South Africa is planning to require banks to provide more detailed information about their mortgage-lending practices to improve access to home loans for previously disadvantaged citizens, according to Human Settlements Minister Mmamoloko Kubayi.
The government aims to amend the Home Loan and Mortgage Disclosure Act, a law established in 2000 that mandates lenders to report on approved home loans.
These proposed changes would allow the state to investigate consumer complaints about home loans and increase penalties for non-compliant lenders, Kubayi said.
“We are calling for a review of the legislation and polices that will make it even for private sector, especially our financial institutions, to be able to assist us to provide shelter for South Africans,” Kubayi said.
Recent data analysis has revealed decreasing affordability and a drop in home-loan approvals, particularly among middle-income earners, the minister noted.
Between 2018 and 2022, lenders received approximately 6 million loan applications.
Of these, 2 million were from previously advantaged groups, with 1 million approved, while 4 million applications came from previously disadvantaged individuals, with 2.4 million approved, as reported by the Human Settlements Department.
The high rejection rate for previously disadvantaged groups is “concerning,” despite banks attributing it to poor credit records and lack of affordability, Kubayi said.
“We know that the banks don’t think that it is necessary, but we do believe that we have a case to make in terms of forcing them to disclose when they have declined an application and the reasons they have declined,” she said.
The Department of Human Settlements has started a series of engagements to review the performance of housing delivery in all metropolitan municipalities in the country.
Kubayi said the department was concerned about the performance of the metros, with leadership and governance instability being a major factor in the performance of human settlements delivery.
Kubayi said the department had therefore started a process of meeting all metros to assess performance and determine the interventions necessary to expedite delivery.
“Our first engagement was with the Gauteng Metros last week and it was noted that although improvements have been visible with some metros, there is a need for intervention in the City of Ekurhuleni.
“We intervened in Nelson Mandela Bay Metropolitan by establishing a War Room to complement the technical capacity in the city. We have seen the significant improvements with the Nelson Mandela Bay due to the intervention of the War Room,” Kubayi said.
She said the City of Ekurhuleni will be afforded a similar intervention, to ensure acceleration of service delivery and respond to the needs of the people of Ekurhuleni.
“We will continue these engagements with eThekwini, Mangaung, Buffalo City and the City of Cape Town in the next few weeks, and where necessary, we will provide the appropriate interventions for the metros,” Kubayi said.
Verification of housing subsidy beneficiaries
Meanwhile, Kubayi said the department is considering appointing a team of legal experts with expertise in large forensic investigation, forensic audit, and data analysis to deal with the injustices in the housing subsidy sector.
The Minister said the department has noted concerns raised by the public regarding housing subsidies provided by government through Breaking New Ground (BNG).
Kubayi said some BNGs were allocated to people who are not rightful beneficiaries, either because the beneficiary list was manipulated or because of syndicates operating across the country who illegally take housing units from rightful owners and sell them to non-deserving citizens.
“There are those that were sold BNG houses within a period of eight years in contravention of Section 10A of the Housing Act, that BNGs are occupied by foreign nationals with no information as to what led to that situation.
“The team is expected to provide a report that will provide clarity on the ownership of the houses, the occupants and where necessary initiate steps for legal action so that corrective measures are taken,” Kubayi said.
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