The City of Cape Town approved a fund aimed at supporting micro-developers who build affordable housing in lower-income communities.
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The fund will subsidise development charges from small-scale rental unit developments to stimulate the affordable housing market and attract investment in targeted areas.
Mayor Geordin Hill-Lewis says the Development Charges Fund will unlock new investment for more affordable housing development faster than the government can build. ‘This is harnessing the power of private investment to achieve an important public outcome: more affordable accommodation.’
He says the fund will be kick-started with an initial R20 million to subsidise qualifying micro-developers on a first-come-first-serve-basis. ‘Subsidies will be available to stimulate the development of more affordable housing in 194 targeted lower income areas.
‘The subsidy will make it much easier for micro-developers to invest in the small-scale rental unit market, enabling much more affordable accommodation across Cape Town.’
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In addition, 75% of the City’s record R12.1 billion infrastructure budget for the 2024/25 financial year will be allocated towards lower-income communities and households, including services such as better water and sanitation, roads, community facilities, and public transport infrastructure.
The subsidy will cover between 50% and 90% of development charges, which the City typically uses to pay for bulk services to support new developments, including roads, stormwater, water, sewerage, public transport and waste removal.
Some of the qualifying criteria includes:
- The applicant must be a micro-developer, intending to develop between three to 30 units at a site
- The applicant must provide proof of the submission of building plans to the City for assessment and approval
- The applicant must confirm that project funding is available before the payment of the development charges from the Development Charges Fund will take place to ensure payments from the DC Fund are prioritised and paid to those developers who are ready to commence with the development. This requirement does not exclude developers to apply for assistance from the fund, it is only a requirement before payment can happen.
A total of 194 areas are being target via this initiative, including, among others:
- Beacon Valley
- Belhar
- Bishop Lavis
- Bloekombos
- Crossroads
- Delft
- Dunoon
- Enkanini
- Fisantekraal
- Grassy Park
- Gugulethu
- Heideveld
- Joe Slovo Park
- Khayelitsha
- Kuyasa
- Langa
- Lavender Hill
- Lentegeur
- Lwandle
- Mamre
- Nomzamo
- Nyanga
- Ocean View
- Parow Valley
- Pelican Park
- Philippi
- Phoenix
- Retreat
- Seawinds
- Sir Lowry’s Pass
- Strand
- Strandfontein
- Steenberg
- Scottsdene
- Saxonsea
- Sun City
- The Hague
- Valhalla Park
- Vrygrond
- Wallacedene
- Wetton
- Witsand
- Westridge in Mitchells Plain
‘Cape Town has a thriving construction industry with micro-developers who are already developing affordable rental accommodation, mostly in formal neighbourhoods,’ says Eddie Andrews, Cape Town’s Mayco member for spatial planning and environment.
‘These entrepreneurs are well-placed to provide this type of accommodation at scale, and to contribute to a more densified and inclusive housing market.
‘A micro-developer is a landowner in one of these identified areas with an erf big enough to build small scale rental units on their land that are complying with building regulations and connected to the City’s services infrastructure.
‘Now that Council has approved the creation of the Development Charges Fund, these property owners can apply to the City for their development charges to be subsidised from this fund, which will significantly bring down the cost of building the rental units,’ he adds.
‘In so doing, the City can assist lower-income families to fully utilise their properties to earn an income from rental units, and at the same time these property owners and other micro-developers will assist with the supply of affordable rental accommodation in areas where it is most needed.’
The project will be executed in partnership with the Development Action Group, a non-profit that supports communities by addressing the economic, social and spatial inequalities within cities.
Quarterly progress reports will be submitted to the Land Release Mayoral Priority Programme to track the uptake of this pilot initiative.
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Also read:
City of Cape Town launches two affordable housing projects (capetownetc.com)
Picture: Mayor Geordin Hill-Lewis / Facebook