The incentivisation of inclusionary housing by South African municipalities: a property law perspective

Abstract

Although it is still in its formative stages, the idea of inclusionary housing in South Africa’s constitutional context is inescapable. The typical characteristic of inclusionary housing is that a developer is required or encouraged to dedicate a specified portion of her housing development project to the provision of affordable housing. This raises concerns about the possible violation of developers’ property rights because it affects their investment backed expectations regarding future earnings. Since municipalities are the chief agents of the implementation of inclusionary housing, it is important to investigate how they can respond effectively to the property related concerns of developers. This article conducts an overview discussion of the concept of property in South African law, with a special focus on how property regulation can be anchored on the “givings” concept. It then explores the legal mechanisms through which municipalities can pay financial incentives to housing developers to ensure the growth of a housing stock that is geared for affordability as well as social and economic integration. We undertake a critique of the current statutes governing local government financial management and illustrate their inadequacy. It is concluded that inclusionary housing can only succeed in South Africa if legal policy recognises the need for financial payments to developers that go beyond mere compensation for excessive regulation of property rights.