Shared ownership: a way up the property ladder?

HOME ownership in South Africa is turning into a hot potato in the runup to the 2014 elections. This after demands by various political parties for state control of private property in the country. Indications are the ruling party’s Reconstruction and Development Plan which aimed to provide every citizen with a decent home, despite its initial successes, has failed largely due to lack of co-ownership incentives. Could shared ownership of property offer a way up the property ladder for ordinary South Africans?

First, let’s take a closer look at the problem. Owning a sub-standard, badly built home has its disadvantages, worse still are the problems faced by those living in informal settlements, those still on waiting lists for housing solutions that seems unobtainable, even after twenty years of ANC rule.

Although a number of social housing schemes have arisen, each claiming to provide gap housing for the poor with banks offering loans to those lucky enough to have full-time employment, and the government’s housing subsidy aiming to bridge the finance gap, this subsidy programme is aimed mostly at key workers with good credit records. The traditional housing market, geared towards the black middle class may be booming with new projects rolling out, but these schemes like the Maboneng precinct in Johannesburg, do not solve the problem of low-cost and affordable housing for the nation’s poor.

In South Africa red tape and bureaucracy prevails with a centralised “Social Housing Regulatory Authority” which aims to regulate social housing schemes. The mandate of the authority is not to assist home ownership per se but rather to regulate and finance the development of rental accommodation. The State housing agency’s website for instance says “we stimulate rental housing through investment, we stabilise rental housing through regulation.” The result is anything but stable.

For starters there is no real focus on ending dependency upon the state and creating incentives beyond a subsidy for home ownership by private individuals, and the schemes touted by the agency essentially represent the needs of banks and developers.

The government-lead programmes, despite their high-minded altruism, are aimed at the interests of capital markets and not the needs of citizens, for instance “social housing is a rental or co-operative housing option which requires institutionalised management…”  The emphasis on “institutionalised management” and  return on investment (ROI) speaks to the bond market and not home-owners. This can be seen in the manner in which social housing projects are turning into get rich quick schemes for investors who already have money.

The National Association of Social Housing Oganisations for instance, which claims to be an independent association of 18 ‘well-established social housing institutions (SHIs) across South Africa” offers its members some form of ownership by mobilising “the collective buying and market power of our members to reduce costs of products and services and increase returns on investment,”  in the process, the needs of the end user, the person who wishes to occupy a property and who may then also want to rent to own, or transact ownership by others means, to part rent and part own, is lost.

Household Responsibility and the South African Dream

THE National Democratic Revolution which ushered in our new Constitution and Bill of Rights brought with it many freedoms. One freedom, the right of access to adequate housing, became the hallmark of the incumbent ruling party. The African National Congress (ANC) launched an ambitious programme to build a million new homes. Between 1994 and the start of 2001 over 1.1 million cheap houses eligible for government subsidies under the Reconstruction and Development Programme (RDP) had been built, accommodating 5 million of the estimated 12.5 million South Africans without proper housing1.

The result was a property boom as government poured money into infrastructure projects such as clean water, electrification, communication and healthcare, with the bond market taking off as both the banks and consumers took advantage of low interest rates. There are now more middle class blacks in the country than whites, and the new wealthy have a collective spending power of upwards of R180-billion plus2 —an enormous achievement given the disparities caused by apartheid

The boom period which began South Africa’s biggest post-War economic expansion lasted until 2008 when it ground to a halt following the global financial crisis. Although still running at a reasonable growth rate of between 2 to 2.5%, South Africans, many of them living on easy credit, found themselves in hot water. For starters, there was the backlog of housing which meant that a large proportion of citizens were still sitting without homes or even basic sanitation and with a growing population that now measured some 52 million individuals and an unemployment rate of 25% which refused to go away, the reality of the problems facing the continent’s largest economy began to dawn.

In effect the country now had too few tax payers and not enough workers in full employment. The burgeoning public service and the growth of the state under the ANC meant that money was now being borrowed simply to pay salaries. In return for these loans from abroad the IMF exacted promises to ramp up capital investment in projects for which there was no immediate financial benefit. A whole host of long term investments which are measured over spans of decades in costly projects involving power plants such as Madupi & Kusile, communications infrastructure such as the WACS cable, transport  like the  Commuter Rail Acquisition Programme, and a range of public benefit programmes such as National Health Insurance and Social Security which had heretofore been merely election promises.

Plagued by political scandal and infighting over corruption, abuse of tenders and the increasing paranoia of the Zuma administration, which had sort to curtail civil liberties after the Marikana Massacre in which 34 striking miners were slaughtered by the state,  the difficult process of national reconciliation began to unravel. The ruling party’s failure to implement the recommendations of the TRC, with its concomitant loss in prestige and failure of historical narrative, has seen several new political formations emerge, each capable of contesting power in the 2014  elections.

The unthinkable according to deputy president Kgalema Motlanthe is now happening, and the ANC “risks losing power.” Many staunch supporters have thus been forced to ask the question whether the corrective to the maladministration and corruption of the Zuma government is a full scale revolution, or rather simply a change in ones political service provider.

This article argues that whatever the outcome, the basis for future growth and  political stability is not vested in our political system or the polls, but rather our nation’s institutions, economic programmes and social services. One such institution is the de facto household responsibility system in which recipients of RDP houses are expected to take responsibility for them on behalf of future generations. Furthermore the goal of adequate housing for all has become a quest for healthy homes and habitat for all citizens, as the environmental standard of housing becomes a factor in determining access, not merely to basic services such as water and sanitation, but value rights such as access to communication, open streets, playgrounds, health and markets.

1There are now some 3 million housing units across a diverse mix of dwellings