MOSSEL BAY NEWS - More than 80% of Mountain View's First Home Finance (FHF) units in Mossel Bay are currently unoccupied, the Western Cape Department of Infrastructure (DoI) confirmed this week.
This is not due to a lack of interest in the 242 unoccupied houses, but rather the fact that potential buyers of these R429 000 homes are not getting loans, said the DoI.
These homes are typically sold to households earning between R3 501 and R22 000 per month.
"The data indicates an extensive loan application decline rate of over 85%, driven by systemic issues of poor credit profiles, high indebtedness, insufficient disposable income, limited credit history, and an affordability gap that persists even with the FHF government subsidy being made available, as well as systemic hurdles within the traditional banking sector," said the DoI.
The spotlight on Mountain View
The Mountain View Project consists of 725 currently occupied Breaking New Ground (BNG) units and 278 FHF units (only 36 occupied). It has been in the spotlight many a time and for varying reasons since its completion in October 2022. The most recent attention to the project came in the form of an ultimatum issued by the political party, the People's Movement for Change (PMC), on Saturday 4 July.
The PMC said if the unoccupied homes were not occupied by qualifying beneficiaries from the Mossel Bay housing beneficiary list by Monday 6 July, it would "embark on decisive democratic action" and "proceed with a peaceful mass mobilisation at Mountain View". Along with the ultimatum, it demanded to be informed of the exact number of empty houses and the reasons for this, as well as the plans to rectify the situation.
It said these houses were not affordable and that it was unacceptable for them to be standing empty while there were residents without houses on the beneficiary list.
Representatives of the party, including its national head of communications, Anco Barker, met with some members of the community near Mountain View on Tuesday evening, when the party's concerns were shared and echoed by many individuals present.
'Affordable' housing
The department explained that Mountain View had been developed in terms of the Integrated Residential Development Programme (IRDP), which aims for integrated settlements, in this case free housing (BNG) allocated to approved beneficiaries (with an income of up to R3 500 per month) and homes for sale (FHF).
According to the DoI, the FHF units were developed "to address the substantial need for affordable housing". Individuals who meet the criteria for the FHF units qualify for government subsidies to cover a portion of the purchase price, as determined by a sliding scale, based on the buyer's income.
According to the Western Cape Government's website, this can be anything between R38 911.40 and R169 264.60, leaving the buyer with anything from R259 735.40 to R390 088.60 to pay.
Then follows what the DoI identified as "one of the primary causes for the [remaining 242] units being unoccupied" - the financing of the remaining money to be paid. "Beneficiaries, therefore, must secure a mortgage bond or find other financial means to cover the balance of the purchase price."
Why are homes in Mountain View not cheaper?
Asked whether lowering the prices of these houses was a consideration, the DoI said the National Housing Code for IRDP requires that the input costs for the development of serviced stands and housing units (in this case, a total project development cost of R339m) should be recouped and covered by the selling price of the housing units."The selling price of these units was approved for R429 000 by Provincial Treasury. The department is therefore not in a position to lower the purchase costs.
"Furthermore, 36 families have already purchased units and have taken occupation. Any reduction in selling price will have an enormous negative effect on their house as a future investment. The units are currently valued at well over the selling price of R429 000."
The DoI said an analysis of the situation revealed that "there is misalignment between a traditional mortgage-backed sale and the financial reality of potential purchasers".
Considering solutions
Although it did not provide specifics, the department said in conjunction with the Mossel Bay Municipality, it is "actively considering innovative ways to provide a crucial bridge for families who have the required income, but are currently disqualified by banks due to poor credit scores and affordability challenges."This includes strategic options that fully align with, and actively advance, the department's social mandate of the provision of much-needed affordable housing."
When asked whether it had a response to the PMC's statements and if it would engage with the party, the Mossel Bay Municipality said the provision of housing is a combined national and provincial government function. "Consequently, the Mountain View Project is managed by the Provincial Department of Infrastructure through its Directorate for Human Settlements. The municipality, as the responsible local authority, provides the necessary support and co-operation required by the department for the project's implementation.
"Any enquiries regarding the project's progress should therefore be directed to the provincial department."
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