COMMITTEE REPORTS:
The Portfolio Committee on Housing held Budget Hearings on 24 and 29 April 2002. Different housing Institutions were invited to brief the Committee on their activities. The Committee wishes to express its appreciation to all housing institutions that briefed the Committee. A list containing the names of those who attended the hearings is included in part J of the report.

A.Briefing by Mr Moholo - Social Housing FoundationThe Social Housing Foundation is a section 21 Company established in 1997. It was given mandate by the Government to develop and build capacity for social housing institutions and to develop a policy framework for the housing sector.

The following are the main objectives of the Foundation:

• To provide social housing sector strategic information
• To mobilise resources for social housing sector
• To facilitate capacitating of sectoral participants
• To promote social housing sector
• To facilitate sector participants
• To facilitate sectoral stakeholder alignment
• To achieve business service excellence

There is a need to intergrate services, for example people need to live in areas that are closer to where they work. The houses that are built for them have to be of good quality. The Foundation also has to respond to the challenge of how to make new and innovative building technologies. Transformation and black empowerment have to be emphasised. The Foundation has different projects in all the Provinces.

Mr Moholo handed over to Ms Crafton who briefed the Committee on the Foundation’s capacity building and support programme. The Document that she was speaking to was handed to members. Her emphasis was more on the purpose of the programme, key outcomes proposed within the programme and elements of the programme. The purpose of the programme is to establish a viable, sustainable social housing sector in South Africa and provision for the basis of its future expansion. Its objective is to contribute towards the establishment of at least 60 sustainable housing organisations, and to ensure that they achieve viability by June 2005.

After Ms Crafton’s briefing, Mr Moholo allowed Mr Higgs to brief the Committee on the Foundation’s finances

Thubelisha is a Section 21 company which was established jointly by Government (Department of Housing) and Servcon Housing Solutions (PTY) LTD. It is governed by an independent Board of Directors. Thubelisha was funded by a grant that was established by Government (R50 million) and relocation assistance from Provincial Housing Department. Thubelisha started its operations in July 1999. End August 2001, Thubelisha still had 49 500 000 and has built 17 000 houses .

The primary responsibility of Thubelisha is to provide alternative, affordable accommodation to households on the Servcon portfolio who have signed rightsizing agreements with Servcon and complied with their interim payment arrangements.

Rightsizing is a process whereby alternative accommodation is provided by Thubelisha for home owners who had their houses repossessed by banks because they could not afford to make repayments. These households are permitted to occupy their existing homes temporarily whilst paying rental determined by Servcon. If their repayment record is good, they are passed to Thubelisha. Thubelisha then assist in relocating them to affordable houses. 95% of these houses are the typical RDP houses delivered in that particular province.

Rightsizing benefits households, Council, the Community, Government and Banks. Households get the opportunity to own property for the second time (and this time with a title deed. They also qualify to benefit from Servcon’ job creation projects. The Council get to increase housing development, develop open space and receive payment of rates and service charges from new occupants of bank houses. Communities benefit from rightsizing because when new houses are built there are job opportunities. Government gets to normalise the housing environment. Banks resale their stock back in the market.

• In some areas owners of property do not want low cost houses to be built next to their properties.
• It is difficult to get land closer to where the client previously lived.
• Thubelisha does not get visible support from Ward Councilor Level.
• It is difficult to get people to relocate especially old people and single parents.
• Clients sometimes refuse to pay for their houses and when they are evicted they refuse to move out.
• Sherrifs sometimes are scared to evict people unaccompanied by the police. The police are reluctant to participate in evictions as they are saying it is the role of the sheriffs to evict.
• Banks are not committed into selling or disposing houses quickly. People without accommodation, people who are eager to occupy these houses have to wait long periods before banks allow them to buy.

• Abandoned spouses - Subsidy houses are not allocated to a woman who’s husband has disappeared without a trace. This is because policy states that both signatories who signed for the original bond with the bank have to sign for the subsidy house. In Khayelitsha, Cape Town about 42 % of households have husbands who have disappeared.

The Department of Housing established the People’s Housing Partnership Trust (PHPT) in June 1997 to implement a capacitation programme to develop capacity at all levels of Government, NGO’s CBOs and communities to support the People’s Housing Process.

Technical Assistance and funding for the programme is provided by the United Nations Development Programme (UNDP), the United Nations Centre for Human Settlements (UNCHS – Habitat) and the United States Agency for International Development (USIAD).

