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