Chapter 11: Housing Subsidy Scheme/Rural Subsidy

Background
Land Tenure
The Policy in Regard to Land Tenure
Land Held by a Community
Implementation Agents
Project Proposals
National Database
Relationships Between Implementation Agent and Beneficiaries
Identification of Land
Qualification Criteria and Amount of Subsidy
Polygamous Unions
Local Authority Accreditation
Revisions

ANNEXURES

Appendix 1	Interim Procedures Governing Land Development
Appendix 1A	Agreement for the Accreditation of an Implementation Agent
Appendix 1B	Agreement to Appoint an Implementation Agent
Appendix 1C	Project Implementation Agreement
Appendix 1D	Agreement for the Appointment of a Financial Agent
Appendix 2	Application Form for a Rural Subsidy

This chapter deals with the rules for the Rural Subsidy. The reasons why this subsidy is required are explained. The type of tenure arrangements to which this subsidy is applied are outlined. In addition the rules whereby the subsidy can be accessed and applied are specified.

1 BACKGROUND

Certain other forms of Housing Subsidy (in particular project linked subsidies, individual subsidies and consolidation subsidies) require, as a pre-condition for their payment ~
1. in the case of consolidation subsidies that the beneficiary already holds title to a particular piece of land;
2. in the case of project linked subsidies and individual subsidies that the beneficiary acquires title to a particular piece of land.
3. The only forms of title that are currently accepted are ownership, leasehold rights and deed of grant rights.
Institutional subsidies are an exception to this rule. These subsidies may be accessed in respect of a subsidy beneficiary even if he or she does not hold and will not acquire title. The rules in regard to institutional subsidies however require the institution itself either to hold ownership or some form of registered title in respect of the larger piece of land which is occupied by beneficiaries.
In terms of the qualification criteria laid down in Part 3, Chapter 2, an individual qualifies for a subsidy only if he or she has not previously received a subsidy from the Government of the Republic of South Africa.
The insistence of security of tenure encountered in the rules governing other forms of the subsidy exists to ensure that subsidy beneficiaries do not forfeit the benefits received by them. If a subsidy is granted to a beneficiary in respect of land, if the beneficiary uses that subsidy in order to improve the land, and if the beneficiary is then deprived of that land ~
1. the beneficiary will effectively have been deprived of his or her subsidy;
2. the beneficiary will not be entitled to receive another subsidy;
3. the owner of the land will have benefited indirectly from the Housing Subsidy Scheme.
In various areas of the country, commonly referred to as rural areas, individuals enjoy functional security of tenure as opposed to legal security of tenure. The Housing Subsidy Scheme, in its current form, precludes those persons from obtaining access to the subsidy. This Chapter accordingly sets out the rules to be applied in extending the benefits of the Housing Subsidy Scheme to those persons, bearing in mind the need to balance ~
1. their legitimate expectations to participate in the subsidy scheme; against
2. the need to ensure that they are not deprived of the benefits of the subsidy due to factors beyond their control.
For the sake of convenience, the subsidies envisaged in this Chapter are referred to as rural subsidies. It is to be noted, however, that ~
1. the areas in which rural subsidies will be made available will not necessary be “rural” in the sense in which that expression is normally understood;
2. the land in respect of which the subsidies are made available could be land that would more commonly be classified as urban (for example land adjacent to urban areas in the former “homelands”).
Rural subsidies are, however, to be regarded as subsidies of the last resort. If in any particular area it is possible (for example in terms of the Less Formal Township Establishment Act, 1991) to create secure rights of tenure for subsidy beneficiaries, preference must be given to subsidy forms which are based on those rights.
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2 LAND TENURE