The PHPT will implement a national capacitation programme with its support activities being initiated and carried out at the provincial and local levels.

PHPT’s mission is to build capacity at provincial level, municipalitity level, NGO’s, CBO’s, tribal authorities, support organisations and other organisations that can potentially support the people’s housing process by enabling them to provide support services to beneficiaries in both rural and urban settings.

The aim is to create a critical mass of support for and promote public awareness of the People’s Housing Process by establishing a viable and sustainable framework of support to the People’s Housing Process comprising of all government levels, support organizations, Traditional Authorities and the private sector.

When the institution was established in 1997, there was nothing in place and it was difficult to convince communities that PHP is a good project. The institution had no habitat office in the country and the United Nations Development Programme (UNDP) and USAID assisted in funding the initiation of the institution. The emphasis of the PHPT’s operations of the first two years was on getting off the ground in all provinces so they could demonstrate the effectiveness of the PHP. In 1999 the activities moved more towards advocacy and promotion. Exchange programmes to demonstrate projects have proved to be an effective way of creating the critical mass of support of the PHP. A strategic planning session of the Trust and its partners was held in 2000 where it was agreed that the next phase of activities of the PHPT should be to take the programme to scale. PHPT decided to mobilise institutions of higher learning. The current operational activities focus on different strategic aspects namely, communication, training, Research and Development, Technical advisory services and corporate services.

The first goal for PHPT staff was to create a presence in all provinces. There were no policies in place but the institution had to ensure that people are housed. A decision was taken to raise awareness and create a demand for PHP. Before pilot projects were implemented there were discussions that took place and eventually beneficiaries got to understand what the project was all about. In 1997 there were no PHP in the provinces but today all nine have People’s Housing Process Units.

The PHPT mobilsed provincial and local government to support PHP through meetings, workshops, presentations and exchange programmes. Over the years there has been demand for PHP.

Facilitators of CBO’s, NGO’s Provincial and local officials and communities in different provinces were offered training to be able to mobilise and conduct workshops on PHP. Different provincial needs are determined and different training programmes are designed.

NURCHA is a presidential lead project established to facilitate finance for low income housing projects. NURCHA is a non – profit (section 21) company which was registered in May 1995. Its task is to facilitate delivery of adequate sustainable housing through the unblocking of financial and other obstacles to the provision of subsidised housing, and to direct the bulk of the assistance to projects focusing on households with an income of below R1 500.00.

NURCHA has raised funding from a variety of sources. Many people and organisations have played a role in NURCHA’S establishment. However, it is the South African Government and Open Society of New York that have provided the finance necessary to run NURCHA successfully. They are the largest contributors to NURCHA’S guarantee capacity.

NURCHA has as its main objectives which are to:

• Facilitate low income housing by guaranteeing loans made by commercial banks and other lenders;
• Focus on the housing needs of families earning less than R2000 a month;
• Promote a broad range of housing initiatives;
• Help extend the housing market until it meets the needs of all South Africans.

NURCHA shares financial risk by providing bank to bank guarantees and project assessment to assist the lender to judge the viability of the project. The final responsibility for assessing the credit worthiness of a borrower and managing the credit risk though lies with the lender and not with NURCHA.

• NURCHA offers financial guarantees to financial institutions for a significant portion of the bridging finance loan required by contactors and developers for housing projects evaluated and approved by NURCHA as viable projects.
• NURCHA provides guarantees to lenders who extend credit for housing to those families who cannot afford to repay small housing loans, but do not meet the bank’s lending criteria.
• NURCHA also provides guarantees to reduce the risk for institutions financing rental stock and rent to buy options for low income families.
• NURCHA also participate in the development of large scale housing projects producing homes for families in the housing market sector

Since its inception NURCHA has approved 487 projects applications, containing 160 000 houses. 102 000 houses were built on NURCHA supported projects. NURCHA has issued guarantees worth R300 million and paid claims of R3,2 million. At least 250 emerging contractor projects were supported. NURCHA has financed the businesses of several leading women contractors.

NURCHA’s goal is to encourage hundreds of thousands of people to accumulate savings to contribute to their housing. They also encourage banks to provide savings (and lending) facilities to the informally employed. Nurcha’s goal is also to arrange small housing loans for a proportion of savers and reward some savers by directing housing subsidies their way. Nurcha also intends to arrange other "housing benefits" for savers.

