SA Affordable Housing July / August 2017 // Issue: 65 | Page 21

COVER STORY
Show houses under construction at Sky City, south of Johannesburg. Image: Cosmopolitan Projects
Current bulk service contributions have in the past not
been regulated by government and therefore all metros
and councils can determine their own bulk service
contribution. This causes a major problem for developers.
EXAMPLE – CURRENT BULK SERVICE CONTRIBUTIONS
FOR EKURHULENI ARE AS FOLLOWS:
1. Water R4 800 for each residential stand
2. Sewer R2 300 for each residential stand
3. Erwat
(Ekurhuleni) R6 600 for each residential stand
4. Roads and
storm water R2 900 for each residential stand
5. Electrical R6 000 for each residential stand
Sub total R22 600
Plus VAT @14% R3 164
TOTAL BULK SERVICE
CONTRIBUTION R25 764 for each residential stand
Taking into consideration that a developer must purchase
the land at about R30 000 for each residential stand plus
consulting fees in the region of R4 000 a stand and an
additional R25 784 bulk service contribution for each
residential stand, brings a total of R59 784 for one
residential stand.
The developer will have to pay in the region of
R60-million for 1 000 residential stand developments
before he can apply to the banks for a development bond
and start construction. This places a tremendous burden on
the developer’s cash flow and makes it almost impossible
for new young developers to enter the market.
The government and local authorities will need to
regulate bulk services contributions, especially for RDP
houses and affordable housing developments.
Therefore, bulk services must be regulated into three
different classes of housing:
• RDP housing – no bulk service contribution (subsidised)
• Affordable housing – limited bulk service contribution
(partly subsidised)
• Normal housing – full bulk service contribution
Councils still demand a bulk service contribution and
design standards for 3 to 4kVA for affordable housing
developments. New building regulations stipulates that all
houses are fitted with solar geysers and the electrical
demand (kVA) has dropped to 2.5kVA. Thereafter diversity
maximum demand of affordable and RDP housing can be
reduced to 2.5kVA to concur with current usage without
any problems.
Traffic count is still based on 0.25 vehicles for each
(affordable housing) household although existing
townships that are more than 10 years old (Protea Glen Ext
16, Mahube Valley) indicate a traffic count of only one car
for every 10 households. SAARDA requests that councils
change their specification to 0.2 vehicles for each
household. This will reduce bulk service contributions for
affordable housing owners for roads and storm water.
Water usage and sewer effluent can also be reduced to
comply with existing data of water metre readings for
established affordable townships.
In conclusion, SAARDA requests that local authorities
review their bulk service contributions for affordable
housing and that government implements a standard for
calculation of bulk services contributions for all metros
and councils.
AFFORDABLE
SA HOUSING
JULY - AUGUST 2017
19