Banks boost for low-cost housing
Shaun Benton
9 February 2006
South African banks could soon make available R42-billion in bonds for low-cost housing.
The government began negotiating with members of the Banking Association in 2005, and hopes to see the release of the funds that would see South Africa's poorer communities absorbed into the housing market shortly, Housing Minister Lindiwe Sisulu told a media briefing in Cape Town on Tuesday.
The current hold-up is because of the guarantees that the banks want from government over bonds for affordable housing, Sisulu said.
The government is refusing to offer any guarantees in the event of non-payment of a housing bond or loan, and is insisting that banks and financial institutions assume the risk of their business activities.
The banks have been calling on the government to guarantee their risk and to mitigate any loss of funds in cases where owners have defaulted on their bonds.
This is the major sticking point in the negotiations, said
Sisulu, adding that the government was in negotiations with the banks on "how to push this forward".
'Revitalisation'
In an interview with BuaNews, the head of media services in the housing ministry, Ndivhuwo Mabaya, said: "We also believe that the majority of our people, given enough consumer education on the value of a housing asset, as well as necessary financial support, have the ability to pay their own bonds."
The government is, however, willing, to assist first-time homeowners with a once-off first homeowner subsidy, said Mabaya. This will be a once-off subsidy, based on the income of the applicant, and will constitute a percentage of their approved bond by the bank.
This would go some way to ensuring that home-owners can afford bond repayments and banks can sell bonds to more and more people, he said.
The release of the R42-billion set aside by the banks for lower-income housing "will contribute to the revitalisation
of the secondary housing market - mostly in townships - and broaden access to houses for the majority of the people", he said.
'Without delay'
President Thabo Mbeki said in his 2006 State of the Nation Address that he expected a final agreement on the modalities for using the R42-billion set aside by financial institutions "without further delay".
Final agreement on this, he said, would contribute to the "national effort" that he urged all South Africans to work towards in a bid to achieve the 6 percent GDP growth needed to halve poverty and unemployment by 2014.
Saying that the years of freedom in South Africa have been good for business, the President in the State of the Nation Address said that, "in its own interest and as part of the national effort, [the investor community] has to invest in the expansion of that freedom."
Source: BuaNews
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