During 2000, NURCHA has encouraged low income earners to save regularly towards their housing needs. Their long -term goal is to create loan products which use the savings together with NURCHA guarantee, and offer the savings track record as proof of ability to make repayments. Government has supported this initiative and the first savings linked lending programme has been agreed between NURCHA and Ithala in KwaZulu – Natal. Funding for the operational costs of launching this programme have been secured from Government, the Open Society Institute and USAID. In the Western Cape, NURCHA is working with PEP Bank in assisting people to save some money.

NURCHA focuses on ensuring that a loan of about R1000 – R10 000 is provided for people earning less than R1 500. NURCHA has been unsuccessful in ensuring that Banks give loans to people who do not qualify. NURCHA does not have a persuasive power to make banks bring financial services to the people.

• Agreements with Ithala, PEP Bank, Standard Bank (EC), Theba Bank, Saccol and Agishana
• Signed up to 25 000 savers
• Proposed a savings linked subsidy programme to the Department of Housing
• Had some provinces allocate subsidies to reward savers
• Established a network of field workers recruiting savers
• Run more than 250 community workshops to encourage savings

The Chairperson also thanked Mr de Beer for his presentation.

NHBRC was established in 1995 to protect home buyers against so called fly – by night builders. It is an independent, non – profit organisation which achieved statutory status in 1999 through the Housing Consumer Protection Measures Act. It last operated as a Section 21 Company on 28 February 2001. The responsibility of the Council is to regulate the home - builders industry. It protects housing consumers and strives to satisfy the needs of all South African Housing Consumers and Home Builders. Its mission is to protect housing consumers by establishing, implementing and regulating quality standards in the home building industry. It has established a warranty fund to provide assistance to housing consumers under circumstances where home - builders fail to meet their obligations in terms of Section 13 (2) (b) (i). It also has to build capacity of home builders and consumers with specific emphasis on the historically disadvantaged. This is done by providing home builders through training inspections. It has to promote housing consumer rights and to provide housing consumer information. NHBRC has to communicate with and assist home builders to register in terms of the Act.

Since the inception of NHBRC, builder registrations and home enrolments have grown significantly. Until 2002, the NHBRC was an industry and a self-regulatory body. The growth represents the increasing acknowledgement of the importance that the regulation plays in this industry.

Membership has to be renewed by members, NHBRC checks if the builder has been doing its work properly before membership can be renewed. There are Engineers who confirm if houses can stand the test of time. During 2002, 2486 applications for builder registrations were received. All applications are subject to a strict approval process to ensure that registered builders have technical competence and financial substance to deliver quality homes of approved standards. 85 % of builder registration applications were successful.

The NHBRC, through its inspection process is able to help registered builders continue to improve standards and quality. A determined programme will be implemented in the next financial years to target the development of emerging contractors. This will not only further improve the quality of standards of the industry but it is also a statutory mandate of the NHBRC to develop the homebuilders.

Whilst the NHBRC is able to commit resources to aid in the development and transformation of the industry, specific interventions are required from the financial sectors to assist emerging contractors meet their financial obligations. This will enable the emerging contractors to have adequate cash flow during the construction period. Until this is done, emerging contractors will be tempted to build below specifications, as a result of cash flow constraints.

NHBRC has spent about R16 million on inspection of houses. In 2002 NHBRC have conducted 65 786 inspections on houses built.

In 2002, NHBRC has repaired about 30 % of the houses that were built by builders.

NHBRC has the capacity to inspect every government houses built by developers. Inspection of homes is done by outsource inspectorates. NHBRC is hoping to train more inspectorates. NHBRC does not set standards, it is SABS that does. NHBRC has a customer Care Centre where consumers can complain and complaints are not acceptable three months after occupation.

Servcon is a joint venture between the Government as represented by the Departments of Housing, Safety and Security, Justice, National Treasury and Banking Council. Servcon, together with Thubelitsha Homes was established by the Government, with a specific mandate to procure the alternative houses for Servcon clients.

Servcon’s role is to deal with the properties repossessed by the Banks in low-income communities. Servcon was then restructured and received a new mandate from Banks and Government on 1 April 1998. The cost of the portfolio is shared by the two parties as they are in partnership. The mandate is to normalise the situation and specifically to dispose of the portfolio over an 8 year period from 1 April 1998 to 31 March 2006. Four years have now been completed under the new dispensation

Servcon has a rehabilitation programme offered to owners of properties to ensure that they are not thrown out of the houses. The rehabilitation programme offers the following:

• Subsidised rental option
• Buy back or loan reschedule option
• Rightsizing option (assistance towards an alternative affordable house)
• Special Assistance to the Aged and Disabled

The target for the period up to 31 March 2001 has been reached as Servcon has disposed of 10118 properties, 30,36% against a target of 30 %. Disposing of property means to have the property normalised and removed from Servcon and returned to the bank. This is done by selling the property back to the ex owners, rescheduling the loan or getting vacant possession through occupant voluntary vacating, rightsizing or eviction of uncooperative occupants.

