The Department of Human Settlements (DHS) and the Banking Association of South Africa (Basa) have revived a revised memorandum of understanding (MoU) to tackle the current low-income-housing provision backlog and advance the department’s ambition of delivering millions of affordable housing units in the next four years.

The public–private partnership aims to facilitate cooperation between the two parties in terms of extending housing finance on a sustainable basis to low-income borrowers who failed to meet government’s subsidy threshold but cannot afford private-sector housing.

The initial 2005 agreement saw R44-billion – R2-billion above target – set aside for afford- able housing finance for those earning between R1 500 and R7 500 a month by 2008, in accordance with the Financial Sector Charter; however, the programme fizzled out shortly thereafter.

Now, DHS acting director-general Mbulelo Tshangana said that, with a housing backlog of 2.1-million, available government funding of R170-billion through the Medium-Term Strategic Framework was inadequate and private-sector support was required.

Speaking at a plenary session between the parties, in Boksburg, he explained that a social contract between the department and Basa has been inked last year to cement the banking sector’s commitment to increase the number of approved end-user loans for affordable housing, support urban development, set a clear housing programme, outline delivery targets and outcomes and mitigate the housing finance constraints that largely related to affordability.

The DHS and Basa committed to appointing working teams that would give effect to the MoU, with the intention of “operationalising” the partnership and accelerating the financing of affordable housing.

About 54% of households, earning below R3 500 a month, met the threshold for the partial- finance-linked individual subsidy programme.

However, of the 31% of households earning between R3 500 and R10 000, around three- quarters – up to three-million households – fell into the gap of households unable to afford private-sector housing, but were above the subsidy threshold.