Social housing is a powerful tool to integrate divided towns and cities by providing reasonable rental accommodation for low-and moderate-income working households. It can bring communities together in concentrated urban areas and revitalise run-down settlements where municipalities have gone bankrupt.
The introduction of the grant at the height of the Covid-19 pandemic in 2020 increased the number of those getting financial assistance from the government to access decent accommodation to a whopping 29 million.
According to the Department of Human Settlements, the programme provides for grant funding to establish, capacitate and capitalise social housing institutions which may develop, hold and administer affordable rental units within identified restructuring zones. Post-covid, the recipients of this social assistance stand at 18 million people.
Social housing is the government’s primary housing product for achieving the desired support transformative spatial outcome. The Social Housing Regulations Authority (SHRAs), which was established in 2010, has a mandate to invest in, as well as capacitate and regulate the social housing sector.
There are two primary intentions of social housing: firstly, to deliver affordable rental housing — for those who mostly do not qualify for free Breaking New Ground (BNG) accommodation, a more updated version of the Reconstruction and Development Programme housing programme, but also, for those don’t qualify for bank financing to purchase a house.
The functions of the SHRA are as follows: promote the development and awareness of social housing as well as an enabling environment for the growth and development of the sector. We hope this article will help to create some awareness of the workings of this initiative. The SHRA has total assets as of 2022 of R 1 160 980 584 under management, which is substantial.
BNG housing, which is a subsidy that builds on the existing housing policy articulated in a White Paper on Housing in 1994, shifts the strategic focus from simply ensuring the delivery of affordable housing to making sure that housing is delivered in settlements that are both sustainable and habitable.
Sipho Nkosi, who is the head of the Red Tape Reduction (RTR) task team in the Presidency, has the mandate to reduce excessively complex rules, regulations, procedures, and processes in key areas of the economy and working with relevant role-players. We wrote to the Portfolio Committee on Public Service and Administration, Performance Monitoring & Evaluation, to advise us on what Nkosi has achieved in respect of cutting red tape at SHRA, and we will advise our readers on the answer.
Meanwhile, the following structure speaks for itself regarding a complicated matter at hand.
The qualifying criteria that must be applied by the Regulatory Authority for purposes of accreditation as a social housing institution are not for the faint-hearted. It requires a very devoted individual with a lot of patience to work through this bureaucratic mountain of obstacles to be overcome to provide social housing. The criteria can be found online at www.gov.za.
The application contemplated in sub-regulation (1) must be accompanied by (a) the institution’s founding documents; (b) the institution’s business plan; (c) the institution’s operational policies; and (d) such information and documentation as may be prescribed by rules of the Regulatory Authority in order to assess the applicant’s- (i) arrangements for good governance; (ii) financial sustainability; (iii) effective tenant management; and (iv) efficient property-management capacity. (3) Applications must be submitted to the Regulatory Authority.
Perhaps it is time to change the name of the Regulatory Authority to “Stumbling Block Intervention Creator Department, with the slogan “beat us if you can” as is the case with the tobacco trade, the excessive taxes has created a huge incentive for illegal cigarette trade to develop. No one will be surprised (and watch this space) if there is not a side hustle created where aspirant social developers can send their documentation and application to a “service provider” that will ensure the documents are made compliant with SHRA regulations.
Some statistics are: total housing needs to be increased by 178 000 units per annum. Over one million households qualify for SHRA rental units. The SHRA unit output between 2014 – 2019: was 13,968 units. The market potential is influenced not only by consumer income and expenditure, but also by the characteristics of the site/location where future development activities are to take place. Retail centres and other urban property markets have specific location requirements, and given the fact that the development potential of an array of other uses should also be tested, these should also be included in the location assessment exercise.
An example of a location score evaluated by Demacon, a company creating economic and real estate consultancy services, in 2019: Restructuring Zone Grading Score. Score, %; Fairview 478, 81,0%, Bay West / N2 Hub 475, 80,5%, Hunters Retreat 472 80,0%, Lorraine 469, 79,5%, Summerstrand 454, 76,9% Kabega Park 449, 76,1%, Parsons Vlei 444, 75,3% 2010 Stadium Precinct 430, 72,9% Despatch CBD 428, 72,5% Uitenhage CBD 425, 72,0%.
The table below indicates what grant the SHRA will offer a registered developer per unit. There are two grants available: Restructuring Capital Grant (SHRA) and the Institutional Subsidy (Province), and the two combined are called the Consolidated Capital Grant. Typically these combined grants will not exceed 70% of the total development cost.
Since this is a social housing benefit, it is only available for people within certain income brackets. The table below shows people with which income levels are eligible.
A Developer is encouraged to incorporate a mix of income-level tenants within a development. The table below shows the recommended spreads of various income-level tenants that SHRA would like to see in a development.
Our readers that fall into the above income brackets are encouraged to contact SHRA at https://shra.org.za to see if there are any developments in their area, either new, upcoming, or existing buildings with vacancies. They have a special page on “how to become a social housing tenant.
Kruger is an independent analyst.
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