1

This research was commissioned by Oxfam in order for itself and its urban-based partner

organisations to understand the national and municipal processes that surround providing decent

housing to vulnerable groups within the inner-cities of South Africa. This series of research consists

of two learning notes. Learning note one is applicable to all South African partners and provides

general, high-level information on inner-city housing. Learning note two focusses on housing in the

Durban Inner-City in more detail.

This learning note, first, provides an overview of the national housing subsidies that are most

applicable to inner-cities, who can apply for them and under what conditions. Secondly, it describes

the roles and responsibilities of local government with regard to housing i.e. vulnerable groups,

building compliance, rates, town planning and by-laws. Lastly, it provides a brief discussion of the

major stakeholder groups in the housing sector.

The Housing Act of 19971 describes the principles of housing policy in South Africa and it defines the

roles, powers and responsibilities of all spheres of government. The Housing Act should be read in

conjunction with the National Housing Code2 (2009), which describes the numerous subsidy

programs which help give effect to the Act. The National Housing Code defines the mechanisms that

are available for the implementation of affordable, subsidised housing projects in South Africa.

Essentially, these mechanisms are a range of capital subsidy instruments, including some funding for

planning and packaging of potential capital projects. In general, the qualifying criteria for people

accessing housing subsidies are as follows:

Lawfully reside in South Africa;

Are legally competent to contract;

Neither the applicant nor his or her spouse has previously benefited from government

housing assistance;

Have not owned fixed residential property; and

1 Housing Act (1997) Available: http://www.acts.co.za/housing 2 National Housing Code (2009) Available: http://www.dhs.gov.za/content/national-housing-code-2009

Inner city housing

Learning Note

March 2016

1. introduction

2. National Housing Subsidies

2

Households must earn a monthly income in the prescribed range as per the National

Housing Code.

The figure below summarises the subsidy programs that are available for housing in a dense urban

or city-centre context, as outlined in the National Housing Code.

The subsidy programs are discussed in more detail below. Detailed reports on all subsidy programs

provided by the Department of Human Settlements are available from their website:

www.dhs.gov.za, under ‘Housing Code’ (especially useful is the ‘Simplified Guide to the National

Housing Code’).

2.1 Emergency Housing Program3

This program envisages that there may be emergency situations during implementation of informal

settlement upgrading projects and that, in cases of natural or man-made disasters (e.g. fire),

emergency housing assistance may be needed. This program could be applied to dilapidated

buildings that require closure, as is often found in South Africa’s inner-cities. The National Disaster

Relief Fund4 would be the first port of call, but where temporary housing is required, this program

could be applied. Persons who satisfy the basic qualifying criteria are eligible for assistance, but in

3 National Housing Code’s Emergency Housing Program (2009) Available: http://goo.gl/pEigv5

4 National Disaster Management Centre (2016) Available: http://www.ndmc.gov.za/

Social Housing Program

Development of affordable rental housing

accommodation within restructuring zones

(areas of economic empowerment). Usually,

pay-slips are required from beneficiaries so

those with little to no income, those who

are informally employed and some foreign

nationals are excluded. Registered Social

Housing Institutions should apply.

Emergency Housing Program

Temporary accommodation solutions in the

case of emergencies. Applicable to all who

satisfy basic criteria, in addition, persons

who have previously benefitted, minor

headed households and foreign nationals.

Municipalities should apply.

Institutional Housing Program

Development of affordable rental housing

accommodation outside of restructuring

zones. Usually, pay-slips are required from

beneficiaries so those with little to no

income, those who are informally employed

and some foreign nationals are excluded. All

institutions that support vulnerable groups

can apply.

Community Residential Unit Program

Rental accommodation in the form of

individual units, but most often has shared

kitchen and ablution facilities. Remains in

public ownership, cannot be sold or

transferred. Tenants must earn less than

R3500 per month and can be informally

employed. Local government should apply.

Figure 1 Subsidy Programs Outlined in the National Housing Code

3

addition, persons who may have previously benefitted from a subsidy or owned a property,

households headed by minors, as well as foreign-nationals could be considered.

2.2 Social Housing Program5

The aim of the social housing program is to provide an affordable rental option to beneficiaries in

areas identified by municipalities as having economic opportunities (‘restructuring zones’).

