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A people-centred housing strategy to address the “missing middle”

Aurecon’s young professionals developed a strategy called The Great Commission to help employees classified as the ‘missing-middle’ enter the housing market, as well as assist young people with early access into the housing market.

The strategy leverages existing financing options in South Africa to help employees classified as the ‘missing-middle’ enter the housing market.

18 April 2018 – Property is a door to wealth creation. With property, you can secure your future and leave a legacy. How many people want to be home owners, but don’t have the means to get into the property market? Are there people who qualify for certain subsidies but simply don’t realise it?

This was the question posed to young professionals at global engineering and infrastructure advisory company Aurecon, who set out to look at ways that they can help Aurecon staff enter the housing market sooner and without the restriction of affordability barriers.

The strategy that they have come up with, which they call "The Great Commission", leverages existing financing options in South Africa to help employees classified as the ‘missing-middle’ enter the housing market, as well as assist young people with early access into the housing market. The ‘missing-middle’ are those people who don’t qualify for subsidised housing, specifically Reconstruction and Development Programme (RDP) housing, but also do not earn enough to qualify for a home loan.

Aurecon employees have been instrumental in designing and bringing client’s building dreams to life, and through the Great Commission initiative those same employees will now have the opportunity to make their own building dreams a reality by owning their very first house.

"We realize that housing is a big challenge across a number of demographics in South Africa, and The Great Commission’s goal is to bring information to those that need it most and continue working to establish additional benefits," says Nothando Khumalo, Aurecon Junior Engineer.

“Millions of South Africans live in shacks and while government has implemented the RDP, this subsidy targets households earning less than R3,500. The qualifying criterion leaves a massive gap of individuals – the “missing middle” – who are ‘too well-off to qualify for RDP housing but not so well-off’ to qualify for a home loan,” says Khumalo.

Many low- to middle-class people in South Africa are stuck between a rock and hard place when they realise that not only do they need to earn R15 000 to qualify for a home loan from banks, but these home loans also have high interest rates.

Investigating different finance models

“To create a people-focused housing strategy that help staff to enter the property market as well as enter it sooner, we started investigating the different subsidies and opportunities in the market,” says Khumalo.

Our investigations focussed on two opportunities in the market. The first is a government housing subsidy called FLISP (Finance Linked Individual Subsidy) by the National Housing Finance Corporation (NHFC). This subsidy was developed by the Department of Human Settlements to enable sustainable and affordable first-time home-ownership opportunities to those who earn between R3 501 and R15 000 per month.

The second opportunity is HiP (Housing Investment Partners) financing model whose mandate is to allow for early access into the property market through specially restructured repayments. HiP is an independent financer that is affiliated with the NHFC and Old Mutual. The selling point of HiP housing is that the monthly repayments are calculated according to your salary and what you can afford.

HiP financing is targeted at individuals who earn R30 000pm gross or less, or for households that have a total income of R60 000pm gross or less. HiP finances properties, subject to qualifying criteria, to a maximum of R650 000.

One of the team members has been appointed as the Facilitator of The Great Commission, so people can book an appointment to get more information about property financing models that they could use to purchase a home, as well as get assistance with the application processes for each of the programs.

The team at Aurecon is in the process of expanding horizons in future by liaising with financial institutions on issues such as interest rates and other large group benefits that could be offered.

“Our goal is to work with banks to help get more of our staff in the property market at younger ages, and we want to help guide our peers through the process,” says Khumalo.

Aurecon employees attended a launch of the programme at Aurecon’s Tshwane office and feedback from staff was very positive.

“This is an excellent initiative and I think it’s going to help a lot of people. I want to be a property owner in the future and I’m going to book a session with the facilitator to find out what my next steps should be,” says Chantell Fisher, Aurecon Project Administrator.

“I’m currently renting but I want to own my own property. I’ve been struggling to move from tenancy to ownership for a while because I couldn’t qualify for a loan. This information session has given me a better understanding of how I can move forward,” says Rodney Louw, Aurecon Records Management Advisor.

Learn more about inspiring projects in South Africa here.

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