Social housing is essential, but should it be rental-only?
Housing: Leeuloop Precinct Development in Cape Town, along with two other proposed mixed-use projects, will provide much needed affordable rental accommodation in the innter city. Photo: Supplied
Protesting for social housing across South Africa has been a long-standing, contentious issue. I recently wrote about the first inner-city affordable housing development announced by the Western Cape government in Cape Town's city centre.
The Leeuloop Precinct Development will have about 840 residential units and consist of two towers on a 3 000m2 erf owned by the city. The towers will have 18 to 20 storeys with retail on the ground floor.
Tower One will consist of 490 open market units, while Tower Two will have about 350 social housing units.
Funding for this project is a mix between private and public. Completion of this project is expected to be in 2027-28.
As far as sustainability goes, the plan is to have a four star green building, and level one (construction waste) net zero carbon certification from the Green Building Council of South Africa.
Leeuloop is one of three mixed-use developments that will tackle the issue of affordable housing in Cape Town. The other two are Founders Garden and Prestwich Precinct.
With more than 7 000 apartments and 3 300 businesses in the inner city, these developments, with an almost 50/50 split of social housing units, should make quite an impact.
This got me thinking about a thought-provoking question I was recently asked: 'What's your opinion on the fact that social housing is rental only?'
It's a simple question on the surface, but the answer digs deep into issues of policy, economics, empowerment and our country's painful history of inequality. It brings into sharp focus the delicate balance between accessibility and opportunity, between preservation and progression.
First things first: social housing in South Africa is intentionally rental-based. It's part of the policy framework designed to address a huge and ongoing housing shortage for low- to middle-income households.
People who qualify for social housing subsidies live in households that earn R3 000 to R22 000 a month. They are too 'rich' to qualify for RDP housing but are not earning enough to qualify for bonds in the traditional property market. This group has long been squeezed out of ownership opportunities and quality rentals. Social housing aims to fill that gap, providing safe, dignified, well-located accommodation at below-market rentals.
And here's the key: if these units were made available for purchase, they'd probably be flipped. Imagine someone buys a unit at a subsidised rate, holds it for a short period and then sells it at market value. This is great for the seller, but it's not so for the next buyer, who now has to fork out more for what was meant to be an affordable unit. Especially in areas such as Cape Town's inner city, where property prices offer potential capital growth and promising yields that will soar far beyond the stipulated social housing rates.
This is what's known as the 'honeymoon period problem'. Ownership might be the dream, but without strong controls in place, it opens the door to speculation and profit-making. Before long, what was meant to serve the working class becomes unaffordable again.
We have also observed that when people receive their RDP houses, many choose not to move in. Instead, they live in more affordable accommodations and rent out the property.
I don't have an issue with this entrepreneurial approach to creating an income stream — the money is still circulating in the South African economy — but I do have concerns about this flaw in the RDP housing system.
So, yes, when it comes to social housing, rental-only keeps the asset in the social housing ecosystem. It ensures long-term affordability. It allows the units to cycle through tenants who need them, instead of disappearing into private hands.
But here's the catch.
Ownership equals empowerment. As much as I understand the logic behind rental-only housing, I can't ignore what ownership represents, especially in South Africa.
It is still one of the most powerful tools for wealth creation. It allows people to build equity, borrow against their assets, and leave something behind for the next generation. It's also psychological. Owning property gives people a sense of stability, control and dignity that renting doesn't always offer.
And, more importantly, it helps people move out of the social housing system. If we want social housing to be transitional and not permanent, we need to give people a pathway to progress. That path usually includes ownership.
So now we've got a problem: on one hand, we need to protect affordable stock. On the other, we need to create a system that doesn't just house people, but also uplifts them.
Is there a middle ground? Yes, this doesn't have to be an 'either-or' debate, but it's tricky. What we need is a tiered model — a more nuanced approach that accommodates both access and advancement.
Over the years, I have familiarised myself with a few ideas that have been floated in policy circles, and that I believe deserve more airtime.
Rent-to-buy schemes allow tenants to rent a unit for a fixed number of years, with the option to buy after that period, often at a discounted rate. This gives them time to build financial stability while creating a clear pathway to ownership.
