Transforming backyard shacks into decent flats

An urban housing solution

One of the fastest-growing forms of housing in South Africa backyard rental is being transformed. This article discusses the pros and cons of converting backyard shacks into solid rental units. It also considers how the government could play a more constructive role in this upgrading process. By Prof Ivan Turok and Dr Andreas Scheba

Largely below the radar, there is a boom in backyard flats under way in many South African townships. People who own a house but with no regular earnings are converting shacks in their backyards into solid rental units to meet the prodigious demand for decent affordable housing from the expanding urban population.

Poor households can now earn a reasonable income by becoming small-scale landlords, while providing a welcome boost to the supply of cheap rental accommodation. The upgrading process is being funded in part by the provision of external private finance. However, there are risks to the well-being of vulnerable groups, compounded by concerns about the sustainability of the process arising from the governments indifference.

The benefits of upgrading

In the course of several recent research projects, we have discovered a seismic shift under way in township property markets. Homeowners are showing considerable initiative by replacing makeshift shacks with bricks and mortar structures offering internal toilets and washrooms. Other entrepreneurial individuals with some savings are also buying up properties informally and replicating this model of backyard apartments.

Private companies such as Indlu, Bitprop, Isiduli, TM Group and After 12 recognise the commercial potential by offering capital and expert help to construct the flats in return for a share of the rent. They are ultimately funded by some of South Africas major banks.

The burgeoning supply of better-quality rental property meets the needs of many young working people who cannot afford to buy their own homes but also dont qualify for RDP housing. Backyard flats offer more secure and dignified living environments for people who can afford to pay a modest rent (between R1 500 and R3 000 a month), but less than what is required in the formal rental market.

Backyarding is also beneficial in creating valuable work for local builders, labourers and hardware suppliers, as well as emerging estate/rental agents, and it helps to densify well-located areas and improve the viability of public transport and community facilities in these places.

The pitfalls of intensification

These short-term positives are offset by serious risks and pitfalls. Most importantly, increased intensive backyard development is happening in a policy and regulatory vacuum without any formal safeguards and protections, let alone positive state support. Government housing policy is preoccupied with homeownership rather than renting.

Backyard apartments are generally built without adhering to municipal bylaws or building standards because of the complexity and cost of these procedures. Non-compliance furthermore means there is no formal oversight of the structural integrity of the flats. This poses obvious risks to residentshealth and safety and compromises the long-term resale value of the properties.

Ignoring land use planning controls means developing beyond the capacity of municipal infrastructure. When a dozen or more households occupy township plots designed for single families, there are serious consequences such as sewage spills, electricity breakdowns and water shortages.

Informal backyarding offers little or no protection for the rights of tenants, who are vulnerable to arbitrary evictions and inflated rents. Many land invasions and protests are caused by disgruntled backyarders struggling to pay the higher rents being demanded by landlords.

Homeowners are prone to manipulation and unfair practices themselves. Unscrupulous building contractors and money lenders can take advantage of their financial illiteracy and poor knowledge of construction techniques to provide inferior services.

Government neglect and indifference

All spheres of the government currently have a hands-off approach to backyard housing. Having installed the physical infrastructure and after building many of the original RDP/BNG housing units, officials expect to manage these areas through rules and procedures that were devised in a different context and are unrealistic in the prevailing circumstances.

Some officials try to enforce these norms and standards but quickly back off in the face of community resistance and violent threats. Most just ignore what is happening on the ground instead of engaging with the process. A cautious auditing culture, weak relationships with communities and limited political support discourage a hands-on approach.

This risks a downward spiral in due course as population densities rise, services get overburdened, infrastructure decays, environmental conditions deteriorate, social trust diminishes and the states capacity to enforce standards declines. Municipalities raise very little revenue from property taxes or service charges in townships, despite the sizeable rents collected by some landlords. Municipal leaders are reluctant to continue investing public funds in communities that can afford to pay something, but wont.

A more constructive approach

It is possible to envisage a much more positive scenario offering broader benefits. Public bodies could strive to contain the negative effects of intensive backyard development and create a more productive dynamic with better overall outcomes.

One element would be to simplify the system of land registration so that households have greater security of tenure and can exchange property safely without risking their investments. A simpler transfer process would also encourage people to go the formal route rather than sell property informally. This would reduce uncertainty and opportunism and support longer-term decision-making. Having collateral would make it easier for property owners to raise external finance so as to construct better buildings.

An up-to-date land registration system would furthermore assist property valuation and could enable municipalities to start collecting taxes on properties above a certain threshold. Increased tax collection in turn would help finance enlarged infrastructure to accommodate the growing population. Additional public investment in bulk infrastructure in areas undergoing densification is crucial to reducing the overload.

In addition, regulatory reforms could help to attract more investment in rental housing. Rules governing the built environment should be streamlined to ensure that standards are appropriate for low-income dwellings and that administrative procedures accommodate inexperienced applicants.

Health and safety considerations should take precedence over cosmetic factors, such as external finishes. Official attitudes need to shift from indifference towards an enabling approach intended to help make things happen. Local advice centres could offer people very practical assistance to achieve minimum building standards and guidance to obtain formal approval.

Simplified systems to oversee landlord-tenant relationships are also worth considering to protect tenants from exploitation.

The fundamental principle is to create more responsive ways of regularising informal rental housing to develop the sector into a robust and integral part of the urban housing system. A gradual upgrading approach in line with rising household incomes should enable people to adjust to the improvements with minimal displacement.

Shifting from a cautious, conservative mentality to a more developmental disposition requires public officials to engage actively with the informal housing sector to encourage more investment in better rental properties and reasonable rental practices. This will require more research to understand the process of upgrading informal rental housing, as well as to co-create solutions with communities to ensure mutual benefits.

Quick wins might be achieved by learning from the experimental initiatives of new private investors to regularise and expand the process. Their experience could be invaluable in trying to streamline the regulatory framework, to build a conveyor belt of support and to improve landlord-tenant relationships.

Authors:

Prof Ivan Turok, executive director, and Dr Andreas Scheba, research specialist, in the HSRCs Economic Performance and Development research programme

Iturok@hsrc.ac.za

Ascheba@hsrc.ac.za

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A study in Cape Town

Simple blocks of rental accommodation are emerging in many South African townships in response to the growing demand from young black professionals and white-collar workers. To better understand the challenges and benefits of backyard renting, HSRC researchers Dr Andreas Scheba and Prof Ivan Turok conducted a study in two Cape Town townships, Delft South and Masiphumelele, between 2018 and 2019. The researchers interviewed government officials, landlords, tenants and other stakeholders, and analysed secondary data, official reports and formal regulations.

They found that in these townships, makeshift backyard shacks are increasingly being replaced by solid rental units and, less commonly, boarding houses. In the latter instance, entrepreneurial landlords demolish the original house and replace it with two-story buildings offering multiple rooms for rent. Such offerings are vital for workers in the
gap market” – those who cannot afford formal rental options and who also do not qualify for RDP housing. However, in the absence of the governments involvement and an overarching vision for a sustainable upgrading process, the formalisation process poses health and safety risks, while many potential benefits such as taxing opportunities and improved viability of public facilities and transport have not been realised.

Source:Informal rental housing in the South: dynamic but neglected in Environment and Urbanization (January 2020)