BREAKING NEW GROUND Portfolio Committee on Housing

BREAKING NEW GROUND Portfolio Committee on Housing_September 9, 2004

Introduction Ø Presented departmental budget June 10, 2004 Ø Budget debate Ø MPs raised concerns Portfolio Committee on Housing_September 9, 2004 2

What were these concerns? 1. Demand 3. Funding 2. Supply 4. Institutional Portfolio Committee on Housing_September 9, 2004 3

1. DEMAND l Current Demand – Realised Demand ¡ ¡ Approximately 2, 4 m households living in informal structures Only 800, 000 on the approved subsidy list – Unrealised Demand ¡ “Ineligible” beneficiaries – – l Previously accessed subsidies in another location Legal requirements of for eligibility (eg dependents not registered legally). Future Demand – Set to grow disproportionately o Net Population growth, Smaller household sizes & Rapid urbanisation Portfolio Committee on Housing_September 9, 2004 4

2. Supply 1. 6 million houses built since 1994 but ØMajor part of the subsidy spent on land & infrastructure ØLittle money left for house ØLittle or no community facilities or amenities ØSupply too homogenous – “no choice” ØLack of access to rental stock ØOne house, one plot model ØConstruction of poor quality ØHousing supply slow with little monitoring ØComplex and lengthy planning process ØLengthy deeds transfer process ØLack of capacity in public and the private sector ØWithdrawal of large construction companies ØAbsence of subsidy or consumer information ØWeak estate agency market in township areas Portfolio Committee on Housing_September 9, 2004 5

3. FUNDING Close to R 30 billion spent on delivering to 1, 6 million households since 1994. Overall challenges – Funding formulae have not kept pace with inflation, income cut-offs too low, lack of flexibility in the funding system Informal market – The low levels of employment and limited subsidy funding combine to ensure that overall funding levels are low to non-existent Incremental and old township markets – Mortgage finance is unavailable Privately developed market – Mortgage finance is limited to this market because of perceived affordability and risk issues Hardest hit are those that earn between the R 3, 000 – R 6, 000 to 7, 000 pm Portfolio Committee on Housing_September 9, 2004 6

4. INSTITUTIONAL ØSubsidy process - complex, slow and bureaucratic ØSuggestions of corrupt local government practices ØTitle transfer processes slow ØIntegration with other development processes weak eg basic service infrastructure, social infrastructure. ØThe NHFC is an “overly bureaucratic institution” ØCurrent Social Housing Association model are costly bureaucracies unable to deliver affordable housing. Need to separate governance roles from operating and managing roles ØIllegal occupation of houses ØPassionate Leadership at all levels is critical to success Portfolio Committee on Housing_September 9, 2004 7

AFTER THE BUDGET? Ø We listened Ø We consulted the politicians, communities, banks, construction companies and all those who were ready to share their experiences Ø We understood the issues Ø We have come with a dynamic plan that will be tested in 18 pilot projects around the country between now & March 2004 Ø We will evaluate the plan after the pilots are complete & then full steam ahead in April 2005 Portfolio Committee on Housing_September 9, 2004 8

Issues to be resolved after the budget debate What are the real needs and choices facing different communities ? How does Government enable the creation of sustainable communities ? Portfolio Committee on Housing_September 9, 2004 9

The Evolution of the Plan Houses Policy in 1994 Strengthen Policy Sustainable Communities l Policy Integration l Sets playing field l Note: Source: Incentives Integrated Government Delivery Portfolio Committee on Housing_September 9, 2004 10

THE PLAN FOR EVERYONE • • • For all South Africans it provides more money for houses and an opportunity to access homes in well designed, serviced and located human settlements; For the hardcore poor ie pensioners and the indigent, the ability to access a home for rental or ownership with no savings requirement; The poor ie those with access to some sort of employment - the ability to access a home for rental or ownership with a cash or ‘sweat equity’ contribution; Those earning above R 3, 500 – R 7, 000, a deposit to access credit; All subsidy beneficiaries will get increased access to credit and a choice of ownership options and top structures; • • • For urban migrants and highly mobile job seekers and seasonal workers, access to a renting in the city while owning a home in the rural area; A decent life for people in the informal settlements with security of tenure, access to services, housing choices and a better life; For the financial sector, commitment to a partnership with Government and a conducive lending environment The construction sector too receives the government’s commitment to a partnership, an enabling environment including incentives to participate actively in housing delivery to the poor. For all South Africans, to participate in a fast tracked delivery mechanism that creates sustainable communities. Portfolio Committee on Housing_September 9, 2004 11

