Servcon Housing Solutions
Report to Stakeholders – 31 March 2002

1. Background
Servcon is a joint venture between the Government as represented by the Departments of
Housing, Safety & Security, Justice and National Treasury and the Banking Council.
Servcon’s role is to deal with the properties repossessed by the Banks in low-income
communities. According to specific criteria.

Servcon was restructured and received a new mandate from the Banks and Government on
1 April, 1998 to deal with "ring fenced" portfolio incorporating properties in default prior
to 31 August 1997 (cut off date). The two parties are in effective partnership and share the
costs of the portfolio.

The portfolio under the Servcon administration was initially just over 33 000 with a value of
R1 280 000 000 (at original loan amount) - (the Provincial breakdown is reflected under the
progress report hereunder).

The Servcon rehabilitation programme offered to the occupants contains the following elements:

Subsidised rental option

Buy back or loan reschedule option

Rightsizing option (assistance towards an alternative affordable house)

Special Assistance to the Aged and Disabled

Servcon’s prime objective 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.

2. Servcon’s Progress and Performance up to 31 March 2002

2.1 The results up to 31 March 2002 are as follows:

KPA 1: SDOs ACHIEVED FROM THE FOLLOWING SOURCES

The good book is driven primarily by the SDO factor. The number of performing leases has
declined due to the following factors:

SDO’s
Poor payment record.

Whilst there are difficulties in most areas where Servcon operates, certain areas are more
difficult than others.

Common issues that have been identified are:

Breakdown of law and order/defiance thereof
Unemployment and poverty
Structural defects
Environmental conditions
HIV/AIDS and other health issues
Poor community leadership
Lack of education and understanding of housing issues
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
Uplift communities


RESOLUTION

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 are relatively insignificant from a
Servcon perspective.

Zola
Wedela
Gelvandale
Bultfontein (insignificant only 17 properties)
Kanana
Drieziek
Bethelsdorp
Kwa Dabeka


PROBLEM AREA STATUS


VOSLOORUS
Servcon is operating in the area reasonably normal. An interim interdict against Ucosa is in
place.



TOKOZA & KATLEHONG -SELF HELP
A proposal has been made to Government to consider an ad hoc decision by granting
relocation in situ subsidies for these cases. The subsidy would resolve the bulk of the cases,
where balances remain, affordability would be improved and most people could make
arrangements to pay off the balance of the debt.


TEMBISA
Servcon is in contact with the various community structures. These structures are influential
and have affected Servcon's ability to make significant progress in the area.


SOSAHUGUVE BLOCK GG & FF
A negotiated settlement involving the Department of Housing has not been implemented. The
group leaders have split up and the renegade groups are telling clients not to co-operate.
Evictions are to proceed.

ENNERDALE, LAWLEY, LENASIA SOUTH
Servcon is experiencing major problems in the area. Evictions fail because of interference
from so called community leaders. Criminal charges for accepting money intended
for the banks are to be brought.


EMDENI
Community has not cooperated -evictions to proceed.


PROTEA GLEN
Community structures and leadership change regularly. There is interference with Servcon
and the eviction process. We are working with the Ward Councillors and a "Community Development Forum".


KHUMA
Local councils involvement has made Servcon's work easier. Clients who have not cooperated
will now be evicted as negotiations have been finalised and agreements reached.

Eviction orders have been obtained. A small number, say 5, will be carried out which hopefully
will encourage co-operation.


EVATON NORTH & LAKESIDE
There are problems being experienced with a group who call themselves Voluntary Steering Committee. This committee interferes with r/sizing and tells clients not to relocate to small
houses. It is hoped that evictions will make clients cooperate.

Plans have been put in place with the Sheriff and the police to carry out evictions on scale.



SEBOKENG ZONE 6 EXTENTION 3
Billiton's offer to pay for alternative accommodation does not seem to be adequate to most
clients. One of the banks sold these properties at R1000.00 each. All clients in this area now
want to buy for R1000.00 irrespective of the Billiton offer.