The previous regime effectively created two legal systems which operated side by side. Land tenure in the previous so-called “black” areas, was controlled by various commissioners. Those commissioners, acting in terms of the powers vested in them, controlled ~
1. the rights of individuals to occupy land; and
2. the terms and conditions of their occupation.
The Black Areas Land Regulations (“the Regulations”), made by Proclamation R 188 of 1969 in terms of the provisions of Section 25 (1) of the Black Administration Act, 1927 provided, in respect of residential land, that a Commissioner could grant to any individual in respect of any particular piece of land, either a right of quitrent tenure or a permission to occupy it.
The Regulations applied to so-called “black” areas which included land held by the South African Development Trust. They were applied in the areas of the former “homelands” but were adapted in some instances. In this Chapter, any reference to the Regulations include a reference to the various derivatives of the Regulations as applied in the former “homeland” areas.
The Regulations ~
1. envisaged that rights of quitrent tenure would be registered in a Registry office and that record would be kept of permissions to occupy in a register maintained by the relevant Commissioner;
2. prescribed detailed rules of succession in respect of both rights of quitrent tenure and permissions to occupy;
3. provided that rights of quitrent tenure and permissions to occupy could be forfeited;
4. provided for the sale and transfer of a right of quitrent tenure, provided that the permission of the Commissioner had been obtained.
Although the Regulations made provision for the registration of rights of quitrent tenure and permissions to occupy, the administration of the Regulations was often characterised by a high degree of inefficiency. The result has been that registration systems were not maintained and that there is currently no authoritative record of the existence of either rights of quitrent tenure or of permissions to occupy. This has, in some instances, led to competing land claims in respect of particular pieces of land.
Three other enactments provide for the grant of rights/permissions to occupy ~
1. the Irrigation Schemes Control Regulations, 1963 (made by Proclamation R5 of 1963);
2. the Rural Areas Act (House of Representatives), Act 9 of 1987; and
3. the KwaZulu-Natal Land Affairs Act (Act 11 of 1992).
4. These enactments, together with the Regulations, are referred to herein as the “included enactments”. The upgrading of Land Tenure Rights Act, 1991, makes provision for the automatic upgrading to ownership of, inter alia, quitrent tenure rights granted in terms of the Regulations. That Act also creates a mechanism to convert into ownership, rights/permissions to occupy granted in terms of the included enactments.
Quite aside from the existence of the various enactments to which reference is made above, land tenure is, and has always been, regulated in various areas, by the laws and customs of tribes.
The Department of Land Affairs is currently in the process of assessing land tenure rights in the Republic of South Africa. In order to maintain the status quo whilst this work is being undertaken, the Interim Protection of Informal Land Rights Act, 1996, has been enacted (“the Interim Protection Act”). The Interim Protection Act ~
1. will remain in force until suitable alternative legislation has been put in place;
2. defines an informal right to land as ~
  1. the use of, occupation of, or access to land in terms of ~
    - any tribal, customary or indigenous law or practice of a tribe;
    - the custom, usage or administrative practice in a particular area or community, where the land in question at any time vested in ~
      - the South African Development Trust established by Section 4 of the Development Trust and Land Act, 1936 (Act 18 of 1936);
      - the government of any area for which a legislative assembly was established in terms of the Self-Governing Territories Constitution Act, 1971 (Act 21 of 1971); or
      - the government of the former Republics of Transkei, Bophuthatswana, Venda and Ciskei.
    - the right or interest in land of a beneficiary under a trust arrangement in terms of which the trustee is a body or functionary established or appointed by or under an Act of Parliament of the holder of a public office;
    - beneficial occupation of land for a continuous period of not less than five years prior to 31 December 1997; or
    - the use of occupation by any person of an erf as if he or she is, in respect of that erf, the holder of a right mentioned in Schedule 1 or 2 of the Upgrading of Land Tenure Rights Act, 1991 (Act 112 of 1991), although he or she is not formally recorded in a register of land rights as the holder of the right in question,
    - but does not include ~
    - any right or interest of a tenant, labour tenant, sharecropper or employee if such right or interest is purely of a contractual nature; and
    - any right or interest based purely on temporary permission granted by the owner or lawful occupier of the land in question, on the basis that such permission may at any time be withdrawn by such owner or lawful occupier;
3. provides that no person may be deprived of such an informal right without his consent for so long as the Act remains in force. This provision is, however, subject to the exception that where land is registered in the name of a community, any individual who occupies any piece of that land in accordance with the laws or customs of that community may be deprived of that right to occupy by means of a majority vote by the members of the community.
In regard to the informal rights to land created by the Interim Protection Act ~
1. no distinction is made between “rural” land and other land;
2. no distinction is made between land held by the State and land held by private individuals;
3. beneficial (*)[1] occupation of land for a continuous period of not less than 5 years prior to 31 December 1997 is recognised as an informal right.
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3 THE POLICY IN REGARD TO LAND TENURE

