Small-scale rental housing a booming sector but remains unregulated

Small-scale rental housing. Picture: Supplied

Small-scale rental housing. Picture: Supplied

Published Jun 10, 2022

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Cape Town - Small-scale rental housing is changing the character of South African cities and helping to solve the accommodation crisis – however, the sector remains unregulated and is mostly non-compliant.

This is contained in a publication called “Small-scale rental housing: Moving from the low to the high road”, which was launched on Wednesday by the Development Action Group (DAG) in collaboration with the Human Sciences Research Council (HSRC).

The publication unpacks reforms and incentives necessary to formalise small-scale rental housing in township areas.

DAG programme director, Zama Mgwatyu said there was an idea in the minds of South Africans that one moves from an informal settlement, receives an RDP house, and later qualifies for a bond-financed house. However, he said in the last five years there had been land invasions, the sale of RDP houses, more backyard dwellers, and high unemployment.

“This calls for us to relook at the strategies that were created in 1994 and to see what are the solutions that we can come up with that can talk to the realities of 2022 and going forward.

“When we completed the People’s Housing Programme projects in Philippi and Khayelitsha in 2017 we started to see individuals building at the back of their houses with some not up to scratch. People are not waiting for the Contactors and Developer Academy to capacitate them or for the City to put together the overlay zones,” he said.

Professor Ivan Turok of the HSRC said it was difficult to find rental units that were fully complaint but despite this, there were positive aspects.

“The fact that it’s non-compliant means that it prevents long-term borrowing and prevents insurance in many cases. Developers can’t borrow the kind of finance they need and that you could get to move by. Because of funding, available developers cut corners to save costs, which sometimes is not a problem but at times affects the safety of the building,” he said.

Mayco member for spatial planning and environment Eddie Andrews said the demand for affordable housing in less formal areas was huge, and growing each year.

“The City alone cannot meet this demand. Micro developers are already involved in this sector; they are doing great work and the City wants to make it easier for them to do what they do best: to build small-scale rental units at pace. One way of doing it is by removing red tape and strengthening this exciting partnership,” he said.

Andrews said an in-depth analysis in 2020, of the small-scale rental market in Khayelitsha, found the market was thriving, despite any assistance from the government.

He said following this study, the council approved a report in September 2020 that concluded that the City should consider incentives for private property owners in housing zones to assist with the provision of affordable rental accommodation.

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Cape Argus