Where has the Money Gone?

Where has the Money Gone?

Private Property South Africa
Lea Jacobs

First-time homebuyers in the lower income bracket undoubtedly breathed a sigh of relief when it was announced that an initiative called the Finance-Linked Individual Programme (FLISP) would offer subsidies to those who needed it most.

Announced in early 2012 by President Zuma in his State of the Nation Address, the subsidy was aimed at those earning between R3 501 and R15 000 a month who wanted to buy a home costing R300 000 or less. Once it had been established that the buyer qualified for a bond, he would complete a subsidy form which would then be submitted to the National Housing Finance Corporation (NHFC). It was stated that, once approved, the subsidy would be paid either to the seller directly or via the bank and the buyer would then receive a mortgage for the remainder of the purchase price, which would be repaid in the normal way.

However, while the programme looked fantastic on paper, the reality was somewhat different and by the sound of things the initiative hasn't worked out as planned.

Daphney Klopper, the Rawson Property Group’s franchisee for Table View and a co-franchisee for Parklands, said that there was a sudden influx of hopeful, potential first-time homebuyers all hoping to take advantage of FLISP.

“The FLISP scheme,” said Klopper, “looked exceptionally promising when it was announced because it offers subsidies up to R87,000 towards the purchase of a home by a first-time buyer. However, clients who approached us and their banks or bond originators for a mortgage loan making use of this scheme have not as yet seen any concrete response to their applications.”

The banks, said Klopper, appeared to be equally keen to implement the scheme, but when approached were almost always told that the Department of Housing was still establishing the procedures which had to be adhered to and was not yet in a position to grant these subsidies.

This was confirmed by the Western Cape Minister of Housing, Bonginkosi Madikizela, in an interview on Radio 567 Cape Talk. But, Klopper said he apparently later told Mike van Alphen, the National Manager of Rawson Finance, that the department thought it essential to “educate” first-time buyers before embarking on the FLISP scheme.

Now it appears that Government have shifted the goal posts and Klopper says that it was suddenly learned via the government’s website information service that the full sum set aside for these subsidies had been entirely allocated as part of the state’s R17,9 billion poverty-relief subsidies. "Exactly to whom the grants had been made was not spelt out, but the net result, she said, was that her franchise’s potential home buyers had clearly been left out in the cold."

"It is believed, that a large portion of this very welcome subsidy fund has been given to tender developments handling the Department of Human Settlements’ projects or possibly directly to banks prepared to deal with first-time home buyers, however, none of whom have benefitted directly from the subsidy so far."

“Absa recently officially launched their first FLISP-linked mortgages. Now the real estate industry would like to know how much of the original fund has been allocated and how much is still available?"

It's a good question and one that needs to be answered urgently. One can only hope that funds are still available and if so, that government doesn't allow FLISP to become entangled in miles of red tape. It would be tragic if this initiative was allowed to flounder leaving those who want to better their lives out in the cold.


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