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Monday Sep 24, 2012

Call to free up state land for new homes

Concerned South Africans recognise that the country faces a very serious housing backlog - the shortage is estimated at one to four million and various suggestions have been put forward on reducing this backlog.

Paul Henry, managing director of Rawson Developers, says the measures proposed take two forms: the recommendation that financial assistance be offered to the eventual owners, the developers or builders; alternatively, that the laws governing development and building be relaxed to make way for lower-cost, informal settlements where occupants can do a fair amount of the building themselves.

The local authorities in charge of housing are delivering to a certain extent but there is much work to be done, Henry says.

"The traditional methods proposed have been shown in SA to have merit if properly administered. However, the UK's experience indicates that more is required if housing backlog shortages are to be solved.

"Many South Africans believe this is the only country in the world with a serious housing shortage.

"But a recent Financial Times weekend feature reported that the UK now needs 250 000 homes a year to catch up. And, as in SA, the government has frankly admitted that it does not have sufficient funds.

"The Conservative-Liberal Democrat coalition has therefore come up with a plan to give financial assistance to developers and to relax planning rules - that is, to adopt the traditional relief packages.

"The Financial Times unequivocally states that, although these measures are welcome, they will come nowhere near meeting the UK's housing shortage. It states that at best they will result in 75 000 homes a year being built."

So, what is the answer to housing shortages?

Henry says the Financial Times suggests that the only way forward is to unlock more state and local authority land for development, arguing that this can be done at low prices, even if the land has not yet been zoned for development.

"This, the report says, would open up new opportunities to developers, and could force Britain's municipalities, parastatals and others 'banking in land' to get moving and sell - rather than waiting for it to appreciate further, " says Henry.

"It is said a wholesale release of new land would greatly reduce the price of all new land for development."

As in SA, says Henry, the UK central government has to face the challenge that many municipalities will adopt a "Not in my backyard" attitude to new development, preferring that it go elsewhere.

He says this stems from an appreciation for landscape and the UK's architectural heritage. This is often "wholly commendable" - but does not help developers and new opportunities.

"The Rawson Property Group's chairman, Bill Rawson, has pointed out recently that many of the biggest municipalities and parastatals are sitting on large tracts of land, often in semi-industrial areas which are certainly not of great scenic value.

"This land could be ideal for low-cost housing and could be expropriated without the massive compensation costs that would be demanded by private owners. The problem, therefore, is not insoluble if this solution is followed."

A big step-up in housing delivery, says Henry, quoting the Financial Times again, would solve the problem that under the new, more stringent economic circumstances many people will find themselves having to live with their parents or friends; or when they get older and themselves rent homes, are unable to cover their rents with their pension incomes.

"It would also help SA to kick-start a more satisfactory growth rate in the economy," says Henry.

Weekend Argus (Sunday Edition)


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