Criticism of the banks' stance on the National Credit Act has been ongoing for most of this year, the general feeling in the property sector being that the National Credit Act is being interpreted too strictly and that thoroughly creditworthy potential borrowers are being rejected because of arbitrary "score card" criteria which often do not take into account their true financial positions.

A practice which Lanice Steward, managing director of the Cape estate agency, Anne Porter Knight Frank, finds particularly inappropriate is that recently introduced by certain banks of refusing bonds to applicants looking to buy a sectional title unit that does not have a garage or an enclosed parking area. What is more, this facility has to be declared in the title deeds if a loan is to be granted.

Equally inappropriate, said Steward, is the new policy of one bank to refuse to issue loans to any freestanding home that has less than 150 m² of erf space.

"This," says Steward, "will have a huge impact on the granting of loans to the already struggling lower end of the market. These new policies are in every way similar to the redlining of certain areas adopted by some banks previously. Again, they do not take into account the financial circumstances of the applicant - it simply places a blanket ban on certain properties without any other factors being considered.

An easing up of the NCA criteria and a further drop in the interest rates are now essential to take the housing sector out of its current "unexciting" phase, said Steward.

"As has been said by several spokespeople for the housing sector, the 0,5% drop in the rates, although welcome, will not be sufficient to bring about a full recovery in the residential market nor is it enough to enable the majority of developers to resume delivery."

For further information contact Lanice Steward on 021 671 9120 or email lanice@anneporter.co.za.