Private student accommodation hard hit by NSFAS rental cap
STUDENT associations have criticised the National Student Financial Aid Scheme’s (NSFAS’S) payment disparity for metro and non-metro rental caps for private student accommodation.
With accommodation for students in the higher education sector remaining a challenge as demand far exceeds the supply, various private accommodations have welcomed the pilot project implemented to address the shortage.
At the beginning of March, a total of 23 Technical Vocational Education and Training (TVET) colleges and 17 universities were roped into the accommodation pilot project for the 2024 academic year.
The project will handle the accreditation, placement and on-boarding of Nsfas-funded students in private accommodation.
The Vaal Student Landlords Association, however, said even though they believed the success of the project would help streamline the process of accurately ensuring students were afforded decent accredited facilities, stakeholders remained concerned about the lack of adequate consultation and engagement with them.
“We, however, note with great concern, that at the centre of this programme is private accommodation, and yet from our experience, NSFAS has not invited for any meaningful engagement private landlords to discuss or resolve issues plaguing the implementation of the programme, such as rentals.
“Rather, it’s been an unfortunate display of arrogance,” said the organisation's Khanyisa Ngwenya.
Ngwenya said they were further concerned by the decision by the financial aid scheme to selectively increase rental capping in metro areas by 11.1%, while at the same time reducing the rental cap for non-metro areas by 9%.
“It would appear that NSFAS is subsidising accommodation in elite areas at the expense of non-metro property investors.
“The operational costs and challenge incurred by landlords in providing standardised and graded accommodation in all regions nationally are similar, and as such the rental cap reduction is highly prejudicial and discriminatory.
“This draconian attack on private business was effected without any stakeholder consultation whatsoever and should be set aside immediately,” he said.
Landlords nationally are battling high interest rates, high fuel costs for transporting students to university facilities from off-campus residences, electricity and other utility rate hikes, including wi-fi, security and cleaning and maintenance wages.
The association said the disparity represented the scheme’s hostility, as this fell far short of the threshold required to successfully and sustainably operate these facilities at their specified and expected grading standards.
Ngwenya said that taking into consideration the many challenges faced by the sector, they proposed that the rental cap to be reinstated to the 2023 level of R45 000.
Added to this was the escalation of 6.5% as announced by the minister for 2024, as was noted as reasonable and fair by Higher Education Minister Blade Nzimande.
“NSFAS has remained steadfast in its stance not to engage with private landlords and continues to try to force acceptance of unrealistic rentals by weaponising payments,” Ngwenya said.
NSFAS is starving landlords by withholding payments to them in order to force them to accept punitive, unrealistically low rentals, he said.
“We remain optimistic that NSFAS will resolve this matter urgently and process payments to landlords and also review rental capping to fair, acceptable levels to the mutual benefit of the programme and private accommodation owners.”
It announced that it needed 397 000 beds for Nsfas-funded students in 2024.
However, by October 2023 the scheme reported to Parliament’s higher education portfolio committee that there were only 25 803, or 6.5%, of the required beds accredited.
The Organisation Undoing Tax Abuse (Outa) also criticised NSFAS, alleging that its current developing crisis could be attributed directly to its decision to appoint inexperienced and understaffed service providers to inspect and accredit student accommodation.
According to Outa’s investigations manager, Rudie Heyneke, the cap on student accommodation meant that developers could simply not afford to rent out their accommodation to NSFAS students, since the R45 000 a year would not cover their costs.
Heyneke said increased interest rates on loans, inflation and ever-increasing municipal bills, as well as running costs had already resulted in huge losses for some of these developers.
Through their investigation into student accommodation tenders at the aid scheme, Heyneke explained how one developer told Outa that the department asked them to develop 5-star accommodation, but it was now only willing to pay 3-star prices.