The South African government is to spend R16 billion on building new houses and human settlements for the poor in the next financial year.
This was announced by Human Settlements Minister Tokyo Sexwale in his budget vote speech to Parliament today, 21 April.
“The bulk of this funding will go to the provision of housing subsidies to the bottom-most end of the market, the poorest of the poor, who earn between R0 and R3 500 a month,” he said.
“A large percentage of this is allocated to provinces in the form of housing development grants,” Sexwale said.
The minister pointed out that there are currently 8 000 human settlements projects underway across the country, and that 219 000 housing units had been built by government in the last financial year.
“Irrespective of what skeptics may say the record of this government on housing delivery speaks for itself,” Sexwale said. “Since 1994, more than 2.3 million housing units have been made available for nearly 11 million people. The scale of government housing delivery is second only to China.”
Sexwale met with the financial sector earlier this week to discuss ways of increasing funding to both the low-cost and affordable housing markets, which could increase the number of houses built by government and private sector. At that meeting, the Banking Association of South Africa cited the fact that the success of government’s low-cost housing programme was “unparalleled”.
In his speech, Sexwale gave further details of his meeting with the banks, saying, “We came away satisfied at the positive outcomes and agreed to form a joint working team to look into various aspects of housing finance notably how to generate innovative ideas around the R1 billion government guarantee fund that is being set up to assist the “gap market”.
“Those who stand to benefit from such a financial platform include inter alia nurses, teachers, police, prison warders, government officials, certain categories of management, and blue collar factory and office workers.
“We emphasised to the institutions that in putting the floor under their operations in this gap market, financial prudency should remain paramount. In no way can there be recklessness in lending practices which may lead to flippant calls upon the guarantee fund.”
Sexwale also advised potential beneficiaries of the fund to exercise responsibility by adhering to the terms and conditions of their credit agreements. Sexwale also pointed out that he had raised concerns with the financial institutions over their compliance with the Home Loans and Mortgage Disclosure Act (HLAMDA), which requires banks to report on their lending patterns. “The ministry will play an activist role in monitoring this activity by the banks, in the interests of regulating the homeowners’ property market, whilst being alive to the complexity and sensitivity of the operations of financial institutions,” Sexwale said.
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Issued by: Department of Human Settlements
21 April 2010