A ray of hope has emerged for millions of South African’s who have been struggling to access the housing market because they are located in no man’s land of sort, not covered by government housing subsidy and rejected by banks.
The hope is raised by the formation of the Human Settlements Development Bank which promises a new approach into housing finance. It comes with a promise of rekindling the Finance Linked Individual Subsidy Program (FLISP) amongst other missions. FLISP is a government instrument designed to assist first time home buyers. But it has not worked well due to bureaucratic challenges.
The Human Settlements Development Bank may address the bureaucratic bottlenecks which hindered FLISP. With a promise to become operational in October this year, the bank sets out to close the missing middle gap, made of low to middle income earners, who have been locked out of the housing market.
For years millions of South Africans have been rendered homeless because their earnings are considered too high to be covered by RDP housing subsidy while banks won’t touch them because they earn too little to qualify for home loans. It is estimated that about 3 million people fall into this gap. They are mainly public servants like nurses, teachers and soldiers.
The Human Settlements Development Bank is designed to close this gap by working with other financial institution to facilitate flow of home loan finance to the missing middle.
Speaking about the new bank human settlement minister, Lindiwe Sisulu, said the new bank will enable human settlement by providing “equity finance especially for emerging black entrants in the property industry”.
She said this is in line with government transformation objectives. “This would require a fundamental shift from the ordinary banking mindset.”
“The Bank will faciltate the scaled up delivery of FLISP to qualifying beneficiaries in the GAP market, including the Goverment Employee Housing Scheme.
“The strategic focus of the Bank will be to facilitate the increased provision of finance across the human settlements value chain, and the specific priority for the Bank in this respect is the mobilisation of and the provision of finance for all planned catalytic projects. The Bank would be the asset that our struggling Black entrepreneurs have been waiting for.”