eThekwini Municipality Perspective

1
eThekwini Municipality Perspective

• REFLECTION ON THE REPORTS FINDINGS AND ITS
  IMPLICATIONS
• Y.H. SACOOR
• DEPUTY HEAD HOUSING ETHEKWINI MUNICIPALITY

2
DEMAND OVERVIEW

• Table 1 Tenure options provided by the different
  surveys
• eThekwini Municipality has long taken a decision
  that there is a need of tenure options to be
  considered beside purely. Public rental
  option.
• Presently, there is the processes of
  transferring R293 rental houses to present
  rental tenants into Freehold. In doing so,
  eThekwini Municipality recognizes the necessity
  of diverse tenure options of tenants that
  includes public rental, private rental, hostel
  rooms and informal rentals.
• In eThekwini area there are a variety of tenure
  options, there are Public rental stock, private
  rental stock, Social Housing rental stock and
  informal rental shacks.

3
Chart 4 Type of dwelling for households that
rent The proportion of households renting is
higher in largest five metros. Chart 5 Rented
dwellings in metropolitan areasExceptionally
high levels of demand in Pretoria, Durban, East
London, Gauteng and P.E0

• Most tenants cannot afford formal inner city
  rental accommodation as it is expensive for
  low income earners. The alternative is to resort
  to informal shack renting.
• Roughly 55 of tenants have an income of R3500
  and 22 earn
• between R3500 and R7500.
• The implication for eThekwini Municipality is to
  increase the building of CRUs and Social Housing
  Units in order to accommodate tenants who are
  earning less than R3500 and those who earn R7500
  pm.

4
Table 3 Rental Increases in Provinces 2003
-2007According to Table 3 a two-bedroom unit in
the market current year (2008) is rented out
between R3600 and R4200 pm.

• Rent between R3600 and R4200 pm is out of reach
  of income earners below R7500
• eThekwini Municipality must deliver more CRUs and
  Social Housing Units in order to accommodate
  households that earn less than R3500 and those
  who earn between R3500 and R7500.

5
High percentage of renters are foreign nationals
therefore demand for rental accommodation could
be bolstered

• This is not fair to locals and impacts negatively
  on supply for locals. However, the residential
  status of foreigners have to be checked
  whether they qualify etc.

6
Rents should not exceed 33.3 of income. The rent
attaching to various unit types will be based on
assumptions about the target market and in
relation to a proportion of income that can be
afforded

• Households earning between R3500 and R7500 pay
  an average rental of R1637, which cannot be in
  the market sector. Once the rentals are more than
  30 of monthly income, it then becomes
  unaffordable.
• The data from Chart 11 indicates that households
  earning less than R3500 are on average paying
  rentals of R322. The R322 rentals is therefore
  not in the market sector, rather the informal or
  backyard shelter.

7
Supply of Rental Accommodation

• Recommendation data from Municipalities
• A provisional data template was developed as part
  of the CRU policy. This included data relating to
  stock, vacancy rates etc. All provinces should
  set up such mechanisms as required for receiving
  funds under CRU.
•  
• eThekwini Municipality has mechanisms set up for
  receiving funds under CRUs.
• eThekwini deals with the Province in this regard.

8
Municipalities did not have clear responsibility
assigned for maintaining data on Municipal stock
they should be held accountable

• eThekwini maintains data on Municipal stock
  regularly through the Maintenance department.
• The Maintenance department also deals with Public
  Rental stock.

9
Factor impacting on the development of Rental
Markets in South Africa

• High demand for Social Housing resulting in low
  vacancy levels, for example, riots took place in
  Newlands, Durban when applications opened for a
  new project.
• This is a clear indication of the high demand for
  Rental Housing.
• Also it is important to structure the allocation
  of vacant units to avoid such problems in the
  future

10
Capacity constraints exist in the housing supply
chain - Bringing stock to the market takes too
long

• Agreed. Beauracracy needs to be urgently
  addressed. Perhaps private sector involvement can
  alleviate some of the constraints.
• Demand for Rental housing exceeds the supply, due
  to lack of resources.
• Not many people are needed in the Housing
  Department to fast-track the supply.
• There are 3 SHIs which deal with this.

11
Evictions Landlords find the current legal
process for dealing with evictions inefficient
and expensive. They then adopt the system where
tenants are evicted by the 21st of the
month.However the Rental Housing Act, effective
May 2008 criminalises such actions. 

• Delay in evictions is a real problem with all
  Municipalities.
• The legal process itself is onerous. Very often
  political intervention and the courts leniency
  to approving evictions that causes delays and
  this impacts on the bad debt situation and causes
  other related problems in rental
  administration.

12
Subsidies There are delays in receiving funds
once subsidies have been approved. Subsidy value
of R41 000 is inadequate given increases in both
capital and operational costs. A new capital
restructuring grant addresses the shortfall of
the subsidy.SHIs highlighted that the various
subsidy does not address the needs of the very
poor.

• Agreed, this impacts in all provinces
• SHF needs to play a more pro-active role in this
  regard
• 30 of tenants earn less than R3500
• Municipalities require far more subsidies to help
  the poor and to sustain the projects for the
  future
• Limited budgets are allocated even for the
  restructuring growth

13
Service delivery by Municipalities - Issues range
from long delays in responding to reported
problems to frequent billing errors.In the areas
of refuse removal and basic cleanliness landlords
often have to augment services provided by the
city directly.

• From eThekwinis perspective, not all Metros
  respond poorly to calls of services required.
• Billing errors are corrected immediately but they
  are not as frequent as stated above
• Refuse removal takes place periodically according
  to a weekly timetable set out for the various
  projects

14
Social Housing and Private Sectors - Tenants in
social housing units should be able to migrate to
private sector units as their incomes increase.
Social Housing Policy has clearly defined target
markets to reduce the risk of downward raiding.
Suggestion that facilities be limited in social
housing projects.

• Not necessary for tenants to move into a private
  sector unit as their incomes increase. However
  they do have the option to move if they so wish.
• Provision of Social Housing aims to encourage
  tenants to enhance their lives and assist in
  upward mobility. Due to tenants enjoying a
  subsidized rental, there is reluctance on their
  part to move to more expensive accommodation when
  their income increases. This has been noted in
  eThekwini Municipality.
•