The Social Housing Investment Programme may invest in social housing projects or social housing institutions (SHIs) in accordance with the investment criteria set out in the social housing Regulations. Capital investment is made through Restructuring Capital Grants, Provincial Institutional Subsidies, and Debt Funding. There are instances where delivery agents are able to contribute their own equity, or may secure donor funds.
Restructuring Capital Grant
The primary purpose of the social housing Restructuring Capital Grant is to contribute towards spatial, social and economic restructuring of South African cities. It is a significant contribution to the capital cost of a Social Housing Project, contributing to the delivery of viable, feasible, and sustainable Social Housing Projects that provide affordable rental housing to the poor.
All delivery agents shall have provisional or full accreditation status, and shall comprise,
- Existing or new SHIs
- Non-profit private sector companies
- For profit private sector companies
Delivery agents shall exclude a provincial government or municipalities.
Restructuring Capital Grant (RCG) Quantum
- The total grant quantum will be determined on a project-by-project basis and will depend on the affordability mix of the units
- The standard grant quantum is equal to R125 615 per unit but may be escalated annually at the discretion of the Investment Committee
- The standard grant quantum will apply to the allocation of a minimum of 30% of the units to the primary target market (households earning R1500 up to R3500 a month) up to a maximum of 70% of the units. The secondary target market (households earning R3501 up to R7500 per month) shall occupy the remaining units
- The variance to the standard grant quantum will be based on the degree of allocation of units to the primary target market. The standard grant quantum will increase by R 749.00 per 1% allocation to primary beneficiaries up to a maximum of 40% (70% the total units in the project). This variation quantum may be escalated annually at the discretion of the Investment Committee
- Whilst projects may include a higher proportion of primary target market than the 70% maximum referred to above, they will not receive any further increase in the total grant quantum.
- Public notices shall be issued by SHRA from time to time, inviting SHIs and other delivery agents to submit applications for RCG funding
- The SHRA investment committee shall determine suitable application requirements, standard forms\templates or tools to be used in applications and may alter or amend these, as it deems fit
- The application will comprise
- the submission of documentary proof of status of the project (to indicate the degree of project readiness) – currently QS-B
- the submission of a comprehensive feasibility study indicating the financial viability of the project – currently QS-C
- any other information as the SHRA may require
- Applications must be submitted to the SHRA on the date and time stipulated in the public notice
- SHRA shall, within 90 days of receipt of applications, notify the applicants whether or not their applications were successful. SHRA shall provide reasons to the applicant in the case where applications were unsuccessful
Specific Investment Criteria
The project must
- meet social housing policy objectives
- be supported by the provincial and local governments
- be located in a Restructuring Zone
- meet the criteria for Conditions Precedent and Financial Closure
- for private sector applicants, a minimum of 10% equity contribution is obligatory
Provincial Institutional Subsidies
The confirmation of the allocation of Provincial institutional subsidies to a project is a pre-condition to the submission of a RCG application. On approval of the grant, it is a condition of Financial Closure that the delivery agent enters into a contract agreement with the Province for the subsidies. The subsidy agreement shall be concluded on the standard terms and conditions of the Department of Human Settlements at the quantum determined by the province taking into account the provisions of the Housing Code and any national and/or provincial adjustments for local conditions.
The SHRA will enter into cooperative arrangements with the province for the disbursement of State funds to meet the financial expenditure targets of both parties.
The province will undertake its own inspections as the project proceeds to determine compliance by the delivery agent of its contractual obligations in terms of the subsidy agreement.
The confirmation of the approval in principle of a debt funding arrangement by an approved Financial Service Provider for a project is a pre-condition to the submission of a RCG application. On approval of the grant, it is a condition of Financial Closure that the delivery agent enters into a contract agreement with the Financial Service Provider for the required loan to cover the balance of funds for the project after taking into account the State grants and subsidies. The debt funding agreement shall be concluded on terms and conditions that are acceptable to the SHRA.
Own Equity And/Or Donations
In certain circumstances, the delivery agent may contribute its own equity to the project or obtain donations to the project. This additional source of funding is welcomed and is acceptable to the SHRA. These sources of funding are to be declared at grant application stage, and are to be included in the financial viability to demonstrate the reduction in debt financing.