Capital Investment

The SHRA may invest in social housing projects in accordance with the investment criteria set out in the Social Housing Regulations.

Capital investment is made through the Consolidated Capital Grants (CCG) and debt Funding. There are instances where delivery agents are able to contribute their own equity, or may secure donor funds.

CONSOLIDATED CAPITAL GRANT (CCG)

The CCG is a significant contribution to the capital cost of a social housing project, contributing to the delivery of viable, feasible, and sustainable projects that provide affordable rental housing to the poor.

DELIVERY AGENTS

SHRA delivers social housing units through delivery partners. These can either be in the form of social housing institution (SHIs), which are non-profit companies or other delivery agents (ODAs) which are for-profit companies. SHIs must be conditionally or fully accredited by the SHRA.

Delivery partners comprise of the following:

Existing or new SHIs;

Non-profit private sector companies;

For profit private sector companies/ other deliver agents (ODAs).

Delivery agents shall exclude provincial government or  municipalities.

CONSOLIDATED CAPITAL GRANT (CCG) QUANTUM

The total grant quantum will be determined on a project-by-project basis and will depend on the affordability mix of the units;

The standard grant quantum is equal to R426 308 per unit but may be escalated annually at the discretion of the Investment Committee:

The standard grant quantum will apply to the allocation of a minimum of 30% of the units to the primary target market (households earning R1 850 up to R6 700 a month) up to a maximum of 70% of the units. The secondary target market (households earning R6 701 up to R22 000 per month) shall occupy the remaining units;

The variance to the standard grant quantum will be based on the degree of allocation of units to the primary target market. The standard grant quantum will increase by R 1 874 per 1% allocation to primary beneficiaries up to a maximum of 40% (70% the total units in the project). This variation quantum may be escalated annually at the discretion of the Investment Committee.

Whilst projects may include a higher proportion of primary target market than the 70% maximum referred to above, they will not receive any further increase in the total grant quantum.

APPLICATION PROCEDURES

Public notices shall be issued by SHRA from time to time, inviting SHIs and other delivery agents to submit applications for CCG funding;

The SHRA investment committee shall determine suitable application requirements, standard forms emplates or tools to be used in applications and may alter or amend these, as it deems fit;

Applications must be submitted to the SHRA on the date and time stipulated in the public notice;

SHRA shall, within 90 days of receipt of applications, notify the applicants whether or not their applications were successful. SHRA shall provide reasons to the applicant in the case where applications were unsuccessful.

The application will comprise

the submission of documentary proof of status of the project (to indicate the degree of project readiness) – currently QS-B;

the submission of a comprehensive feasibility study indicating the financial viability of the project – currently QS-C;

any other information as the SHRA may require.

INVESTMENT CRITERIA

The project must:

Meet social housing policy objectives;

Be supported by the provincial and local governments;

Be located in a Restructuring Zone;

Meet the criteria for Conditions Precedent and Financial Closure; and

For private sector applicants/ other delivery agents (ODA), a minimum of 20% equity contribution is obligatory.

DEBT FUNDING

The confirmation of the approval in principle of a debt funding arrangement by an approved Financial Service Provider (FSP) for a project is a pre-condition to the submission of a CCG application. On approval of the grant, it is a condition of financial closure that the delivery agent enters into a contract agreement with the FSP for the required loan to cover the balance of funds for the project after taking into account the CCG. The debt funding agreement shall be concluded on terms and conditions that are acceptable to the SHRA.

OWN EQUITY AND/OR DONATIONS

In certain circumstances, the delivery agent may contribute its own equity to the project or obtain donations to the project. This additional source of funding is welcomed and is acceptable to the SHRA. These sources of funding are to be declared at grant application stage, and are to be included in the financial viability to demonstrate the reduction in debt financing.

OTHER INVESTMENT AREAS

Capital Investment

The Social Housing Investment Programme (SHIP) may invest in social housing projects in accordance with the investment criteria set out in the Social Housing Regulations.

Institutional Investment

The Sector Development and Transformation (SD&T) Programme administers the Institutional Investment Grants (IIG).

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