Township builders are housing the nation as state support lags, dialogue warns

A powerful warning emerged from Johannesburg this week: township residents are driving one of South Africa’s fastest-growing housing markets almost entirely on their own, while government policy and infrastructure remain years behind the pace of change.

This was the central message delivered at the inaugural Township Rental Dialogue held on November 25, where more than 60 representatives from government, civil society, finance and academia gathered to confront the realities of a rapidly expanding but largely unsupported sector.

The Dialogue was a partnership among Dag, Planact, and the University of the Free State.

Across South Africa’s townships, small-scale landlords and micro-developers are producing thousands of affordable rental units every month - from backyard flats to multi-storey walk-ups - in an effort to meet the demands of a rising urban population and a housing backlog that continues to deepen. 

Participants described this activity not as a marginal trend but as a critical part of the country’s housing system, quietly absorbing the majority of low-income tenants who cannot access state housing or the formal private market.

Yet despite the scale of this contribution, the sector remains overshadowed by legal, infrastructural and regulatory gaps. Overloaded sewer systems, patchy building compliance, unclear tenant protections and limited municipal investment are straining many communities.

Developers face inconsistent rules, slow approvals and little recognition from the state - even as their work becomes essential to the functioning of South African cities.

Opening the event, Zama Mgwatyu of the Development Action Group issued a direct challenge to policymakers.

“People are building regardless,” he said. “Government must acknowledge, engage, collaborate and lead in shaping rental markets to maximise the contribution to township economic and social development.”

His message was clear: the sector is moving, and the state can no longer afford to sit on the sidelines.

Professor Ivan Turok, NRF Chair in City-Region Economies, reinforced this urgency in his keynote address. He described township rentals as “enormously significant” to the country’s housing and urban economies, highlighting the transformation underway as homeowners invest their savings into rental rooms and flats.

He cautioned, however, that piecemeal interventions will not deliver the breakthrough needed.

“We need a stronger, more compelling vision for the sector to convince politicians, government and financial institutions to take it more seriously,” he said.

Panel discussions revealed both the momentum and the friction shaping the market. Officials and experts from Gauteng, Ekurhuleni, National Treasury and Wits University outlined the obstacles slowing down reform, from outdated planning frameworks to limited political backing for township programmes.

Civil society and government representatives noted incremental progress in some municipalities, but warned that township realities still sit at the edges of urban policy rather than at the centre.

Financial institutions, including two commercial banks and housing micro-finance providers, reported growing interest in lending to small-scale landlords. But they acknowledged significant barriers: incomplete documentation, unclear tenure and insufficient data.

Without stronger intermediary support and better evidence, they said, financing will remain limited and expensive.

By the close of the dialogue, participants had converged on a set of urgent priorities:

• Modernise planning and building regulations to reflect township densities and construction patterns.
• Resolve title deed backlogs and develop alternative tenure recognition where deeds are not possible.
• Create new funding models to upgrade bulk infrastructure in rapidly densifying areas.
• Strengthen grassroots training and capacity programmes for small-scale developers.
• Support township developers in organising forums to engage government and lenders more effectively.

Many attendees described the event as a turning point - a long-needed platform to bring the lived experience of township builders into direct conversation with policymakers and financiers.

For years, township developers have been filling a gap left by the state; now, stakeholders say, the state must respond.

With demand surging and cities densifying at unprecedented rates, the township rental market has become a critical engine of urban growth.

The question left hanging after the dialogue was whether the government would finally match the speed and innovation coming from South Africa’s townships - or continue forcing residents to build the country’s housing future on their own.