Starting a Social Housing Institution (SHI)

When you want to start an SHI, the Social Housing Foundation (SHF) is geared to support you. We ensure that you set out on the right footing with clarity, confidence and commitment.

Our goal is to guide you in making a first-time and long-term success of your social housing institution (SHI).

First, we make sure you know what an SHI really is. When you do, you're saved from wasting precious resources. With the experience of setting up many SHIs, we know what works, what the potential obstacles are and we are here to guide you through the process.

Social housing - how we define it

The definition for social housing that underlies all our activities is:

High quality and well-located subsidized housing managed by viable sustainable, independent institutions on participatory management principles. Social housing is aimed at low-to-moderate income families and provides different tenure options with the exception of full ownership.

Three types of SHI

Social Housing Institutions (SHIs) are typically a combination or variation of these three types:

  1. Umbrella-organisation or management agents which provide property management services to smaller tenant organizations or SHIs.
  2. SHIs which develop, own and manage their own rental stock. They mostly deal directly with their own tenants. Currently, the most common type of SHI in South Africa. In addition, there are also SHIs which develop and provide housing for installment sale to residents (they own and manage the housing until the residents take over the ownership in time).
  3. SHIs mostly established by tenant groups or associations or by people with a common goal and desire for secure tenure, or collective ownership. With limited skills to manage buildings themselves, they employ a Type One organization to manage (or even build housing for them), while they remain collective owners.

How SHIs differ

Social housing and SHIs can differ, one from the other, by way of:

Tenure - Rental, installment sale or co-operatives
Legally - Section 21, private company or co-operative
Development type - New build, refurbishment, conversion
Development stage - Emerging or established SHI

First steps

It's like making up a soccer team

To start any type of SHI the process is the same.

First, someone has the idea to start one - this can be an individual, group of people with similar interests, a community or a municipality or local authority.

Choose your team (SHI board members)

Once the idea is clearly formulated, the original group must identify who else should be part of the project. Choose the people who will be strategically best to have on the board - like choosing a team for a soccer game; consider who would be best in which position and invite them to play.

When selecting the right people for your SHI, think about who can contribute the knowledge, skills or expertise and bring the right assistance to the project.

For example, consider who has funding or can get it and who has the financial and business acumen to benefit the project. When you've debated and decided who is best they must be approached and agree - in principle at least - to participate in the SHI.

Choose your leader (someone to head up the SHI board)

Choosing who will captain the SHI board (team) is next. This is a critical decision: The person must be a leader who can actively drive the project forward, pushing it through every stage (not necessarily the same one who had the idea)

SHF is your team coach

Think of the SHF as part of the advisory team, guiding the process forward. We are much like the SHI team coach - we don't play but we are there to help, train and give sideline support at every stage of play.

Learn the rules

When you've selected your SHI captain, team and coach, make sure everyone knows the rules of the game. Ask us to run a workshop to ensure everyone in your SHI game is referring to the same rules (like the laws around SHIs, social housing and the exact nature of the proposed housing are all covered)

Get the commitment

Once everyone understands the rules of the game, commitment is necessary. Everyone needs to agree to establish an SHI. At this point, we suggest you get their commitment in writing. In the same document, outline specific project phases and timeframes for delivery, as well as what contributions can be expected from the individual team players.

Create a plan

The team needs to plan. At this point in the planning process, identify and research the feasibility of each. This should include factual information to support the likely success of the SHI and project, like:

Do a feasibility study

This is key to the success of your SHI. Look at what the socio-economic and market demand is for social housing - it is critical to first determine if there really is a demand for social housing. If there is, find out what type of tenure is most suitable, what the extent of the demand is, what quality of housing people want (at what price) and who your SHI should target for success. For specialist assistance like this, you may need the help of a consultant or market researcher to do a professional feasibility study. Ask us.

Make a decision - is it viable or not?

Once the feasibility study has been done, make a decision:

Either your SHI and housing project is viable, or it's not. The feasibility study will point to going ahead or bring the SHI team back to the drawing board to review the design of the project (to better match realistic demands shown by the study).

Not all ideas and projects explored will result in forming an SHI. It may be more feasible to work with an existing SHI in your area than start a new one. Never force a project to work - a fact of the social housing game is that it takes time and commitment. Because it's costly to initiate a new SHI, it is essential that the project proves feasible in the long term.

Create you business plan

Part of the feasibility study should include the design of the financial model and a business plan which sets out, in details, how the SHI intends to function as a going concern. You need a solid business plan to get governmental approval and apply for funding. The SHF has supported many housing institutions in drafting business plans.

We also have business plan guidelines to guide you in writing your first draft. After that, your SHF consultant can bring your business plan before an internal review panel who give feedback to help you refine the plan (before you approach potential funders). Board members and stakeholders need to approve the final business plan.

Funding your SHI

With a clear business plan writing up, the SHI team next looks at funding. Government provides a number of different grants and subsidies. Examine which your SHI qualifies for. There are also private sector options and funding organizations to apply to for start-up funding for the SHI.

Get advice from SHF (team coach)

The SHI team will need financial resources to cover the cost of doing the initial feasibility study and funding applications. Let SHF guide you through managing this process and help you arrange start-up financial support. While SHF doesn't provide funding, we can motivate to access funding from various key sector players.

What a strong SHI board membership, (your team) should look like:

Strategically good players to have on the board of a new SHI include:

They should form the founding board of the new SHI and be registered as directors of the organization once the project proves feasible. Regular progress meeting should be set up and each person given responsibilities and deadlines to move the SHI to becoming a viable business. Upfront finance for this process will need to be sourced. A dedicated project leader is critical to give cohesion to the initial business and funding application processes.

Once the SHI is established and the housing project is built and finalized, the SHI should be able to run, manage, and maintain the project in a sustainable and socially responsible way.