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SALGA SUBMISSION: Public Hearings on THE RENTAL HOUSING AMENDMENT BILL [B 56-2013]

SALGA SUBMISSION: Public Hearings on THE RENTAL HOUSING AMENDMENT BILL [B 56-2013] Portfolio Committee on Human Settlements 29 January 2014. Introduction Cost implications for municipalities Provincial Rental Housing Tribunals Ministerial regulations Impact on backyard rental

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SALGA SUBMISSION: Public Hearings on THE RENTAL HOUSING AMENDMENT BILL [B 56-2013]

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  1. SALGA SUBMISSION: Public Hearings on THE RENTAL HOUSING AMENDMENT BILL [B 56-2013] Portfolio Committee on Human Settlements 29 January 2014

  2. Introduction • Cost implications for municipalities • Provincial Rental Housing Tribunals • Ministerial regulations • Impact on backyard rental • Conclusion Presentation outline

  3. SALGA derives its mandate from section 163 of the 1996 Constitution of the Republic of South Africa as the voice and sole representative of local government • Important to note: • This submission should not be construed as substituting any input that may have been submitted directly from individual municipalities. • This opinion is a technical input and, given that it has not gone through SALGA governance structures for approval, does not represent official OLG position. 1. Introduction

  4. Munis expressed concern that requirement to set up RHTIO creates costs for local government. • ProvDept will incur costs associated with implementation of Act, including publication of the Bill for public comments, information sessions, and translations. • Section 2 of Amend Bill: • NatlDept responsible for developing and funding programmes to train munofficials who appointed or designated to carry out duties pertaining to RHTIO • Provdeptsmust assist local munswho have not been accredited to Level 3 (or assigned) the housing function, in establishing a RHTIO. • Only those six Metros who are set to be assigned the housing function in 2014, must cover those costs themselves. • Low-capacity munis who are unable to hire a new person or designate a full-time post to the RHTIO can combine the functions of the RHIO with an existing officeSection 12 Amend Bill • It is therefore SALGA’s view that the Amendment Bill adequately addresses the issue of the cost to municipalities of establishing an RHTIO. 2. Potential cost to municipalities

  5. In evictions-related cases, the Tribunal must refer the matter to a competent court within 30 days of receipt of the complaint. Section 11 Amend Bill • RHT will no longer hear any evictions-related cases • Potential confusion related to cases of unfair practices and evictions: • Cases related to unfair practices must be heard by RHT unless proceedings have already been instituted in any other court Principal Act Section 13(9) • RHT must refer evictions-related cases to a competent court Amend Bill Section 11(c) • Does unfair practices include evictions? • Costs of implementation of legislation fall on Prov Dept. In many cases, budget of RHT already stretched. • Costs will include: training of mun employees assigned to RHTIO; publication of bill for public comments; information sessions; translations; other costs. 3. Role of Rental Housing Tribunal

  6. 4. Regulations issued by Minister • Amend Bill: Minister—not the MEC—may make regulations related to the Act • Principal Act Section 15(1)f says regulations may relate to ‘unfair practices’ which include: • Overcrowding and health matters • Maintenance • Reconstruction or refurbishment • Municipal services • Deposits • Eviction • House rules • Tenants committees • Amend Bill now empowers the Minister to also issue regulations which relate to: • “Norms and standards that are aligned to the policy framework set out in Section 2(3), in relation to: • Terms of and conditions of the lease • Safety, health and hygiene • Basic living conditions including access to basic amenities • Size • Overcrowding; and • Affordability • Provided that such norms and standards may be set per geographical areas to avoid unfair practices particular to that area.” Amend Bill Section 13(f) • Minister can also issue regulations relating to: calculation method for escalation of rental amounts and maximum rate of deposits by tenants

  7. 4. Regulations issued by Minister • NB: Muns fall under category of ‘landlord’ in cases of municipally-owned rental stock • Presumably also social housing institutions (SHIs) • Geographic areas clause is problematic: • Does this subsection give the National Minister powers to set different norms and standards for rental housing for any and all geographical areas in the country? (The size of such geographical areas is not specified). • Could theoretically result in different safety standards between municipalities or provinces, or within a municipality • Raises serious equity concerns across provinces and cities • Also problematic because a municipality is much better suited to make individualized norms and standards appropriate to communities in its jurisdiction, than the National Minister. • Further noted that the Amendment Bill does not require that the Minister specifically consult with municipalities before issuing these regulations.

