The number of formal properties in SA’s urban areas that lack accurate title deeds represents a silent crisis. But it is also an untapped opportunity that could unlock vast economic potential and support wealth creation in some of the country’s poorest neighbourhoods.
Much attention is given to the lack of formally recognised land rights in informal settlements and rural areas. But about 1.6-million households in formal, demarcated and serviced urban areas of SA also lack accurate title deeds to their properties.
This surpasses the total number of households in informal settlements, underscoring the urgency of addressing this issue and the considerable financial benefits an effective titling initiative could deliver.
Housing is the single most substantial asset on the balance sheets of low-income households. Assuming an average value of R200,000, these untitled properties are worth R320bn — more than 4% of the nation’s GDP.
Why title deeds matter
A title deed is more than a piece of paper; it is a gateway to economic inclusion and security. Without formal title deeds property transactions are mediated by informal mechanisms, restricting market access to insiders and suppressing property price growth. Owners cannot leverage their properties for loans, and disputes are common. Often these are resolved through extrajudicial means.
Without accurate title deeds municipalities struggle to confirm ownership or bill for services. Likewise, the financial sector cannot operate in areas with compromised title systems. Uncertainty about ownership and the lack of enforceability of claims also deters lending, leaving the financial sector exposed to accusations of red lining and discrimination by politicians.
As in other sectors, informality in housing markets perpetuates lawlessness and creates barriers to economic growth and stability.
Barriers to formal ownership
Several factors contribute to the titling crisis in SA. The main problem is that the formal mechanisms that govern property transfers are costly and complex, rendering them inaccessible to many low-income households.
Even when a property’s title is initially secure, it may become compromised over time if owners and purchasers lack the financial means to maintain legally recognised title. In addition, the ill-considered eight-year restriction placed on the selling of state-subsidised properties predisposes sellers to engage in informal transactions.
Take the example of John, who bought an RDP house in Delft informally in 2010 for R50,000, using funds from the sale of his original home (also an RDP property). There was no title deed for his new house, so he paid the seller in cash and moved in. Over time, he invested in the new property.
In 2019 the previous owner told John that title deeds were being issued, and if he wanted the title deed he would need to pay her R150,000 more. The provincial housing authorities were approached but insisted that since John did not qualify for a housing subsidy (as he had already owned a house), he would need to pay them R94,000 more to get the title deed. Despite appeals to the premier this matter remains unresolved.
There is a backlog of more than 1-million subsidised properties that have been handed over to beneficiary households but for which title deeds have not been issued. Rectifying this, often many years after the properties were occupied by original beneficiaries, can be complex, costly and time-consuming.
While municipalities delay issuing title deeds in these cases, life goes on for those in occupation of the property. Some marry, divorce, die and even (despite laws that seek to prevent this) sell their properties. But when the time finally comes to transfer the property from the government to the owner, it is often not easy to establish who the actual owner is.
Economic upliftment
While the absence of title deeds is a huge problem, it simultaneously presents an enormous opportunity for targeted economic upliftment in SA’s poorest urban areas. The challenge is vast and complex, but we have a good sense of how to proceed.
Various interventions exist and offer valuable lessons. For instance, the Tenure Support Centre (TSC), operating from FNB’s Khayelitsha branch in Cape Town, offers low-cost professional conveyancing services and assists owners such as John with compromised titles to formalise their ownership. This service should be replicated in bank branches countrywide.
Beyond enabling confidentiality and security, providing housing-related assistance in bank branches reinforces the association between property ownership and wealth accumulation, shifting it away from service delivery and political patronage.
Restrictive policies that inadvertently promote informality must be scrapped. Top of that list is the law that prevents subsidy beneficiaries from selling their properties for eight years.
Likewise, the Free Market Foundation’s Khaya Lam project has been working successfully with municipalities to clear the title-deed backlog.
Policy reform is also critical. Restrictive policies that inadvertently promote informality must be scrapped. Top of that list is the law that prevents subsidy beneficiaries from selling their properties for eight years.
The sector is also ripe for disruptive digital innovation. Conveyancing is particularly well suited to the application of agentic AI solutions that can automate processes and strip out costs without the need for direct human intervention.
In addition, a fully digital system could be developed for properties awaiting formal title, offering legal recognition and protection while various barriers to transfer are resolved. It could lead the way in the development of a fully digital property registration system for the market as a whole.
SA has an opportunity to transform the lives of millions of its citizens by addressing the challenges regarding title deeds in urban areas. By so doing we could unlock vast economic potential and strengthen the foundations of our cities.
The path forward requires determination, collaboration and a willingness to embrace innovative solutions. The benefits of such efforts will be felt not just by individual homeowners but by the nation as a whole.
• Melzer, a founder of the TSC, is an engagement manager at the 71point4 economics consultancy. Bisseker is an economics writer and researcher at the Bureau for Economic Research.
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