing goods and services.
- one third of the members by suppliers and financiers of
housing goods and services, at a national level.
- one third of the members by Government interests in housing
(both national and provincial), having due regard for the need for separation of the
legislative and executive arms of government and inter alia, including organised
local government and the State corporate housing sector.
In addition, Provincial Housing Boards will be represented
by their Chairpersons, in an ex officio capacity, on the NHB. The NHB will be expected to
assume a proactive role in fulfilling its advisory function and to have a distinct impact
and influence in government policy on housing and will replace the current National
Housing Board which was created as an interim measure in the process of rationalisation.
(b) Provincial Housing Boards
Given the importance and constitutional placement of
housing at a provincial level, Provincial Housing Boards, constituted along the same lines
as the proposed new national advisory body, are already being established in each of the
provinces. These Boards are to be established by and accountable to the Provincial
In addition to advising provincial governments on
provincial housing policy, these Boards will also deal with the approval of projects in
terms of both national (as agents of the NHB) as well as provincial housing programmes.
Similarly constituted bodies may also be justified in the
larger metropolitan and local authority areas or in rural districts in order to devolve
the decision making and fund allocation processes to the closest local level.
[ Top ]
(c) Rationalisation of statutory assets and
The process of rationalisation of statutory assets and
liabilities was initiated under the Housing Arrangements Act (No 155 of 1993), in terms
whereof the five statutory (previously own affairs) funds were brought under central
Government will proceed with this process and will apply
the following guidelines:
- Assets and liabilities will follow the devolution of
functions and authority to provincial and local / metro level or the transfer to other
- Assets which are revenue-generating but do not belong in the
housing function (such as infrastructure loans to local governments) will be transferred
to appropriate governmental or parastatal institutions with the aim to realise realistic
capital values for application in the housing effort.
- Retail loans (to individuals) will, after application of the
extended R7,500 benefit (subsidy) and upon conversion to commercial interest rates, be
sold to appropriate private sector or State corporate entities active at the retail level.
- Liabilities within the statutory housing funds but
inconsistent with the institutional and funding framework will be transferred to
appropriate institutions / departments to the extent that agreement can be reached.
5.2.5 The State Corporate and Parastatal Sector
For a wide range of historic reasons the housing market in
South Africa currently is distorted and abnormal. It is incumbent on government, on a
short term temporary and longer term permanent basis, to intervene to ensure that the
imbalances, distortions and anomalies in the housing market are overcome. Such
facilitative intervention by Government is envisaged to be primarily aimed at creating an
enabling environment for delivery by the non-State sector but may, where necessary and
desirable, include direct State involvement in delivery. It is believed that, to be
effective, such facilitative interventions should be performed by institutions structured,
funded and targeted through unambiguous mandates, to fulfil specific facilitative
functions. These functions are not the normal functions of a civil service department but
should be structured on business principles within parastatal corporate entities, fully
and transparently accountable in terms of managerial performance and financial
responsibility to government and the public at large.
Parastatal organisations in the housing sector are
currently characterised by overlap, inconsistencies in policy and approach, mandates
conflicting with those of other organisations or with the policies and strategies of
government and a distinct lack of transparency and accountability.
It is envisaged that all housing funding functions
fulfilled by all parastatal organisations will be rationalised and restructured into
clearly mandated, accountable and streamlined new or restructured parastatal bodies,
focused on specific mandates in the housing process. Where such housing functions are
being fulfilled by organisations under the control of other government departments, the
cooperation and agreement of such departments in such rationalisation and restructuring
processes will be sought.
Government's objective with the process will be to
rationalise and restructure within a coherent long term institutional framework which will
serve the best interests of housing in the country and will enhance overall cost
effectiveness, efficiency and sustained delivery in the sector.
Restructuring and rationalisation will be panned and
undertaken with the full involvement and participation of all affected institutions.
[ Top ]
5.2.6 The Private Sector
State resources and capacity to deal with the massive
housing backlogs and the process of reconstruction and development in the housing sector
are severely limited. It is recognised that
South Africa cannot address this massive challenge without
the mobilisation of the collective resources, capacity, knowledge and skills in the
broader non-State (private) sector.
Government housing policy and strategy is essentially
directed at utilising limited State resources in order to achieve maximum gearing of such
efforts and resources with non-State investment and delivery.
The concept of a broad partnership between the State and
the non-State sectors in addressing the housing challenge in the country is central to
Government's approach. As far as the specific stakeholders in the non-State sector is
concerned the following approaches are envisaged:
184.108.40.206 The Suppliers of Materials and Services to the
The housing sector is emerging from a prolonged depressed
period of low activity. It is of critical importance that the material and services supply
sector to the housing industry impose effective measures of self regulation and control in
order to contain inflationary pressures on the prices of goods and services. It is
recognised that direct government intervention in this regard is undesirable and likely to
be less effective but this will be undertaken if this sector is unable to impose the
necessary self regulation, timeously and effectively.
Vigorous and open competition on level playing fields by a
wide range of suppliers is believed the be the most effective mechanism to secure the
maximum possible stability and restraint in pricing.
220.127.116.11 The Construction Sector
This sector obviously is a key link in the chain of
delivery. The stark dichotomy between the resource and skills base of the largely white
controlled and owned formal construction sector and the relatively disadvantaged less
formal and predominantly black small construction sector, is detrimental to the effective
mobilisation of all non-State resources in the delivery effort required.
Government housing subsidy policy, tender procedures and
procurement policies will increasingly be directed towards facilitating and encouraging a
bridging of this gap. It is essential that an equitable and comprehensive partnership
between the large and small contracting sector be established which will enable the
sustained upliftment, integration and growth of the less formal sector within the main
stream construction industry.
Although the growth and support of the emerging (black)
construction sector is not seen as a primary housing responsibility and therefore does not
justify the allocation of housing funds, housing policies and strategies should
pro-actively seek to facilitate the participation of this sector in the housing process.
As with the suppliers of material and services to the
housing sector, self regulation within the construction sector of construction prices will
be a critical element to the success of a large scale national housing delivery programme.
Uninhibited escalation of construction prices will inevitably destroy any benefit to be
attained from State subsidies and will unavoidably lead to the necessity for government
imposed measures to counteract such a threat.
As with the supply industry, Government is committed to the
promotion o vigorous competition between as many as possible delivery agencies in the
housing construction sector.
[ Top ]
18.104.22.168 The Financial Sector
The extremely low (almost insignificant) level of end user
finance provision to people in the income categories below R3500 is cause for great
concern. Given the limitation on State resources, the mobilisation of private credit for
housing purposes is a central aspect of government approach to housing.
Government recognises and accepts the responsibility to
create and maintain a lawful environment in which contractual rights and obligations are
respected and enforceable. At the same time it is believed that there is an obligation on
the private sector to support Government in its efforts to stabilise an environment which
has become increasingly destabilised over the past few years as apartheid structures broke
The effective withdrawal of private sector finance from
low-income communities causes a further deterioration in physical and environmental
conditions in these areas which in turn leads to conditions resulting in even further
withdrawal of investment.
