Set South Africa’s RDP houses free

Preventing poor people from selling their RDP houses widens the inequality gap in South Africa. (Delwyn Verasamy/M&G)

Preventing poor people from selling their RDP houses widens the inequality gap in South Africa. (Delwyn Verasamy/M&G)

COMMENT

The announcement by the ANC at its elective conference in December about implementing land expropriation without compensation got me wondering about the value tied up in Reconstruction and Development Programme (RDP) houses. Land expropriation without compensation is a terrible idea and I hope this goes the way of most ANC policies, which is to say that nothing happens.

RDP houses have been a policy that was actually implemented, with our president living in the most obscene “RDP” house ever built. Unlike other beneficiaries of the RDP housing scheme, he can move out whenever he wants.
He can sell and settle his bond but, in theory, have some equity left over. He could use this to start a business or, in his case, start paying off his lawyers.

Now as I understand it, if you are not President Jacob Zuma, you have to stay in your RDP house for at least eight years before you can sell it. A Mail & Guardian article from 2015 seems to indicate that (as of that year) government wanted to clamp down on people selling their houses prematurely. This is a bad idea. In fact, I think the best idea would be to remove any constraint on the trade of RDP houses.

For many South Africans, a house is the only asset of value they may ever own. Government feels this wealth should be preserved and that these houses could then be left to the children of the initial beneficiaries of the RDP programme. On paper this sounds charitable but the reality is that this assumes that government’s one-size-fits-all plan will be better than the ideas of a very large number of extremely motivated people.

Not only can the capital tied up in the house not legally be used for eight years but it is also devalued because of it being untradeable in that period.

For so many South Africans a lack of capital is the biggest barrier to being able to build a better life and now, when they have some capital in reach, we create rules that defers access to it. But we don’t only remove access to that capital — and in the process create a Gumtree black market — we also restrict the mobility of labour.

The dompas system was designed to stop black workers leaving an area, keeping the cost of labour low. Farmers didn’t want workers leaving because of bad conditions, or if they felt they could get a better offer elsewhere, and the pass system forced them to stay put.

Through the ugly law of unintended consequences, the RDP housing system has the same effect. If you have an RDP house in the Eastern Cape and your work is in Johannesburg, how do you relocate? At the end of eight years you can sell your house back to government but that’s not happening and no one wants to sell into a market of one (unless you are Mala Mala Game Reserve and you get paid R1-billion for your game farm).

Every wealthy person in South Africa can trade in property as they wish but we remove this right from the poor — further opening the gap between the poor and the rich.

Government criminalises normal human behaviour but has no way to act on this illegal behaviour, leading to the question: Why is it illegal to sell your RDP house?

Government ought to be less patronising. People will make mistakes and lose money. It’s a terrible experience but it’s important because it’s also forces people to figure out the things that work for them. Our over-regulated economy makes this difficult for people whose lives are already unimaginably hard.

I was stunned to find out that in 2015 the largest growing property market in South Africa was in the RDP sector. Human Settlements Minister Lindiwe Sisulu sees this as problematic but I believe the opposite is true.

Deregulate RDP housing. Think of the economic activity that would be created. Think of the entrepeneurship that would be inspired by the capital released into the market. Think of the ability of more people to move to where the jobs are.

So while a debate continues on land expropriation, could we not make an immediate difference in the lives of so many people by lifting all restrictions on the sale of their houses? These houses are theirs after all. Surely they should be have the right to do what they will with them? Isn’t this what freedom is all about?

Donald MacKay is a director of XA  International Trade Advisors and Stratalyze

Donald MacKay

Donald MacKay

Donald MacKay likes to see the world and eat unusual things. To fund this lifestyle, he established XA International Trade Advisors, which advises companies about complex international trade issues. Donald also established Stratalyze, an international trade analytics company. He listens to a lot of music, reads obsessively and cooks – eggs are a specialty. Read more from Donald MacKay

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