A R429 million housing claim against the Free State government has been put on hold, exposing deep-rooted issues in South Africa’s post-apartheid housing policies that still impact thousands of low-income homeowners across the country.
At the heart of the case is Hlano Financial Services (Pty) Ltd, a financial institution claiming it is owed a staggering sum for homes once tied to the South African Housing Trust (SAHT), a government-backed initiative aimed at providing affordable housing for lower-income South Africans.
The origins of the claim can be traced back to the early 1990s, when the newly elected post-apartheid government sought to redress the inequities of the apartheid era by implementing a housing programme designed to offer affordable homes to previously disadvantaged citizens.
Under the SAHT, thousands of low-income families received homes through government-subsidised loans.
However, the trust’s troubled legacy came to the fore as many of the borrowers, particularly those who had participated in anti-apartheid boycotts or were unable to relocate to alternative government housing, found themselves unable to repay their loans or facing uncertainty about their rights to the homes they occupied.
Hlano Financial Services inherited the housing portfolio from the SAHT and has since been seeking compensation for thousands of unpaid debts, which they argue are the result of the government’s failure to honour its obligations under the policy.
According to the company, numerous homeowners, despite being given the promise of affordable housing, were left with unresolved mortgage issues.
As a result, Hlano was forced to pursue legal action in an attempt to recover the R429 million it claims is owed.
In July 2020, after years of attempting to engage the Free State government over the matter, Hlano representatives met with provincial authorities to discuss the long-outstanding portfolio.
The response, according to Hlano’s legal team, was one of bureaucratic delays.
They were told that the national Department of Human Settlements had to intervene before any resolution could be made.
As the months passed without progress, the financial institution was left with little option but to turn to the courts.
The Free State government’s response has been one of resistance, arguing that the applicant is misapplying the housing policy, which was created to offer aid only to qualifying beneficiaries.
The provincial authorities also point to a critical point: the national government must be involved in any judicial proceedings related to housing policy.
This legal technicality, known as “non-joinder”, meant that Hlano’s case was halted for now, with the court ruling on 14 January this year that the national Ministry of Housing and the Ministry of Human Settlements must be joined to the proceedings.
Judge Van Rhyn upheld the Free State government’s objection, ordering that the proceedings be suspended until these ministries are formally added to the case.
The court also ruled that Hlano must bear the legal costs associated with this adjournment.
The case highlights the ongoing tension between the state’s lofty housing goals and its practical implementation.
The 1994 Record of Understanding (ROU) between the national government and the banking sector laid the foundation for the post-apartheid housing market, but it failed to address the complexities of homeowners who had previously participated in political boycotts or were unable to relocate under government programmes.
Since then, various measures have been implemented, such as the Servcon Deal in 2007, which aimed to settle outstanding housing portfolios.
However, Hlano was excluded from this deal, leaving it with a significant backlog of unpaid debts.
Despite the Free State government’s reluctance to take full responsibility for the outstanding debts, Hlano insists that its claims are valid.
Legal experts are watching closely as the case progresses, with the final decision likely to set a significant precedent for how future housing disputes are handled, particularly those concerning the broader government’s role in resolving post-apartheid housing challenges.
As of now, the path forward is uncertain.