If this cycle is not broken the situation cannot be
expected to improve.
A number of incentives and measures in order to create a
more conducive environment for private investment and the provision of credit in these
areas are under consideration and more fully dealt with later. These incentives and
measures are aimed at facilitating structural adjustments within the major banks in order
to enable their sustained and viable involvement in the provision of housing finance at
the lower end of the market.
At the same time measures are also introduced to stimulate
the sustained growth of specialised lenders to supplement and compete with the efforts of
the major banks.
The contractual savings industry in South Africa controls
vast savings of the nation of which very little currently finds its way into housing. It
is essential that ways and means be found to channel a significant proportion of these
resources into housing investment. This is a task on which the proposed National Housing
Finance Corporation will be specifically mandated to focus from this and other appropriate
sources. The NHFC is envisaged to constitute a central conduit which will implement the
necessary mechanisms to create institutional and financial framework in the housing sector
which will attract the required level of investment in housing.
The housing circumstances of employees have a material
influence on their health and productivity.
The housing crisis facing South Africa requires the
mobilisation of every effort, including those of employers in relation to their employees.
It is incumbent on employers to know the housing circumstances of their employees and to,
within their means, provide advisory, administrative, financial and other material
assistance in order to improve the housing circumstances of their employees. This process
and challenge would be undertaken in consultation with the affected workers and the
representative trades unions.
5.2.7 Community and Civil Society
South Africa's housing inheritance can largely be
attributed to top down and ideologically driven development approaches. It is held that,
by making housing development people-centred, the major disadvantages resulting from these
past approaches will be overcome.
As is already evident in Government subsidy policy,
meaningful and structured participation by communities in the processes of needs
identification, prioritisation, planning and the implementation of housing development
projects will increasingly become central requirements of Government policy and subsidy
With increased involvement in the decision making process,
the accountability of communities in the process of housing delivery will also increase.
An environment conducive to all parties meeting their obligations must be created, if
sustainable development is to be achieved.
[ Top ]
5.2.8 Non-Governmental Organisations
22.214.171.124 Fora of Civil Society
Organisations such as the National Housing Forum and
various emerging Provincial Housing Fora have an important role to play in facilitating
the involvement of broader civil society in the housing debate and in voicing the views of
broader civil society on housing. Past experience has clearly indicated that, without the
active involvement and participation of broader civil society in the design of housing
policies and strategies, these policies and strategies are likely to fail in their
Government will therefore continue to encourage the
activities of these fora and will remain accessible for inputs from these fora in order to
inform its processes of decision making.
126.96.36.199 Non-Governmental Service Organisations
Non-Governmental Service Organisations or NGO's have played
and are playing a significant role in supplementing and building capacity at community
level. It is believed that these organisations have a very important role to play in this
respect. In particular, such NGOs should continue to provide valuable support and
assistance to communities, especially those faced with the challenges of engaging in a
sustainable development process for the first time.
[ Top ]
High levels of unemployment, relatively low average wage
levels and the levels of costs in the provision of housing, contribute to a major
affordability problem in South Africa. The ability to contribute to the cost of housing is
severely limited in most families in the country. Given the constraints imposed by the
need for fiscal discipline, it is clear that the State will not in the foreseeable future
be able to provide levels of subsidisation at the lower end of the market which are
sufficient to cover the costs of delivering a formal house to every South African in need
of housing. It is therefore central to Government's approach to the provision of housing
to utilise a combination of the provision of subsidies within the fiscal abilities of the
State to those most in need and least able to contribute to the costs of their own housing
and, through various mechanisms, mobilising individual savings as well as private /
non-State credit in order to supplement subsidy assistance provided by the State.
Legal RSA residents with monthly household (joint spouse)
incomes below R3,500 (in 1994 terms) are envisaged to remain eligible for State subsidy
assistance for the foreseeable future. Subsidy programmes are envisaged to continue to
focus on family housing.
5.3.2 Focus on the Poor
Government remains committed to a system of subsidisation
which is biased in favour of those most in need of Government assistance. It is essential
that the bulk of State housing resources be utilised to assist the poorest of the poor and
the introduction of a fourth (higher) category of subsidy, for the lower end of the
market, has been decided upon.
Security of tenure is a key cornerstone of Government's
approach towards providing housing to people in need. In this regard, Government rejects
the elevation of the individualised private home ownership above other forms of secure
tenure. Subsidy policy will therefore be designed to provide for the fullest range of
tenure options, on the basis of a limited State contribution to be geared by private
(individual) investment, credit / finance and, where possible, the sweat equity of the
owner. Ensuring that subsidies can be made available in areas where traditional tenure
arrangements apply is essential and this issue is currently under investigation.
5.3.4 Market Anomalies
Government recognises the fact that, for a variety of
historic reasons, a range of historic subsidy anomalies are currently existent in the
To the extent that it is affordable within fiscal
constraints applicable and the need for balance between total State funds available for
new housing and needs for housing in the country, it is Government's intention to address
some if not all of these historic anomalies in order to level the playing fields for a
sustained take-off in housing delivery at scale.
5.3.5 Subsidy Mechanism
The capital subsidy approach adopted under interim
arrangements implemented recently meets the criteria of transparency, ease of budgeting,
fiscal discipline and the ability to provide the individual with the maximum freedom of
choice and benefit. It is therefore envisaged that this subsidy mechanism will be retained
as a national subsidy approach, and be subject to a constant process of evaluation.
[ Top ]
5.3.6 Subsidy Programmes
It is recognised that an appropriate balance between
project based and individual subsidy allocations is essential in order to:
- enable scale delivery; and
- the development of a diversified primary and secondary
demand for housing by individuals, groups or communities exercising maximum freedom of
Government will not introduce hidden subsidies over and
above the basic capital subsidies being made available to the end user. It is regarded as
essential that financial equity with regard to all types of State assistance should apply
throughout the Republic.
In addition to the project based subsidy programme already
in place, Government will introduce a range of specifically designed lump sum subsidy
instruments to support a broad and innovative housing delivery process in the country.
Aspects already covered or to be covered include inter alia:
- Individually accessible as well as project based allocations
of subsidies for individual ownership purposes which will be either:
- Non-credit linked and therefore attract limited gearing with
In these instances subsidies will
be available directly from the subsidy authorities (Provincial Housing Boards (PHB),
either to individuals applying on approved projects (where the PHB has reserved a
specified number of subsidies for the project), or directly to the PHB to acquire a
property not situated on an approved project.
- Credit and savings linked and therefore attract significant
- In these instances individuals will be able to, at the time
of applying for a loan with an accredited financial institution apply for a subsidy and at
the same time register for a special, government endorsed, savings linked credit scheme
(or prove an adequate savings track record and accumulation). Once savings requirements in
terms of the scheme are met the applicant will be ensured of a subsidy and, provided
eligibly still applies, a housing loan. Financial institutions have agreed to reduce
deposit requirements for loan applicants under this Savings Scheme.