Registered Social Housing Institutions (SHIs) are eligible to apply for subsidies. These institutions

must be accredited by the Social Housing Regulatory Authority (SHRA).6 The SHRA is a national body

whose primary role is the regulation of the social housing sector. Subsidies provide assistance for

social housing developments, but SHIs must also raise their own finance as the subsidies cannot

cover the full development costs, and must be in a position to cover all ongoing operating and

maintenance costs, usually through rentals received. The Social Housing Company (SOHCO) is

regarded as one of the most successful social housing institutions in South Africa and although the

company is Durban-based, it has successful projects in East London and Cape Town.7 JOSHCO (the

Johannesburg Social Housing Company) is the SHI established by the Johannesburg municipality

which has a very good track record, particularly in turning around non-compliant buildings.8

Because the viability of the operations of an SHI depends on rental income, qualifying criteria to

individual tenants, in addition to the state subsidy qualifying criteria, are usually applied e.g.

submission of formal pay-slips. This means that social housing is not generally available to those with

little to no income, or to those who are informally employed. Foreign nationals, whose status is

uncertain are not usually eligible either. The inclusion of non-subsidised units in social housing

developments also helps make these projects feasible, and the quantum of subsidies received by an

SHI for a project is on a sliding scale in relation to the number of low income beneficiaries that are

accommodated.

2.3 Institutional Housing Program9

This program allows for housing institutions to apply to the MEC for subsidies to develop affordable

rental accommodation outside of restructuring zones. The rental units may be sold to beneficiaries

after a minimum of 4 years. As with social housing, the housing institution must access its own

funding in addition to the subsidies, which cannot cover the full development costs. This program

may be applied for by institutions that support vulnerable groups or groups with special needs.

Institutions such as universities are eligible to apply for institutional subsidies for student housing.

2.4 Community Residential Unit (CRU) Program10

This program is intended for the provision of affordable rental accommodation for those with little

to no income, such as those living in sub-standard, back-yard rentals or over-crowded and unsafe

buildings. It also provides a rental option for the informally employed, who would not qualify for

5 See the National Housing Code’s Social Housing Policy (2009) Available: http://goo.gl/GJXXVN

6 Social Housing Regulatory Authority - http://www.shra.org.za/

7 SOHCO Property Investments (2016) Available: http://www.sohco.co.za/

8 JOSHCO (2016) Available: http://www.joshco.co.za/

9 National Housing Code’s Institutional Subsidies (2009) Available: http://goo.gl/8XH7K3

10 National Housing Code’s Community Residential Unit Program (2009) Available:

http://goo.gl/Ug6Pss

4

social housing. CRU projects are usually initiated by government, usually a municipality, and the

requirement is that housing funded under this program must remain in public ownership on an

ongoing basis. Units may never be sold or transferred. Accommodation may be in the form of

individual units, but most often there are shared kitchen and ablution facilities. The program

provides for capital subsidy, plus assistance with major maintenance costs, but the regular

operations must be funded through rental collection. In Durban, this program has mainly been used

to upgrade existing hostels11.

The National Department of Human Settlement criteria for the prioritisation of CRU projects includes

the following:

Property is in public ownership;

Tenants must earn less than R3500 per month (pm);

Basic structural and specification standards are met;

Operating costs must be covered by rentals;

Capital costs must be in the acceptable range;

Project must be well located; and

Municipality must be positioned to manage the stock.

2.5 Applicability of Housing Codes to Foreign-Nationals

The National Housing Code does not guarantee “Immigrants whose residence status is uncertain on

the conditions prescribed by the Department of Home Affairs” access to government housing

subsidies but says that this will be decided on a “case-by-case basis”12. Furthermore, only South

African residents are able to apply for subsidies and even legal foreign nationals can only receive

residency status after five years13. This is controversial as human rights activists argue that adequate

housing is part of South Africa’s Bill of Rights and extends to everyone living in South Africa,

regardless of their official residency status.14 The exclusion of foreign-nationals from such programs

and affordable housing schemes, in general, is a barrier to forming sustainable urban communities. It

also provides the conditions in which unsafe housing practices grow and become a hazard for all city

inhabitants. For these reasons, it is important that government and local officials actively include

foreign nationals in their housing policy and planning.

