Tuesday, July 17

Focus on Inclusionary Housing: Policy is not enough to address the issues

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What is needed are clear objectives and targets

Inclusionary housing – a scheme to include affordable units within new developments – is a critical and intensely debated issue in Cape Town. However, stakeholders are realising, after some failed attempts, there is no one-size-fits-all solution.

Experts say while there are policies in place, these alone are not good enough. They warn that unless pivotal matters – relating to the supply of housing that is affordable for low-to-moderate-income residents within developments – are addressed, it will never become a reality.

Patricia de Lille, talking at a Cape Times breakfast earlier this week, touted inclusionary housing as a first for the country and as one of the ways to help address apartheid spatial planning. Stumbling blocks, she said, were to be expected as the city grappled with how best to take on this model.

Rashiq Fataar, founder of independent think-tank Future Cape Town, believes what is needed for the scheme to succeed are:
* Clear objectives and targets.
* Priority status given to innovative pilot projects in the inclusionary housing space. 
* Regular co-operation and collaboration between all role players, including local government, developers, designers, banks and communities.

The City of Cape Town has acknowledged that the “dire need” for housing for the city’s most vulnerable households is the biggest challenge it is facing, and arose from apartheid spatial planning that consigned the majority of Capetonians to settlements far from work opportunities. Added to this there was little or no investment made to stimulate economic activity in these areas.

In 2017, as a means to address the issue, the City earmarked five sites in the city centre for a mixture of affordable housing development. It is also developing a strategy for the provision of housing opportunities in smaller inner-cities.

Read: Other hurdles currently hampering delivery

           Developer incentives must be ‘adequate’ to mitigate risk

           Innovative pilot projects should be prioritised and fast-tracked

But while the intentions may be honourable, Fataar believes the focus of inclusionary housing has been wrong.

He says mechanisms to increase, and supply, this housing across diverse income brackets is needed. An inclusionary housing policy alone is not going to achieve delivery of affordable housing by the private sector in well-located areas, he says.

“While policy is essential, it does not deliver units on the ground within a defined period of time.

“Inclusionary housing policies should not necessarily focus on prescribing minimum percentages of affordable housing units to be included in developments, such as 20%, as these percentages are often arbitrary and may be unrealistic, depending on the project. There is no one-size-fits-all solution.”

Deon van Zyl, chairman of the Western Cape Property Development Forum (WCPDF) and director of Al&A, a local development and project management company, says the debate in Cape Town should be about provision of affordable accommodation for people who do not earn enough to access conventional housing opportunities but do contribute to the economy, and breaking down the historic apartheid legacy of urban planning that remains entrenched to this day.

“Local authorities are grappling to define their own roles in addressing these two debates.”

Property economist Erwin Rode, of Rode & Associates, says the purpose of an inclusionary housing programme is to increase the number of units built for low-income categories, and promote the integration of socio-economic classes. In its attempts to do that, the City of Johannesburg has proposed a policy which will compel developers to provide a minimum of 20% low- and middle-income housing units in each new residential development.

The 80:20 housing development concept sees developers:
1. Unlock potential bulk on existing sites;
2.  Add 20% more apartments (these will fall under the more affordable houses) to the original scheme;
3. The planning and building costs, among others, of this 20% will now be subsidised by the now 80% of the total development.

Fataar says: “Rather than waiting on the formulation of a perfect policy, we need to lead with pilot projects and learn from projects that go beyond business-as-usual and feed these learnings into our policies.”

Blok’s 80:20 inclusionary housing model, Forty on L, is currently being piloted in Cape Town. Managing director Jacques van Embden believes it could provide a “groundbreaking template for future inclusive development in the city”.

However, he says it is important to note the company’s model is based on the perceived needs of the local market and therefore primarily caters for the middle-income market.

Developers, says Emden, have a role to play in contributing towards a more integrated, diverse, and sustainable development trajectory.

Blok’s Forty on L development initially planned to provide urban apartments for the middle-income market using the 80:20 model. However, following extensive consultation with industry professionals and feedback from stakeholders, this was amended to a “one-for-one”basis, which means that for every square metre of inclusionary housing added, the developer can add a square metre to the original scheme.

The City of Cape Town’s Brett Herron, mayoral committee member for Transport and Urban Development, says there is an obligation on the City and on the private sector to ensure the inner-city and other CBDs are accessible and affordable to those still living on the periphery. 

‘Affordability’ definition should differ from city to city

A hurdle to the success of inclusionary housing delivery is the definition of “affordability”, which Future Cape Town’s Rashiq Fataar says needs to be refined.

“A blanket definition of affordable housing tends to be used but this definition does not reflect the price gradient of housing across cities.

“We need to define affordability in relation to the median income of an area as well as the median value per square metre. We cannot continue using the same low base for affordability for every area in a city.”

To illustrate this, he explains: “What do we mean by affordable housing in well-located areas like the Cape Town CBD? While costs and interest rates increase per annum, no review is being done each year that broadens the classification of income bands in need of some form of assistance, be it through the public or private sector.

“We also need to acknowledge that cities in South Africa are different; for example, land is much more expensive in Cape Town than other cities in South Africa, which has a significant bearing on levels of affordability.” 

The City of Johannesburg defines “low-middle” as household incomes of less than R7 000 a month. Its inclusionary housing proposal stipulates that rentals, including levies, but excluding utility bills, like electricity, may not exceed R2 100 a month. The ceiling of R2 100 is based on 30% of a household income of R7 000.

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