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Wednesday Mar 17, 2021

Fraction of qualifying buyers apply for subsidy

The goverment's Finance Linked Individual Subsidy Programme (Flisp) works well to provide homes for firsttime low-income buyers and meet the government’s social housing objectives, but the process to access the subsidy needs to be made easier.

First National Bank (FNB), which has grown its affordable housing lending book by 24 percent year-on-year, estimated that 57 percent of its retail customers qualified for Flisp, with the potential to benefit first-time buyers to the value of R100million.

However, only a small fraction of these customers took up Flisp as part of their home purchase, largely because the process to make use of the programme was a challenge.
This resulted in property practitioners not prioritising deals linked to Flisp, said FNB Retail chief executive Raj Makanjee.

One of the biggest companies in South Africa that helps buyers access Flisp is developer Calgro M3, which has big housing projects in various stages of development, including more than 36 000 stands and 6 596 serviced opportunities.

Calgro M3 chief executive Wikus Lategan said in an interview that although the subsidy is "human capital intensive", the group’s experience at many developments was that the subsidy provides low-income families with a capital base to gear themselves up for further investments, such as improvements to their home, or to buy a second home, and therefore Flisp "works".

Lategan said that at integrated housing developments, where house prices ranged from R290 000 to R1.2m, the owners of the lowest-priced homes tended to aspire to improve their circumstances. Often, he said, construction workers on the housing developments would end up buying one of the units themselves.

Flisp is a government homeownership assistance programme for households that fall within the "gap housing market", whose income is between R3 501 and R22 000 a month, and who do not qualify for the government’s free housing programme and do not earn enough to afford an entry-level housing unit in the market.

Flisp can be used as a cash contribution or deposit to supplement an approved home loan. It reduces the overall outstanding balance and monthly repayments for the consumer.

Daily News12 Mar 2021 EDWARD WEST

Lategan said demand for affordable housing was high, aided by low-interest rates. The group has about 4 000 affordable units under construction compared with about a 1 000 units 18 months ago.

FNB Home Finance chief executive Lee Mhlongo said the affordable housing market remained resilient and attractive to home buyers.

"There is an increased need for an inclusive approach to address affordable housing challenges, including community participation and stakeholder engagement, while considering the broader socio-economic, cultural and spatial impact," he said.

Last month, Finance Minister Tito Mboweni said in the Budget review that 18 housing projects were planned, including six Department of Human Settlements integrated residential development programmes, 10 social housing projects, and two large-scale privately led developments.

The 18 projects had an investment value of R129 billion. They would provide housing for more than 170 000 potential applicants, and were projected to create more than 358 000 jobs during construction and more than 55 000 jobs once operational.


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