One of the longstanding socio-economic challenges of Ghana is the availability of affordable and decent housing for all citizens. The Centre for Affordable Housing Finance in Africa estimates in the 2019 Housing Finance Yearbook that Ghana has a housing deficit of more than 1.7 million housing units. This is not far- removed from the projection of State Housing Company CEO Kwabena Ampofo Appiah that for every Ghanaian to own a house, the government will have to build two million houses.
This challenge is compounded by other factors such as land litigation, high cost of construction and demand for rent on medium to long term basis which places financial constraints on many tenants. The myriad of challenges have prompted the New Patriotic Party under the leadership of President Akufo-Addo to propose certain measures in their manifesto for the 2020 elections. The objective of these measures is to address the barriers to housing acquisition or rental in the country.
One key measure is the National Rental Assistance Scheme (NRAS). The immediate goal of this scheme is to address the short to medium market failures in the renter segment of the housing market. Through this scheme, the government will pay rent advance for individuals with verifiable sources of income directly to bank accounts of landlords. Individuals will then pay back the money to the government on monthly basis.
It is expected that this intervention will take the rent advance load off the shoulders of many Ghanaians. It will also ensure a predictable rental income for landlords. Additionally, the government will be able to track rental incomes and apply the appropriate taxes. Over the years, the government has not been able to keep track of landlord-tenant transactions and thus lost out on tax revenues that could accrue to the state. This new scheme will have a 360 effect for landlords, tenants and the state, contributing to the progress of the country.
Further, the NPP recognizes in their manifesto that Ghana’s housing deficit is “particularly acute for low-income households.” The Party commits to building low-income houses over the next four years. They intend to make use of local materials and collaborating with the Building and Roads Research Institute (BBRI) as well as private developers. Land banks are already in place and the houses built are to be made available for rent, rent-to-own or outright purchase.
To drive the housing delivery agenda, the NPP plans to establish two new bodies. First, the Ghana Housing Authority. This authority will be responsible for improving the legal and regulatory framework, creating land banks, providing infrastructure and standardizing houses. Second, the National Housing and Mortgage Finance Company will manage the Mortgage and Housing Fund set up in the 2020 budget, provide incentives to enable the private sector build communities’/housing units, and create jobs in the process across in the country.
Under the leadership of President Akufo-Addo, the NPP further intends to expand the capacity of the State Housing Company to lead government’s efforts alongside the private sector to build large pools of affordable houses for Ghanaian workers and families. Meanwhile, the government is committed to completing all housing projects begun by previous administrations in addition to the new projects initiated and yet to be initiated by the government.
Real Estates Investment Trusts (REITs) are going to be sponsored and promoted as vehicles for rent-to-own schemes, private sector mortgage finance companies and mortgage-backed securities. Also, the Mortgage Finance Act, 2008 (Act 770) is to be reviewed to simplify foreclosure processes. The Pensions Act will also be amended to allow pension funds to be able to invest more than 5% of their portfolio in real estate assets.
By implementing these measures, the Akufo-Addo administration will significantly address the housing deficit over the next four years.