Urban Homes News.

An inclusionary housing development model which incentivises developers to add a percentage of more affordable apartments to an existing development, targeted at the middle-income market. 

Developers apply to the local city council for additional building rights on their existing development known as a bulk departure. This bulk departure falls within the zoning scheme and is well within the maximum envelope that could be built on the site as defined by the setbacks and height restrictions.

They then allocate this bulk on a 1-for-1 basis, which means that for every square metre of inclusionary housing added, the developer can add a square metre to the original scheme.

As part of the extensive consultation procss which involved input from the local city council, it was suggested that the model should be scalable so that developers should be incentivised to introduce more affordable units into their developments, while improving the overall viability of the project. It was felt that this amendment to the model would act as a stronger incentive than the 80:20 ratio model.

It is the site of Blok’s development where the inclusionary development model will be piloted. It is located at 40 Lion Street, Bo Kaap.

It comprises the original scheme of 54 open-market apartments (already launched for sale) and will use the bulk departure to add:

  • 400 sqm for 11 more affordable apartments and
  • 400 sqm for more open-market apartments

Affordable housing can be defined as housing units which are affordable by the section of society whose income is below the neighbourhood’s median household income or whose income would not qualify the household for finance to apply for the open-market units in a particular development.

It is a form of affordable housing supplied by the private sector to a market whose household income is not sufficient to grant them access to finance or a bond for a particular development on the open market, or where their income range would not give them access to purchase housing in a well-located area within which the development takes place. 

They will be priced at 30-50% lower than the sale value of open-market apartments within the overall development and the development is in a well-located part of Cape Town.

Currently, the average 1 and 2 bedroom prices in the Cape Town CBD require an income range of R70,000 to R150,000 a month to qualify for a bond or loan financing. The more affordable apartments in FORTY ON L will be targeting a combined or household income range of R15,000 to R45,000 per month.

While the prices have not yet been finalised, the apartments’ prices will be between 30-50% lower than the prices of similar open-market apartments in FORTY ON L.

The 1 bedroom apartments will be approximately 35-40 sqm and the 2 bedrooms will be approximately 50-55 sqm.

Yes, a common shared space towards the centre of the development will be accessible to all homeowners and includes a deck, pool, laundry and a gym.

Yes. While they do not finance, design or build the development, the model requires the support and buy-in of the local city council to obtain the additional development rights. It is then the role of the developer to finance/design/build/sell and the participating community in the project to inform the criteria for qualification and provide general support for the development.

This is achieved through a cross-subsidisation where the open-market units in the development subsidise certain costs. i.e. these cots are not allocated to the inclusionary housing units. These costs include the cost of the land, interest costs, holding costs, finance costs and various service fees related to the development such as engineers, architects, planning and more.

They will be sold through an open-draw system, after households have been through a prequalification process with a 3rd party independent financial institution.

The apartments will be made available to first time buyers only, and households will qualify for certain apartments based on their total household income and household size (the number of people living in the household).

Yes, however a restriction on the sale value will apply for a period expected to be between 15 and 20 years. This is done to ensure that these apartments remain within the targeted middle income market, rather than being bought, flipped for profit and ending up in the market-related space.

The design was guided by a Contextual and Urban Fabric Analysis prepared by an independent third party firm. You can download the report here.