The City of Johannesburg Inclusionary Housing Policy DETERMINING - PowerPoint PPT Presentation

The City of Johannesburg Inclusionary Housing Policy DETERMINING THE POLICY EFFECT ON THE RESIDENTIAL PROPERTY SECTOR JULY 2019

1. Introduction  Review dynamics surrounding inclusionary housing policy in the City of Johannesburg  Examine proposed approach to policy implementation  Gather input from property sector stakeholders  Determine the effect of the policy implementation on developers, residential property market, property development, local economy

2. Impetus for implementation • Unique spatial, social, human settlement context Isolated Affordable Segregated human housing urban spaces settlements backlog Inc Inclusionary ho housing as as int interventi tion • Private sector participation in affordable housing • Affordable housing supply in well-located areas • Integrate peripheral communities in formal areas

3. Overview of inclusionary housing

3.1 .1. Im Implementatio ion approach 1 2 3 4 Mandatory ry Volu luntary ry Ta Targ rget eted Neg egotia iated • • Developers obliged to Developers incentivised by • Mandatory requirements • Requirements are negotiated include units deemed public sector to include applicable for developments in on a project-by-project basis affordable units affordable areas specifically delineated for between developer and public • Incentives to induce developer • Blanket approach to inclusionary housing sector participation implementation • Area delineation in line with • Determined by the unique • Compliance required to gain development objectives financial considerations of the development rights • Outside these areas, voluntary project • Certain cost offsetting implementation may still take measures availed by public place sector

3.2 .2. Poli licy ele lements a b c d Mode e of f Inclusionary Aff Affordabil ilit ity Affordabil Aff ilit ity pro rovi visio ion requirem re ements defi efiniti tions mec echanis ism 1. On-site 1. Price and rental restrictions 1. % units 1. Homogenous 2. Off-site 2. Dwelling unit size 2. % of RFA 2. Differentiated 3. Fees in-lieu restrictions

3.3 .3. In International case studies • Gro rowing demand for for inc inclusionary ho housing im implementa tation Identify approaches; instruments; and mechanisms o Determine factors which influence implementation o Relevant approach transferable to local urban context o • NB int internati tional cas ase stu tudies o Context; approach; mechanisms; justification; incentives; requirements o Developing countries: Brazil; Colombia; Turkey o European countries: Spain, Ireland, England o North American countries: USA & Canada

3.3 .3. In International case studies Measure toward protecting development feasibility ✓ Refraining from a blanket, city-wide implementation of rigid inclusionary requirements ✓ Inclusionary requirements are flexible based on the local context relating to the economic and property market conditions ✓ A spatially flexible approach to inclusionary housing implementation, taking cognisance of differing land values and property market conditions ✓ Provision of cost-offsetting measures and incentives to offset increased expenditure imposed on private developers ✓ Spatial flexibility in the affordability mechanism and target recipient households of the affordable units ✓ Limiting inclusionary requirements to large residential developments ✓ Feasibility of private developer participation is considered through alternative options in the provision of inclusionary housing based on the unique context of the development ✓ Consideration of the negotiation-based approach to implementation

4. City’s implementation context

4.1 .1. Poli licy overvie iew Options Inclusionary requirements Typology details Incentives - Social housing - 30% of all units are subject to price/rental - FLISP housing Option 1 restrictions - Housing with a rental cap of R2 100 (2018 prices) - Increased FAR - - 10% of the total residential floor area is made up Minimum size: 18m2 - Increased density (du/ha) Option 2 of smaller units - Maximum size: 30m2 - Reduced parking - 30% of all units are subject to size restrictions - Average size: 24m2 requirements - 20% of the total residential floor area is made up - Minimum size: 18m2; Option 3 of units that are 50% of the average market unit - Maximum size: 150m2 - 30% of all units are subject to size restrictions Option 4 To the satisfaction of City Transformation and Spatial Planning, City of Johannesburg

