Rethinking housing subsidies

Private Property South Africa

It might sound like an oxymoron to suggest giving previously disadvantaged people a housing subsidy will empower them, but that’s exactly the idea that the IRR (the Institute of Race Relations) is putting forward.

The issue with RDP housing

“In the past 21 years, the State has provided more than 2.5 million houses and a further 1.2 million serviced sites. Despite this, the housing backlog has grown from 1.5 million units in 1994 to 2.1 million units today. In addition, the number of informal settlements has expanded from 300 in 1994 to the present 2 225”, the IRR claimed in a recent statement.

Bruce Swain, MD of Leapfrog Property Group believes that the issues surrounding government’s housing project are well known; “the backlog keeps growing with only around 118,000 houses being constructed per year. Many of these are of sub-standard quality and badly located, despite the fact that the housing subsidy has been increased to R160, 500 per household – leading even those in power to refer to them as ‘incubators of poverty’. The situation is further compounded by the fact that the astounding backlog at the Deeds Office also means that thousands of housing beneficiaries have not been given the title deed to their property and, as such, cannot sell it or use it as collateral to obtain a loan (which could be used to send their children to university, for example)”.

Taking these issues into account the IRR is calling for a complete reform of the housing situation; advocating for government to transfer the housing subsidy directly to successful applicants who, it argues, could use it more efficiently. “In principle I’d agree that the current situation is untenable – the waiting list for housing keeps growing and the housing constructed is often sub-standard. As such it’s clear that maintaining the current course would be a mistake”, says Swain.

A word to the wise

While transferring a housing subsidy directly to a beneficiary will certainly lead to economic empowerment for some, not everyone will necessarily have the same access to trustworthy builders or know how to manage the subsidy properly. “There likely isn’t a single solution that will solve the housing issues. That being said I do agree with the IRR that making people responsible for their own homes is certainly a step in the right direction”, believes Swain.


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