- Subsidies for collective social and rental housing, directed
at institutions supplying such housing. Government believes that it has a significant role
to play in actively developing and supporting new and innovative approaches to social
housing, especially where these provide for the self-management of housing stock within
the ambit of such institutions.
This is an area of
housing opportunity that has long been neglected in this country, and may well require
significant engagement with international expertise and experience. Subsidies under these
programmes will be provided to the institutions involved (not an individual beneficiary)
and will go towards subsidising the capital cost of new housing units built or existing
units acquired by approved institutions, to be made available in the market under the
rules of the Subsidy scheme. Units can only be made available to beneficiaries eligible in
terms of the normal requirements of the subsidy scheme. The institutions involved will be
subject to restrictions to prevent subsidies to be utilized for private gain. Individual
beneficiaries leasing such stock will not be disqualified for purposes of ownership
subsidies and, provided eligibility criteria are met will be able to access such subsidies
provided that the subsidized (social) stock is vacated.
- Subsidies specifically designed and targeted at redressing
anomalies created by past Government subsidisation interventions. It must be noted,
however, that the State's ability to deal with these anomalies, given their magnitude, is
extremely limited and that, to the extent that subsidisation under these circumstances
will be considered, this will by necessity be done at the expense of new housing delivery.
The project based consolidation subsidy to be
implemented will make available a supplementary grant to the amount of R5,000 per
beneficiary, on approved projects where serviced sites only were previously provided by
the State or with State grants (including capital subsidies made available by the
Independent Development Trust).
This subsidy can be applied towards:
- the acquisition of building materials;
- building a starter top structure;
- expanding an existing starter structure;
- off-setting in part or in full, a housing loan obtained by
the beneficiary; and
- paying a deposit in order to gain access to a housing loan.
[ Top ]
5.3.7 Levels of Subsidy
Government's primary aim with the introduction of subsidies
is to, in the first instance, provide security of tenure and access to basic services as
well as possibly a rudimentary starter formal structure to the poorest of the poor.
In recognition of the severe financial constraints faced by
the relatively large proportion of households with monthly incomes below R800, it has been
decided, in anticipation of a substantially increased 1995/96 housing budget, to introduce
a fourth (higher) level of subsidy at this level in the market. The following subsidy
levels will apply to new subsidy applications with immediate effect under project
allocations by the Regional Housing Boards established under the Housing Arrangements Act
(No 155 of 1994).
Joint Spouse monthly income (R) Subsidy * (R)
0 - 800 15,000
801 - 1,500 12,500
1,501 - 2,500 9,500
2,501 - 3,500 5,000
*Adjustable by up to 15% (on an area, not project basis)
at the discretion of the relevant Provincial Housing Board, for locational, topographical
or geotechnical reasons.
In order to maintain financial equity, subsidy levels may
be varied for geotechnical, topographical or locational reasons, in the various provinces
(on an area rather than project basis) within these guidelines. It is also proposed to
allow for the application of the variation in cases where special needs apply, as in the
case of the disabled.
5.3.8 A National Subsidy Standard
The level of subsidisation provided by the State has to be
perceived as equitable by all communities. It is essential that financial equity is
perceived by all beneficiaries in as far as State assistance for housing is concerned,
across the nation. Significant disparities in subsidy approach and value between provinces
will affect housing standards and have the inherent potential to prejudice the economic
interests of provinces perceived to be providing inferior / lesser benefits. In terms of
Section 126 of the Constitution Amendment Act No 2 of 1994 an Act of Parliament in respect
of matter requiring minimum standards to be set across the nation and / or in which
provincial disparities may prejudice the economic interests of another province, will
A national subsidy standard is believed to be such a matter
and it is therefore not envisaged that subsidy mechanism or level variations on a
provincial or local / metropolitan basis, will be possible. It will, however, be
imperative to allow maximum flexibility with regard to provincial and local innovations in
the application of the subsidy, provided that no hidden subsidies should be provided in
[ Top ]
5.3.9 Subsidies and Rural Housing
Present subsidy policy deals with urban circumstances with
freehold or leasehold tenure arrangements as well as with housing provision in formal
towns in the rural areas where such tenure can be achieved.
Areas where traditional tenure regimes apply are still
effectively excluded, which is an undesirable situation. Government is currently
investigating the feasibility of providing subsidies in these areas linked to a set of
criteria which will evaluate the security of residential tenure of applicants, and
particularly the case of women in this regard. Farm workers are effectively excluded as
secure tenure is rarely achievable and because of the linkage between employment, the
place of employment and the home. Subsidies for farm worker housing (currently provided by
the Department of Agriculture to the farm owner) are envisaged to be replaced by end user
subsidies to be provided via the Department of Housing. Mechanisms to de-link farm worker
housing from the specific farm / employer are under investigation and several schemes such
as the possibility of the establishment of Agri-villages (where secure tenure will be
available) on a pilot basis, sectional title and security of investment, are under
For a variety of reasons there is a general declining in
trend in personal savings and investment in housing in South Africa. Government regards
personal equity in housing as a corner stone of a sustainable housing delivery process.
Savings can also be used to gain access to credit in order to gear State subsidy
assistance and own equity in acquiring housing. It is therefore Government's intent to
allocate a portion of the national housing budget towards individually directed subsidies
to be linked to a programmed savings and housing credit scheme (savings linked credit
scheme). In exchange for a consistent and regular pattern of savings by the individual
over a prescribed minimum period of nine months and the individual being eligible for
credit at the time of completion of the savings cycle, accredited lenders in terms of this
scheme, will undertake to make available a mortgage loan or other housing finance to such
This mechanism is intended to have the effect of increasing
control in the hands of individuals with regard to access to housing credit, provides
mortgage lenders with an enhanced ability to assess credit worthiness and a level of
comfort with regard to the ability and willingness of the individual to repay. It is
anticipated to mobilise a significant amount of private, personal investment in housing in
the country, as well as have a significant impact on gender relations within the
household. These effects are expected to be vital components of stability and
sustainability in the sector.
5.5 Housing Credit
The availability and accessibility of credit for housing
purposes has been identified by Government as a key cornerstone in a sustainable housing
After an extensive process of consultation, research and
investigation the conclusion has been reached by Government that short and medium to
longer term intervention by Government is essential to enable a resumption of lending at
scale and to ensure sustained capacity mobilisation and growth as well as expansion of
lending activities to lower-income people.
5.5.1 Major Banks
It is essential that housing credit for low-income people
should become available at scale in the shortest possible time frame and the conclusion
has been reached that an important part of the solution in the short to medium term is the
mobilisation at scale of the major banks (mortgage lenders) into the lower end of the
market. Only these institutions have the infrastructure, resources and expertise to make
the necessary impact in the short term.
A banking code of conduct for housing finance, general
lending considerations and an agreement on lending targets, disclosure and monitoring
mechanisms have been negotiated with the Association of Mortgage Lenders. The historic
agreement will result in large-scale resumption of lending on a transparent, accountable
and sustainable basis, starting off with a target of
+-50,000 loans during 1995/6 at the lower end of the market
(down to loan size of R10,000) and growing to exceed 100,000 loans per annum by 1999.
