Issued by: Department of Housing
MEDIA RELEASE BY THE DEPARTMENT OF HOUSING
In light of recent calls that have been made for mass action, the Department of Housing deems it necessary to correct certain distortions of fact, and to reiterate the policy of the Government.
(The question of the recent increase in the mortgage rate, which can only have a negative impact on the housing programme, is a separate issue from those contained in the Record of Understanding.)
The Record of Understanding, which was negotiated and signed between the Department of Housing and the Association of Mortgage Lenders in 1994, was a landmark agreement aimed at restoring normality to a market distorted by legacies of the past including bad lending, inadequate consumer education, bad building as well as non-payment. This Agreement, which has the full backing of Cabinet, has subsequently been enhanced, and is likely to be further improved on an ongoing basis.
In terms of the Record of Understanding, all households in default on their bonds are approached and presented with a rational and reasonable formula for the rehabilitation of their loans. It is the view of Government and the Banks that all such households in default should be offered every possible opportunity to stay in their homes. Where households are no longer able to afford their bonds, even after they have been offered the advantageous terms of the package, the state will make a financial contribution towards the securing of more affordable accommodation.
In order to make progress in this regard, the co-operation of households is necessary and, in the majority of cases, such co- operation has indeed been forthcoming. It is important to state, for the record, that legal actions have been instituted only against those who have refused to co-operate; to even discuss this matter with officials from the banks, SERVCON and the South African Housing Trust.
Some of these households have been approached by officials authorised to resolve their problems as many as eight times; not only have they refused to even discuss the matter, they have issued threats of violence and even of death against such officials.
It is such people that are threatened with legal processes that will culminate in eviction: the Department of Housing is at a loss to understand why any organisation would wish to take up such cases as a matter of principle.
The facts are:
In excess of 90% of low-income households with private sector bonds pay on time, every time;
The majority of households in arrear are willing and co-operative in resolving their particular problems;
Legal action is being taken against a minority within a minority who wish to live in their houses for `free' - in effect, to have others pay for them.
The Department of Housing is concerned that, in the climate that is currently being created, there are new calls for bond boycotts in some parts of the country. Mobilising around non-payment is, of course, very easy and popular whereas supporting initiatives to save or to pay require a different level of organisation and effort. An expansion of bond boycotts would have an extremely negative and damaging impact on the national housing programme, and should be condemned by all those who have an interest in housing and development.
The priority in the housing programme must remain focussed on the poor; on women; on the mobilisation of savings and on the continual extension of credit. The current focus on defending the `rights' of those who can pay but do not wish to pay can only be at the expense of the poor, and those who wish to access credit.
The Department of Housing, in reiterating Government's support for the Record of Understanding, wishes to acknowledge that there are certain weaknesses with the agreement, and that we would be open to entering into substantive discussions with any organisation with a view to the improvement of this agreement.
Issued by: William Cobbett Director General for
Department of Housing (021) 45-1516
11 June 1996