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Red tape hobbling housing developers

30 September 2015 - 02:29 By Shenaaz Jamal

Private sector housing developers and investors are being short-changed by red tape and inefficiencies in the municipal system. Developers yesterday told Gauteng MEC of human settlements Jacob Mamabolo how multimillion rand housing projects were being stalled by poor administration of the Finance-Linked Individual Subsidy Programme and municipalities' bad plan approval system.Debbie Newton, an investment professional at Old Mutual, said developers waited up to five months for building plans to be approved by municipalities, a process that should take 21 days.Newton was speaking at a breakfast that Mamabolo held with the private sector."The processes are complicated and result in long delays. Obviously, the municipalities want to protect themselves from the risk of water and electricity use with no payment but the current way of dealing with this has caused very costly delays to all of our developments," she said.As projects are delayed, developers are faced with increasing costs, which ultimately get transferred to home owners.Old Mutual investors, who develop affordable housing to middle-income earners under its Housing Impact Fund South Africa, have been battling to make investment returns on housing projects."The delays make the product more expensive. This limits the ability to sell to the middle-income target market. The knock-on effect of this is a reduction in volume and profitability," Newton said.Mamobolo acknowledged contributing factors to the housing developments were red tape, inefficiency from the government and stringent credit criteria implemented by financial institutions."The government has to improve the use of the urban settlements development grants meant for infrastructure and follow proper policies when entering into partnerships," he said...

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