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ADD NAME/TITLE HERE NATIONAL UPDATE HOUSING CO-OPERATIVES

Contents • Purpose • Social Housing Act 16 of 2008 • Role of Co-ops • Plan of Action • Engagement up to now • Way forward 8/26/2014 SHRA/Co-ops 2

To update the Portfolio Committee on the Department’s support towards implementation of a sustainable co-operatives model.

Social Housing Act 16 of 2008 • Co-ops are explicitly mentioned in the Social Housing Act as follows:- • Chapter 1 : definitions • "social housing" means a rental or co-operative housing option for low to medium income households at a level of scale and built form which requires institutionalised management and which is provided by social housing institutions or other delivery agents in approved projects in designated restructuring zones with the benefit of public funding as contemplated in this Act; • (5) Subject to any conditions prescribed by the Minister, a social housing institution must be a company registered under the Companies Act. 1973 (Act No. 61 of 1973), or a co-operative registered under the Co-operatives Act, 2005 (Act No. 14 of 2005)or any other form of institution acceptable to the Regulatory Authority. 8/26/2014 SHRA/Co-ops 4

Role of Co-ops • Regarded as a valid delivery agent for social housing. • Must subscribe to the same requirements as that of Social Housing Institutions. • Must be accredited • Must acquire, develop and manage social housing stock • Must fulfil all reporting requirements • Will be subject to regulations • Must reinvest operational surpluses into new social housing projects 8/26/2014 SHRA/Co-ops 5

Plan of Action • Extract from SHRA Business Plan 2011/12:- 8/26/2014 SHRA/Co-ops 6

Engagement up to now • Met with SAHCA (South African Housing Co-op Association) on 9th June 2011. It was acknowledged that the traditional European model of housing co-ops did not work well in SA. We need an African housing co-op model. • Advised of the formation of the Gauteng Housing Secondary Co-operative (GHSC). This entity will own the property and provide support to primary co-ops who will develop and manage the stock. This will be used as a pilot. • It is proposed that SHRA and SAHCA will sign an agreement that sets out the parameters of the partnership. • GHSC will submit its Business Plan to SHRA for consideration. They have also applied for establishment grant to set up the organisation. • SHRA was also advised of the Housing Co-op Seminar in Istanbul scheduled for the end of June 2011. 8/26/2014 SHRA/Co-ops 7

Engagement up to now • A brief overview of the model is as follows:- 8/26/2014 SHRA/Co-ops 8

Way Forward • Draft and conclude agreement between SHRA/SAHCA • Give consideration to GHSC request for establishment grant. • Give consideration to GHSC Business Plan and proposed projects. • Collaborate with Gauteng Dept of LG and Human Settlements to facilitate the establishment, development, growth and graduation of GHSC. • Establish a working model for the country. 8/26/2014 SHRA/Co-ops 9

SHRA • SHRA High-level Process 8/26/2014 SHRA/Co-ops 10

Definitions • Social Housing:- • A rental1 or co-operative housing option for low income2 households at a level of scale and built form which requires institutionalised3 management and which is provided by accredited social housing institutions4 or other delivery agents5 delivering approved projects6 in designated restructuring zones7 with the benefit of public funds8 8/26/2014 SHRA/Co-ops 11

Definitions • 1: Rent in perpetuity (not rent-to-buy/own). Public Asset. Large state investment. • 2: Income levels: R1500 – R7500. Rentals = 30% of income = R450 – R2250 (in practise = R2500/R800) • 3: No individual ownership • 4: SHI’s = Section 21NPO’s. No distribution of dividend of profit after tax. • 5: Other delivery agents = private sector, PPP’s Co-ops, developers, mining houses • 6: approved/accredited projects separate from accredited SHI’s • 7: Restructuring Zones (economic, spatial and social integration) – PRZ’s pre-determined • 8: State subsidisation = 60-65%. 35% gearing 8/26/2014 SHRA/Co-ops 12

Traditional Roles • Looking at PPP opportunities • Large-scale developers • Other funders • Private Sector : 10% equity contribution • Accreditation of projects • Alternate building material and methodology • Green buildings + energy efficiency 8/26/2014 SHRA/Co-ops 13

Funding • Funding for Social Housing is a mix of government subsidies and debt. 8/26/2014 SHRA/Co-ops 14

Funding 8/26/2014 SHRA/Co-ops 15

Regulations • As long as state subsidy is used, subject to regulation. • Must submit annual business plans, lease documents, reports. • Must be open to inspection, conducting of socio-economic surveys • SHRA can intervene if project is mismanaged (liquidation, curatorship, scrapping of board etc.) • Must remain rental stock, even if sold • Must always cater for the relevant income groups. 8/26/2014 SHRA/Co-ops 16

Exit • Cannot be sold for 15 yrs. • Any sale before 15 yrs will result in penalty payments (pro-rata repayment of state portion). • Any sale must be cleared with SHRA first. • Condition of sale will be that it remains rental catering for the relevant income group. • Will be subject to regulation in perpetuity unless confirmed otherwise. • Meaningful tenant participation is necessary. 8/26/2014 SHRA/Co-ops 17

THANK YOU!

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