Real Estate Investor Magazine South Africa September 2013 | Page 30

STRATEGIES

BY MALCOLM MCCARTHY

Breaking with Assumptions
Greening Social Housing in South Africa

P

eople involved in Social Housing in South Africa are asking many tough questions about the meaning of greening of the sector. The reconciling of cost and impact is very important given the tight financial margins in the sector. While there is a body of knowledge emerging around commercial properties this is far less so in the medium to higher density residential rental market. So now key players in the Social Housing sector are starting interventions to better understand both what should and can be done about greening the social housing sector. The intent of Social Housing is to provide good quality rental housing affordable to low and moderate-income households in well-located parts of our cities. The housing stock is developed and managed by strong entrepreneurial non-profit Social Housing Institutions

(SHIs) using a capital subsidy from government. Many of the 30 000 social housing units developed in South Africa are in medium density projects occupied by households with monthly incomes between R2000 and R7500. Maintaining affordable rentals, within the tight constraints of the cost of provision and management and the levels of government subsidy, is increasingly a challenge even to the most entrepreneurial of Social Housing Institutions. This challenge is compounded by the rising utility charges, specifically electricity. These are forcing more tenants to leave this formal housing option and return to backyards and other less formal housing provision. Tenants say that it is not the quality of the accommodation, nor the management service, nor even the rentals, but the rapid increase in utility costs that force them into an unwanted choice.

This reality has given impetus to thought and action that is now incorporated in the slogan the ‘Greening of Social Housing’. The slogan is easy, the reality of delivering on it more complicated. As organisations like the National Association of Housing Associations (NASHO) starts to untangle the challenges involved, the dimensions become clearer. The glib explanations that greening reduces costs; that savings from greening can help cover the cost of the capital investment; that green education automatically changes behaviour are challenged by the reality. The initial and ad hoc attempts to undertake more proactive greening of the social housing units and buildings has to date concentrated on the substitution of electrical geysers by solar heated water or heat pumps. The limited monitoring of the impact of these has raised problems regarding the increased capital costs that accrue to the project development and the benefits accruing to the tenant. So while on the one hand it achieves greater affordability for tenants, on the other hand the Social Housing institution is not receiving the savings to repay the capital outlay. At the same time the government’s capital subsidy stays the same and so there is no financial incentive to pursue the capital aspects of greening. Then, too, the installation of heat pumps - while reducing the unit costs of hot water - is not necessarily producing savings but rather increased consumption of water. It is clear that beyond the ‘greening’ platitudes, the sector needs greater understanding of the f inancial, economic and social bottom lines to its greening efforts. This understanding should then help frame the necessary p ol ic y, r e g u l a t ion s , f i n a n c i a l mechanisms, partnerships and action programmes to achieve well-defined and realistic ‘greening’ objectives. So how does the sector follow that route? In November 2012 NASHO, with support from Agence Francaise

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September 2013 SA Real Estate Investor

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