Johannesburg - In the inner city of South Africa’s most populous metropolis, those who rely on the affordable housing market to provide them and their families with safe accommodation are facing a crisis.
Ratepayers are awaiting the City of Johannesburg’s announcement of the final decision on municipal rates, tariffs and surcharges for 2023/2024 with great concern, as completely unworkable increases have been put forward in the proposed budget.
A vast number of Johannesburg’s lower-income inhabitants rely on the private sector for safe places to live, as they do not qualify for COJ’s Expanded Social Package. Around 250 000 of these inner-city residents live in accommodation provided by members of the Johannesburg Property Owners and Managers Association. JPOMA members are active in the rejuvenation of the inner city and represent R15 billion in private capital invested in affordable housing units. They contribute around R80 million per month in utilities and taxes to the City’s revenue.
According to JPOMA general manager Angela Rivers, their members provide affordable housing to the citizens of Johannesburg, where the government has failed, with rentals of between R1 750 and R6 500 to accommodate families whose household income ranges from R4 500 to R25 000.
In the decade between 2013 and 2023, the average household income has increased by around 72%. That has also been the average rental increase for an inner-city flat over the 10 years. However, Rivers notes that over the past couple of years, many landlords have been unable to implement any annual increases whatsoever and have, in some cases, lowered rentals to combat rising vacancies. The economic downturn is real, and its effects are visible in empty windows and boarded-up shopfronts in Joburg’s inner city.
In sharp contrast, the cost for municipal services has soared in this decade, between around 171% for customers with prepaid electricity meters, to a whopping 295% for those who are post-paid customers. At the same time, the inefficiency and ineffectiveness of the City with regard to its own processes, repairs and maintenance and continual increases in employee numbers and costs are well documented.
“These exorbitant annual increases pose a very real threat to the sustainability and viability of developers and managers of affordable accommodation, who have no prospects of matching these expenses with increasing rental,” says Rivers.
She is concerned that those who provide affordable accommodation housing provision are evaluating the current and long-term situation and, in some cases, deciding that they will no longer be investing in Johannesburg and the inner city.
“JPOMA membership has dropped this year due to various landlords selling their properties in the inner city to move to more stable environments. We can only hope they have sold their properties to legitimate landlords, who will continue to pay for services.”
In the 20 years since JPOMA has been active, the City has only become more desperate for affordable accommodation, and the private sector has made a major contribution in providing for the thousands of responsible low-income tenants.
“If the private sector withdraws due to continuing unreasonable increases in municipal services costs, the poor and vulnerable communities will suffer further,” says Rivers.
“The city needs to take firm steps to up the effectiveness of its own revenue collection, recovery of water and electricity losses, cost management and resource deployment, instead of throwing it in front of the ratepayers’ door with these continued and unacceptable increases in municipal services and rates.”
The increasing cost burden on investors, developers, businesses, employers and residents is making Johannesburg unattractive for investors and developers, as well as those who work and live in the city, she adds.
The lack of enforcement of the by-laws, as well as the high levels of corruption, compound the increased costs of urban development and management, says Rivers.
“The conditions for attracting and retaining economic investment and development activity by the private sector are on a downward spiral, and this will be felt in the affordable housing sector.”
JPOMA has reiterated its commitment to provide support and expertise to City structures but warns that if the City does not address these negative realities with meaningful interventions, it fears that the loss of confidence within the private sector and the communities will be irreversible.
The increases on services will be announced by COJ in June.