The benefits of the Housing Subsidy Scheme will be extended to persons who enjoy functional security of tenure, provided that they comply with the other qualification criteria set out in Part 3, Chapter 2.
The Interim Protection Act, for so long as it exists, creates, in respect of informal rights to land as defined in that Act, functional security of tenure in the sense that persons who hold those rights may not be deprived of them (subject to the exception noted in 2.8.3 above).
The Interim Protection Act , however, only aims at safeguarding rights whilst the process of reform is undertaken. During that process new systems of land tenure will be devised and implemented and competing claims to land will be resolved.
Benefits of the Housing Subsidy Scheme cannot therefore, without enquiry, be extended to all informal rights to land as envisaged in the Interim Protection Act. Subsidies will only be extended to persons whose informal rights are uncontested and who are unlikely to lose those rights during the current land reform process.
Where a person’s informal right to land is uncontested and exists in respect of land which belongs to the State, there is a high degree of likelihood that the person in question will ultimately secure formal rights of tenure. On the other hand, and where the informal right exists in respect of land which belongs to a land owner other than the State, no such a degree of likelihood necessary exists.
Rural subsidies may accordingly be made available to persons who occupy land ~
1. by virtue of the laws and customs of a tribe, if the land is State land (as defined below);
2. as holders of registered quitrent tenure rights or registered rights/permissions to occupy in terms of any of the included enactments;
3. by virtue of the administrative practice which previously existed, if the land occupied is State land. This category includes all unregistered quitrent tenure rights and unregistered rights/permissions to occupy granted in terms of the included enactments.
4. The Interim Protection Act grants protection not only to persons who occupy land, but also to persons who have access to land in terms of the various informal rights detailed in that Act. A typical example of a case where a person has access to land but does not occupy it, would arise where a group of people have grazing rights over a particular piece of land. Rural subsidies will be made available, in addition to the persons envisaged in 3.6.1-3.6.3 above, also to persons who have access to land in terms of the informal rights protected in the Interim Protection Act, provided that those persons can illustrate that they have complied with the provisions of this Chapter.
For the purposes of this Chapter the expression “State land” means land which at any time vested in ~
1. the South African Development Trust established by Section 4 of the Development Trust and Land Act, 1936;
2. the Government of any area for which a legislative assembly was established in terms of the Self Governing Territories Constitution Act, 1971;
3. the Ingonyama Trust Land; and
4. the Governments of the former Republics of Transkei, Bophuthatswana, Venda and Ciskei.
The beneficiary’s rights must be uncontested. Any beneficiary who occupies land and wishes to obtain a rural subsidy should accordingly ~
1. if he or she occupies land by virtue of the laws and customs of a particular community, produce a certificate from the leader of that community in order to confirm his or her rights;
2. if he or she holds registered quitrent tenure rights or a registered right/permission to occupy, provide documentary proof of that right;
3. if he or she is entitled to occupy the land in question by virtue of the administrative practice which previously existed, produce documentary proof of the rights granted to him or her (such as the unregistered quitrent tenure rights or the unregistered right/permission to occupy).
It is, however, likely that in certain instances beneficiaries included in the category envisaged in 3.8.3, will not be able to produce the required documentary proof of their rights. If such a person has been in occupation of State land (as defined above) for a continuous period of 5 years, he or she in all probability enjoys functional security of tenure. If, therefore, any such a person is unable to produce the required documentary proof, his or her application for a subsidy will be entertained if he or she occupies State land (as defined herein) and he or she has occupied that land for at least 5 years (on the date upon which application for a subsidy is made). Occupation of this land is to be proved as follows ~
1. the beneficiary must submit an affidavit to the Provincial Housing Development Board ( hereinafter referred to as Housing Board) in which he or she details the nature of the rights held by him or her in respect of the land for which he or she applies for a subsidy (“the allotment”), swears positively to the fact that he or she was, in the past, in possession of the necessary documentary proof in respect of those rights and that he or she has subsequently lost those documents, and in which he or she confirms the fact that he or she has occupied the allotment for a continuous period of 5 years;
2. the applicant must obtain and submit to the Housing Board, affidavits by all the adult members of the household which occupies the allotment in question, in which those persons confirm that, insofar as they are aware, no person has contested the applicant’s rights to occupy that allotment;
3. the applicant must obtain and submit to the Housing Board a certificate from the registered owner of the land, in which that owner certifies that, insofar as it is aware, there are no competing claims in respect of the allotment.
A Housing Board will not be compelled to accept, if any particular beneficiary complies with the criteria laid down in 3.9 above, that the applicant in question in fact holds informal land rights to a particular allotment. Any Housing Board shall be entitled to conduct such investigations and surveys with regard to the informal land rights allegedly held by any particular applicant as it may require, and may itself determine the scope and manner of conducting any such an investigation or survey.
The Minister of Land Affairs (“the Land Minister”) is the nominal owner of State land as defined in this Chapter. The Land Minister recognises that he/she, in his/her capacity as the nominal owner of State land, must take into account the wishes of the persons who are beneficially entitled to any particular portion of land.
Persons who have access to State land (rather than the right to occupy State land), may from time to time resolve to develop the State land in respect of which they have access. In order to create clarity, the Land Minister has prescribed interim procedures governing land development decisions in respect of State land. A copy of those procedures (“the Interim Procedures”) is annexed to Part 3 as Appendix 1.
A group of persons who hold access to State land and who wish to obtain rural subsidies in order to develop that State land must ~
1. prepare a development proposal in accordance with Appendix 1 and submit it to the Land Minister for his consent;
2. indicate in that development proposal how the identity of persons who will be entitled to participate in the development will be identified;
3. obtain the Land Minister’s approval of the proposed development and submit a copy thereof together with their application for rural subsidies.
Any person identified in any development proposal approved by the Land Minister in terms of the Interim Procedures, will qualify for a rural subsidy (provided that he/she otherwise qualifies for subsidy in terms of the criteria specified in Part 3, Chapter 2).
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4 LAND HELD BY A COMMUNITY

