OUR PURPOSE, MISSION & VALUES
Our Purpose is to Serve the South African households evolving needs of access and affordability to adequate housing, in quality living environment, and our Mission is to provide innovative and affordable housing finance solutions for the low-to-middle income market. We do this by applying our Values, which are Accountability, Collaboration, Excellence, Leadership, Integrity, Innovation, Diversity, Ubuntu and Professionalism.
The NHFC is a state-owned entity in the human settlements sector, supporting housing delivery through the provision of affordable housing finance. The organisation has been in existence since 1996, operating on a national level, providing wholesale funding to the affordable housing market.
Our funding focus has primarily been social housing institutions, non-banking retail intermediaries, privately owned property developers, construction companies, and investors. The secondary focus had been loan origination and other forms of wholesale funding (equity and quasi-equity) that was made available to intermediaries that operate within the affordable housing market sector. With the merger of RHLF and NURCHA into NHFC, our mandate has since expanded to include rural housing as well as supplying bridging finance to developers and construction companies in the subsidy housing market.
HOW WE ACHIEVE OUR MANDATE
The NHFC mandate incorporates the provision of loans to institutions that offer rental accommodation. The types of rental accommodation offered are:
Social Housing, by definition, is subsidised rental accommodation which is driven by Social Housing Institutions (SHIs), Other Delivery Agents (ODA), the Social Housing Regulatory Authority (SHRA), and Provincial Human Settlement Departments in conjunction with Local Municipalities. The NHFC provides top-up funding of approximately 30% as secured debt and the balance of which is provided for by the SHRA to accredited SHI’s and ODA’s that qualify for Consolidated Capital Grants (CCG) to complete the project. Social Housing projects are aimed at providing subsidized rental housing to accommodate the low- to middle-income rental market sector.
Private rental is a project or development finance programme which enables properties owned by landlords to be developed or refurbished for purposes of leasing properties to tenants. The NHFC provides medium- to long-term debt funding to such property practitioners (Developers or Landlords) to refurbish existing buildings or for greenfield housing development projects.
The NHFC offers wholesale funding in a form of structured loans to Retail Finance Intermediaries. These RFI’s on-lend to qualifying low- and middle-income homeowners to improve their housing condition on an incremental or gradual basis. The loans are provided by the RFIs to homeowners via the purchase, on credit, of building materials via established builders’ merchants. Acceptable end-user loan usage includes the building of a new house, extensions to homes, fixed improvement to a house, connecting to utilities (water, sewerage and electricity), energy efficient retrofits (including solar energy, insulation and other energy-generating or energy-saving solutions), water harvesting, fencing and productive housing. Incremental Housing Finance is facilitated to empower both rural and urban low-income earners to improve their living conditions. Therefore, the NHFC aspires to see RFIs grow to such a level where they can access funding from other institutions, thus crowding in the private sector as a funding partner to the NHFC.
SUBSIDY HOUSING PROGRAMME
Subsidy bridging finance is a project or development finance product that offers short-term revolving facility. The term is typically taken out over a period of around 60 days to bridge contractor’s cash flows between the service provider and pending payment by the respective employer. The NHFC provides bridging finance to contractors who have been appointed for the construction of subsidized houses either by an organ of State or from the private sector. This bridging finance product is directly linked to the value of approved certificates, known as Invoice or Certificate Discounting. The Certificate Lending Product aims to assist Contractors with cash flow between the issue and payment of the monthly Payment Certificate. The product also offers material supplier undertakings where the NHFC agrees to pay the material supplier for the goods delivered on behalf of the contractor once a certificate of a completed milestone is certified and approved by the Employer.
AFFORDABLE HOUSING PROGRAMME
The NHFC provides project development finance to developers involved in building affordable housing for sale
to the low- to middle-income earning group. This is a short-term development finance for the purpose of servicing sites, construction of top structures either free-standing or sectional titles. Loans are provided to developers who are actively involved in providing affordable housing, in service of this market.
We work closely with investors, developers, housing development agencies and funding institutions to leverage private sector and development funding. This is used to finance and create affordable housing that caters to the market that we serve. In this case, the NHFC will typically invest through a range of instruments which can be equity, quasi-equity, and even secured debt instruments in these entities.
FINANCE LINKED INDIVIDUAL SUBSIDY PROGRAMME
FLISP was developed by the National Department of Human Settlements. The objective of FLISP is to facilitate sustainable and affordable first-time home-ownership to South African citizens and legal permanent residents who earn between R3,501 and R22,000 per month. FLISP offers qualifying applicants, with approved mortgage loans, a measurable opportunity to reduce the eventual monthly loan repayment instalments to an affordable amount over the loan repayment term.
PARTNERSHIP WITH BANKS
The NHFC actively partners with banks and traditional lending institutions through co-financing agreements and risk enhancement mechanisms. Bank lending in this segment of the market is increased and supplemented through leveraged funding provided by the NHFC.
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IN CELEBRATION OF OUR 25TH ANNIVERSARY – A LOOK BACK IN TIME
The NHFC’s historic timeline
1996 - Housing rights enshrined in the Constitution.
- The National Housing Finance Corporation (NHFC) established, with initial capitalisation of R880 million, as a wholesale finance institution to provide housing finance facilities for incremental housing.
- Social Housing Foundation (SHF) established under the auspices of the NHFC to support, capacitate and establish a viable social housing sector.
- The NHFC and City of Cape Town form a 50/50 joint venture (Cape Town Community Housing Company (CTCHC) for the provision of social housing.
- Gateway Home Loans (Pty) Ltd established as a subsidiary to deliver housing at scale, for the gap market (income earners earning a salary ranging from R25 000 to R60 000 per annum) and promotes the secondary home loan market.
- Sponsors and co-founds the Micro Finance Regulatory Council.
1996 - 2001
- Sets up the Trust for Urban Housing Finance (TUHF) with other partners and provides start-up capital.
- Implementing agent for the Kliptown project, which formed part of the 50-year anniversary of the Freedom Charter.
- Participated in the National Credit Bill process development and the formation of the Regulatory Institution in terms of the National Credit Act, Act No. 34 of 2005.
2003 - 2005
- Establishes, in partnership with Old Mutual, Housing Investment Partners (HIP), which designed and developed the innovative income-linked home loan product.
- The NHFC acquires 100% shareholding of CTCHC.
- Establishes a retail division (Home Front) to accelerate the provision of access to affordable housing through providing mortgage loans to the target market.
- Enters into a co-funding agreement with the Gauteng Partnership Fund (GPF) to enhance access to housing finance for historically-disadvantaged entrepreneurs who otherwise, would be excluded from participating in the residential property market.
2016 - 2018
- The NHFC is re-classified as a non-tax paying company, effective from 1 April 2016.
- The Companies Tribunal approves an administrative order exempting the NHFC from NPC restrictions as contained in the Companies Act; and the NURCHA and RHLF memoranda of incorporation (such that the applicants may conclude and implement the consolidation on the basis that NHFC remains a for-profit company) is drawn up and signed.
- The NHFC merger with the Rural Housing Loan Fund NPC (RHLF), and the National Urban Reconstruction and Housing Agency NPC (NURCHA) into a single entity is accomplished in October 2018 as the first step towards establishing the Human Settlements Development Bank (HSDB).
- Process to establish the HSDB gets underway.