Tuesday, January 18

How to buy an affordable home in the Western Cape


The Finance Linked Individual Subsidy (FLISP) is a great option to help first-time home buyers in the affordable housing market become homeowners.

This subsidy is currently used to cover the difference between the sale price and the mortgage loan and can also be used to cover the costs of registering property and bonds.

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If a portion of the subsidy remains after the seller and transmitter have been paid, it will be transferred to your home loan account and used to lower your monthly loan payments, making it more affordable to buy a home.

Households with incomes between R3501 and R22,000 may qualify for the FLISP subsidy if they meet all the qualifying criteria.

It is a well-known fact that many people in the affordable housing market have limited options for accessing traditional bonds to purchase residential homes.

Under current policy, a potential beneficiary is required to obtain a mortgage with an accredited financial institution in order to access the FLISP grant. In the Western Cape, between financial years 2018/19 and 2019/20, 3,811 combined applications were received and a total of 2,935 households successfully accessed FLISP.

The rejection of certain households to the subsidy is generally based on the misrepresentation of previous marital status or regime, income and / or property.

In an effort to accelerate and promote property ownership for the affordable housing market, the Western Cape Department of Human Settlements (WCDoHS) has partnered with outside stakeholders, including financial institutions, transfer attorneys, and real estate developers, and granted access to the Housing Subsidy System (HSS) that allows them to capture and monitor the progress of requests, dramatically improving response times for processing these requests.

This review stems from the 2018 decision of the provincial and national ministerial members of the executive councils (MINMEC), which proposed that the FLISP be disassociated from being a mortgage-only option. This means that in the coming months, when the amendments to the Housing Code have been approved at the national level, the approval of a bond would no longer be the only requirement for the affordable housing market to access FLISP, but a series of varied and non-financial related. options would be offered.

The untied FLISP is intended to enhance options and allow flexibility, and will include other non-mortgage financing options supported by:

  • the beneficiary’s pension / provident fund,
  • a cooperative or community savings plan (such as a stokvel),
  • the Housing Plan for Government Employees,
  • any other employer-assisted living plan,
  • an unsecured loan, and
  • an installment sales contract or a rental contract with the option to buy.

In addition, the FLISP grant would be allowable when there is no loan and the beneficiary is using his or her own personal or other resources to supplement the shortfall between the grant and the property’s purchase price.

These options will ensure more opportunities and greater access, particularly for those who may find the current process quite strict. Therefore, we continue to engage our national counterparts to accelerate this process so that it can be implemented quickly, particularly as we see ownership as the true form of redress and empowerment.

In the Western Cape, we have already started similar initiatives. One of them is our pilot deferred ownership (rent to own) project to be carried out in the municipalities of Cape Agulhas and Saldanha Bay. This is linked to our credit readiness program, where after a period of three to five years, and after clearing their credit records, residents can qualify for the FLISP grant.

Because certain checks and balances performed by the financial institution when a property is purchased through a mortgage are not present in many of the above scenarios, WCDoHS is designing standard operating procedures that will include measures to ensure that beneficiaries receive value for money. -price. This means that the requirements for habitability evaluations and property appraisals are part of the grant application.

All financial institutions will be subject to the National Credit Act (NCA) and must enter into agreements with the grant authority, that is, the WCDoHS in the case of the Western Cape. The FLISP subsidy will also be paid to the seller only when ownership is transferred to the beneficiary, protecting both the buyer and the subsidy from abuse.

The revised grant, once approved, can be used to purchase an existing home, that is, the secondary market, or a newly built or yet to be built home in a housing development. It could also be used to purchase a booth where a house will be built or to pay for the construction of a house on a booth already owned by the beneficiary.

While the new draft of the policy is still being developed, we are preparing our systems and processes to accommodate the new untied FLISP grant, once implementation begins. It should be noted that, although certain sources indicate that requests of this nature should be directed through the National Housing Finance Corporation (NHFC), the Western Cape does not subscribe to the use of this institution and all requests should be sent directly to the department. .

This initiative is yet another demonstration of WCG’s forward-thinking and innovative approach to solving key and relevant social problems. We also remain committed to accelerating the delivery of human settlements, while promoting social inclusion through the development of integrated, resilient, safe and sustainable human settlements in a society of open opportunities.

Tertuis Simmers is the Western Cape Minister for Human Settlements.

Opinions expressed are not necessarily those of GroundUp.

© 2021 GroundUp. This article was published for the first time here.


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