There are different kinds of subsidies for people with different circumstances.

INDIVIDUAL SUBSIDY: BUYING A HOUSE AS AN INDIVIDUAL HOUSEHOLD for households earning between R0 – R3 500 per month

This subsidy is for low-income households wishing to buy residential property for the first time and may be used to purchase an existing house, including the land on which the house stands or finish an incomplete house. This subsidy can only be used once by a successful applicant.

How much is an individual subsidy worth?

This depends on how much your gross (before deductions) monthly household income is. The subsidy is currently worth the following:

• If your household income is less than R3 500, you qualify for a subsidy up to R202 888.
• If your household income is less than R3 500 and you can prove that you are disabled or in permanent bad health, you qualify for a housing subsidy of up to R202 888, plus a set amount to pay for the cost of any extra features your house may need – for example, a ramp for wheelchair access.

The subsidy amounts are fixed and are increased in April of each year. You do not have to repay the subsidy as it is not a loan.

How much will I have to pay in?

You will have to pay the difference between the subsidy and the cost of the house. For example, if you buy a house for R222 888 and receive a subsidy of R202 888, you will have to pay in R20 000, plus the bond registration and conveyancing attorney’s costs. Transfer duty is not payable on properties below R1 100 000.

However, if you buy a house for R197 888 and receive a subsidy of R202 888 you will have R5 000 of the subsidy left over. You can use this to pay for at least part of the bond registration and attorney’s costs. Remember that the money will not be paid out to you, but directly to the relevant parties.

How do I apply for an Individual Housing Subsidy?

There are two kinds of Individual Housing Subsidies, based on whether you can pay your contribution to the house out of your savings, or if you need to borrow money to pay for it:

• A Non-Credit-Linked Individual Subsidy: This is what you get if you can pay your contribution in full, out of your pocket. To apply for a Non-Credit-Linked Subsidy, you will need to fill out an application form at your local municipal housing office.
• A Credit-Linked Individual Subsidy: This is what you get if you cannot afford to pay your contribution, in full, out of your savings and need to do so using a loan from a bank or some other financial institution. You will need to be pre-approved for credit with an approved financial institution before you can apply for a Credit-Linked Subsidy at the Department of Local Government and Housing or at your local municipal housing office.

To apply for an individual subsidy you will need to fill out an application form at your provincial Human Settlements Department or go to your local municipal housing office for assistance.

What documents must I supply when applying for a subsidy?

You will need to supply:

• A copy of your and your partner or spouse’s bar-coded South African IDs, and the birth certificates of your financial dependants
• Your marriage certificate if you are married, or your divorce papers if you are divorced and have financial dependants
• A recent payslip as proof of income

If you are applying for a non-finance-linked subsidy, you will need to supply a certified copy of the signed agreement of sale for the property. Be sure to make the sale conditional to your receiving the housing subsidy.

If you are applying for a finance-linked subsidy, you will need to supply a certified copy of the signed agreement of sale for the property. Be sure to make the sale conditional upon your receiving a government housing subsidy as well as a home loan. You will need to provide proof that the home loan has been approved.

How is the individual housing subsidy paid out?

The subsidy is not paid out to you. It is paid directly to the financial institution from which you are receiving a home loan (in the case of a Credit-Linked Individual Subsidy) or the seller (in the case of a Non-Credit-Linked Individual Subsidy).

Will I have to pay anything back?

The housing subsidy is not a loan and you do not need to pay it back.

CONSOLIDATION SUBSIDY

This is for people who have already received assistance from government and who live on a serviced site and want to build a better house. This money can only be used for building, as services have already been provided on the site, to upgrade, or complete a non-subsidy house. The subsidy amount is R109 947.

What you need to qualify for a consolidation subsidy:

• Must be registered on the housing demand database at the nearest municipality
• Be a South African citizen or have a permanent residency permit
• Be 18 years or older
• Be married or living with a partner
• Be single or divorced and have proven financial dependants permanently living with you
• Have a monthly household income of R3 500 or less before deductions
• Must not be a current or previous property owner

INSTITUTIONAL SUBSIDY

This is for non-profit organisations like churches, local authorities or housing associations (also called ‘social housing institutions’) that want to provide rented accommodation to people from lower-income groups. It is called an institutional subsidy because it goes to the institution that can rent out the housing to different families. A family who lives in this type of rented accommodation does not jeopardise their chance to apply for their own subsidy at a later date. This is because the subsidy for rented housing is taken in the name of the organisation and not in the name of the individual. The homes developed through the institutional subsidy must remain in the ownership of the organisation for at least four years after they are built.