There is currently virtually no land which is held by communities. It is, however, anticipated that the current reform process will result in the transfer of land to communities.
The Interim Protection Act envisages that a person may be deprived of his or her right to occupy land registered in the name of a community in accordance with the customs of that community. Whether or not any such a person could ultimately be deprived of his/her land in accordance with the customs of the community, will depend on the terms upon which land is transferred to the community. There is, however, a prospect that, in respect of land held by a community, occupants may be deprived of their rights in accordance with the laws and customs of the community.
If any particular person accesses a housing subsidy and is then deprived of his or her right to occupy the land in respect of which that subsidy is given, he or she will lose his or her subsidy. For that reason the following rules will apply to a person who obtains a subsidy in respect of land which is registered in the name of a community ~
1. as and when a subsidy is granted to him or her, his or her name (and that of his or her spouse) will be recorded on the National Database;
2. if he or she is thereafter deprived of his or her rights to the land in question, he or she will be given the opportunity to prove that he or she has lost his or her land. Proof must take the form of an affidavit signed by the beneficiary. The Housing Board will be entitled to investigate the circumstances giving rise to the loss in order to enable it to satisfy itself that the subsidy beneficiary has indeed been deprived of his or her land;
3. if the Housing Board is satisfied, as a matter of fact, that the beneficiary has lost his or her land, he/she must be required to cede to the Housing Board any claim which he/she may have against the landowner arising out of any improvements made by him/her to the land concerned;
4. against such a cession, the name of the beneficiary (and his/her spouse) will be removed from the National Database, so that he or she will again qualify for a subsidy;
5. if the Housing Board, in terms of the cession obtained by it pursuant to 4.3.3, recovers from the land owner an amount which exceeds the subsidy originally granted to the beneficiary, the Housing Board shall, as soon as may be reasonably possible, pay the amount of that excess to the beneficiary.

