Affordable special home loans for families

JULY 14, 2016

Qualifying government employees and members of the public will now have the opportunity to access affordable housing finance following a R10.5 billion investment in SA Home Loans (SAHL).

The Government Employees’ Pension Fund (GEPF), through its investment manager, the Public Investment Corporation (PIC), on Wednesday launched a partnership to facilitate special home loan opportunities for government employees and members of the public.

The Department of Public Service and Administration (DPSA) said the investment aims to provide government employees and qualifying members of the public with end-user home finance and development finance for approved affordable housing projects.

The investment comprise the following:

  • R5 billion for public service employees;
  • R2 billion for affordable housing end-user financing, as defined in terms of the Financial Sector Code;
  • R2 billion to enable SAHL to extend home loans to the rest of qualifying home loan applicants; and
  • R1.5 billion will be used to fund affordable housing developers.

The investment in SAHL is part of the developmental investment mandate that the PIC is carrying out on behalf of the GEPF. This investment addresses the social infrastructure element which has housing as one of the key components.

“The PIC is intentionally implementing a developmental investment mandate, which primarily seeks to achieve two types of returns, namely financial and social returns,” said PIC board member Claudia Manning.

She said the financial return means that PIC must generate profit for clients and social return means the investments should positively affect the social conditions of the stakeholders.

“Our view is that members of the GEPF should benefit during their active working years and during retirement – and this is a social return. Investing in affordable housing finance schemes such as this provides these members with a real benefit,” said Manning.

Lack of access to housing

Lack of access to housing has been identified by the National Development Plan (NDP) as one of the big challenges facing South Africa.

In its diagnostic report, the NDP notes that “the growth of property value has led to an overall average house price that has made housing unaffordable to many South Africans, and has further excluded participation in the property market by historically excluded groups. The growth has largely benefitted middle and higher income groups”.

Abel Sithole, Principal Executive Officer of the GEPF, said: “We believe there are many GEPF members who often do not qualify for bank-issued housing loans and housing subsidies offered by the government.

“We are excited about this investment, as it will enable many government employees to own their own houses at a much more affordable rate. Most importantly, we believe home ownership can restore people’s dignity.”

Government to assist in accessing funding

The Government Employees’ Housing Scheme (GEHS), an agency of the DPSA, will assist government employees to access funding from SAHL.

“The DPSA welcomes the participation of the GEPF through the PIC in the Government Employees’ Housing Scheme. The GEHS housing finance access service seeks to secure and deliver affordable and enabling housing finance for government employees,” said DPSA Director-General Mashwahle Diphofa.

He said it was even more pleasing to see the PIC stepping forward as the first investor and participant in the GEHS housing finance service to bring this much needed value-added service to government employees.

Home loans already available

Interface systems between GEHS and SAHL have already been developed and are operational. Government employees may also approach SAHL directly to apply for home loans.

“We are excited about this partnership. More than anything, this investment is an expression of confidence in our service offering.

“We believe we have the necessary capacity and skills to deliver excellent home financing services to clients that will be coming through the GEHS platform, as we have consistently done with all our clients,” said Kevin Penwarden, Chief Executive Officer of SAHL.