Even though over 71% of the occupants have signed agreements or have normalised the situation. The record of payment in terms of signed agreements is very poor. Only about 30 to 40 % occupants pay regularly. This trend is worrying. Servcon pay as little as R30:00 a month and they are allowed to pay what they can afford. This imposes some problems as Servcon is in process of canceling a number of leases where payments are not made and clients have not responded. A new credit control policy is now effective where about 50% of clients have signed the agreements and are now paying. The problem is with those who do not cooperate and have not been doing so for the past 12 years.

Most of the houses are structurally sound but there are those with defects. The problem that has been observed by Servcon is that the houses are not properly maintained. This is sometimes due to the fact that some people are ignorant and do not know how to fix and maintain the houses. Servcon can assist in ensuring that the structural defects are repaired.

This is a programme which assists people who have defaulted payments on their housing loans. It ensures that these people are relocated to alternative houses. Government pays a subsidy "relocation assistance" towards the new house. This is a difficult concept to promote and often Servcon encounters resistance from its clients and community structures. To ensure that projects proceed smoothly, extensive interaction is required.

778 families have been successfully relocated in projects in Embalinhle, Volsloorus, Katlehong, Tsakane, Khayelitsha and Motherwell.

It a myth to say that people have boycotted payment for their houses, most people have stopped their payments because of a number of reasons one of which is that they have lost their jobs. Socio – economic conditions in the townships have led to people not paying for their houses. During the transition from Apartheid to the democratic government, people have lost their jobs through retrenchments/redundancy and also through other social issues. High mortality rate has also contributed towards non – payment. For example, partners have lost their spouses through illnesses, divorce and abandonment. Servcon has realised that most of their clients still face economic hardship. December and January are traditionally bad periods for payments. Legal action is being taken against non – payers but has to be balanced against action against unco-operatives given the volumes.

Evictions are implemented where people have refused to join the pogramme (which is to sign an agreement and start paying) or where they have defaulted on an agreement. It takes time to implement this process of eviction. People are advised to join the programme and if they resist they are unfortunately evicted

According to Servcon, no person needs to be homeless and those who cannot afford to pay for their house should approach Servcon and try to make repayments. Servcon does offer people alternative houses to stay in, but has encountered resistance from people who do not want to be relocated into smaller houses.

Servcon is unable to obtain orders in all the provinces. However, in Eastern Cape, the applications for eviction orders have to comply with Prevention of Illegal Eviction from unlawful Occupation of the Land Act No 19. Attorneys in Eastern Cape are able to comply with this Act and eviction orders are obtainable.

According to Servcon, Sheriffs are able to carry out evictions in most areas with the support of SAPS. However, in some areas, Sheriffs are unable to perform their duties because of lack of support from SAPS. Khayelitsha is an example of an area where support from SAPS has been lacking and very few evictions where carried out for the past 12 months. While some Sheriffs perform their duties as expected by the Courts, there are Sheriffs who fail to carry out their duties as expected. These Sheriffs are very unco-operative and have been reported to the Board of Sheriffs by attorneys and Servcon. They are from Soweto West and Soshanguve area. Servcon is endeavoring to get this matter resolved by either the Board of Sheriffs or the Department of Justice. It is still very difficult to obtain successful prosecutions where people move back into properties after evictions. An investigator has been appointed to assist the police to compile dockets but this is an onerous process.

Servcon has been experiencing pressure from people who cannot afford to pay for their houses to extend the cut off date which is 31 August 1997. This matter has been referred to the banks and Government and the Policy Review Committee which is to review progress. Servcon has requested the Minister to convene the meeting.

The current year is considered a critical one in Servcon’s history as it will set the platform for the ultimate realisation of its goals. Servcon is committed into changing the levels of performance, efficiency and success to a higher plain.

1. Reduction in portfolio;
2. Improve payment record through a vigorous arrear strategy;
3. Clients to join programme;
4. Reduce the number of problem areas;
5. Communication strategy, to improve Servcon’s image and get its message across;
6. Self Help job creation projects, to assist in boosting affordability amongst its clients.

