Business Day (Johannesburg)

12 September 2006

South Africa: 'Inclusionary Policy' to Compel Developers to Build Low-Cost Houses

Durban — Legislation is on the cards for an "inclusionary housing policy" that will force developers to allocate a certain percentage of their development towards low- or medium-cost houses, local government, housing and traditional affairs MEC Mike Mabuyakhulu said yesterday.

Speaking at the second KwaZulu- Natal housing summit, he said the policy would release pockets of land for low- to medium-income housing close to employment areas.

"While the intention is not to build a low-cost house on the doorstep of a R300m house, it is possible, through planned integration, to have a good address while living in small house."

The percentage of low- or medium-cost homes to be allocated for all potential new developments may vary between 2% and 10% -- and this will be determined by national government.

Prof Dan Smit, a development consultant, said many countries, such as the US, UK, Belgium and Canada, had inclusionary housing policies. The policy was driven by legislation and zoning or town-planning schemes.

Some of the policies were dependent on housing subsidies, while others sought to avoid subsidies entirely, said the development consultant. Smit said incentive-driven policies, as opposed to prescription-based policies, tended to be more successful. For instance, in Malaysia, where 30% of all housing developments were required to be low cost, developers had built low-cost homes in areas where there was no demand for them and many stood empty. A key issue would be to define precisely what "affordable" meant. Smit said there was little support in the R80000-R350000 house price range.

Banking Association financial charter co-ordinator Jopie von Honschooten said access to private sector land for housing was expensive. Where a "land-to-stand" development might have taken 12-18 months to develop five or six years ago, the average time now was three to five years. It took only five months for a "stand-to-house" development five or six years ago, but the current average was 19 months "at best".

He said in January 2004, a person earning R1500-R7500 a month could afford a house of between R64000-R135000. Today that person would need R9300 a month to buy the same house, the cost of which had risen to R195000.

Mabuyakhulu said his department had finalised criteria for the allocation of housing to child-headed households and other vulnerable groups.

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