Summary PUB2604 NOTES DEP.OF HOUSING

GENERAL NOTICE NOTICE 1376 OF 19994 DEPARTMENT OF HOUSING THE WHITE PAPER ON HOUSING IS HEREBY PUBLISHED FOR COMMENT. All interested persons are invited to furnish written comments to the Director-General, Department of Housing, Private Bag X644, Pretoria, 0001, not later than 31 January 1995. WHITE PAPER A new Housing Policy and Strategy for South Africa Contents 1. PREAMBLE 2. HOUSING AND THE ECONOMY 2.1 INTRODUCTION 2.2 MACRO-ECONOMIC PERFORMANCE 2.2.1 Economic growth 2.2.2 The distribution of income 2.2.3 Employment 2.2.4 Investment 2.2.5 Savings 2.2.6 The fiscal deficit 2.2.7 Inflation 2.2.8 The balance of payments 2.2.9 Policy implications 3. THE CURRENT HOUSING CONTEXT 3.1 STATISTICAL PROFILE OF HOUSING IN SOUTH AFRICA 3.1.1 Demographic profile of South Africa (1 995) 3.1.2 Income profiles (1 995) 3.1.3 Living conditions, existing housing stock and rate of supply 3.1.4 Access to basic services 3.1.5 Summary 3.2 EXISTING HOUSING CONDITIONS IN SOUTH AFRICA 3.2.1 Present housing backlog 3.2.2 Conditions of tenure 3.3 EXISTING CONSTRAINTS TO RESOLVING SOUTH AFRICA'S HOUSING CRISIS 3.3.1 Scale of the housing problem 3.3.2 Structure of South Africa's human settlements 3.3.3 Institutional framework 3.3.4 Policy framework 3.3.5 End-user finance and subsidies 3.3.6 Land and planning issues 3.3.7 The housing construction sector 3.3.8 Sociological issues 3.3.9 Economic issues 3.3.1 0 Summary 3.4 OPPORTUNITIES PREVALENT IN THE HOUSING ENVIRONMENT 3.4.1 Participative policy development processes 3.4.2 Acknowledgement of importance of housing in the RDP 3.4.3 Well developed infrastructure 3.4.4 Potential resources for housing 3.4.5 Economic factors 3.5 RECENT AND CURRENT DEVELOPMENT PROCESSES IN HOUSING 3.5.1 Housing in the interim phase 3.5.2 Present National Housing Forum/Department of Housing relationship: Joint Technical Committees 3.5.3 Relationship with the provinces 4. PROPOSED NATIONAL HOUSING STRATEGY 4.1 INTRODUCTION 4.2 NATIONAL HOUSING VISION 4.3 NATIONAL HOUSING GOAL 4.4 BASIC POINT OF DEPARTURE 4.4.1 Sovereignty of the Constitution 4.4.2 Housing as a basic human right 4.4.3 The role of the State 4.4.4 People-centred development 4.4.5 Freedom of choice 4.4.6 Non-discrimination 4.5 UNDERLYING POLICY APPROACHES AND CONSIDERATIONS 4.5.1 Housing and economic empowerment 4.5.2 Sustainability and fiscal affordability 4.5.3 Hostels 4.5.4 Special needs housing 4.5.5 Urban and rural balance 4.5.6 Housing and the RDP 4.5.7 Consumer protection and education 4.5.8 Accountability and monitoring 4.6 OVERALL APPROACH TO ENSURING HOUSING DELIVERY 4.6.1 Stabilising the housing environment 4.6.2 Supporting the housing process 4.6.3 Mobilising housing credit 4.6.4 Mobilising savings 4.6.5 Subsidies 4.6.6 Institutional arrangements 4.6.7 Land 4.6.8 Coordinated development 5. KEY SUBSTANTIVE APPROACHES AND INTERVENTIONS 5.1 STABILISING THE HOUSING ENVIRONMENT 5.1.1 General strategy 5.1.2 Prioritization of reconstruction areas 5.2 INSTITUTIONAL ARRANGEMENTS 5.2.1 Government 5.2.2 Role of provincial government 5.2.3 Role of local, rural and metropolitan government 5.2.4 Statutory advisory and policy execution bodies 5.2.5 The State corporate and parastatal sector 5.2.6 The private sector 5.2.7 Community and civil society 5.2.8 Non-Governmental organisations 5.3 SUBSIDIES 5.3.1 Eligibility 5.3.2 Focus on the poor 5.3.3 Tenure 5.3.4 Market anomalies 5.3.5 Subsidy mechanism 5.3.6 Subsidy programmes 3.5.7 Levels of subsidy 5.3.8 A national subsidy standard 5.3.9 Subsidies and rural housing 5.4 SAVINGS 5.5 HOUSING CREDIT 5.5.1 Major banks 5.5.2 Non-Traditional Lenders (NTRLs) 5.5.3 Facilitating the provision of housing credit 5.6 HOUSING SUPPORT 5.7 LAND AND THE HOUSING DEVELOPMENT PROCESS 5.7.1 Overall policy approach 5.7.2 Substantive policy approaches 5.7.3 Land development and land use control 5.7.4 Land registration and tenure systems 5.7.5 Mechanisms for resolving conflicts-Land delivery process 5.7.6 Policy approach: Disposal of publicly-owned Land for low-income housing 5.8 INFRASTRUCTURE, SERVICE STANDARDS AND TARIFFS 5.8.1 Institutional framework and role of sectors 5.8.2 Standards 5.8.3 Technology choice and infrastructure costs 5.8.4 Cost-recovery and tariffs 1. PREAMBLE Housing the nation is one of the greatest challenges facing the Government of National Unity. The extent of the challenge derives not only from the enormous size of the housing backlog and the desperation and impatience of the homeless, but stems also from the extremely complicated bureaucratic, administrative, financial and institutional framework inherited from the previous government. This White Paper marks the beginning of a process. For the first time in its history, South Africa now has a policy framework for all of its citizens. The approach adopted has been the search for the creation of an enabling environment, and not for the publication of a new set of rules. It aims to contribute to the certainty required by the market, as well as give the Provincial and Local Governments their capacity to fulfil their Constitutional obligations. Throughout