Based on results of this study there is reason to believe that vested interests of monopoly landowners make it difficult to deliver AURL for low-income housing. Hence, it is necessary to improve the effectiveness of land administration and agencies responsible for land management as a prerequisite to scale-up the delivery of AURL for low-income housing. In order to achieve this, particular attention should be given to the following approaches.
6.5.1 Restructure the Land Administration System 6.5.1.1 Revise Taxation and Zoning Regulations
The results of the study indicated that the urban poor fail to access land for housing largely due to demand-side challenges that limit housing affordability. Hence, to encourage the urban poor to participate in the market, the price for urban land should be set at a benchmark of 0.09 per cent of household income. In order to achieve this, the expropriation mechanism in the 1997 Land Policy and Section 25(2;3) of the 1996 Constitution need to be amended to accommodate this benchmark. The results also indicated that access to AURL is also limited by supply-side challenges associated with issues of withholding land from the market for speculative reasons. Within eThekwini municipality, there are many parcels idle, under-utilised and undeveloped land in inner-city areas that could be unlocked for low-income housing.
Ethekwini Municipality should adopt a citywide strategy for the assembly of AURL for low-income housing through the identification of idle, underutilised and undeveloped urban land in inner-city areas. In order to implement this strategy, the municipality should conduct audits of vacant and underutilised urban land held by the public and private owners in order to match land availability with low-income housing needs. The audits should be conducted concurrently with an assessment of current and anticipated housing needs of low-income households in relation to demographic trends, including patterns of urbanisation, labour, migration and population growth and age. This could ensure that the delivery of AURL targets the low-income segment of the population who face acute housing need. These audits should lead to a review of urban land-use by-laws to ensure that urban land is zoned, used and regulated in a manner that serves the collective housing needs of low-income, middle-income and high-income households. The review of land-use by-laws could, for example, designate urban land occupied by informal settlements as ‘special zones’ within which town planning and engineering standards of settlement establishment are adapted to allow for incremental housing development by low-income households. This ensures that urban land in these ‘special zones’ could be available to low-income households at a price benchmarked at 0.09 per cent of their household income
169 Such idle, under-utilised and undeveloped land in inner-city areas could be freed for low-income housing development through the use of a high rate of taxation. Taxation of idle urban land in inner- city areas is required to support the delivery of AURL for low-income housing. An annual tax on idle land in inner-city areas that is more than 0.5ha in size should be set at the same level as the mortgage interest rate to encourage landowners to supply urban land for development. This measure is also intended to discourage speculative behaviour in the land market. However, the municipality should only sanction a transaction of urban land in inner-city areas if the selling price of the land is set at a benchmark of 0.09 per cent of household income.
The study also recommends that eThekwini Municipality should utilise zoning regulations in Land-use Schemes to deny planning consent to proposed housing developments on idle, under-utilised and undeveloped land in inner-city areas unless it is for low-income housing. Middle-high-income housing developments proposed on idle, under-utilised and undeveloped land in inner-city areas should only be permitted under special consent if the material considerations are compelling. The zoning by-laws in Land-use Schemes that regulate development in locations close to employment opportunities should compel private owners of idle, under-utilised and undeveloped land in inner-city areas to develop low-income housing within a 10 year period commencing from the day the scheme is promulgated. If they fail to develop such housing within the specified time frame they should be compelled to sell the land to low-income households at a benchmark of 0.09 per cent of household income.
6.5.1.2 Regularisation of Urban Land Rights
Local government should recognise and regularise tenure arrangements on land occupied by informal settlements if these settlements are on land ideal for human settlement. The proposed pricing mechanism could assist in the regularisation of such tenure arrangements by allowing residents of informal settlements to purchase land they currently occupy at a price the can afford. Participation of residents of informal settlements in a market that sets land prices at a benchmark of 0.09 per cent of household income would be crucial to successful implementation of tenure regularisation projects.
The participation of residents of informal settlements in the land market, whose land rights are often ignored due to limited affordability, should be actively supported by recognising their right of adverse possession on an individual or collective basis. Owners of land occupied by the informal settlement should give the squatters, on an individual or collective basis, the right of first refusal when such land is up for sale. However, the municipality should only sanction a transaction of urban land occupied by an informal settlement if the selling price of the land is set at a benchmark of 0.09 per cent of urban poor’s household income and the land invaders with the right of adverse possession are given the right of first refusal.
