172 the municipality could permit landowners to hold on to urban land, but only in peri-urban areas where demand for such land for low-income housing is not high. As an incentive, the municipality could give a land tax exemption to owners of vacant land in peri-urban areas to encourage landowners to consider exchanging their vacant urban land in inner-city locations for land in peri-urban areas. Under this tax incentive, vacant urban land in inner-city areas could be taxed heavily so that speculative landholders can be coerced into developing their land for low-income housing or sell it to low-income households at a price benchmarked at 0.09 per cent of their household income. However, any proposed development on vacant land in inner-city areas has to comply with the provisions of the Land-use Scheme that compel them to develop the land for low-income housing or sell it to the municipality at below-market rates if they do not wish to develop low-income housing. Fourthly, the municipality could also use the incentive scheme of transferable development permission through which landowners could release vacant urban land in inner-city areas for low-income housing in exchange for attractive terms for the development of industrial and commercial enterprises elsewhere. Fifthly, the municipality could further require private owners of extensive reserves of vacant urban land, who are also housing developers such as Tongaat Hullets, to make such land available to low-income households at a price benchmarked at 0.09 per cent of their household income as a condition for the issue of development permits for high-income housing.
Overall, the research findings on the prices for urban land and housing that the urban poor can afford suggest that housing affordability issues the urban poor face cannot be resolved by the market. The policy implication of this is that in order to improve housing affordability among low-income households it requires policy reforms in the land, housing and finance sectors that target demand-side challenges. In order to effectively deal with the housing affordability problem requires the state to rescale the mechanism for pricing urban land in inner-city areas at a benchmark of 0.09 per cent of household income. Vacant land in inner-city areas should be reserved only for low-income housing and the prices for land in such areas must be set using this benchmark. Zoning restrictions and land- use by-laws are vital in the practical implementation of this alternative mechanism of pricing urban land at levels the urban poor can afford. The government at all levels has to demonstrate genuine commitment and political will to implement necessary and comprehensive land market reforms particularly the mechanism for pricing urban land.
173 pricing mechanism would assist households experiencing severe housing affordability stress to build their own housing incrementally primarily with household income. Findings in this study indicate that households that under-consume housing and basic non-housing goods are able to purchase urban land without state financial support if the land is priced at a benchmark of 0.09 per cent of household income. This mechanism could have significant housing policy implications. It is hoped that further assessment and wider application of this mechanism would confirm the findings of this study with respect to its potential to reverse the growth of informal settlements.
Another significant contribution of this study is the application of this pricing mechanism to strengthen the incremental housing process in South Africa. The application of this mechanism proves that it is possible to deliver urban land at price levels the urban poor can afford without subsidy support. Given the current lack of in-depth research literature on housing affordability in South Africa, it is hoped that this study would contribute to the existing pool of scant literature and help to inspire other research work in this important area of housing research. This study could hopefully contribute towards overcoming the existing dearth of in-depth housing affordability research literature in South Africa.
Beyond arguing for increased public intervention in housing delivery in pursuit of the housing policy objectives, there is need for exploring alternative mechanisms of housing assistance that would complement the proposed land pricing mechanism given the level of housing affordability of low- income households in South Africa. Valuable insights would be gained in exploring the viability and feasibility of using different planning instruments such as zoning, taxation, housing quota systems to unlock the delivery of AURL for low income housing.
It is pertinent to emphasise that the neo-liberal housing policy in South Africa is failing to tackle the enormous shortage of AURL and low-income housing. There is little connection between the goal of land and housing policies of scaling-up the delivery of AURL for low-income housing and the means to achieve it. The nature of low-income housing; the complexity of its delivery systems, its physical and socio-economic roles, and the enormity of the housing backlog are raising the informal settlement challenge beyond any solution the market ideology or the social redistributive ideology can independently provide. The liberal housing market is failing to deliver AURL at scale in strategic locations due to market inefficiencies. The public sector is also failing to meet the scale of low-income housing need especially due to limitations of the budget, human resources and level of housing backlog.
Therefore, the real issue is not whether public intervention in AURL delivery is necessary, it is how best to scale-up the delivery of AURL in support of the incremental housing process, given the enormity of the low-income housing shortage and the socio-economic realities in South Africa. It is
174 evident that the neo-liberal land policy is failing to deliver AURL for low-income housing. While mistakes in land expropriation witnessed in other countries should be avoided, that should not be a reason or the justification for the government to remain committed to market-based land redistribution when the socio-economic realities in South Africa contradict such an approach. Indeed it is beneficial to all stakeholders when low-income households gain access to AURL for low-income housing. However, the enormity of the low-income housing shortage requires the active involvement and integrated efforts of all stakeholders including the government, private sector, civil society and local communities. Thus, rather than de-emphasise the role of government, the land and housing policies should have strongly amplified its role within the context of the enablement approach.
Nevertheless, policies for land, housing and finance can be restructured to meaningfully support the incremental housing process and community-driven housing initiatives. The challenge is that the South African constitution commits the government to redistribute land within the market framework guided by the ‘willing seller-willing buyer’ principle. However, the limited level of affordability on the part of the government and poor households hampers the redistribution of urban land for low-income housing development. The ‘willing seller-willing buyer’ principle limits the ability of the government to resist the pressure from supporters of markets to adopt inappropriate neo-liberal land and housing policies. The government must prioritise the housing interest of the majority who are poor before safeguarding the private interests of monopoly landowners and big business. Fortunately, the amount of vacant urban land presents an ample and uncommon opportunity to substantially redistribute land resources at prices the poor can afford to stimulate low-income housing development. With careful planning and implementation, the delivery of urban land at a price benchmark of 0.09 per cent of household income could boost low-income housing production and reverse the tide of escalating informal settlement in South Africa.
The present South African housing context and socio-economic realities demand far more vigorous government involvement in the redistribution of urban land and housing resources. In this regard, the government should work together with the private sector, civil society and local communities in order to tackle the enormous shortage of AURL and low-income housing in the country. The housing policy goal of ensuring that all South Africans own or have access to affordable and adequate housing with secure tenure poses such a formidable challenge that it would require fundamental changes in the mechanisms of housing provision and income distribution. It would also require changes in the mechanisms of land delivery that ensures redistributive policies are not just provided but implemented. The government must show deeper commitment to move beyond political rhetoric and pursue practical policy reforms and implementation strategies with a political will that matches the
175 monumental housing challenge the country faces. It is only then that the lofty goal of the South African housing policy would mean something more than just words.
176
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