Real Estate Investor Magazine South Africa July/August 2019 | Page 17

AFFORDABLE HOUSING
Addressing the shortage of low-cost housing requires
constant innovation which can benefit all parties involved
including;investors, property owners and developers.
Taking a closer look at the newly implemented policy in
Johannesburg, we can unpack the various mechanisms being
employed to implement affordable housing.
CASE STUDY: Johannesburg
The City of Johannesburg’s Inclusionary Housing Incentives,
Regulations and Mechanisms for 2019 was approved on
21 February 2019 and implemented on 23 May 2019. The
new policy applies to any development application under
the jurisdiction of the City of Johannesburg Metropolitan
Municipality that has 20 dwelling units or more. As part of
the policy, developers must ensure that 30% of the units
cater to inclusionary housing. The new implemented policy
will impact all new developments in Johannesburg.
What does this mean for
developers?
Developers will have three ways in which they can
implement affrodable housing. Option one, limits rental
or sales prices using Social Housing ( as per the Social
Housing ACT and the Social Housing Regulatory Authority)
or through FLISP (the Finance Linked Individual Subsidary
Programme) a national programme that provides grants to
first time homebuyers. FLISP is subject to first-time home
buyers who are wanting to make a purchase under a certain
price. Under option one, developers can also opt to apply
the city imposed rent control of R2100 a month. Options
two and three limits the size of the units in order to reduce
the price it will go for on the market.
Understanding the policy:
There are multiple reasons as to why the City of
Johannesburg has implemented the new policy, including
an effort to address the stark inequalities which currently
exist in the City.The City of Johannesburg has highlighted
the main aims of the new inclusionary housing framework
below:
•
The framework aims to increase the supply of
lower income housing, create more of a mix of
income groups across new developments in the
city and create more afforadble housing in areas
that are well located in terms of access to jobs and
amenities.
The framework serves as a mechanism for land
value capture in favour of the City and its residents.
“Council is mandated to administer and award
development rights within the City. The awarding of such
rights usually results in the increase of value. This increase
in value should not only enjoyed by the propety owner,
but should benefit the wider City and its residents, as per
the principles outlined in SPLUMA,” said an official City of
Johannesburg statement
It aims to enable the City to leverage infrastructure
investements it and other spheres of government
make. This is done to ensure that such investements
benefit large and diverse portions of the population
therefore effecting spatial transformation.
According to Section 9 (1) (f ) of the Housing At 1997, the
framework aims to generate more of mix income groups in
private housing developments
“
(1) Every municipality must, as part
of the municipality’s process of
integrated deveopment planning,
take all reasonable and necessary
steps within the framework of nationa
and provincial housing legislation
and political to (f) initiate plane,
co-ordinate, facilitate, promote
and enable appropriate housing
development in its area of jurisdiction.
“
Across the country, heads of spatial development are
working on creating solutions to the current housing
crisis. Globally, various countries have adopted their own
unique policies in order to generate and increase housing
opportunities for its residents. For example, Hamburg and
Copenhagen improved the housing supply by placing
publicly owned assets into an “Urban Wealth Fund”
partnering with the private sector to implement residential
projects..
“(1) Every municipality must, as part of the municipality’s
process of integrated deveopment planning, take all
reasonable and necessary steps within the framework of
nationa and provincial housing legislation and political to
(f ) initiate plane, co-ordinate, facilitate, promote and enable
appropriate housing development in its area of jurisdiction.”
A statement by the City of Johannesburg assures exisiting
free-standing home owners they will not be impacted by
the new policy.“It has no effect on exisiitng rights in the
City, inclusionary housing is triggered by new development
applications.”
Cape Town is currently in the process of developing a
programme for affordbale housing. The draft of this policy
is reportedly going to be released at the end of this year.
What is the importance of AH in SA?
With majority of poorer resdients located in far distance from
where they work or ‘rural’ areas, the spatial inequality still
exisits. Earliar this year, Time Magazine placed South Africa on
SA Real Estate Investor Magazine JULY/AUGUST 2019
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