Gov’t considers Rent-to-Own Scheme for affordable housing

Photo: Nana Akufo-Addo - President of Ghana

  .TUC wants mechanisms to ensure low to middle income earner own the homes 

President Nana Addo Dankwa Akufo-Addo has said that  government has developed a plan to revive affordable housing projects nationwide, which will guarantee the provision of decent homes in a concerted effort to reduce the country’s housing deficit; estimated at two million housing units.

The pilot project saw the construction of 204 houses including one to two-bedroom expandable housing units with adequate infrastructure (water electricity, drainage and roads) in a record 9-month period at a cost of GH¢45 million.

According to the President, the Affordable Housing Real Estate Investment Trusts (REITs) (Rent-to-own) scheme, will be the major driver of the government’s master plan at addressing the housing deficit head-on.

“This was designed to give low income workers the opportunity to rent and eventually own homes; the focus will be on apartments and also inner-city rehabilitation.

Government will therefore use this framework, the Affordable Housing Rent to Own REIT’s to revive the affordable housing concept and complete many of the abandoned housing units across the country started by  former President John Agyekum Kufour,” President Akufo-Addo said.

The President said this when he inaugurated a new community at Tema Community 22 spearheaded by the Tema Development Corporation (TDC) under the National Housing Program.

The Rent-to-own initiative is under the National Housing and Mortgage Fund (NHMF) which is currently piloting two schemes: The National Mortgage Scheme (NMS) and Affordable Housing Real Estate Investment Trusts (REITs) (Rent-to-own) Scheme. Under the National Mortgage Scheme (NMS), mortgages are being underwritten at rates of 10 to 12 percent by the participating banks – namely GCB Bank Limited, Stanbic Bank Ghana Limited, and Republic Bank Ghana Limited. The intervention aims at reducing mortgage rates by over 60 percent, compared to the average market rate of 28 percent.

The President is optimistic that these initiatives by the Ministry of Finance and the Ministry of Works and Housing will help to reduce the burden on government to provide sovereign guarantees to back such projects: “The Affordable REIT will become the off-taker of the properties of the rent to own scheme, this will significantly reduce the enormous pressure that is put on government for sovereign guarantees.

With a successful off taker system being created, there will be no need for requests for sovereign guarantee that puts excessive burden on the government.

The Ministry of Finance and the Ministry of Works and Housing will also partner and speedup work on the delivery of houses under the National Mortgage Scheme and the Affordable Housing REIT scheme to promote investors interest in developing affordable housing in the country”.  For him, the rent-to-own scheme will eliminate the burdening two-year rent advance system. It is designed to give low-income workers an opportunity to rent and eventually own homes.

Works and Housing Minister

The Minister for Works and Housing, Samuel Atta Kyea, told the B&FT in an interview that the vision of the President to revive affordable housing and give decent homes is feasible and needs some strong push. He believes if more funds are allocated into the NHMF, the job to provide affordable houses will be achieved quicker than anticipated.

“What we are seeing today at Community 22 is a pilot scheme; they can continue but with a serious overdrive. We are just talking about some 204 housing units here built in 9 months; we are having a big deficit, so they should just increase the mortgage and Housing fund, in terms of capital infusion, and we do the overdrive where every constituencies or district as the case may be, will be a beneficiary of good housing for our people, it will stem the migration from the city into the rural areas and depopulate the urban areas,” he said.

According to him, one third of Ghanaians are not living in decent homes and therefore there is a drive towards 1 Constituency 4 Flat in the next administration of the NPP government.

Finance Minister

The Minister of Finance, Ken Ofori-Atta told the media after the ceremony that: “This is the realization of the ingenuity and the perseverance of Ghanaians because about GHC45 million  was pumped into this. We had six contractors of which five are local contractors doing about 70 percent of the work. We can within a COVID period, use 9-10 months to create a community of this nature with 204 homes.

In 9 months if we can do 204, imagine the 260 districts all working at this pace; we will have 6000 homes around the country in a hurry. It is really a legacy issue going forward, God willing the Akuffo Addo government comes back housing, and hospital infrastructure will be the norm for everyone”. According to him, per data available, the nation needs some 200,000 houses a year to close the deficit and work must begin earnestly.

TUC Concerns

The Trade Union Congress (TUC) after commending the government for the Community 22 project requested that a mechanism be put in place to ensure that the low to middle income earners who are the target of the project really benefit.

The Deputy Secretary General of the TUC Joshua Ansah cautioned that, “The situation where we will have the rich in society acquiring these homes and renting them out to workers is something that we would be happy if a mechanism is put in place to avert it. The low and middle income earners as have been said in all the documentation should have the opportunity to become homeowners through these schemes.”

Houses available

At Tema Community 26, 11 residential blocks have been completed and 46 additional blocks are to be done by the first quarter of 2021, while some 93 blocks will be added by 2023. According to the TDC the pricing of the house begin from GH₵8 thousand.  At Community 22, 204 1-2 bedroom expandable housing units are available.

Work under the Asokore Mampong Affordable Houses has started and would be allocated to the Ghana Medical Association upon completion.

Some private estate developers under the Ghana Real Estate Association (GREDA), including Adom City Estate, have coordinated with the Ministry of Works and Housing and the Ministry of Finance to take part in the government’s affordable housing provision venture.  Based on the building specification, the starting price for houses are GH¢140,000 and GH¢90,000 for standard two-bedroom and one-bedroom respectively.

How to benefit

The houses are being allocated to public sector workers who have worked for more than three months. Interested people are expected to pick forms from any of the partner banks – GCB Bank Limited, Stanbic Bank Ghana Limited, and Republic Bank Ghana Limited- and fill out; a three-month pay slip from the Controller Accountant General needs to be attached to the forms upon submission.  The forms would be scrutinised and vetted and upon qualification a house would be allocated.

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