South Africa

URBAN DEVELOPMENT OP-ED

Small-scale rental housing in SA is an idea whose time has come

An informal settlement in Cape Town. (Photo: Gallo Images / Jacques Stander)

After years of neglect, selected parts of government are beginning to recognise the valuable contribution of one of the most dynamic and adaptable segments of the housing market.

Small-scale rental housing is a grassroots phenomenon that is transforming people’s quality of life by providing decent affordable accommodation in well-located neighbourhoods. It’s also creating many jobs, skills and livelihoods by unlocking the agency and assets of individuals. 

A new report from the Human Sciences Research Council and Development Action Group shows that harnessing the full potential of this phenomenon requires active support and enablement on the part of government, not the bureaucratic indifference or enforcement of inappropriate regulations that has often characterised the past.

A confluence of forces has spurred a shift in thinking on urban housing — to embrace rather than penalise informal activity. 

The pandemic-induced disruptions have created a new sense of urgency about improving people’s security and wellbeing. 

The fiscal squeeze has curtailed the state-centred housing programme and prompted a search for new solutions to the backlog that are more bottom-up and driven by demand. 

In the economy, there is mounting pressure to support small and informal enterprises by reducing red tape and other unnecessary obstacles. 

Meanwhile, soaring frustration and instability in the townships has compelled decision-makers to do more about the hardship and squalid living conditions.

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In the absence of an effective housing policy that responds to people’s needs and realities on the ground, many township homeowners have been erecting makeshift structures in their backyards to rent out to individuals and families with no roof over their heads. 

This spontaneous process of converting under-used assets has been replicated over and over again across cities and towns, revealing the huge pent-up demand for cheap rental accommodation. 

Evidence suggests that backyarding has probably delivered more shelter than any other form of housing supply over the last two decades. 

This phenomenon has evolved in interesting and important ways in recent years. 

A range of small-scale entrepreneurs and township developers have emerged who recognise the demand for better quality rental units made of bricks and mortar. 

They can charge four or five times more for a solid unit than for renting out a shack or Wendy house, and can also recover their initial investment within three or four years if they manage their budgets prudently and limit their costs. 

But because they lack formal government authorisation for their buildings, they cannot raise long-term funding and have to rely on multiple ad hoc sources, savings and personal loans instead. 

The report found that having to comply with municipal planning and building regulations would more than double developers’ costs of development. This would render their projects completely unviable. 

The main compliance costs are development charges, more expensive building materials, rezoning fees, professional charges, administrative fees and procedural delays. 

As a result, most developers either don’t bother to apply at all for permission, or they give up part way through the process.

The surge in affordable rental housing units has been beneficial for property owners and occupiers, but it has also imposed a heavy burden on the public services in many townships. 

When five or six times as many households occupy a neighbourhood compared with the original planned infrastructure capacity, the risks multiply of having blocked sewers, electricity breakdowns, taps running dry and refuse collection systems being overwhelmed by the volume of waste produced. 

These hazards are compounded by physical encroachments onto the pavements and servitudes as property owners and developers seek to extend their building footprints beyond their own boundaries. 

This obstructs vehicle circulation and makes it impossible to gain access to the main water and sewage pipes and pylons for repairs and maintenance.

Municipalities have struggled to know what to do about these problems. 

It is difficult to enforce established planning rules and building standards when they are clearly unsuited to township conditions — and in the face of widespread community disregard and refusal to comply. 

So, officials often retreat to crisis management — only getting involved when fires break out, sewage spills onto the streets or electricity sub-stations collapse. 

The everyday invisibility of government erodes public trust and creates a high-risk, volatile environment where anything goes and unaccountable gatekeepers in the community tend to take charge. 

Selected parts of government now recognise the need for a fundamental change in approach. This requires working with, rather than against, the small-scale housing phenomenon and the various NGOs and other stakeholders involved in supporting it. 

There are three essential ingredients of a more positive and progressive policy. 

First, it is essential to simplify key built environment regulations and streamline administrative procedures to make applying for permission less cumbersome, onerous and slow. 

The enormous complexity of the land-use planning and development management system is prohibitively expensive for small and emerging developers to abide by. 

Second, municipalities need to raise awareness among developers and provide hands-on support to enable them to apply for planning permission and building approval. 

Some developers need constructive guidance and capacity building to safeguard the structural integrity of their properties and the health and safety of their tenants. 

Third, it is vital to take action on the wider physical and social environment of these areas. This requires additional investment in public infrastructure, schools, clinics and other facilities to accommodate the enlarged population in dignified conditions. 

It also means new ways of managing the public realm and open spaces to prevent vandalism and fly tipping, and to improve personal safety and security. 

In short, municipalities need to establish a new social contract and governance framework with these communities to improve communication and accountability, and to clarify mutual roles and responsibilities.

The City of Cape Town has plans which probably go further than many other metros to enable small-scale rental housing. 

An adjustment to the planning system is under consideration to exempt developers in certain areas of the city from having to apply for rezoning. A new bylaw is also being explored to simplify building standards for affordable rental units. 

And the opening of local planning support offices is being discussed, whereby developers can get expert help to draft their building designs and planning applications. 

The mayor and deputy mayor are behind these initiatives and the new Integrated Development Plan pledges institutional support.

Proper recognition of the role of small-scale rental housing will be a journey rather than a quick fix. 

There is further work to be done to address the needs for suitable land, project finance and title deeds, and to protect the rights of tenants and neighbours in the face of overbearing developers. 

With the appropriate support systems in place, there are much better prospects of shifting township trajectories from the prevailing “low road” of overcrowding, insecurity and instability, and onto the “high road” of more liveable and vibrant neighbourhoods. 

The gradual regularisation and formalisation of rental properties should also render their value more visible and enable municipalities to capture a fair share of it through rates and taxes. DM

Prof Ivan Turok holds the SARCHI Chair in City-Region Economies at the University of the Free State and is a Distinguished Research Fellow at the Human Sciences Research Council. Dr Andreas Scheba is a Senior Researcher at the HSRC and a Senior Lecturer at the UFS.

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