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Mixed response to City of Joburg’s inclusionary housing policy

The rich will soon live side by side with the poor in Johannesburg.

The so-called ‘inclusionary housing policy’ that was adopted by the City of Johannesburg on Thursday, which envisages the rich and poor living side by side in some of the city’s exclusive residential developments, has garnered mixed reaction from private property developers.

The policy compels property developers to allocate at least 30% of any new residential developments comprising 20 or more units to what is called inclusionary or affordable housing.

The requirement will be imposed on property developers by the city when they apply for land use and development approvals.

The policy, which comes into effect in the next three months, means that property developers who build residential units for rent and sale in wealthy Johannesburg neighbourhoods such as Rosebank, Sandton, Melrose and Hyde Park, must dedicate a portion of their developments to affordable housing.

The city said its policy will give those in lower and middle income households – who often live in far-flung areas and spend an inordinate amount of time and money to travel to places of work because of the legacy of apartheid – an opportunity to live close to economic nodes.

Spatial equality vs continued investment?

Residential property developers and industry bodies are divided over the move, with some welcoming the policy for eliminating spatial inequality and economic injustice, and others fiercely objecting to it, saying it will deter new residential investments.

The South African Property Owners Association (Sapoa), which represents the biggest property developers in the country and was a vocal critic of the policy when it was in draft form in 2018, said it is “disturbed” by the adoption of the “onerous policy”.

“The city, even though we submitted extensive comments after undertaking best-practice international research on this matter, ignored most of the private sector view,” Sapoa CEO Neil Gopal told Moneyweb. “The unintended consequences [of the policy] could be that there is a shift in the focus from the residential sector to other asset classes.”

Gopal said there is not much the organisation can do to challenge the policy at this stage. “We [will] have to wait and see what approach developers would take.”

Chris Renecle, MD of property development firm Renprop, which has ongoing luxury residential developments in Rosebank, Dunkeld and Bryanston, says the unintended consequences of the policy could include a regulatory burden on private developers as well as increased time and costs for developments.

“The policy [if not implemented correctly] would have drastically slowed or even stopped residential property development in the City of Johannesburg, which would have serious consequences for the general economy and the property market,” said Renecle in his submission to an earlier version of the policy.

Read: Joburg inclusionary housing a reality this year

Policy support

Balwin Properties, a JSE-listed sectional title developer, has welcomed the housing policy, saying it should become a countrywide policy.

“Why should it be the right of only the wealthy to live close to work? We have a shocking legacy of apartheid and developers also have a responsibility to redress the crimes of the past,” said Balwin CEO Stephen Brookes.

Balwin, which has the capacity to develop 5 000 apartment units per year in areas such as Olivedale, Linbro Park and Kyalami, is already offering affordable housing valued below R700 000. Brookes said he wished the policy was supported by a strong infrastructure plan on public transport, which remains inefficient and limited in its reach across the city.

Four ways to comply

The city has offered property developers four options through which to comply with the policy:

* Under the first option, 30% of total units in the residential development must be social housing, ‘Flisp’ housing (Finance Linked Individual Subsidy Programme, where government subsidies are offered to first-time homeowners earning between R3 501 and R22 000 a month), or housing with rentals capped at R2 100 a month. The latter amount is intended to cater to households earning less than R7 000 per month.

* The second option stipulates that 10% of the total residential floor area of a development must be made up of units that are a minimum of 18m2, a maximum of 30m2 and an average of 24m2. And at least 30% of total units in the development must be for inclusionary housing.

* In the third option, 20% of the total residential floor area must be made up of units that are 50% of the average size of market units in the same development, with a maximum of 150m2 and a minimum of 18m2 per inclusionary unit.

* Developers under the fourth option might negotiate with the city and propose a plan for how they plan to incorporate inclusionary housing.

The city went further, saying the housing units must have the same outward appearance as other units in the same development or property, and must share common spaces such as entrances, lifts, communal spaces and shared amenities. “Access to these common facilities must be unconstrained for all residents,” the policy document reads.

The city has offered various incentives to motivate developers, including increasing the size and density of their residential floor area and reducing the parking requirements for inclusionary housing units.