Then there is the shared equity ownership model. This is when a housing institution retains part ownership of the property, while the resident buys a share. This limits resale profits and keeps the unit partially in the public domain, while still allowing residents to build some equity.
We could also look at the concept of capping resale prices. This solution is slightly more controversial, but worth exploring. Some developments internationally allow owners to sell — but only at a capped return (linked to inflation or a fixed formula). That way, people benefit from ownership, but can't exploit the system.
Last, maybe the core of social housing stock stays rental-only, but adjacent units or pilot schemes within a development are made available for sale under stricter rules. Essentially, this would be ownership of non-core units. This creates a dual system that caters to both short-term needs and long-term growth.
The goal with social housing should always be to give people the tools to move forward, not to keep them stuck in a system that only meets their basic needs.
We have to think long-term when it comes to social housing. We have to find ways to protect affordability and create opportunity, to keep the public good intact, and to support private growth. It's not easy, but it's not impossible either.
I understand why social housing is rental-only. It makes sense. But we also need to keep asking the tough questions: are we just housing people, or are we helping them build a future? If it's the latter, then ownership — even if limited, delayed or carefully managed — has to be part of the conversation.
Because real transformation isn't just about where people live, it's about what they can build from there.
Ask Ash examines South Africa's property, architecture and living spaces. Continue the conversation with her on email (
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Herald
4 hours ago
- The Herald
FAIS ombud upholds complaint against Luvuyo Burial and Consulting
The office of the ombud for financial services providers has issued a determination in favour of Pumelele Mantingani after financial services provider Luvuyo Burial and Consulting failed to honour a funeral policy claim. Luvuyo Burial's failure to honour the claim has also resulted in its licence as a financial services provider being suspended by the Financial Sector Conduct Authority (FSCA). Mantingani, who took out a funeral policy with the company in September 2020, lodged a complaint with the ombud's office on October 28 last year after Luvuyo Burial and Consulting failed to honour a valid claim after the death of her uncle, Mbuyeni Katshi, on July 17 2024. Mantingani submitted her claim on July 27 2024. Luvuyo Burial and Consulting, based in Khayelitsha, Cape Town, acknowledged the claim and committed to payment, but only partially honoured the obligation, paying R5,000 of the R10,000 due. Despite further assurances, the balance remains unpaid. Numerous attempts were made by the ombud to resolve the matter amicably. Though Luvuto Burial undertook on more than one occasion to settle the outstanding balance, it failed to do so. During the investigation, it also came to light that Luvuyo Burial was operating without an underwriter, raising serious concerns regarding its compliance with regulatory requirements. In assessing the evidence, the office found that the policy was valid and that the deceased was listed as an insured life. However, Luvuyo failed to act in accordance with the policyholder protection rules, which require that: 'An insurer must, within two business days after all required documents in respect of a claim under a microinsurance policy or a funeral policy have been received, assess and make a decision whether the claim submitted is valid, and authorise payment of the claim, repudiate the claim or dispute the claim and notify the claimant of the dispute.' The ombud said the company's failure to process the claim appropriately reflected noncompliance with treating customers fairly outcome 6, which states that 'customers do not face unreasonable post-sale barriers when they want to change a product, switch providers, submit a claim or make a complaint'. As a result, the ombud upheld the complaint and ordered that Luvuyo Burial and Consulting pay the complainant the outstanding balance of R5,000 with interest at a rate of 11.25% per annum from the date of the determination until the date of final payment. 'Given the respondent's failure to comply with regulatory requirements, a copy of this determination was referred to the FSCA for its attention and possible enforcement action. 'As a result, the respondent's licence as a financial services provider was suspended by the FSCA on April 14,' the ombud said. TimesLIVE
The Herald
4 hours ago
- The Herald
Store account add-ons, ‘lack of due care' car claims among top disputes for consumers
The life division of the NFO finalised 5,977 cases in 2024. The total amount recovered was R202.8m. Denise Gabriels, lead ombud: life division, said funeral benefits remained the product most complained about, accounting for 45% of complaints. The most common causes for complaints were claims being declined; at 56%; followed by poor service or administration, at 34%. Of the five life insurance companies that received the most complaints: 628 formal cases were opened against Old Mutual Life Assurance Company, representing 18% of all complaints opened; Liberty Group Limited had 399 formal cases opened, representing 11%; Hollard Life Insurance Company had 259 cases, representing 7%; Metropolitan Life had 216 cases; and Sanlam Life Insurance Ltd had 188 cases opened. Credit The credit division of the NFO successfully closed 2,040 cases, achieving positive outcomes for complainants in 49% of cases. This resulted in financial redress totalling R2.35m. The highest number of cases were opened with: the Retail Credit Solutions (RCS) Group, which had the highest number of cases opened, totalling 243, representing 17% of all cases opened; Opco 365 had 133 cases opened, representing 9% of all cases opened; Edcon Limited had 126 cases opened, 9% of all cases opened; and DMC Debt Management had 121 cases opened, 9% of all cases opened. Findings in favour of complainants totalled 44%. Howard Gabriels, lead ombud: credit division, said two matters that stood out with a number of retailers for their systemic impact during the reporting period were: value-added services (VAS); and minimum payment calculations. 'A serious concern emerged regarding the application of payments on credit accounts where VAS charges (such as airtime or insurance add-ons) were not considered in determining the minimum monthly payments,' he said.
