ADD NAME/TITLE HERE

NATIONAL UPDATE HOUSING CO-OPERATIVES

Purpose Social Housing Act 16 of 2008Role of Co-opsPlan of ActionEngagement up to nowWay forward

Contents

04/18/23 2SHRA/Co-ops

• To update the Portfolio Committee on the Department’s support towards implementation of a sustainable co-operatives model.

Co-ops are explicitly mentioned in the Social Housing Act as follows:-

Chapter 1 : definitions• "social housing" means a rental or co-operative housing option for

low to medium income households at a level of scale and built form which requires institutionalised management and which is provided by social housing institutions or other delivery agents in approved projects in designated restructuring zones with the benefit of public funding as contemplated in this Act;

• (5) Subject to any conditions prescribed by the Minister, a social housing institution must be a company registered under the Companies Act. 1973 (Act No. 61 of 1973), or a co-operative registered under the Co-operatives Act, 2005 (Act No. 14 of 2005)or any other form of institution acceptable to the Regulatory Authority.

Social Housing Act 16 of 2008

04/18/23 4SHRA/Co-ops

Role of Co-ops

04/18/23 5SHRA/Co-ops

Regarded as a valid delivery agent for social housing.Must subscribe to the same requirements as that of Social Housing Institutions.Must be accreditedMust acquire, develop and manage social housing stockMust fulfil all reporting requirementsWill be subject to regulationsMust reinvest operational surpluses into new social housing projects

Plan of Action

04/18/23 6SHRA/Co-ops

Extract from SHRA Business Plan 2011/12:-

Workstream Sub-Area Output (2011/12 Snapshot)

Corporate Services

SHRA Outreach Programme (Communication Plan, Awareness Campaign) Filling of all posts Agreements with Key Stakeholders State of the Sector Report Annual Financial Statements Annual Report Business Plan 2012/13

Regulations Accreditation Processing of all applicants for accreditation Issuing of accreditation certificates Development of Register of Accredited Institutions Development of BIS for Accreditation and Regulation

Regulations Gazetting of Regulations Development of Sub-ordinate Legislation Monitoring of 10 SHI’s Crafting of SHORP Plan 2012/13

Investment Capital 1 712 units approved Develop Private Sector Engagement Strategy Develop Co-op Engagement Strategy Develop Funders Engagement Strategy

Institutional Development of Institutional Grant programm Development of Roster of Accredited Service Providers Issuing of 20 Institutional Grant Craft SHIP Plan 2012/13

04/18/23 SHRA/Co-ops 7

Engagement up to now

Met with SAHCA (South African Housing Co-op Association) on 9th June 2011. It was acknowledged that the traditional European model of housing co-ops did not work well in SA. We need an African housing co-op model.Advised of the formation of the Gauteng Housing Secondary Co-operative (GHSC). This entity will own the property and provide support to primary co-ops who will develop and manage the stock. This will be used as a pilot.It is proposed that SHRA and SAHCA will sign an agreement that sets out the parameters of the partnership.GHSC will submit its Business Plan to SHRA for consideration. They have also applied for establishment grant to set up the organisation.SHRA was also advised of the Housing Co-op Seminar in Istanbul scheduled for the end of June 2011.

04/18/23 SHRA/Co-ops 8

Engagement up to now

A brief overview of the model is as follows:-

04/18/23 SHRA/Co-ops 9

Way Forward

Draft and conclude agreement between SHRA/SAHCAGive consideration to GHSC request for establishment grant.Give consideration to GHSC Business Plan and proposed projects.Collaborate with Gauteng Dept of LG and Human Settlements to facilitate the establishment, development, growth and graduation of GHSC.Establish a working model for the country.

04/18/23 SHRA/Co-ops 10

SHRA

SHRA High-level Process

Application for Accreditation

Yes

No

Application to RCGProgramme

CapacitationProgramme

Yes

No

Successful

RCG Programme

Regulation (whether accredited or not)

04/18/23 SHRA/Co-ops 11

Definitions

Social Housing:-

A rental1 or co-operative housing option for low income2 households at a level of scale and built form which requires institutionalised3 management and which is provided by accredited social housing institutions4 or other delivery agents5 delivering approved projects6 in designated restructuring zones7 with the benefit of public funds8

04/18/23 SHRA/Co-ops 12

Definitions

1: Rent in perpetuity (not rent-to-buy/own). Public Asset. Large state investment.2: Income levels: R1500 – R7500. Rentals = 30% of income = R450 – R2250 (in practise = R2500/R800)3: No individual ownership4: SHI’s = Section 21NPO’s. No distribution of dividend of profit after tax.5: Other delivery agents = private sector, PPP’s Co-ops, developers, mining houses6: approved/accredited projects separate from accredited SHI’s7: Restructuring Zones (economic, spatial and social integration) – PRZ’s pre-determined8: State subsidisation = 60-65%. 35% gearing

04/18/23 SHRA/Co-ops 13

Traditional Roles

• Private Sector : 10% equity contribution

• Accreditation of projects

• Looking at PPP opportunities

• Large-scale developers

• Other funders

• Alternate building material and methodology

• Green buildings + energy efficiency

04/18/23 SHRA/Co-ops 14

Funding

Funding for Social Housing is a mix of government subsidies and debt.

04/18/23 SHRA/Co-ops 15

Funding

Finance Element Value Notes %

Cost of Unit 300,000 40m2 2 bed 100

       

RCG 120,000   40

Institutional 60,000   20

Sub Total 180,000 Full state subsidy 60

       

Difference 120,000 Required as loan  

04/18/23 SHRA/Co-ops 16

Regulations

As long as state subsidy is used, subject to regulation.Must submit annual business plans, lease documents, reports.Must be open to inspection, conducting of socio-economic surveys SHRA can intervene if project is mismanaged (liquidation, curatorship, scrapping of board etc.)Must remain rental stock, even if soldMust always cater for the relevant income groups.

04/18/23 SHRA/Co-ops 17

Exit

Cannot be sold for 15 yrs.Any sale before 15 yrs will result in penalty payments (pro-rata repayment of state portion).Any sale must be cleared with SHRA first.Condition of sale will be that it remains rental catering for the relevant income group.Will be subject to regulation in perpetuity unless confirmed otherwise.Meaningful tenant participation is necessary.

THANK YOU!