Policy Addendum for improving title transfer in

UISP projects

February 2015

Purpose of presentation

Outline of presentation

• Policy Addendum: background and objectives

• Scope of Policy Addendum

• Addendum development process

• Some key concepts

• Some key features of the Addendum

• Feedback from municipalities & discussion

• Final opportunity for feedback

Policy Addendum

Background

• Policy for improving title transfer in new greenfields projects (title transfer policy)

approved March 2014

• Title transfer policy sets out comprehensive and detailed provisions for transfer,

and background to the legal process

• Many of these provisions are applicable across all subsidy projects ending in

ownership – but some differences in UISP projects

Objectives of Addendum

• Indicate key differences between greenfields and UISP projects regarding transfer

• Shows how UISP projects can fit within general rules and policy provisions set out

in Title Transfer Policy

• Adapts a few policy provisions to address transfers in UISP projects

Title transfer policy

Central goal of the Policy

• Achieve timeous transfer of title to housing beneficiaries in new

greenfields projects

• Policy defines timeous property transfer as transfer that occurs

within 150 days of beneficiary occupying housing unit

• A longer delay in transfer leads to problems and adds to backlog

Scope of the Addendum

• Addendum covers the transfer of ownership-based products to approved beneficiaries (i.e. top structures and serviced sites)

• The sale of units to non-qualifiers is not covered in this addendum (normal process of sale will pertain)

• Focus of the Addendum is on improving transfer in existing types of UISP projects

• Projects in which there is a mix of top structure and serviced site end points for ownership are catered for

• Projects in which serviced sites are transferred a long period before top structures are built are not explicitly covered in this policy (but not prohibited)

Addendum development process: Aug 2014 – March

2015

Research on legal process in UISP projects and problems related to transfer (Mainly Aug/Sept)

Engagement with Departmental officials

Engagement with municipalities

- Flag scope of Addendum and broad policy approach with municipalities via SALGA Infrastructure Working Group (mayors, MMs, top officials)

- Draft Addendum circulated to all municipalities in Dec/Jan for comment via SALGA; comments received

- Presentation to municipalities on 19 Feb: Presentation of, Q&A on Addendum, response to municipalities’ comments at SALGA Infrastructure Working Group in February 2014

Briefing of Provincial Min for Human Settlements

- End of Feb

Concepts

Phases 1&2: Pre-formalisation

Phase 3&4: Formalisation

Qualifiers & non-qualifiers: possibility of different kinds of qualifiers in

UISP projects

Products & product differentiation

Resting points: serviced sites of various kinds; incremental products

to path to end points

End points: end point of government subsidy: top structures, ESS,

projects with mix of ESS and top structures, possible other products,

Two types of projects: 1-stage formalisation

Formalisation process in a UISP project gives rise to a finite number of subsidy units

clear site / greenfields site service installation and top structure occupation

| transfer |

• Majority of projects are 1-stage formalisation

• Relocation coupled with subsidy approval means that UISP 1-stage formalisation

projects taken a very form to greenfields projects

Approach followed in the Addendum

2-stage formalisation

clear site / greenfield service installation occupation top structure occupation

| transfer |

• Developer implements formalisation process in two stages • Stage 1: formalised serviced sites developed as resting points for beneficiaries and occupied for a period.

Sites may be enhanced individually to some degree or via communal services

• Stage 2: end points are produced

• Majority of 2-stage cases: Transfer once top structures are built/being built

(preferred option)

Feedback from municipalities

George

- Important to only transfer property once end point products are built in

a 2-stage formalisation project - esp in a municipality like George which

is on a migration path; occupation without transfer allows developer to

gauge whether occupant will settle

- Some municipalities find it possible to transfer property before the

beneficiary occupies the top structure – can this be a universal standard

Overstrand

- Support the policy

General rules set out in Policy

When should transfer occur? Only products fit for habitation, or where the

completion of these products is imminent, should be transferred

When should subsidy approval occur? Only an approved beneficiary

should be given occupation of a unit intended for ownership

When should occupation occur? Before occupation, the developer must

have entered into a written sales agreement with the beneficiary

specifying the precise property (by reference to the erf number) which

gives the right to the beneficiary to take transfer of the unit.

Provision 1: Key legal process steps are completed before

formalisation starts (GP registration); enforced and supported

through project approval

Formalisation Phases 3 & 4

Provision 3: Milestones - handover certification

1-stage formalisation projects• apply as in Policy

2-stage formalisation projects• Top Structure: Beneficiaries on formalised sites receiving a top structure as an end point

subsidy product may receive two certificates, when first occupy formalised plot (commodatum agreement certificate) and at handover of the unit (“handover certificate”)(the second certificate is of relevance

• Serviced Site: Beneficiaries receiving a serviced site as an end point subsidy product may get a commodatum agreement certificate (if no relocation between when first occupy serviced site and when receive the right to take transfer of the serviced site via a signed sales agreement)

Two options to certify occupation of the serviced plot to be transferred• New “handover certificate” provided after beneficiary approval for the serviced site and more or

less at the same time top structure beneficiaries are signing handover certificates

• No “handover certificate” i.e. Not required (and sales agreement date used in monitoring indicator)

Option chosen: handover certificate for serviced sites

Implementation date for the policy

Addendum and rules and provisions come into for all UISP projects without

UISP Phase 3 project approval on 1 April 2015.

Thank you

Legal process

The Policy outlines the legal steps that must be followed, in a particular sequence, for plots to be transferred to beneficiaries

Key steps:

1. Acquisition of land for the project by developer

2. Approval of the development by the planning authority (the munic/ProvGovt)

3. Approval and registration of GP by SG and DO

4. Signing of sales agreements by land owner and beneficiary

5. Lodging of transfer documents at DO

• Array of legislation that governs the legal process, and the sets of authorities and professionals involved in each step of the process.

• To achieve successful transfers, developers need to co-ordinate legal steps with planning, beneficiary administration, service installation and construction

Policy provisions that directly affect municipalities

Provision Purpose of provision

1. Changes to project

approval conditions

and reorganisation of

tranche payment

schedule

Dept to make sure developers complete 3 legal steps

before providing funding for servicing/construction: 1)

development approval; 2) GP approval; 3)

registration of the GP

2. Changes to information

requirements regarding

rights for land

acquisition funding

applications

Dept to make sure that developers have identified

land legal issues (e.g. servitudes) and plans for

addressing them before grant land acquisition

funding

3. Introduction of project

management

milestones

Project managers and regional planners report that

specific steps in the legal process (milestones) have

been completed and collect evidence from

developers

4. Increase in transfer

retention amount

New subsidy payment incentives for property

transfers: Dept will withhold double the value of the

subsidy amount for transfer until unit is registered

Policy provisions internal to the Dept that support implementation

Provision Purpose of Provision

5. Designation of Chief Director: HS

Implementation as Champion of

Policy

Champion oversees changes to the Dept’s systems,

procedures and supporting documents, and reports

on implementation progress

6. Changes to contracting

municipalities as project

developers

Contract template amended to support the provisions

of Policy including increase in transfer retention

amount

7. Measurement of the monitoring

indicator

Dept will check efficacy of the Policy by gauging

extent to which the 150 day benchmark is being met

Legal process