5 IMPLEMENTATION AGENTS

In a typical Greenfield development ~
1. a developer identifies a project and applies for the approval of that project for the purpose of the allocation of project linked subsidies;
2. a township is established and an infrastructure is provided to it;
3. top structures are constructed on individual erven;
4. properties are transferred to beneficiaries;
5. the subsidy is accordingly used for planning, to provide infrastructure and to provide top structures.
Such a rigid system cannot be imposed in respect of rural subsidies. It is unlikely that townships will, at least initially, be established. It is in addition unlikely that the subsidy will be used to provide formalised infrastructure.
Rural subsidies may, accordingly, be used for any purposes which, in the discretion of the Housing Board, amount to housing purposes. Without limiting the discretion of any particular Housing Board, the following purposes may be regarded as housing purposes ~
1. the provision of sanitation facilities;
2. the provision of roads and stormwater drains within the boundaries of any particular settlement;
3. the provision of water;
4. the construction or upgrading of dwellings;
5. the purchase of building materials in order to enable a beneficiary himself or herself to construct or upgrade a dwelling.
It is likely that particular subsidy beneficiaries will wish to pool their resources in order to install services which will be of benefit to all those beneficiaries (for example the building of a road or the sinking of a borehole). Since the purposes for which the subsidy could be utilised are so diverse, it is critical to ensure that the utilisation of subsidies is planned properly. This planning should as far as possible, take account of ~
1. Prudent precautions such as, for example, the need to prevent the construction of dwelling within a one in fifty year floodline;
2. The work being undertaken by various organs of the Government in providing facilities to rural areas (such as, for example, the provision of water).
Beneficiaries may be able to access credit and by doing so they may be able to gear their subsidies with other funds. Institutional structures should accordingly be created which will assist potential beneficiaries to access credit (if they can afford to do so).
Rural subsidies may accordingly only be accessed on a project basis, and not on an individual basis. No minimum and no maximum number of participants in any such a project will be imposed. Each particular Housing Board will, in its discretion, determine whether to approve any particular project or not, and in reaching that decision it will obviously be guided by its perceptions of the benefits of any proposed project to the beneficiaries who will participate in it.
Developers at this stage play a meaningful role in the implementation of the other forms of subsidy. In the case, for example, of project linked subsidies and institutional subsidies, projects are developer-driven in the sense that developers (or institutions) take the initiative in identifying and implementing projects. There has, however, been a movement away from this reliance on developers, particularly insofar as the People’s Housing Process is concerned. That process envisages that subsidy beneficiaries will themselves take the initiative in order to launch projects which will improve their own standard of living. In this sense, the housing subsidy scheme is accordingly becoming even more people-driven.
It is unlikely that developers will utilise rural subsidies to any significant degree. It is accordingly essential to ensure that access to these subsidies will be people-driven (in very much the same way in which the People’s Housing Process is people-driven).
Communities which could potentially access the subsidy will require assistance particularly in order to plan proposed projects, to collect the evidence of their entitlement to subsidies and, in appropriate cases, to obtain access to credit. At the moment the Housing Boards lack the institutional capacity themselves to take an active role in this regard. Projects will accordingly be undertaken through the intervention of intermediaries, to be known as implementation agents. The role of these implementation agents will be ~
1. to educate the general public in regard to the availability of rural subsidies;
2. to plan projects and to submit those projects to the Housing Board and, if applicable, the Land Minister, for approval;
3. if the Housing Board approves any particular project, to implement it;
4. in applicable instances, to ensure that participating beneficiaries obtain access to credit.
Each Housing Board shall therefore be entitled to accredit implementation agents. The identity of persons and/or bodies who will be accredited by Housing Boards, will be left to the discretion of those Housing Boards. A Housing Board shall, however, in accrediting any particular implementation agent, satisfy itself that the implementation agent is either itself qualified or has access to the necessary skills in order to undertake the following ~
1. the planning of any particular project and the preparation of a project proposal;
2. the implementation of that project with specific emphasis on technical, financial and administrative ability;
3. the ability (or access to resources) required to operate and maintain communal services included in the project;
4. in appropriate instances, the ability to assist beneficiaries in obtaining credit.
5. The agreement for the accreditation of an implementation agent is contained in Appendix 1A to this Chapter of this Part 3 of the Code.
Without limiting the discretion of any particular Housing Board, implementation agents may include ~
1. developers;
2. local and provincial authorities;
3. rural NGOs;
4. the Utshani Fund, the Rural Housing Loan Fund and support organisations in terms of the People's Housing Process;
5. community groupings, including church groups;
6. private sector agents including, for example, project managers, attorneys, land surveyors, town planners, engineers and building contractors.
Each Housing Board shall maintain a list of all implementation agents accredited by it and shall make that list available on enquiry and without the payment of a fee.
Any group of beneficiaries which wishes to undertake a project should accordingly conclude an agreement with an implementation agent accredited by the relevant Housing Board. In that agreement ~
1. the beneficiaries concerned will appoint the implementation agent;
2. the implementation agent will be obliged to plan the project, to submit a project proposal to the Housing Board (and, if applicable, the Land Minister) and, if the project is approved, to assist the community in implementing it;
3. in appropriate instances, the implementation agent will be obliged to assist beneficiaries to obtain credit;
4. subject to 5.14, the beneficiaries and the implementation agent will agree on the fees that will be payable by the beneficiaries to the implementation agent in respect of the services rendered by him or her;
5. the parties must agree on the matters set out in 8 below.
6. The agreement between the implementation agent and the beneficiaries is contained in Appendix 1B of this Chapter of Part 3 of the Code.
The fees payable by the beneficiaries to the implementation agent will, if the project is approved, be paid out of the approved subsidies. It is accordingly necessary to limit the fees that will become payable to the implementation agents by beneficiaries and in this regard ~
1. the fee payable to the implementation agent for the planning of the project and for obtaining the Housing Board’s approval should not exceed 5% of the total amount of the subsidies approved in respect of the project;
2. the fee payable to the implementation agent for assisting the beneficiaries in implementing the project should not exceed 2% of the total subsidies approved by the Housing Board.
3. In certain instances, for example very small projects, the fees set out in this paragraph 5.14 may, however, not be adequate. Housing Boards shall accordingly be entitled to increase those fees. This discretion must, however, be exercised sparingly and Housing Boards should regard themselves, in this regard, as the ultimate guardian of the rights of the beneficiaries concerned.
The agreement between the beneficiaries and the implementation agent shall further provide that if the implementation agent is not able to obtain the Housing Board’s approval of the project, no fees of any nature whatsoever will be payable by the beneficiaries to the implementation agent.
It is, however, recognised that not all implementation agents will be in a financial position that will allow them to undertake the planning stage of any project on risk. Any particular Housing Board may accordingly in writing agree with any accredited implementation agent ~
1. that it will make an agreed amount available to the implementation agent in order to assist the implementation agent in preparing any particular project proposals;
2. on the amount that will be made available and the times at which it will be paid;
3. that if the project in question is not approved, the implementation agent will not be obliged to refund any or all the amounts paid to it;
4. that if the project is approved, the implementation agent shall be obliged to refund any amounts paid to it, and shall be entitled, in its agreement with the beneficiaries concerned (and subject to 5.14 above) that the fees payable to it by the beneficiaries shall be utilised in order to repay the Housing Board.
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6 PROJECT PROPOSALS

