FINANCE MATTERS bond is not particularly suitable as a financing instrument for the poor as it is premised on households being able to demonstrate regular income as well as a credit and employment track record .
FLISP , first introduced by the National Department of Human Settlements in 2005 , acknowledges the importance of crosssector collaboration between , government departments , the private sector and government entities in bridging the affordability gap between access to housing finance ( entry-level housing ) and the range of mortgage instruments available in the market that can be used to boost the purchasing power of prospective homebuyers in the affordable housing market . Due to the implementation challenges established through various performance evaluations of the programme , the Department has comprehensively revised FLISP to not only cover the supply side subsidy instruments but to also concentrate on demand-side subsidy linked products whose feature combination will contribute towards expanding entrylevel housing .
As a response to market needs , FLISP has been catalysed so that it be linked not only to mortgage financing but also for all non-mortgage housing via diversified mortgage and nonmortgage offerings . Some of the key policy adjustments worth noting are as follows :
The programme will be expanded to include non-mortgage housing facilities :
• Housing loans supported by pension and provident funds ( pension backed loans ).
• Housing loans supported by cooperative or communitybased schemes .
• Housing loans supported by employer-based schemes .
• Housing loans that are not supported by any form of security ( unsecured loans used for housing purposes ).
• Housing Finance facilities other than loans ( such as instalment sale , deed of sale and rent-to-own agreements ).
The revised administrative process will consist of :
• The Government Employee Housing Scheme which will administer all FLISP applications that are linked to it ;
• Provincial Departments will process FLISP applications that are linked to approved Integrated Residential Development Programme (‘ IRDP ’) projects ; and
• The National Housing Finance Cooperation will act as the National Implementing Agent for the FLISP Programme , and so they will process all other FLISP applications .
The revised programme aims to broaden options for accessing homeownership in both urban and rural areas and will allow beneficiaries to use the FLISP Subsidy for the following purposes :
• To buy a new build or an existing home .
• To buy a stand which must be ( 1 ) connected to municipal services ; ( 2 ) zoned for housing .
• To pay for the building of a house on a stand which the household / applicant already owns and which must be ( 1 ) connected to municipal services ( 2 ) zoned for housing ( 3 ) be enrolled with the NHBRC ( 4 ) Linked to a building contract with an NHBRC registered contractor .
• To pay for the building of a house on a stand which is part of an IRDP project , and which must be ( 1 ) connected to municipal services ( 2 ) zoned for housing ( 3 ) be enrolled with the NHBRC ( 4 ) linked to a building contract with an NHBRC registered contractor .
Registered owners of a Permission to Occupy are not deemed to be homeowners and those who are owners of a vacant / housing stand are also not deemed to be homeowners , but they can benefit from FLISP if they meet the qualification criteria in the proposed new policy .
In an effort to improve turn-around times in respect of processing FLISP applications and to address previous institutional shortcomings that were impeding the implementation of the Programme , a pre-qualified applicant may request and be granted a guarantee certificate before they approach a lender for housing finance . The new Policy Framework recognises that for FLISP to be successfully implemented it is crucial that lenders continue to facilitate lending to qualifying beneficiaries .
The category of households that the programme intends to assist continues to be households that have been unable to access mortgage loans without some housing finance support from the State in the form of a capital subsidy .
The ‘ new look ’ FLISP aims to increase the range of financing options , improve regulatory efficiency , resolve long-standing administrative and implementation challenges , and presents an opportunity for the participation of a wider range of lenders into the affordable housing market . Expanding the Policy Framework to include non-mortgage financing options could potentially have a positive impact on market activity , encourage robust cross-sector collaboration , increase consumer awareness and access to reliable information , promote development in previously under-serviced housing markets , compel a more concerted effort to address issues of affordability for many consumers / households within this market segment and empower aspiring home-buyers to take advantage of the financial support offered by the programme .
The following steps can be taken by Estate Agents or Developers if they have a client that may be interested in the programme and who meets the qualifying criteria . It is important to note that the steps will differ depending on the nature of an application , that is , if the applicant wishes to purchase a property in the open market versus a property within an IRDP project or make use of mortgage finance , a pension backed loan or the Government Employees Housing Scheme . All these aspects will influence the steps to be taken . For this article , the National Department of Human Settlements has put together generic steps based on the assumption that most applications will be made for an open market property .
Step 1 :
• Clients to be informed of the existence of FLISP and its benefits .
• Remember to inform the client of the implications of the pre-emptive right as set out in Sections 10A and B of the Housing Act , 1997 .
• Inform the client of the intent of FLISP , is for it not to be used to increase the home loan amount .
www . saaffordablehousing . co . za MAY - JUNE 2021 5