Evaluation of the Housing Subsidy Scheme

Presentation to the Portfolio Committee by the Public Service

Commission

16 April 2003

2

The Evaluation of the Housing Subsidy Scheme (HSS)

PSC’s main mandate: Promote the values set out in section 195 Investigate, monitor and evaluate the public service Propose measures to ensure effective and efficient performance within

the public service PSC’s Management and Service Delivery Improvement Program

Four main thrusts: Citizen Satisfaction Surveys Citizen’s Forums Assessing organizational performance and restructuring Evaluation of Government programs and systems

PSC evaluates service delivery from many perspectives to get a varied view to give best possible advice on improving public admin

In accordance with this mandate, the PSC identified the Housing Subsidy Scheme as an area to evaluate under the CSS and this project

3

Objectives of the Study

Main Objectives: Evaluate whether the objectives of the

Housing Subsidy Scheme have been achieved

Identify the reasons why some or all the objectives of the Housing Subsidy Scheme were not successful or not achieved

Make recommendations on the Housing Subsidy Scheme

4

Structure of Presentation

Housing Subsidy Scheme

Objectives of the HSS

Research methodology

Key issues emerging from the study

Citizen Satisfaction Survey (CSS) - background

CSS findings and recommendations

Evaluation recommendations

5

The Housing Subsidy Scheme

Subsidy types: Project linked subsidy

the main housing subsidy over 80% of housing delivery

Individual subsidy was frequently abused and is seldom used anymore

Consolidation subsidy for households who own serviced sites

Institutional subsidy for rental or co-operative housing owned by housing institutions

Rural subsidy for households with uncontested informal land rights in areas where there is

no individual ownership only recently introduced, and no projects have been completed as yet

6

Changes in the Housing Subsidy Scheme

The Housing Subsidy Scheme has been continually evolving over the past 8 years:

White Paper on Housing 1994 Project-linked subsidy introduced 1994 Consolidation subsidy and institutional subsidy introduced 1995 People’s Housing Process policy introduced 1998 New Norms and Standards (e.g. minimum size of 30m2) applied

from 1999 Rural housing subsidies introduced in 2000 New procurement policy and disestablishment of Provincial

Housing Development Boards in 2001 New subsidy band and new contribution requirement in 2002

7

Objectives of the Housing Subsidy Scheme

Overall objectives of housing policy and the Housing Subsidy

Scheme:

1. Providing access to adequate housing

2. Creating socially and economically viable communities

3. Ensuring balanced and sustainable spatial development

4. Provision of choice

5. Sustainability

6. Transparency and equity

7. Co-ordination of state investment

8. Efficiency and effectiveness

9. Creativity and innovation

8

Evaluation criteria

Evaluation criteria developed from the objectives:

1a. Extent to which the housing delivered has been adequate

1b. Extent to which housing need has been quantitatively met by housing

delivery

2a. Extent of community participation in, and empowerment through,

housing delivery

2b. Extent to which housing delivery has resulted in skills transfer and

economic development for local communities

2c. Extent to which the settlements created by housing delivery have been

socially and economically viable

9

Evaluation criteria

3. Extent to which housing delivery has contributed to balanced and

sustainable urban and rural development

4. Extent to which housing delivery has resulted in the provision of a range

of housing options to address different housing needs

5a. Extent to which the Housing Subsidy Scheme has mobilised additional

non-state capacity and resources for housing delivery

5b. Extent to which the housing delivered in terms of the Housing Subsidy

Scheme is financially sustainable in the long term, both for the

government and beneficiaries

5c. The extent to which housing delivery has had a positive economic

impact in terms of the housing sector and the broader economy

10

Evaluation Criteria (cont.)

