Provincial housing funder, the Gauteng Partnership Fund (GPF), has partnered with the National Housing Finance Corporation (NHFC) on a R200-million Entrepreneur Empowerment Property Fund (EEPF) programme aimed at Human Development Index-owned companies pursuing rental-housing opportunities in Gauteng.
The GPF and the NHFC formally entered into the cofunding agreement on June 18.
“The EEPF programme, which was launched in 2010, was initiated as an intervention for the affordable housing market. Black property entrepreneurs have, to date, experienced a myriad of constraints in entering the market.
“The partnership provides a funding solution to bridge the capital gap experienced by these property entrepreneurs,” says GPF CEO Kutoane Kutoane.
He adds that the global financial woes have unabatedly continued to pound on the confidence of banks to increase their quantum of funding in the low end of the housing market, as well as continued to frustrate their programmes.
Nevertheless, he says banks have shown great resilience and innovative design capabilities in their funding models. He hopes this will translate into an increased quantum of funds being allocated to affordable housing programmes.
The GPF mandate has, over the years, evolved in line with the changing provincial government housing objectives.
The GPF has extended its funding facilitation reach to cover the wider affordable rental housing market.
It is estimated that 25% of South African households have no access to housing, owing to affordability challenges.
“To promote the sustainable entry of black economic-empowerment participants in the ownership of medium-density property in the inner cities, the NHFC has partnered with the GPF to enable the transformation of the affordable rental property market,” says NHFC CEO Samson Moraba.
“This partnership will ensure that EEPF projects have up to 95% project funding available,” adds GPF chief investment officer Boni Muvevi.
These are households that earn above the government housing-subsidy threshold but do not qualify for bank mortgages, as a result of their perceived high risk and low credit rating. The assumption is that the percentage of such households is much higher in Gauteng.
“EEPF participants are selected through a public call and vigorous selection process on a yearly basis,” says Muvevi.
After a public call for proposals is made, prospective entrepreneurs are short-listed and put through a rigorous induction programme that covers aspects such as property, facilities and resources management.
The first proposal call yielded 11 participants, of which eight have had their proposals approved and secured funding.
Once a project is approved, a dedicated GPF programme manager will be available to assist with any challenges.
The GPF board of trustees has approved R100-million for the EEPF facility and another R100-million from the NHFC as part of the cofunding agreement. Additional funding will be considered depending on the programme’s success.
In line with the provincial government objective of delivering 20 000 rental accommodation units by 2014, the GPF has committed to the objective of facilitating funding for 6 000 units in its current strategy.
This will require over R1.4-billion in funding, of which government will be expected to contribute about R470-million.
With the new partnership between the GPF and the NHFC, as well as the benefit of experience, the provision of affordable accommodation makes economic sense and is a good investment for entrepreneurs, states the GPF.