Pretoria could lose 120 beds for people in desperate need of care

Programme manager Nompumelelo Nhlapo attends to a terminally ill patient at the Tshwane Leadership Foundation’s Rivoningo Care Centre in Pretoria. This is one of 120 special needs housing units that could be sold off. Photo: Warren Mabona.

• The business rescue of Pretoria’s oldest social housing institution, Yeast City Housing, may see properties with 120 special needs beds sold off to private entities.
• The facilities are designed to cater for vulnerable people, including people who are terminally ill, elderly people, female victims of violence and people with mental health conditions.
• The special needs housing units were funded by the government, yet Yeast City Housing’s state-owned creditors want the units to be sold off for cash.

Yeast City Housing, a social housing institution in Pretoria currently in business rescue, risks losing at least 120 beds designed to cater for vulnerable people, including people who are terminally ill, elderly people, female victims of violence and people with mental health conditions.

The business rescue practitioners and state-owned creditors want the properties to be sold for cash, because Yeast City Housing (YCH) is not compliant with the Social Housing Act, they say.

Yet the units have been funded by the government through, among other entities, the Gauteng Partnership Fund (GPF), which is one of YCH’s creditors, and the Social Housing Regulatory Authority (SHRA).

Several of Yeast City Housing’s (YCH) special needs units were started as pilot projects with funding from state entities. YCH owns thousands of social housing units in addition to the special needs units. But since the Social Housing Act of 2008, which does not make provision for special needs housing, by law the special needs housing units must be separated from YCH’s social housing stock.

“The state has an obligation towards vulnerable communities,” said a source familiar with the matter. “If social housing policy changes, then surely these assets should not be lost. The units were funded by government entities who now want them to be sold.”

The Tshwane Leadership Foundation (TLF), a non-profit organisation which founded YCH in 1997, was given an opportunity to purchase the properties from YCH. But according to TLF’s CEO Wilna de Beer, one property housing 36 elderly people who live on SASSA grants and are unable to pay rent, is already in the process of being sold to a private company, because TLF was unable to raise sufficient funds in time. The current residents are being moved to another of YCH’s properties.

TLF would need to raise about R5.4-million to purchase the remaining special needs facilities. “We can raise the money, but we need time,” said De Beer. TLF will make offers on the properties and then ask for time to raise the funds.

De Beer noted that TLF has invested millions of rands in the properties through renovations, increasing the value of the properties, and several of the properties were donated to TLF and later transferred to YCH.

GroundUp visited two of YCH’s special needs housing facilities in Pretoria from which TLF runs social care programmes. One facility has 20 beds for palliative and frail care, catering for elderly people and people who are terminally ill.

We also visited a facility with 20 beds for people living with chronic mental conditions. Many of them have received psychiatric treatment at state facilities, but cannot live alone and are unable to return to their family homes.

Programme manager Nompumelelo Nhlapo said that some residents have been staying there for more than 20 years.

“This is their home. This is the only home they have. They have bonded with this place,” said Nhlapo.

Most of the residents, should they be evicted, will be homeless.

Alternatives to selling off

YCH is an accredited social housing institution. Its social housing units were subsidised by and are regulated by the SHRA. Social housing units by law are only to be made available for rental to households that earn less than R22,000 a month.

The special needs housing units owned by YCH are not social housing and therefore, according to YCH’s creditors and business rescue practitioners, are not compliant with the Social Housing Act.

YCH placed itself in voluntary business rescue last year after failing to pay its loans to the GPF and the National Housing Finance Corporation (NHFC), both of which are government entities that provide loans for social housing projects. This was mainly due to an ongoing rental boycott at Thembelihle Village, its largest housing facility with 738 units. Evictions are currently underway to put an end to the boycott.

According to the business rescue plan, which has been approved by the NHFC and GPF, the special needs units must be sold for cash. The business rescue plan was voted on by the YCH’s creditors and the company’s board had no say.

EngagedBT, the appointed business rescue practitioner, says that because of the non-compliance with the Social Housing Act, YCH could lose its accreditation as a social housing institution if it does not separate the 120 special needs housing units from its social housing stock, either by ring-fencing them or selling them to another entity.

The creditors have opted for the units to be sold.

SHRA spokesperson Lesego Diale confirmed to GroundUp that by law, the units should be separated from the social housing stock. Although the SHRA did fund some of the units, the properties “do not fall within the mandate of the social housing programme”.

“The presence of special needs housing within SHRA’s portfolio is a historical matter,” said Diale.

A source familiar with the matter says that although the government’s policy has changed since the properties were first funded by the SHRA and GPF, Yeast City Housing has been fully compliant with the original funding provisions for special needs housing and should not be called non-compliant.

There is also no debt on the special needs housing units.

There are various ways to ring-fence the properties without selling them. The source believes that the creditors should have been considered alternatives, such as allowing Yeast City Housing to ring-fence the properties within a new subsidiary, which would not incur substantial costs for the company.

This has been done before by Communicare, the Western Cape’s largest social housing institution, which like Yeast City Housing is a non-profit public benefit organisation. Communicare holds social housing units, special needs units and open-market units.

Communicare CEO Anthea Houston told GroundUp that although there has been no pressure from the SHRA, they are in the process of ring-fencing the stock into three different portfolios under wholly-owned subsidiaries.

Because Communicare and its subsidiaries are public-benefit organisations, they are exempt from transfer duties, although there are conveyancing fees and taxes related to improvements made to the properties.

Another alternative would be to donate the properties to Tshwane Leadership Foundation, although this would incur transfer fees as TLF is not a subsidiary of YCH.

The GPF, responding to GroundUp’s questions, said the business rescue process “limits the GPF’s ability to intervene further”. This is not strictly true, as the GPF voted in favour of the business rescue plan and, according to EngagedBT, is regularly consulted by the business rescue practitioners.

The NHFC did not respond to our questions.

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