[ Top ]
5.5.2 Non-Traditional Lenders (NTRLs)
Various parastatal and non-Governmental organisations
involved in the provision of housing credit, play an important role in the provision of
credit and especially in developing innovative new approaches to such provision. The
capacity of this sector, however, is currently relatively limited and, although Government
intends to provide specific support in order to grow and expand this sector, focus will in
the short term, also have to be on the major banks if the availability of credit is to be
enhanced. The need for special purpose lending vehicles as pioneering and innovating
institutions is, however, recognised and programmes to ensure the sustained growth and
expansion of this sector are envisaged to be part of the mandate of the National Housing
5.5.3 Facilitating the Provision of Housing Credit
It is recognised that, for large scale provision of housing
credit to be sustainable, such credit provision has to be viable and profitable for the
lending institutions, while affordable and accessible for the target market. Against this
background, Government is currently implementing a number of facilitative measures aimed
at creating an environment within which sustainable housing credit provision will be
188.8.131.52 Immediate Measures
The effective withdrawal of finance to the lower end of the
market in large areas in the country, necessitates extraordinary steps in order to
facilitate a resumption of lending activities.
Having identified the major banks as the most significant
short term source for such finance, government has engaged in negotiations with the banks
in order to determine the requirements for a re-engagement in the market. As a result of
these negotiations the following short term interventions are envisaged in order to enable
the banking sector to engage on a sustainable basis, given a substantially abnormal
lending environment in many areas in the country.
(a) Mortgage Indemnity Scheme
Financial institutions have, over the last few years,
suffered significant losses as a result of a situation in many areas where factors largely
outside the control of these organisations, have prevented the exercising of normal
contractual rights and the beneficial accessing of underlying securities of loans
As a result of this, financial institutions have identified
a requirement to be indemnified against a re-occurrence of such a situation where lending
has to take place in areas where such a risk may exist. As temporary measure to overcome
these concerns of the financial institutions and enable an immediate scale resumption of
lending at the lower end of the market, government will implement an indemnity scheme in
terms whereof the State will indemnify accredited financial institutions against losses
incurred under circumstances where beneficial vacant access to underlying securities
cannot be obtained, due to the breakdown in the due process of law.
The scheme will be introduced for an initial three year
period only and cover will be provided for all existing performing mortgages as well as
new mortgages granted by accredited financial institutions. Claims will only be met where
loans were made in terms of lending considerations approved by the mortgage indemnity
scheme and will be subject to defined limitations. Cover will be phased out after year
three with cover only remaining in place after the end of year three on mortgage loans in
those areas where the risk covered is still material. It will be essential for the State
to act decisively against continued occupation (without due arrangements and payments
being made) of properties bought in under MIS.
[ Top ]
(b) Existing Properties in Possession (PIPs)
Large portfolios of properties, involving approximately
16,000 properties, are currently held in possession by financial institutions where a
breakdown in the due process of law is preventing the execution of court orders and
beneficial, vacant attachment of the properties.
This situation has to be normalised, if new development is
to resume. Of specific importance will be the necessity for dealing with these properties
and the occupants in a manner consistent with approaches adopted under the MIS.
In terms of the understanding reached with the mortgage
lenders, existing PIPs will be individually assessed on a programmed basis over the three
year MIS cover term. If the breakdown of the due process of law is assessed to be the
partial or sole cause of an inability of the financier to secure beneficial, vacant
possession, part or all of the holding costs on such PIPs will be taken over by the State
for the remainder of the three year MIS cover term. Firm steps will be taken against
occupants refusing to vacate or pay for occupation, while efforts by both the financier
and State will continue to dispose of the property. Should a PIP not be disposed of by the
end of the three year MIS cover term and the breakdown in the due process of law still
prevails, MIS will purchase the affected property from the financier in terms of normal
MIS claims procedures.
(c) Right sizing
One of the major contributing factors to the large property
in possession holdings of financial institutions where beneficial vacant occupation cannot
be obtained and people are remaining in houses illegally, stem from the fact that limited
alternative accommodation for such households exist. There are no appropriate mechanisms
through which these families can be assisted to either down-size in terms of debt and move
into more affordable accommodation or to move into starter schemes in cases of severe
economic hardship, exist.
Government and participating mortgage lenders are jointly
establishing a service organisation (SERVCO). This organisation will specialise in
providing assistance to individuals experiencing difficulties in continuing to meet their
obligations under existing loans. The service organisation will, in addition, also provide
an ongoing service to the mortgage indemnity scheme and financial institutions with regard
to new properties purchased under the MIS or new loans experiencing difficulties under
cover of the MIS. The possibility of linking the Consumer Protection Programme into these
service centres, is also under investigation.
(d) National Home Builder Warranty Fund
Defective workmanship and other product defects have, in
the past, compromised housing consumers and contributed to payment stoppages and
consequent losses by financial institutions. Government is of the view that contractors
should be obliged to stand behind products delivered to vulnerable consumers without the
necessary knowledge and expertise to assess the technical integrity of the product
received. It is further believed that the construction industry as a whole should create a
mechanism through which an accredited contractors' warranty will be backed by a central
warranty mechanism in the event of such a contractor failing or not being able to meet his
/ her warranty obligations.
The construction sector has responded positively to a
proposal for self regulation and the creation of such a warranty mechanism within the
industry. A high level task team appointed by the construction and material supply sectors
as well as the affected professionals are currently working on proposals in order to
design a warranty scheme which will comply with criteria jointly developed between the
Department of Housing and various affected parties.
Of specific importance will be to ensure that such a scheme
does not, by virtue of qualifying requirements exclude small and emerging building
contractors from participation in the provision of housing. The possibility of special
mechanisms to enable such participation without compromising the right of the consumer to
a proper standard product, is currently under investigation.
It is envisaged that consumers will be given the choice to
either contract with an accredited contractor or to deliberately waive cover under the
proposed warranty fund, under which circumstances there will be a legal obligation on the
contractor to disclose this fact to the buyer.
[ Top ]
(e) Consumer Protection
Many instances of malpractice around advertising and
marketing of lower cost housing as well as fraud and the theft of deposits, have occurred
in the recent past. It has become clear that relatively unsophisticated consumers have
become the easy prey of the many unscrupulous operators in this market, not all of whom
can be described as small or 'fly-by-night'. This situation is exacerbated by the
relatively low entry barriers to the home building industry which attract opportunists who
in many instances do not last long. In the process of their demise they often deprive
families of vital savings accumulated for deposit purposes. The effects of this practice
are compounded by the fact that such deposits are not considered as rust money (such as
money paid to an attorney or registered Estate Agent). An investigation into this matter
has commenced under Section 8 (4) of the Harmful Business Practices Act No 71/1988 and a
Notice to this effect has been published in the Government Gazette. Pertinent legislation
to regulate such activities, proposed by the Department of Trade and Industry, is
currently under consideration.