Mail & Guardian
6 hours ago
- Mail & Guardian
Loan company exploited social grant beneficiaries, high court rules
The high court in Johannesburg has ruled against JDG Trading. Illustration: Lisa Nelson The high court in Johannesburg has declared that it is unreasonable to offer social grant beneficiaries insurance for disability and retrenchment if they are already disabled or unemployed. An insurance product offered by credit provider JDG Trading included cover for disability and retrenchment. But disabled and unemployed clients, mostly social grant beneficiaries, would never be able to make a claim for disability or retrenchment. The court ruled recently that this exploited social grant beneficiaries who took out loans from JDG Trading and infringed on their constitutional right to social assistance. JDG Trading offers loans to social grant beneficiaries for household goods and furniture. Customers are required to insure the loans, and can purchase insurance from JDG Trading directly or another provider. Because JDG Trading's insurance bundle included cover for disability and retrenchment, and many of its clients are already disabled or unemployed, the National Credit Regulator took JDG to the National Credit Tribunal, arguing that the insurance policy was unreasonable and against the National Credit Act. The National Credit Tribunal ruled in favour of JDG and the regulator — whose mandate is to promote and support the development of a fair, transparent, competitive, sustainable, responsible, efficient and effective consumer credit market — then took the matter to the high court. The regulator argued in court that by offering cover for retrenchment and disability to unemployed or disabled people, JDG made customers assume a risk that was unreasonable. JDG was using these customers, who could not fully benefit from the policy, to subsidise others who could, the regulator argued. Rights group Black Sash, represented by the Centre for Applied Legal Studies, joined as a friend of the court. It argued that the insurance policy particularly affected social grant beneficiaries and therefore infringed on the constitutional right of access to social security and social assistance. Black Sash submitted expert evidence from an actuary to demonstrate the impact on customers. But JDG Trading argued that its policy was not unreasonable because consumers were not obliged to sign up for its insurance and were free to obtain the insurance elsewhere. JDG Trading argued that the regulator and Black Sash had taken a 'paternalistic approach' and failed to provide any evidence of consumers who misunderstood the policy's provisions at the time they signed up or had been deceived. It said its product was affordable and convenient, thereby enabling greater access to credit. Johannesburg high court judges Shaida Mohamed and Khashane Manamela agreed with Black Sash and the regulator that the policy was unreasonable. The consumers in this case belonged to a marginalised group who are dependent on social grants for their existence, the judges said. Because the insurance policy was offered to the consumer at the point of sale it was unlikely they had time to consider it properly. JDG Trading had conceded that this class of consumers could never have made use of the policy and therefore it was clear they were cross-subsidising younger consumers who could benefit from the policy. Pensioners would not knowingly sign up for a disadvantageous policy, the judges said. There was no option to exclude the disability or retrenchment cover from the bundle. By placing an unfair burden on a vulnerable segment of society, the insurance product was at odds with the goals of the National Credit Act, which aimed to make credit more accessible and combat inequitable and discriminatory practices to this end, the court said. The appeal was therefore upheld with each party to pay their own costs. This story was first published by .