6. Extent to which the design and implementation of the Housing Subsidy

Scheme been transparent and equitable

7. Extent to which housing delivery in terms of the Housing Subsidy

Scheme has been linked to delivery in terms of other government

development programmes

8. Extent to which the administrative processes of the Housing Subsidy

Scheme been consistently applied, efficiently implemented and effective

9. Extent to which the design and implementation of the Housing Subsidy

Scheme has been innovative and flexible

11

Research methodology

The research process had five main stages:

Review of policy documents, interviews with Provincial Housing Departments

Formulation of a project typology to classify projects Selection of a random, representative sample of 40 projects,

including at least 3 in each province Investigation of the 40 projects: interviews with key role players,

technical evaluations Beneficiary surveys:

18 projects, including at least 2 per province In each project surveys of 30 randomly selected households were

carried out to get an end-user perspective Plus 60 individual subsidy beneficiaries

12

Project Typology

Criteria Categories

Subsidy type Project-linked subsidy, consolidation subsidy, institutional subsidy

Developer type Public, private, non-profit

Project location Metro/city (400 000+), medium-large town (40 000+), small town/ rural

Sub-regional location

Districts with low unemployment (0-30%), medium unemployment (30.1-50%), high unemployment (50.1%+)

Project size Large (1000+ units), medium (200-999 units), small (0-199 units)

Project status Projects completed 1996-1999; projects completed after 2000 or still in implementation; projects approved before 2000 but not implemented

13

Overview of the Sample

Category Breakdown of sample

Province EC 4, FS 4, Gauteng 6, KZN 7, Limpopo 4, Mpumalanga 3, NC 3, NW 3, WC 6

Location 16 metro/city, 8 medium-large, 16 small town/rural

Developer 15 public, 12 private, 9 non-profit, 4 public/non-profit

Size 12 large, 21 medium, 7 small

Sub-regional location

16 low unemployment, 18 medium, 6 high

Completion status

9 before 2000, 28 2000+,

2 unimplemented

14

Eastern Cape

1. Missionvale PLS project,

Port Elizabeth (493)

2. Seymour No 6 PLS

project (202)

3. Tabankulu PLS project

(30)

4. Kings Flats CS project

(1000)

15

Free State

Kentha Construction PLS

project, Botshabelo (500)

Manyatseng PLS project,

Ladybrand (400)

Petrusburg PLS project (30)

Freedom Square CS project

(3700)

16

Gauteng

1. Phola Park PLS project (4090)

2. Mamelodi Ext 10 PLS project (655)

3. KwaThema Ext 3 PLS project (2674)

4. Diepsloot West Ext 1 & 2 PLS

project (3850)

5. All Africa Games Village IS project

(1799)

6. Newtown Co-op IS project (351)

17

KwaZulu-Natal

1. Wiggins Fast Track PLS/IS project, Cato Manor

(1038)

2. Ntuthukoville PLS project, Pietermaritzburg (161)

3. KwaNobamba Phase 2 PLS project, Weenen

(182)

4. Congo, unimplemented PLS project, Inanda

(1000 units)

5. Steadville CS project, Ladysmith (584)

6. Westrich IS project, Durban (99)

7. Shayamoya IS project, Cato Manor (320)

18

Limpopo

1. Westenburg PLS project,

Polokwane (960)

2. Mahonisi PLS project (996)

3. Faith Integrity PLS project (229)

4. Itsani PLS project (280)

19

Mpumalanga

1. Tekwane South PLS project, Nelspruit

(1600)

2. Emjindini PLS project, Barberton (1150)

3. Vlaklaagte PLS project, Mkobola District

(500)

20

Northern Cape

1. Boikutsong PLS project,

Kimberley (412)

2. Postmasburg PLS project (300)

3. Nonzwakazi PLS project, De Aar

(92)

21

North West

1. Jouberton PLS project (2580)

2. Cyferskuil PLS project (1000)

3. Oukasie CS project, Brits (60)

22

Western Cape

1. Delft South Towns 3-6 PLS project,

(3746)

2. Klapmuts PLS project (750)

3. Masithembane CS project,

Khayelitsha (220)

4. Zwelihle CS project, Hermanus

(290)

5. Stock Road IS project (600)

6. VukuZenzele IS project, Philippi

(235)

23

Key Issues Emerging From the Study

1a. Adequacy of the housing delivered? Generally provided secure tenure, basic infrastructure and adequate shelter for

households There are some problem projects where the housing that has been povided has

not been adequate (eg, one room houses, houses at risk of collapse, no water supply, no sanitation, located over 10 km from the nearest town)

1b. Housing need being quantitatively met by housing delivery? Over a million housing units have been delivered through the Housing Subsidy

Scheme but this has not been sufficient to decrease the housing backlog

2a. Community participation in, and empowerment through, housing delivery?