PALM SPRINGS
No progress. Recent negotiation to get rightsizing stock built in the area failed because the
community leaders want bigger structures out of the R16000.00. Evictions are being planned
for the area.


CROSSROADS
Up until now approximately 100 out of our 231 clients have responded and signed agreements
in terms of the settlement negotiated between the community and the Bank last year. Legal
action is now in progress against the balance, however no evictions have been carried out of
late due to a temporary inability on the part of polices services to provide support to the sheriff.
The success or otherwise of evictions will be the test of progress towards normality.


KHAYALITSHA
Situation appears to be normalising although the question of historic failed evictions, where the clients are still in occupation, has not been resolved. There have also been no evictions of late
due to the temporary inability of the police services to provided support to the sheriff.


MOTHERWELL 4A & 7A (CPA HOUSES)
Following the previous rejection of a proposal, a further submission has been made to the Department of Housing for them to reconsider this proposal involving in situ subsidies, given
the special circumstances in this matter.


DALEVIEW
Still no evidence of any change in attitudes with minimal co-operation and performance.
Evictions that were planned were held back following an action instituted by an attorney acting
for the clients, that was based on a recent Eastern Cape Court ruling. Our attorney is handling
the matter and we are confident that shortly we will obtain a Court ruling in our favour that will enable us to proceed.


MOTHERWELL NU5 (DISA HOMES)
The majority of clients in the area have responded, however we are still faced with a minority dissident group. The major problem has been one of failed evictions, however where effective
action has taken place against trespassers, this has resulted in our achieving some belated co-operation. Some recent problems have been experienced in the process of taking action against
those that have re-occupied properties, but due to the active involvement of our attorney and
the Justice Department, this is in the process of being resolved.



THABONG
We have recently had an increase in communication and interaction with Metropolitan
Municipal and political leadership and with the structures in certain sections within Thabong. Members of the leadership have also been taken to Kanana to view a rightsizing project,
which was seen in a favourable light. Slow progress is being made and discussions are now
taking place with Thubelisha, with regard to the possibility of a pilot project.


MELODING
Following on an agreement between all roleplayers at the end of last year a mutually
acceptable assessor was agreed to by all parties for a pilot property assessment and
inspection project to be undertaken. Numerous delays have followed in having the local
structure agree on which properties should be assessed and for them to allow the task to be undertaken. Following the intervention of the local MP, Ms. Patricia Coetzee-Kasper, this
is due to be finalised by 11 April, after which the assessments will be done. It is hoped that
the report will form the basis of a way forward.

3. EXPENDITURE PATTERNS

4. INVOLVEMENT IN PROVINCES

4.1 Portfolio distribution and performance

4.2 Evictions in Provinces

Evictions are used in the following scenarios:

Clients refuse to respond
Defaults on new agreements
Clients refuse to accept rightsizing houses


COMMENT

We are able to obtain eviction 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.

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 looking and very few evictions where carried out for the past 12 months.

While most 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. We are endeavouring 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 independent investigator has been appointed to assist the Police
to compile dockets but this is an onerous process.


5. SUPPORT OF NATIONAL PRIORITIES

6. ALIGNMENT WITH OTHER INSTITUTIONS

THUBELISHA HOMES

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

NURCHA

We are still in discussions regarding a savings scheme for Servcon Club members.

N.H.F.C.

Nothing further to report.

NHBRC

No interaction during the period.

7. GENERAL

7.1 Servcon Mandate

We are still waiting for the Department of Housing to react to proposals submitted in 2001 to introduce more flexibility into the Servcon programme with respect to:

Subsidies to be paid "in situ" in certain circumstances
The 31 August 1997 cut off date

The lack of progress is affecting Servcon’s activities in certain areas.

7.2 New Subsidy Rules

We are awaiting clarity from the Department of Housing on the new subsidy amount and
rules and how this will impact on our rightsizing programme. We are concerned that our
clients will not be able to make a contribution of R2 479. On the other hand, the Peoples
Housing Process will delay the delivery of rightsizing.

Denis Creighton
Managing Director 19 April 2002