Financing of social housing investments in South Africa

Abstract

The right to adequate housing is enshrined in the South African constitution. Accordingly, social housing has been identified by the government as one of the strategic interventions to be pursued in the delivery of housing services to the poor. As public sector funds are limited, it is imperative to establish alternative mechanisms for financing social housing investments.

A multiple case study approach reviewed social housing investment with specific reference to how they were financed, the challenges faced and whether there would have been a benefit in using alternative means of financing. This was supported by a literature review as well as interviews with relevant stakeholders.

The results highlighted that funding for the sector is available primarily through government grants and loan funding from national and provincial DFIs. Private sector participants are willing to participate in the sector and have the resources to do so. Nonetheless, there are concerns from private sector participants around the regulatory framework and the availability of collateral on funding provided to the sector. Social Housing Institutions (SHIs) also noted that the SHRA should facilitate discussions on the development of ‘social housing agreements’ with municipalities that enable access to land, provide waivers on bulk contributions and afford SHIs rebates on municipal rates and tariffs. Successful delivery of social housing is dependent on both the private and public sector, sturdy institutions and a functional regulatory framework.