the document, a partnership between the various tiers of government, the private sector and the communities is envisaged. This is seen as a fundamental prerequisite for the sustained delivery of housing at a level unprecedented in the history of this country. It requires all parties not only to argue for their rights, but also to accept their respective responsibilities. One of the greatest initial challenges facing all roleplayers is the creation of a public environment conducive to attracting the necessary private investment, both of the household as well as that of the institutions. Our collective success in achieving this productive climate will be the essential foundation for removing the blight of homelessness-one of the most visible and destructive legacies of the past. Success in meeting the housing challenge will be one of the cornerstones of rebuilding our social structures and regenerating the economy. This White Paper also marks the end of a process. From its inception in 1992, the National Housing Forum has played a seminal role in creating the conditions necessary for a national consensus in housing, most visibly evident at the National Housing Summit in Botshabelo on the 27 th October 1994. Out of this consensus, the people of South Africa now have the task of harnessing the skills, resources and energy that the nation has in abundance, and directing it to the task at hand. We believe that of all of our resources, nothing compares with the latent energy of the people. The housing programme must be designed to unleash that energy, not only to get the houses onto the ground, but also to give meaning to the notion of a people-centred development. The time for policy debate is now past the time for delivery has arrived 2. HOUSING AND THE ECONOMY This chapter analyses the housing sector within the context of the macro-economy. 2.1 Introduction In order to assess the relationship between the housing sector and the macro-economy in South Africa for the purposes of formulating housing policy, it is necessary to define the general economic context in which that policy will operate. The analysis of the intersection of the housing sector with the broader economy can be desegregated into four interrelated areas: - Real side linkages: Real linkages include the effects of housing policy on such macro-economic variables as output, employment, income, consumption, savings and investment, prices, inflation, and the balance of payments; - financial linkages: Financial linkages deal with the relationship between the financial sector-in particular formal and informal institutions providing housing finance-and the demand for, and supply of, housing; - fiscal linkages: Fiscal linkages cover the contribution of government to the supply of housing through tax and subsidy policy; and - socio-economic linkages: Housing policy, through the quantum and quality of housing delivered impact on sociopolitical stability, productivity and attitudes and behaviour. 2.2 Macro-economic performance 2.2.1 Economic growth Growth in the Gross Domestic Product (GDP) has shown a cyclical decline over the past three decades, with the average annual growth rate of the GDP falling below the annual population growth rate. This has resulted in a decrease in real per capita income. 2.2.2 The distribution of income In South Africa, the effect of previous racially-based policies has left the distribution of income substantially skewed, prompting powerful arguments in favour of economic redistribution. The trend towards equalisation needs to be accelerated. An increased income to lower-income groups could have a major impact on the housing sector by converting latent demand for housing into effective demand. Evidence indicates that while low-income groups have more restricted savings capacity than higher income groups, their savings are more directly targeted towards specific needs, such as education and housing. 2.2.3 Employment South Africa is characterised by large scale unemployment in the formal sector of the economy. The increasing growth rate of the economically active population in conjunction with a declining or stagnant rate of growth of GDP, implies that the level of unemployment is set to increase still further. The high level of unemployment, coupled with the declining levels of per capita GDP, has a negative effect on demand for and investment in housing and diminishes Government's resource ability to assist the poor and unemployed. A solution to this problem is fundamental to a sustainable solution for the housing problem. At the same time, it is equally apparent that the housing sector has a potentially enormous role to play in the revitalisation of the South African economy. This point is underlined by the very high direct and indirect economic multiplyer effect of housing production. In this regard, the closest possible linkage between the housing and electrification programmes should be sought as one of the primary approaches to satisfying basic needs as well as providing a sound basis for job creation and economic sustainability. 2.2.4 Investment