Housing rethink can empower individuals and break logjam - Businesslive

18 November 2019 - The biggest obstacle to helping the poor out of poverty could well be the intuitive assumption that poor people are helpless. One consequence is that society squanders the most dynamic mechanism available for improving people’s lives.

Michael Morris

The biggest obstacle to helping the poor out of poverty could well be the intuitive assumption that poor people are helpless. One consequence is that society squanders the most dynamic mechanism available for improving people’s lives.

This was illustrated a few years ago by a researcher who revealed how a then A-grade rental rate of R140/m2 — the sort of return expected only at the high end of the market — was typical for rental income in an emerging accommodation model in the Khayelitsha suburb of Ilitha Park on the poverty-prone Cape Flats.

Willing tenants were forking out not the R12,000 or more a month which, at that rate, they’d have to pay for a two or three-bedroom house, but perhaps R1,400 for a 10m2 room. This showed, the researcher said, “what is achievable in delivering affordable housing to people who don’t earn a lot”.

Critically, what is “delivered” is not a house or another housing plan, but the conditions in which people can choose what suits them and craft solutions to match. This is exactly how the middle class lives, and thrives. Why should the poor be denied opportunities to get there too?

Due to unrelenting urbanisation — 65% of South Africans already live in cities — all urban centres are under pressure. Yet despite the 3-million RDP houses and 1-million serviced sites provided since 1994 (and larger sums devoted to housing), the backlog has grown from 1.5-million to upwards of 2.3-million units, and the number of informal settlements has soared by 650% from 300 to 2,225.

My colleague, Institute of Race Relations (IRR) head of policy research Anthea Jeffery, estimated in 2017 that it would take at least 20 years to house all those on the waiting list, let alone meet new demand.

But there is an alternative, and Jeffery is the author of it. Her nonracial economic empowerment for the disadvantaged (EED) proposal addresses all the key socioeconomic deficits holding SA back. It includes “a fundamental rethink (on housing) to empower individuals, provide better value for money and break the delivery logjam”.

It proposes giving state-funded housing vouchers worth, say, R800 a month, redeemable solely for housing-related purchases, to about 10-million South Africans between 25 and 35 years old who earn less than, say, R15,000 a month. Recipients would receive the vouchers for 10 years (R100,000 or, if a couple pooled their money, R200,000).

Jeffery calculated in 2017 that the scheme would cost the fiscus about R96bn a year, which “could be met by redirecting much of the current budget for housing and related community development”.

The market it would create would encourage the private sector to build many more houses and apartment blocks, or renovate old ones for housing purposes. Beneficiaries would find it easier to get mortgage finance. They could use the vouchers to build backyard flats and rent them to tenants also armed with housing vouchers. Rental stock would grow.

People living in informal settlements would have new options — to stay and use their vouchers to buy building supplies, hire electricians, plumbers and other artisans to upgrade their homes, or move to new housing.

Individual initiative and self-reliance would grow and, coupled with title deeds to homes (an essential complementary reform), “a more normal housing market would develop” that would “stimulate investment, generate jobs, and give the weak economy a vital boost”.

The A-grade rental returns of Ilitha Park need not be an oddity, and the ingenuity and dynamism of the poor need not be squandered.

• Morris is head of media at the Institute of Race Relations

https://www.businesslive.co.za/bd/opinion/columnists/2019-11-17-michael-morris-housing-rethink-can-empower-individuals-and-break-logjam/

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