Cape Town- Small-scale rental units, or backyard flatlets, are a booming phenomenon post-Covid in areas such as Khayelitsha.
This is according to a report that was compiled by the Development Action Group (Dag), the intergovernmental relations department of the Treasury, Human Sciences Research Council, the Lincoln Institute on Land Policy and the Contractor and Developer Academy.
The report comes as City councillors are thrashing out a new land use category to administer small-scale developments.
Earlier this year, the City published a list of areas deemed “appropriate” for small-scale rental units and instructed sub-councils to deliberate on the item and provide feedback before the end of the year.
The report considers the City’s regulations too rigid and the process too costly to allow small-scale developments to flourish.
Deputy mayor and Mayco member for spatial planning and environment, Eddie Andrews, told the Cape Argus that the city was now pursuing legislative reform to incentivise this type of development.
He said the sector contributes to alleviating poverty, transforms previously neglected areas and creates jobs.
The report shines the spotlight on the regulatory reforms, financial incentives and public support measures needed to grow the market in a formal way. It also highlights the barriers faced by would-be small-scale developers.
The review gives the thumbs-up to Cape Town’s growing small-scale development and the document’s researchers said the market, in general, promises to “spur a post-Covid economic recovery”.
The report said small-scale rental housing provides a myriad public benefits, like the economic boost, but on the flip side it puts a strain on service delivery and infrastructure, poses safety risks and comes with densification.
Experts and city officials agree that a change in approach is needed to avoid a “low road of overcrowding, insecurity and instability”.
Conversely, the report said a “high road” approach has regulatory reform and incentives, which would lead to a more sustainable urban densification and vibrant neighbourhoods. The report encourages government action on this road.
“Cape Town’s current regulatory regime (including land use, building and title deed regulations, institutional-administrative systems and bureaucratic practices) fosters informality and inhibits formal investment in small-scale rental housing.
“Our analysis highlights the enormous complexity, time and resources involved in getting regulatory approvals,” the report reads.
Researchers used three construction scenarios to demonstrate that the costs to comply as a small-scale developer are unaffordable.
The report suggested new technology and a review of municipal procedures to pick up bottlenecks; solutions to expedite approval processes; and the creation of transparent processes.
Andrews said to show its commitment in boosting the sector, the City agrees that the exemption of this sector from requiring planning permission should be examined and that the necessary statutory steps be taken to achieve this outcome.
“(We) already agreed to exempt this sector from paying building plan application fees provided that their municipal accounts are up to date,” he said.
Among other steps city figureheads are taking is considering exempting the sector from paying administrative penalties in terms of the municipal planning by-law for compliance; a report about this consideration is to be brought before council.
Andrews said: “The city values the contribution this sector can make in delivering affordable rental accommodation.”
He vowed the city would do all it can to reduce or remove unnecessary obstacles.
He said the city is working closely with DAG and the Human Sciences Research Council to find ways to incentivise the sector.
“The city is acutely aware that over-regulation will nullify the potential of the sector,” he said. Andrews said public health, public safety, structural stability, fire requirements, and liveability for the surrounding neighbourhood should not be compromised.