TOWNSHIP AFFORDABLE RENTAL MARKET UNDER RENEWED SPOTLIGHT

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TUHF21, through its uMaStandi subsidiary which is an impact-driven property finance company focused on township developments, has welcomed the publishing of the Department of Public Works and Infrastructure’s National Infrastructure Plan (NIP) 2050 Phase 2 which was recently gazetted for public comments.

The NIP is designed to create a foundation for achieving the National Development Plan’s vision for inclusive growth in South Africa. Phase 1 focuses on bulk infrastructure related to energy, water, freight transport, and telecommunications. The Phase 2 plan details how government aims to achieve its broader infrastructure goals across housing, education, health, and roads.

As part of this, the National Department of Human Settlements is developing a new human settlements policy whitepaper that aims to reform the housing subsidy scheme and delivery systems to enable partnership between the public and private sectors. Furthermore, several cities have begun developing policies and programmes to enable the development of small-scale affordable rental accommodation to contribute to the urban densification mission of Phase 2.

“As TUHF21 we are very supportive of the intentions of this plan around the commitment to systematically support the provision of affordable housing in township areas. With government implementing this new thinking, we hope this will provide impetus to speed up the process when it comes to town planning procedures. Additionally, we hope that government will closely examine the associated processes with the NHBRC (National Home Builders Registration Council) and the support that is provided to micro-developers in this rapidly growing segment of the housing space,” says Lusanda Netshitenzhe, CEO of TUHF21.

While the potential for affordable rentals is significant, the complexities of operating in the townships must be acknowledged. Micro-developers and/or private sector property entrepreneurs as well as resident landlords, the latter being the traditional “backyard housing provider”, need to receive equal government support.

“Government must be enablers in this regard. It will be interesting to monitor to what extent synergies will be created between the departments themselves to ensure there are no policy conflicts. For Phase 2 to work, there must be intergovernmental cooperation between national, provincial, and local government. Even though it would have been better to have begun this process sooner, the 2024 implementation target must not be delayed. Already, township developers have begun moving ahead with or without government support,” says Netshitenzhe.

Critical to the successful implementation of Plan 2 will be government’s willingness to work with private sector partners and promote an environment where knowledge sharing takes place. Training on key business management skills and financial literacy is key in ensuring the long-term success of developers and/or landlords in the townships.

“The municipalities are key stakeholders to the realisation of Plan 2. Of course, government cannot be expected to affect change on its own. This provides opportunities for initiatives like our uMaStandi commercial mortgage facility that targets township property developers to become property entrepreneurs,” says Sammy Dibate, Portfolio Manager at uMaStandi.

Dibate believes that there must be more collaboration from all stakeholders across the public and private sectors.

“Government must consider leveraging the experience of companies like TUHF21 who understand this market segment and have been providing finance to support micro-developers and resident landlords in townships for several years already. All stakeholders should work together to provide the means for the sector to perform better,” concludes Dibate.