New jozi developments may have to include affordable housing

Johannesburg’s proposed new housing policy, which recognises the need for developments to yield a profit, may turn out to be a win-win solution.

As part of its strategy to create a more liveable urban space, the City of Johannesburg is introducing a new Inclusionary Housing Policy that could make it mandatory for developers to build affordable housing as part of new residential developments.

‘It is impossible for the City alone to address housing shortages, and we have to find all possible options to get to where we need to get to as a city,’ explains Eric Raboshakga, director of the City’s Transformation and Spatial Development department.

Johannesburg Mayor Herman Mashaba writes in a News24 column that the city has a housing backlog of 300,000 units, and about 3,000 new people move in every month. Further, 50% of Johannesburg households earn less than R3,543 a month, and 40% earn less than R2,487. He explains that there is a high spatial mismatch between jobs and housing, as reflected in people’s spending: ‘Most South Africans spend up to 70% of their often meagre income on food and transport, especially to work’. He writes that the proposed new policy would provide developers with good opportunities for business as well as social responsibility.

Johannesburg’s Spatial Development Framework 2040 is intended to direct growth and development in a way that addresses inequality and inefficiency. It promotes highdensity, mixed-use development that enables people to live close to where they go to work or school, and reduces the cost of providing infrastructure and services such as public transport. The proposed Inclusionary Housing Policy is intended as a tool of the framework. It requires that new developments with 10 or more units build an additional 20% affordable housing on the same property. The inclusionary units, whether flats or houses, are required to be a minimum of 15 square metres, include a private bathroom, and have the same look as the market units on the property. All residents would share common areas and facilities.

The inclusionary units are intended to cater for households with an income of up to R7,000 per month, and rent is capped at R2,100 for 2018. The minimum size makes them suitable for a single person, a couple, or a couple with a small child. A number of options are being explored with regard to how properties can be maintained, and how to manage occupancy so that there will not be overcrowding.

The first draft of the policy provides two options for the inclusionary housing units. These are social housing managed by a registered not-for-profit social housing institution; and ownership for rental by a private entity. According to the department, it is likely that the final policy will include more options and greater flexibility, for example, market-related units that are smaller and therefore cheaper.

By far the strongest incentive for developers is the density bonus. Where 20% of a development is given to affordable housing, the developer will be allowed an additional 20% density. This means that developers who planned to develop 100 market units will still build their 100 market units, but in addition will be allowed a higher density to include the 20 affordable units. In other words, developers will be rewarded with higher-value land-use rights in return for including affordable units.

Other incentives include reduced parks contributions, engineering services contributions, and parking requirements for the inclusionary units. The incentives are proportional to the percentage of inclusionary housing provided, to a maximum of 50% of total units in the development. If passed, the policy will be applied to new developments only and will not affect existing developments.

There are concerns about the affordability of schools, shops and medical facilities in the higher-income areas, but the department says that it is attempting to make it possible for people to save time and money that is currently spent on transport so that they and their families can live higher quality lives.

It is anticipated that the policy will be challenged on legal grounds with regard to whether inclusionary housing can be implemented at municipal level. Raboshakga explains: ‘We are mandated by law to write policy that we believe to  as the market units on the property. All residents would share common areas and facilities. The inclusionary units are intended to cater for households with an income of up to R7,000 per month, and rent is capped at R2,100 for 2018. The minimum size makes them suitable for a single person, a couple, or a couple with a small child. A number of options are being explored with regard to how properties can be maintained, and how to manage occupancy so that there will not be overcrowding.

The first draft of the policy provides two options for the inclusionary housing units. These are social housing managed by a registered not-for-profit social housing institution; and ownership for rental by a private entity. According to the department, it is likely that the final policy will include more options and greater flexibility, for example, market-related units that are smaller and therefore cheaper.

By far the strongest incentive for developers is the density bonus. Where 20% of a development is given to affordable housing, the developer will be allowed an additional 20% density. This means that developers who planned to develop 100 market units will still build their 100 market units, but in addition will be allowed a higher density to include the 20 affordable units.  In other words, developers will be rewarded with higher-value land-use rights in return for including affordable units.

Other incentives include reduced parks contributions, engineering services contributions, and parking requirements for the inclusionary units. The incentives are proportional to the percentage of inclusionary housing provided, to a maximum of 50% of total units in the development. If passed, the policy will be applied to new developments only and will not affect existing developments.

There are concerns about the affordability of schools, shops and medical facilities in the higher-income areas, but the department says that it is attempting to make it possible for people to save time and money that is currently spent on transport so that they and their families can live higher quality lives.

It is anticipated that the policy will be challenged on legal grounds with regard to whether inclusionary housing can be implemented at municipal level. Raboshakga explains: ‘We are mandated by law to write policy that we believe to be effective and efficient for carrying out the objectives of the City. We identify areas that require intervention from a local perspective, and we write policy to intervene in that space.’ He says that the policy will be analysed by a legal team to make sure that the City is not acting outside the bounds of its constitutional mandate.

The proposed policy is intended as a land-use tool rather than a housing tool, and it is common practice for municipalities to impose conditions on development, for example limits on building height and density of development. ‘There is no “right to develop”,’ explains Raboshakga. ‘You apply for permission for a certain development on a certain piece of land, and the municipality decides to grant or not grant.’ The Constitution makes the allocation of land-use rights a municipal function.

The proposed policy was put through a public participation process, and the department is now processing comments and suggestions. At the end of this process it hopes to have a more detailed picture of how the policy could be rolled out. One of the key uncertainties, says Raboshakga, is whether the policy will be made mandatory or, instead, be presented as a set of guidelines for developers to implement voluntarily. He hopes to have the next draft ready by September.

In the meantime, the concept is being piloted with developers, with one developer already nearly ready to launch.