ENHANCED PEOPLE’S HOUSING PROCESS (EPHP)

The Enhanced People’s Housing Process aims to support households who want to save money on their housing subsidies by building their own homes. The subsidies are available to communities or organised groups of households. This subsidy allows people to play an active role in building their own homes through an organised group. Applications should be submitted to the nearest municipality.

By using their own labour rather than paying someone else, these households can make their housing subsidy and personal contribution go further by building better quality and/or larger houses for less money. The Enhanced People’s Housing Process can also include the following support:

• Access to land that can be serviced
• Training opportunities
• Technical assistance

SOCIAL HOUSING

Social housing aims to provide good quality, well-located and affordable rental accommodation to low-income and ‘gap market’ households. “Gap market’ households are those who earn too much to qualify for other types of housing assistance, like RDP houses, but who earn too little to afford the commercial housing market.

Social housing is a rental or co-operative housing option for households that are earning between R1 850 – R22 000 per month and people in the ‘gap market’ (typically those earning between R6 000 – R10 000 per month). Social housing projects are developed, owned and managed by non-profit Social Housing Institutions (SHIs) which should be accredited with the Social Housing Regulatory Authority.

The law also allows for-profit private stakeholders called Other Development Agents (ODAs) to participate, as long as they make a 20% equity investment in the social housing project. In such cases, the social housing project would need to be monitored by the Regulator to ensure it is accredited and is compliant, but the ODA itself does not require accreditation.

Social Housing projects are developed within areas that contribute to spatial, economic and social restructuring. Social housing is therefore built in restructuring zones, which are areas of major social and economic opportunity which are typically unaffordable to low-to-lower-middle income households. Government subsidies are provided to Social Housing Institutions to build new social housing projects.

Through this subsidised programme people can gain access to a rental house or apartment. The household pays a reduced amount of rent, based on their income, to the Social Housing Institution. The rentals have to cover the running costs of the social housing project.

The SHIs don’t decide these rental rates on their own. They must follow the regulator’s guidelines for setting the rent.

Households may qualify for this subsidy if their income is between R1 850 per month and R22 000 per month. This amount aligns with the Financed-Linked Individual Subsidy Programme (FLISP).

How do you qualify for this service?

You will qualify for this subsidised programme if:

• You are a South African citizen or have a permanent residency permit
• You are 18 years or older
• You are married or living with a partner
• You are single or divorced and have proven financial dependants permanently living with you
• Your monthly income is between R1 850 – R22 000 before deductions

How to apply for a social housing subsidy?

Visit the nearest municipality to find out whether there are any Social Housing projects in a particular area and which Social Housing Institutions are operating in the area. The housing units are managed by Social Housing Institutions and applications for units are made directly to the SHI.

RURAL SUBSIDY

This subsidy is available to people who don’t have formal tenure rights to the land on which they live (such land is owned by the government and tenure is granted in terms of traditional laws and customs). The rural subsidy is available only on a project basis and beneficiaries themselves may decide on how to use their subsidies. The subsidy may be used for building houses, providing services or a combination of both.

INTEGRATED RESIDENTIAL DEVELOPMENT PROGRAMME (IRDP)

The Integrated Residential Development Programme replaced the Project Linked Subsidy Programme. The IRDP provides for the planning and development of integrated housing projects. Projects can be planned and developed in phases.

Phase 1: Land, Services and Township Proclamation

This phase includes planning, land acquisition, township establishment and the provision of serviced residential and other land use stands to ensure a sustainable integrated community.

Phase 2: Housing construction and individual ownership options

This phase includes the construction of houses by contractors for people who qualify, and the sale of stands to non-qualifying beneficiaries and to commercial interests, etc.

ENHANCED EXPANDED DISCOUNT BENEFIT SCHEME (EEDBS)

This scheme promotes home ownership among tenants of publicly-owned rental housing (municipal and provincial). Purchasers can receive a discount on the selling price of the property. When this happens the property is transferred free of any further costs. Some municipalities have already transferred much of their housing stock to tenants who have utilised the Enhanced Expanded Discount Benefit Scheme.

