With a number of inner city players in the commercial and industrial property sector, there is a range of funding options available to assist entrepreneurs looking to purchase.
To understand the funding you’re trying to access, you need to first understand the sector you’re operating in and the funding criteria that applies to that particular sector.
Property for example, is a long-term investment. TUHF operates as an SME property financier, that offers a 15-year mortgage product that funds conversions and refurbishments aimed at residential use in urban areas. An entrepreneur approaching TUHF you are expected to contribute 20% of your own equity towards a building project and the other 80% is raised by TUHF. The purchase price of the building, the costs of refurbishment or conversion and the equity a client can contribute from their own pocket, informs how much finance they qualify for.
To make accessibility even easier for entrepreneurs, TUHF’s lending criteria is largely focused on the perception of entrepreneurial characteristics of a potential client than their property nuance and credentials, affording them equal opportunity to enter the market.
“These entrepreneurial qualities include an open-minded attitude that is willing to take advice and someone who is self-disciplined and manages the cash flows of the property to the benefit of the property, not for personal use. Other sought-after characteristics include someone who keeps their tenants happy by keeping the property clean and well maintained, providing all round good customer service; is committed to doing everything in their power to ensure the success of the deal; is up-to-date on utilities; and directly involved in the property management, even if there is an external service provider,” according to TUHF CEO, Paul Jackson.
The distinction between inner-city property financiers and traditional commercial banks is how risk is assessed. TUHF’s ability to ‘spot potential, where others don’t’, enables the financier to support SMEs and projects in areas of decline in urban centres. The future of the affordable housing market remains promising; entrepreneurship is realised as a key driver of economic growth. Through these partnerships, TUHF has created jobs, revitalised urban neighbourhoods, combatted inequality and unemployment and, as an effect, stimulated the economy.
To address the procurement of finance, at the most favourable terms for entrepreneurs, we need to promote partnerships between the private and public sector and share the risks of funding projects. This will help the sector by providing budding entrepreneurs sustainable entry into the rental housing market. It’s very important for government to remove barriers and put in place inclusive urban development plans and policies.
On 22 February 2019, the City of Johannesburg adopted the Inclusionary Housing Policy. The policy seeks to, ‘Promote accommodation opportunities for low-income and lower-middle-income households and households who otherwise may not have afforded to live in well-located areas – close to jobs, schools and public transportation.’
According to the COJ, the framework enables a move towards a more inclusive, efficient and effective city as it provides requirements and conditions for inclusionary housing and details the different options available to developers and associated incentives to implement this housing programme.