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 R328 867 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 20% of equity.
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.