Joburg inclusionary housing a reality this year

Despite considerable criticism and several threats of legal action, the City of Joburg hopes to pass its inclusionary housing policy before the end of the year.

Moneyweb earlier reported that the draft policy provided that developers of residential complexes with more than 10 units would be required to set aside at least 20% of the total number of units for low and low-middle income tenants, with rent being capped at R2 100 per month.

Some developers considered this to be an unconstitutional infringement of their property rights and warned that, if adopted, the policy would be challenged in court.

The city has now given feedback to stakeholders about the comments from stakeholders following the publication of the draft policy in February, and has made some changes.

The 10-unit threshold before the inclusionary housing policy becomes mandatory has been increased to 20 units. Developments with fewer than 10 units would however be able to participate voluntarily, should they choose to.

The policy would still apply to all new developments within the jurisdiction of the City of Joburg, should they have 20 or more units.

The minimum size of the inclusionary housing units has been increased from 15m² to 18m², still with at least a bath, toilet and basin.

In the previous version of the draft policy, the city proposed two implementation models. The first was for the units to be managed by a social housing company as defined in the Social Housing Act. The second was for developers/owners to rent the units out privately – although, in the case of sectional title developments, the units should be owned, managed and rented out by the body corporate. The city proposed strict reporting requirements for body corporates as part of this model.

This second option has now been removed after several stakeholders expressed their concern that body corporates are run by volunteers without the necessary skill to manage such rentals.

The city now proposes four options, some without mandatory rent control, where:

1. 20% of all units are social housing rentals with the rent capped at R2 100 per month, or housing in terms of the Department of Housing’s Finance Linked Individual Subsidy Programme (FLISP), which provides for subsidies for South African citizens who earn between R3 500 and R15 000 a month to buy their first homes;
2. 10% of the total residential floor area to be made up of small units, varying between 18m² and 30m²;
3. 20% of the total residential floor area to be made up of units that are 50% of the average market unit size, that is between 18m² and 150m²; or
4. Proposals “To the satisfaction (in writing) of City Transformation and Spatial Planning, City of Johannesburg”.

The incentives offered to developers include an increase in the floor area ratio and density to accommodate the inclusionary units, as well as a reduction in the parking requirements for these units.

The city is still considering whether it will reduce the developers’ bulk services and parks contributions.

Officials told Moneyweb that it is not yet clear whether there will be another opportunity for stakeholders to make submissions on the basis of the changes made. The city does however hope to have the policy approved before the end of the year.

Moneyweb earlier reported that the South African Property Association (Sapoa) had raised concerns that the proposed policy could deter the private sector from developing residential units.

Sapoa represents the biggest property developers in the country, most of them operating in Johannesburg.

Sapoa CEO Neil Gopal said on Tuesday that he is waiting for feedback from the organisation’s consultants who attended the city’s feedback session before he will be able to comment on the latest draft.