The state subsidises social housing in order to ensure provision of rental housing of exceptional quality, at affordable rentals in well located areas. This is done through capital grant funding called the Consolidated Capital Grant (CCG). The average cost of construction is R426 000 per unit (including land and bulk services) and the current quantum that the SHRA administers is R265 000 per unit. The grant applicant must provide the remainder of the cost through loan funding and provision of equity of which ODAs are required to provide 10% of equity.
The SHRA will only consider project applications that adhere to the investment criteria and are located in certain urban areas named restructuring zones. These are geographic areas identified by local authorities and supported by provincial government for targeted, focused investment.
The ideal social housing project is one that aims to restructure cities by providing low to medium income households with housing opportunities in well serviced areas of high economic activity. Investment in social housing projects is also targeted in urban areas that require revitalisation. It is hoped that this state investment will act as a catalyst for private sector investment therefore the overall aim of the social housing programme is one of restructuring and not just housing delivery.
As per the Regulations, Chapter 5, a summary of the investment criteria is as follows:
- Land and services: the SHI must have land rights, adhere to zoning, ensure there are bulk services.
- Housing design criteria: medium to high density, bachelor to 3 bedroom units, high quality spec.
- Marketing: ensure proper marketing of units, applicant training programmes and equitable selection process.
- End User Agreement: lease required.
- Rentals / levies as stipulated.
- Financial viability needs to be demonstrated.
- Governance and management to be demonstrated.
- Building and property maintenance to be undertaken.
To apply for capital grant funding, the first step is to contact your Municipal and Provincial official for social housing. It is a requirement that these officials endorse your project. Thereafter, you must register the project on the social housing pipeline for assessment and accreditation. For further information click here.
Social Housing Institutions and projects are required to become accredited by the SHRA. The SHRA’s intention is to ensure that the social housing stock is well maintained in order to protect the state’s investment.