MAIN IMAGE: Rudi Botha, CEO of BetterBond and Dr Andrew Golding, chief executive of the Pam Golding Property group
From a real estate perspective, the big news coming out of the Medium-Term Budget Policy Statement (MTBPS) was that R1bn of the R50bn worth of government expenditure that is being reprioritized over the next three years will be directed to housing subsidies that assist more low and medium-income households to access affordable home loans and become home owners.
So says Rudi Botha, CEO of BetterBond, in a recent media statement. He notes: “Finance Minister Tito Mboweni did not elaborate but we assume that he was referring to boosting the number of subsidies available under the Finance-Linked Individual Subsidy Programme (FLISP) introduced some years ago by the Department of Human Settlements (DHS).”
According to the statement FLISP* is intended to assist those earning more than R3500 a month but less than R15 000 a month (the “gap” market) to qualify for home loans and buy their own pre-owned or newly-built homes – and it is the only government housing programme that immediately brings low and medium-income earners into the formal or “bonded” housing sector, he says.
“Consequently, the move to centralise an additional R1bn worth of funding and make it available to those applying for FLISP subsidies is likely to have quite a significant effect on the real estate market over the next three years.”
In a recent statement from Pam Golding Properties, Dr Andrew Golding, chief executive of the Pam Golding Property group, also welcomed the announcement of R1 billion in housing subsidies. “Also positive is the R669 million to be invested over the medium term to revitalise government-owned industrial parks in township areas which will boost employment opportunities and hence ultimately local housing markets,” he added.
Dr Golding said the finance minister’s statement sought to inspire investor and market confidence in South Africa by reinforcing the five measures recently highlighted by the President in order to stimulate the economy.
“With Tito Mboweni at the helm, it is hoped that we will see a return to fiscal health with the growth-enhancing economic reforms implemented and coming to fruition, as we need to see a confidence boost not only among investors but also among our country’s own citizens and the business sector alike. We also trust that the MTBPS will serve to retain South Africa’s current credit rating with Moody’s, thereby averting an exodus of foreign capital, and crucial to sustaining the Rand’s recent recovery while the country gets its economic reforms back on track,” said Golding.
“Over and above all, an economic stimulus will have meaningful spin-offs for all – including the housing market – but most importantly in the current economy, for increased investor confidence and employment opportunities. Unemployment is a key imperative, especially given the high percentage of unemployed youth who after all, represent the future of South Africa and who are our aspirant home owners.
Enabling and encouraging them to acquire their own residences in turn bodes well for their future financial stability while in turn, impacting positively on the housing market in general. For after all, the housing sector is a significant contributor to government revenue generation via transfer duty, municipal rates and taxes and construction,” concluded Dr Golding.
More on FLISP subsidies
According to BetterBond’s statement FLISP subsidies are available on a sliding scale depending on household earnings, with the maximum amount available (to households earning between R3500 and R3600 month) being R87 000. These funds can be used to either directly reduce the size of the bond required to purchase the property in the form of a deposit or bridge a shortfall between the loan amount and the property price.
According to the DHS medium-term expenditure notes, some 23 300 FLISP subsidies have been granted to date, and a further 18 700 were expected to be granted in this financial year before the additional R1bn allocation in the MTBPS.
And now, says Botha, even if every household that applies for a FLISP subsidy were to receive the maximum grant of R87 000, the extra R1bn has the potential to enable at least 12 000 additional families in the gap market to access home loans and acquire their own homes over the next three years.
“We are thus delighted with this move and would urge all those seeking home loan pre-qualification prior to launching a FLISP subsidy application to do so through a reputable bond originator like BetterBond,” ends Botha.
**For more information on FLISP subsidies see https://www.nhfc.co.za/Products-and-Services/flisp-overview.html