City’s housing contract with major banks delivers

City’s housing contract with major banks delivers

The second stage of an agreement signed three years ago between the City of Cape Town and three major banks to provide affordable housing for middle income people, reaches fruition this week when Standard Bank starts marketing two housing projects in Elsies River.

The City of Cape Town/Banks Co-operation Agreement was concluded in 2006 with the three national banks. This was the first operational and tangible partnership between a local authority and the major national banks and the rationale of the agreement is that if the City provides the land and the banks the finance and development expertise, affordable and aesthetically pleasing “GAP” market housing could become a reality for households earning R3500-R10 000 per month.

In November 2007, Executive Mayor Helen Zille and Councillor Dan Plato, Mayoral Committee Member for Housing, hosted a ceremonial handover of well located housing sites to ABSA, Nedbank and Standard Bank for the development of affordable housing.

At the time, Zille said: “The land will be transferred directly to the people buying the houses. The prospective owners will negotiate directly with the bank. This will keep the land price down and we will prioritise people who are on our housing lists and meet the income criteria.”

“One of the key drivers of Standard Bank’s approach to housing is that we are no longer merely providing finance, but doing whatever is required to produce housing opportunities to the Financial Services Charter [FSC] target market.

“Our mandate is to not only address immediate housing challenges but to build a future customer base and facilitate a sustainable environment for all South Africans to prosper. The partnership with the City of Cape Town is an example of the many partnerships that we hope to foster in the future,” says Kevin Duncan, Managing Director of Standard Bank’s Integrated Residential developments Division (IRDev).

The Elsies River sites, located on the 11th and 22nd Avenue, include only two of the tracts of the land allocated to Standard Bank.

The environmentally friendly development of these sites will improve the look of neighbourhood.

The site layout is based on medium density designs, which include off street parking, security access and area greening (trees).

There are 125 units in 11th Avenue (target market: R3500-R10 000 per month household income) and 75 units in 22nd avenue (target market: R3500 and above household income)

David Williams, Marketing Manager for Bitol Ltd, developers of the Leonard Mews complex in Elsies River, said, “It is a secure complex offering two bedroom apartments to households earning below R10 000 per month.

This market forms part of the 2003 Financial Sector Charter (FSC), in which the banking sector committed to originating loans to low-income households totalling R42bn over the five-year period. It provides a housing product catering directly to this market as the demand for housing far exceeds supply in this segment.

Traditionally developers positioned themselves in the million rand plus market where the property boom experienced the best returns, but has subsequently deflated following the rise in interest rates and present economic climate. The affordable market remains overlooked and has generated a pent up demand for housing products for new entrants into the home market and low-income earners.

“Apart from the selling price, this development would not be out of place in any affluent suburb of Cape Town. To further assist home owners in their day to day running costs all units are provided with solar water heating systems as well as a grey water system to service the garden and landscaping in the development.
“A water recovery system has also been designed into the development, the water recovery systems filters rain and grey water and then introduces it into the toilet system, in doing so saving on water usage and costs.”

The development of affordable housing under the City/Banks Co-operation Agreement is just one of the City’s housing delivery interventions. Others include, the development of social housing, upgrading informal settlements, the development of affordable housing by developers, the developing of subsidy RDP housing, the hostel re-development programme and emergency housing programmes.

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