New bank will help those who don’t qualify for housing loans
The government has established a bank to provide housing loans to people in the gap market. The Human Settlements Development Bank is to be launched by the department in Cape Town today.
It will provide housing finance to people earning too much to qualify for RDP housing but not enough to secure mortgage bonds from retail banks.
Human Settlements Minister Lindiwe Sisulu announced during her budget debate that the bank consolidated three development finance institutions from her department.
Sisulu joked ahead of her budget speech: “I never thought in my life I would own a bank, but now I do.”
But the bank will only start to function once the Human Settlements Development Bank Bill, which is in its fifth draft, is passed by parliament.
The department hopes this will be done by the end of September.
Sisulu said: “The strategic focus of the bank will be to facilitate the increased provision of finance across the human settlements value chain.”
Once functional, it would also provide finance to emerging black entrants into the property sector, and would scale up delivery of the finance linked individual subsidy.
This subsidy is aimed at firsttime home owners earning below R15 000 a month.
But Human Settlements director-general Mbulelo Tshangana said they were also considering increasing this threshold to R20 000.
Sisuslu said one of the bank’s priorities would be funding her department’s catalytic projects.
The department has prioritised 46 of these projects which would build houses as a partnership between the government and the private sector.
She also announced that non-citizens would no longer be able to buy low-cost homes built by the government for the poor.
Owners of low-cost government-funded homes were allowed to sell them after eight years.
However, Sisulu said that many of those who could afford to buy them were foreign nationals.
Sisulu said the government’s intention in providing free houses was to give the poor an asset and entry into the economy.
She said selling these houses “defeats the ends for which we put this together”.