Thumeka* (not her real name) is a 47-year-old live-in domestic worker who earns R6 500 a month. In 2017, after years of renting RDP houses in Khayelitsha, Thumeka purchased her first house in the area. This was a dream come true for her. Thumeka had wanted to own her own house for many years and finally had a property she could pass on to her children. To quote Thumeka:

“I was tired of living in other people’s housing. They were charging me a lot of rent for starters and they would put their own rules in their houses. Even if I did not like them, there was nothing I could do. And I also wanted my kids to have their own home.”

Thumeka approached the Transaction Support Centre in November 2019 asking for assistance with applying for a retrospective FLISP subsidy. She had signed the sale agreement for her property in October 2017 but because transfer only took place in April 2018, the sale fell within the two-year retrospective FLISP time limit. The property Thumeka purchased was a 124 square metre, two-bedroom house in Khayelitsha that was valued at R300 000. Thumeka paid R70 000 upfront upon signing the sale agreement^[2] from her own savings and took out a R230 000 mortgage bond^[3] for the remainder. Thumeka’s monthly bond repayments including insurance amounted to R2 700, approximately 43% of her monthly income. This exceeds the ‘rule-of-thumb’ housing affordability ratio of 30% of gross monthly income. Thumeka was committed to paying her mortgage and never missed a monthly bond repayment, but by the time she approached the TSC she was under severe financial strain.

In addition to the high costs of the property transfer and bond registration process (see Figure 1), Thumeka had incurred unexpected maintenance costs of approximately R13 000 to fix electrical and plumbing problems on the property.

Figure 1: Transfer and bond registration costs

The sale agreement includes a clause that requires the seller to provide an electrical and plumbing compliance certificate (see Figure 2), and prior to the sale the estate agent promised to have an electrician and plumber check the property. But in fact this never occurred. And by the time Thumeka took occupation of the property, transfer has already gone through and she was unable to hold the seller and estate agent liable for the problems.

Figure 2: Sale agreement clause in OTP regarding electrical and plumbing compliance

In addition to maintenance expenses, Thumeka’s mother had become ill during this time and she had to cover additional monthly costs to pay for a caregiver. After sharing her financial concerns with a friend, her friend referred her to the TSC for assistance with the FLISP.

Q: What made you decide to apply for the FLISP subsidy when you did?

“I heard about it from my friend. I was struggling financially. Like after the bond stop order, then I would have very limited amount of money left for me to even eat. Or for anything at home. So I decided to give another try via the office [the TSC].”

The TSC assisted Thumeka prepare her FLISP application, gather the necessary documentation, submit and track the application through the Provincial Department of Human Settlements administration processes. The application was submitted on the 14^th of November 2019 and was approved  on the 6^th of February 2020. In line with Thumeka’s income, the value of the subsidy was R107 056, or approximately 45% of the principal debt owed to the bank. This subsidy would result in her monthly repayment declining from approximately R2 700 to R1 500 (including insurance and monthly service fees).

Table 1: Mortgage loan amount pre-and-post FLISP

Thumeka’s excitement about the subsidy approval was in part dampened by the long delay in the subsidy pay-out. As outlined in Figure 3 below, it took over three months from the date the subsidy was approved for the funds to be paid out to the bank. A full month passed between the letter of undertaking being sent to the bank and the subsidy pay-out. While some leniency can be afforded to the Department due to the Covid-19 national lockdown, other FLISP subsidy applications facilitated by the TSC have also seen long delays between subsidy approval and subsidy pay-out. These delays may not only be a function of the Department’s administration; it is not clear whether the bank’s internal processes might have contributed to this delay. In addition, it took the bank nine days to inform Thumeka that they had received the funds and restructured her loan. This, of course, created immense anxiety for Thumeka.

A full timeline of the FLISP application and pay-out process for this case is provided below.

Figure 3: FLISP application timeline

Thumeka’s experience of buying her first property was not easy. When we spoke with her, she highlighted the lack of communication from the estate agent throughout the process. She also described the issues she encountered with the electricity and plumbing in the property. It is not clear whether the bank granted the mortgage without the required certificates or whether these certificates were provided by an unscrupulous service provider. In addition, there was no one to advise Thumeka on her rights and potential avenues for recourse when it became evident that there was a problem with the electrical and plumbing connections in the property.

Q: What was the process like of buying a property – was it easy or hard?

“Yoh!…That was so complicated. I almost had a heart attack. It was a tricky, tricky journey to go. I had to wait for long, long, long time before everything was finished. The agent was supposed to help me with each and everything. But they hardly did anything, those guys. The only day they were really hands on was when they took me around to view a couple of properties before I chose the one that I bought. And the other day was when I had to go and sign the OTP in their office. After that there was nothing they did. I only saw them when I had to collect the keys for the house. I wouldn’t say they were that helpful at all. “

Q: What were the other things you were not satisfied about? 

“It was my first house, I was a first time buyer. They were supposed to guide me and tell me from this step we are going to that step. They were not communicating at all. If I didn’t pick up the phone and ask where are we now or what’s going to happen, they will just keep quiet. And also on the OTP, I was supposed to have an electric certificate and a plumbing certificate which somebody had to go and check up on those things, if they were up to date and okay but definitely something was not right somewhere. Because they just sent someone to go and check the electricity and a plumber but to my shock when I got there the day I moved in nothing of that sort was done. There was a lot of electrical problems. I had to call in an electrician to come and fix the motherboard, there were no plugs. A lot of things were just wrong. And the plumbing as well. I had to spend a lot of money fixing those things. And as a woman I don’t have much knowledge of electrical and plumbing things. So I did not really know what to check when I moved in if the things were right or wrong.”