The short answer
It is a complicated question but this may be a person's best chance to own a property.
The whole question
Is it legal to purchase a shack in an informal settlement which has services including electricity? I am concerned about a woman I know who wants to “buy” a shack for R26,000 in Philippi. Nedbank has confirmed it will lend her the money but she has nothing more than the informal committee saying that in the “book” the owner is listed and she can sell. There are no papers. I am assuming that the municipality has put in services but that these plots are legally available for sale? Can you help understand the process and what advice I should give her. Can the municipality reclaim this land at any time leaving her homeless again?
The long answer
Thank you for your email asking what advice you can give to a woman who wants to buy a shack in an informal settlement in Philippi for R26,000.
It is a complicated question, because while there is no title deed which would make her the legal owner of the shack, a great many informal sales do take place in informal settlements. This might involve the seller handing over a document which records her right of occupation, such as a rent card, which might take place in a local office in the presence of an official. It could also take place in the presence of witnesses from the community and members of the leadership structure, such as the committee, which has confirmed that the owner is listed in the “book” and can sell.
In an article in the Daily Maverick in July 2019, the Socio-economic Rights Institute (SERI) noted that local lists and shack numbering worked like local land records, and that rules about newcomers and one home per household were widespread. These land governance arrangements provided “markers for layout planning to build on what already exists.”
A research document commissioned by the City of Cape Town says that local government must recognise that there is usually a structure in informal settlements exercising leadership, with whom they must communicate. In upgrading informal settlements, local government had to try by all means to keep the community informed and engaged so that they would be willing to pay for the services provided.
I think it is unlikely that the municipality will reclaim the land and leave her homeless again, as the City is on record as saying that it recognises that the influx of people is far greater than the City’s ability to provide formal housing, and that it accepts that upgrading of informal settlements is the way to go.
The City recognised that security of tenure was essential and planned to introduce this in phases as it upgraded settlements. The challenge was to encourage people to use the official “deeds” type of registration where this was possible, or, on the other hand, to incorporate “private conveyancing”, where the seller gives the buyer the documents that describe the rights to the land, into the formal system.
The fact that Nedbank has agreed to lend her the money is significant, as it has often proved extremely difficult for people in this person’s circumstances to get a loan from the banks.
So all things considered, she probably stands a better chance of acquiring a home this way, than any other way at present.
Answered on Aug. 14, 2019, 1:42 p.m.
Please note. We are not lawyers or financial advisors. We do our best to make the answers accurate, but we cannot accept any legal liability if there are errors.