7 September 2007




The City of Johannesburg herewith responds to your invitation to submit comments on the Social Housing Bill as published in the Government Gazette No. 30022 of 6 July 2007.


The following comments were received from the Office of the Executive Director: Finance.




1.1                     The purpose of the Bill is set out in the heading thereto and refers to the three tiers of government, namely national, provincial and local government. The preamble likewise refers to the three tiers of government.


1.2                     Section 2(1) then describes the joint obligations of the national, provincial and local spheres of government.


1.3                     However, where sections 3 and 4 describe the roles and responsibilities of national and provincial government, section 5 refers to the roles and responsibilities of municipalities. The Bill thus commences with local government and then moves to municipalities without creating a connection between local government and municipalities.


1.4                     Although provincial government is defined in the definitions section, there appears to be no definition for either local government or municipalities. To overcome the above problem and for the sake of consistency, it is proposed that additional definitions be inserted for local government and municipalities.




“Department” is defined so as to mean the Department of Housing. It is presumed that the Bill refers here to the National Department of Housing and not the Provincial Department of Housing. If that is correct, it is proposed that the definition be amended so as to refer to the “National” Department of Housing. 


3.                   AD SECTION 3(2) READ WITH SECTIONS 5(c) AND 18(1)


      3.1           In terms of section 3(2), the costs and expenses connected with the implementation of this Act (sic) must be defrayed from money appropriated by Parliament to the Department for that purpose.


3.2           By virtue of section 18(1), funds for the social housing programme and for financing the implementation of the social housing programme and any relevant provincial housing programme consistent with national housing policy must be made available from-


(a)                 money earmarked for that purpose from the Department’s annual budget; and


                        (b)        money allocated to a province for that purpose in terms of the annual Division of Revenue Act.


      3.3           In terms of section 5(c), one of the roles and responsibilities of municipalities is “to provide access to land and buildings for social housing development in designated restructuring zones.” This might have a financial implication for the City, as the Bill does not state whether the provision of access would actually include the provision of land by municipalities for social housing development purposes.


      3.4           Should access to land in fact entails the provision of such land by municipalities, it appears that by virtue of sections 3(2) and 18(1), the costs to obtain any land from the City will be borne by the Department, as the costs of the land would of necessity be regarded “as costs and expenses connected with the implementation of the Act”.


      3.5           In order to clarify this aspect and put it beyond doubt, it is proposed that section 2(3) be amended to read as follows:


                     “The costs and expenses connected with the implementation of this Act, including the costs to obtain land and buildings for social housing development in designated restructuring zones and the costs of acquiring municipal housing rental stock, must be defrayed from money appropriated by Parliament to the Department for that purpose.”


      3.6           The above proposal would confirm the general role of municipalities as set out in paragraph 2.2 of the Memorandum on the Objects of the Social Housing Bill that was attached to the Bill, where it is inter alia stated as follows:


                     “Municipalities are tasked with facilitating social housing delivery in their areas of jurisdiction, while the National Housing Finance Corporation will participate in social housing development by improving access to loan funding.”


4.       AD SECTIONS 13(4) AND (5)


4.1           In terms of section 13(4) a municipality may establish “an institution”, which we presume actually means a “social housing institution” as defined in section 1. As no definition exists for “an institution” and it is presumed that the intention is to actually mean a “social housing institution”, it is proposed that the words “an institution” where it appear in this section, be substituted with the words “social housing institution”.


4.2           Section 13(5) stipulates which legislation a social housing institution should comply with. As:


(i)                   a municipality would by virtue of section 13(4) also be empowered to establish a social housing institution; 


(ii)                 such institution might amount to an external service provider providing a municipal service on behalf of the City as contemplated in Chapter 8 of the  Local Government: Municipal Systems Act, 2000, (Act 32 of 2000); and


(iii)                such institution might also amount to a municipal entity as contemplated in Chapter 8A of the  Local Government: Municipal Systems Act, 2000, (Act 32 of 2000) and Chapter 10 of the Local Government: Municipal Finance Management Act, 2003 (Act 56 of 2003)


it is proposed that the following words be inserted at the end of section 13(5):

“Provided that in respect of a social housing institution established or to be established by a municipality, the relevant provisions of Chapters 8 and 8A of the Local Government: Municipal Systems Act, 2000, (Act 32 of 2000)

and Chapter 10 of the Local Government: Municipal Finance Management Act, 2003 (Act 56 of 2003), shall in addition apply.”


5.       AD SECTION 15(1)(a)   


This sub-section makes difficult reading. It is thus proposed that the words “a corporate governance plan” where it appear in the second line be deleted and be inserted after the words “accreditation, prepare and submit” where it appear in the first line. Section 15(1)(a) would then read as follows:


“(1) Each accredited social housing institution must-

(a)        within 90 days of it having attained accreditation, prepare and submit a corporate governance plan to the Regulatory Authority for approval, which must address at least-


(i)                   ……

(ii)                 ……

(iii)                …… ; and

(iv)                …….”



The following comments were received from the Office of the Executive Director : Housing.


The lack of a legal framework for social housing has impacted on the scale and success of social housing delivery to date. The development of the Social Housing Bill should provide an enabling and supportive environment for social housing delivery.


General Comments


  1. The Bill takes into account the Public Finance Management Act but does not provide much consideration of the Municipal Finance Management Act and its possible implications for the Social housing delivery.
  2. Social Housing can also be implemented in terms of the institutional subsidy programme of National Government and it is not clear how the Bill relates to this programme.
  3. The Bill address the issues of regulation and ensuring compliance, but does not adequately provide on issues of support and creating an enabling environment as is highlighted in the Social Housing Policy.


Roles and responsibilities of National Government


Section 3(1)(f) - Municipalities may not necessarily provide for restructuring zones in their IDP’s given the timing of these processes.  Therefore the clause should rather refer to restructuring zones being aligned with the IDP.


Roles and responsibilities of municipalities


It is important to note the enabling and supportive role identified for municipalities.  However in many instances municipalities are not able to effectively support social housing and social housing institutions as a result of procurement processes that do not allow for preferential treatment etc. as well as restrictions in term of the MFMA.


Social Housing Regulatory Authority


The establishment of regulatory authority is an important component of the Bill, however it is proposed that a number of clauses especially regarding the functions of the regulatory should not be included in the Bill but rather in the regulations.


Powers of intervention of the regulatory authority


The powers identified for the regulatory authority in this section with regard to addressing maladministration of social housing institutions may not always be possible, especially in circumstances where the grant / subsidy support to social housing institutions are negligible in comparison with funding etc. from other institutions eg. social housing institution that are wholly owned by the municipality. In these situations the powers identified in the Bill may not be applicable or implemented.


In addition the role of the regulatory is not reflected as that of empowering the sector or social housing institutions but is very much projected as having a punitive function. Reflecting a more empowering legal framework may achieve much more than the current punitive focus.


Management of Social Housing Institutions


Section 15(3) (a) - is an example of the inappropriateness of certain clauses and the detailed operational issues that the drafters try to be prescriptive on. It is proposed that the Bill should not be stipulating such details but should rather be promoting more broadly good corporate governance.


We trust that the above comments would be useful in drafting the final legislation.


Kind Regards