Subsidised Housing Assets (Panel 2)

SUBSIDISED HOUSING ASSETS (panel 2)

Exploring the Performance of Government Subsidised Housing in South Africa

Finmark Trust

Why is there a delay in titling?

Research commissioned by Urban LandMark points to several factors that undermine the transfer of title to subsidy beneficiaries.

• Delays in the township establishment process and proclamation
• Revisions to the project payment process in the development of subsidy houses
• Failure to hand over title deeds
• Appropriateness of the deeds registration system

The major cause is a failure by developers (both government and the private sector) to finalise the establishment and proclamation of new areas being developed for subsidised housing. Projects go ahead without the approval of a General Plan for the area, largely because the players involved, lack either the time or expertise (or both) to address the many underlying issues that need to be resolved on certain tracts of land. Legislative, administrative and situational difficulties all contribute to the challenges. With the immense pressure on government officials to deliver housing at scale, the processes of township proclamation are sometimes short-circuited in favour of getting houses on the ground quickly.

In part because of these challenges, the project payment process for subsidy housing was revised, ironically creating another factor undermining the legal transfer process. Originally, the registration of the title deed in the name of the beneficiary was a key milestone against which a developer would have to perform in order to get paid. This meant that in the more complex developments, time delays associated with the registration process undermined the viability of the development. In 2003, therefore, the progress payment system was changed to allow for payment of the completed top structure before the registration of transfer. This means that developers can now be fully paid out without having to ensure that the title for the property is put into the name of the beneficiary. As a result, the registration of deeds for subsidy properties has progressively declined since 2003. In 2009, less than a quarter (23.4%) of all subsidised properties reported as having been delivered were formally registered in the deeds registry. And this was an improvement on the low of 16.4% registered in 2007.

In some cases, while the property has been registered, the title deed has not been handed over to the beneficiary. The Department of Human Settlements has reported on this phenomenon to Parliament, indicating that many beneficiaries have still not collected their title deeds after they have been processed (and after having resided in the premises for several years). In other cases, title deeds have been held back by the conveyancer due to non-payment of fees by the project owner – usually the province or municipality or their appointed contractor.

Of course these issues, and the experiences they describe, raise the question of the appropriateness of the deeds registry system, specifically with regard to subsidised properties. Some experts have suggested that while the residential property conveyancing system in South Africa is thorough and legally sound, it is far too complex for small transactions. The conveyancing process is also relatively expensive in the subsidised housing market (given the value of the transactions involved), and generally inaccessible to low income earners wishing to engage in what is sometimes their first-ever property transaction. When the state fails to assert the formality of their tenure through the delivery of a title deed, the inflexibility of the deeds registry system challenges even further their capacity to overcome their invisible informality.

“We have a first-world deeds system in a developing-world spatial context. We need to question the very necessity of title deeds”. Former Land Title Adjustment Commissioner.

The phenomenon of informal sales does not only occur in respect of beneficiaries who do not have title deeds, but also in respect of those who received title deeds. Even if the owner has a title deed, the process of formal transfer is complicated, can take between three and six months and the costs involved can be prohibitive for the “purchaser”. For these reasons individuals bypass the formal sales process – living informally in formal housing.

This approach may ultimately lead to a lighter, more flexible and responsive form of urbanism which accommodates local desires, narratives and initiatives. Rather than abandoning our clients in the light of limited budgets we have pooled human resources through combined networks in order to realise our mandate of creating a public space for cultural programme.

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FINMARK TRUST