It is Government's intention to fully explore all current
legal remedies and determine their adequacy and to implement appropriate measures to
provide adequate protection to consumers, should current measures prove to be inadequate.
(f) National Education Programme
Many of the problems associated with the provision of
finance and the exploitation of consumers relate to the very low levels of awareness and
understanding of the technicalities around housing and housing finance amongst the
majority of the population of South Africa. This historic disadvantage founded in the
limited exposure that people in the past were afforded to these issues, has to be
A proposal for the creation of a National Housing Education
Fund which will fund appropriate national and provincial educational programmes aimed at
informing and educating the general public about housing matters, is under consideration.
Such a drive will be implemented in conjunction with the
envisaged political campaign aimed at the resumption of payment for services received and
is seen as a vital component of an overall strategy to stabilise the housing environment.
(g) Fixed Instalment Mortgage Instruments
The ability of borrowers to absorb the impact of
fluctuations in instalments is severely limited at the lower end of the market. Large
fluctuations in interest rates have in the recent past resulted in significant numbers of
foreclosures as a result of instalments suddenly becoming unaffordable. The Association of
Mortgage Lenders have indicated that the banking industry intends to introduce fixed
instalment mortgage loans by the end of 1994. This initiative is encouraged by Government
as it is believed that the introduction of such instruments will contribute significantly
to meeting the requirements of the market. The principle of pricing for risk and cost is
likely to result in a higher interest rate on such bonds than the prevailing bond rate.
Accordingly, possible ways to reduce the cost of administration of such loans will be
investigated by Government, with the private financial sector.
184.108.40.206 The Establishment of a National Housing Finance
The possibility of a 'National Housing Bank' was raised in
the Reconstruction and Development Programme.
Following extensive investigations, including international
expertise from a number of countries, it was concluded that an institution tasked with
unlocking housing finance at the wholesale level at scale and on a sustainable basis, has
become necessary. Given the nature of its envisaged activities the name 'Bank' is believed
not to be appropriate, and the proposed institution will rather be known as the National
Housing Finance Corporation.
The range of interventions identified to be necessary to
mobilise credit are believed to require the efforts of a focused agency which will have to
be seen to be transparently accountable and whose performance can be objectively measured
in terms of effectiveness and efficiency.
Government therefore is currently finalising the detailed
design of a National Housing Finance Corporation with the mandate to promote and
facilitate sustainable provision of credit at scale, predominantly in the government
subsidised housing market.
[ Top ]
Work is being undertaken in order to determine the exact
nature of the functions to be performed by this corporation which may, inter alia,
- As agency of Government:
- The accreditation and monitoring of lending patterns and
performance of lending institutions,
- the identification, encouragement and support of viable,
people-driven, innovative approaches to mobilisation of savings and credit,
- the management of the national housing education fund,
- the management of the proposed (temporary) Mortgage
- overseeing and monitoring the activities of the proposed
- As agency for the National Housing Board:
- The administration of credit linked subsidies and the
credit-linked savings scheme;
- As parastatal business corporation:
- The possible partial underwriting of fund mobilisation by
lending institutions involved in experimental lending activities at the lowest end of the
- the funding or partial underwriting of the funding of rental
and social housing retailing institutions,
- the introduction of securitisation instruments into the
- providing a conduit for international investment earmarked
specifically for housing in South Africa,
- the issue of own paper in the market for purposes of funding
activities or the partial underwriting of paper issued by retail lending institutions,
- the management of a proposed equity assistance fund for
specialised lenders, including specialised (national or provincial) State corporate retail
- the monitor / regulation of the national home builders
warranty fund, and
- research and development activities around the promotion and
facilitation of credit provision in the country, both at the wholesale (funding) and
The work currently being undertaken will determine the
final functions, institutional positioning and the capitalization needs of this
organisation. It is intended that a corporate institution which is self sufficient in
terms of operating costs and eventually capitalization will be established and, if
possible and desirable, an existing institution will be rationalised / converted into the
The new entity will be given a clear and unambiguous
mandate and will be required to fully and publicly account for costs, income and risk
Regular efficiency and effectiveness audits as well as
performance audits with full public accounting to Government and Parliament will be
required in terms of legislation enabling the establishment of the National Housing
Finance Corporation. It is Government's firm intention to establish the Corporation as a
matter of the most extreme urgency.
With regard to short term (temporary) interventions to be
introduced and managed by this Institution, specific sunset provisions requiring
parliamentary review will be built into the design, in order to establish the necessity to
continue with these interventions at regular intervals as well as evaluate their
effectiveness and efficiency.
220.127.116.11 Rural Housing Finance
Similar to subsidies, finance for housing outside formal
towns in rural areas is virtually impossible to access.
The National Housing Finance Corporation will have, as
explicit part of its mandate from government, the responsibility to investigate, design
and introduce / promote mechanisms through which access to credit for housing purposes can
be substantially broadened.
This aspect will also form an integral part of the
envisaged Agri-village pilot programme as well as other approaches under consideration for
subsidy purposes. It is further anticipated that the issue of rural credit is to be the
subject of a Presidential Rural Finance enquiry, which is likely to provide greater
clarity on the status quo and way forward in this regard.
[ Top ]
5.6 Housing Support
Households access housing at a level commensurate with what
they can afford at the time. Given the subsidy approach outlined earlier, South Africa can
only afford to provide limited financial assistance to beneficiaries in the lower-income
segments of the housing market.
In order to assist individuals and communities in the
housing process, Government is currently considering the establishment (in conjunction
with the private sector where possible) of housing support mechanisms throughout the
country. These mechanisms are envisaged to, inter alia, provide:
- Advice and support to communities in the planning and
funding of new housing developments and their continuous upgrading;
- advice to prospective home owners / tenants on technical,
legal and financial as well as consumer protection aspects;
- planning assistance including the quantification and costing
of material and other requirements;
- assistance and advice in respect of contracting and
- assistance and advice in terms of material procurement at
affordable prices; and
- advisory support during the implementation/ construction
Such mechanisms will have to be subsidized from State
sources but should, as far as possible, involve contributions and participation of the
private sector, and are seen as essentially instruments in the hands of local government,
to support local communities in their quest to satisfy their housing needs. New housing
developments must therefore be undertaken on a programmed basis to ensure that projects
are public investment priorities until the necessary levels of social services and
development of the public environment have been achieved. Apart from multi-functional
public investment in order to achieve this, the mobilisation of credit for housing
purposes for those who can afford it, will be a critical success factor in such ongoing
5.7 Land and the Housing Development
The land delivery process, that is the identification,
allocation and transformation of undeveloped land into serviced land for residential
settlement (land development) is a critical component of the housing supply process. The
effectiveness of land delivery has a fundamental impact on:
- The rate and scale of housing supply;
- the potential for housing supply to contribute to the
socio-economic development and environment of poor communities; and
- the potential for housing supply to contribute to the
racial, economic and spatial integration of South Africa.
