Subsidy delays: The challenges of government housing subsidy administration

Part of the TSC’s core purpose is to document the experiences of lower-income households as they navigate the formal property market system in South Africa, including their experiences with government housing subsidy programmes. In some ways, the experience of our clients in the subsidy space is not typical as the TSC team shoulders much of the administrative burden. As a result, our team has first-hand experience of the processes and systems that underpin the administration of the Individual and FLISP[1] housing subsidies.

Two common challenges relate to the issuing the Letters of Undertaking and delayed subsidy disbursements. 

The challenge with the Letters of Undertaking is simple human error. The TSC has seen a number of cases where these letters are issued with the incorrect subsidy value, issued to the wrong conveyancing firm or other incorrect party, or issued with incorrect property / location details. It is an administrative nightmare to get these Letters of Undertaking amended and these errors cause significant delays to the transfer process.

The second issue is with delayed subsidy disbursements. In the TSC’s experience, it takes anywhere from five weeks to three months for the subsidy money to be paid to the receiving party, be that the bank who is financing the house or the sellers who are waiting for their money (see figure 1 below). This same issue was flagged in an external evaluation of the FLISP subsidy[2] commissioned by the National Department of Human Settlements in 2021 , although little appears to have changed since then.

Figure 1: TSC client examples of subsidy payment delays

In cases where there are individual sellers who are expecting to receive subsidy funds as part or whole payment for the sale, this delay creates incredible frustration and stress. They have sold their property, their names are no longer on the title deed, they’ve most likely vacated the property and handed over the keys, but they do not have the money owed to them due to poor government administration. This is inexcusable.

To say that these delays detract from what is otherwise a helpful subsidy programme would be a great understatement. Delays create a poor perception of the subsidy programme and undermine trust in the formal system. Sellers and estate agents who have been party to subsidy financed transactions are unlikely to recommend the FLISP subsidy to others. In the TSC’s experience, sellers will increasingly simply not entertain a subsidised sale because of the lengthy delays in the process, so while a purchaser may qualify for a subsidy, he or she cannot actually access that subsidy because of an inability to find a willing seller.

The good news is that these should not be difficult problems to solve. The subsidy application process is already partly digitised and could be further streamlined. This would offer transparency to all parties involved, could help drive accountability and reduce human error in the process. The Department should also be able to schedule weekly if not daily payment runs for subsidy disbursements, aligned with transfers that have been finalised in the preceding time period.

Perhaps the barrier to change arises on the side of officials. They may lack incentives to create a subsidy process that is efficient and responsive. They may also be unaware of the impact of poor administration – they are not personally receiving the phone calls from irate sellers who cannot understand why it is taking so long for them to receive their money, or placating the buyer whose bond statement doesn’t reflect the subsidy money they are expecting.

To quote the World Bank, ‘any policy is only as good as its implementation’, and as highlighted in this blog, there are clear but resolvable implementation failures in the Individual and FLISP housing subsidy programmes that require attention. Until these seemingly small but significant issues are resolved, government housing subsidy programmes will continue to underperform on client experience, no matter how many times they’re given an external facelift.

[1] Recently rebranded to the ‘Help me Buy a home’ programme

[2] “With regards to payments, the NHFC and some Provinces should be able to pay within five (5) working days after a request for payment has been made by the attorneys but in many cases this process can take months according to some banks, resulting in offers for mortgage finance being cancelled.” Final Evaluation Report for the Implementation Evaluation of the Finance Linked Individual Subsidy Programme (FLISP). December 2021. Accessible:

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