170 Expropriation of urban land subject to no compensation to facilitate the delivery of AURL to residents of informal settlements. Subject to national laws, this may be appropriate for urban land that has been neglected for a prolonged period by absentee landowners, including land held by landowners who failed to pay land taxes. Ethekwini Municipality could expropriate with compensation urban land occupied by informal settlements and allocate it to residents of these settlement. This option should be considered only as a last resort, given the high fiscal cost to the government, when voluntary measures have been unsuccessful and expropriation does not apply to urban land held by absentee landowners. There should also be a compelling justification for expropriation, such as when the size of the landholding is excessive and inequitable in the given urban setting.
The complete registration of tenure rights in the urban residential land information system (URLIS) would be an important step towards tenure security. Hence, consideration should be given to the impact regularisation of insecure tenure and registration would have on the price of urban land and low-income housing. In this regard, eThekwini Municipality should support a 10 year restriction on transaction of land whose tenure is regularised under conditions specified above. This could safeguard low-income households against sudden increases in the price of urban land and counteract the risk of gentrification. In order to strengthen tenure security, the URLIS should be simple, accessible, transparent and affordable to give low-income households a reasonable opportunity to contest or query recorded tenure rights and arrangements through public consultation on tenure arrangements, public display of tenure maps and appeal processes. Unlike a conventional cadastre, the URLIS should not only support ownership but reflect varied and overlapping tenure rights and the spatial realities that exist in urban settlements.
6.5.1.3 Completion and Updating of Urban Land Registers
The efficient operation of land management requires efficient and complete registration of urban land and up-to-date information on land-use and value. The complete registration of urban land, which provides up-to-date information on land ownership, use and value is crucial in facilitating the redistribution of such land at prices the urban poor can afford. Ethekwini Municipality can use these registers to identify, zone and reserve urban land close to job opportunities for low-income housing but subject to a proviso that such land can only be sold to low-income households at a price benchmarked at 0.09 per cent of their household income. Valuing urban land at a price set by the proposed mechanism would allow the urban poor to participate in the housing market without public financial support. A complete land registry could make transfers and registration of urban land more efficient, easier and less costly, and thus, reduce the financial obstacle that seriously hinder low- income housing development due to costs of delays in obtaining development permits. Efficient urban land management could directly provide accurate information on land rights, land-use and land value
171 that could facilitate low-income housing development. Urban land management could be strengthened through the partnership of local government and community organisations to develop accurate land registers that could help in the redistribution of urban land subject to low or no compensation. The ideas of John Nash are crucial in guiding negotiations for tenure regularisation and the level of compensation to be paid to affected landowners.
6.5.2 Efficient Release of Affordable Urban Land
The legacy of land dispossession and residential segregation in South Africa makes it imperative for the post-1994 housing policy to deliver AURL for low-income housing in inner-city areas. Therefore, this study recommends that eThekwini Municipality should utilise Land-use Schemes to deny planning consent to proposed housing developments on vacant land in inner-city areas unless it is for low- income housing. Middle-high-income housing developments proposed on vacant land in these zones can only be permitted under special consent if the material considerations are compelling. The by- laws of Land-use Schemes that regulate development in locations close to employment opportunities should compel private owners of vacant land to develop low-income housing within a 10 year period commencing from the day the scheme is promulgated. If they fail to develop such housing within the specified time frame they should be compelled to sell the land at below-market rates to the municipality. Therefore, the expropriation mechanism in the 1997 Land Policy and Section 25(2;3) of the 1996 Constitution that require the government to expropriate urban land with compensation need to be revised or changed to enable the expropriation of urban land subject to low or no compensation.
The delivery of AURL for low-income housing close to employment opportunities needs to be linked to the ‘banking’ of urban land in inner-city areas. Funding for the acquisition of urban land in such locations can be sourced in two ways. Firstly, a land fund must be set up that municipalities can use to immediately purchase and ‘bank’ urban land in inner-city areas for low-income housing. Secondly, municipalities can use revenue they generate from land taxation on vacant urban land, industrial, commercial and high-income housing developments. If the landowners of urban land in such locations remain committed to holding on to their land for speculative reasons, the municipality should adopt a range of measures discussed below to curb speculative behaviour linked with urban land ownership and encourage private landowners to release AURL at scale for low-income housing.
In order to deliver AURL for low-income housing eThekwini Municipality could, firstly, substantially increase land taxes on idle, underutilised and undeveloped urban land in inner-city areas to discourage the behaviour of holding land for speculative reasons or of inducing land supply to push up prices.
Secondly, the municipality could also expropriate unused urban land at low or no compensation if owners of vacant urban land in inner-city areas refuse to develop it for low-income housing. Thirdly,
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.