The RDP and Breaking New Ground initiatives held “housing” as an excellent tool for redressing racial, economic and Apartheid spatial divides. These saw the delivery of three and a half million houses to poor South Africans. This we justifiably celebrate as a great success for the country. However, the failure of our housing practice was driven by our measuring success only by the numbers built.
In reality, our housing practices should have been evaluated by many metrics. For example, breaking down apartheid spatial division, an urban land solution, wealth creation and transfer, gender impact, skills development, small business facilitation, local manufacturing etc. With these in mind, multiple opportunities would not have been missed, and greater returns on spend achieved.
The question is “Was the money wasted?” – the answer, “Most definitely not!” So what do we do to maximise the social value of the investment already made, and what are the high effect, lower-cost opportunities to remedy the deficiencies?
Most planners and activists would argue that we must improve public transport to the city centres, encourage local economic activity, improve policing and build better community facilities. However, a more straightforward, short-term intervention that could catalyse all this exists.
Most RDP houses, some estimate up to 80%, have not been transferred to those meant to be owners and technically belong to developers (long gone) or the state. This leaves all those structures functioning only as shelter. Registering these houses in the names of the new owners turns them into assets and brings agency and financial inclusion to millions of people, allowing them, with time, to utilise their assets as they deem fit.
Valuing these as assets worth R100k each and registering 2 million houses means that R200billion is transferred to the hands of the poor along with 400million square meters of urban land. Of course, this will not all become active economic assets in the short term, but the potential over time is enormous. Adding formal accommodation in the backyard gives a rental return to the owner exceeding 20% per annum. Adding rooms for private use adds security and comfort.
A small group of Fellows has met and is considering how best to tackle this aspect.
Government, given our debt, inefficiency costs and corruption, will not be able to spend anything near what is needed to cover the deficiencies nor yet provide houses for the backlog in the same way as before. Housing delivery for the next decade or two will require various solutions, including PPP, DFI funding, and private investment. As for much else, a coalition of government, civil society and business will have to design and deliver in new ways and at scale. An industrial policy underpinned by the state will have to be built and allowed to flourish.
During a recent Dialogue on this topic, ideas flew thick and fast, many in the space of smarter thinking around the financial engagement in housing. One idea was that National Treasury could provide tax incentives for employers to build properties for their domestic workers. Another was that lenders could be relieved of some administrative burden: currently, the admin required for a R150,000.00 bond is the same as for a R10 million bond. There was also a suggestion that inspiration could be drawn from the insurance model, where actuaries calculate the spending required to support expected outcomes. In a housing model, this is potentially a game-changer. “If we use creative mechanisms to unlock the trillions of Rands in deposits held by the banks, the impact will be greater than we can imagine.”
It was noted that the housing backlog comes with an opportunity to uplift communities, build the economy, and create jobs, especially if we see it as something that could reinvigorate the value chain, from material supply through to maintenance. Affordable housing model. Who knows what might flow if high levels of innovation is applied to low-cost housing?
We cannot give up on the heady dreams of our struggle for democracy just yet.