Intending to buy a state-funded house? Here’s what you need to know

The Constitution of South Africa enshrines the right of everyone to have access to adequate housing. This places a mandatory duty on the state to achieve this right for all South Africans through its available resources. The government introduced the Reconstruction and Development Programme (RDP) as its social housing programme to provide low-income families with sustainable housing. Despite the substantial commitment by the government, there have been cases of illegal sales and fraudulent activities related to state-funded houses. The purpose of this article is to establish whether state-funded houses may be sold.

Section 10A of the Housing Amendment Act (hereafter referred to as the “act”) is the relevant provision to consider in the regulation of the sale of state-funded housing. Section 10A of the act provides that notwithstanding any provisions to the contrary in any other law, it shall be a condition of every housing subsidy, as defined in the Code, granted to a natural person in terms of any national housing programme for the construction or purchase of a dwelling or serviced site, that such person shall not sell or otherwise alienate his or her dwelling or site within a period of eight years from the date on which the property was acquired by that person unless the dwelling or site has first been offered to the relevant provincial housing department.

In the case of Adul v William and Others, the appellant concluded an agreement of sale and purchased a property from the respondents. Upon establishing that the property was subject to a restrictive condition imposed by section 10A of the act, the parties subsequently concluded another agreement wherein they agreed that the appellant would rent the property until the restrictive condition expired. The appellant was also required to pay municipal rates and taxes in terms of the second agreement. The appellant fell in arrears with paying the municipal rates and taxes. The respondents instituted eviction proceedings against the appellant in the Magistrate’s Court. The appellant was ordered to vacate the property, which she refused. Aggrieved by the order, the appellant appealed the decision to the High Court and among her issues were that:

• The act did not explicitly state that an agreement made in violation of section 10A would be rendered null and void.
• The lower court (court a quo) should have considered the inconvenience and impropriety caused by declaring the sale agreement null and void.

The court found both agreements to be void ab initio (have no legal effect from inception), and thus nullity because their conclusion contravened the restrictive provisions of s10A of the act. Neither the appellant nor the respondents are the owners of the property. The ownership reverted to the relevant department of housing. The court held that the interpretation of s10A of the Act must be viewed in the context of the government’s constitutional obligation to provide adequate housing for indigent persons.

The absence of the restriction provided for in s10A of the act would permit persons who were not indigent, to buy state-subsidised houses meant for the poor to profit from the sale or lease of such properties on the open market. Clearly, that would frustrate the objective of the act.

Considering the foregoing, the act restricts the voluntary sale of state-funded houses, because it goes against its main objective. The provisions of section 10A of the act need to be clearly considered by the RDP prospective buyers before they pay any purchase price or conclude any agreement of sale.

Reference list:

1. Abdul v Williams and Others (CA227/2018) [2019] ZAECGHC 103
2. The Housing Amendment Act 4 of 2021

WRITTEN BY SINAZO MAU-MAU

Sinazo Mau-Mau is an Attorney at Miller Bosman Le Roux Attorneys.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)