Generally a low level of community participation in most aspects of housing projects, e.g. location, town planning layout, house design, and choosing the level of services, especially in private developer projects

The People’s Housing Process approach has generally resulted in more empowerment

24

Key Issues Emerging From the Study

2b. Skills transfer and economic development for local communities?

The direct local economic development impact has been limited to job creation for local residents during the construction phase, and to support for emerging contractors and building manufacturers

Other income generation activities in most housing projects are informal activities such as spaza shops, taverns and crèches

2c. To what extent are the settlements created by housing delivery in terms of the Housing Subsidy Scheme socially and economically viable?

Most projects lack essential community facilities, apart from schools, which seem to be generally well provided

A large proportion of projects in rural areas are not socially and economically viable, e.g. the Mahonisi project in Limpopo where the nearest town is 12 km away and there very few employment opportunities within commuting distancee

25

Key Issues Emerging From the Study

3. To what extent has housing delivery in terms of the Housing Subsidy Scheme contributed to balanced and sustainable urban and rural development?

Housing delivery has lagged behind urban growth in cities and metropolitan areas, resulting in growing informal settlements, while the increasing allocation of housing budgets to predominantly rural provinces has sometimes result in inappropriate housing delivery in rural areas with few economic opportunities

4. Range of appropriate housing options to address different housing needs provided by housing delivery?

A range of options for most households with incomes of less than R3 500 per month has been provided

But beneficiaries (and other role players) are often unaware of, or do not understand these options

26

Key Issues Emerging From the Study

5a. To what extent has the Housing Subsidy Scheme mobilised additional non-state capacity and resources for housing delivery?

Very little beneficiary savings and loans have been added to the subsidy amount, apart from in PHP projects

Private developer capacity has been mobilised, but private developer-driven projects seem to have been particularly problematic

In some instances developers have abandoned unfinished projects but have still managed to get beneficiaries to sign off on their houses, and the developer has disappeared

5b. To what extent is the housing delivered in terms of the Housing Subsidy Scheme financially sustainable in the long term, both for the government and beneficiaries?

Most beneficiaries find it financially difficult to maintain their houses or repair defects Affordability of ongoing housing costs varies depending on local authority rates and

service charges Big local authorities are able to cross-subsidize rates and service charges, while

smaller local authorities are often unable to do this Rates and service charges (excluding electricity) vary between R50 and R200 per

month, with an average of about R100 per month High rate of non-payment for rates and service charges, up to 80-90% in some

projects

27

Key Issues Emerging From the Study

5c. To what extent has housing delivery in terms of the Housing Subsidy Scheme had a positive economic impact in terms of the housing sector and the broader economy?

The delivery of over a million subsidised housing units has obviously had many economic spin offs, but a viable secondary market for subsidised housing has not yet developed

6. To what extent has the design and implementation of the Housing Subsidy Scheme been transparent and equitable?

Although the design of, and processes for implementing, the HSS are broadly transparent and equitable, there is a lack of accurate and up-to-date information on housing delivery

Although the amounts of the subsidy scheme have been designed to be equitable, people in the R1500-3500 income bracket are often excluded from housing projects as they are unable to supplement their lesser subsidy amounts due to a lack of access to housing credit

The Housing Subsidy Scheme also excludes all single people and young people with dependents, e.g. single women under 21 with children

28

Key Issues Emerging From the Study

7. To what extent has housing delivery in terms of the Housing Subsidy Scheme been linked to delivery in terms of other government development programmes?

Some projects, especially the Presidential Lead Projects, have involved the co-ordinated provision of a variety of facilities and programmes, but in many other projects, especially in rural areas, there have been few complementary initiatives to accompany housing projects

8. To what extent have the administrative processes of the Housing Subsidy Scheme been consistently applied, efficiently implemented and effective?