2.6 Development Finance Institutions

As well as providing subsidies, the South African Government has developed several financing

institutions such as The National Housing Finance Corporation (NHFC)15 whose primary focus is to

find sustainable (i.e. non-state funded) models on affordable housing finance for the low- and

middle-income target market.

11

eThekwini Municipality (2013) Available: http://goo.gl/67Tcx0 12

National Housing Code’s Simplified Guide (2009) Available: http://goo.gl/q1J8Mn 13

Paralegal Advice (Date Unknown) Available: www.paralegaladvice.org.za 14

See the Consortium for Refugees and Migrants in South Africa (CORMSA)’s submission to the South African Human Rights Commission (2009) Available: www.cormsa.org.za 15

National Housing Finance Corporation (founded in 1996) Available: www.nhfc.co.za

5

Essentially, the municipality is responsible for the planning and co-ordination of the provision of

services and infrastructure and implementing service delivery, as well as for the management and

maintenance of such, ensuring basic health and safety for all residents. This role includes: the

promotion of the city as an attractive city to live, work, invest in, and play; facilitation of new

development in alignment with national, provincial and local policies and priorities; and

enforcement of development and planning regulations, building regulations, by-laws and other

standards and guidelines.16 The roles and responsibilities relevant to housing are discussed in more

detail below.

3.1 National Building Regulations17

One of the key compliance aspects, and a common contravention, relates to whether there are

approved building plans for a building. This may not seem like a big issue at face value, but approved

plans indicate that the building complies with the National Building Regulations which cover all

aspects that affect the health and safety of the occupants, as well as the general public, such as the

structural design of a building, the refuse disposal, the space heating and ventilation.

3.2 Municipal By-Laws

In addition to the National Building Regulations (NBR), buildings (and occupiers/users) need to

comply with the Municipal General By-laws, Building By-laws, and accommodation establishments

need to also comply with the specific Accommodation Establishment By-laws. The provision of

ablutions, cooking areas, overcrowding, licensing, building condition, waste, water and sanitation,

storm water management, and vermin (including mosquitoes), are all regulated through the by-laws.

Electrical installations are required to be legal (i.e. a registered metered connection for billing

purposes) and separately certified (certificate of compliance issued by a registered electrician). The

by-laws dealing with fire protection and control of fire-fighting equipment are also relevant. These

are set out in the Metro Fire By-Laws. Fire risk is a major threat in overcrowded buildings, and even

where buildings comply with the fire regulations in the NBRs, compliance with the additional fire

related by-laws is important.

A non-profit organisation called Code4SA (code4sa.org) is in the process of digitising South Africa’s

by-laws, which, until now, were often only available in hard-copy from the municipality or via

scanned images on the web. The movement, called ‘Open By-Laws’ is a community effort to make

by-laws freely available, easy to read and easy to share. By-laws for Johannesburg and Cape Town

Metros are already uploaded and can be accessed at openbylaws.org.za. Code4SA are looking for

funding to expand into other metros and then to all municipalities and finally, to national legislation.

Criminal activity in buildings, which is a very real problem in many generally non-compliant buildings

in urban areas, is handled through the laws of the land and should be enforced by SAPS. A breach of

the law is also deemed to be a breach of the by-laws, which are then enforced by Metro Police. A

16

South African Local Government Association (2011) Available: http://goo.gl/Q8UTVh 17

National Building Regulations and Building Standards (Act No. 103 of 1997) Available: http://www.dti.gov.za/business_regulation/acts/building_standards_act.pdf

3. Local Municipality roles and responsibilities

6

breach is grounds for prosecution as well as grounds for licences, including accommodation

establishment certificates, to be withdrawn.

3.3 ‘Bad Buildings’

The term ‘bad buildings’ is used to refer to buildings where owners, landlords, or tenants allow

buildings to become overcrowded and dilapidated. Sometimes, this happens without the owners’

knowledge, but not always. Overcrowding exacerbates deterioration, especially of services which

cannot cope with the excessive demands. When this happens, the building contravenes many of the

National Building Regulations and the Municipal By-Laws, and tenants are left living in unsafe and

unsanitary conditions. In some cases, the owner ceases to pay municipal rates, and disappears.

