Guiding consumers since 2009

RDP house for sale scam

By Staff Writer
The City of Cape Town has issued a warning to buyers of state-subsidised houses (RDP houses), following the illegal sale of many of these properties, which have left some buyers hundreds of thousands of Rands out of pocket. As these sales are not legally going through the Deeds Office and other legal routes, the buyers are not able to register these properties in their name.
 
While each of these cases is examined on an individual basis, Councillor Benedicta van Minnen, the City’s Mayoral Committee Member for Human Settlements explained: “[The buyer] would be out-of-pocket with no legal deed to the house. That is why we are warning potential buyers to make sure that the property can legally be sold, in accordance with the provisions of the National Housing Act.”
 
RDP houses are not allowed to be sold for eight years after being issued to the owner in terms of the National Housing Act.
 
The selling of RDP houses
 
Van Minnen highlighted that where these properties are knowingly sold by owners before the eight year period, it is carried out with intent, and is therefore a scam and classified as fraud. In these cases the South African Police Service (SAPS) must be notified.
 
“This happens with serviced sites as well and is even one of the reasons that land becomes illegally occupied. People are ‘offered’ land/a house/a serviced site for sale which, legally, may not be sold as it is, amongst others, not theirs to offer up for sale.
 
“In addition, we see many instances where a housing development has been completed but fewer beneficiaries than those who were formally approved for the housing opportunity turn up. It will then turn out that they have already ‘sold’ their unit or serviced site and that they have moved to an informal settlement,” explained van Minnen.
 
In addition to selling their RDP houses, some people also rent them out, and rather stay in an informal settlement or another dwelling. However, van Minnen highlighted that there are the same restrictions on renting the properties as there is on selling them. This means that it is illegal to rent out an RDP property while the restrictive clause is in effect (eight years from the date that the house is handed over to the recipient).
 
“After eight years, the buying or selling of an RDP house would be subject to the same requirements and processes as any other property transaction and driven by market powers,” revealed van Minnen.
 
If you want to buy an RDP house, but don’t know if it can be legally sold, van Minnen noted that potential buyers can approach their local City housing office, or the Western Cape Government’s Housing Tribunal.
“They should obtain the potential seller’s ID and the erf number and address before approaching the City,” added van Minnen.
 
Why the houses are sold
 
Van Minnen highlighted that while there may be cases of individuals knowingly and willingly committing fraud by selling RDP houses, there is a problem of people not understanding the law. “That is why the City invests significant resources in educating the beneficiaries of housing opportunities. We aim to empower them so that they have the knowledge and the ability to act within the prescripts of the law.”
 
In addition, some of the beneficiaries of the RDP houses may be in a financial situation which might encourage them to sell their house for cash while it is still subject to the eight year clause. Van Minnen noted that in these situations people will often move back into an informal structure in an informal settlement.
 
Van Minnen added that “the property market also indicates that there is a large need for gap housing, especially for those who do not qualify for subsidised housing as their income exceeds the threshold for State-subsidised housing.”
 
How does the RDP system work?
 
In order to qualify for an RDP house there are several criteria that need to be met.
 
Van Minnen noted: “You must be registered as a beneficiary on the relevant municipality’s Housing Database. The housing database is compiled according to the National Governments Subsidy criteria and Allocation Policy. The City of Cape Town does everything in its power to ensure that there is a fair and systematic approach to the delivery of housing opportunities. As the housing need is pronounced, the prevention of queue-jumping, among others, is very important.”
 
The qualifying criteria are as follows:
·         You must be over the age of 18, married or co-habiting and must not own property.
·         You are single with financial dependents (and can prove their dependency).
·         You are a South African citizen, or have a permanent residence permit.
·         You are legally competent to sign a contract.
·         You are not the beneficiary of a government housing subsidy.
·         You are not married to someone who is the beneficiary of a government housing subsidy.
·         You (together with your spouse or partner) do not have a gross monthly income exceeding R3 500 per month.
 
It is illegal for a family to own multiple RDP houses. However, some RDP applicants have successfully obtained an RDP house despite their spouse being an owner of one. Government systems may not pick this up as two people may be married but still hold different surnames or married just under customary law and not under recognised state law.  Van Minnen highlighted that one of these applications would be rejected if it was found that the spouse had an RDP house in their name already.
 
The illegal sale of an RDP house needs to be reported to the SAPS. Or you can contact the City’s Fraud Hotline on 0800 32 31 30.

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