April 18, 2024

Housing Finance Development

It's Your Housing Finance Development

The National Housing Finance Corporation continues to provide innovative and affordable housing finance solutions for South Africa’s low- to middle-income households

WHO IS THE NHFC 

 The National Housing Finance Corporation (NHFC) was established by the National Department of Human Settlements as a development finance institution (DFI) in 1996, with the principal mandate of broadening access to affordable housing finance for the low- and middle-income households earning between R800 and R22 000. 

 The NHFC provides wholesale funding in the affordable housing market mainly to: 

  • Social Housing Institutions (SHI), 
  • Other Delivery Agents (ODA), 
  • Non-banking retail intermediaries 
  • Privately owned property Developers, 
  • Construction companies  
  • Investors 
  • Micro Finance Institutions (MFIs) 
  • Co-operative Finance Institutions (CFIs), Community Based Organisations  (CBOs) and Housing Co-operatives 

It also provides loans and other forms of wholesale funding (equity and quasi equity to certain niche businesses that are in the affordable housing market. For the end-user the NHFC provides grant funding to those who want to own a house for the 1st time. 

NHFC

NHFC’s OFFERINGS 

 THE NHFC PROVIDES THE FOLLOWING PRODUCTS:  

 SOCIAL HOUSING FINANCE

 Social Housing, by definition, is subsidized rental accommodation which is managed by Social Housing Institutions (SHI’s), Other Delivery Agents (ODA), the Social Housing Regulatory Authority (SHRA), and Provincial Human Settlements Departments in conjunction with Local Municipalities. The NHFC provides top-up funding of approximately 30% as secured debt and the balance of which is provided for by the SHRA to accredited SHI’s and ODA’s that qualify for Consolidated Capital Grants (CCG) to complete the project. Social Housing projects are aimed at providing subsidised rental housing to accommodate the low- to middle-income rental market sector. 

NHFC

Social Housing Project, Cape Town

BRIDGING SUBSIDY HOUSING FINANCE 

 Subsidy bridging finance is a project or development finance product that offers short-term revolving facility. The facility is typically taken out over a period of around 60 days to bridge contractor’s cash flows between the service provider and pending payment by the respective employer.

NHFC

 

NHFC

Bridging Subsidy Housing Finance Project, KZN

BRIDGING AFFORDABLE HOUSING FINANCE 

The NHFC provides project development finance to developers involved in building affordable housing for sale to the low- to middle-income earning group. This is a short-term development finance for the purpose of servicing sites, construction of top structures either free-standing or sectional titles. Loans are provided to developers who are actively involved in providing affordable housing for the affordable housing market. 

NHFC

Bridging Affordable Housing Finance Project, Gauteng 

PRIVATE RENTAL FINANCE

Private rental is a project/development finance programme which enables properties owned by landlords to be developed/refurbished for purposes of leasing to tenants.  The NHFC provides medium to long term debt funding to such property practitioners (Developers/Landlords) to refurbish existing buildings or for greenfield housing developments. 

NHFC

Private Rental Project, Sunset Village, Cape Town 

INCREMENTAL HOUSING FINANCE 

NHFC offers wholesale funding in a form of structured loans to Retail Finance Intermediaries (RFIs), who are on-lending to qualifying low- and middle-income homeowners to improve their housing condition on an incremental/gradual basis. Acceptable end user loan usage includes building a new house, house extension, fixed improvement to a house, connecting to utilities (water, sewerage and electricity), energy efficient retrofits (including solar energy, insulation and other energy innovations), water harvesting, fencing and productive housing.  

NHFC

Incremental Housing Finance Project, Edendale, KZN

STRATEGIC INVESTMENTS: EQUITY AND QUASI EQUITY INVESTMENTS 

NHFC Corporate Finance works closely with private investors, developers and housing development agencies and fund managers to leverage private sector and development funders to finance and create affordable housing that caters to the market that NHFC serves. Capital is deployed in the form of equity and quasi equity i.e,ordinary shares, shareholders loan, junior debt, preference shares and mezzanine debt.  

 WHAT IS THE GENERIC LENDING CRITERIA FOR A CREDIT FACILITY? 

  • The borrowing entity must be a registered legal entity, 
  • Equity contribution is required and is determined on a case-by-case basis to enable acceptable gearing levels, 
  • The proposed development must address the core NHFC mandate and 
  • The project must be financially viable. 
  • For social housing, the project must be located in a Restructuring Zoning and the borrowing entity, it must be a registered legal entity or a Non-Profit Company (NPC) and accredited SHI or ODA for social housing, 
  • For subsidy housing, contractor must have been awarded a contract by the employer and 
  • For incremental housing, the applicant must be registered as a credit provider with the National Credit Regulator for Incremental Housing. 

FIRST HOME FINANCE 

NHFC

  •  South African citizens and legal residents earning between R3,501 and R22,000 often find it difficult to receive  mortgage finance, yet through First Home Finance this is now possible. The NHFC received a mandate to manage  this programme as a funded mandate. First Home Finance allows qualifying beneficiaries to reduce the initial  mortgage loan amount or augment the shortfall between the qualifying loan and the total house price bringing the  eventual home loan instalment to an affordable amount over the loan repayment period. Depending on the  applicant’s gross monthly income, their once-off First Home Finance qualifying amount may vary between  R38,878.35 and R169,264.60 as defined in the First Home Finance Scheme Quantum.

WHAT FIRST HOME FINANCE CAN BE USED FOR?

      • To buy an already-built house, whether brand new or existing
      • To buy a housing stand but which must be: (1) connected to municipal services/off-the grid sources; (2) zoned for housing.
      • To pay for the building of a house on a stand which the household/applicant already owns and which must be: (1) connected to municipal services/off the grid sources; (2) zoned for housing; (3) enrolled with NHBRC; and (4) linked to a building contract with an NHBRC-registered contractor.
      • To pay for the building of a house on a stand which is part of an IRDP project, and which must be: (1) connected to municipal services/off the grid sources; (2) zoned for housing; (3) enrolled with NHBRC; (4) linked to a building contract with an NHBRC-registered contractor.
      • To buy or build a house on a stand: (1) that is owned by or vested with the government or a government-recognised traditional authority  (2) which may or may not be connected to permanent municipal services; but (3) which must be attached to a Permission to Occupy (PTO) issued by government recognised traditional authority
      • To pay for house buying costs (such as conveyancing fee, transfer fee, deposit, NHBRC enrolment fee, etc.)

First Home Finance Units, SkyCity, Gauteng  

STRATEGIC PARTNERSHIPS & PROGRAMME MANAGEMENT  

Through this programme, the NHFC supports the development of project and programme management capacity and enhances service delivery in the Human Settlements sector. Programme management services are offered to provincial and local authorities who are experiencing challenges with projects that can’t be completed successfully. Support to these entities includes the provision of management tools and  systems that can help support each project’s personnel. Furthermore, the NHFC through this programme develops emerging contractors by imparting skills such as efficient business management, technical construction knowledge, construction financial management and also assists them to access funding. These enterprises/contractors are nurtured until they are fully sustainable. 

Before and after pictures, Programme Management, Cape Town

Before:

NHFC

After:

NHFC

 

NHFC

A CSI Initiative in Northern Cape. This project was managed by the Strategic Partnerships & Programme Management Division.

For more information contact our Business Development Manager on email via [email protected].

To apply for the First Home Finance subsidy contact: 010 085 2199 or visit   www.nhfc.co.za to apply directly. 

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