Government pension fund pours R10.5bn to boost Affordable Housing

Government Employees Pension Fund (GEPF) has provided R10.5 billion facility to SA Home Loans, in-order to boost government employees and the public access to housing. [File Photo]

The Government Employees Pension Fund (GEPF), SA's largest pension fund, has approved R10.5 billion facility to lender SA Home Loans, in-order to boost government employees and the public access to housing.

Recent studies suggest that while the demand for affordable housing is on the rise, affordability remains a barrier for millions of South Africans in this segment, resulting in renting increasingly becoming a more feasible option than buying.

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The finance deal, will be managed by GEPF's asset manager, Public Investment Corporation (PIC), which aims to provide government employees and qualifying members of the public with end-user home finance and development finance for approved affordable housing projects.

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"We can make good financial returns," Dries de Wit, vice-chairman of the GEPF, said at a presentation in Johannesburg. Housing is key to economic development, stimulates the demand for goods and services, and will help grow the economy, he said.

Of the funds, R5bn is earmarked for public servants, R2bn will be allocated to affordable housing for low-income earners, R2bn to help SA Home Loans extend mortgages to other qualifying applicants and R1.5bn rand for affordable housing developers.

The PIC is intentionally implementing a developmental investment mandate, explained PIC board member Dr Claudia Manning. It “primarily seeks to achieve two types of returns, namely: financial and social returns,” she said.

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With assets under management of R1.6 trillion, the GEPF has 1.2 million contributing members and just more than 400 000 pensioners receiving a pension from the fund every month.

SA Home Loans is the largest non-bank provider of home loans in South Africa, said CEO, Kevin Penwarden.

The GEPF has given the PIC R70 billion for developmental investments over the next five to ten years, according to De Wit.

This is in addition to the more than R18 billion that has already been invested in developmental and other unlisted investments.

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In addition to the R10.5 billion, the PIC has allocated R500 million equity to be invested directly into Affordable Housing Development Company, which will assist with developing affordable housing.

As it stands, some 954 000 government employees receive a housing allowance, which increased from R900 a month to R1 200 a month in July 2015. Only 30% of these individuals own houses.

In SA, with unemployment at 27%, there have been increased protests over a lack of decent housing, access to finance and the slow pace of land reform since the end of apartheid in 1994.