Although Renprop’s Renecle is not embracing the policy, he says it is workable.

“We welcome the inclusion of more options for developers to comply with the policy. Having only option one under the previous policy was a disaster and made the policy not workable.”

He is also positive about the incentives the city is offering developers. “We would be getting more density. This allows developers to build smaller units to give potential property buyers more options to purchase affordable units.”

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And then the new developments do not find the “high end” tenants and goes bust.

Property development stops and :

The move to the Republic of Cape Town just accelerates !!

……levies, rates & taxes? Will they willingly pay?

…bylaws of the complex?

Can’t see harmony happening

You nailed it. The rent is one thing … the levy another. I don’t see “all the tenants” agreeing on those expensive club houses and gardens.

and how do you cut off services to those that don’t pay….

Well Casper as they say…Eventually we all sit down to a banquet of CONSEQUENCES and in this regard woe betide those communities who will have these Socialista/Soviet era lunatic housing Diktat consequences shoved down their throats. Do these liberation Klowns never learn?
Venezuela for Atholl Oaklands is one of the FORESEEN consequences, one of the unforeseen is the RENT CONTROL that was slyly slipped into this howling mad social engineering disaster policy…..Rates? Who will pay assessment rates in this Cuba on Sandton City? Answer, very damned few! Example? See non payment of power in this country.

Concur totally!!!

I think people need a bit more blue sky thinking, I see a lot of 19 unit developments in the future of Johannesburg.

Fifty years ago the wealthy already had mixed housing. It was very useful to them if the do estic workers, gardenerers, nannies and guards lived in backyard servant quarters.

btw, can somebody share the layout of an 18 square meter housing unit? The kitchen would have to be in the toilet?

A kitchen was not required, they ate the same food as their employers from the same kitchen.

18 sqm !!!! Thats the size of a single garage !!!

Have you tried looking at some granny flats in “middle class” to “upmarket” area? a white lady who works in my building has a 20 sqm granny flat.

R700 000 homes cannot be called affordable for the vast majority of South Africans, but if you extricate the 10m or so illegal immigrants then housing is much easier solved.

Balwin Developments likes this because it will stop all competition from forming around their already developed apartments.
They (Balwin) have been on a glut of building apartment buildings and I think that they have correctly assessed that the bill will kill the industry.

Why not just upgrade publuc transportation making it affordable and secure? It would be a lot cheaper and more comfortable than forcing non compatible communities from having to share the same space? Yet another instance of robbing Peter to pay Paul – nobody wins with ridiculous ideas like this.

Because that means that everyone will get decent transport and sort out most of the problems. The regime and co. need to destroy and no build because they need an excuse to divide during election time and the rich folks are the enemy

Do you want to upset the taxi industry?

@Dayview, yes, that should be the primary objective.

Once again the DA doing it’s best in Johannesburg to undermine property values:

1. Turn a blind eye to squatter camps on the borders of middle class suburbs and on council owned properties.
2. Levying higher rates in areas where residents are contributing to upliftment without investing a cent of those rates.

Where are we going with these new measures? More non-enforcement of bylaws.

Time to buy an apartment in an existing block. Prices of the old stuff is going to rocket.

I understand the rationale but making it compulsory means that gov is trying to get private to do it’s job in terms of making housing available. Why doesn’t the gov take whatever budget is allocated for housing and start a fund where it invests in these developments alongside developers, thereby incentivizing developers to do these sort of goodwill projects. Any profits can be reinvested to do more of this over the long term. I wouldn’t trust a ANC gov to roll something like that out however, if you look at what’s happening at the PIC as a example.

Almost all cities around the world are engineered around the “Apartheid-style” residential concept (…because this concept works well, you see): the ultra expensive inner-city (where commuting time is low) versus the outlying suburbs (cheaper property, but sacrificing more commuting time to business hubs)…and then far out of the cities/towns where cheap living (per m2) is possible on a plot/small-holding. But be prepared to wake up at 4h30am to be on time at work.