When services in a building break down, the effects are visible on the street. Bad buildings

contribute to broader urban decay through a ripple effect that results in a loss of investor

confidence, and the proliferation of a sense of unmanaged public space in the vicinity.18

In Johannesburg, the municipality often expropriates such buildings and offers them to investors for

re-development, usually writing off part or all of the rates arrears as part of the deal. They also

sometimes negotiate rates arrears as a means of encouraging existing owners to refurbish, however

this still takes a long time.19 In Durban, the owners are fined for non-compliance, buildings may be

closed down, and owners charged in court. Buildings that are still functional may be placed under

judicial administration, especially sectional title buildings where there may still be some unit owners

in residence. This whole process can take years. Usually prosecution is through criminal action, but

sometimes civil action is more successful.20

3.4 Rates Policy

Setting and implementing a Rates Policy is a key municipal role, and a potentially potent tool for the

municipality to use as an incentive/disincentive, with respect to building compliance. The Municipal

Rates Policy is updated annually and can be accessed via the municipal website. The Rates By-Laws

for eThekwini, Johannesburg and Cape Town are available on openbylaws.org.za.

3.5 Town Planning Scheme

Land use zoning and parking requirements are dictated by the Town Planning Scheme. Re-zoning to

regularise land use takes a long time, and triggers the need for environmental authorisation as well.

There are examples of accommodation conversions done well but without proper zoning, which is

problematic, although dysfunctional buildings with the correct zoning can be equally problematic.

Compliance notices and fines are the main means of enforcement, with court action as a last resort.

3.6 Vulnerable Groups

Several municipalities, such as the cities of Cape Town and eThekwini, have developed vulnerable

group policies as they recognise that they are the sphere of government closest to communities and

18

See the Mail & Guardian Exposé ‘When Good Buildings Turn Bad’. Available: http://mg.co.za/article/2015-07-23-when-good-property-turns-bad 19

See Johannesburg’s ‘Draft Strategy for addressing blighted medium and high density residential “bad buildings” in Johannesburg: working document for discussion’ (2009) for an excellent review of the situation and legislation. Available: http://goo.gl/bz2UgQ 20

See eThekwini’s Exco Decision and Report Back on Bad Buildings at http://goo.gl/RrKtgF

7

therefore have a moral responsibility to protect vulnerable persons.21 This is not to undermine, but

to support, the initiatives of other government departments and civil society organisations’

initiatives targeting vulnerable groups. The Housing Code makes provision for an additional subsidy

amount for making housing units suitable for people living with disabilities. Addressing

homelessness is often seen as a housing issue, but it is not this simple. Many so-called homeless

people may have homes in rural or peri-urban areas, but have nowhere to stay in the city (referred

to as ‘roofless’). Similarly, dealing with children living on the street is a social, rather than an

accommodation issue, and should be treated as such. Appropriate shelter for children living on the

street and other homeless persons is only a part of the solution.22

In order to understand the urban housing environment, it is useful to try and see it from the

different perspectives of the broad categories of players in the space, and to understand their

imperatives and constraints.

4.1 Private and Public Developers and Owners

For developers, the availability of suitable properties is key. Targeting bad buildings as a potential

source of affordable building stock requires complex and time consuming facilitation, which may

include acquisition (e.g. via purchase or expropriation), negotiations with residents and/or evictions,

and a range of possible procurement procedures before such properties can actually be

redeveloped.

Access to finance can also be problematic when developing within the city or in low-income areas.

Most financial institutions have guidelines for assessment of development proposals (e.g.

Propertuity reports that more than 70% of residential accommodation in a mixed-use development

is regarded as high risk and is unlikely to attract finance23). Furthermore, the practice of red-lining

(the blanket refusal of loans by finance institutions in areas perceived to be risky) does occur, even

though it is prohibited.24 This affects a developer’s ability to make sales and, as in the recent case of

Propertuity’s Pixley House development25, forces the developer to adopt a rental, rather than sales,

business model. The state makes finance available via subsidies but has also tried various initiatives

to reduce financier risk in order to stimulate loans in the affordable market. This has mostly been in

the form of loan guarantees or funding soft loans though organisations such as the National Housing

Finance Corporation.

