SOCIAL HOUSING THE WAY FORWARD

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1 Social Housing Policy - The implementation process Kobus van Wyk, NMMU CONTENTS 1. BACKGROUND AND INTRODUCTION 2.WHAT THE POLICY SET OUT TO ACHIEVE 3.HOW IT HAD TO BE ACHIEVED AND BY WHO 4.IMPLEMENTING PROCESS(ES) 5. FEEDBACK ON THE IMPLEMENTING PROCESS 6. FAMILY TYPE INTROSOPECTIVE REFLECTION 7.THE WAY FORWARD 8. ACKNOWLEDGEMENTS

2 WHAT SOCIAL HOUSING IS? A rental or co-operative housing option for low income persons at a level of scale and built form which requires institutionalized management and which is provided by accredited social housing institutions or in accredited social housing projects in designated restructuring zones (SHP).

3 BACKGROUND AND INTRODUCTION Involvement in rental housing demand surveys in two towns and observed others Impression of a cumbersome process Will we achieve our goals and objectives and meet the demand? Can the implementation process be streamline / improved? If so, how, by who and when? Will we remain among the best in the World in terms of housing delivery?

4 WHAT THE POLICY SET OUT TO ACHIEVE IMPROVE SITUATION: o By 2005: 30,000 social housing units managed by 60 operational SHIs (facing financial and management difficulties) o Delivery rate was 2500 p.a. over 10 years. o By 2010, rental units developed using Instit Sub. QUANTITATIVE GOAL: National Rental Housing Strategy set out to deliver units in the period 2007/ /12 ( SH and CRU (municipal and provincial stock) (SHP)

5 WHAT THE POLICY SET OUT TO ACHIEVE THE TARGET MARKET : o The rental sector = 17%-20% of (+-11 million) households in South Africa (expected +-2,2 million in 2011). o Roughly 55% have an income of less than R3,500 per month while a further 22% earn between R3,500 and R7,500. o Over 40% of renter households live in slum conditions; hence needing improved housing (SHF Supply and Demand).

6 WHAT THE POLICY SET OUT TO ACHIEVE OTHER DRIVERS FOR THE SHP: o Regeneration of inner cities and urban efficiency o Well located land for human settlement o Need to broaden housing assistance o Higher density development o Increasing demand for rental housing o Integrated spatial patterns (racial restructuring) o Sustainable human settlement development o Social cohesion and improved quality of life o Economic growth and job creation o Enhanced flexibility and mobility

7 HOW AND BY WHO? Legislative and Regulatory Framework o Social Housing Policy and Social Housing Act o Housing Act and Rental Housing Act o Other relevant policies and acts, such as the Housing Act, DFA, PIE Act. Institutional framework o NDHS, Municipalities and Provincial DHSs o Accr SHIs, PPPs, Implementing Agents, Facilitators o SHF, SALGA & NASHO o SHRA o NHFC, TUHF, Banks and international funding agencies o NURCHA, HDA, NGOs, CBOs, Professionals & others

8 HOW AND BY WHO? Financing o Housing Subsidy Scheme and Human Settlement Redevelopment Program Institutional Subsidy o Social Housing Capital Grant o Restructuring Capital Grant for Restructuring Zones o Capacity Building Grant o Top-up by Province and Municipality o Loan funding from NHFC and Private Lenders o Other sources such as Integrated Residential Development ( units = R2,75 billion in grant funding with a grant to debt ratio of 45 % to 55% in Now ratio is 70% grant : 30% private(?)) NB: Tax incentives (exempts from VAT) and risk mitigation.

9 IMPLEMENTATION Challenge: Provide quality public sector subsidized rental accommodation at a rent of R600-R2400 per household and sustain it. See Public Sector Rental Housing Implementation Toolkit (Feb 2010): 1. PROGRAMME LEVEL 1.1 Capacity Development: o Create awareness of rental housing programme o Institutional structuring o Implementing skills

10 IMPLEMENTATION (Program) 2. Rental Housing Policy and Strategy o Demand, supply, gaps, stakeholders, resources, costing 3. Land identification, packaging and transfer 4. Project identification and assessment 5. Partnership formation 6. Annual rental housing program budget 7. Monitoring and evaluation

11 IMPLEMENTATION (Project) Project Identification Project Planning and assessment Project approval and financial allocation Implementing contracting and contract management Stock and tenancy management Project monitoring and evaluation See also CRU Toolkit and many other documents and templates

12 IMPLEMENTING A SOCIAL HOUSING PROJECT (TOOLKIT) STAGE 1: Proposal and initiation o Identify target market & generate ideas re needs o Appoint development manager o Identify and pre-assess land and properties o Conduct a market survey to establish demand o Idea, Land and demand match? o Initiate land procurement o Initiate funding procurement o Appoint professional team

13 IMPLEMENTING A SOCIAL HOUSING PROJECT (TOOLKIT) STAGE 2: Preliminary design and feasibility o Define project and prepare prelim designs o Feasibility studies (market analysis) o Secure land and property o Obtain development rights and service land o If feasible, appoint professionals for further work

