SA Affordable Housing November - December 2019 // ISSUE: 79 | Page 15

COVER STORY
Montrose City
ready to go to market
When it comes to a new affordable housing development, before
it can move to the marketing phase the banks are required to
accredit it. In the case of Montrose City Mega City, a development in
Randfontein, they have recently done so.
By Eamonn Ryan | All images by SCM Holdings
A
ccording to South African Reserve Bank rules, banks are
required to split the risk and the financing amongst one
another, and each have an acceptable risk exposure –
determined, among other factors, by their appetite.
The most recent milestone in Montrose is that it has been
accredited by all the major banks’ risk committees. One bank is
typically appointed the ‘lead’ bank, a decision which remains
to be taken. “On the Finance Linked Individual Subsidy
Programme (FLISP), or subsidised bonded units register we
have 1 225 units and this will be split among the banks, either
25% or 30% or more of the total number of units available
(rather than rand value),”explains Sam Mhlaba, CEO of
development company SCM Properties and Development,
which controls Montrose in a ring-fenced company.
This in turn means the banks are prepared to provide
mortgage bonds to Montrose unit buyers subject to their usual
credit checks on individual applicants. The next step, says
Mhlaba, is to agree on a standard Offer to Purchase (OTP) and
loan application forms to enable interested buyers to fill in a
single form rather than separately apply to each of the
home-loan banks. Montrose’s lawyers, Adams & Adams, are
currently working on finalising a standard form which each
bank will accept.
“If the development was not accredited with a bank, that
bank would not approve a loan application as they would be
unfamiliar with the risk profile of the development as they
hadn’t looked at its progress.” On the one hand, bank finance is
about satisfying the bank concerning the development’s bona
fides, and on the other about satisfying itself regarding the
applicant’s personal circumstances.
Montrose now has sufficient units completed in Phase 1 to
market them. Engineering services have been installed,
Preparations for the foundations for a new section of the development.
www.saaffordablehousing.co.za
NOVEMBER - DECEMBER 2019
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