A group of 20 Gauteng residents have started a stokvel with a monthly savings that will buy a member a house cash every six months. Members are required to pop out R5,500 every month. The last two members will have their house in the 10th year.
Cash House Stokvel
Founded by Midrand-based entrepreneur Bathabile Moreki, Cash House Stokvel has been operating for three months.
The business model requires it to have at least 20 members who will fork out monthly contributions.
After six months, the stokvel would have generated R660,000, which would be used to buy a house for a member.
Contributions will align with changing rates
Moreki told Sunday World that the monthly contributions would increase based on interest rates hikes and rising property prices.
She said the stokvel, which started in November, will see its first beneficiary getting a house in May.
This means the 20th member will get their house in 10 years.
She said later in her career, she saw it a better idea to help others have houses in their names to open doors for them.
Giving people access to home ownership
“It is easier to get a car loan but not a home loan. This leaves people renting homes for a long time. Money that could have been used to pay off your own house. This is about saving money and having your own house.
“We have a minimum of 20 people in each stokvel group and build two houses every year. In 10 years every one of these members will have houses in their names,” she said.
A member pays R5,500 per month for 10 years and gets to choose the house they want to own.
While there are concerns over trusting each member in the 10 year period, she said they had procedures in place to ensure that everyone involved sticks to their end of the deal.
Inspired by own experience
Moreki said this was inspired by her own true story and learning that it was easier to secure loans with a house as backup.
“We want people to buy houses cash because reality is that it is not easy to secure a home loan and the term is too long. Plus a bond makes you pay at least three times the price tag,” said Moreki.
She acknowledged there were risks involved in the stokvel. She said those who have received houses but failed to continue paying monthly contributions would have their houses taken away and rented out. The rental would be used to pay the monthly contributions.
There was also an option for members to take out insurance. This would kick-in in case an emergency causes a member to fail to pay their contributions.
Security, clauses to protect members
Members were also encourage to have financial education. Estate agents will be available to help with choosing a good house. Then there will be clauses to sell or rent out the property in case a member cannot continue paying off the house.
Cash House Stokvel member, Nokuthula Nethononda, told Sunday World that she had exhausted means to get a house after being retrenched from work. She was planning to move to Venda when she saw the stokvel’s advertisement.
Shopping for a house
While her husband worried about the legitimacy, she started paying off the due amounts and is now shopping for a house in the East Rand.
“I am in my 40s and my husband in his 50s. We thought we would not own a house of our own unless we try to build one in Venda. We considered that a cheaper option, but I now have an opportunity to own a house in my favourite area,” said Nethononda.