14 IMPLEMENTING A SOCIAL HOUSING PROJECT (TOOLKIT) STAGE 3: Implementation planning (design and development) o Develop project implementation plan & approve o Finalize design, cost estimates & feasibility studies & approve o Prepare technical documentation and submit building plans for approval o Obtain approval and secure funding

15 IMPLEMENTING A SOCIAL HOUSING PROJECT (TOOLKIT) STAGE 4: Implementation planning (Tendering) Procurement options and type of tendering Consider contract options and decide Prepare tenders, call for tenders, adjudicate, select and appoint Market units and allocate to tenants

16 IMPLEMENTING A SOCIAL HOUSING PROJECT (TOOLKIT) STAGE 5: Implementation and control Sign contracts and hand over site Supervise and administer contract Contract completion and unit handover Project close out Letting and occupation starts Stock management and maintenance

17 FEEDBACK ON THE IMPLEMENTING PROCESS Specific feedback was obtained from some practitioners, and a SHP author re long, difficult implementation process e.g. survey, zoning, priority list, co-ordination. Should it take eight (8) years to get to the project tender stage? (3 years investment for long term use is in order). Important to provide enough and suitable land / property earmarked in good time to serve demand. Inform role players on the processes and be inclusive. The process is over-regulated(?). Appropriate knowledge and operating budget assistance are required (capacity grant?).

18 FEEDBACK ON THE IMPLEMENTING PROCESS Are municipalities ready for initiating and facilitating the implementation processes? Efficiency re administration, zoning, land release, registration, approvals, infrastructure provision, financing? Can the funding mechanisms be rationalized? Interference of provincial - local power tensions.

19 FEEDBACK ON THE IMPLEMENTING PROCESS Do the existing SHIs have sufficient capacity to meet the demand or must private investors be drawn in on a ROI basis? Will SHIs enjoy the same incentives as private investors and be allowed to convert to private? Can this be done without interfering (too much) in the private rental market? The budgets of SHIs are tight and volumes (20k units) are required to make them sustainable. SA need estate (housing stock) managers (education?).

20 FEEDBACK ON THE IMPLEMENTING PROCESS Is the NHBRC relevant re protecting tenants while the SHI is the owner? Release SHIs of some municipal fees. Ensure that all the appropriate units in municipalities function efficiently. Provision in the limited market is currently fantastic and provides community wellness Mentorship from experienced countries add to the success of SHIs

21 FEEDBACK ON THE IMPLEMENTING PROCESS Locality is of critical importance (close to work, limited travelling time and costs). Tenants expect benefits in place of tenure. (It must compete with ownership re affordability, location, mobility, communal living, quality of life, security, etc).

22 FAMILY TYPE INTROSPECTIVE REFLECTION 1. The Government is not the only role player: The success of the sector is dependent on all the role players. 2. Regulation, accreditation and monitoring are critical features of the SH Policy tough but necessary: o For quality, viability, accountability, sustainability; o to guard over the capital investment (R9bn by 2014); o to achieve the other goals and objectives of Policy. 3. The rental sector* is possibly the second most efficient housing market (after the high income market) (SHF, 2010). (*6 types backyard-private). 4. Anecdotal evidence suggests unmet demand in key urban centers (SHF, 2010).

23 FAMILY TYPE INTROSPECTIVE REFLECTION SHIs and rental landlords report low vacancy rates. Private landlords describe the market as insatiable. supply does not meet the demand (in terms of household growth) and does not support affordability thresholds of sub-markets Distribution of managed social housing units is: 46% in Gauteng; 25% in Western Cape; 12% in KZN; 7% in EC; 0-5% in all the other provinces. Demand? While new developments are of good quality, there is a concentration of low-income earners living in informal structures (inadequate housing). SHRA endeavoring to attract private investors are laudable. Business function on ROI and SHIs?

24 FAMILY TYPE INTROSPECTIVE REFLECTION Is the demand concentrated in (inner) cities or also in rural towns? In comparison with other countries, the rental market in SA (+-20 of total) is low and has scope for expansion (50%?). The policy and its implementation have challenging facets, but they are justifiable. Recognize SH as a specific segment of the market for income earning households and do not see it as the solution for all.

25 THE WAY FORWARD Grow the economy and create jobs so that people can afford their accommodation! Increase the subsidy categories? Balance public subsidized and private rental accommodation? Release more suitable land close to needs? Establish more SHIs and capacitate them? More incentives for facilitators? More delivery agents and how to entice them? More capacity to manage processes, projects and completed stock (see lessons from public stock?)

26 THE WAY FORWARD Provide financing to private landlords to improve their (low rent) rental units? Do proper risk assessment and tenant selection and apply the rules. Recognize that it is a young policy, meant to serve only a part of the housing market. Believe in it, JOIN FORCES, implement and ACHIEVE (TOGETHER)! Nkosi Sikilela iafrika!

27 ACKNOWLEDGEMENTS Contributors to the presentation are acknowledged, including: o Managers of SHIs o An Implementing Agent o A Dutch Support Agency o A former DoHS and SHF Manager o Authors of sources from which data was extracted, especially SHF publications. o The NMMU and the SAHF

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