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Property owners in less formal areas can boost rental market

In 2020 the City of Cape Town’s Council approved recommendations intended to enable property owners in less formal areas to develop small scale rental accommodation that is affordable and complies with the National Building Regulations. A report identifying areas appropriate for small scale rental units has been circulated to Subcouncils across the city for their consideration and comment.

Cape Town is facing a huge demand for affordable rental accommodation.

An in-depth analysis in 2020 of the small scale rental market in Khayelitsha found the market is thriving, despite any assistance from government. This market is driven by private individuals who develop rental opportunities on their land, either by extending their homes, or by adding separate rooms or structures. These additions are formal or informal.

Following this study, the City’s Council approved a report in September 2020 that concluded that the City should consider incentives for private property owners in incremental housing zones to assist with the provision of affordable rental accommodation.

Following Council’s support, City officials have made great progress over the past 18 months to develop initiatives to stimulate this trend, and to make it easier for individuals in incremental housing zones to pursue this form of development.

The progress to date is as follows:

• A report on a proposed overlay zone to identify areas appropriate for small scale rental units has been circulated to Subcouncils for their input and comment

• A menu of proto-typical building plans for small scale rental units have been drafted and are now being developed. Once concluded, the land owner will be able to select a plan from this menu and submit it to the City for approval in terms of the National Building Regulations

• A review is underway to determine the development contributions payable by those developing small scale rental units

• The City has entered into a memorandum of understanding with registered financial institutions making development finance available to this sector

• The City has committed to supporting the roll-out of an academy where contractors and developers can be trained

• ‘The report that is currently before Subcouncils for consideration and comment, relates to small scale rental units that private property owners can build on their properties to earn an additional rental income. The intention is for these units to be formal and comply with National Building Regulations. These are referred to as small scale as normally, you will find only one or two of these units on an erf, depending on its size.

• ‘Local ward councillors across the metro now have the opportunity to comment on this proposal to make it easier for private property owners to develop units on their properties to rent out to tenants. Several initiatives are being explored to make this easier. For example, we are working on providing ready-to-use building plans for such units that owners can procure from the City, and we are liaising with financial institutions to provide financial assistance or services to those owners who may want to make use of the opportunity,’ said the City’s Deputy Mayor and Mayoral Committee for Spatial Planning and Environment, Alderman Eddie Andrews.

• This form of development is already happening in areas mentioned in the report before the Subcouncils, and are close to economic opportunities (jobs) with access to public transport services.

• Once the City has received comments from all of the Subcouncils across the metro, a report will be submitted to Council where the City will request Council’s approval to commence with a public participation process where residents will have the opportunity to submit their comments.

• This process is to take place in the latter part of this year, should Council agree and if all goes as planned.

• ‘In February, the Mayor and I hosted a meeting with the development industry and those involved in the small scale rental market also attended. The demand for affordable housing in less formal areas is huge, and growing year-on-year. The City alone cannot meet this demand. Micro developers are already involved in this sector, they are doing great work and the City wants to make it easier for them to do what they do best: to build small scale rental units at pace. One way of doing it is by removing red tape and strengthening this exciting partnership,’ said Alderman Andrews.

• Apart from assisting and encouraging micro developers, this is also intended to empower small scale entrepreneurs across the city to use their properties to generate an income.

• The City is working in partnership with the Development Action Group, Human Research Council and financial institutions to promote and assist the interest of this important sector.

• ‘By investing in their properties the small scale rental landlords can become owners of on-site long-term capital assets that will grow in value. These units should comply with the National Building Regulations, which is in the interest of the health and safety of the tenants, and the City wants to ensure that the units comply with our standards to connect to services such as water, electricity and sewage,’ said Alderman Andrews.

Source: City Of Cape Town