Rental Housing

1
Rental Housing

• Response to the Recommendations of the FFC on
  Rental Housing
• National Department of Housing
• 7 August 2009

2
FFC Recommendations Rental Housing

• Relaxation and flexibility on
• Eligibility criteria for accessing the SHRCG to
  allow projects falling outside the DRZ to access
  funding
• Number of DRZs to respond to excess demand for
  rental housing
• Minimum units size for developments of existing
  buildings
• The process of disbursing funds for rental
  housing within the housing sector should be made
  shorter, to minimise time lags following the
  submission of approved project plans
• The Social Housing Regulatory Authority should
  improve inter-sectoral co-ordination between
  various government departments responsible for
  integrated human settlements
• The qualifying income bands should be reviewed
  to ensure that individuals are not unfairly
  excluded from benefiting from the subsidy (due,
  for example, to increases in the cost of living)

3
Relaxation flexibility

• Eligibility criteria for accessing the SHRCG to
  allow projects falling outside the DRZ to access
  funding
• The Social housing programme is a targeted
  programme rather than a mass housing delivery
  programme with specific restructuring objectives,
  than mass provision of affordable rental housing
• The restructuring aims will facilitate the
  further provision of private rental accommodation
  by the private sector in areas where no or
  minimal investment in rental housing is
  occurring, but is required
• The DRZs therefore ensure that governments
  investment in rental housing is targeted and
  focussed in areas where it is required and will
  be sustainable

4

• The CRU programme is not limited by the DRZs and
  can be accessed in any areas.
• The institutional subsidy can still be access
  outside the DRZs for rental housing.
• Rental housing in rural areas has been studied
  indications are that for the Social housing
  income bands rental housing is provided as a
  employment perk and would not be required through
  a subsidy programme of this nature
• Experience of social housing development prior to
  the introduction of SHRCG has indicated that
  location of rental housing stock is critical to
  success and sustainability of the projects and
  needs to be carefully selected. This further
  informed the DRZ approach of the programme

5
Relaxation flexibility

• Number of DRZs to respond to excess demand for
  rental housing
• Rental housing demand and need is mostly in
  metros and urban area
• All these areas are covered by the current DRZs
• Local, province and national jointly inform and
  agree on the specific DRZs in relation to demand
  and sustainability of rental housing in the areas
  as well as restructuring objectives(social,
  economic and spatial)

6

• Often developers would like to develop rental
  housing where an opportunity arises. The
  opportunities do not always meet the
  restructuring criteria or are not always suitable
  for sustainable rental housing
• The DRZs ensure that governments investment is
  targeted and focussed and will be sustainable

7
Relaxation flexibility

• Minimum units size for developments of existing
  buildings
• Purpose of social housing programme is to
  encourage new rental stock development, therefore
  the programme is bias towards new development
• CRU deals with existing rental stock and is
  flexible enough to accommodate existing buildings
• The minimum unit sizes defined are linked to the
  subsidy quantum and financial model informing the
  programme.
• Should the units size not be defined, the
  programme costs will be completely open ended and
  the costs would not be able to be contained and
  managed as well as the product that is to be
  rented

8

• The social housing programme currently does not
  accommodate the development and rental of rooms
  with shared facilities , which is the typical
  approach for the redevelopment of existing
  buildings in inner-city area in order to address
  lower income groups
• Work is being done to look at a minimum
  specification and financial model for this
  approach without creating future hostels or
  encouraging slum landlords through the programme

9
Funding disbursement process

• The proper management of rental stock is the key
  success factor to rental housing
• The process of accelerating the delivery of
  rental housing considers
• Readiness of projects
• Management of projects post construction
• Cost of projects
• Standard assessment tools for projects have been
  developed and agreed with the sector. These are
  utilised to assess each of the elements indicated
  above.

10
Funding disbursement process

• The funding disbursement process complies with
  PFMA/government requirements and key controls as
  well as requirements for viable rental housing
  projects
• As sector becomes familiar with the process the
  turnaround times are shorten through better
  quality project submissions
• The SH programme guidelines define specific
  turnaround times for programme/project approvals
• A capacity building approach is being implemented
  to improve the capacity of province to approve
  rental housing projects, as these projects are
  more complex than ownership project approvals.

11
Funding disbursement process

• Alternatively, the programme could be made a
  national programme (from a funding perspective),
  with funding disbursed from a national directly
  or through an institution
• Thjis would allow capacity for rental housing to
  be dedicated and focussed ensuring sustainability
  
• Province to concentrate on other housing
  programmes

12
SHRA inter sectoral co-ordination

• The SHRA was established to focus on the
  regulation of the social housing sector in order
  to protect governments investment in rental
  housing
• In terms of the SH Act and Rental housing Act,
  national government should ensure that all
  spheres of government and other government
  departments are aligned to enable and support the
  development of rental /social housing
• In terms of Inter-governmental arrangements and
  relationships, the NDoHS is best positioned to
  fill this roll rather than the SHRA

13
Qualifying income bands

• The institutional subsidy qualifying criteria
  does not apply when the SHRCG is utilised in the
  social housing programme
• There are however requirements to ensure that
  governments investment does benefit the targeted
  income groups (below R3500 R1500) through cross
  subsidisation with middle and higher income
  groups
• Some SH developers would still like to utilise
  the institutional subsidy and not the SHRCG as
  the criteria is less onerous and they bypass
  regulation. This will no longer be possible when
  the SHRA is established
• Currently the institutional subsidy allows for
  rent-to-buy and if the income bands are changed
  individuals would get access to an ownership
  product of higher value than in other subsidy
  ownership programmes.

14
Concluding statements

• Rental housing programme is quite different to
  the ownership programme as the focus is on the
  sustainable management of stock post development
• NDoHS acknowledges that there is great demand and
  need for affordable rental housing
• The national rental housing strategy is focussed
  to respond to this through
• Scaling up the delivery of rental housing
• Ensuring accessibility for low income groups
• Current funding environment limits the extent of
  investment possible in rental housing / housing

15
Thank you