What are human settlements? Public Transport Provision of Basic Services Safety and Security Funding Housing Public Spaces Community Economic Opportunities Title Deeds Health & Education Services Portfolio Committee on Housing_September 9, 2004 12

THE PLAN High Level Details Portfolio Committee on Housing_September 9, 2004 13

1. Redefinition of role • Oversee entire residential market. • Housing to sustainable settlements. • Policy, Implement, Monitor & Audit. • Create non-racial integerated societies. Portfolio Committee on Housing_September 9, 2004 14

2. SUBSIDIES • For the hardcore poor : Access to R 25, 800 with no savings requirement. • The poor access a home for rental or ownership valued at R 25, 800 and a cash or ‘sweat equity’ contribution of R 2, 479. • Those earning R 3, 500 – R 7, 000 per month, contribution to the deposit required for mortgages Portfolio Committee on Housing_September 9, 2004 15

3. QUALITY PRODUCTS • Choice & quality non-negotiable. • Work smart. • Multi-departmental approach – Bulk Infra structure – Land • Approach ensures subsidies spent on quality and bigger top structure Portfolio Committee on Housing_September 9, 2004 16

4. RENTAL • Rental • Rent to buy • Part of broader urban renewal and inner city regeneration • Housing to be dovetailed with urban development zone tax incentive Portfolio Committee on Housing_September 9, 2004 17

5. INFORMAL SETTLEMENTS • Reduce & replace. • Suitability located – upgrade on area wide basis. • Certainty, access to proper services, security, choice and formal top structures. Portfolio Committee on Housing_September 9, 2004 18

6. PRIVATE SECTOR • Financial Sector – the government’s commitment to a partnership, an enabling environment including incentives to lend to all households; – negotiate the housing provisions of Financial Services Charter; – Review pre-emptive recovery rights of local authorities. • Construction Sector – Opportunity to partner with government; – Established & BEE (men and women) contractors; – Skills development • Employer Assisted Housing Portfolio Committee on Housing_September 9, 2004 19

7. HOUSING: Creating Wealth • Consumer education on housing as an asset. • Encourage linkages between primary & secondary markets. • Limit barriers for re-sale of subsidised house from 8 to 5 years. • Title deeds. Portfolio Committee on Housing_September 9, 2004 20

8. Housing Institutions • Evaluate and redefine the mandates of all housing institutions. • Align to the Plan Portfolio Committee on Housing_September 9, 2004 21

9. FAST TRACK DELIVERY • Delivery chain timelines. • Strong Project Management. • Responsibility and Accountability. • Role of local government. • Accreditation. Portfolio Committee on Housing_September 9, 2004 22

10. IMPLEMENTATION • Current Projects to continue • Next 100 days – 18 pilot projects • National Implementation Team • Inter-Ministerial Committee • Evaluation & Assessment • Streamline plan & full speed ahead by April 2005. Portfolio Committee on Housing_September 9, 2004 23

THE PLAN IN ACTION “N 2 Gateway Project” Cape Town Portfolio Committee on Housing_September 9, 2004 24

Statistics 1. 2. 3. 4. 5. 6. 7. 8. No. of households 10 000 Existing densities range from 60 -125 / ha Existing area 124 ha Developable area estimated 48 ha Target densities (4 storeys) 150 du/ha Capacity of N 2 land 7 200 du Deficit 2 800 du Land identified in Delft & Driftsands Portfolio Committee on Housing_September 9, 2004 25

Scope of the Project CT Int Air t por Portfolio Committee on Housing_September 9, 2004 26

The Synergies Epping Industria Joe Slovo New Rest, Kanana, Barcelona Airport Industria URN KYA URN MP Portfolio Committee on Scope Housing_September 9, 2004 of N 2 Gateway 27

Borcherds Quarry Interchange Portfolio Committee on Housing_September 9, 2004 28

Barcelona Portfolio Committee on Housing_September 9, 2004 29

A Vision for Barcelona Portfolio Committee on Housing_September 9, 2004 30

Airport Approach Road Portfolio Committee on Housing_September 9, 2004 31

New Rest NY 1 Kanana Portfolio Committee on Housing_September 9, 2004 32