Inclusionary Housing Development By Joshua Rutgers

What is inclusionary housing development and will this become a feature of housing policy in South African cities? The housing policy recently adopted for Johannesburg provides some insights.

The City of Johannesburg Metropolitan Municipality on 22 May 2019 put into effect its Inclusionary Housing Incentives, Regulations and Mechanisms policy, which defines inclusionary housing as “a housing programme that, through conditions attached to land use rights approvals, requires developers to dedicate a certain percentage of new housing developments to low income and low-middle income households, or to households that may otherwise not be able to live in such developments”.

This policy seeks to deal with problems associated with the provision of middle to low income housing in Johannesburg by attempting to ensure a greater mix of income groups in new developments, so that middle to low income households will be afforded the opportunity of residing closer to employment opportunities and social amenities in the city.

It will now be mandatory in the City of Johannesburg for all new developments with 20 dwelling units or more to include a minimum of 30% of the total units in the development for inclusionary housing, on the same site as the other (“market”) units of the development. The policy only applies to new development applications, and will therefore not impact on existing land use rights. The requirement of inclusionary housing provision will be a condition for approval of the development by the City of Johannesburg.

The policy provides four options for developers:

1. Providing 30% of the total units of the development for inclusionary housing, which can be made up of the following:

• Social Housing units in terms of the Social Housing Act, 2008, which must have the same outward appearance as the market units of the development, and must share in the common spaces and facilities of the development;
• Finance Linked Individual Subsidy Programme units, which comply with the minimum design requirements; and
• Privately owned units, with a rental cap of R2 100, which comply with the minimum design requirements.

1. Providing 10% of the total residential floor area of the development for units which are a minimum of 18m², a maximum of 30m² and an average of 24m². These units are inclusionary housing units, and must comply with the minimum design requirements. This option will only apply in areas where a density of 60 dwelling units per hectare or more is allowed under the prevailing spatial policy.
2. 20% of the total residential floor area of the development will be made up of units which are 50% of the average size of the marketed units, with a minimum size of 18m² and a maximum size of 150m². These units must comply with the minimum design requirements.
3. A developer may request to provide for inclusionary housing in a manner differing from the first three options. A developer must then give reasons for not making use of options 1-3, with a proposal setting out how inclusionary housing will be provided for. The City of Johannesburg may then accept, reject or amend such proposal.

The minimum design requirements, referred to in options 1-3 above, entail that inclusionary housing units must comply with the following:

1. A private bathroom;
2. A minimum of 7m² habitable space per person and a minimum unit size of 18m²;
3. The outside appearance of the inclusionary housing units must be the same as the other (“market”) units of the development, on the same property;
4. Inclusionary housing units must share in the common facilities of the development.

The inclusionary housing policy will materially affect developers, probably resulting in housing development being less profitable. However, there are also incentives for the implementation of the options listed above, ranging from an increase in the allowable residential floor area to an increase in density to accommodate inclusionary housing.

The City of Johannesburg’s new inclusionary housing policy is aimed at ameliorating the social inequality that exists within the City, by attempting to integrate different income groups in new developments and providing affordable housing to lower income households, and bringing lower income residents closer to employment opportunities and social amenities.

The inclusionary housing policy aims to change past housing inequalities and discrimination. Whether the policy will achieve its objectives remains to be seen.