It is recognised that policies for most of the issues in
land delivery fall outside of the authority of the national and regional housing
authorities. However, given the key role of land delivery in housing supply, it is
essential that a housing perspective informs the future development of land delivery
policy at the national and regional levels. This approach is in line with the emphasis
placed in the Reconstruction and Development Programme on the coordination across various
government departments involved in development. Within the objective of providing the
context for the future formulation of detailed policy (comprising policy, administrative
practice and legislation), this White Paper proposes policy approaches for a number of
components that fall within the land delivery process. The approaches proposed are those
which best serve the overall housing strategy outlined earlier.
The components included in the scope of proposed land
delivery policy are:
- Land Use Planning;
- Land Development and Land Use Control;
- Land Registration and Tenure Systems;
- Infrastructure, Services Standards and Tariffs;
- Mechanisms for resolving conflicts in the Land Delivery
- Alienation of State owned Land.
[ Top ]
The fundamentally important issue of land restitution is
explicitly excluded from the scope of land delivery policy. This is because restitution is
a specific programme within land reform policy and not necessarily part of
development-oriented land delivery policy.
Clearly once communities have been allocated land through a
restitution process, the policies relevant to the transformation of that land into
serviced land for residential settlement will apply. It is expected that detailed land
delivery policy will be formulated at the national and regional levels in the medium term,
that is over the next one to two years. However, in the short-term, the National Housing
Ministry and Ministry of Land Affairs jointly tabled in Parliament this year, a
Development Facilitation Act. The Act proposes to give legislative effect to land delivery
policy. In addition, the Development Facilitation Act provides the enabling legislation to
set up appropriate institutions that would formulate comprehensive and detailed land
delivery policy at national and regional levels in the medium term.
Land delivery processes, i.e. land identification, land
assembly and land development, are processes that are relevant to a variety of land uses
other than housing or residential settlements. It is recognised that detailed policies,
administrative practices and legislation developed over time within the ambit of land
delivery policy will have to be informed by the requirements of sectors other than
housing. What is therefore presented in this document is a policy perspective on land
delivery informed by the need for South Africa to address the housing challenge within the
overall approach outlined earlier.
5.7.1 Overall Policy Approach
The following points of departure should inform detail
policy formulation in all areas that fall within the scope of land delivery policy.
18.104.22.168 Comprehensive Approach
Policies, administrative practice and legislation should
address both urban and rural settlement needs, should facilitate all forms of housing as
envisaged in the overall housing delivery approach and should facilitate both new
residential settlements and the formalising of existing settlements.
22.214.171.124 Equity in Products of Land Delivery Processes
Notwithstanding the use of a variety of different
procedures in land assembly and land development, to suit different circumstances, no one
form of human settlement should be accorded less legitimacy and permanence than any other
form. To do so would marginalise communities and undermine their economic, social,
physical and institutional integration.
126.96.36.199 Effective and Integrated Development
Policies, administrative practice and legislation should
promote efficient and integrated development, in that they:
- Promote integration with respect to social, economic,
physical and institutional aspects of development;
- promote the integrated and balanced development of rural and
urban areas in support of each other;
- promote the location of residential and employment
opportunities in close proximity to or integrated with each other;
- optimise the use of existing physical and social
- provide for a diverse range of land uses at all levels
(local and regional);
- discourage urban sprawl;
- contribute to the development of more compact settlements,
towns and cities;
- contribute to the correction of the historically distorted
racial and spatial pattern of South African towns, cities and rural areas; and
- facilitate and encourage environmentally sustainable
[ Top ]
188.8.131.52 Housing as a Desirable Land Use
While recognising the extent of the development challenge
in the RDP and therefore the competing claims for the utilisation of land, housing as a
land use should not be subordinated to other land uses (eg. mining, industrial).
The principle of non-discrimination should be upheld in all
policies, administrative practices and laws relating the land delivery process. This is of
particular importance in the rural context and in respect of gender equality.
184.108.40.206 Presumption Against Homelessness
Policies, administrative practices and laws should be such
that their implementation does not render people homeless.
In the administration of land delivery process, the maximum
degree of public participation should be sought. The absence of such an approach will
merely serve to continue and exacerbate the ignorance, anger and emotion surrounding the
release of land, and land use.
220.127.116.11 Sustainability of Land Delivery
Policies, administrative practices and laws should promote
the sustainability of land delivery in that they should:
- Result in the ongoing delivery of developed land at the
required scale and rate and on an ongoing basis;
- be within the fiscal, institutional and administrative means
of the country;
- promote the development of viable communities;
- promote environmental sustainability and deal sensitively
and responsibly with the impact of land development on the environment; and
- be suitable for the affordability levels of South African
18.104.22.168 Expeditious Processes
Policies, administrative practices and laws should promote
expeditious processes for the identification of land, the assembly of land and land
development (the transformation of undeveloped land into serviced land for residential
Policies, administrative practices and laws relating to
land delivery should be transparent in that they should:
- Be clearly and simply described;
- be made available generally to all interested parties;
- serve as guidance and information not merely as regulatory
- facilitate the promotion of trust and acceptance.
Public sector administration of land delivery processes
should be open and accountable.
[ Top ]
5.7.2 Substantive policy approaches
22.214.171.124 Land Use Planning
Role of Land Use Planning Land use planning is a specific
public sector intervention that creates the framework for managing the allocation of land
uses among competing development needs. As such it is a basic precondition for
facilitating housing supply.
As a key public sector intervention land use planning
should serve a range of objectives. The objectives relevant to housing are:
- To redress the spatial inequities and distortions that have
resulted from planning according to apartheid and segregation policies of the past;
- to ensure that housing is developed on well-located land
which promotes physical social economic and institutional integration of South African
- to translate national and regional reconstruction and
development policies into appropriate on-the-ground development;
- to provide the framework of certainty necessary to mobilise
investment into development from both government and non-government sectors; and
- to ensure that well-located land is allocated specifically
for affordable housing alternatives.
126.96.36.199 Development and Planning Commission
The Development Facilitation Act provides for the
establishment of a Development and Planning Commission. This statutory Commission will be
responsible for, inter alia, the formulation of policy, administrative practice and
legislation with respect to land use planning. In effect, the Commission will be charged
with the sensitive and long-term challenge of reviewing all planning and related
legislation in South Africa, with a view to the amendment, repeal and replacement of
188.8.131.52 Urgent Identification of Land for Housing
Given the urgent need for housing it is undesirable that
the identification of land for housing is delayed while the planning and development
commission is established, the performance criteria are set and land use planning
processes are set in motion.
Provincial, metropolitan and local authorities are to
identify specific parcels of land that can be developed in the short-term. This
identification process is to override existing guide plans, structure plan, zoning schemes
or other statutory plans.
The identification of land in the short-term should be
guided by the overall policy approaches outlined earlier.
5.7.3 Land Development and Land Use Control
Policy on land development and land use control affects all
types of development. As such, approaches taken have important implications for housing
delivery. As a major development thrust will be the provision of housing, it is
appropriate that the policy orientation to land development and land use control
accommodates needs from a housing perspective.
