Government is intensifying efforts to end the protracted
negotiations that have been holding up the release of R42-billion
set aside by South Africa's banks and financial institutions for
affordable housing for people in lower-income brackets, the
Minister of Housing indicated yesterday.
Government began negotiating with members of the Banking Association last year, and hopes to eventually see the release of the funds that would see South Africa's poorer communities absorbed into the housing market shortly, Lindiwe Sisulu told a media briefing yesterday.
The current holdup is because of the guarantees that the banks want from government over bonds for affordable housing, Sisulu said.
Government is refusing to offer any guarantees in the event of non-payment of a housing bond, or loan, and is insisting that banks and financial institutions assume the risk of their business activities.
The banks have been calling on government to guarantee their risk and to mitigate any loss of funds in cases where owners have defaulted on their bonds.
This is the major sticking point in the negotiations, said Sisulu yesterday, adding that government was in negotiations with the banks on “how to push this forward”.
In an interview with BuaNews, the head of media services in the Housing Ministry, Ndivhuwo Mabaya, said: “We also believe that the majority of our people, given enough consumer education on the value of a housing asset, as well as necessary financial support, have the ability to pay their own bonds.”
Government is, however, willing, to assist first-time homeowners with a once-off first homeowner subsidy, said Mabaya. This will be a once-off subsidy, based on the income of the applicant, and will constitute a percentage of their approved bond by the bank.
This would go some way to ensuring that home-owners can afford bond repayments and banks can sell bonds to more and more people, he said.
The release of the R42-billion set aside by the banks for lower-income housing “will contribute to the revitalisation of the secondary housing market - mostly in townships - and broaden access to houses for the majority of the people”, said Mabaya.
Among the other things already agreed by the banks and the government in line with the negotiations is the responsibility of the banks to educate all beneficiaries of their financial products on roles and responsibilities, and the importance of their house as an asset to create wealth and alleviate poverty.
President Thabo Mbeki said in his State of the Nation Address that he expected a final agreement on the modalities for using the R42 billion set aside by financial institutions “without further delay”.
Final agreement on this, he said, would contribute to the “national effort” that he urged all South Africans to work towards in a bid to achieve the 6 percent GDP growth needed to halve extreme poverty and unemployment by 2014.
Saying that the years of freedom in South Africa have been good for business, the President in the State of the Nation Address said that, “in its own interest and as part of the national effort, it 'the investor community' has to invest in the expansion of that freedom”.
The Minister of Housing told the media yesterday, she was also in negotiations with developers and contractors to ensure that 20 percent of housing developments is made available for affordable housing, to build integrated human settlements.
These negotiations are being undertaken “in the spirit of the integration of communities across racial and income brackets”, said Mabaya.
This is an issue that government wants to see applied to all new housing developments.
It is vital that affordable houses are built in areas that are closer to areas of economic and social activities, said Mr Mabaya. This will cut transport costs for workers and the poor, thereby reducing the deleterious effects of apartheid spatial planning, which located the majority of the country's workers far from places of work.
According to Mabaya, the Department of Transport says that annually it spends more than R3 billion on subsidising rail and bus transport for people entering economic zones from far-flung areas.
The 20% of housing developments set aside to house poorer communities that government is asking for from developers will create an availability of affordable housing for low-income earners that will in turn reduce transport costs, create a housing market for the poor, integrate communities and ultimately contribute to meeting government's target of economic growth of over 6 percent of GDP from 2010.
On 16 March, the Minister of Housing and the leadership of the construction industry will meet to discuss details on this, said Mabaya.
They will also examine joint research and see how a 20% slice of new developments for affordable housing can be facilitated by a partnership between government and relevant private sector players.
This forms part of the Social Contract between government and relevant stakeholders on how they can work together to implement the government's housing programme.
Affordable housing generally refers to a house worth between R50 000 and R250 000, according to Mabaya. Low income includes household income of between R1 500 and R7 500 per month.
At the social cluster briefing yesterday, which drew together representatives from the departments of Agriculture and land Affairs, Public Works, Social Development and Provincial and Local Government, the media received figures stating that the number of indigent households in South Africa is currently estimated at 5 682 272, out of a national total of 12 701 571 households.
There are further moves afoot to draw the poor and lower-income earners into the housing market. The president in his State of the Nation Address on Friday said the National Housing Finance Corporation (NHFC) would be transformed into a Housing Corporation that will provide finance to the poor and middle-income groups.
Yesterday, it was announced that the process of expanding the NHFC's mandate to deepen and broaden housing finance was already at an “advanced stage”.
