COSMO CITY - LAUNCH
Thursday, 18 May 2006

Talk Radio 702 and First National Bank (FNB), in association with construction firm M5 Housing (Pty) Ltd and the Gauteng Department of Housing, today launched a pioneering new housing initiative, that will see 702 houses being made available within the government-subsidised Cosmo City housing development.

The project, officially launched by the Minister of Housing, Ms Lindiwe Sisulu, is an innovative new housing programme. It is a public-private partnership that aims to help address the current housing backlog in the province by providing low-income earners with access to affordable housing.

Cosmo City is a mixed-use, integrated housing development near Kya Sands in northern Gauteng. The Department of Housing currently provides subsidies for the construction and servicing of 9 000 units, 5 000 of which are fully-subsidised, 3 000 of which are finance-linked units and 1 000 of which are institutional rental apartments.

The 702 FNB Housing Initiative forms part of the finance-linked component of Cosmo City, where people earning between R3 500 and R7 000 per month can apply for an FNB mortgage bond and government housing subsidy to finance their new home.

FNB Public Sector Banking CEO Modise Moatlhodi said the bank realised that there was a gap in the low-income housing market and developed appropriate solutions to address the shortage of housing stock and lack of access to credit.

To improve access to credit, FNB established a focused business unit called FNB Housing Finance, which has developed a tailored credit approach for this market. Moatlhodi said the unit has set aside R200 million in end-user finance to enable the people of Cosmo City to own houses.

“We are creating more flexible lending conditions in all areas to ensure that we increase accessibility to housing. The bank has diversified its product portfolio to include a home loan called Smart Bond designed for people earning a single or joint gross monthly income of between R2 500 and R10 000 per month,” said Moatlhodi.

To address the shortage of housing stock, FNB has developed an innovative approach through collaboration between its business units which has seen the FNB Commercial Banking division provide additional R168 million in development funding for the Cosmo City Project.

FNB Commercial Banking CEO Iris Dempsey said the bank was committed to helping the country overcome the housing shortage at the lower end of the market, adding “we will do our best to provide finance for developers to build the thousands of houses we need."

"Through FNB's Commercial Property Finance division, we have made R170 million available to developers for the construction of houses in the Cosmo City project. This is in addition to the millions of rands we will be offering as loans to individual buyers of houses in the project," said Dempsey.

The project reflects Talk Radio 702’s ongoing commitment to its community, and follows two previous successful housing initiatives with Habitat for Humanity, where staff and sponsors helped build a total of fifteen houses over two years in previously disadvantaged areas.

“We’re very excited to once again be embarking on a project that has the ability to change people’s lives so dramatically,” says Talk Radio 702 station manager, Pheladi Gwangwa. “Housing is a basic human right and we believe that through facilitating access to affordable home loans via this project we’re doing our bit to uplift and empower the community. We pledged during our previous building project that we would increase the number of houses we made available to previously disadvantaged communities from 10 to 702, and we’ve made good on that promise today with the launch of this exciting initiative.”

To qualify for a finance-linked house, applicants need to contact FNB (on 0860 644 644.) with all their details. Thereafter a pre-screening will be arranged at the Department of Housing’s offices to ascertain whether the applicant in fact qualifies for a finance-linked housing subsidy under this scheme. If successful, applicants then meet with M5 estate agents, completing all the necessary documentation. At this stage in the process it will be established for which size home the applicant has qualified.

The houses will be made available either new or through secondary markets to first-time home-owners only. There will be a number of different sizes and styles for successful applicants to choose from, depending on the home loan amount they have qualified for. The houses will be constructed by M5 Housing in accordance with the requirements of the National Building Regulations (NBR), the NHBRC and relevant by-laws of the local authority.

The programme will be disbursed as a once-off subsidy to qualifying beneficiaries who won’t be permitted to qualify for future state-assisted housing subsidies.

The 702 FNB Housing Initiative is in line with the Department of Housing’s mission to address the provincial housing backlog through innovative and affordable solutions by way of public-private partnerships, in accordance with the objectives of the national reconstruction and development programme.

It also goes a long way to meeting the Department’s objectives of “offering inventive credit-based home-loan packages; empowering the participation of small and micro enterprises; and recognising the family as the core of our society, with housing the most effective way to restore community and national pride”.

In addition, FNB’s involvement in the initiative is a practical demonstration of its commitment to meet its Financial Service Charter obligations.

Collectively, the country’s banks will strive to deliver a minimum of R42-billion for new, affordable housing in the R1 500 to R7 500 income-per-month bracket by December 2008. FNB’s contribution to this will amount to R8.2-billion.

Construction on the houses starts in June 2006 and is expected to be completed by December this year.

* Applicants need to be 21 years or older; married or single with dependants or living with a long-term partner; earning less than R7000 per month; a South African citizen or a foreigner with a permanent residence permit; a first time home-owner; and cannot have received any government housing assistance before.

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