Cape Town - Despite the Human Settlements Department’s welcoming of the recent adjustments to subsidies, there are fears that this could lead people into greater debt.
On Friday, Human Settlements Minister Minister Mmamoloko Kubayi announced changes to the Human Settlements subsidies.
Kubayi said since the last adjustment of the qualification criteria in 2018, tenants in social housing were struggling to pay their rentals due to inflation and substantial increases in utility costs.
The Social Housing household income qualification criteria has therefore been adjusted from between R1 850 and R22 000 gross monthly income as opposed to the previous R1500 to R15000.
With effect from April 1, 2022, the Finance Linked Individual Subsidy Programme (FLISP) quantum range increases by between 7.2% and 10%. FLISP is aimed at providing affordable first time home-ownership opportunities to people who earn between R3 501 and R22 000 a month.
“This change, we believe, will go a long way in enhancing affordability of home loans as households will be able to put in higher deposits for their home loans or cover other housing acquisition or building costs permissible in the policy,” Kubayi said.
Human Settlements MEC Tertius Simmers said the adjustments would lead to an increase in demand for social and affordable housing, allowing those who could not access housing opportunities before, due to earning higher than the previously prescribed household income band.
“In many instances what we have observed is that the credit worthiness of citizens who apply for a FLISP subsidy is a major challenge and often results in the banks declining the finance application,” Simmers said.
Ndifuna Ukwazi executive director Adi Kumar said the FLISP uptake in communities has been low, given the scale of housing backlog and demand.
“We think that while the changes to the Housing Programme are in line with inflation, the programme does not address the housing needs of the poorest of the poor. Instead, there is substantial focus on providing housing and financial support only for middle-income earners (through social housing and FLISP).
“And without having proper financial systems, support mechanisms for construction and intrinsically making well located land available, this programme could put middle-income earners at even greater financial risk.”