Small-scale micro-developers have brought much-needed affordable rental housing to South Africa’s townships. Now they’re asking for more institutional backing.
The micro-development sector is estimated to be worth billions of rand to the SA economy. Developments range from single dwellings to purpose-built apartment blocks, typically up to 20 units. Crucially, rents are affordable even on a modest income. The cheapest units can go for less than R1 000, while the most expensive cost around R4 000 a month – compared to a national average of R8 598 in Q1 2024.
But the developers still face significant challenges, especially compliance requirements and access to finance. Traditional banks are often reluctant to lend to them as they are often building smaller developments or do not have an extensive track record, limiting their capacity to pull off big projects.
Some municipalities are stepping up to help. The City of Cape Town is proposing changes to its Municipal Planning By-law that would make it easier to build small developments of up to 12 affordable rental flats.
The next step for them is to secure more national support, and a non-profit representing the sector has called on the government of national unity to give the sector more support. The Development Action Group says more support would not only promote affordable housebuilding, it would encourage job creation, reduce poverty and create asset wealth in communities lacking it.
It remains to be seen if their calls will be answered. Industry organisations have been asking for development-friendly reforms for several years, but still face most of the same obstacles. But if they do get the support they need, it could revolutionise low-cost renting and help poorer tenants find affordable homes.
