Photo source: Urban LandMark, 2010
In a 2010 study entitled “The struggle for property ownership in New Crossroads”, Urban LandMark examined the implications of owning a home for low income people in formal South African settlements. In particular, they focus on New Crossroads, a small township of about 20 000 people located outside of Cape Town. Recognising the link between housing ownership rights and the promise of equal citizenship, this study serves as a reminder of the importance of consumer education and tenure security. Only when homeowners have an unambiguous sense of tenure on their homes will they feel as though their citizenship and sense of belonging in the Western Cape has been affirmed. An analysis of this study reveals a few important lessons.
- There is an overwhelming need for a clear and simplified transaction process. The study suggests that the ways in which a property is transferred are as important as the property itself. In an attempt to formalise their ownership, the municipality offered residents three opportunities to transfer public rental property into individually-registered titles. Many households did not take the opportunity because they were unaware of the offer, could not afford the transfer costs, or were even excluded from the township registry. For those households who did apply for a registered title, they had to navigate various pieces of legislation, leaving them uncertain about the exact status of their title. A prolonged transaction process creates a sense of unease among consumers, making them feel insecure about their ownership.
- Once consumers secure a property from the government, they must navigate the process of paying rates. Many tenants in New Crossroads were confused as to whether they were responsible for paying rates, or whether it was the municipality’s job. In fact, the study revealed that very few people understood the difference between rent and property rates. The residents who were aware of their responsibility did not make repairs on their homes or pay their rates because they could not afford to do so, or because they did not have the documents needed to prove they were the legitimate owners.
- Municipal debt is a significant problem, yet the study suggests that many low income people are willing to pay for services, but remain confused by their accounts. In one case, the study identifies a man (Mr. S) who did not understand that a dash (-) before a value on his account indicated a credit balance. He ultimately continued to pay into current accounts that were in credit, thinking he owed that value.
Thus, the most significant finding of the study is that an asset must be accompanied by education. Low income people such as Mr. S can find themselves in vulnerable positions, paying much more of their disposable income than they can afford, because they do not understand housing finance. When buying and selling their houses, moreover, opportunities such as government subsidies become inaccessible when unaccompanied by education and assistance throughout the application process.
Each of these challenges can be meaningfully addressed by streamlining and centralising the transaction process, while simultaneously implementing programmes to educate consumers on buying, selling, and homeownership. Clarifying existing rights of occupation in New Crossroads — status of ownership and leasehold — with the assistance of the City of Cape Town and the Deeds Office, would also address some of the insecurities that current residents face over their ownership.
A link to the study can be found here.