Servcon has initiated job creation and community development projects in a number of areas aimed primarily at their clients.

Most of the problems encountered by Servcon are due to environmental and socio – economic conditions. Whilst there are difficulties in most areas where Servcon operates, certain areas are more difficult than others due to a variety of reasons.

1. Unemployment and poverty result in communities not paying for their houses.
2. Defiance of law and order – Servcon has encountered a lot of people who are disrespectful of the law. For example, some people prevent the Sheriff from carrying out his duties. Others move back to into properties from which they have been evicted. It is often difficult to get the police and or prosecutors to investigate criminal charges against people who have illegally reoccupied properties.
3. Poor community leadership – People tend to disregard their leaders.
4. Environmental conditions – Communities are not happy in environments they are living in, this results in the value of property declining.
5. Lack of education and understanding – people do not have an understanding of mortgage and bond.
6. Illnesses – Due to poor health, some people are unemployed or they lose their job.
7. Party politics and quality of leadership - There are some people who are politicizing the housing issue and who influence others for party political gain.
8. Lack of financial discipline.

A package of measures to address each issue within a holistic context is required in order to create an enabling environment, re – establish the secondary market and to uplift communities.

It is clear that Servcon needs more support in order to solve some of the problems. According to Servcon the problem is not housing per se, but a mixture of social, justice, safety and security, economic as well as housing.

The following areas have been "normalised" or at least improved to a status in keeping with the norm for Servcon areas or have been removed as they re relatively insignificant from a Servcon perspective.

Zola, Wedela, Gelvandale, Bultfontein, Kanana, Drieziek, Bethelsdorp and Kwa Dabeka.

Servcon has developed a working relationship with all major local authorities with success in some areas. They have rebuilt their relationship in Ekurhuleni now that the new Mayor has been installed. The level of cooperation has improved considerably but when evictions occur, the pressure increases considerably.

The following projects are underway:

The projects is still operating even though there is an accommodation problem. Servcon is still waiting for a response from Boksburg Service center for the application they have made for a site.

These are still operating.

Progress is still low due to unavailability of machines. Servcon got an order to do running vests for puma Athletic Club.

In Collaboration with the AIDS consortium, Servcon has been funded to the tune of 100 000 US dollars over a period of 18 months. This programme will allow them to train Servcon clients in HIV/AIDS counseling and home based care in other areas as well. Trainees will be expected to render a service to the broader community and will be given allowance ranging from R600 to R800 depending on the number of trainees. Servcon is also exploring possible solutions to the problem of parentless households.

Two members have been trained as trainers. Efforts are being made to ensure that the computer center is up and running.

Servcon will be intensifying their efforts this year to embark on community development / job creation projects in the Ekurhuleni Metro. This will be done in partnership with Metro Council, Banking Council, Thubelisha, Ekurhuleni Business Initiative and other stakeholders.

Crèche: The Standard Bank has agreed to lease house no Erf 7441 at R50 per month to be used as a crèche by three our clients. There are 9 lids registered at the crèche.

Agriculture: Servcon is still waiting for an application made to food and trees for Africa for utilisation of the farm Rietkuil.

Servcon is still waiting for an application for a site to build the resource center.

Servcon is exploring ways and means to seek funding for the proposal from Motherwell to establish a fund for loans and guarantees to enable their clients to establish small businesses.

Servcon is proceeding to establish an institutional relationship between Servcon, the three banks and Gauteng Government for the sale of vacated PIP’s. If this pilot becomes successful, Servcon will attempt to extend it in other provinces.

The relationship has been greatly enhanced and Servcon is working in very close and productive cooperation. 1367 Families have been relocated in terms of the rightsizing programme during this year.

Servcon is still in discussions with NURCHA regarding a savings scheme for Servcon Club members.

Servcon is still waiting for the Department of Housing to react to proposal submitted in 2001 to introduce more flexibility into the Servcon programme with respect to subsidies to be paid in certain circumstances and 31 August 1997 cut off date. Servcon’ s mandate does not allow for them to take new people rightsizing.

Servcon is awaiting clarity from the Department of Housing on the new subsidy mount and rules and how this will impact on their rightsizing programme. They are concerned that their clients will not be able to make a contribution of R2 479. On the other hand they feel that People’s Housing Process will delay the delivery of rightsizing.

Mr Moraba thanked the Committee for giving him the opportunity to brief the Committee.