If an implementation agent is able to identity any particular project for which rural subsidies will be sought, it shall prepare and submit to the relevant Housing Board an outline proposal which contains the following ~
1. the names and identity numbers of the qualifying beneficiaries who will participate in the proposed project;
2. the support of the owner of the land (including, if applicable, the approval of the Land Minister in terms of the Interim Procedures);
3. details of allotments in respect of which the project will be undertaken, and the nature of the informal rights held by the beneficiaries in respect of those allotments;
4. proof, in the form required by this Chapter, of those informal rights;
5. a copy of the written agreement concluded between the beneficiaries and the implementation agent;
6. details of the amount of the subsidy for which application is being made, and the manner in which the amount of those subsidies will be applied;
7. if engineering services are to be provided, a copy of the agreement concluded with the service provider, which makes provision for the maintenance of those services;
8. if the participating beneficiaries will obtain credit, details of the credit provider concerned, and the terms and conditions on which credit will be made available.
If the Housing Board is prepared to accept the outline proposal in question, it shall advise the implementation agent and shall inform the implementation agent of further steps which it requires in order to plan the project in detail. The implementation agent shall thereafter undertake the required detail planning and shall submit a detailed project proposal to the Housing Board.
If the Housing Board accepts any detailed project proposal, it shall conclude an agreement with the beneficiaries concerned (represented by the implementation agent) in which ~
1. the beneficiaries undertake to implement the approved project (assisted by the implementation agent);
2. the Housing Board agrees to pay the approved subsidies to the financial agent envisaged in 6.4 below (for disbursement by that agent in the course of the project) at such milestones as the Housing Board may agree.
3. The agreement between the Housing Board and the beneficiaries (represented by the implementation agent) is contained in Appendix 1C of this Chapter of Part 3 of the Code.
Given the current administrative constraints experienced by Housing Boards, the payment of rural subsidies will be administered by financial agents on behalf of the Housing Board. The amount of any approved subsidies shall be paid to those financial agents at such milestones as the Housing Board may agree and the financial agents shall disburse those funds as and when required in the implementation of the project. Ideally one person should not be appointed as both the implementation agent and the financial agent since a person who holds such an appointment is, inevitably, placed in a conflict of interest situation. It is recognised, however, that in certain instances and due to the non-availability of potential agents, Housing Boards may be compelled to appoint one person as both the implementation agent and the financial agent.
The Housing Board shall, as and when it concludes an agreement with the beneficiaries, conclude a further agreement with the financial agent, which agreement shall provide that ~
1. the Housing Board appoints the financial agent as the Housing Board’s agent in order to attend to the administration of the payment of subsidies;
2. the Housing Board shall pay the amount of the approved subsidy to the financial agent at the times set out in the agreement between the Housing Board and the beneficiaries (and the Housing Board shall be guided by the principles set out in 6.6 below in determining those times);
3. any amounts thus paid to the financial agent shall be invested in an interest-bearing bank account;
4. the financial agent shall, as and when work in undertaking the project progresses, pay to the suppliers of materials and services such amounts of money as they may be entitled to receive, and shall make those payments out of the funds deposited with it by the Housing Board;
5. the financial agent shall at regular intervals, but not less frequently than monthly, furnish reconciliations to the Housing Board indicating the details of all moneys received by it from the Housing Board, all interest earned on those moneys, all payments made by it and the manner in which payments have been attributed to each individual qualifying beneficiary who participates in the project;
6. the financial agent shall be entitled to be paid, in respect of the administration of the payment of subsidies, a fee (in an amount agreed by the Housing Board);
7. that fee shall be payable at specific times set out in the agreement;
8. all interest that accrues on the amounts invested from time to time as envisaged in 6.4.3 above, shall accrue for the benefit of the Provincial Housing Development Fund and the financial agent shall at regular agreed intervals, but not less frequently than monthly, pay that interest to the Housing Board.
9. The agreement between the Housing Board and the financial agent is contained in Appendix 1D of this Chapter of Part 3 of the Code.
In determining the times at which the amount of approved subsidies shall be paid to financial agents, Housing Boards shall be guided by the following principles ~
1. it is essential to ensure that the agent will be in possession of the funds required by it to make payments in connection with a project as and when those payments fall due;
2. the Housing Board’s risk of mal-administration by the agent should, however, be limited as far as possible;
3. the agent should therefore not be placed in possession of more funds than it reasonably requires for a specific period;
4. Housing Boards should accordingly require agents to prepare an anticipated cash flow and should make payments to the agent in accordance with that anticipated cash flow;
5. Provision should, however, be made for deviations from this cash flow (and consequent payment to the agent), in order to take account of delays in the programme or of the implementation more rapid than initially anticipated.
If, in any instance, one person is appointed as both the implementation agent and the financial agent, that person shall furnish to the Housing Board security to the satisfaction of the Housing Board for its implementation of that project. The Housing Board shall itself be entitled to determine the nature of the security, which could consist of ~
1. if the agent is not a natural person (in other words if it is a company, a close corporation, a co-operative or a trust) a personal suretyship, for the due and proper administration of the payment of subsidies, from the members of the agent (if the agent is a company, close corporation or co-operative) or from the trustees of the agent (if the agent is a trust);
2. fidelity guarantee insurance, taken out by the agent and ceded to the Housing Board, for an amount equal to at least the anticipated maximum amount of the subsidy that will from time to time be held by the agent. The agent shall itself pay the premiums payable in respect of this insurance and those premiums shall under no circumstances be included in the amount of the subsidy payable in respect of the project.
In selecting financial agents, Housing Boards should ensure that the agents in question have the necessary financial and administrative skills required in order to act. Housing Boards should bear in mind that there is always a possibility of mal-administration by any particular financial agent and Housing Boards should, in appropriate instances, require security from financial agents.
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7 NATIONAL DATABASE

