Presentation to the Portfolio Committee on Human Settlements A progress report on Cooperative housing initiatives

Purpose of the presentation To share work in progress to guide the development of the housing cooperative sector.

Definition of Co-operative The term co-operative is used to describe a group of people who collaborate voluntarily to meet common economic, social and cultural needs through a jointly owned and democratically controlled enterprise.

Housing Co-operative A housing co-operative is a legally registered entity or association comprising people who collectively own and govern their housing on a not-for-profit basis. Section 4 of the Cooperatives Act, 2005 gives recognitions to housing co-operatives.

Rationale for a housing cooperative By working together, members of a co-operative can provide themselves with better and more affordable housing than they could as individuals. Within the housing sector, co-operative housing meets the particular need of people wishing to build a community, have a say over how their housing is managed and promote a culture of democracy. A housing co-operative differs from other forms of tenure in that residents share responsibility, ownership and governance of their homes.

The current enabling environment for co-operatives The Co-operative Act, 2005 (Act No. 14 of 2005) was designed to assist co-operatives to flourish throughout South Africa; The definition of co-operatives in the Act provides for the following: – “Housing co-operatives means a primary co-operative that provides housing to its members or a secondary co-operative that provides technical sectoral services to a primary housing co-operative” Section 4(1) of the Act specifically includes housing co-operatives as a from of co-operative covered by the provision s of the Act; The Act furthermore regulates the registration of co-operatives and its operational procedures.

Social Housing Regulating Authority (SHRA): champions the cause of housing co-operatives by building capacity in the co-operative sector and regulates the accreditation processes; South African Housing Co-operatives Association (SAHCA): an apex body which unites, represents and provides leadership to housing co-operatives throughout South Africa. The current enabling environment for cooperatives

The Department of Trade and Industry has developed a strategy to assist co-operatives by reducing the regulatory burden, to empower co- operatives and to enhance the autonomy of co- operatives. The strategy envisages: – Non financial support; – The creation of a demand for products and services; – Improving the sustainability of co-operatives; and – Increasing financial support for co-operatives.

Guidelines for housing co-operatives Draft guidelines have been developed regarding the National Housing Programmes that may be accessed by housing co- operatives for housing development assistance purposes for their members; This document will now be processed for approval and will then be published.

Discussion on the guidelines for housing cooperatives Housing assistance are provided to housing co- operatives in respect of their members who qualify for housing subsidies through the Social Housing Programme. This Programme provides capital grants to institutions for development of non-individual ownership housing options; The Programme will require that the co-operative must be accredited by the SHRA to enable it access grant capital.

Once accredited, the co-operative may also be assisted with training and start-up facilitation funding available under the Social Housing Programme; The Social Housing Subsidy is calculated on the percentage of the development cost of the dwellings and varies from project to project. National Housing Programmes

The Social Housing Programme only applies in Restructuring Zones proclaimed by Municipalities; Where co-operatives wish to develop units outside of Restructuring Zones, they may apply for Institutional Housing Subsidies; Institutional Subsidies are however much lower than what is available under the Social Housing Programme – R52 427,00 per unit and the co- operative will be required to finance any shortfall from its own resources. National Housing Programmes

Co-operatives may furthermore elect to involve their members in the construction of the houses they will occupy; For this purposes the Peoples Housing Process Programme may be accessed. This programme provides technical and financial support to the co-operative and its members to realise their housing goals. National Housing Programmes

Co-operatives wishing to apply for grant funding and capacity building assistance available through the National Housing Programmes are advised to contact the SHRA through the Department of Human Settlements. It should be noted that all project applications will be considered by the MECs responsible for Human Settlements/Housing. Therefore all applications must be submitted to the applicable provincial human settlement department for processing; Funding for approved projects is also administered by the MECs and it is important that proper planning is undertaken with the provincial human settlement departments to ensure funding prioritisation is aligned with development planning. National Housing Programmes

Critical success factors Cooperatives are recognised in the housing policy. We need to recognise the contribution that can be made by housing cooperatives. The Housing policy and programmes already exist to facilitate grant funding assistance to housing co- operatives; Cooperative legislation. Legislation for the formation, regulation, and operation of housing cooperatives already exist and should perhaps be actively marketed to the sector; Cooperative regulatory agency. The envisaged co-operative regulatory agency needs to be established to authorise and generate the formation of new cooperatives, including housing co-ops, and regulate their operations.

Critical success factors Housing finance. Public and/or private financial institutions need to be prepared to receive the pre-occupancy savings of the cooperative housing members and provide short-term construction and long-term financing for cooperative housing projects. Housing subsidies should be aligned to projects that are ready for launching. Cooperative housing technical service organisations. These organisations, referred to as TSOs, provide a range of services to a group of individuals wanting to resolve their housing problem with cooperative ownership. A TSO can offer, for example, assistance on selection of land, the project design, and supervision of construction; education and training to the members, boards of directors and committee members on their respective responsibilities; securing of the short and long-term project financing; and project operations and management.

Way Forward The Department will finalise the draft guidelines in collaboration with stakeholders and publish it for consumption; and The Department will finalise its institutional arrangements to specifically support co- operative housing initiatives in collaboration with the SHRA

Thank You