While South Africa has a robust and well-regarded system for registering property ownership, it is expensive, complex, and inaccessible for lower income households. As a result, parties to property transactions commonly make use of alternative mechanisms to transfer ownership without using conveyancers and without reference to the deeds registry.By Chris Carter, director, GeoAfrika Surveys In terms of first-time transfers, it is estimated that there are over a million subsidy houses built by government and occupied by subsidy beneficiaries that have not been registered in the deed’s office. These properties are the most significant assets for low-income households and not having title deeds constrains their ability to participate fully in the formal property market, access finance and use their assets more productively. This also impacts substantially on municipal rates revenue streams, as well as on the national economy. Two pilot projects funded by the International Finance Corporation (IFC) have helped to map the way forward. These were launched during 2019 within iLembe District Municipality, focusing specifically on the KwaDukuza and Mandeni Local Municipalities. Referred to as Pilot A and B, both ran simultaneously in KwaDukuza and Mandeni, with GeoAfrika Surveys appointed to lead their implementation. Pilot A investigated the titling situation in low-income/low-property value areas and tested the appetite of homeowners to access official titling services. To kick start the process, land-use community centres were opened in two selected townships, namely Sundumbili in Mandeni, and Groutville in KwaDukuza. The findings in both cases were revealing. Pilot A study in Sundumbili In contrast to Groutville, Sundumbili is a very established and older township, which has a total of 3 402 properties. During the time the land-use centre was open, a total of 350 title deed claimants recorded their claims, which meant that more than 10% of the community did not have title deeds to their property. In terms of the latter, the majority were heir occupiers, where the rightful owner of the property had died intestate. The next highest category (20%) had purchased their properties through informal sales, i.e., without registering the change of title in the Deeds Office through a conveyancer. To address the titling cases received in Sundumbili, a partnership between the Mandeni Local Municipality and the KwaZulu-Natal Department of Human Settlements was forged, enabling the formation of the Sundumbili Dispute Resolution Committee. This committee is currently being rolled out under the leadership of the municipality and funded by the department. Claims are being dealt with on a case-by-case basis. During the study, it was also discovered through the claimants that the municipality had been withholding the issuance of title deeds due to non-payment of rates. This practice has been deemed unlawful and a total of 150 title deeds were eventually released by Mandeni Local Municipality to property owners. Findings in Groutville During the Pilot A study in Groutville Ward 12, the results were startling. Out of a total of 1 104 properties in Ward 12, a total of 785 claimants came forward to lodge their right at the land-use centre. This meant that 71% of the properties in the area had residents who did not hold title deeds for the properties they claim are theirs. By far the largest category of these claimants (50%) claimed to be original subsidy beneficiaries of the eThafeni housing project. On investigation, it was discovered that this project had completely stalled years ago with no title deeds issued.
In response, the Groutville Pilot A team conducted a land audit to investigate and validate the land-legal blockages preventing the eThafeni transfers. Subsequently, the team successfully secured the relevant Power of Attorney over the underlying land. This enabled the appointment of conveyancers to deal with individual cases and then transfer title after a detailed beneficiary validation process. There are now 204 title deeds about to be issued, with more to follow.While the Pilot A projects did have positive outcomes, it did also highlight some alarming trends. Firstly, low-value property owners tend not to have wills in place. Secondly, informal sales are common practice and seem to be even more prevalent in more dynamic areas. Thirdly, it’s evident from the eThafeni example that thousands of housing project beneficiaries in South Africa have never received their title deeds. Unless resolved, passing on title either by inheritance or formal sale is impossible. Transfer cost barriers Overall, the findings from Pilot A paint a bleak picture of formal and correctly registered property ownership. However, the setup of well-capacitated local land-use offices like the Pilot A centres will assist communities with title deed issues by making the process more accessible. The major focus though should be on introducing a process that makes the sale of low value properties quicker and cheaper. This will significantly reduce the potential for a growing backlog of title deeds that unnecessarily delay legal transfer. The only long-term solution is to introduce new legislation, which is a key recommendation in the Pilot A report. Common themes for Pilot B The Pilot B projects nominated by each local municipality varied considerably in size and quantum of issues hindering the issuance of title. A huge amount of time-consuming work ensued in conjunction with the IFC, the municipality concerned and the KwaZulu-Natal Department of Human Settlements. The project team also worked with the Centre for Affordable Housing in Africa and National Treasury’s City Support Programme to develop a toolkit. The latter offers housing authorities practical advice on how to deal with the common issues that emerge during the primary transfer process. In terms of the Pilot B investigations, land-legal impedances and/or the non-availability of municipal services certificates for water, roads, stormwater, or electricity were identified as the most common reasons preventing the opening of township registers. A subsequent change in legislation was another key impediment factor. A case in point is the scenario where projects approved under previous legislation are now subject to the Spatial Planning and Land Use Management Act because the township registers were not opened timeously. In limbo, these projects now need to be subjected to a level of scrutiny to determine the extent of any deviations from plan. Examples include illegal structures, encroachments and building in environmentally sensitive areas, often in conflict with the approved cadastral layout of the township. This creates all manner of problems when trying to regularise these projects. A prime example is the Inyoni Housing Project in Mandeni, where it took three years to successfully get the first batch of title deeds issued in August 2022. So whereto from here South Africa? Pilots A and B highlighted and confirmed numerous challenges facing our country with respect to property titling and the current system, particularly in low value, low-income areas. The massive title deed backlog is increasing by the day, and we need to urgently find workable solutions. On top of that, a more viable system (legislation and supporting government infrastructure) needs to be in place to ensure sustainability via an attractive new system of registration for lower-value properties.