The “Incremental” Housing Boom – how do households get the building advice they need?
It is incredible the change that occurs in an area over a defined period. Four years ago there were two Cashbuild stores supplying the largest district municipality of Capricorn in Limpopo Province, in the north of South Africa. Going back today, that number has more than doubled, and rightly so due to the noticeable scale at which many people are improving their houses. The demand for housing construction materials is evidenced by the upsurge in these building stores. Alongside the growth of building stores is the number of households that are either in the process of renovating or adding rooms, or who have building materials on their yards.
In the rural village of Moletlane (where I went for my festive holiday), three out of four of my neighbours were either extending their houses or had purchased building materials, such as sand or bricks, and were storing these in their yards. My brother and mother are also renovating our family home. One of the biggest constraints that seemed to be prevalent was finding skilled builders to undertake the construction of these houses.
For example: We are renovating our old house which was built by my grandmother way back in the day. The amount of effort it takes just to find the right person to do a simple task- and to do it well- is extremely excruciating. One has to rely on word of mouth as there is no formal registration system to identify reputable builders or contractors. Not finding the right person has been costly: thus far, the list of things that need to be fixed the second time around include our roof, the wall plastering and the electric wiring. The people employed to do the job the first time around came recommended and some we even knew personally. The amount of money that has been wasted due to poor workmanship has been significant and set us back, delaying the completion of the renovation.
Minimising the risks associated with incremental construction has been on the agenda of many housing finance institutions. Many of them have developed some form of programme to address the support needed by borrowers in their incremental construction process. Fortunately this is not a new area, there has been extensive work done in Africa and other parts of the world concerning this subject matter.
Housing support services is a theme within the housing microfinance sector that resonates with many disadvantaged communities and tries to find solutions that benefit everyone. Between September 2009 and January 2010 there was a series of studies conducted by FinMark Trust’s Centre for Affordable Housing Finance in Africa into the impact of housing microfinance and the associated housing support services. The study found that firstly, many communities experienced great challenges when it came to procuring skilled builders and artisans. Secondly, offering housing support services came up as a real and obvious solution that is being offered mainly through financial products sold by lenders. The form of support differed among the institutions, whereby some provided support throughout the entire housing value chain and others only in one section of the chain.
In South Africa there are a number of lenders that provide support in the construction of a house. The Rural Housing Loan Fund is a Section 21 Company established by the South African government as a wholesale development finance institution with the mandate of supporting the growth of retail lenders offering housing microloans. The RHLF has developed a building advice handbook which its client lenders make available to their borrowers. The book offers some very basic advice to help borrowers understand the technical requirements of their housing construction process. Habitat for Humanity Kenya offers a broader range of support where they design the house, ensure building standards are adhered to, even identifying skilled labour and much more.
Defining the right sort of housing support srevices to offer is an important part of the housing microfinance loan design process. But contexts differ and so special attention should be given to making realistic interventions that suit local conditions. It needn’t be complicated: the solution to minimising construction related risks could be as simple as having a local registration platform where builders can be registered and examples of their past work can be recorded. This would help those renovating their homes to choose a reputable builder from among those claiming to have the necessary skills. While most of the housing support services on offer are limited to the lenders’ clients, there may be value in lenders joining forces in attending to this important detail that is somewhat outside of their core business. The solution to every problem is simply a matter of getting the right people into a room together.