Landlords to charge maximum of one-year rent advance

… as Cabinet peruses revised Rent Law

Minister for Works and Housing, Samuel Atta Akyea (right) addresses members at PAC

Homeowners, under the proposed revised Rent Law, cannot charge prospective tenants more than one year’s rent advance, as government seeks a middle ground that satisfies both homeowners and prospective tenants.

The revision of the law follows concerns raised by the public about the incessant demand by landlords for high rent advances – in some cases as much as two years – from home-seekers in major towns and cities in the country, contrary to the Rent Act-1963 (ACT 220).

The Act empowers landowners to take only up to six months’ rent advance; but it’s flouted, largely as a result of the huge housing deficit that has increased demand for the limited reasonably-priced homes and apartments up for rent.

Housing deficit in the country currently stands at over 1.8 million units and is said to be growing by 70,000 units per year, a figure that has been thrown into doubt by experts who contend that is probably more.

The Ghana Real Estate Developers Association (GREDA) estimates that about 50 percent of Ghanaians live in sub-standard houses and various unsuitable structures.

With the population projected to reach 32.2 million in 2020 and about 57 percent living in urban communities, in addition to the ever-increasing rural-urban migration this presents a big challenge to government.

Minister for Works and Housing, Samuel Atta Akyea-Speaking to B&FT in an interview after appearing before the Public Accounts Committee (PAC) hearing in Accra, sees the amendment of the Rent Law as the first step in dealing with this complex problem.

He said: “We are pro-poor, and because income levels will not permit huge sums of money in terms of rent advance, should we stay at six-months?

“We are going to strike a middle-ground and six months is what the existing law is saying: in the new law, if there is a proposition of one year, would it not be an arrangement that encourages real estate developers to roll-out more houses?

“This is what we are looking at, but the ultimate responsibility as to what it will be good for the people of Ghana will not rest with Cabinet. We need to come to Parliament so they take the decision as to what is good for our brothers and sisters who do not own houses but need a place to live.”

The new revised bill, which is before a Cabinet sub-committee, will soon be brought to Parliament for deliberations and approval.

On when it will come before Parliament, he explained that it has to go through a process.  “After moving from the sub-committee, it will move to full Cabinet for assessment and analysis before a memo will be brought to Parliament, after the Attorney-General’s work to bring the bill, before it can be passed into law,” he said.

Renting vs home ownership

The soaring price of land in major cities of Accra, Takoradi, Tema, Kumasi and Tamale, as well as other regional and district capitals, has made it difficult for low- and middle-income earners to build decent houses to shelter their families.

A plot of land measuring 100 X 70 feet on the fringes of Accra—Abokobi, Oyarifa, Amrahia, Oyibi and others – costs an average GH¢40,000. The situation is not different in Tema, Kumasi and Tamale.

While individual buyers struggle to raise enough money to purchase plots of land, estate developers have also had to contend with the rising cost of land – the basic component in their operations.

Government, in an attempt to stimulate investor interest and also to make housing affordable, scrapped the 5 percent VAT on real estate in the 2017 budget approved by parliament. However, this is yet to translate into any reduction in the retail price of houses.

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