The Western Cape Department of Human Settlements has signed a memorandum of understanding (MoU) with five financial institutions operating within the affordable housing market, with the parties pledging their commitment to accelerating the delivery of affordable housing in the province.

These institutions – under the banner of the Banking Association of South Africa – include Absa, First National Bank, Nedbank, Standard Bank and SA Home Loans.

The signing of the MoU marks the commitment of public–private partnerships to increasing financial offerings to clients in the middle- and lower-income brackets for affordable housing and to develop a minimum housing specification that would result in a more affordable housing unit.

This process has been ongoing since 2014.

All efforts by the parties are geared towards assisting those in the gap market, or affordable market, to access finance and increase home ownership in the Western Cape, which Western Cape Minister of Human Settlements Bonginkosi Madikizela hoped would have a major impact on people's lives.

He further noted that engagements with the other eight provinces in South Africa to implement similar projects were under way.

This ground-breaking project, which was in line with the policy of the national Department of Human Settlements and would not be affected by any recent political changes, would allow the working class to be a part of the South African property market, worth about R6-trillion.

“This is one way of making sure that you bring those hardworking people into the mainstream economy in order for them to sustain themselves, instead of government focusing on providing free homes for those who qualify for them,” he told Engineering News at the MoU signing last week.

The gap market refers to households earning a monthly income between R3 501 and R15 000 – too little to access home loans but also too much to access free housing subsidies from government.

This public–private partnership will also develop a more effective and user-friendly Finance Linked Individual Subsidy Programme application process.