SA Affordable Housing July - August 2019 // Issue: 77 | Page 34

FINANCE MATTERS
Finance and funding for
entrepreneurs
With a number of inner city players in the commercial and
industrial property sector, there is a range of funding options
available to assist entrepreneurs looking to purchase.
By Trust for Urban Housing Finance (TUHF)
The future of affordable housing is set to create vast opportunities for entrepreneurs..
T
o understand the funding you’re trying to access, you
need to first understand the sector you’re operating
in and the funding criteria that applies to that
particular sector.
Property for example, is a long-term investment. TUHF
operates as an SME property financier, that offers a 15-year
mortgage product that funds conversions and
refurbishments aimed at residential use in urban areas.
An entrepreneur approaching TUHF you are expected to
contribute 20% of your own equity towards a building
project and the other 80% is raised by TUHF. The purchase
price of the building, the costs of refurbishment or
conversion and the equity a client can contribute from their
own pocket, informs how much finance they qualify for.
To make accessibility even easier for entrepreneurs,
TUHF’s lending criteria is largely focused on the perception
of entrepreneurial characteristics of a potential client than
their property nuance and credentials, affording them equal
opportunity to enter the market.
“These entrepreneurial qualities include an open-minded
attitude that is willing to take advice and someone who is
self-disciplined and manages the cash flows of the property
to the benefit of the property, not for personal use. Other
sought-after characteristics include someone who keeps
their tenants happy by keeping the property clean and well
maintained, providing all round good customer service; is
committed to doing everything in their power to ensure
the success of the deal; is up-to-date on utilities; and
directly involved in the property management, even if there
is an external service provider,” according to TUHF CEO,
Paul Jackson.
32
JULY - AUGUST 2019
The distinction between inner-city property financiers and
traditional commercial banks is how risk is assessed. TUHF’s
ability to ‘spot potential, where others don’t’, enables the
financier to support SMEs and projects in areas of decline in
urban centres.
The future of the affordable housing market remains
promising; entrepreneurship is realised as a key driver of
economic growth. Through these partnerships, TUHF has
created jobs, revitalised urban neighbourhoods, combatted
inequality and unemployment and, as an effect, stimulated
the economy.
To address the procurement of finance, at the most
favourable terms for entrepreneurs, we need to promote
partnerships between the private and public sector and
share the risks of funding projects. This will help the sector
by providing budding entrepreneurs sustainable entry into
the rental housing market. It’s very important for
government to remove barriers and put in place inclusive
urban development plans and policies.
On 22 February 2019, the City of Johannesburg adopted
the Inclusionary Housing Policy. The policy seeks to,
‘Promote accommodation opportunities for low-income and
lower-middle-income households and households who
otherwise may not have afforded to live in well-located
areas – close to jobs, schools and public transportation.’
According to the COJ, the framework enables a move
towards a more inclusive, efficient and effective city as it
provides requirements and conditions for inclusionary
housing and details the different options available to
developers and associated incentives to implement this
housing programme.
www.saaffordablehousing.co.za