TONY CLARKE: THE BUDGET IGNORED THE NEEDS OF THE REAL ESTATE SECTOR

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05 March 2010, 08:25:19 AM

Tony Clarke, Managing Director of Rawson Properties, has joined other high profile spokespeople in the property sector in congratulating Finance Minister, Pravin Gordhan, on the balance achieved in his recent budget between growth stimuli and educational, social upliftment and welfare packages. In the current post-recessionary conditions with the tax revenue down some 13%, said Clarke, this was no mean feat.

However, Clarke took issue with Gordhan on one “crucial” matter, the budget’s lack of incentives to home ownership and the real estate sector in general. In this respect, he said, the State’s policy and actual performance are still miles apart.

“Only a week before the budget speech,” said Clarke, “President Zuma said that help for the man who could not afford his own home, would be forthcoming – and Gordhan has said that a policy to achieve this will be worked out – but nothing concrete has been suggested in this field for a long time and many of us are worried that nothing will be seen.”

One positive step, said Clarke, is the granting of extended times on the VAT payments for materials used by property developers. Previously they had to pay their VAT on materials within a few weeks of receipt but were unable to claim them back until the unit was sold. Now options are being investigated to determine equitable values and easier VAT claim back times. This, said Clarke, will help to get developers moving again.

Also likely to have a beneficial effect (on a limited scale), said Clarke, is the extension of the amnesty period given on transfer payments to those taking property out of companies, trusts and close corporation and transferring it to individual ownership.

Reverting to the housing issue and repeating statements made more than once by Rawson Properties Chairman, Bill Rawson and Rawson Developers MD, Paul Henry, Clarke said he would like to see the State really “get to grips” with low cost home ownership.

“Housing,” he said, “is a basic need. It has been shown by companies like Inframax and Asrin that it creates political stability and promotes a work ethic – the man with a home of his own is more likely to work to keep it – but it has also been shown that the State has to partner private enterprise here to achieve real delivery. The idea that municipalities will ever really be successful as developers has been disproved again and again, not only in SA but in India, Brazil and Australia. They simply do not have the background or the expertise for what is essentially an entrepreneurial exercise.”

In addition to a bolder approach to low cost housing, said Clarke, he believes that a reduction in transfer duty would have been a big help to the whole property sector.

He would also like to see a strategy evolved by banks and/or the State to capitalise on the large numbers of repossessed or distressed owners’ homes now on the market at prices 15 to 25% below their real value.

“We have here a wonderful opportunity to give potential homeowners their first step on the housing ladder instead of just letting investors add to their portfolios, could we not make these houses available to first time or less affluent buyers by means of state-bank subsidies for, say, an initial period of five years.”

This, Clarke said, would bring SA more into line with the UK methods to which he has previously drawn attention of encouraging home ownership by “ladder” or scaled-up bond payments.

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