Recently, the Tenure Support Centre (TSC) has collaborated with Hlano Financial Services (formerly Khayalethu Home Loans) on a groundbreaking initiative in Mandela Park, Khayelitsha. Our joint efforts are geared towards addressing persistent issues with title deeds, offering hope and security of tenure to numerous families and individuals in the area who have been waiting for this resolution for many years, and unlocking a significant amount of dead capital.
In the early 1990s, Mandela Park experienced rapid development. Many property owners turned to Hlano for mortgage bonds to finance their dream homes. Unfortunately, a significant number of these loans defaulted over time which meant property owners faced the constant threat of eviction and repossession of their homes.
In a bid to stop evictions of defaulting property owners by mortgages and sales in execution of the affected properties, the Western Cape Department of Human Settlements undertook to settle these Hlano loans over a 10-year period. However, due to a number of reasons, this has not happened, leaving some 1,200 property owners in the Western Cape without access to an unencumbered title deed for their homes. The TSC is working with Hlano, property owners and the Department of Infrastructure to find a solution for these cases.
In addition, there were some mortgages loans that were settled, but given the extensive time period since the loans were initiated, Hlano has struggled to arrange the cancellation of the bonds and the handover of title deeds. The TSC has helped, bringing clients to the TSC offices to sign documents and funding bond cancellation costs for pensioners.
Together with ward Councilor Mkutswana, we handed over the first title deeds to property owners last week.
The TSC is currently actively working on another 105 cases as a result of its collaborative effort with Hlano. This is a significant step towards providing homeowners in Mandela Park with formal security of tenure and peace of mind.
The first five Hlano clients holding their title deeds
The Tenure Support Centre (formerly known as the Transaction Support Centre) has been assisting lower-income individuals resolve their title deed problems for over five years. Since its establishment in 2018 the TSC has assisted over 1700 clients and secured over 600 title deeds. It has become a trusted service provider for households who have problems with their title deeds and serves as a key referral point for government departments.
The TSC invites you to a presentation of the highlights and lowlights of the past five years. Using a combination of case studies and area-based analysis, the team will share our understanding of the nature, scale and ramifications of the title deed challenge across urban South Africa and the solutions required to solve it at scale.
This event is open to all with a keen interest in household wellbeing and wealth building, financial inclusion, township development and the viability of South African cities. Join us if you are a township property owner, employer, housing market practitioner, developer, real-estate professional, proptech expert, financier, conveyancer, policy maker, official, analyst, academic, journalist or just a regular person interested in the issue.
Event details
Tuesday, 29 August 2023
Workshop17 Watershed, Waterfront, Cape Town
3:30pm for 4pm start followed by drinks, snacks and networking
A link will be made available to anyone who cannot attend in-person
A 2001 amendment to the Housing Act saw the addition of Section 10, which makes it illegal for housing subsidy beneficiaries to sell their houses for a period of eight years. Twenty years on, it is clear to everyone that the law has had no impact. The illegal sale of subsidy houses continues apace. In March this year, the Minister of Human Settlements noted on SAFM [1] that there are too many subsidy beneficiaries who are selling their houses to foreign nationals and moving back into shacks. The Minister noted that the Department cannot police the law and relies on whistle blowers in communities to come forward to report this kind of illegal activity. The Minister also claimed that people are selling their houses for R20 000.
Perhaps the Minister needs to broaden her base of community informants. In our experience in Cape Town, RDP houses are being sold to decent families who are working hard, saving up and buying houses in good faith for R200 000, not R20 000. Beyond this, the sellers are not moving back into shacks, but are moving back to the Eastern Cape where they invest their funds in building houses. This should be a cause for celebration for the Minister.
Of course, one can understand why this might upset the Provincial MEC of Human Settlements in the Western Cape who might resent the outflow of money from his province to the Eastern Cape. His DA credentials might lead one to think he holds property rights as sacrosanct. Not so. Also in March this year, he went on a walking tour of Highbury Park Housing Project and issued a stern warning to people who have bought RDP houses [2]. No doubt that walk-around has been very effective and purchasers have followed his advice to report the sellers to the police and get their money back.
The stupidity of a law that prevents people from selling their houses is even more obvious in the context of the title deed backlog that exists in South Africa. According to the Department of Human Settlements, there are over 1.1 million title deeds that have yet to be issued to owners of RDP properties. These property owners have no option but to transact informally if they choose to transact. While some might call these transactions illegal, in reality, the bit that was well and truly illegal was the construction of the house to begin with. In some cases, there is no title deed because there is no registered plan, and there is no registered plan because subsidy houses were built in violation of SPLUMA and NEMA. If the private sector had built these houses they would have been demolished.