4.2 .2. In International benchmark comparis ison Mandatory approach Voluntary approach City of Johannesburg: - Mandatory inclusionary requirements - Condition to planning approval of development Free market status Blanket - Land-value recapture quo: inclusionary - Cost-offsetting measure to support feasibility housing approach: - Price/rental and unit size restrictions - Various implementation options Private developer profit maximisation Land-value recapture by public Zero inclusionary sector requirements Mandatory Private sector inclusionary carries no cost of requirements affordable housing provision

4.2 .2. In International benchmark comparis ison Measure toward protecting development feasibility City of Johannesburg policy Refraining from a blanket, city-wide implementation of rigid inclusionary requirements No Blanket, City-wide implementation Inclusionary requirements are flexible based on the local context relating to the No Rigid inclusionary requirements economic and property market conditions A spatially flexible approach to inclusionary housing implementation, taking cognisance No Rigid inclusionary requirements of differing land values and property market conditions Provision of cost-offsetting measures and incentives to offset increased expenditure Yes Cost-offsetting measures provided imposed on private developers Spatial flexibility in the affordability mechanism and target recipient households of the Yes Different affordability mechanisms affordable units All new developments larger than Limiting inclusionary requirements to large residential developments No 20 dwelling units Feasibility of private developer participation is considered through alternative options in the provision of inclusionary housing based on the unique context of the No On-site provision development Consideration of the negotiation-based approach to implementation Yes Implementation option 4

4.3 .3. Urban and human settle lement context • Low-income human settlements on periphery • Middle- to high-income areas in central areas • Established economic nodes, with economic opportunities and access to quality social facilities spatially concentrated • Objective to improve access to housing for households in periphery, increasing proximity to economic opportunities and social infrastructure.

4.4 .4. Housing context 400000 339282 312213 300000 279002 245036 200000 100000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

4.5 .5. Economic and sectoral l growth 8% 7% 6% 5% 4% 3% 2% • Economic growth 1% 0% -1% -2% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 South Africa 4,9% 4,9% 5,4% 3,3% -1,4% 2,9% 3,2% 2,2% 2,6% 1,9% 1,1% 0,5% 1,5% 0,7% City of Johannesburg 5,6% 7,1% 6,9% 4,9% -0,6% 3,4% 4,1% 3,3% 2,9% 2,7% 1,4% 1,6% 1,2% 1,4% 18% 16% 14% 12% 10% 8% • Sectoral growth 6% 4% 2% 0% -2% -4% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 South Africa 11,9% 10,4% 15,5% 9,9% 8,5% 0,7% 0,4% 2,6% 4,6% 3,5% 1,8% 1,2% -0,6% -1,2% City of Johannesburg 12,7% 12,0% 16,2% 9,7% 10,5% 2,3% 0,3% 2,5% 4,5% 4,4% 1,8% 1,3% -0,5% -1,3%

4.6 .6. Property develo lopment in industr try context 50% 40% 30% 20% 10% 0% -10% -20% May 2014 May 2015 May 2016 May 2017 May 2018 May 2019 SA listed property 5,3% 38,3% 11,0% 3,7% -12,7% -4,8%

4.7 .7. Residentia ial property market context • Annual growth in nominal house prices in the City of Johannesburg 4,5% 3,5% 3,4% 2,1% 2016 2017 2018 2019Q1

5. Inclusionary housing and the private sector

5.1. Research methodology  Primary sources: o Data collected from property sector stakeholders (including consultants, property developers, etc.) through targeted questionnaires and engagements.  Secondary sources: o Secondary academic sources; existing SAPOA report

5.2. Sample overview Property ty sec ecto tor sta takeholders: Property sector stakeholders 50% • Property development 40% 45% 42% 30% • Legal (Conveyancer, etc.) 20% 10% 5% 8% 0% • Consultancy (Town planning, Property Legal Consultancy Other development architecture, etc.) Professional activities Relevant residential market segment 8% High-income 55% • Other (Property related) Middle-income 76% housing Low-income housing 47% 92% Relevant other 8% City of Johannesburg Other 0% 20% 40% 60% 80%100%