He briefed the Committee as follows:

The NHFC’s mandate is to search (in partnership with the broadest range of organisations) for new and better ways to mobilise finance for housing, from sources outside the state. It is to ensure that every South African with a regular source of income can on time gain access to finance to acquire, rent and or improve a home of his / her own. NHFC is eager to expand housing finance market to accommodate the low - income households. They have adopted an aggressive strategy and are willing to take risks and are working closely with Development Bank of South Africa (DBSA). NHFC has been set up to create new and better ways for low income households

The NHFC’s mission according to Mr Moraba is to seek to create housing opportunities for the low and moderate income families by:

• funding or Underwriting the funding of intermediaries and institutions to promote broader access to housing and housing finance.
• Facilitate the building of adequate and sustainable capacity within the organisations and institutions that it funds.
• Partnering organisations and institutions to deliver innovative housing finance solution options.

The primary responsibilities of NHFC are as follows :

• Stimulate the Primary and the secondary market in the low and moderate income housing sector
• Undertake the funding as a wholesale intermediary and act as a fund manager
• Specialise in identifying, assessing, pricing, monitoring and managing the risks associated with the placement of funds
• Partner with established institutions in providing innovative housing finance solution options
• Successfully implement the Presidential Job Summit Housing Pilot Project.

• Research and Product development
• Improve Access to housing finance
• Build / support housing finance capacity
• Specialise – Develop, Align and implementcredit and other standards in the LIH (unique sector – appropriate standards)
• Pilot funding programmes that would improve the performance of the sector.

• Sustainability of the Niche / Retail Lenders and Housing Institutions – Capitalisation and Capacity Building Issues
• Facilitate entry of the private sector into the LIH – Risk – enhancement mechanisms
• Raise additional Capital from the markets – Cost of Funding of the Corporation
• Effective linkage of subsidies to housing programmes – Subsidies, Savings, Equity and Credit to deliver better affordability levels and draw developers to this market
• Diverse and highly skilled workforce.

NHFC is the only institutions that has funded quality rental stock in all provinces. NHFC has granted incremental housing loans of about 489 480. Since its inception the Corporation has increased access to housing through micro – finance products, created capacity of alternative / niche lenders in the LIH sector – 25 new intermediaries, solely funded all housing institutions that have delivered high quality stock in most areas.

From 1988, a subsidiary, gateway was set to link up with big banks. Initially NHFC met with banks and assured them that the project would succeed. In April 1999, the Corporation established Gateway Home loans to deliver home ownership at scale using the secondary market process. Now it continues to stimulate the primary market by improving liquidity and supporting capacity building the sector. The Gateway Home Loans accredited banks such Absa, Nedcor, African Bank and Cash Bank. The main objective behind was for them to originate and service home loans that would be sold to Gateway Home Loans. Gateway would in turn issue debt paper/securities at the back these loans to the Capital Markets to raise funding (a process called securitisation). There were lessons that NHFC learnt from this partnership with other organisations.

The Corporation has not sustained partnership with banks as they feel the housing market is very risky. About 80 397 houses have been built and the target for 2002/2003 is 90 5000 houses. 195 043 loans have been granted and the institution’s target is to grant 205 000 loans.

• Successfully attracting the private sector is a challenge – RISK SHARING
• Intergration and co-ordination within the housing sector – Social housing provide capacity in the sector and NHFC depends on them
• Intergrating capacity across government institutions e.g SMME, Infrastructure
• Intergrated support of financing initiatives of Government
• The primary market in this is highly dysfunctional and NHFC has to ensure that there is a market out there.

1. Financial

• NHFC has to be self sustainable and not worry about where the next funding for the Corporation would come from
• They have to link savings and subsidies to credit
• Private sector investment in the low income housing market has to be increased by challenging banks in assisting them with funding (Risk enhancement mechanism)
• NHFC has to run a cost effective operation and conform to all the Public Finance Management Act regulations

NHFC has to:

• Put a roof over people’ heads
• Deliver finance for all forms of low income housing such as ownership (including urban renewal projects), alternative tenure (rental, rent to buy and installment sale), incremental (use micro finance in rural areas)
• Deal with the AIDS factor that is most prevalent in this target market and work with other NGOs to quantify the magnitude and the likely impact of AIDS among the lower income households
• Explore housing solution options for the AIDS sufferers

NHFC has to:

• Effectively use policy instruments to ensure maximum participation by the private sector such as Banks and non-banking financial and insurance institutions in the low income market
• Stipulate measures that will ensure that NHFC fulfills its public mandate

After 1994 there was transformation that took place and it resulted in a new company called Housing Infrastructure Development Company (Hidco). There were management problems within the Company which emanated before 1994 and continued after 1994. The role of the Board had to be changed before it became the North West Housing Corporation.