We can rant and rave as much as we like – about people selling their houses or the stupidity of laws that criminalise this. The reality is many thousands of decent people are living in houses that they paid hard earned cash to buy. They are not criminals. They are the people we should celebrate and support. They have invested in property, put down solid roots in the city and got on with their lives. They are not demanding a hand out from the government, or waiting for the State to give them a house.
It cannot be nice for them to hear the Minister calling for local informants to come forward to report them to the authorities or to see the MEC walking around issuing warnings. Clearly, this needs to stop. Government needs to take responsibility for creating an unenforceable law that is creating havoc in the lives of too many good people. At worst government should acknowledge the law as a bit of a blunder, turn a blind eye and let people get on with it. At best the law should be scrapped.
In many low-income neighbourhoods across South Africa, two forms of land administration co-exist; the formal system governed by laws and regulations facilitated by legal professionals, and the informal system typically facilitated by local community leadership structures. Informal or ‘off-register’ property transactions are not recorded in the Deeds Registry and ownership of the property does not legally change from one owner to the next.
While informal transaction mechanisms are accessible and affordable, they create material risk. Local property markets are unstable, with competing systems to record and enforce property rights; local government is unable to identify and engage with property owners, impeding citizen-centric governance; and the financial sector is unable to support secured, housing-led investment, blocking a critical pathway for transformative financial inclusion. Critically, property owners are unable to realise the value of their housing assets and their wealth levels remain low.
While it is difficult to determine how many informal transactions have taken place in an area, the experience of the Transaction Support Centre in Khayelitsha, as well as other evidence, suggests that the practice of selling properties off-register was widespread.
Since its opening in July 2018, the Transaction Support Centre (TSC) in Khayelitsha has logged 112 cases with title deed problems due to past informal cash sales. Most of these sales took place over ten years ago but with rising property prices and increased awareness of the risks of not having a title deed, homeowners are actively coming forward to secure their property rights. To date the TSC has regularised ten informal cash sale cases and has a further 18 cases that are currently in the process of being resolved.
The TSC’s experience demonstrates that it is possible to regularise some informal transactions that have taken place in the past. Where the original sellers have been located, in the TSC’s experience, they are generally willing to participate in the regularisation process and sign the necessary documents. There are, of course, some cases that cannot be resolved through current processes. To date the TSC has had to close or pend 37 informal cash sale cases. In 22 cases, it is because the seller cannot be traced through the buyer, community networks or credit bureaus. In some cases sellers dispute the transaction, while in others the seller is deceased and heirs dispute that the sale ever took place. Where there is a dispute, registered property owners can evict off-register owners who may not have sufficient evidence of the transaction.
This exact risk prompted Nomathansanqa and her husband to approach the TSC for assistance with regularising a house they purchased 12 years ago. The couple bought the property in Khayelitsha for R15 000 in 2007. The property was badly damaged and the seller had already moved back to rural Eastern Cape. The seller’s brother, who still lived in Khayelitsha, helped facilitate the sale. Nomathansanga and her husband invested between R200 000 – R300 000[4] to rebuild the property. Nomathansanqa and her husband remained in contact with the seller’s brother and when they learned that the seller was in poor health, they were concerned that she might pass away putting them at risk of being evicted by her heirs.
With the assistance of the TSC, Nomathansanqa and her husband became the registered owners of the property in November 2019.
We spoke to Nomathansanqa to learn more about her housing story and how she feels now that she has a title deed.
https://youtu.be/pUWsIFn3vY0
REFERENCES
Barry, M (2020). Hybrid land tenure administration in Dunoon, South Africa. Land Use Policy, 90 (2020). 104301, 1 – 11.
Urban Landmark (2007). Do informal land markets work for poor people? An assessment of three metropolitan cities in South Africa. Available: http://www.urbanlandmark.org.za/downloads/Operation_of_the_market_Synthesis_Report.pdf
Some studies have highlighted that the prevalence of informal cash sales in state-subsidised housing developments differs between areas with some housing developments only experiencing a small number of informal transactions because, in the main, beneficiary households recognised and valued the importance of transacting through formal channels. See: Barry, M., Roux, L. (2016). Study of effective land registration usage in state-subsidised housing. South African
The couple did not keep formal records of the amount spent on the construction but estimate that it is between R200 000 – R300 000.