The Housing Subsidy Scheme has generally been efficiently and effectively implemented, although there have been some regional inconsistencies in the application of the Housing Subsidy Scheme

Outside the cities and metropolitan areas there is a lack of local government capacity Capacity building of local authorities seems to be a problem Some provinces report that not enough funds are being received from the national

department to capacitate the municipalities, to initiate/train/resource their housing departments

Capacity is also sometimes lacking at provincial level to provide necessary support to local authorities.

29

Key Issues Emerging From the Study

9. To what extent has the design and implementation of the Housing Subsidy Scheme been innovative and flexible?

Housing Subsidy Scheme has evolved and responded to problems over time Examples:

Problem of most of subsidy going to infrastructure with little or nothing left over for a top structure led to the introduction of the Norms and Standards for Permanent Residential Structures

Problems of poor quality led to the establishment of the National Home Builders Registration Council and their standards and warranty scheme

Problems of poor location and lack of integrated development led to a new procurement policy in which local authorities play the key role

the lack of beneficiary contribution led to the introduction of a requirement for the R2479 contribution in order to access a subsidy

HIV/AIDS has been another challenge that has not yet been effectively addressed by the Housing Subsidy Scheme, apart from in KwaZulu-Natal and Gauteng.

Although some of the housing projects in the sample have been internationally recognised as sustainable human settlements good and best practices by UNCHS, many of these projects had additional funding and are therefore not replicable

30

Reasons for Objectives Not Being Completely Achieved

Some of the key reasons for some objectives of the Housing Subsidy Scheme not being completely achieved are:

Poverty and unemployment Frequent changes in housing policy, which have caused delays

in housing delivery Changes in local government structures and responsibilities Lack of local government capacity, especially in rural areas Lack of integrated development Limited access to affordable, well located land Prior to 2001, the Housing Subsidy Scheme was application-

based and primarily aimed at private sector developers, which resulted in many unviable projects being implemented

Lack of comprehensive data on housing delivery Weak civil society

31

Citizen Satisfaction Survey (CSS)

Background:

PSC undertook a survey to: Accommodate citizen’s desire to be consulted about

the services rendered to them Determine the citizen’s perceptions of the quality of

services Measure actual service delivery against expectations

to identify gaps Identify and highlight areas that have to be

prioritized for improvement Provide a benchmark for future surveys to allow M &

E of service delivery levels within the Public Service

32

Citizen Satisfaction Survey - Scope

The survey included, amongst other departments across the 9 provinces the Departments of Housing

The survey was conducted with both internal and external service users: External Service Users (citizen’s at large using the

services of the Departments) Housing Subsidies

Internal Service Users (service providers involved in the processes of housing delivery)

Municipalities NGOs CBOs Developers and Contractors

33

CSS – Key Findings (Strengths and Weaknesses of the Departments)

34

CSS – Key Findings (Strengths and Weaknesses of the Municipalities)

35

CSS – Comments and Suggestions regarding Housing Subsidies

36

Evaluation of the HSSRecommendations

The recommendations are based on the research fieldwork and validation workshops:

1. Audit of projects A comprehensive audit of projects implemented to date is

required with remedial action taken where necessary Fieldwork suggests that there are a number of problem projects

that require intervention

2. Compiling accurate and up-to-date information on housing delivery

The fragmented nature of collecting and compiling information on housing delivery has inhibited effective monitoring and evaluation

National, provincial and local gov should co-ordinate the collection and capturing of info on housing delivery

Information should be collected in a standardized, uniform format

37

Recommendations

3. Ensuring Policy alignment Housing-related policies and procedures at all levels need to be

clear and reinforce each other and should be equitably and consistently applied across provinces

Do regular adits of what needs to be revised Communication across the different spheres and other key

stakeholders regarding proposed changes in housing policy should be improved

4. Expanding eligibility criteria for housing subsidies Review eligibility criteria for housing subsidies Make special provision for single people and large extended

families, who are currently disadvantaged or excluded from housing subsidy projects

38

Recommendations

5. Promoting the People’s Housing Process The People’s Housing Process has been the most impressive housing

delivery option and should be promoted It can take substantially longer than contractor-delivery and needs

appropriate support It generally results in a better housing product , more sustainable income

generation opportunities, greater community development, and greater mobilisation of sweat equity and monetary savings

