GOVERNMENT SUBSIDY

In post-segregation South Africa, gated communities have mushroomed in response to high levels of violent crime. Gated communities are residential estate which contain strictly controlled entrances for pedestrians, bicycles and automobiles and often characterized by a closed perimeter of walls and fences.

 The townhouse market virtually disappeared in 2008, and has now made a comeback and offers significant growth opportunities. Houses priced between R300,000 and R500,000, falling within the government subsidised housing segment, cater to a different market, but also one in which Government has been falling behind its targets.

 Having decent, well-built affordable housing is critical to our future. The key is that it needs to be affordable enough for that household. It needs to be good quality, safe and predominantly in places that are close to people’s places of work to help people’s standards of living as well. In part, property developers have adopted this response to counter squatting, which local residents fear due to associated crime, and which often results in a protracted eviction process.

Finance Linked Individual Subsidy Programme

Government has set several criteria that you have to meet in order to qualify for FLISP:
Income: Your household must earn more than R3,500 but less than R22,000 a month. This is your household’s
income (both you and your spouse’s income, or any relative you apply for a home loan with). It refers to your gross
salary – the total amount you receive before taking away taxes or deductions.

Dependents: You must be living with a partner (either married or habitually cohabiting) or living with financial
dependents. Financial dependents include: children, grandchildren, parents, grandparents, sisters or brothers under 18,
and unwell extended family members.

A house to buy: You need to find a house to buy (either a new house or an existing house), and the seller needs to
have a title deed. This house can cost any amount that you can afford (previously the maximum property value for the
house was set at R300,000 but that cap was removed in 2014). This programme may be used to acquire any formal
residential property (including previously housing subsidy financed properties) on condition that the households have
successfully applied for mortgage loans to finance the purchase.
The house can part of a new housing development: some developers already have deals with National Housing Finance
Corporation (NHFC), which makes it easier to access FLISP – you can contact the NHFC for more information. Or you
can use the FLISP to purchase a house on the resale market (an old house that is being resold). If you can’t buy a house,
FLISP can be used to build a house on a vacant stand that you already own.
Previously, FLISP beneficiaries were not allowed to sell their houses until 8 years after they had purchased their house.
However, in 2018 a decision was taken to remove this sales restriction; this has not been approved from the provincial
MEC nor has it been Gazetted which means the status quo remains unchanged.
Home loan: You need to have applied for home loan (also known as a mortgage) to qualify for FLISP. It can be done
through a bank or through a company that offers home loans (such as SA Home Loans). You can also apply for a building
loan to build a house on a vacant plot. To get the loan, most banks will want you to show proof of two years of
continuous, formal employment for you to qualify for the loan, and will want you to have a good credit record.
In 2018 government took a decision to expand the scope of the programmed to permit beneficiaries to use non-mortgage
options to purchase their home, such as pension/provident fund-back loans, short-term loans or savings-linked schemes.
However, the details of how this would work have not yet been determined, so that option is not yet available in practice.
Never owned a home: The house that you intend to purchase must be your first house. If you have previously owned
a property and had a property registered under your name, you will not qualify for FLISP. This applies to you and the
person you apply for the loan with (whether your partner or a family member and includes the family member’s partner).
Never received government assistance for housing: According to law, you may only receive government
assistance for housing once. For example, if you have already received an RDP house from government, then you would
not qualify for FLISP. This is both for you and the person you apply for the loan with (whether your partner or a family
member and includes the family member’s partner).
However, the recent changes that were made to the FLISP programme in 2018 have aligned the programme with
the Government Employees Housing Subsidy Scheme (GEHS). Public servants who receive housing assistance through
the GEHS will in future still qualify for a FLISP subsidy. Public servants must enroll with the National GEHS Administrator
under the GEHS to qualify for FLISP.
Resident of South Africa: You must either be a South African citizen or have permanent residency.

If you are purchasing new house as part of a FLISP housing development project, then the developer assists you to complete the FLISP application form and submits it for you to the NHFC. If you are buying an existing house in the open market, once the bank grants you approval for a home loan, then you complete the FLISP application form (with the assistance of the estate agent) which you can access on the NHFC website, or at the provincial department of human settlements office, or the municipal office. the form is submitted to the NHFC. There is more information on how the process works on the NHFC website here.

This depends on your household income; it will be between R27,960 and R121,626. The less you earn, the more subsidy you qualify for. The subsidy for those earning R15,000 a month has increased to R62,304 (it used to be R20,000), up to R121,626 if you earn R3,501 a month. Take a look at the FLISP Subsidy tables to see exactly how much you would qualify for.

The main principle behind the FLISP is that it must be tied to a home loan. You cannot get the FLISP without a home loan. Then, FLISP is meant to work in one of two ways: FLISP can be used to decrease your loan amount, which decreases your monthly repayments. For example, if the house you want to buy costs R599,000 and you qualify for a subsidy of R47,743, your monthly repayments will be R469 lessthan without FLISP. Here are some examples of how this works, if you are paying back a loan at 10.25% (interest may vary from bank to bank) over a period of 20 years (this may also vary from bank to bank):

Almost every home loan requires a deposit. Sometimes the deposit is bigger than you can afford. FLISP can be used to pay the deposit needed by the bank.

A tricky question to answer because only a bank can inform you of the size of the loan you can qualify for. When applying for a loan, according to the National Credit Act, you must undergo an affordability and credit assessment before you can
be approved. This assessment considers your and your partners’ net income, your credit record, your existing debt, and your monthly expenses, among other things. We believe that you should spend no more than 25 – 30% of your monthly gross income on housing. But this can be bigger or smaller depending on your expenses, savings and debt.

If the house is bought with a partner or family member, then you must make sure that the house is registered under both of your names. There were many questions whether being black-listed would disqualify a FLISP application. Being black-listed does not,
but it does affect your chances of qualifying for a home loan — a bank will not give you a loan if you are black-listed or over-indebted. We advise you to pay off your debt and clear your blacklisting before you apply for a home loan.
The National Credit Regulator (NCR)can give you advice if you are in debt or are black-listed.

You can contact the NCR
for more information.
Home loan
amount without
FLISP

Monthly home
loan repayments
without FLISP

FLISP subsidy
amount

Home loan
amount less
FLISP

Monthly home
loan repayments
with FLISP

Monthly home
loan saving
with FLISP
R599,000  R5,880  R47,734  R552,307  R5,411  R469
R628,000  R6,165  R44,612  R583,388  R5,727  R438

It is important that the seller and/or developer of the property you buy has a title deed for the property that is registered with the Deeds Office. When you buy the house, you must make sure you transfer it to your name. You cannot get the FLISP, or a home loan, if you do not follow the formal process of transferring the property into your name. For this you will need a special lawyer, known as a conveyancer appointed by Kings Gate Estate. A problem could be that you do not get a FLISP subsidy because there is not enough funding for the programme. Each year each provincial departments of human settlements set aside money for FLISP. There is the chance that a provincial department of human settlements do not set aside enough funding for all the FLISP applications for the financial year. If you fail in your application for FLISP because of this, try applying after April of the next year, when there is a new budget for FLISP.

Brand New Units From Only R599 000

SITE AGENTS

NELLY NTAKA
076 831 6162 | nelly@kingsgateestate.co.za

DUNCAN MCKENZIE
082 448 6356 | duncan@kingsgateestate.co.za

RYAN JOHNSON
083 657 4430 | ryan@kingsgateestate.co.za

TEAM LEADER

SAcoronavirus.co.za

For more information on COVID-19 and government regulation: Click here

Emergency Hotline: 0800 029 999 WhatsApp Support Line: 0600-123456