Both owners and developers are at risk to tenants defaulting on rental payments as the right to

housing is protected in the constitution and there are procedures that need to be followed to get an

eviction order for defaulting tenants. Even in the event of chronic default, eviction is treated as a last

21

See Cape Town’s (2013) Vulnerable Groups Policy here: https://goo.gl/YhlK3q 22

Human Sciences Research Council (2015). Available: http://goo.gl/Lse5mj 23

Interview with Propertuity (2016) 24

African Union for Housing Finance (2015) Available: http://www.auhf.co.za/publications/newsletters/ 25

Propertuity Development (2016) Available: http://propertuity.co.za/durban/

40% 68% 64%

87%

4. stakeholders

8

resort and sometimes leads to illegal evictions. The Prevention of Illegal Evictions Act (PIE), Act 19 of

199826, is particularly onerous for landlords, requiring in principle, that tenants must be offered

alternative accommodation first. The South African Local Government Association (SALGA) published

a thorough review of court cases on evictions in South Africa with the aim of sharing “information

with municipalities on what their obligations are with regard to evictions and to provide some advice

on how best to handle these issues”.27 This document is also critical for NPOs and civil society in

order to understand their rights in this regard. For example, in the Blue Moonlight Case (2006-2012),

the court held the City of Johannesburg liable, not only to the evictees for new accommodation, but

also to the developer for rent lost over the years before the successful eviction.

Owners living in sectional title buildings and investment owners are further vulnerable if their body

corporates are not functioning well. Many absentee owners, whether they have tenants or not,

employ agents to manage their affairs. Property management is challenging, and security is an

important issue to guard against overcrowding through sub-letting, as well as building hijacking.

4.2 Tenants

Tenants base their selection of accommodation on various individual criteria, but location,

affordability and quality are often the primary considerations. Potential landlords may require proof

of income, which is sometimes difficult to provide, which results in fewer options being available to

these people, and may result in the exploitation of these tenants. Many people living in poor

conditions in urban areas have previously lived under worse conditions and their priority often is to

send money home, so they are much more tolerant of poor conditions than might be expected.

Foreigners, in particular, are vulnerable and are unlikely to draw attention to themselves by

protesting.

4.3 Civil Society

Civil society is active in many forms in this sector and has a critical role to play in monitoring human

rights violations, enhancing transparency in the sector and mobilising stakeholders around critical

housing issues. Planact is one such example of an NPO making a difference in the inner-city of

Johannesburg through holding stakeholder consultation and conducting baseline research.28 Oxfam

and its partners fall into this group of stakeholders, and understand the issues and constraints from

their perspective and from their various constituencies. This paper is intended to provide

background and context to inform their activities.

26

Prevention of Illegal Actions Act (1998) Available: http://goo.gl/ul4KLJ 27

SALGA (2014) Available: http://goo.gl/sgM7qg 28

NGO Pulse (2015) Available: http://goo.gl/NKMava

9

Inner-city housing is a complex topic. Jurisprudence is constantly changing and the roles of

stakeholders, especially, local government are constantly being redefined. It is the responsibility of

municipalities to remain up-to-date with the latest jurisprudence but it is also the role of civil society

to monitor human rights violations and hold government accountable. Most jurisprudence is

updated due to civil action groups taking housing matters to court on behalf of vulnerable groups.

Vulnerable groups particularly affected by inner-city housing problems include foreign nationals,

informal workers and those suffering from substance abuse or other psychosocial problems.

The municipality must balance the rights of these residents, legal or illegal, with the constitutional

responsibility to economically develop the city and provide a safe living environment. This means

enforcing building regulations and by-laws and sometimes writing off rates payments, at the

municipality’s own expense, in order for developers to have access to building stock in areas that

offer immense economic opportunity.

National government offers various subsidy tools and financing bodies that are in place to assist local

government and civil society with this task that is made so much more difficult when the inner-city

has already been allowed to fall into urban-decay, as it has in certain part of the Durban Inner-City.