6. Improving the institutional subsidy mechanism The institutional subsidy is essential because it allows for high density

housing that can contribute to urban restructuring, and many institutional projects are impressive in terms of urban quality

The institutional subsidy is problematic in its current form The institutional subsidy should be used only for genuine long term rental

and communal ownership. Currently, monthly costs for institutional housing are considerably more

expensive than the monthly costs of equivalent individual ownership housing; this would seem to suggest that the institutional subsidy amount should be substantially more than it is at present

39

Recommendations

7. Dealing with the impact of AIDS Increasing number of child-headed households Households facing increasing economic hardship Institutions for children and adults with HIV/AIDS are necessary KZN and Gauteng have transitional subsidy programmes for short

term accommodation This needs to be replicated in the other provinces

8. Building local authority capacity to manage the housing process and provide basic services

Local authorities need the capacity to prepare integrated housing strategies as part of their IDPs; acquire land for housing; and, initiate housing projects

Mostly many smaller local authorities in rural areas lack capacity Building capacity of local government is the responsibility of DPLG

and Provincial Local Government Departments, but Provincial Housing Departments also need to play a role in ensuring that smaller local authorities are able to formulate and implement effective housing strategies

40

Recommendations

9. Building the capacity of community organisations Strong community organisations are essential as a way of

ensuring more effective participation that results in housing projects that better meet people’s needs

10. Ensuring effective beneficiary education A framework for housing consumer education is in the

process of being finalised This process should be prioritised, and sufficient funding and

capacity should be made available to ensure that potential beneficiaries are aware of all their options, rights and responsibilities before projects are implemented

41

Recommendations

11. Support for informal economic activity and the unemployed Informal economic activities must be supported in housing projects

as more housing subsidy beneficiaries depend on informal economic activity as source of income

Possible ways of doing this include: house designs that are suitable for home-based enterprises, provision of appropriate public spaces for informal markets

12. Identifying and releasing land for housing The scarcity of affordable and well-located land suitable for housing,

especially in cities and metro areas, has been a constraint to housing delivery

Local authorities should take the lead in identifying and acquiring land for housing

The establishment of a land fund is proposed to assist local authorities in acquiring and “banking” land

National rapid land release programme must be developed

42

Recommendations

13. Moving towards appropriate norms and standards Increasing norms and standards are particularly problematic as increases in

the subsidy amounts have lagged behind inflation The subsidy needs to be increased to keep up with the increased norms and

standards

14. Promoting energy efficient and environmentally sustainable housing The possibility of an additional subsidy amount for environmental

interventions should be investigated

15. Linking funding for integrated urban development to the Housing Subsidy Scheme It appears that integrated development is only possible where sufficient

funding is available for providing community facilities and capacity building programmes, e.g. in the Presidential Lead Projects

Some form of funding for facilities, or a contribution towards the cost of facilities, should be linked to the housing subsidy to ensure that all housing projects have a full range of community facilities

43

Recommendations

16. Introducing a funding mechanism for integrated rural development

It does not appear that the housing subsidy is an appropriate mechanism for rural development

The priority in underdeveloped rural areas should be to build social and economic viability

A flexible and integrated funding mechanism for rural development needs to be developed

17. Emphasising quality living environments More emphasis needs to be placed on the quality of living

environments.

44

Recommendations

18. Reviewing the land registration and transfer system The system needs to be seriously reviewed The formal land tenure system is starting to break down in new housing

projects, where already up to 15% of the occupants in some projects are not the legal owners

Land legal issues are one of the major delays in implementing green fields projects and the slow issuing of title deeds is always a problem

In many completed PLS projects, few beneficiaries have received title deeds yet (e.g. in Diepsloot West in Gauteng, a year and a half after the completion of the project only 20% of beneficiaries have title deeds)

19. Promoting housing savings and credit Encouragement of savings and stimulating access to credit is important Although there have been initiatives such as the National Housing

Finance Corporation, the National Urban Reconstruction and Housing Agency, the National Housing Savings Scheme and Gateway Home Loans, these have not been on a sufficient scale to have a big impact