The South African government should consider other options for the social housing industry in light of the potential 40% increase in electricity prices, according to the National Association of Social Housing (Nasho).
Since they won’t be able to afford it, landlords and social housing developers need to be shielded from the upcoming increase in electricity prices.
“Currently, social-housing tenants are not cushioned from the high cost of municipal services, including the exorbitant price of electricity in any way,” Karabelo Pooe, general manager of Nasho said, as reported by the Zawya.
“This is despite the fact that around 35% to 40% of social housing tenants earn below 6,700 rand per month, and therefore should qualify as indigent. However, because they rent their homes through an ‘institutional landlord’, they are not able to apply for indigent benefits. This means that although they are in effect indigent, they are expected to fund their living costs without the safety net of indigent subsidies,” he elaborated further.
This means that tenants of social housing, or affordable housing, who meet the income requirements to be considered indigent, for example, in places like the City of Johannesburg (CoJ), find it difficult to apply for benefits due to burdensome municipal procedures and bureaucratic red tape.
Unfortunately, this is not specific to Johannesburg City. In most South African municipalities with social housing projects, tenants living in poverty are also not able to obtain basic services at no cost or a reduced cost.
If someone is eligible for benefits, they should be given them regardless of whether they live in social housing, own their property, or rent from a private landlord.
“If a person is indigent, irrespective of the tenure of where they live, they should be given access to the benefits that go along with indigency in their local municipality,” Pooe said.
However, currently, a large contingent of social housing tenants is being excluded from these benefits and will be made even more vulnerable upon implementing the 40% electricity tariff increase.
“This (the above scenario) will of course also hold negative consequences for social-housing landlords, who will see their tenants battle to keep up with rents, and possibly lead to rental boycotts which can cripple the sector,” Pooe concluded.