Learning Note 2 takes a closer look at the Durban Inner-City’s current status, problems and

resolutions going forward.

SALGA (2014) ‘Understanding and Planning for the Role of Municipalities in Evictions: Case Study of

the City of Johannesburg’. Available at:

http://www.salga.org.za/app/webroot/assets/files/Municpal%20Focus/FINAL%20Joburg%20eviction

s%20case%20study%2019%20June%202014.pdf

South African Human Rights Commission (2015) ‘Investigation Hearing Report: Access to Housing,

Local Governance and Service Delivery’. Available at:

http://www.sahrc.org.za/home/21/files/Access%20to%20Housing%202015.pdf

The Housing Development Agency (2013) ‘Reviving our Inner-Cities: Social Housing and Urban

Regeneration in South Africa’. Available at:

http://www.thehda.co.za/uploads/files/HDA_NASHO_reseach_report_lo-res.pdf

5. conclusion

Further reading

10

African Union for Housing Finance (2015). ‘A different approach to rental housing’. Available:

http://www.auhf.co.za/publications/newsletters/ [Date accessed: 11 March 2015]

Consortium for Refugees and Migrants in South Africa (CORMSA) (2009) ‘Submission to the South African

Human Rights Commission’s Public Hearings on Millennium Development Goals and the Realization of

Economic and Social Rights in South Africa’. Available at:

http://www.cormsa.org.za/wpcontent/uploads/submissions/Joint%20Submission%20to%20the%20SAHRC%20

on%20Social%20and%20Economic%20Rights.pdf [Date accessed: 14 March 2016]

eThekwini Municipality (no date). ‘Plans to address the City’s Derelict Buildings’ Available at:

http://www.durban.gov.za/City_Government/mayor_council/Exco_Decision/Pages/Plans-to-Address-the-

City%E2%80%99s-Derelict-Buildings.aspx [Date accessed: 11 March 2015]

eThekwini Municipality (2013). ‘KZN Premier Launches Hostel Upgrade Project’. Available:

http://goo.gl/67Tcx0 [Date accessed: 11 March 2016]

Housing Act (1997) (As Amended). Office of the President. 19 December 1997. Amendments in 1999 and

2001. Available at: http://www.acts.co.za/housing

Housing Codes (2009). Department of Human Settlements. Available at:

http://www.dhs.gov.za/content/national-housing-code-2009

Human Sciences Research Council (2015). ‘More than just a roof: unpacking homelessness’ Available:

http://goo.gl/Lse5mj [Date accessed: 11 March 2015]

Mail & Guardian (2015). ‘When Good Buildings Turn Bad’. Available: http://mg.co.za/article/2015-07-23-when-

good-property-turns-bad [Date accessed: 11 March 2015]

National Building Regulations and Building Standards (Act No. 103 of 1997) Available:

http://www.dti.gov.za/business_regulation/acts/building_standards_act.pdf

National Housing Finance Corporation (founded in 1996) ‘National Housing Finance Corporation: About Us’.

Available: www.nhfc.co.za. [Date accessed: 11 March 2015]

NGO Pulse (2015). ‘Tacking Housing Challenges: Focus on Inner city JHB’. Available:

http://www.ngopulse.org/article/2015/10/14/tackling-housing-challenges-focus-inner-city-jhb [Date accessed

11 March 2015]

Paralegal Advice Website (Date Unknown) ‘Chapter 2 – Citizenship Immigrants and Migrants’. Available:

www.paralegaladvice.org.za [Date accessed 14 March 2015]

Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 Available:

http://www.saflii.org/za/legis/consol_act/poiefauoola1998627.pdf SALGA (2014) [Date accessed: 11 March

2015]

South African Local Government Association (2011) ‘Guideline Document on the Roles and Responsibilities of

Councilors, Political Structures and Officials’ Available: http://goo.gl/Q8UTVh [Date accessed: 11 March 2016]

Zack, T., Bertoldi, A., Charlton, C., Kihato, M., and Silverman, M. (2009) ‘Draft Strategy for addressing blighted

medium and high density residential “bad buildings” in Johannesburg: working document for discussion’.

Available: http://goo.gl/bz2UgQ [Date accessed: 11 March 2016]

references