December, 2012
by Stephen Berrisford et al (Urban Land Mark)
Just over one million housing subsidy beneficiaries in South Africa have not received the title deeds to their properties, and the situation is worsening. As a result, poor households cannot fully benefit from the ownership of a property and use it properly as an asset and to improve their financial circumstances. A recent study by Urban LandMark reveals that the registration of title to subsidy properties in favour of beneficiaries is not happening in approximately one third of cases. The study estimates that just over one third (35%) of all houses delivered through the housing subsidy scheme have not been provided with a title deed.
There has been much emphasis on the poor building quality of subsidised houses in the country, but scant attention is being paid to the potentially more harmful effects of not transferring registered title to subsidy properties. This effectively denies beneficiaries a critical point of entry into the formal property market.
One of the cornerstones of the South African housing policy is the housing subsidy scheme, launched by the Department of Human Settlements in 1994. The government provides small, low-cost houses on a stand to qualifying individuals, mostly free of charge, on an ownership basis. The proof of this is the title deed to the property which is registered in the beneficiary’s name.
The obvious value of a title deed is that it protects rights to a property and records changes in ownership. Title deeds also recognise the owner as being part of the municipality and enable the owner to secure loans and to pass the property on to family members when they die.
In 2007 the Department began mapping the extent to which deeds had been provided to beneficiaries. The exercise was not completed but what emerged was that many people were not staying in the houses allocated to them, people did not understand the value of their home as an “asset”, and there was a disconnection between deeds records and the reality on the ground.
The Urban LandMark research expands this picture and points to several contributing factors which undermine the transfer of title to beneficiaries. The major, if not the greatest, root cause is the failure to finalise the establishment and proclamation of new housing areas being developed.
These delays in township proclamation, as it is called, are largely because the project developers (government and private sector) do not follow through on the requirements to get an approval of a general plan for the particular housing development. This then delays the opening of a township register for the issuing of title deeds. The primary stumbling blocks are that underlying disputes over land rights need to be resolved first and provincial and municipal departments and the Deeds Registry offices often don’t have the necessary expertise.
There is also immense pressure on government officials to build subsidy houses at scale, which sometimes entails short-circuiting the process of township proclamation to get houses on the ground. The current township registration and property transfer process is too complex and costly for the subsidy housing market and as a consequence is being by-passed both by developers and by home owners. This obviously affects the beneficiaries’ ability to formally sell the house, should they want to, and so perpetuates an informal market in subsidised houses.
Revisions in the project payment process for subsidy housing is one of the causes of the low levels of registration. Until 2003 the registration of the title deed in the name of the beneficiary was a key milestone of the payment process to the project developer. However in that year the progress payment system was changed to allow for payment of the completed top structure before the registration of transfer.
This change recognized that transfer processes were complex and took too long to implement, which delayed the developer’s access to payment. As a result, the registration of deeds for subsidy properties has progressively declined since 2003. The prevalence of informal sales and the widespread discrepancy between current occupants and registered owners are two key consequences of the low level of title deed registration. Correcting this situation is no small task. The Urban LandMark study recommends two specific areas of intervention: improving the registration processes in new subsidy housing projects and resolving the issue of the backlog of properties that are not registered.
There is a strong case for re-introducing financial and administrative discipline into the housing subsidy development process, even if this slows down development initially. The sequential phasing of development should be re-instated so that it is not possible to commence the building of the housing until registration has occurred. The final payment should not occur until title deeds have been provided to beneficiaries.
Where registration has not occurred a registration backlog eradication plan is needed, including a dispute resolution process to address disputed claims, along the lines of the successful Discount Benefit Scheme model applied in Gauteng between 1993 and 2003, which resulted in some 216 000 deeds being registered in ten years.
Further, consideration should be given to establishing a more immediate, more affordable administrative system to record land rights, to supplement and make accessible the existing Deeds Registry system. This system must retain administrative clarity on who owns a property, but allow ownership to be registered at accredited provincial or municipal administered property registers, that are more localised and accessible. Consideration should be given to rationalising the need for clearance letters and electricity compliance certificates. Sellers and buyers should themselves be able to process transactions without reliance on conveyancers. The high levels of title uncertainty and informality in subsidised housing undermine the integrity of the deeds registration system and threaten to destabilize the effectiveness and credibility of that system across all residential property title in South Africa. Unless something radically different is introduced, both in respect of new properties being developed and the backlog that exists, the problem will only grow and could reach a point where it is beyond repair.
Original report found here. For more information about this article contact Stephen Berrisford from ULM
Source: Afesis-corplan
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