Financed Linked Individual Housing Subsidy Programme (FLISP) Financed Linked Individual Housing Subsidy Programme (FLISP) HUMAN SETTLEMENTS PORTFOLIO COMMITTEE 6 MARCH 2013 HUMAN SETTLEMENTS PORTFOLIO COMMITTEE 6 MARCH 2013

WHAT IS FLISP 2 The Finance Linked Individual Subsidy Programme (FLISP) provides down payment assistance to qualifying households who have secured mortgage finance to acquire an existing house or a vacant residential serviced stand linked to a house construction contract. The objective of the Programme is to reduce the initial mortgage loan amount to render the monthly loan repayment instalments affordable over the loan repayment term.

WHAT IS FLISP (Cont…) FLISP is one of the elements of a broader strategy to improve the property markets by facilitating the increased supply of affordable housing finance; It is responsive to affordability challenges faced by the target market i.e. Ensure subsidy assistance is made to those in the Gap market (R3501 – R ). Ultimately improves income or wealth distribution in the country; 3

FLISP Main Objective FLISP assists qualifying beneficiaries who wish to obtain mortgage finance from a lender to: acquire ownership of existing improved residential property; obtain vacant serviced residential stands which are linked to house- building contracts with home builders registered with the National home Builders Registration Council (NHBRC); or construct a new residential dwelling assisted by a homebuilder registered with the NHBRC, on a serviced residential stand, that is already owned by the beneficiary. 4

Broader Context of Human Settlements – Outcome 8 5

1.The FLISP Household income ranges from R3 500 to R15 000; 2.A property price/value may not exceed R ; 3.Households in the income group R3 501 to R7 000 may opt to apply for FLISP or to be assisted through the allocation of free serviced stands as their once off subsidy; 4.An income based differentiation system applies- the higher the income the lower the subsidy amount; 5.The FLISP Subsidy amount ranges from R down to R10 500; 6.A 8 year sale restriction period will apply; 7.The NHFC was appointed as the Programme implementing Agent; and 8.FLISP is being launched through a project based approach; Policy Principles

FLISP Achieved Milestones Nov MINMEC approved revised FLISP strategy Feb 2012 – SONA Pronouncement on FLISP April Revised Policy Implementation date May-Nov 2012 Negotiations and Conclusion of Implementation Protocols FLISP budget re-prioritization Projects identification, accreditation and implementation preparations October 2012 – Launch of FLISP in EC November 2012 – Launch of FLISP in GP Feb 2013 – State of the Nation Address and FLISP confirmed as a priority programme 7

ROLES AND RESPONSIBILITIES Implementation Protocols PROVINCENHFC Reserve Funds from annual housing allocation Tranche FLISP Allocation to the NHFC Operating Account Funds disbursements FLISP subsidies to Lenders and/or Transferring Attorneys Identify and Accredit Development ProjectsIdentify and Recommend projects Grant final Subsidy Approval Pre-screen Subsidy Applications Communicate Application outcome to all parties incl Beneficiaries Communication strategyLiaising and Coordinate implementation activities with the Lenders and conclude necessary MOU’s 8

Implementation Progress 8 Implementation Protocols; 1 MOU (FNB); 13 accredited projects across the country; estimate total units in all these projects; 2012/13 FY = budget is R Current budget commitment estimated at R42mil; 835 subsidy applications currently processed in development projects representing 3173 households; 57 approvals to date; 2013/2014 budget estimate = R189mil

CHALLENGES AND MITIGATION ChallengesMitigation Project Specific Implementation challenges i.e municipal approvals, Environment issues Projects steering Committee Implementation of Section 10 A and 10B of the Housing Act require amendment Delays to conclusion of the MOU’s with the banks due to the sale restriction provision NDoHS to fast track the review the Housing Act Implementation of the programme proceed due to the high expectation to deliver [2013 SONA] Conclusion of other FLISP implementation agreements outside the NHFC mandate creates implementation uncertainty Addressing this challenge jointly with the NDoHS

CONCLUSION Identification and accreditation of projects is on-going; Secondary/resale market roll out is determined by the provincial budget allocation; NHFC established dedicated, well resourced PMU to administer the programme as mandated; NHFC remains committed to the implementation of the programme to achieve government objectives.