Investigation into the delays in issuing title deeds to beneficiaries of housing projects funded by the capital subsidy

The Department of Human Settlements reports that between 1994 and 2009, 2.94-million housing units and serviced sites have either been built or were under construction. By September 2010, 1.44-million of these properties were formally registered on the Deeds Registry. This means that about 50% of subsidy beneficiaries had not yet received formal title for their housing. Moreover, since 2005, the percentage of subsidy properties that have been formally registered per year has plummeted.

Research commissioned by Urban LandMark points to several factors that undermine the transfer of title deeds to subsidy beneficiaries, including:

Delayed and stalled processes of township establishment and proclamation
Revisions to the project payment process in the development of subsidy houses
Failure to hand over title deeds, even where they have been issued
Appropriateness of the deeds registration system.

The major cause is a failure by developers - both government and the private sector - to finalise the establishment and proclamation of new areas being developed for subsidised housing. Projects go ahead without the approval of a General Plan for the area, largely because the players involved, lack either the time or expertise (or both) to address the many underlying issues that need to be resolved on certain tracts of land. Legislative, administrative and situational difficulties all contribute to the challenges. With the immense pressure on government officials to deliver housing at scale, the processes of township proclamation are sometimes short-circuited in favour of getting houses on the ground quickly.

The delay in issuing title deeds for subsidised houses fundamentally undermines the asset quality of government-subsidised housing and compromises the integrity of our Deeds Registry. It is a critical challenge facing the state, which must be addressed with urgency.

Our research finds that there are two areas in which registration performance must be improved. First, changes must be made to improve registration rates in new projects, and secondly, steps have to be taken to address the backlog - the roughly 1.5-million beneficiaries without title deeds.

Further research in this area

A research initiative sponsored by the FinMark Trust, Urban LandMark, the National Department of Human Settlements, Western Cape Department of Human Settlements, the South African Cities Network and the FB Heron Foundation explored the performance of government-subsidised housing in South Africa. The investigation found that:

Just under 25% of all residential properties in the Deeds Registry are government-subsidised houses delivered as part of the national housing subsidy programme.
Over one million subsidy beneficiaries have not been provided with the title deed to their property.
Subsidy houses are valued by their owners and significant levels of investment are evident.
Only 6% of all formally registered, subsidised houses have been sold at least once.
Subsidy properties have been used to secure about R20-billion in mortgage finance.

The reports within this project can be accessed at FinMark Trust's Centre for Affordable Housing Finance in Africa.