SA Affordable Housing September / October 2020 | Page 25
LEGAL MATTERS
SPONSORED BY STBB
2. Finance Linked Individual Subsidy Programme (FLISP)
The Government, in terms of the Housing Act, introduced a
variety of National Housing Subsidy Programmes which
provide the poor and the low- to middle income households
with access to adequate housing.
The FLISP is specifically intended for the market segment
whose income is inadequate to qualify for a home loan, but
exceeds the maximum limit applicable to access the
Government's ‘free basic house’ subsidy scheme. This market
segment earns between R3 501 and R22 000 per month.
Households in this segment, if buying a home for the first time,
may apply for a FLISP subsidy.
In practical terms this means that a purchaser who qualifies
for and uses the FLISP subsidy will fund the purchase price
with both the FLISP subsidy and a mortgage loan obtained
from a financial institution. The FLISP subsidy serves as a cash
deposit which enables the purchaser to qualify for the bank
loan required for the balance of the purchase price of the
FLISP house.
prescribed documentation which trigger the payment of the
FLISP subsidy into the trust account of the conveyancer, prior to
the transfer taking place. Transfer shall only be allowed if the
FLISP subsidy is received in the conveyancer’s trust account. On
registration of the transfer and the linked mortgage bond the
proceeds from both the FLISP subsidy and the mortgage bond
become payable to the developer.
3. Sections 10A and 10B of the Housing Act
A purchaser who receives a FLISP subsidy from the State does
so under stringent conditions as described in the Housing
Act. Section 10A(1) of the Housing Act prohibits such
purchaser from voluntarily selling this house purchased with
a FLISP subsidy within a period of eight years from the date
on which the property was acquired, unless it is first offered
to the relevant Department of Human Settlements. Section
10B(1) of the Housing Act exempts the financial institution
which granted the credit (mortgage loan) for this creditlinked
subsidy from first offering it to the relevant
Department of Human Settlements in case of the
involuntarily sale of the property (sale in execution).
These restrictions are incorporated against the title deed for
the stand on which the FLISP house was constructed as a new
title condition imposed in terms of the prescribed legislation in
the following manner:
The NHFC as administrator of the FLISP subsidy is thus fully aware
of the requirement that a mortgage bond must be registered
simultaneously with the transfer of the property for which a FLISP
subsidy was granted, as can be seen from the above extract from a
FLISP Letter of Grant it issued, where specific reference is made to
the loan amount of the mortgage bond.
When the conveyancer lodges the linked transfer and bond
at the Deeds Office, the NHFC as implementing authority, is
advised of lodgement. This notification is accompanied by
This ensures that if such purchaser attempts to sell and transfer
the FLISP house during the first eight years after transfer that
the examiners at the Deeds Office will request compliance with
this title condition by calling for the consent from the
Department of Human Settlements as prescribed in Section
10B(7) of the Housing Act.
COSMOPOLITAN PROJECTS
STBB offers a variety of legal
services where our expertise and
friendly approach allows us to deal
with every legal matter in an effective and efficient manner
ensuring a pleasant experience for our clients.
In the property sector we cover:
• Property law: We offer benchmark services for both retail
and development property transactions. We are reputed for
our teams of seasoned property law practitioners who share
an extensive set of skills to smoothly address every aspect
of property law and land development transactions.
• Local Government, Planning, Development and
Environmental law: Our Development Law Unit has nine
specialists addressing development requirements in the
fields of planning law, environmental law, construction law,
renewable energy law and local government law. The Unit
partners with land developers to function as a vital
watchdog and one-stop-shop for all legal requirements of
land development projects, including low cost housing
projects.
For more information related to the information published,
please contact Gert Minnaar at [email protected] or visit our
website www.stbb.co.za to view contact information for your
nearest branch.
www.saaffordablehousing.co.za SEPTEMBER - OCTOBER 2020 23