New property scam preys on South Africa’s most vulnerable population segment

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He shared that this backlog has been compounded by issues of ongoing semigration, with 150,000 people migrating to the province every year in search of better economic prospects in the Western Cape.

“Residents are becoming increasingly distressed in their search for affordable and safe housing and as a result, an increasing percentage of the country’s most economically vulnerable population are falling victim to fake government housing scams,” shares Jackie Smith, head of Buyers Trust, a safe and secure bank-hosted deposit solution for homebuyers and a subsidiary of ooba Group.

Smith is uniquely qualified to speak on this topic through her cybersecurity experience as head of the Buyers Trust platform, and as one of the individuals responsible for spearheading ooba Group’s partnership with the National Housing Finance Corporation in making the First Home Finance subsidy (previously known as Flisp) more accessible to first-time homebuyers.

“The latest scam doing the rounds is that of residents receiving an SMS notifying them that they have been approved for a free RDP home in the Maroela housing scheme in Kraaifontein – a project that will only be completed mid-2025,” she shares. “These victims are then told to pay a significant registration fee to become eligible.”

Red flags to watch out for

Unfortunately, Smith shares that the Maroela housing scheme scam is not a rare occurrence but rather the latest in a string of government housing-related fraud across the country. “In the wake of the recent elections, these could become more commonplace due to changes in the administration allowing scammers to slip through the cracks.”

These crimes are usually perpetrated on social media, making the perpetrators harder to identify. “Scammers will pose as government housing officials and request citizens to either pay a deposit or holding fee for a government-subsidised home; pay a fee to be approved for the housing programme; pay for the processing of an application or to be moved up the long waiting list.”

As is the case with phishing scams, which the Buyers Trust platform is designed to guard against, Smith shares that the common red flags of fraudulent correspondence include communications without an official letterhead; frequent spelling mistakes or the use of informal language; and communications that are sent from a suspicious-looking email address or cell phone number.

“While sophisticated scammers will often create official-looking documents to appear more legitimate, the golden rule for protecting yourself from these scams is remembering that no payment is required when applying for government-subsidised housing or for the First-Home Finance programme,” says Smith.

“In fact, there is only one way to lawfully receive a subsidy housing opportunity and that is to qualify after registering on the official online housing needs register, which is regularly updated and audited to prevent queue jumping.”

Government-housing subsidy types

The two main types of government-subsidised housing are Breaking New Ground (BNG) homes which is reserved for those earning up to R3,500 a month, and gap units for those who earn between R3,501 and R22,000 a month. “Applicants will also need to meet a host of additional non-income related criteria to be put on the waiting list for these kinds of homes, which are usually located in government housing developments,” explains Smith.

However, the First Home Finance subsidy is not restricted to government housing developments and instead takes the form of a financial subsidy of between R38,878 and R169,264 which can be put towards buying an existing home or apartment.

The First Home Finance programme is targeted at first-time homebuyers earning between R3,501 and R22,000 a month and aims to close the housing gap by eliminating waiting lists and cutting down the application process to approximately 21 days.

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She adds that the subsidy can even be used as a deposit on a home purchase, giving the buyer immediate equity in their home. “With the risk of scams and cybercrime so prevalent in South Africa, buyers of all backgrounds have the option to entrust their hard-earned deposit to the Buyers Trust platform”.

“The platform not only promises stringent security measures, but also operates as a bank guarantee and ensures that your deposit is only transferred into the verified seller’s bank account once the property transfer process is completed.”

Smith concludes saying that while the current affordable housing crisis has created a ‘perfect storm’ for the rise of government housing scammers, citizens still have the responsibility to educate and protect themselves.

“Verify the source of any government housing communications you receive and protect other possible victims by reporting suspected scams to the police and the dedicated City of Cape Town tip-off line.”