Before finally approving any particular project, a Housing Board shall require the implementation agent to deliver to it, in respect of each beneficiary who will participate in that project, the application form annexed hereto as Appendix 2.
On receipt of any particular application form, the Housing Board shall satisfy itself that the beneficiaries in question are entitled to receive a subsidy. The Housing Board shall, in the process of satisfying itself, cause searches of the National Database and of all deeds registries in the Republic of South Africa to be undertaken.
If any particular beneficiary included in any particular project does not qualify for a subsidy
1. the Housing Board shall advise the implementation agent;
2. the Housing Board shall require the implementation agent either to substitute that beneficiary with a person who does qualify for a subsidy, or to amend the project proposal accordingly.
In finally approving any particular project, the Housing Board shall finally approve the participation of a specific list of beneficiaries in that project. The Housing Board shall, against the approval of any project, cause the names of the beneficiaries reflected on that list to be captured on the National Database.

8 RELATIONSHIP BETWEEN IMPLEMENTATION AGENT AND BENEFICIARIES

A Housing Board which approves any particular project shall satisfy itself that the agreement concluded between the implementation agent and the beneficiaries is fair and transparent.
Any such an agreement shall contain at least the following ~
1. details of the project to be undertaken, the land in respect of which it will be undertaken and of the assistance that will be given from time to time by the implementation agent to the beneficiaries (such assistance could, for example, relate to the negotiation of contracts with the providers of services, or to assistance to be given by the implementation agent to the beneficiaries in purchasing building
2. materials, including assistance in regard to the delivery of those materials);
3. the fees payable to the implementation agent (by the beneficiaries out of their subsidies) for planning the project and for assisting the beneficiaries in implementing it;
4. if the implementation agent is also appointed as the financial agent, details of the fees that will be payable by the Housing Board to the agent in respect of the administration of the payment of subsidies (these details are to be given for information of the beneficiaries);
5. a provision to the effect that if any dispute should arise between the beneficiaries and the implementation agent, that dispute shall be referred to a person appointed by the Chairperson of the Housing Board for adjudication. That person shall rule on the dispute between the parties acting as an expert and not as an arbitrator, and shall be entitled to adopt any such procedure as he or she may deem appropriate. That expert shall, however, in determining the procedure to be followed, ensure that adequate opportunity is given to both the implementation agent and the beneficiaries.
6. Provided that if, for any reason whatsoever, the project is not implemented and finalised in accordance with the project proposal made, in respect of the project, to the Housing Board, the implementation agent shall not be entitled to be paid any fees of any nature whatsoever by the beneficiaries.