The land development process is, by its very nature, a
highly complex administrative procedure which requires detailed and fair regulatory
frameworks. Within a housing context, the development process should accommodate and
legitimise all valid housing processes, including formal and informal housing delivery,
new residential settlements, the upgrading of existing settlements in-situ and
redevelopment, for example, of inner city areas. Existing regulatory frameworks do not
accommodate all of these in a balanced way and may even render some of the processes
invalid or unlawful. In developing new systems or amending old ones, it is necessary that
policy direction be provided at the national level. This section sets out this broad
national approach. It is anticipated that detailed approaches will be developed through
other processes, such as that prepared in the Development Facilitation Act.
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184.108.40.206 Objectives of Land Development and Land Use
A national policy approach to land development and land use
control should from a housing perspective, have the following objectives:
- The land development process should accord equal status to
all valid housing processes;
- the land development process should provide the best
possible security of tenure for individuals, families and groups, development agencies and
businesses and others who have investments in the land;
- the land development process should deliver housing at the
required rate and scale through optimising the contributions of all sectors active in
- the land development process should limit the costs of and
the time taken for developing and holding land;
- the land development process should be sustainable;
- the land development process should be transparent;
- the land development process should lead to the
establishment of adequate land use control systems for new residential settlements; and
- public sector administration of the local development
process should be open and accountable.
5.7.4 Land Registration and Tenure Systems
Policy on land registration and tenure systems falls within
the ambit of the ministry for Land and Regional Affairs. There are, however, important
implications for housing delivery that flow from the policies and legal frameworks that
are established nationally for registration and tenure systems. It is therefore
appropriate for national housing policy to detail the orientation, from a housing
perspective that are required in registration and tenure system.
220.127.116.11 The Key Requirements on Registration and Tenure
Systems from a Housing Perspective
Any policy regarding land registration and tenure systems
which fails to recognise the enormous importance of the informal land transfer systems
operating in South Africa would be incomplete. Informal tenure systems operate outside of
the formal land registries and are based either upon customary tenure or upon existing
freehold sites. The informal systems tend to perpetuate themselves in circumstances where
the entry barrier into the formal land registration system remains high. Essentially,
security of tenure depends upon the community's will and capacity to sanction those who do
not conform, from the community. The system leads to abuse in a number of respects:
- Members of a community are unable to enforce an abstract
right to property in the face of community pressure - i.e. they are not empowered to
maintain their fundamental rights to security of tenure as contained in the Interim
- informal tenure systems based upon the sanction of
banishment often degenerate into patronage systems which can be very negative for families
in a community; and
- customary tenure systems tend to discriminate against women.
However, customary tenure has been historically important
in providing a social safety net wherein the moral land ethic to provide to those in need
ensured many a displaced person of a place to stay.
The land registration and tenure system must cater for the
variety of different housing delivery approaches as envisaged in the overall strategy.
The system must be such that end-user finance in the form
of mortgage finance and housing subsidies can flow early on in the development process so
driving down the costs of development and ensuring the mobility of developers,
particularly in the NGO sectors.
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The existence of parallel land registration systems has
created unnecessary and unjustifiable complications and distinctions between various forms
of title. In most cases, these systems developed in parallel to the mainstream land
registration system of the country for ideological reasons, based upon the principle of
creating separate, racially based administrations. It is clearly in the interests of
institutional simplicity that the administration of land registries currently existing in
various jurisdictions comprising the area of South Africa as constituted in 1910, should
be unified by incorporating parallel systems into the mainstream Deeds Registry system
governed by the existing Deeds Registries Act.
The policy orientation is to further develop informal and
customary tenure systems into a formal and registered social contract. The State
maintained registration system will be simultaneously developed to accommodate such
contracts and hence both the needs of the State and the preference of communities are met.
5.7.5 Mechanisms for Resolving Conflicts in the Land
The government's policy position on conflict resolution in
the land delivery process has been developed within the context of the Development
Facilitation Act (DFA).
Two key needs have been identified in the area of
governmental decision-making in relation to land developments:
- The need to ensure expeditious and binding decisions of
government in difficult cases where bilateral or multi-lateral disputes exist between
various stakeholders in the context of a development; and
- the need for an approach to 'public sector management' which
expedites the traditional cumbersome and time consuming process of gathering comments and
approvals in respect of a proposed development, from a range of government departments and
public enterprises, without which a development can normally not proceed.
Bilateral and multi-lateral disputes have much potential
for delaying and even frustrating projects, in relation to a number of issues, eg.:
- Land development generally (eg. the 'N.I.M.B.Y.' syndrome);
- non-linear developments specifically (for example, upgrading
projects, where sequential steps traditionally associated with cadastral development have
not been adhered to prior to settlement);
- engineering services responsibilities of various sectors
(eg. local government and developers);
- levels and standards of engineering services, where there is
a fundamental difference of interest between the developer and government body (low input
cost for internal services, leading to high levels of required maintenance, vs the
opposite interest of the public authorities); and
- local government jurisdiction.
5.7.6 Policy Approach to the Disposal of Publicly-owned
Land for Low-income Housing
Land held by public authorities represents a significant
national asset and the allocation and disposal of it should be undertaken within a policy
18.104.22.168 Points of Departure for a Policy Approach
- The approach is a short-term one to encourage the
development of low-income housing;
- it is largely an urban approach, targeting land within and
adjacent to local authorities;
- the emphasis is an promoting positive development
- the success of the approach will rely on commitment from
local governments and all land-owning public authorities;
- the approach does not attempt to audit all public land; and
- the approach does not address the land claims and
restitution issue but should not conflict with it.
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22.214.171.124 Definition of Publicly-Owned Land
Land that will be subject to the policy approach must
include all land currently owned by a public authority that was acquired at some point
with public funds or was donated for public use. The authorities included in this
definition are central State departments, provincial and local authorities, former
self-governing territories and TBVC States, in the first instance.
Although more difficult to access, former State but now
privatised or commercialised institutions holding former public land, parastatal
institutions and State-sponsored institutions should be included.
126.96.36.199 Definition of Disposal of Land
The disposal of land includes all acts which have the
effect of making the land concerned available either for development by that same
authority or another party including sale (by tender, auction etc), donation, land
availability agreements and long leases.
188.8.131.52 The Proposed Approach
Consistent with a housing approach, all publically-owned
urban land is ultimately destined for either housing or non-housing uses. Using these two
broad distinctions, a two-pronged approach is envisaged:
Approach to Non-Housing Public Land
- Where land is destined for non-housing uses, there is the
need to determine whether any of this land is suitable for low-income housing;
- any public land to be alienated or developed by the
authority should notify the local authority who will bring these intentions to
develop/alienate to a review body;
- a review body should assess the applications and make a
- where land is found to be suitable for low-income housing
the review body should notify the appropriate Provincial MEC who shall instruct the
authority not to proceed with the non-housing use;
- as a short-term measure, it is proposed that land which is
not already zoned in terms of a town planning or zoning scheme and land subject to
rezoning fall within the ambit of his policy; and
- the review body should make its decisions based on
guidelines developed by national housing, planning and reconstruction and development and
on the merits of each application. They should also act in conjunction with institutions
adjudicating urban land claims which may be considering similar tracts of land.