The NHFC, said Mr Mabaya, currently provides finance to developers and other industry players. Once it is transformed, it will offer finance directly to individuals for affordable housing. - BuaNews
Government began negotiating with members of the Banking Association last year, and hopes to eventually see the release of the funds that would see South Africa's poorer communities absorbed into the housing market shortly, Lindiwe Sisulu told a media briefing yesterday.
The current holdup is because of the guarantees that the banks want from government over bonds for affordable housing, Sisulu said.
Government is refusing to offer any guarantees in the event of non-payment of a housing bond, or loan, and is insisting that banks and financial institutions assume the risk of their business activities.
The banks have been calling on government to guarantee their risk and to mitigate any loss of funds in cases where owners have defaulted on their bonds.
This is the major sticking point in the negotiations, said Sisulu yesterday, adding that government was in negotiations with the banks on “how to push this forward”.
In an interview with BuaNews, the head of media services in the Housing Ministry, Ndivhuwo Mabaya, said: “We also believe that the majority of our people, given enough consumer education on the value of a housing asset, as well as necessary financial support, have the ability to pay their own bonds.”
Government is, however, willing, to assist first-time homeowners with a once-off first homeowner subsidy, said Mabaya. This will be a once-off subsidy, based on the income of the applicant, and will constitute a percentage of their approved bond by the bank.
This would go some way to ensuring that home-owners can afford bond repayments and banks can sell bonds to more and more people, he said.
The release of the R42-billion set aside by the banks for lower-income housing “will contribute to the revitalisation of the secondary housing market - mostly in townships - and broaden access to houses for the majority of the people”, said Mabaya.
Among the other things already agreed by the banks and the government in line with the negotiations is the responsibility of the banks to educate all beneficiaries of their financial products on roles and responsibilities, and the importance of their house as an asset to create wealth and alleviate poverty.
President Thabo Mbeki said in his State of the Nation Address that he expected a final agreement on the modalities for using the R42 billion set aside by financial institutions “without further delay”.
Final agreement on this, he said, would contribute to the “national effort” that he urged all South Africans to work towards in a bid to achieve the 6 percent GDP growth needed to halve extreme poverty and unemployment by 2014.
Saying that the years of freedom in South Africa have been good for business, the President in the State of the Nation Address said that, “in its own interest and as part of the national effort, it 'the investor community' has to invest in the expansion of that freedom”.
The Minister of Housing told the media yesterday, she was also in negotiations with developers and contractors to ensure that 20 percent of housing developments is made available for affordable housing, to build integrated human settlements.
These negotiations are being undertaken “in the spirit of the integration of communities across racial and income brackets”, said Mabaya.
This is an issue that government wants to see applied to all new housing developments.
It is vital that affordable houses are built in areas that are closer to areas of economic and social activities, said Mr Mabaya. This will cut transport costs for workers and the poor, thereby reducing the deleterious effects of apartheid spatial planning, which located the majority of the country's workers far from places of work.
According to Mabaya, the Department of Transport says that annually it spends more than R3 billion on subsidising rail and bus transport for people entering economic zones from far-flung areas.
The 20% of housing developments set aside to house poorer communities that government is asking for from developers will create an availability of affordable housing for low-income earners that will in turn reduce transport costs, create a housing market for the poor, integrate communities and ultimately contribute to meeting government's target of economic growth of over 6 percent of GDP from 2010.
On 16 March, the Minister of Housing and the leadership of the construction industry will meet to discuss details on this, said Mabaya.
They will also examine joint research and see how a 20% slice of new developments for affordable housing can be facilitated by a partnership between government and relevant private sector players.
This forms part of the Social Contract between government and relevant stakeholders on how they can work together to implement the government's housing programme.
Affordable housing generally refers to a house worth between R50 000 and R250 000, according to Mabaya. Low income includes household income of between R1 500 and R7 500 per month.
At the social cluster briefing yesterday, which drew together representatives from the departments of Agriculture and land Affairs, Public Works, Social Development and Provincial and Local Government, the media received figures stating that the number of indigent households in South Africa is currently estimated at 5 682 272, out of a national total of 12 701 571 households.
There are further moves afoot to draw the poor and lower-income earners into the housing market. The president in his State of the Nation Address on Friday said the National Housing Finance Corporation (NHFC) would be transformed into a Housing Corporation that will provide finance to the poor and middle-income groups.
Yesterday, it was announced that the process of expanding the NHFC's mandate to deepen and broaden housing finance was already at an “advanced stage”.
The NHFC, said Mr Mabaya, currently provides finance to developers and other industry players. Once it is transformed, it will offer finance directly to individuals for affordable housing. - BuaNews
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