Retired lecturer loses R500 000 in city's 'lower income' housing scam

A DAMNING Special Investigation Unit (SIU) report which revealed widespread corruption in eThekwini Municipality's Infill Housing Programme (IHP) in Phoenix, has opened old wounds for many individuals including a retired lecturer who paid a R500 000 deposit for a home, and others who had applied to purchase vacant land. 

According to the recently released report, developers allegedly purchased municipal-owned land that were earmarked for the building of low-income housing at bargain prices, then sold it for massive profits.

An 81-year-old woman, who declined to be named for the fear of her safety, said she had allegedly fallen victim to one of the developers (the name is known to the POST).

She said she now hoped swift action would be taken, including further investigations, after she allegedly paid a R500 000 deposit for a flat that was meant to be built by one of the developers in Woodview. 

The retired lecturer, who was born in South Africa, and later relocated to the United Kingdom, said she wanted to return to the country in 2020. 

“I moved abroad about 50 years ago. However, all of my family members, including my sisters, still live in South Africa. During one of my visits to South Africa I met with a family member who told me about these flats that were going to be built in Phoenix, and that they intended on purchasing a unit. It was going to be a two-bedroom unit with a little garden. This sounded wonderful as I was retired and wanted to return to South Africa so I could be with my family, who live in Phoenix. We would be close to each other. 

“When I came to South Africa I met the developer, who seemed to be quite professional. I never suspected what was to come. I was told that the total cost of the unit was R980 000 and I could pay a deposit. The balance was payable on completion,” she said. 

The woman said she met with the developer and the developer's attorney in January 2018.

“After signing some documents, which looked legitimate, I paid the deposit into the developer’s bank account. Now when I look back, I realised it should not have been done that way. I should have made the payment into the account of the attorney. 

“However, the developer promised that the unit would be completed within 18 months. I was initially excited, but that feeling slowly died off. Over the next few months, I would continuously ask for updates, but was told they were still building and it was taking some time. It was excuse after excuse. This included that the delay was due to municipality holdups,” she said. 

The woman said in March 2020 she found out that the developers were not using the land meant for the IHP purposes. 

“There was a community meeting and the family member, who had also paid a deposit for a unit,  informed me that there were developers found to be purchasing land meant for the IHP, but selling them at high prices. One of which was the land that our future homes were meant to be built on. I immediately contacted the developer and told them that they had sold me land which had been earmarked for South Africans in the lower income group. I was in no way considered as ‘low income’.

“I told the developer that I should not have been offered the option to purchase. I also said I would not have entered into the contract had I been informed of the relevant facts, and that because these facts were knowingly withheld from me, it rendered the contract invalid. I requested the return of my deposit. They agreed and I provided my bank details. But since then I have not received a cent,” she said. 

The woman said she has since sought legal recourse. 

“However, it has been five years and my legal fees are over R50 000. If this continues I would have used up all of my retirement savings, then what will I do? I have also written to the SIU to assist me, and am hoping that I can get my deposit money back so I can return to South Africa and purchase another property. I also hope the developer faces the legal consequences for what they have done.”

- A 65-year-old man, who also declined to be named, said he had applied to the municipality to purchase a portion of an initially vacant municipal-owned land in Clayfield. 

“My family has been living in the area for more than 50 years, and had been maintaining the land for years at their own cost. The land was also used to park vehicles or for functions. In 1996 I made an application to the municipality to purchase the land as we were hoping to build a little homestead. However, the municipality said they could only sell us a portion, which was still fine. 

“But months went by and there was no communication. I eventually received a response that the land was sold. I was shocked as I had applied and was given confirmation of such. Initially I lost hope, until a few years ago when I was contacted by the SIU about the investigation into the sale of the land which was meant to be part of the IHP. I told them about my experience. 

“This also led me to doing my own investigation, only to find out that a developer (the name is known to the POST) had been sold the land for R78 763. However, the developer then sold it for R600 000 to other persons. Over the past few years development has started on the land and there is now a sign board saying ‘for sale’. When I called to find out the price of a unit, I was told R1.35 million, which is definitely not affordable for a person in the ‘lower income’ bracket,” he said. 

The man said he had since written to SIU calling for action. 

“There needs to be some accountability. I believe the municipality needs to take back the land and that it be used for its intended purpose.”

- Another resident said he applied to purchase vacant municipal land in 2002. 

“We had approached the municipality with an offer to purchase a portion of the land, which was accepted. They said it would however take a few years for the land to be released and conclude the sale. We continued to email and requested updates on the process, only to find out that the entire land had been sold to a developer for just over R20 000 in 2023. Our offer was almost triple the amount. 

“When I approached the municipality we were told that nothing could be done and that it would be investigated. I also found out that the land was sold to the developer as part of the municipality’s IHP.  However, there is still no development on the land. It is devastating as my family has been maintaining the portion we intended on purchasing since the 1990s.”

In a previous response to the POST, Gugu Sisilana, the municipality’s spokesperson, said they took the matters raised in the SIU report seriously and remained fully committed to cooperating with the investigation.

The SIU report revealed several irregularities in relation to the sale and purchase of various municipal-owned land including community parks and sport grounds. 

According to the report, around the year 2000, the municipality took a policy decision to utilise various vacant sites called “infill sites” for the purposes of facilitating housing development for the  affordable market population within the eThekwini operational area. 

The infill sites were previously vacant and comprised municipal-land dispersed in various parts of Phoenix. 

According to its findings, the SIU revealed that it found that the disposal of or alienation by the municipality did not comply with the provisions of the Constitution of the Republic of South Africa, Act 108 of 1996, the Municipal Finance Management Act 58 of 2003, and the municipality's Supply Chain Management Policy. 

In addition, the SIU found that the appointment of developers, Lady Brick Block Property Developments trading as Woodglaze Trading (Pty) Ltd, Madupha Business Enterprise CC and Ready Homes CC was made in contravention of the SCM legislation and prescripts. 

The investigation further revealed that the allocation of sites to developers was contrary to the intended purpose of the IHP, thereby constituting irregular and unlawful conduct by the officials who failed to follow the municipality's SCM processes. 

“A corrupt relationship between the developers and the officials who received undue gratification in the form of financial benefit for their unlawful conduct,” it read. 

The SIU in its report, said it had finalised its internal processes to refer the matter for civil litigation in the Special Tribunal. 

THE POST