NWHC has existing stock of R210 m some of the stock include R20m(flats), serviced stands (R39m). All of them are at book value which is on average 50 % below market value.

Work in progress amount to R42m

Accounts receivable – R220m

Fixed Assets – R1m

Investments – R7m

Liabilities that the Corporation has are mostly historical and are long term loans of about R77m (Public Investment Commission), Winterveld Trust (R5m), Accounts payable by South African Housing Trust(R22m) and Retention of about R1m.

There are 2836 residential stands of which 700 was developed as part of low cost housing and the rest as affordable housing and 60 business stands which exclude stands for public amenities. The total value of these stands is R39m. There is work in progress of about R42m. There are though 13 low cost housing projects that Corporation implemented but are affected by the repeal of Proclamation R239. This means that the houses that have been built cannot be transferred to people for ownership as the beneficiaries do not have title deeds. Corporation’s money is tied on to properties and cannot be revolved. This makes it difficult for new projects to be built. Some of the beneficiaries have passed away and the P5 cannot be paid.

The transformation and repositioning process still needs to be completed and the legacy problems still need to adjust and implement. The Corporation has to reduce its liabilities.

• More units have to be delivered.
• The quality and size of the units constructed have to be improved.
• The Corporation has to offer those who have already benefited an opportunity to improve and enlarge their homes.
• It also has to improve access to housing finance and implement the discount benefit scheme and where applicable pass ownership.

• The transformation process still needs to be completed
• Transit to the new company – Housing Infrastructure Development Company (HIDCO) has to be completed as well
• HIDCO has to be changed into a section 21.
• All operations and policies that were based on the old dispensation still have to be eliminated
• With the new mandate from the province, the operations of the Corporation have to be realigned. For example, the introduction of social housing
• The Corporation has to work with housing institutions from national through cooperation and joint ventures.

There is a need for the Corporation to:

• Access short term finance to pay current liabilities
• Collect accounts receivable, especially from Government Institutions
• Become a primary market lender
• Resolve barriers related to work in progress

1. Proclamation R293
2. Land transfer

• Renegotiate terms for the loans that were obtained in the past if they cannot be turned into grants

Mr Masimong requested the intervention and assistance of the Portfolio Committee, Department of Housing, Social Housing Foundation, NURCHA and NHFC in addressing and solving the following problems:

• The transfer of land among Government spheres - There are houses that have been built on National land and some of the land has been transferred to Municipality.
• Properties in the Free State – The Corporation has properties in Thaba Nchu that under the new demarcation fall under the jurisdiction of Free State. The Corporation would like the land to be transferred back to them. They need support of negotiations between the North West and Free State Government over those properties in Thabu Nchu.
• Loans taken during the old dispensation – The Corporation requests that loans taken by them in the old dispensation be turned into grants, especially in the light of the Corporation not receiving annual grants anymore.

The NWHC is suggesting that if no immediate legislative solution to the problem of proclamation R293 can be found, the Corporation seeks the following:

• Corporation of Department of Provincial and Local Government, the State Attorney and the Surveyor General to speed up the opening of new township registers.
• Intervention of Department of Provincial and Local Government to assist Municipalities to take over basic services where they are rendered by the Corporation.
• Guidance of the Department where the discount benefit is given to beneficiaries while the Corporation has to service loans and pay interest as well.
• Intervention from the department of Provincial and Local Government in the matter of rent that was collected by Municipalities on behalf of the Corporation but was never paid over, for example R5,7 million from Temba, Mabopane and Garankuwa alone.

Mr Masimong also urges Social Housing Foundation to:

• Utelise the Corporation’s experience in rental housing
• Form partnership to develop capacity among Municipalities
• Turn some of the Corporation’s existing flats into social housing projects and utelise some of the services stands for the same purpose.

The Corporation would like to have joint ventures with NURCHA for non – subsidy projects and to have NURCHA bridge finance for low cost projects. Applications are being finalized for low cost projects and one affordable housing project for short term, while another affordable housing project is planned for the medium term.

The NHFC is unfortunately not operating in the North West Province.

