RDP homes ‘dead capital’ of R50bn

2012-09-02 15:56

 Johannesburg - Not registering nearly half of all RDP houses with any deeds office could be costing the South African economy at least R50bn, according to the Free Market Foundation.

Nearly half of all houses built in formerly black-designated areas are not registered with any deeds office – a situation which means their owners effectively have no legal claim to their homes.

The figure is based on the 10 million such properties valued at a conservative R5 000 each.

The foundation’s executive director, Leon Louw, said the houses were currently “dead capital” – they could not be used to open a bank account or access any other financial services.

He acknowledged, though, that attaching freehold title deeds to all such houses would be a logistical nightmare.

“While it could be a wonderful political opportunity, there are also huge challenges, including how to prevent people taking advantage of this. It would require tremendous political will,” said Louw.

The South African Institute of Race Relations’ figures from 2010 revealed that only 48% of the country’s approximately three million RDP homes were registered at deeds offices.

Louw said most black South Africans were still being subjected to apartheid-era land acts.

“Most black people in this country don’t have full title due to the mess that apartheid land legislation left.

“Most instances where black people were able to access full title were to buy former so-called white property,” Louw said.

According to him, these historical restrictions meant a large percentage of black property owners battled to enter the formal property market.

“They can’t sell their houses on the open market, thus there is always this underground economy where houses are being traded without deeds. It is a legal mess that is becoming much worse,” said Louw.

Most RDP houses are subject to an eight-year prohibition on selling or letting. More than one dwelling is not allowed per property.

“This had reduced letting, subletting and selling of a house to a ‘second economy,’” he said.

“Most ignore their lawful options and sell or let their RDP or other township house ‘informally’,” he said.

Land valuer Peter Meakin from the South African Constitutional Property Rights Association says that giving people freehold titles is the second best solution to solving South Africa’s property problems, apart from moving to a land-based tax system that would abolish VAT.

But he was sceptical whether taking away the restrictive rights on RDP houses would work.

“The state is giving away a free house. If the beneficiary goes away and sells the house, surely it defeats the purpose?”

Human Settlements spokesperson Xolani Xundu didn’t respond to messages left on his phone and email on Friday.

- City Press

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  • david.lebethe - 2012-09-02 16:54

    This is an urgent matter that needs looking into and the government to act on. Imagine having to emerge later that my children cannot inherit the very house I have been living in since 1996 and when I propagated for people not to pay rent on matchbox houses they lived during apartheid era? The rationale we used at the time, was that people (read Sowetans) had long paid-off their houses yet have no title deeds. It looks like nothing has indeed changed from that time as one has to roll up his sleeves and fight again.

  • Madoqua - 2012-09-02 18:17

    These figures don't add up. If we have 50 million people in SA and there are 10 million RDP houses out there, why do we still have people living in shacks? And how do you build a house for R5000? - 2012-09-02 18:33

      errr they say "Nearly half of all houses built in formerly black-designated areas are not registered with any deeds office" they go on to say The figure is based on the 10 million such properties valued at a very conservative R5 000 each." this means there are 20 million rdp houses LOL

  • Vince.York - 2012-09-02 20:16

    are you all beginning to get an inkling as to why zuma and the traditional kings want to push that bill through parliament so urgently, and to make even more land common property for the elected chiefs and kings only? SA government has been usurped by traditional royals determined to make a mockery of everyone and bankrupt them in the most evil nefarious way COME ON & WAKE UP, you are all about to see SA sold out insidiously from under your feet without even realizing it! AND THAT MEANS YOU TOO ALL YOU BLACK MEN & WOMEN blindly voting so loyally for your own financial destruction by pursuing tribal ways over the democratic means and safeguards.

      Blixum - 2012-09-03 08:58

      Stop whinging Yorkie. You voted for the anc and now you are blaming blacks for the predicament. Emigrate man. This is Afirca. You old hypocritical old weasel. A country gets the government it deserves. Proven through the ages and by history.

  • willem.dehaan.94 - 2012-09-02 20:35

    Having property registered in the deeds office is a simple procedure - obtain a diagram by having the land surveyed, have the diagram registered at the surveyor general's office and the state attorney's office can draw the deed of grant, assuming it is state land, and have it registered. All that is required is a decision to do so and set the procedure in motion. But, can this be done with the people who are now running the show? That is the question.

  • winifred.watson.9 - 2012-09-03 15:39

    My domestic has a RDP house, I asked her if she has papers to say it belongs to her, she said no. They told her she must wait 5 years. I said 5 years for what........she just laughs and thinks I am stupid for asking.

  • Mbonisi Gushman - 2013-09-16 18:14

    EFF should be SCREAMING about this. But they are silent.

  • David Christianson - 2013-10-10 16:42

    Given the failure to create a market in this space, my calculations suggest the creation of dead capital is more like R300 billion since 1995

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