Affordable housing remains an important need and continues to be one of the most pertinent topics of our time. As urbanisation continues and population growth expands, the need to sustainably provide affordable housing opportunities to more people has become urgent.
Lusanda Netshitenzhe, CEO of TUHF21 believes that while making a profit through investing in affordable housing, is essential; it needs to be complemented with deliberate actions to create a positive impact on communities and society. “This is especially so in recent times, because funders are beginning to consider how effectively companies align with Environmental Social and Governance (ESG) goals before funding a project.”
Additionally, in South Africa, over the past year water scarcity has become a contentious and critical topic to address. This, along with the recent return of load shedding shining a light again on the need for sustainable power supply, is making environmental concerns a priority. Housing and development projects, for example, are increasingly incorporating greening solutions – including solar power, more efficient water heating alternatives and more efficient ways to use both electricity and water.
“We are no stranger to impact investing and the role it must play in inculcating positive, lasting social change. We have been committed to fostering urban regeneration and densification through affordable rental housing for more than 21-years and continue to remain so. What we are seeing now is the importance of impact investing being brought even more to the fore,” says Netshitenzhe.
Affordable and decent housing is crucial to fostering the dignity of all citizens, as well as enabling people to build their prosperity. It is also an integral part of addressing spatial exclusion and historical inequalities.
For these reasons, the government has committed to provide more housing in the country’s city centres, and the new Expropriation Act, if applied appropriately, lays the groundwork to take a firm aim at addressing the problems of abandoned and hijacked buildings and to use such buildings to create new affordable housing opportunities.
“However, neither government nor legislation can address the challenge of creating affordable housing on its own,” says Netshitenzhe. “Fostering urban and economic development requires partnerships between government, private companies and entrepreneurs who are empowered to succeed, so that together we can generate sustainable, inclusive growth in our cities and the country. For that to be a reality, we must attend to urban regeneration, urban densification, and urban management.”
In context, for the past 30 years, government has responded to the challenge of providing affordable housing in many commendable ways and their programmes have accommodated many people in decent homes.
While this approach had value, it also meant that many such housing developments were built on the periphery of cities, where building costs could be kept low, and land was less expensive. Unfortunately, this also resulted in urban sprawl, fragmented city structures, and people having to travel long distances into the city where many worked.
The recent pandemic and the lockdowns it demanded magnified the social inequalities that have long been of concern. Lack of access to well-located affordable housing and lack of access to funding for entrepreneurs has reached a point where critical intervention is needed.
“We have aimed to address these challenges with uMaStandi, which focuses on reinvigorating townships and helping bring decent and affordable housing into traditionally underserved areas,” says Netshitenzhe. “Our approach is to curate products that solve urban development challenges and there is still more to be done. The next product we are considering bringing to market is a rent-to-own model. The idea would be to offer property entrepreneurs a funding vehicle that allows them to provide housing on a rent-to-own basis rather than a rental-only basis.”
Once adopted, the product will mean tenants can ultimately buy their units – making it easier for first-time homeowners to enter the market, creating a sense of ownership of the unit, the building and the surrounding precinct.
“We believe that this will inculcate more active involvement from tenants in our areas of finance, leading to better urban management and preserving the quality of building stock. We further believe that tenants who own part of the buildings in which they live are more likely to feel invested in building upkeep and maintenance of the surrounding precinct,” says Netshitenzhe.
“Our aim is to create real development impact and value in areas where we invest and this, we do to improve people’s lives – enabling them to live in dignity, earn a sustainable livelihood, succeed and contribute to healthy communities. This is the kind of positive and sustainable socioeconomic change that we are committed to,” concludes Netshitenzhe.
