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State of the Social Housing Sector Report

by Madelein
State of the Social Housing Sector Report

Main image: Social housing units must be self-contained, which means that each unit must contain sleeping quarters, living/dining/kitchen areas and ablutions. Photo by SHRA

The annual State of the Social Housing Sector Report provides an overview of the current state of the sector, including the demand to date for social housing, the profile and performance of the sector, the current state of transformation in the sector, and the successes, challenges, opportunities and developments facing the sector. It also presents the plans and initiatives of the Social Housing Regulatory Authority (SHRA) and the sector to support the development of the Social Housing Programme, policy and the sector in partnership with all key role-players.

Social housing in South Africa

The Social Housing Act, 2008 (Act No 16 of 2008) defines social housing as: “A rental or co-operative housing option for low- to medium-income households at a level of scale and built form which requires institutionalised management, and which is provided by social housing institutions or other delivery agents in approved projects in designated restructuring zones, with the benefit of public funding.”

Primary legislative and policy documents and initiatives that define social housing in South Africa include the Constitution of South Africa, 1996 (Act No 108 of 1996), the Housing Act, 1997 (Act No 107 of 1997), as amended in 2001), the Social Housing Policy, 2005, and the Social Housing Act, 2008 (Act No 16 of 2008).

Social Housing Programme

The Social Housing Act governs the implementation, funding and regulation of social housing in South Africa. As a policy instrument, the primary purposes of social housing are urban restructuring and regeneration and increasing the supply of rental housing in good locations for low- to moderate-income earners.

Social housing projects are developed and managed predominantly by SHIs. SHIs are intended to be sustainable cooperatively-, privately- or municipal-owned entities (MOEs) operating a for-profit or not-for-profit over a long period. The policy also enables private sector for-profit entities termed other development agencies (ODAs) to develop and manage social housing projects.

In addition to residential accommodation, social housing estates can incorporate other facilities and services. These provide community development incentives and empowerment benefits and promote a lifestyle conducive to community cohesion.

Government grant provides housing opportunity

Social housing is delivered under the jurisdiction of the SHRA and must be developed within restructuring zones. The SHRA is a juristic person whose core functions are to regulate SHIs and projects, and to invest in capital projects and institutional development.

A government grant enables access to the housing stock provided by low-income households. The focus is on funding projects rather than units, which allows for a holistic approach to lifecycle costing and the long-term perspective required for social housing projects.

Public sector funding for social housing comprises three components:

  • Funding for social housing projects through the Consolidated Capital Grant (CCG).
  • Funding for SHIs through the Institutional Investment Grant (IIG).
  • Funding for the operations of the SHRA, which is mandated to oversee the social housing sector.

Social housing funding

A total of R4,3 billion has been allocated for social housing over the five-year MTEF period. This is expected to deliver 30 000 social housing units.

The CCG of R723 706 million is only 2,2% of the human settlement’s capital budget for the 2019/20 year (the budget is R32 752 billion). Of this, 57% (R18 779 billion) was allocated to the human settlement development grant (HSDG) and 37% (R12 045 billion) to the urban settlement development grant (USDG). The SHRA is currently motivating for an increase in its allocation, as it believes the current allocation is insufficient for 30 000 units. The current Social Housing Act and Regulations do not allow the SHRA to borrow or leverage its current capital allocation.

Demand for social housing

Based on data from the 2016 Community Survey (StatsSA), social housing is 0,5% of the housing sector, which is about 76 617 units. Most social housing units are in metropolitan areas, where social housing is 1% of the sector.

The size of the formal rental segment in which social housing falls decreased by 5% from 2011 to 2016. The highest growth was in backyard formal rental (16%) and backyard informal rental (5%). Formal owned grew by 8%.

Despite this, SHRA independent research in 2016/17 established that the demand for social housing was about 320 000 units nationally, comprising 235 000 units in metropolitan municipalities and 83 000 units in district municipalities.

Overview of SA’s social housing sector

Since 2005, a total of 135 projects were delivered through the Social Housing Programme, providing 33 241 units. A further 38 projects are in progress, which will bring the number of projects to 173, providing 52 683 units.

Of the 173 projects developed or in progress, 90 (52%) and 27 000 units (51%) are in Gauteng. A total of 21 projects (12%) and 6 000 units (11%) are in the Eastern Cape. Cape Town has 17 projects (10%) and 6 000 units (11%), and KwaZulu-Natal has 21 projects (12%) and 7 500 units (14%). These four provinces account for 86% of the projects.

Self-contained units

Social housing units must be self-contained, which means that each unit must contain sleeping quarters, living/dining/kitchen areas and ablutions. No rooms with communal ablutions or other facilities are funded.

Units must be a minimum of 30m², but the SHRA is looking to become more demand responsive. To this end, draft norms and standards were developed in 2020.

Full acknowledgement and thanks go to www.saaffordablehousing.co.za for the information in this editorial.

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