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Blanket inclusionary housing policy ‘unworkable’

Sapoa opposes Joburg’s mandatory scheme.
Various factors relating to the residential housing market have not been taken into account in the draft policy, the SA Property Association says. Picture: Shutterstock

The City of Joburg’s proposal to compel private developers of residential complexes to reserve 20% of developments with more than ten units for “inclusionary housing” could deter the private sector from developing residential units, the South African Property Association (Sapoa) says.

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

The organisation issued a statement about the proposed city policy which would cap the rental income from such units. Sapoa will also formally submit its comments before the deadline on April 30.

Moneyweb earlier reported that property expert Erwin Rode also warned agains the unintended consequences of the scheme.

According to Sapoa CEO Neil Gopal the draft policy does not address the complex matters associated with affordable housing and inclusionary housing, including residential market realities, or what the financial and social consequences may be for introducing such a policy.

In terms of the draft policy the inclusionary units should provide rental accommodation for households with a total income of R7 000 or less per month if privately managed or should fit into published social housing bands.

Sapoa says if implemented, the scheme may impact the feasibility of residential developments and is potentially burdensome to private developers experiencing declining returns and profit margins.

An inclusionary housing obligation that does not take into account the prevalent economic conditions and health of the residential property market could negatively impact on housing delivery, Sapoa says.

“Affordability requirements thus influence the feasibility of inclusionary projects from a developer’s viewpoint,” the organisation says.

“In addition, the city is proposing an income range (monthly household income of R7 000 and less) that is fixed for the entire city, which, according to Sapoa, does not consider the spatial fluctuations in land costs. With the implementation of inclusionary housing, this fixed affordability income threshold may open private developers in certain areas to revenue loss and risk.

“The draft policy states that any residential development of ten or more units is subject to inclusionary housing requirements. However, research suggests that the scale of developments substantially influences the feasibility of including affordable rental units. Based on the decreased feasibility of inclusionary housing provision and management of units in smaller residential developments, the addition of developments consisting of ten or more units in the framework of inclusionary housing may prove challenging to successfully implement.

“In terms of potential social impacts, the proposed inclusionary housing policy may isolate low-income households in high-income, market-related developments, with inadequate access to affordable social facilities. This is in addition to the challenges related to cross-subsidisation among housing consumers. The capacity of the City of Johannesburg to monitor mandatory compliance of private developers in this regard (including rent control and tenants suitable to delineated income thresholds) is an additional concern in determining the success of the envisioned inclusionary housing policy.

Sapoa criticises the fact that incentives are limited to the inclusionary units and says this has little cost-reduction effect for the developer. “To incentivise the developer, one would expect the inclusionary units to be entirely or largely free from any contributions,” Sapoa says.

The organisation makes the following recommendations:

  • A negotiated rather than mandatory blanket approach to the provision for inclusionary housing as well as incentives;
  • The obligation should be limited to selected, larger developments where the scale supports the inclusion of units for low-income households in a feasible manner;
  • The requirements should be flexible, taking into account economic and residential market conditions;
  • The affordability threshold should be flexible according to location and cater for a wider income range to ensure smaller income differences between market and affordable units, to mitigate potential loss to the developer.

Sapoa says it “does not believe that the draft policy is a workable solution and may, in its current form, possibly deter the private sector from developing residential units.”

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Oh, but it would be SO much more convenient if the au pair and domestic and gardener and drivers could live on the property and stop blaming those blasted taxis and trains for arriving late! But REALY, must they have access to the clubhouse with its indoor pool, gym and the bar?

This is exactly what will happen. The store room becomes domestic quarters (again) and the body corporate does its patriarchal duty in the name of God… Heaven help us.

Pretty dumb. All it will do is debase the value of the high-end housing. These units will sell for less which will mean that they will end up being all too similar to the ‘inclusionary housing’ as the developers will never get a return on a high value property given the location. If the DA believes that they will get affluent folks to live with upgraded erstwhile squatters they are delusional. People are smarter than that. This will put upward pressure on existing high end housing which will encourage smart high earners to gap it elsewhere. More social engineering doomed to fail.

This idea is naive in the extreme. But have at it, DA, have at it. You’ve lost my vote a long time ago anyway.

I know the DA is desperate for black votes, but just remember, the black middle class (who should be your target) most certainly will not be keen on this idea, either.

DA/ANC….two sides of the same coin

#DAxit 2019

Equality of outcome, post-modernist, neo-Marxist, social justice swine.

…..oh and as an extra no cost benefit this unit comes with its own neighbourhood slum!

The trend is in the opposite direction. The law of unintended consequences has the effect that the socialist ANC policies are driving communities further apart. The idea of “inclusionary housing” was the status quo in farming communities until new socialist legislation forced farmers to move workers off the farm. New labour laws and security of tenure laws are effectively driving farm workers off the farms into squatter camps. The road to hell is paved with good intention. The one with the money never runs out of plans, that is how he came to the money in the first place. This is why a socialist government is eventually forced to embrace communism. Those citizens who own assets are always one step ahead to adapt to socialist policies.

“I cannot possibly understand how fraternity can be legally enforced without liberty being legally destroyed…”
― Frédéric Bastiat, The Law

The DA led Joburg has tried hard to do better than the ANC – but this idea has to be the worst for a good while. What are they thinking ??? I cannot believe that a rational human being would think that this is a good idea.
The Municipal brains trust should rather focus on keeping squatters out of the suburbs.

Actually, contrary to perception, the DA actually encourage squatters.

In Cape Town the DA provide clinics, housing, electricity, water, refuse/sewerage services and what is left of the water supply…..all basically for free….

So the squatters go wherever the DA run the show…. squatters don’t want to live in ANC-run cities

So don’t vote DA just because you perceive that they will keep your areas “as they are”

#DAxit 2019

Would advise the CoJ use MONACO as a study guide: consult their city management to enquire about their “inclusive housing” schemes in that principality, and how it is done abroad. Learn from other cities’ mistakes.

If it works for Monaco, it will work in JHB.

(…but in Monaco such social engineering schemes are non-existent, as I can’t find any mention of it). If you google the words “Monaco inclusive housing”, my PC crashes!

Hahaha Monaco with JHB really?

Well it is funny and entertaining to see the capitalists scream murder at this.

Surely, logical since many made their money in property in SA and property developers are such a ‘genius’ class of entrepreneurs, mostly riding the bloated self-serving financial industry with missallocation of dead rent seeking capital..the sector dearly needs some regulation.

.

Sad: The DA is pandering to EFF, proposing anti-rich regulation instead of being anti-poverty.

Perhaps those in Council wo wish to dictate rather than to serve should:
1 Enforce existing municipal by-laws before adding more, that will be impossible to police.
2 Demonstrate that they know what they are doing by making the traffic lights work (the previous administration did not seem to have heard of water-proofing) and synchronise them so that the millions of ZARs in foreign exchange literally going up in smoke from idling cards at unsynchronised lights could be saved.

Don’t hold your breath….the traffic lights in DA-run CT are guaranteed to be red at every interection on most roads…

End of comments.

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