Unlocking affordable housing: Cape Town's townships offer new opportunities for micro developers

The ground is ripe for Cape Town townships' micro developers to build solutions to the pressing demand for affordable housing. 

Until recently, municipal by-laws, zoning requirements and complex, slow processes have been a significant barrier. This has resulted in slow development or simply led to developments that do not comply with regulations, a risk to property owners and their tenants.

“This journey started in 2020,” says Nomfundo Molemohi, Western Cape portfolio manager, uMaStandi.

“We wanted the City of Cape Town to recognise and support the township landlords who were already driving a quiet rental revolution - and we have continued to engage with the city on our clients’ behalf to find solutions that would promote affordable housing developments that comply with city regulations,”  Molemohi said. 

uMaStandi, TUHF’s specialised finance vehicle for property entrepreneurs in townships, has long been a vocal advocate for policy change to ease the red-tape burden and empower aspiring property entrepreneurs to rise to meet the demand for affordable rental housing.

The City of Cape Town's amendment to its Municipal Planning By-law, announced in July 2025, is a significant step towards unlocking the potential for affordable housing in the townships.

After years of back-and-forth discussions, expert input, and relentless behind-the-scenes work with uMaStandi portfolio managers actively pushing and advocating throughout the process, this approval of the Municipal Planning By-law amendment is a breakthrough.

Officially gazetted on 8 August, the Municipal Planning By-law amendment will come into effect at the beginning of next month. 

Molemohi explained that in many township areas, the current zoning is SR1 or SR2, which only allows up to three dwellings per plot. If a landlord wanted to build more, they would have to go through a long, technical and costly rezoning process.

“It has been a real barrier for landlords and micro developers. But with the new Municipal By-law amendment, landlords and aspiring micro-developers will be able to submit building plans for 8 to 12 units, depending on the plot size, without having to rezone.

"This saves time, cuts out expensive professional fees, and helps get affordable housing into the market much quicker.”

To help small-scale developers navigate the process more easily, the City of Cape Town has also developed prototypical building plans for bachelor and one-bedroom units; ready-made designs that meet regulatory standards.

These plans will help in fast-tracking building approvals, reduce the need for costly professional services, and cut down on delays. It is a practical tool that makes compliance more affordable and accessible, especially for emerging landlords and micro developers.

For uMaStandi, ensuring that the projects it finances are fully compliant has always been a top priority, and these plans are a welcome support in achieving and sustaining that.

“We work with our clients to make sure their developments are compliant, but until now the process had been slow and challenging,” says Molemohi.

“The availability of pre-approved prototypical building plans opens the door and will create significant opportunities for new rental developments. And just as importantly, it also creates an opportunity for existing landlords who simply opted out of meeting compliance requirements to now formalise and regularise their developments.”

This matters because compliant properties have higher values and can even be leveraged to unlock refinancing.

“Our core mission at uMaStandi is to drive real development impact by helping our clients unlock dead equity in township property and build generational wealth.

"The fast-tracking of approvals and reduction in professional fees represents a powerful shift that will transform Cape Town’s landscape, particularly in historically excluded areas and a win for both micro developers and the broader housing sector," she says.

Township residents can also benefit from these regulatory changes as demand for decent, affordable rental housing is pressing. uMaStandi has financed 134 units across several micro developments so far, and all are fully tenanted with waiting lists.

“Our clients are ready and willing to develop more projects,” Molemohi says. “The by-law amendments will allow up-and-coming developers, who have been eager to get building, to step forward and make an impact.”

uMaStandi said for them it is about more than simply building new developments.

“Our clients are aspiring property entrepreneurs who want to build successful, affordable rental housing businesses. So, we provide formal training and hands-on mentorship to support our clients every step of the way, on everything from securing plan approvals to registering companies to sustainability.”

The landlords and micro developers will also benefit from the TUHF Programme for Property Entrepreneurship (TPPE): a comprehensive training programme in partnership with the University of Cape Town. This certified programme empowers entrepreneurs - clients and non-clients alike - with the tools to succeed in property.

Most uMaStandi projects incorporate water and energy efficiency measures, as well as backup systems like solar power installations or JoJo tanks for rainwater harvesting, to alleviate dependence on municipal services.

Self-contained units with their own ablution facilities, Wi-Fi, security and on-site laundromats are just some of the other features that make uMaStandi-funded projects attractive to township residents.

Molemohi said they are proud of the fact that, through their engagement with the Mayor and City of Cape Town officials, their clients’ voices have been heard and the barriers preventing them from investing more in the townships they live in – and love – have been eased.

“We’re looking forward to supporting micro developers as they develop safe, compliant, sustainable, affordable housing solutions much more quickly than ever before.”

In February, the Western Cape Property Development Forum (WCPDF) released a position paper, Enabling the Delivery of Housing in South Africa, providing insights from the property development and construction industry, recommending ways to move forward.

Amongst other things, it posed ideas such as: the possible breaking down of finance into sub-parts of a development; reaching an understanding with traditional financiers around which part of the production line holds the highest risk for banks; reconsidering ownership of land towards establishing equity; and the need to establish more innovative financial solutions around the micro development sector.

It also looks towards the establishment and possible funding of a South African-wide Government Fund which could act not as a lender but rather as a guarantor for affordable developments, within strict guidelines. 

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