The National Department of Human Settlements has launched an investigation into the City of Cape Town’s release of the Annandale Farm site near Dunoon for affordable housing development. The probe follows claims that national grant funding was used to acquire the land and no houses have been built for the community it was meant to serve.

Deputy Minister of Human Settlements Tandi Mahambehlala announced the investigation after a service-delivery imbizo in Dunoon last week (30 September), saying the Dunoon ward councillor and GOOD Member of Parliament Brett Herron had brought the matter to her attention.

Mahambehlala noted that Dunoon was one of the most overcrowded areas in Cape Town and that “Annandale was meant for the delivery of houses for the people of Dunoon.”

She said the land was acquired by the national Department of Human Settlements for the Western Cape. “We hear that the province decided to transfer the land to the City and the City now sold the land. Now the Minister of Human Settlements has sanctioned an investigation because we don’t want to speak out of turn. We want to get to the bottom of what has happened because we believe that public funds are for public consumption.”

City announced land release

On 6 August the City announced it was releasing the nearly 72-ha Annandale site, along the N7 and opposite Dunoon, for affordable housing opportunities through public-private partnerships.

The site is valued at approximately R256 million. The City said it had completed preliminary feasibility assessments and invited developers to submit proposals by Wednesday 21 October.

The proposed development could include affordable and market-related housing, commercial and educational facilities, community services and public open space.

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Grant funding and profit claims

Herron, GOOD Secretary-General and the party’s mayoral candidate for Cape Town, issued a statement on 24 September based on a Promotion of Access to Information Act (PAIA) application he had submitted to the City.

According to the City’s PAIA response, the R162 636 558 (excluding VAT) paid for the land came from Urban Settlement Development Grant (USDG) funding, and the acquisition was recorded against a specific City project code tied to the property.

National Treasury’s grant framework states that USDG funding is meant to supplement municipal budgets “to support the national human settlements development programme, focusing on poor households”, with objectives including “increased acquisition and availability of well-located land for human settlements development” and “increased access of poor households to public and socio-economic amenities”.

Herron, who was Cape Town’s Mayco member for Transport and Urban Development at the time, said he had publicly announced the acquisition of the 71,8-ha farm in 2017 to reduce pressure on Dunoon.

“Nine years after money was spent for purposes of ‘increased access of poor households to public and socio-economic amenities’ none of it has gone towards housing Dunoon’s poorest and overcrowded residents. Zero houses have been built, but the City’s turning a fat profit.”

The land was now being sold for a R71 million profit to a private developer, with only a “weak and unbinding reference to affordable housing”, Herron said. More Dunoon residents would have benefited had the City developed social and affordable housing on the land itself.

The City had refused his PAIA request to see the original approval and valuation reports, classifying them as confidential. Herron has lodged a formal appeal against the decision.

He also referenced the Constitutional Court’s Tafelberg School judgement, saying the City’s first obligation before selling publicly owned properties was to test whether the land could be used to provide well-located public housing. The City is due to report to the Constitutional Court on its housing progress and plans.

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City responds

Carl Pophaim, Mayco member for Human Settlements, said the property was purchased to be developed for affordable housing, as documented in the Mayoral Committee resolution at the time, of which Herron was part.

He said the acquisition was not a Dunoon-specific response but a city-wide housing response, and the land-release programme did not dispose of land to make a profit.

“The potential land disposal is not to make a profit, but rather to enable the discounted release of the property in exchange for the maximisation of affordable housing opportunities in the development scheme.”

National and Provincial Treasury had been informed of the impending disposal and Council had approved strict conditions. The tender process was still underway and no appointments had been made.

Pophaim said material changes in the national housing regime since 2020 meant the subsidy for fully subsidised housing was now focused exclusively on beneficiaries over 60, military veterans and child-headed households.

Dunoon residents under 60 and not within the national categories would not qualify for fully subsidised subsidy housing because the national programme does not allow for this anymore.

The Breaking New Ground (BNG) programme would therefore not be able to build homes for Dunoon residents, as there was no housing subsidy programme the City could offer employed people or anyone under 60.

In response the City had developed its own affordable-housing programme over the past two years, based on public-private partnerships, targeting households earning more than R3 500 and less than R34 800 a month.

“Because we don’t have an active grant to support affordable housing from the national government we are using the private sector to develop these properties for us,” Pophaim said. “We are using our land as leverage to incentivise the private sector to do this.”

Anyone from Dunoon or elsewhere earning between R3 500 and R34 800 would be able to apply. For residents who earned too little or did not qualify under national requirements the City had plans for Doornbach and other land parcels in the area.

Pophaim said the City had also permitted micro-developers to build up to 12 units on their property without submitting a rezoning application and had made it possible for building plans to be approved cheaply.

“This is not about taking opportunities away from residents of Dunoon,” he said. “This release, along with the micro-developer programme, is about expanding the housing options for Dunoon’s residents.”

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