Uhm….the filthy rich would certainly NOT entertain the idea of the likes of me (with my out of place cargo-pants shorts & bush-sandals) to wander about and admire the boats in V&A Yacht Club near the Waterfront…hence it’s access controlled with a “member’s only” sign! 😉 To keep me and my ilk out! (Nothing wrong with that)

To have the rich next to the poor in an experimental social design, only made the wealthy to relocate. And society DO NOT want the wealthy to relocate, because WHO is going to make the economy buzz??? Certainly not the poor…they “depend” on the tax collected by the wealthy.

Interestingly, developers are clever….to be able to offer lower-priced residential units for the “less affluent”, they just shrink the size of units. So the “value per sqm” remains the same.

Michael use some of your millions and buy a unit in the V&A – then you can walk around in your Speedo!!!

True Michael and for most of SA, except the derided DA run Cape Town, city centres are the opposite of “ultra expensive” and mostly quite far from “jobs” which are in decentralised areas. So the thinking, in SA anyway, could be archaic?

This shows the commitment that South Africa is making, to alleviate poverty and social class inequality.
A step toward Mandela’s vision of a free and fair South African.

I do not see how mixing the poor in with the rich is going to alleviate poverty. Those individuals will end up paying more in levies etc. for their housing, leaving them even more out of pocket.

There are many other ways to build a free and fair South Africa, but mixing housing units is not the solution.

SA’s inequality is not unique in the world. When one Google-streetview many large South American cities for example, there’s large stretches of shanty-towns on the cities’ outlying hills…looks even scarier than in SA. Poverty even more rife.

Coming back to mixed development: how would the less affluent family benefit financially from living in wealthier nodes?? The poor person’s life can only improve when there’s better salary/income prospects/jobs. In fact, the poor will have it worse in a wealthy suburb….as they’d have to compete with general higher prices of goods/services in such area.

With a R100 note you can “shop until you drop” in Jo’burg CBD, but won’t buy you a meal in Mandela Square, Sandton.

If the cutoff is 20 units, watch and see how many 18 unit complexes spring up. The developers are business people and are looking to make a profit, (which incidentally pays taxes,) as soon as you prescribe to businesses how they should deploy their capital and cap their returns, they will go elsewhere, unless there is some kind of tax incentive to make it worth their while.

While the cause is a worthy one, this implementation will not work. Having decent transport infrastructure will go a long way to alleviating many of the spatial problems in cities.

The need for inclusionary housing is largely due to the failure of the ANC’s housing ministry.

Too much corruption, too much wrong policy but also too many illegal immigrants to house.

Then you read this and wonder why inner city ghettos are the norm in SA’s cities. ttps://www.timeslive.co.za/news/south-africa/2019-02-25-three-dead-including-metro-cop-in-absolute-bloodbath-in-central-durban/

The ANC is just trying to pass the buck as the real solution is just allowing and facilitating for higher density in general and with improved supply the problem sorts itself out.

What may very well happen is less supply.

Next we will be force to reserve a seat in our car for the poor guy, who cant afford a car

A forced integration of people from vastly different income groups , is simply not an effective mechanism to galvanize large scale investment . And large scale property investments is what SA needs for our fast growing population .
Money and therefore people vote with their feet . If they dont like the prospect of forced integration , they simply wont buy in these new style developments .
And that is exactly what will happen , and investment will slow down ,instead of speeding up .
Is it neccesary to force integration ? No of course not , people are free allready to purchase and live where they want to .
Politicians simply dont learn that less regulation , fewer restrictions , less red tape , more tax incentives is what business needs to grow .

quote,
envisages the rich and poor living side by side.

Definition of rich according to brains still wondering why bank VBS did not do the expected.
Definition of poor. Humans locked up zoo like will in the end associate thanks to a feeding scheme of preference and given rights.
In socialism we trust.

Absurd law. The CoJ can pass all it wants of this sort of thing, but it can’t force people to live there.

If I were a millionaire, I for sure wouldn’t want to live in a development where I am guaranteed that 30% of the inhabitants are low income and probably struggling with money.

I guess we can see these developments as “charatcer correction camps”. Whatever high-value individuals buy and live in such a development will have to be hopelessly naive. My guess is that they won’t be, when they finally get out.

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