• The Corporation has approached NHFC for a short term finance of R10 million for operational expenses
• The Corporation needs to turn existing installment purchase agreements into loans and sell them to NHFC.
• The corporation needs to form a joint venture with NURCHA to build houses for those on the waiting list with the end user finance from it and the loans sold to NHFC.

The Corporation:

• Manages the existing stock until it is transferred to its beneficiaries.
• Is a role model for future housing institutions
• Seeks accreditation from NHFC as primary market lender in the province.

1. Role of Corporation as the Property Developer is to:

• Turn the existing stock into liquid and build more houses
• Form joint ventures with NURCHA for new non – subsidy projects in the province
• Develop 3000 serviced stands with the cooperation from NURCHA
• Form partnership with Social Housing Foundation and introduce social housing in the province

The NWHC requests the support of both the provincial and national government, cooperation from all housing institutions at national and they want to move to the new Section 21 Company.

The Corporation has been trying to establish a register of people owning house and flats in the province. There are about 25 000 debtors, people renting flats and houses. Those who had bought the houses are on arrears. There are also people who do not have title deeds hence it is difficult to make transfers of ownership.

All the Housing Institutions that have briefed the Committee are not operating in North West.

There is a need for the NWHC to continue implementing projects as some municipalities do not have the capacity.

The private sector has not been assisting in funding for housing projects in the North West. If the Corporation can leave everything to the private sector, no housing development would take place in the province.

R293 proclamation – Land on which properties were built by NWHC is the problem. There was no register of the properties and the province does support the repel of R293. These properties cannot be transferred to beneficiaries as the land on which property was built is a problem. There are no records with the Municipality and the Department does not know whether the land is owned by the Municipality or National Government. The Province believes that land is owned by National Government. The MEC has written a letter to the Department of Land Affairs and have not received any response. The province does not have control over certain areas that are under the jurisdiction of the National Departments of Land Affairs and Agriculture.

At the moment National Housing Institutions do not assist where there are problems in the province. They prefer to assist in bigger cities. An institution like NWHC has a vital role to play in the development of the province. He urged the Committee to look seriously at the manner in which Housing Institutions can be influenced to assist in developing rural areas. He urged the Committee to assist and ensure that the housing institution do serve their mandate by developing rural province as well.

Mr Litha Jolobe; Head of Ministry; Department of Housing

Ms Swazi Tai – Tai; Parliamentary Officer; Department of Housing

Ms Nkele Sebasa; Researcher; Parliament

Ms Phazamile Dumiso; Intern; Parliament

Ms Nadine Botha; Parliamentary Liason Officer; Legi – Link

Ms WM Busieka; Monitor; Parliamentary Monitoring Group

Ms Paballo Ralefu; Monitor; Parliamentary Monitoring Group

Ms Swazi Tai – Tai; Parliamentary Officer; Department of Housing

Ms Nkele Sebasa; Researcher; Parliament

Mr Mzolisi Fukula; Parliamentary Committee Monitor; Parliamentary Monitoring Group

Ms Collette Pillay; Parliamentary Liason Officer; Legi – Link Parliamentary Intern

Mr Brian Moholo;Chief Executive Officer; Social Housing Foundation

Ms Odette Crafton; Policy and Research Manager; Social Housing Foundation

Mr Andrew Higgs; General Manager – Finance; Social Housing Foundation

Mr Kevin Duncan;Chief Executive Officer; Thubelisha Homes

Ms PA Vilakazi; Technical Advisor; People’s Housing Partnership Trust [PHPT]

Mr C de Beer;Chief Executive Officer; National Urban Reconstruction and Housing Agency [NURCHA]

Dr Jeffery Mahachi;Executive Director; National Home Builders Registration Council

Mr PMS Makgathe; Chief Executive Officer; National Home Builders Registration Council [NHBRC]

MEC DE Africa; Department of Local Government and Housing; North West

Mr Denis Creighton; Managing Director; Servcon Housing Solutions

Mr Jacob Ngo; Area Manager; Servcon Housing Solutions

Mr Samson Moraba ; Chief Executive Officer; National Housing Finance Corporation [NHFC]

Ms Salome Sengani; Executive Manager; National Housing Finance Corporation [NHFC]

Mr Paul Masimong; Acting Chief Executive Officer; North West Housing Corporation [NWHC]

Mr Aopakwe Louw; Board Member; North West Housing Corporation [NWHC]

Mr Samuel Pholoso Mowale; Chairperson of the Board; North West Housing Corporation [NWHC]