9 IDENTIFICATION OF LAND

Any Housing Board which approves any particular project, must satisfy itself that the land in respect of which the project will be undertaken has been identified satisfactorily. A Housing Board which approves a project proposal shall require the land in question to be identified at least in the manner set out in this paragraph.
The ideal which a Housing Board should strive to attain, is that the land should be identified on a general plan which has been prepared by a land surveyor. Such a general plan would contain allotment numbers and would be available for registration on the National Housing Subsidy Database.
If it is not practical to require the preparation of a general plan ~
1. and the project is situated entirely within the boundaries of a surveyed farm or portion of a farm in respect of which a diagram has been registered in the office of the Surveyor General, the land to be developed may be identified with reference to that diagram;
2. the project is situated on a piece of land for which no diagram has been approved by the office of the Surveyor General, a survey of the outer boundary of the project must be undertaken, a diagram must be prepared, and that diagram must be approved by the Surveyor General.

10 QUALIFICATION CRITERIA AND AMOUNT OF SUBSIDY

Subject to the provisions of 11 below, the qualification criteria set out in Part 3, Chapter 2, apply to rural subsidies. A person who wishes to obtain a rural subsidies must prove to the satisfaction of the Housing Board that ~
1. he or she holds an informal right to land, of the nature set out in 3.6 above;
2. he or she otherwise complies with the aforesaid qualification criteria.
Each qualifying beneficiary shall be entitled, if his or her application for a subsidy is approved, to receive, as a subsidy, the amount determined in accordance with the criteria set out in Part 3, Chapter 2.
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11 POLYGAMOUS UNIONS

It is likely that potential qualifying beneficiaries may have contracted polygamous marriages. If any person is indeed in a polygamous union ~
1. that union will be recognised in terms of the Recognition of Customary Marriages Act, 1998 (Act no. 120 of 1998);
2. that person will, however, and in terms of the qualification criteria set out in Part 3, Chapter 2, qualify for a subsidy only in respect of his or her “first” spouse;
3. the other spouses of that person will accordingly be prejudiced since those spouses will be denied access to the subsidy scheme;
4. the qualification criteria set out in Part 3, Chapter 2 will accordingly, in the case of rural subsidies, be relaxed in order to provide that one person may qualify for as many subsidies as he or she may have spouses. Such a person shall, in respect of each subsidy obtained by him or her, obtain that subsidy in respect of a particular spouse and the children of the union between him or her and that spouse. In each case the details of the applicant together with the details of the spouse in question shall be recorded on the National Database and an appropriate endorsement shall be made on that database in order to indicate that the subsidy in question has been granted in respect of a polygamous union.
5. if a polygamous union terminates, care must, however be taken to ensure that a person with multiple spouses does not retain the benefit of a subsidy granted to him/her in respect of a person to whom he/she is no longer married. This is particular important since the name of the ex-spouse of that person will still be contained in the database and he/she will not qualify for a further subsidy.
6. accordingly, and if any person applies for a subsidy in respect of a partner to a polygamous union, he/she shall, in the application form completed by him/her undertake-
  1. not to evict his spouse or any of the financial dependants of that spouse from the property in respect of which the subsidy has been granted for any reason whatsoever;
  2. that if he/she breaches this undertaking, he /she shall refund the subsidy in question to the Housing Board together with interest on that calculated at a rate equal to the prime overdraft lending rate charged from time to time by First National Bank Limited of South Africa to its most favoured customers, such interest to be calculated and compounded annually in arrears with effect from the date upon which the final payment of that subsidy is made for the benefit of the applicant concerned up to and including the date upon which that applicant causes his or her spouse and/or his/her financial dependants to be evicted from the property concerned.
7. In the circumstances, and if a partner to a polygamous union has received the benefit of a subsidy and is thereafter evicted from the property concerned by his or her spouse, his or her name shall be removed from the database in order that he or she may again qualify for a subsidy.
8. For the sake of clarity it is stressed that an applicant who is a party to a polygamous union will only be entitled to obtain a rural subsidy if ~
  1. he or she holds informal rights (of the nature recognised in this Chapter) in respect of a particular allotment;
  2. that allotment is physically occupied by a person to whom he or she is married by virtue of a polygamous union, and/or the children or such polygamous union.

12 LOCAL AUTHORITY ACCREDITATION

The programme of rural subsidies contained herein is a housing programme in respect of which municipalities may be accredited as envisaged in terms of Section 10 of the Housing Act, 1997.
The Minister of Housing may, accordingly, in future prescribe accreditation criteria for the accreditation of municipalities in respect of the programme contained in this Chapter.

13 REVISIONS

The ongoing work of the Department of Land Affairs in regard to land tenure systems in the Republic of South Africa may require revisions of amendments to this Chapter.
The Department of Housing will, accordingly, monitor those developments and if necessary revisions of and amendments to this Chapter will be made.