COMMUNITY RESIDENTIAL UNITS (CRU) PROGRAMME

This programme provides funds for the re-development of government-owned housing stock (e,g, hostels, council flat buildings) for low-cost rental. CRU targets low-income persons and households earning below R3500 per month who are not able to be accommodated in the formal private rental and social housing markets.

The funds through the CRU Programme will be utilised for the development of the following public rental housing assets:

• Old workers’ hostels that are either government-owned (either by provinces or municipalities) or that have both a public and private ownership component
• Public housing stock that forms part of the enhanced extended discount benefit scheme but which cannot be transferred to individual ownership and has to be managed as rental accommodation by the public owner
• Publicly owned rental stock developed after 1994
• Existing dysfunctional, abandoned, and/or distressed buildings in inner cities or township areas that have been taken over by a municipality and funded through housing funds

EMERGENCY HOUSING ASSISTANCE

This programme applies to those experiencing emergencies of exceptional housing needs who are not in a position to address their housing emergency from their own resources or from other sources. Income qualifications are the same as those for other subsidy schemes.

To access funds under this programme, the municipality must first identify a need for emergency housing, and apply to the provincial department. Communities should approach their municipality for assistance under this programme when an emergency arises (e.g. a fire or flood). The amount of the grant will be determined by the provincial Human Settlements MEC based on the nature and extent of the emergency housing situation and a properly prepared project plan.

NOTE: People with disabilities (or who are in permanent bad health) may receive the higher housing subsidy for individual, project-linked or relocation assistance even if their household income is more than R1 500 but less than R3 500. They are also entitled to receive an amount higher than the usual subsidy amount to cover the cost of special structures to meet their needs (such as a wheelchair ramp for the mobility impaired).

FINANCE LINKED INDIVIDUAL SUBSIDY PROGRAMME (FLISP)

The Finance-linked Individual Subsidy Programme (FLISP) is a subsidy established by government which aims to provide the poor and low to middle-income households with access to adequate housing. The subsidy may be used to:

• Buy new or old residential property
• Buy a vacant serviced residential stand, linked to an NHBRC-registered homebuilder contract, or
• Build property on a self-owned serviced residential stand, through an NHBRC-registered homebuilder

Subsidies are provided depending on your income bracket and will be used to reduce your monthly home loan repayments. This will make your home loan more affordable. If you want to buy your own home for the first time and your household income is between R3 501 to R22 000 per month, you might be eligible for a FLISP subsidy.

The aim of FLISP is to reduce the initial home loan amount to make the monthly loan repayment affordable over the long term. FLISP can be used to purchase an existing house or to buy a vacant serviced residential stand which is linked to house building contracts.

Depending on your income, you could qualify for a subsidy of between R38 000 to R170 000. However, this amount will be subject to change. Examples of the subsidy amount:

• If your income is R3 501 the subsidy amount will be R169 265.
• If your income is R15 000 the subsidy amount will be R85 238.
• If your income is R22 000 (the limit for this subsidy), the subsidy amount is R38 911.

HOW DO YOU QUALIFY FOR A FLISP SUBSIDY

You qualify for this subsidy if:

• You earn between R3 501 and R22 000 per month
• You are a first-time home buyer or existing homeowner (you must apply within a certain time and each Province has their time limit)
• You are a South African citizen
• You have not received a government housing subsidy before
• You are married or cohabiting
• You are single with financial dependants

Since 1 April 2022 first-time buyers can qualify for a FLISP subsidy even if they don’t have a bank loan from a formal financial institution. You may qualify if you have financial assistance to buy a property in the form of:

• A pension/provident fund loan
• A cooperative or community-based savings scheme, i.e. stokvel,
• The Government Employees Housing Scheme
• Any other Employer-Assisted Housing Scheme
• An unsecured loan
• An Instalment Sale Agreement or Rent-to-own Agreement

Since April 2022, the attorney’s transfer bond fees are also covered by a FLISP subsidy.

HOW TO APPLY FOR A FLISP SUBSIDY

If you have a bank loan or alternative financial assistance to buy a property, contact your municipality or the Department of Human Settlements to complete a FLISP application form.