  8. 4. Regulations issued by Minister • Minister only has 12 months after the commencement of the Rental Housing Amendment Act to issue such regulations. • Short timeframe is problematic because: • Scope of the potential regulations is very wide—ranging from safety standards to rent limits—and the likelihood of sufficiently researching, developing and gaining consensus on such technical and controversial issues within one year is unlikely. • All municipalities should be consulted on regulations which stipulate fire safety standards for backyards in their jurisdiction, for example. • Given the dynamic nature of the rental market—especially the informal market—such regulations should not be a once-off exercise. Provision should be made for the regulations to be updated from time to time.

  9. 5. Impact on backyard rental • In the principal Act, definition of dwelling includes a hostel room, shack, room, or outbuilding. Therefore the Act will theoretically apply to backyarders in both formal and informal dwellings. • No specific mention backyard dwellings or explicit inclusion of this subsection • Amend Bill introduces requirement all tenants have written lease enforceable in RHT or competent court Section 6(a) Amend Bill • Minister to do develop pro-forma lease in 11 languages • Includes list of defects • Application of this requirement to backyard rental will have far-reaching implications • Most backyard tenants have informal arrangements (often non-monetary)

  10. 5. Impact on backyard rental • Backyard dwellings are one of the largest housing sub-sectors in South Africa • Make a significant contribution to the provision of rental housing to households whose needs are not addressed by government subsidy programmes. • Largely without any government intervention/support, the sector successfully provides accommodation to non-qualifiers, migrants or temporary workers not seeking home ownership, and any other households wishing to rent but who cannot afford formal rental accommodation available. • Census 2011: • 25% of all South Africans rent • Of all households, 1.14 million (7.8%) are in backyard rooms or shacks. • 43% of all backyard structures are formally constructed (second dwellings and formally constructed rooms); 57% informally constructed (shacks).

  11. 5. Impact on backyard rental • SALGA research on backyarders in 2012 and developed a document which sets out the appropriate local government response to backyarding. • Consulted with all our member municipalities in all 9 provinces in 2013 • To be finalised and presented to Human Settlements MINMEC in March 2014. • In the absence of a national policy framework on backyarders, this document will serve as an important policy and project guideline for local government. To pursue the enforcement of the Rental Housing Act (as amended) to the backyarding sector could have far-reaching impacts. Government intervention—in the form of Ministerial regulations setting out strict norms and standards applicable to informal dwellings in backyards—could have the unintended negative effect of undermining landlord incentives to rent out backyard space and thus reduce an important supply of affordable private rental in urban areas.

  12. 5. Impact on backyard rental • Principal Act is not explicit. If intention is to cover informal backyard rental, Amendment Bill must make this explicit. And cater to unique aspects of informal rental. • Significantly more thought and explicit attention needs to be given to how to address backyard sector constructively, to avoid unintended negative consequences of national regulations. • For example, enforcing requirement for formal written leases will seriously distort and alter the backyard rental market, which capitalizes on the flexibility of lease arrangements. • Will there be separate norms & standards for backyard rentals in the Minister’s regulations? Will the definition of ‘unfair practices’ be different for formal and informal rental? • Enforcement of norms and standards for backyard rental will be costly and require significant resources. Responsibility of municipality? • To expect municipalities to take on this burden, without, at a minimum, going through an extensive consultation process with affected municipalities, is unrealistic.

  13. 6. Conclusion • Aspects of Amend Bill have potential to massively alter informal backyard sector, if enforced. • Specifically: requirement for written lease, and authority of Minister to make geographic-specific regulations related to detailed aspects of rental conditions. • Amend Bill, as written, places unreasonable enforcement burden on local government, without acknowledging municipality’s authority and closer knowledge of particularities of its own area. • Backyard tenants have right to protection of their right to basic services and adequate housing. • However, scope of regulations which the Minister can make is over-regulation of the rental market, which runs risk of negatively impacting market and reducing supply of affordable (informal) rental. • Further, scope of regulations covers areas which fall under municipal authority and should be addressed by municipal by-laws.

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