Publicly-Owned Land Destined for Low-Income Housing
- Each local authority must make public notification of public
land within their area which has been earmarked for low-income housing;
- this identified land will either be disposed of to a
developer for low-income housing development or be retained by the authority for
development by the authority;
- where land is to be developed by a developer, the methods of
disposal of the land must be transparent, fair and open. Current methods used such as
public tendering, land availability agreements or long leases must be reassessed to meet
these requirements; and
- where land is to be developed by the authority itself for
low-income housing, checks are required to ensure that it reaches that destiny. As this
land was subject to a public notice, any party may monitor the development and lodge a
complaint. The complaint should be lodged with the local authority for land other than
local authority land and additionally with the provincial minister where it is local
- All publically-owned land which has been advertised for
low-income housing must, in addition to public 'watchdog' monitoring, be monitored by the
local authority. A quarterly progress report must be submitted by the local authority to
the Provincial Minister concerned.
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5.8 Infrastructure, Service Standards
The policy approach outlined below applies to the provision
of water, sanitation, roads, stormwater drainage and domestic energy to housing
developments. The question of institutional arrangements in respect of energy to housing
developments. The question of institutional arrangements in respect of energy is currently
being dealt with by the Department of Mineral And Energy Affairs, and is not addressed
The Policy approach covers four main focus area:
- Institutional framework and role of sectors:
- technology choice and infrastructure choice; and
- cost-recovery and tariffs.
5.8.1 Institutional Framework and role of Sectors
The current institutional arrangements for the provision of
water and sanitation has resulted in the lack of provision of these services in many
instances. There is fragmented responsibility a national level, an absence of authorities
at provincial level and varying degrees of functionality at local government level. Before
proposing institutional reform in this area, certain important principles need to be
included in new national legislation to enable effective institutional structures. These
- Institutional arrangements should cover the whole area of
population of South Africa;
- national bodies should be responsible for setting an
enforcing compliance with minimum standards;
- appropriate water management systems, preferably catchment-
based, should be created;
- services should be provided and operated on a sustainable
basis with regard to both fixed investment, operation and maintenance and the natural
environment. The general consumer must be responsible for paying for the service.
- institutions should be accountable to the communities they
serve, There should be clear roles and responsibilities for service provision; and
- responsibility for the provision of water and sanitation
services must be devolved to the lowest institutional level where adequate competence and
There are always cost implications for the setting of
standards. As a general rule it should be stated that the higher or more restricted the
standard, the higher the cost to the community as a whole. Sensitivity to regional
variation is also important and there may well be instances where, in the national of
regional interest, alternative standards that do not meet the accepted standard in the
short-term, may have to be considered. The policy approach to the standards issue covers
two broad categories of standards:
- environmental standards
- physical standards
(a) Environmental standards
There is a need for a set of national standards for the
provision of water and sanitation services and the management and control of human
activities on the country's water resources.
Existing standards in terms of the following legislation
should be used as the point of departure in writing new legislation:
- SABS 241 (1984) Water for Domestic Supply: for water quality
- water Act (Act 54 of 1956) as amended: for sewerage effluent
quality for discharge into water courses
- health Act (Act 63 of 1977) for the maintenance of public
- environment and Conservation Act (Act 73 of 1989) as amended
for solid waste.
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In respect of electrification, insufficient attention has
been paid to the relationship between thermal efficient qualities of housing, and the
generating needs with the energy sector. For example, the provision of basic insulation,
including the installation of ceilings, can have a real and quantifiable beneficial impact
on our society. This is equally true at the point of consumption as well as at the point
The departments of Housing and of Mineral and Energy
Affairs have already had preliminary discussions about the need for, and potential
benefits of, a much closer coordinated approach to this issue.
(b) Physical and Engineering Standards
Due to structural tensions (between authorities, developers
and consumers) in the provision of services to housing developments, there is a need for a
conflict resolution mechanism.
the respective financial and other responsibilities of
developers, township applicants and local government bodies to provide internal and
external engineering services to a particular housing development; and
the levels and standards of engineering services to be
provided in a particular housing development.
Appropriate engineering standards should be formulated at
provincial level;. They should be clearly documented and publicly available. Significant
work has already been done in this area and it is suggested that chapters 6 to 10 of the
so- called "Red Book" produced by the Division of building Technology of the
CSIR, be used as a basis for determining these standards.
5.8.3 Technology Choice and Infrastructure Costs
The policy approach taken in this regard is that provincial
authorities should define a service matrix for use by local authorities. It is important
to recognise that the choice of service level is influenced by a range of interactive
factors, such as:
- The nature of the housing development eg: greenfield in-situ
upgrading, inner-city infill etc;
- access to and availability of bulk-infrastructure;
- on-site conditions;
- site layout, site sizes and densities;
- community needs and priorities and the need to ensure basic
health, safety and welfare;
- ability of local authority to administer and maintain
- the ability to upgrade services where necessary; and
- impact of technology choice on the environment.
5.8.4 Cost-Recovery and Tariffs
The structure of the tariff for both water and sanitation
should be set at the national framework or strategy proposed. This does not imply the
changing of nationally uniform tariffs as regional variations must be accommodated.
Underlying the approach set out below, is the principle
that communities should pay for the operational and maintenance costs of the service
provided. Hence, water and sanitation services should not be provided free.
However, in the case of the destitute, there should be a
form of State subsidy administered through the State welfare department, or alternatively
creatively applied within the tariff structure itself. As distinct from the destitute, the
poor also need to be identified as a target market for policy regarding cost-recovery and
tariffs. The category of "poor" should be defined at provincial level and
applied consistently across that region.
External bulk and connector services to residential areas
must be provided by local authorities and this cost recovered through charges raised on
users of the service. This policy position is likely to imply the need for rationalisation
of various State corporate structures, so that local authorities are able to access
appropriate loan finance for the provision of such bulk and connector services.
Internal infrastructure must be provided by developers at
their cost excluding internal revenue generating services.
The poor should pay a life-line or social tariff, which is
transparently subsidised. Other users will have to cross- subsidise this through a tariff
structure which rises with increased consumption and includes a subsidy portion, while the
possibility of contributions from provincial and even national fiscuses cannot be ruled
out, given the potential magnitude of such subsidies.
Where there are dry, on-site systems the tariff is based on
the cost of emptying the system. In wet, off-site systems there is a very close link
between water supply and sewage disposal hence a cross-subsidy approach similar to that
for water is proposed based on 60% of the water consumption per household per month. A
higher percentage may need to be used for flats and other high density areas where more
water is discharged to the sewer. (Revise in accordance with recent White Paper on Water).
Solid Waste Disposal, Roads and Stormwater:
For the provision of these services to the poor it is
considered most equitable to raise a monthly service charge per household based on the
historical operation and maintenance costs of each service.
All other users should pay the full cost for the disposal
of solid waste and the maintenance of roads and stormwater drainage.
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