Real Estate Investor Magazine South Africa Real Estate Investor Magazine - July 2017 | Page 32

AFFORDABLE HOUSING
Mind the Gap
Affordable Housing Solutions
BY MARYNA BOTHA
Affordable Housing Options
Many millions of South Africans, particularly in the
low income earning segment, dream of owning their
own home. These dreams have increasingly become
a reality, thanks to a number of affordable housing
financing options. There is however still an enormous
gap to fill and some considerations are highlighted
below.
Ring-fencing the term “affordable housing’:
the GAP market
The five-year Strategic Plan adopted by the Department
of Human Settlement in 2014 underpinned by the
mandate outlined in the Government’s National
Development Plan (NDP) highlights the following
key aspects with regards to the delivery of housing in
South Africa:
1 The need to fast-track the delivery of housing and
improving living conditions of citizens
2 The need to integrate settlements and development
in well-located areas.
Against this backdrop, the special focus in the
Affordable Housing Segment was aimed at addressing
housing challenges to those that are considered “too
rich” to receive free-government subsidies houses, yet
“too poor” to fall within the normal mortgage lending
stream within financial institutions. These citizens
literally fall into a gap: the segment being made up
of persons earning between R3,500 to R15,000 per
month.
The “GAP Market” backlog is according to November
2016 newspaper reports estimated to be at 60 to 70
thousand units per annum, while the delivery rate is
currently at about 6 000 per annum.
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JULY 2017 SA Real Estate Investor
Some of the options available to GAP
income earners
1 FLISP: Finance Linked Individual Subsidy
Programme
Individuals in the salary bands of R3 500 to R15 000
per month, will generally find it very hard to qualify
for housing finance as their income is probably too low
to succeed in a mortgage finance application, but too
high to qualify for government’s ‘free-house’ subsidy
schemes.
These GAP income earners can use a once-off FLISP
subsidy qualifying amount to assist them to purchase
residential property. The subsidy may vary between
R10 000 and R87 000, as defined in the FLISP
Subsidy Quantum.
The National Housing Finance Corporation provides
the following examples on its website, to demonstrate
how this subsidy works practically:
“Example 1 is based on an R9 000 p/m income-band,
where the individual after the Lender/Bank’s credit
and affordability assessment, based on the National
Credit Act (NCA) criteria, qualified for R300 000
home loan
FLISP REDUCES the mortgage loan amount to render the
monthly loan repayment instalments affordable; (payment
made to home loan account)
Property Price R300 000
Bank HL Approval R50 000
Less FLISP as a deposit R250 000
EVENTUAL HOME LOAN AMOUNT R300 000
www.reimag.co.za