With a backlog of 600,000 housing units and the state providing only 2,500 per year, the private sector has a role to play
- The City of Cape Town has a huge housing backlog and the legacy of apartheid spatial planning.
- Over the past five years, the municipality has begun to take steps to address the housing crisis through the private sector.
- But researchers say more can be done to facilitate the development of affordable, well-located housing.
Although Cape Town can rightly claim leading municipality In the provision of state-funded housing, there is a housing crisis. According to Mayor Jordyn Hill-Lewis the city is lacking approximately 600,000 homes. Meanwhile, an average of less than 2,500 state-funded homes have been handed over every year over the past five years.
Migration alone is increasing the population of the Western Cape by almost 180,000 people per year, most of whom settle in Cape Town. And with millions of rands budget cuts In a province maintained by the National Department of Human Settlement, there is no prospect that state-funded housing will ease the growing pressure.
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Meanwhile, less than 11,000 new dwellings were completed by the private sector in the Western Cape province last year, According to StatsSA.
Without addressing new demand, if all private sector homes were just built in Cape Town and combined with state-funded housing, it would still take 45 years to clear the existing backlog.
With demand exceeding supply, this is the situation in Cape Town highest property prices In South Africa. average listing price Last year in Cape Town it was R2.7 million for a two-bedroom unit, and R2.2 million for a one-bedroom unit.
According to a standard bond calculator, an income of R72,000 per month is required to fully bond a property worth R2.2 million. still 2024 Cape Town City Household Survey shows that only 6.5% of Cape Town households earn more than R51,201 per month, and almost 70% of households earn between R1,601 and R25,600 per month.
liberating city land
After years of housing activism, the City of Cape Town is now pushing for more affordable housing on land that is not on the outer fringes of the city.
In 2017, following the release of the Affordable Housing Prospectus for Woodstock, Salt River and the Inner-City, the municipality announced the sale of 11 land parcels for social and mixed-income housing. These include Pine Road, Dillon Lane and Pickwick Road, Salt River Market and Maitland Mews in Woodstock. As far as GroundUp is aware, only Maitland Mews is rented, with not a single brick laid at any of the other sites yet.
In 2022, the Mayor made the release of municipal land for affordable housing a priority program. More sites have been released, such as the Fruit and Veg site on Rowland Street.
June 1, 2023 report Notes that releasing vacant and under-utilized public land at a discounted price to developers to build social and mixed-income housing “offers great potential for urban inclusion”. Such units are rented rather than sold, and they remain affordable for future generations of eligible families.
The municipality has also put properties that have been packed and ready for development up for tender to private developers to build affordable housing this month. However, these are in Blue Downs and Atlantis, far from the city center and do not address the legacy of apartheid spatial planning.
Somewhat better located land in Ottery, Lansdowne and Brackenfell was also put to tender in January for affordable housing development.
The municipality is also conducting an auction 50 sites this weekBut there is no provision for affordable housing. Some of these, such as the Good Hope Centre, will become prime sites for well-located affordable housing. Due to this, protests have started against the sale of land.
Zoning
“In the Cape Town context, the private sector has an important role in the provision of affordable housing, both through state-subsidized housing programs and private development,” UCT graduate Sophia V. Meynell Briel said in her 2022 postgraduate dissertation in city and regional planning.
He argued that municipalities need to provide both regulation and incentives for the private sector to step in and provide affordable housing.
One regulatory mechanism is inclusionary zoning. This is a form of land regulation which, as the City states in its Inclusionary Housing Concept Document, “requires large new developments to make some contribution to the provision of affordable housing, usually in cases where developers are applying for additional rights of way”.
Developers must include housing units that are affordable for low- and moderate-income families within the development, provide affordable housing nearby or on a suitable site, or contribute fees to invest in social housing or affordable housing developments.
But the City of Cape Town has not yet finalized it inclusive housing policyThe idea was conceived nine years ago. The municipality did not respond to GroundUp's questions on when it would be finalized.
red ribbon
While the inclusive housing policy remains on the back burner and the municipality auctions well-located land, changes have been made in the town planning by-laws recently to ease the housing crisis.
Meco member for spatial planning and environment Eddie Andrews said the change had made it “easier to build and develop in the city”. He said this would help densification, including mixed-use development, in “appropriate locations”.
He said one of the changes is an incentive overlay zone for development in Athlone, Maitland, Paroo/Elsie River, Bellville and Deep River. The overlay zone eliminates land use applications, so only building plans are required, saving time and costs.
Properties within the overlay zone get additional development rights for increased height, number of storeys, area of the property on which construction can be done, smaller setbacks from the road and adjacent properties and “additional use rights”.
Andrews said the city has also allowed property owners to develop affordable rental flats as an additional use right in selected areas. He said it “encourages micro and small developers to invest in areas where demand for affordable rental housing is highest”.
The areas where these additional use rights apply are mostly those where state-funded housing has been built and where household incomes are in the low to middle range.
For example, the owner of an RDP home in Dunoon can now legally build up to 12 flats if the property has two storeys or a larger property can now build eight flats.
Andrews said, “This form of housing delivery contributes to creating a vibrant township economy driven by people's own enterprise, ingenuity and investment and generates significant income for poor homeowners who bring their property assets into productive use.”
However, these micro developments are still subject to development fees to upgrade or maintain infrastructure such as sewers and stormwater pipes.
Andrews said a “third housing right” was also approved as an amendment to the by-law in 2019. This means that property owners can build up to three separate residences on their property (for example the main house and two “granny flats”) without obtaining prior permission from the city or neighbors.
Incentive
Michael Clarke, urban land researcher at Development Action Group, says the city can still offer a number of financial and regulatory incentives to increase the provision of affordable housing.
Financial incentives include waiving development fees paid by developers, and waiving or reducing planning and construction fees. Municipalities may offer rate discounts and service charge subsidies, particularly in housing developments to those who qualify for the poor grant.
On the regulatory side, Clark said, there are town planning assistance incentives where planning approvals, rezoning applications, geotechnical studies and increased bulk infrastructure approvals can be fast-tracked, as these take a lot of time, which impacts the profitability of development.
Reducing or removing parking requirements, especially for developments near public transportation hubs, would also allow developers to build more apartments, so they can maintain their return on investment but offer their apartments at lower prices because they can build more units.
He said the city could also give height and density bonuses to developers to enable them to build more apartments in the same complex.
In exchange for these incentives, which reduce capital costs for the developer, the municipality can insist on making inclusionary housing part of the development.
He said the municipality is already doing some of this work.
Clarke said Stellenbosch has approved its inclusionary housing policy and has since approved at least 900 inclusionary housing units, of which 114 have already been developed.
The Garden Route District Municipality has developed a draft policy on both financial and regulatory incentives, “so people are really thinking about this,” he said.