Housing in Southern Africa July 2016

Continued ▶▶▶

‘Government has increased the social housing budget and it forms part of human settlements, integrated

developments and Catalytic projects.’

Mogane joined, there were only four or five social housing institutions – of which three had tenants. By 2001, the NHFC had rationalised the business and brought the HIDF under its wing, bringing with it 2 900 units. In 2004, the Minister of Housing, Sankie Mthembi-Mahanyele, sepa- rated the Social Housing Foundation and made it independent of the NHFC. Social Housing Foundation continued to provide capacity build- ing programmes, whilst the NHFC continued to provide top-up funding. Each year two or threemore social housing institutions came on board and, in 2008, the Social Housing Foundation evolved into the Social Housing Regulatory Authority (SHRA). The new regulatory authority ac- credited social housing institutions and projects and mobilised grant funding. With this came the sourcing of technical expertise to support the institutions in developing housing stock. Today, SHRA provides 70% of the grant funding required and the NHFC provides 30% of the funds required in the form of a project loan. Mogane explains that 70% of grant funding is non-repayable, but comes with certain conditions and criteria to serve this sector – and to make social housing rental space affordable. Rental levels are determined by SHRA. In 2009, the income criteria in- creased to between R1 500 and R7 000. This, however, does not mean that someone earning over R7 500 cannot access social housing, Mogane says there is a formula that provides for cross subsidisation. For example, someone who earns R3 500 per month will pay rent of R750 or R1 000 per month, whilst another tenant earning R10 000 per month will be charged R1 800 or more per month. Cross subsidisation makes it more affordable for everyone. One of the key requirements of any social housing institution is to be sustainable from the rental income it generates, to repay loans. It has to provide, clean, decent, well located

neighbour R1 800.” Soc i a l hous i ng i s not on l y about families. He mentions that the Madulammoho Housing As- sociation provides accommoda- tion for abused mothers and dis- advantaged people. The individual units share communal bathrooms, recreational areas and kitchen facili- ties. Mogane says that in 1998-2000 the cost was between R50 000 and R60 000 to build a one or two bed- room unit – R18 400 was provided from the social housing subsidy and the social housing institution still required R41 600. At that time the NHFC financed 80% of the deal and the social housing grant subsidy was 20%. Today, a two bedroom social housing unit costs R370 000, grant funding including subsidies is R235 000, the NHFC top up loan is R145 000, and the average monthly rental is R1 200. He explains that the bulk of the funding comes from SHRA. Social housing does not yet meet the demand but, says Mogane, “Those people who are able to rent froma social housing provider are far better off, than they would be paying market related rentals.” There has been considerable interest from European multilateral institutions who are keen to fund social housing. This is a positive sign and shows that social housing is on the right trajectory.” Going forward, NHFC will no longer be the sole funder. Commercial banks, local authorities andmunicipalities will be providing funding for social housing

accommodation. In addition, extra resources should be used to provide amenities such as recreational facili- ties and after school facilities. “That’s what makes social housing,” says Mogane. He cites examples of social hous- ing providers in Holland. “It is almost like living in a middle income house – the social housing complex includes a crèche, after care facilities, and some even include frail care facilities for the elderly. We are not there yet ‘The challenge is to differentiate between the units without creating tension between neighbours as one tenant may pay R750 and the neighbour R1 800.’ compared to European standards, but are getting there. We now have 51 social housing institutions and 23 of them own andmanage their units. The number of social housing units is well over 24 000. South Africa is still in its infancy compared to overseas where some social housing institu- tions are 100 or 150 years old.” Another challenge for social hous- ing institutions is size of the units. Mogane explains that the social housing provider has to be innova- tive in the way that space is used, in order to maximise the number of units and make the organisation sustainable. “The challenge is to dif- ferentiate between the units without creating tension between neighbours as one tenant may pay R750 and the

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