More than 1 000 housing opportunities have now been delivered at the Mountain View development in Mossel Bay, where the Western Cape Government is introducing a new ownership model aimed at helping more working families get onto the property ladder. Cape {town} Etc reports.
The development has provided 725 Breaking New Ground (BNG) homes for lower-income households and 278 First Home Finance (FHF) opportunities for middle-income earners, according to the Western Cape Department of Infrastructure.
The latest announcement comes after criticism over the number of completed First Home Finance units that remained unoccupied. Provincial government previously revealed that around 80% of the remaining FHF homes were vacant, largely because many qualifying buyers could not secure mortgage finance.
A different path to home ownership
To address the challenge, the provincial government has approved an Instalment Sale Agreement (ISA) model for the remaining Mountain View units.
Under the previous model, buyers had to secure a bank home loan before they could take ownership of a First Home Finance unit. The new Instalment Sale Agreement allows qualifying buyers to move into their homes without an upfront bank bond.
Instead, they make monthly instalment payments directly to the provincial government while working towards full ownership. Participants also receive financial literacy and homeownership support to improve their financial readiness, according to the Department of Infrastructure.
Western Cape Infrastructure Minister Tertuis Simmers said changing economic conditions required government to rethink how affordable housing is delivered.
‘Rather than abandoning the project we are adapting it to meet today’s housing realities and creating a sustainable bridge from renting to owning. Affordable housing must respond to the realities faced by working families. If the market changes, government must innovate.’
He added that the approved model would help keep completed homes occupied, protect taxpayers’ investment and give qualifying families ‘a genuine opportunity to become homeowners’.
Bridging the ‘missing middle’
The revised approach is aimed at the ‘missing middle’, households earning between R11 400 and R22 000 a month. These families often earn too much to qualify for fully subsidised housing, yet struggle to obtain a bank home loan because of affordability assessments, existing debt or limited credit histories.
Eligible buyers may also qualify for a First Home Finance subsidy of between R38 911 and R169 264, depending on household income. The province says the homes are not being sold at a lower price. Instead, the new financing model changes how qualifying buyers purchase them.
The Department of Infrastructure says the revised model is expected to reduce the number of completed homes standing vacant while giving qualifying families a practical route to homeownership without having to secure mortgage finance before taking occupation.
The government maintains that the new model will also help reduce the risk of vacant homes being vandalised or illegally occupied while ensuring completed housing stock is used as intended.
Be the first to know – Join our WhatsApp Channel for content worth tapping into! Click here to join!
Also read:
Picture: Jakub Zerdzicki / Pexels
