Financial fitness
Door to home ownership opened for public servants
While becoming a homeowner is an empowering experience – giving people a sense of security and stability – accessing the funds needed to buy a property can be an uphill battle.
Many government employees earn too much to qualify for a state subsidy yet earn too little to be given a mortgage by a commercial bank. It was against this backdrop that the Government
Employees Housing Scheme (GEHS) was launched.
The GEHS is an employee benefit scheme that offers housing access support services to government employees, subsidising public sector employees who are buying their first home.The scheme also subsidises homeowners who have already paid off their housing bond.
Qualifying government employees who own their own home receive a monthly housing allowance of R1 398.35.
Employees who joined the public service before 27 May 2015 and who are eligible to receive the housing allowance but do not own a house, receive R900 per month as part of their salary.The balance between the full allowance and the R900 paid to them – which is R498.35 per month – is deposited into the employee's individual-linked savings facility
(ILSF) in the GEHS, to be accessed when the employee acquires home-ownership.
Employees who joined the public service after 27 May 2015 and who are eligible to receive the housing allowance but do not own a house will, however, have the full housing allowance paid into their ILSF.
The allowance is reviewed and adjusted by inflation each July.
In terms of the Public Service Co-ordinating Bargaining Council Resolution 7 of 2015, employees who are home-owners and have submitted proof of title deeds or a permission-to-occupy certificate, including an affidavit that the employee and his/her immediate family occupy the house, are eligible to receive a housing allowance.
The GEHS facilitates access to affordable housing finance by:
• Profiling enrolled employees to inform them of housing choices or solutions.
• Arranging affordable housing finance with registered financial service providers.
• Offering home loan repayments through payroll deductions.
• Facilitating access to available subsidies such as the FinanceLinked Individual Subsidy Programme at the Department of Human Settlements.
• Educating and advising public servants on the advantages and disadvantages of long-term rental, compared to home-ownership.
In order to benefit from the scheme, employees must apply by submitting the necessary documents through the human resources department of their employer. In addition, applicants must register on the GEHS website.
GEHS services include nonmortgage housing loans and mortgage-based housing loans, both of which are accessed from a registered financial institution for the purposes of buying, building and/or renovating a house.
Non-mortgaged loans generally do not have bond registration costs and have a shorter repayment term.The average loan amount is R250 000.The GEHS requires evidence that the property exists and a record of ownership.
With mortgage-based loans or bonds, the house is used as collateral for the loan. Generally, these loans attract bond registration costs; estate agent commission; insurance costs and an average repayment term of 20 years.These loans are subject to affordability, the value of the house and the lender's terms. Property valuations and inspections will be done by the financial institution prior to granting the loan.
The scheme's ILSF is an interestbearing savings fund for government employees who do not yet own a home. When an employee enters the property market, they are able to access their savings to buy, build or renovate their home.The ILSF is administered by the GEHS office and managed by National Treasury.
One of the GEHS's partners is SA Home Loans which, through a partnership between the Department of Public Service and Administration (DPSA), the Public Investment Corporation and the Government Employees Pension Fund, provides special home finance opportunities to government employees.
In addition, a partnership between the DPSA, Rural Housing Loan Fund, the Ithala Bank in KwaZulu-Natal and Risima Housing Finance Corporation in Limpopo means that public servants in rural areas also have access to housing finance.
All persons employed in the public service in national and provincial departments can enrol with the GEHS.
For more information and to enrol, go to the GEHS website – www.gehs.gov.za